GOVERNMENT-DONOR COORDINATION COMMITTEE (GDCC)

Minutes of the Fourteenth Meeting of the Government-Development Partner Coordination Committee (GDCC)
Held on 28 April 2009, at CDC

H.E. Deputy Prime Minister Keat Chhon, Minister of Economy and Finance and First Vice Chairman of the Council for the Development of Cambodia, in his capacity as Chairman of the Government-Development Partner Coordination Committee (GDCC), opened the fourteenth meeting of the GDCC by welcoming all participants. In his opening remarks he emphasized that the meeting is a continuation of dialogue at the CDCF in December 2008 and should be conducted in the same partnership-based manner. The objective of the meeting was to reflect on the economic situation and consider immediate as well as deeper-rooted and longer-term measures to support national priorities, such as support to the RGC socio-economic development and reforms; and more results-focused partnerships, which need collective commitment, especially to mitigate the impacts of global financial crisis on the livelihoods of Cambodian people through the downturn of the main growth sectors – garments, tourism, construction, agriculture, and Foreign Direct Investment.
The agenda items of the meeting were:

Impact of the global economic crisis and the government response, specifically in the garment sector, social safety nets, agriculture and foreign direct investment
Progress in the implementation of the Joint Monitoring Indicators agreed at the 2^nd CDCF and endorsement of the JMI on Aid Effectiveness (JMI target 2)
Update on the integration of planning, budgeting and aid management processes and NSDP extension to 2013

[All presentations are available on www.cdc-crdb.gov.kh]

Agenda item 1: Impact of the global economic crisis and the government response, specifically in the garment sector, social safety nets, agriculture and foreign direct investment

H.E Hang Chuon Naron, Secretary General, Ministry of Economy and Finance gave a presentation on Macro Economic Development and Policy Options of RGC to Mitigate the Global Financial Crisis in Cambodia. Regarding the economic conditions in 2009, growth projections for Cambodia have decreased from 6% to -1%. The downturn adversely affected three of the main growth and employment sectors of garment export, tourism, and construction. However, RGC has committed to maintain its 2009 budget expenditure plan and protect social spending, health and education. It was noted that revenue increased by 3.4 times between Jan 2008 and Jan 2009 due to high capital revenue receipts; and, bank deposit growth has continued. Inflation has reduced further in 2009 (9.4% in Jan to 6.2% in Feb).The government has also identified policy options and measures at macro and sectoral level to mitigate the impacts of the global financial crisis on Cambodia.

Comment by Mr. Qimao Fan, World Bank Country Director and Lead DP Facilitator: Mr Fan welcomed opportunity to monitor progress against the goals that were set for both the government and development partners at the last December CDCF. Development partners support the Prime Minister’s call for close collaboration between the government and development partners to manage our way through this crisis. He identified issues for further discussion as follows:

Guidance on how the government plans to monitor changing levels of risks and vulnerability over the coming months and how development partners can support this effort.
Information on government steps in identifying and monitoring priority projects and programs for implementation and use of the TWGs in quarterly monitoring.
Public spending should be on pro-poor social outlays and safety nets and high-quality infrastructure projects that would strengthen competitiveness, broaden private sector growth and promote sustainable development.

He concluded that both the government and development partners should focus on (1) helping and protecting the poor, the vulnerable and the weak; and (2) turning the crisis to an opportunity for promoting a sustainable and competitive economy that will benefit all Cambodians.

Response from RGC: H.E. Hang Chuon Naron addressed the issue of monitoring of the situation and reported that the government continued to use the existing mechanisms they have set up to monitor all changes caused by the impacts of the global crisis at macro and sector level, and the Committee for Economic and Financial Policy was considered a main actor to monitor the situation. However, RGC needed to receive more regular reports on the disbursement and project status and some bottlenecks of those projects. He also suggested that there should be improved information sharing between the government and development partners.

H. E. Chhieng Yanara addressed the need to monitor projects financed by development partners. The government will work with DPs to identify the prioritized and potential projects/programs that can be able to accelerate the economic growth and provide safety nets; moreover, he asked development partners to expedite the fast-tracking disbursements. The government also proposed that more assistance in investment projects instead of technical cooperation or advisory support would be needed to ensure a strong and immediate response to the impacts of crisis. It was agreed that priority projects would be identified and monitored through the TWG and GDCC mechanism.

