CDC - Opening Remarks by the Co-Chair, Mr. Ian C. Porter

Consultative Group Meeting for Cambodia Opening Remarks by the Co-Chair, Mr. Ian C. Porter Country Director for Cambodia, World Bank Phnom Penh, June 20-21, 2002

Excellencies, Ladies, and Gentlemen: I would like to thank the Prime Minister, His Excellency Samdech Hun Sen, for his warm welcome and keynote address which has provided an excellent starting point for our discussions today and tomorrow. I would also thank the Royal Government of Cambodia for the excellent arrangements made for this meeting. Indeed, this is a very special occasion as it is the first time we are holding the Consultative Group Meeting for Cambodia in Phnom Penh. On behalf of the World Bank Group, I am delighted to welcome you all to the Sixth Consultative Group Meeting for Cambodia. We are pleased to welcome members of the Cambodian delegation headed by His Excellency Keat Chhon, Senior Minister and Minister of Economy and Finance — and co-chair of this meeting. Our gratitude also goes to the Cambodian delegation and officials who worked to prepare the excellent documentation for the CG meeting. Finally, let me extend a warm welcome to all the representatives of the donor community and other partners who have been strong supporters of Cambodia’s development agenda, including representatives of civil society and the private sector. Based on our experience from the five preceding CG meetings, we have modified our approach to this meeting in two important respects. First, and in keeping with evolving practices for CG meetings in other countries, I am delighted to be co-chairing this meeting with His Excellency Senior Minister Keat Chhon. Second, in order to allow more time for discussion, we have asked speakers to limit the length of their prepared statements and have introduced a traffic light system to help speakers know when their time is running out. We are also encouraging all speakers to submit prepared statements for the record, and, in fact, prepared statements from the European Union, Sweden, France, and the UK have already been distributed. We hope these modifications to our procedures for this meeting will help make the limited amount of time we have together as productive as possible. Excellencies, Ladies, and Gentlemen: This meeting comes at a time when Cambodia’s economy is showing resilience in spite of the challenging international economic environment. Economic growth in 2001 was estimated at 6.3 percent, driven by an expanding tourism sector and robust garment exports. In 2001, there was nearly zero inflation, and, so far this year, inflation continues to be low. The budgetary performance continued to improve in 2001, with a modest increase in revenue and also a modest reorientation of public spending towards the critical social sectors. The prospects this year are broadly favorable, as well, with the Government aiming for a 5.5 percent increase in GDP. Over the past year, the Government has made significant progress on several fronts. Earlier this week, the National Assembly adopted the Second Socio-Economic Development Plan (SEDP-II), which lays a solid foundation for poverty reduction. The SEDP-II and the Interim Poverty Reduction Strategy Paper provide the framework for a true action plan to reduce poverty. The Government has also made significant progress this past year in producing strategies for moving forward in a number of key areas, including education, health, governance, and nutrition. These are complemented by on-going efforts to improve public expenditure and revenue management, and define a medium-term expenditure framework. As you will remember, at the end of the Tokyo meeting, we agreed on ten specific action areas, where progress would be monitored and followed-up over the next year. Those action items are: • Adopting the anti-corruption law. • Rendering the National Audit Authority (NAA) operational, and appointing an Auditor-General. • Adopting the Forestry Law and completing negotiations with concessionaires. • Launching the full demobilization program. • Finalizing a credible civil service reform strategy and beginning to implement it. • Implementing the 1995 procurement sub-decree. • Finalizing the action plan for legal and judicial reform. • Rationalizing investment incentives. • Adopting the Land Law. • And enhancing disbursement to key sectors. With respect to these action areas and as the Government’s status report shows, it has made important strides in a number of areas, including launching the demobilization program, rationalizing the investment incentives under the Law on Investments (LOI), and adopting the Land Law. There has been some progress in a number of other areas, but progress with respect to anti-corruption and legal and judicial reform has been disappointing. Over the course of the next two days, we will review the progress made on this reform agenda as well as the areas where more needs to be done. Excellencies. Ladies, and Gentlemen: In addition to taking stock, it is also important for us to focus on the critical policy challenges for the coming year. The Government has identified its key development challenges and priorities for socio-economic development in the documents prepared for this meeting. Similarly, the working groups have distributed drafts of potential benchmarks for progress over the coming year, especially with respect to good governance, natural resources management, the social sectors, and fiscal management and public administration reform. Over the next two days, we will discuss the policies, programs, laws, and decrees in each of these reform areas, and their importance for Cambodia’s long-term development prospects and for poverty reduction. Excellencies, Ladies, and Gentlemen: The overall theme of our CG meeting this year is Poverty Reduction and Governance. Government, donors, and civil society have placed the reduction of poverty at the center of the development challenge in Cambodia. In this context it is critical that the Government’s overall strategies and policy pronouncements are translated into effective implementation and real results in terms of improved service delivery, poverty reduction, and achievements of the other Millennium Development Goals. This CG meeting provides us with an opportunity to focus more attention on moving from strategy to implementation. Excellencies, Ladies, and Gentlemen: The final point I would like to make this morning is on the issue of partnerships and coordination. We had a very good discussion on this yesterday, and the Government has made some specific suggestions in its documentation on ways to enhance donor coordination and collaboration and better harmonize donor procedures and policies, and we had a very good discussion on this topic yesterday. Ensuring the poor benefit from the substantial resources committed to development assistance in Cambodia is central. This depends on effective coordination and management of this assistance through development partnerships amongst Government, donors, civil society, and the private sector. I look forward to continuing this discussion tomorrow morning. How we organize ourselves to work together is critical to whether or not we collectively achieve our goal to reduce Poverty in Cambodia. Excellencies, Ladies, and Gentlemen Looking ahead to our agenda over the next two days of our plenary meetings, we will have opportunities to review progress, discuss critical issues, identify areas for action, and consider how the donor community can more effectively support poverty reduction in Cambodia. During our morning session today, we will review the current macroeconomic and fiscal situation, and the progress made on implementation of the Government’s poverty reduction strategy. We will also discuss the Government’s plans to increase the contribution of international trade to growth and poverty reduction. After lunch, we will focus on issues of governance and their critical linkages to poverty reduction. We will take stock of progress on civil service reform, the government’s demobilization program, and legal and judicial reform. We will conclude the afternoon with a session on natural resources management, including discussions on forestry and fisheries reform, land management, and water. Tomorrow, we will start the morning with summaries of the working discussions held on Wednesday on decentralization and partnerships and aid coordination. Later tomorrow morning, we will discuss Cambodia’s external financing requirements. Participants will be invited to outline their assistance programs and indicate the proposed level of support for Cambodia. We will conclude this year’s CG meeting with a decision on the timing and venue of the next meeting and with closing remarks from the co-chairs. Let me - once again - say how pleased I am to be able to welcome you to this Sixth Consultative Group Meeting for Cambodia - and the first Consultative Group meeting in Phnom Penh. I look forward to our discussions on the development challenges facing Cambodia and on how we can work together in partnership to provide the critical assistance needed to help in overcoming those challenges. Thank you very much.