Social Safety Nets: The representative of the Council for Agriculture and Rural Development (CARD) and the Ministry of Rural Development revealed the short-term and long-term measures to identify policy options to safeguard the poor and vulnerable. The government would work with development partners to complete the tasks assigned which mainly focused on Social Safety Nets. Moreover, the government has improved the institutional arrangement and developing the Social Safety Net Strategy (SSN strategy). For short-term measures, the government continues to strengthen the existing mechanisms, such as Food for Work program and Equity Fund in rural areas. Furthermore, the representative from MRD added some measures that the government has implemented in order to help increase the living of the people at the rural areas and to contribute to the Social Safety Net System.

Comments by Mr. Jean-Pierre de Margerie, representative from WFP: It was suggested that the government accelerate the process of finalizing the SSN strategy in order to meet the deadline in December 2009 and identify the additional new poor target areas for ID Poor Program, which would be supported by development partners. It was also important to identify the most vulnerable, and then determine what can be done through a Social Safety Net arrangement.

Response from RGC: H. E. Chair referred to the background paper from CARD on Social Safety Net which addressed many of the participants' questions. He reaffirmed the government commitment to quickly resolve this problem.

Comments by H.E. Arjun Goswami: It is necessary that the ID poor program confirm the coverage target areas around Boeung Tonle Sap lack and the timeframe for the expansion of coverage for ID poor program among those target areas.

Response from RGC: Regarding Social Safety Nets, the government had implemented some short-term strategies to solve the problem of the poor and the vulnerabilities. These were as follows:

Strengthening the existing mechanism
Working on the possibilities of the establishment of new programs to assist the poor and vulnerabilities. In this regard, Food Security and Nutrition TWG and World Food Program were collaborating in the process.
World Bank and World Food Program would support the preparation of the Social Safety Net Strategies
Programs and projects such as (1) Labor Food Project; (2) ID Poor Program; (3) Equity Fund Project and Program; (4) Social Security fund; and (5) Food Subsidiary for Student were highlighted as important components of the response.

A representative of MoP added that the target areas for ID Poor Program are Pursat and Kampong Thom, around Boeung Tonle Sap Lake, Banteay Meanchey, Kampot, Svay Reang, and Steung Treng. The timeframe to extend to all these target areas is 2009.

Agriculture Sector: H.E. Chan Tong Yves, Secretary of State, Ministry of Agriculture, Forestry, and Fisheries (MAFF) identified the existing measures that the government has implemented. He noted that RGC has developed some strategies for the agriculture sector to promote development and to reduce poverty. Those strategies are included in the Rectangular Strategy Phase II, NSDP (2006-2010), Strategy for Agriculture and Water (SAW 2006-2010), and Strategy for Food Security and Nutrition (2008-2012). Particularly, the Five National Programs of the Strategy for Agriculture and Water have been developed and are being finalized.

Comments by Representative from AFD: Government agencies in the agriculture sector must accelerate those measures and strategies so that implementation can begin.

Response from RGC: Short-term mechanism to implement the 5 SAW programs had been discussed; due to the fact that agriculture is multi-sector issue, there needed to be close cooperation with concerned agencies to enhance productivity and diversification. The problem that RGC is facing for agriculture is that during the crisis the market for Cambodian agriculture can contract. Thus, both short-term and long-term strategies are needed. The Fisheries TWG is also working with DPs on the preparation of the 10-year Strategies Plan including 3 and 5-year Plan; and on the establishment of Fisheries Operating Group in order to coordinate all activities around a common objective.

After the discussion, it was agreed that the Five National SAW Programs would be finalized in the middle of this year. SAW issues would be further discussed in the dialogue at TWG on Agriculture and Water.

Garment Sector: H.E. Senior Minister Cham Prasidh, Senior Minister of Ministry of Commerce, shared information on the general status of the garment sector in Cambodia and the measures which RGC has implemented. The export of garment products had slowed down during the global financial crisis. The decrease in garment product demand in June and July which caused 63, 000 jobs loss from the beginning of crisis, decrease in monthly pay-roll and theft of designs and produce were the main challenges for Cambodian garment sector.

Regarding those challenges, the government has taken some measures such as reforms to the taxation regime, trade facilitation to improve import-export, industrial improving, and other measures in order to promote the competitiveness of the garment sector, particularly the approval on the proposed joint-measure for garment sector between Committee for Economic and Financial Policy and Private Sector Development Committee on February 2009.

Comments by ILO: Development partners welcomed those measures and asked the government to continue its efforts to coordinate and facilitate the trade area and ensure commercial operations with low cost and higher productivity in order to be competitive.

Foreign Direct Investment: H.E. Senior Minister Sun Chan Thol, Vice Chairman of CDC, identified the short-term, medium-term and long-term measures of the government to attract foreign direct investment during this period that caused FDI downturn. He added that Cambodia Investment Board (CIB) is playing a role to promote and accelerate foreign direct investment inflow. The Investment Aftercare Unit has been set up with Terms of Reference (ToR) within CIB. For the measures taking, CIB was requesting DPs to provide TA to accelerate those measures and CIB is working with a JICA team to conduct a study on the institutional strengthening and promoting investment in Cambodia which will be finalized by 2010. Development partners welcomed these measures and will support the Investment Aftercare Unit to promote investment and review the incentive program for promoting locally-financed investment.

Comments by DPs: Development partners asked the government to clarify measures to retain existing foreign investors, as well as, identify the roles and responsibilities to support investors to be more actively targeted. Moreover, they asked the government to detail its approach to facilitate the entry of new domestic business, and to position Cambodian market as attractive one in the global economy; and the promotion strategies that will help both FDI and local investment.

Response from RGC: H.E. Senior Minister Sun Chan Thol provided response to the issues raised that the government would encourage Cambodians to invest in the country. Therefore, the government has created a one-stop service to be more efficient in the investment process. He also mentioned that the government would look at the investment strategies at both national and provincial level and needed to make CIB more effective and efficient and to provide more information to those investors.

DPs agreed that they would work with the government in promoting FDI.

Agenda item 2. Progress in the implementation of the Joint Monitoring Indicators agreed at the 2^nd CDCF and endorsement of the JMI on Aid Effectiveness

H. E. Chhieng Yanara, Secretary General of CRDB/CDC, presented a short up-date on the Joint Monitoring Indicators and on the joint efforts to identify aid effectiveness priorities which are relevant to the national situation as well as to the government commitments in the Accra Agenda for Action. Two documents had been shared: (1) an overview of TWG progress in implementing their own work plans and the JMIs; and (2) the aid effectiveness priorities that have been identified.

He mentioned that there were achievements in some JMIs agreed at the 2nd CDCF, and progress was being made on some other indicators; capacity and ownership were key factors.

He further stated that CDC/CRDB has worked with TWGs on identifying the priorities for aid effectiveness at the sector and cross-sector level. This work showed the commitment of the government in enhancing aid effectiveness and to respond to the Accra Agenda for Action which focuses on the Program-Based Approach, strengthening Monitoring and Evaluation system, the use of country system and enhancing partnership and mutual accountability. In addition to the priorities set by TWGs, a number of complementary aid effectiveness activities have been identified to strengthen aid effectiveness implementation and to support TWG work.

Comments on JMIs by Ms Carol Rodley, Ambassador USA on behalf of development partners: There were some progress of the implementation of the JMIs set at the CDCF buit further dialogues was requested as follows:

To re-establish the Public Administration Reform TWG, thereby supporting the development of a Public Administration Reform sector-wide approach.
To urge prompt passage of the remaining four fundamental laws and the anti-corruption law, urging that the four fundamental laws should be submitted to the National Assembly for enactment as soon as possible.
The implementation of court registers at the model courts is moving quite slowly and may require the hiring of additional staff to ensure full implementation.
Sharing the current draft anti-corruption law before it moves forward.
Taking measures to deter corruption in all public services by: 1) reducing the time and lowering the cost to imports and exports clearing through the port of Sihanoukville; and 2) implementing the Cross-Border Transport Agreements between Cambodia and Thailand and Cambodia and Vietnam.
Clarifying the status of access to information policy and to understand the impediments to approving the policy.
Discussing efforts by Ministry of Land Management, Urban Planning and Construction to accelerate the partnership process by 1) signing the partnership principles; 2) reviving the technical working group and secretariat and establishing a sector-wide approach. It was also necessary to discuss enhancing urban land-tenure security by developing the Housing Policy and assuring proper process, transparency and just compensation in case of resettlements.

Response from RGC: Representative from CAR responded that MBPI strategy and PMG is on track, MBPI transition strategy needs to wait for Health Sector, and Ministry of Health has prepared sub-decree to set up many SOAs. CAR indicated that a meeting of the PAR TWG would be convened in the near future.

In response to the comments from DPs, H.E HANG CHUON Naron from Ministry of Economy and Finance stated that Medium-term Economic Framework (MTEF) was finalized and PFM Reform Program has proceeded. The government committed to move to further progress and prepare more workshops for line ministries for implementation of PFMRP Phase II. There would be an establishment of the working group that will coordinate this process.

Furthermore, there were two points raised by H. E. representative from CRDB/CDC as (1) PAR TWG has already developed the hierarchy and secretariat and CDC/CRDB has provided both technical and financial supports in order to help it function properly; however, the problem is the absence of the development partner, so we need DPs to nominate a DP facilitator, and (2) regarding the Partnership Principles in the Land sector, the government has been ready to sign this document.

The spokesman from the Agriculture and Water TWG answered to the development partner that although Agriculture and Water Strategy has been approved, the development of the 5 programs was still on the process. Program 5 has not yet been sufficient, thus they needed more financial support so that the program can be finalized by mid 2009. Besides, A&W TWG has also committed to move from project-based approach to the program-based approach. Development partners further suggested that the cooperation and coordination between the Ministry of Agriculture, Forestry and Fisheries and the Ministry of Water Resources and Meteorology should be strengthened such as to increase the effective interventions in the development of agriculture and water sectors. Regarding this, H. E. Chair responded that the government has already set up the responsibility for each ministry.

Official from Forestry TWG mentioned about the progress on Forestry that they have regularly updated the website of MAFF in every three months, and there were some measures taken in order to maintain the forestry coverage area up to about 60% to 70%.

The representative from the Legal and Judicial Reform TWG replied to the issue of the submission of the four fundamental laws that three of them were sent to the Council of Ministers for endorsement prior to being sent to the National Assembly.

The spokesperson from the Land TWG provided a brief overview of progress that (1) they are ready for the signing of the Partnership Principles with the DP side; (2) there is special training policy regarding the enhancing urban land-tenure security; and (3) there is a draft policy for the land-tenure registration of the minority groups. Development partners provided feedback that they also agree to sign the paper, so they will meet and discuss this.

H. E. Chair noted that there was some progress on the reduction of the cost and time spent for clearing the imports and exports at the Sihanoukville Port, and the government will provide detailed explanations and discussions at the seminar on the Investment Climate that will be held soon. Concerning the cross-border agreement with Vietnam, it can be done; however, the agreement with Thailand was unlikely to be completed in the near future.

H. E. Chairman also added that there is lack of information sharing within TWGs and between DPs. He suggested that we further enhance this sharing and work harder to make partnerships efficient and focused on results.

Comments on aid effectiveness by UNDP and EC: Ms Ricarda Rieger, Deputy Country Director, UNDP spoke on behalf of DPs as follows:

The aid effectiveness priorities set will contribute to achieving three results: (1) development of sector strategies and PBA; (2) contribution to the implementing annual operational plans; and (3) improvement of the coordination of capacity development efforts to strengthen country system.
Three preconditions to swift and full implementation and monitoring of these priorities are: (1) it is important that political commitment and leadership on these priorities be secured; (2) more joint effort are needed to improve the quality of partnerships at the level of TWGs; and (3) mutual accountability should be practiced when implementing and monitoring these aid effectiveness priorities.
Development Partners were committed to support their respective Government counterparts in each line ministry and agency in implementing these joint aid effectiveness priorities. They would like to propose organizing, with CDC/CRDB, an experience-sharing workshop for development partners engaged in aid coordination in the various sectors in order to promote aid effectiveness cross-fertilization within the development partner community.

There were three questions for further discussion as follows:

With reference to these priorities being associated with the JMIs, how does the Government envisage monitoring the implementation of the aid effectiveness priorities and to promote stronger mutual accountability?
What kind of support for implementation and monitoring would be expected by the Government from development partners?
How will the Government ensure inter-ministerial coordination necessary for the implementation of aid effectiveness priorities in key sectors which involve a number of Ministries in the rural development and agriculture sectors? (by EC)

Response from RGC: H. E. Chhieng Yanara provided feedback regarding the significance of the commitment from policy level on the identification of the aid effectiveness priorities. He stated that the process of setting up the priorities was approved by the TWGs and then the ministers of the line ministries and development partners before they were presented for endorsement. However, there were some TWGs that haven't finished their discussion, so they should continue their meetings and discussions. The second point of his feedback was to respond to how to monitor the implementation of the priorities. The ministries and agencies of the government would be the ones who implement those set activities, and TWG and development representatives would coordinate the process. And the government was going to use TWG mechanism to help this process with reporting to the GDCC through existing mechanisms; TWG P&H would provide a forum to discuss implementation and share experience while CRDB/CDC, as the GDCC secretariat, will report on the result of the implementation at the next GDCC meeting and at the next CDCF. Moreover, the government would also prepare training on results-based management related to the JMIs. The Chair responded to the EC question on inter-Ministerial coordination by noting the importance of using the TWGs to address these coordination issues, with the addition possibility of using the Council of Ministers for internal RGC deliberations.

Agenda item 3. Update on the integration of planning, budgeting and aid management processes and NSDP extension to 2013

The representative from Ministry of Planning gave a brief summary of the developments in the integration process. There had been joint meetings by concerned agencies and ministries (the Ministry of Planning, the Ministry of Economy and Finance, CRDB/CDC and the Supreme National Economic Council). There will be an establishment of an inter-agency taskforce, comprised of the representatives from the above agencies, with the MoP serving as lead coordinating agency.

Regarding the extension of the NSDP 2009-2013 so as to make it synchronized to the RS-II and the mandate of the government, the Ministry of Planning was preparing the details of preparation process that would be described in an RGC Circular to be issued soon. This was done to respond to "the need to ensure consistency in terms of hierarchy, role, substance, coherence and synchronization between the Rectangular Strategy, the National Strategic Development Plan and the Sectoral Development Strategies, as well as other policy documents, investment programmes and the nation budget" as articulated in the Rectangular Strategy, Phase II.

Comments on Integration of planning budgeting reforms by WB: How does the government perceive the scope and timeframe of the integration agenda? How is it proposed to frame relatively quick technical reforms that can be carried out over the current year within a longer-term program for improvement? How can DPs help, within and between TWGs?

Comments on NSDP extension to 2013 by UN: The DPs looked forward to the forthcoming circular and information on the process for preparing the extension phase. The Development Partners emphasised the need for broad and effective consultation and enquired about how to best support the government to ensure broad consultation and to ensure that policies can draw on best available analysis.

Response from RGC: Concerning the process of budget integration, a representative from MEF observed that the process of planning and budgeting requires a sustained effort. The PFM Reform Program Platform II supports the line ministries and agencies inintegrating all resources in to the Budget, domestic and external, through the use of Budget Strategic Plans. MoP will therefore articulate institutional arrangements for the integration work but the Budget Strategic Plan is how all resources will be integrated and this will be managed by MEF. One of the challenges RGC is facing is that there are many PIUs which led to difficulty for line ministries to systematically consolidate all of their resource flows. Based on sector policy, we must link MTEF to NSDP well so that we get a comprehensive MTEF that is aligned to national priorities.

Closing Remarks

In his closing remarks, H. E. Chair expressed thanks to DPs in regards to the effort they have made to support RGC development priorities. He reminded the government to enhance its ownership in order to promote mutual accountability. He further suggested that both RGC and DPs work harder to strengthen the TWG mechanism as many issues discussed at the meeting could have been addressed and resolved at that level and implementing many of the actions agreed at this meeting will require more effective TWG cooperation. Last but not least, he wished all participants both from Royal Government of Cambodia and development partners a happy Khmer new year, good health, wisdom and achievements in all works.
The meeting agreed to meet again for the 15th GDCC in September or October with the date to be confirmed at a later time.

The meeting was adjourned at 1:30pm.