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2.4.1
SOCIAL SECTORS EDUCATION
SECTOR 62.
For Cambodia, investment in education and training is critical for
achieving sustained economic growth and productivity improvement. The
Government is committed to expanding equitable access to basic education
and improving its quality and strengthening the efficiency of use of
resources allocated to education. The Government is also committed to
mobilizing additional resources for education to increase spending in line
with other countries in the region. The Government’s education reform
process that began in mid 1999 has resulted in the formulation of an
education policy and strategic frameworks that establishes the overall
sector development priorities, sub sectoral targets and a medium term
education expenditure framework for the period 2001/2005. In late February
2001, the education strategic plan (ESP) was reviewed and appraised by
other stakeholders, following which a
more detailed education sector support program (ESSP) was prepared
late May 2001. In late June
2001, both the ESP and the ESSP were again reviewed and broadly endorsed
by the Government, donors and NGOs. Subsequently, these education reform
plans have been endorsed at a high-level Governor’s Forum and the
Education Round Table. The key policy elements and the phasing/sequencing
and implementation of these policy priorities will continue to be refined
through a rolling Program guided by the Government-led Education
Strategic Plan (ESP) and the Education Sector Support Program (ESSP) issued
around mid 2001. The joint endorsement of ESP and ESSP by the Government,
donors and NGOs provides a shared framework and commitment to key policy
actions that will be further elaborated in a joint common policy action
matrix to be endorsed in 2002. 63.
Basic Education: The
basic education reform agenda now being implemented is aimed at improving
the delivery of education services and strengthening equity of access.
The Government accords the highest priority to providing nine years
of quality basic education. Recent reforms have begun to address these
equity and efficiency issues with the extension of school instructional
hours, increased textbook provision and increase in teachers' salaries
even though salaries of other public servants have been frozen. Abolition
of start of the year parental contributions, provision of school operating
budget and remedial classes under PAP have resulted in immediate impact.
MoEYS reports that primary school enrolment has increased from 2.3 million
to 2.7 million in the last 12 months. Secondary enrolment has increased
from 380 000 to 460 000. It
has reported increased enrolment in parts of the country where children
were less willing or able to attend school. Also, the progression rates in
primary school in 2001 have increased from around 75% to 90%. In other
words, repetition in the lower grades is being reduced, allowing more
children to enter grade 1. The number of girls in the higher grades is
also increasing. In other words, the reforms are dealing with both the poverty
and the puberty traps. 64.
Upper Secondary: In recent years, reforms have focused on
increasing enrolment, especially of girls, strengthening academic
standards, and reducing repetition and drop out rates through a sustained
improvement in the quality of education.
Enrolment of girls is still low but improving with girls
constituting about one third of total enrolment.
The planned education reforms include expansion of the upper
secondary education facilities in under-served areas, curriculum
development, and provision of adequate operational budgets, as well as
measures to ensure equitable access for the poorest families. Incentive
programs at upper primary and lower secondary levels (eg. school feeding,
scholarships for the poor) have resulted in increasing retention and
progression of the poor and girls that will result in increased upper
secondary enrolment over the next 2 to 3 years reflecting the enhanced
participation of the disadvantaged and vulnerable groups. As part of the
reform process, the Government has begun to carry out a public/private
partnership study in 2001 that will examine the opportunities for the
participation of the private sector in providing upper secondary school
education services. 65.
Higher Education: The
Government recognizes that higher education institutions need to improve
performance. A number of areas have been identified that need to be
addressed to make post secondary education yield higher returns and be
able to support the process of economic and social development. A policy priority of the Government is to strengthen
financial, regulatory and management systems alongside improved quality
assurance mechanisms, linked to increased operational autonomy for the
institutions. The priority action program (PAP) for higher education in
2001 and 2002, which includes operational budget support for institutions,
is the initial vehicle for improved institutional governance and
transparent financial planning and management. MoEYS will also prepare an
enabling legislation in 2002 on the revised status of higher education
institutions, designed to underpin the governance, institutional and
financing reforms. 66.
Technical and Vocational Education and Training (TVET):
Concomitant with economic growth is the increased demand in urban
and rural areas for a broader range of relevant technical skills.
At present the capacity of the public TVET system is limited and
its orientation is largely divorced from the needs of a market economy.
In recent years, student enrolment and the number of courses have
been declining because of a perception of poor quality of training and
lack of opportunities for employment in public administration. The
weakness in public sector TVET system have encouraged a robust private
sector response with an increasing number of private sector institutions
providing training, on a fee basis, in information technology and foreign
languages. However, most private sector TVET activities are confined to
Phnom Penh and TVET capacity in rural areas remains dependent on external
assistance through non-formal TVET delivery. In early 2001, a Strategic
Plan for the development of the TVET system has been approved by the
National Training Board. The first priority of the Government is to put in
place the needed regulatory and quality control mechanisms and to support
the growing public/private partnerships, and to ensure an increased
operational autonomy for the institutions. TVET plans for 2002 include
expansion of the provincial training center network to underserved
provinces, sustainable financing of the TVET operations and the national
training fund, as well as support for building capacity of the public
sector TVET system. HEALTH
SECTOR 67.
During 2001, the Ministry of Health reviewed and revised its formal
Health Policy Statement for 1999-2003.
The 1999-2003 policy had focused on seven main areas, these have
been expanded to 12, and sharpened in focus. The Health Sector Review was
also completed in 2001, it is the first step in a sequence of actions that
will shape Cambodia’s health services in the future. The purpose of the
Review was to provide a broad assessment of the sector’s performance and
of the effectiveness of the policies and strategies that have guided its
development. The Ministry is now engaged in a consultative process that
will result in a Health Sector Strategic Plan for 2003-2007. The level of
financial resources available for funding priority health services will be
established in the course of the preparation of the Government’s Medium
Term Expenditure Framework. 68.
Findings of the Health Sector Review: The main features of
Cambodia’s health sector are of relatively recent origin. Only ten years
ago the role of the Ministry of Health (MOH) was very modest in scope, and
there was only a nascent private sector. However, both have since
developed rapidly. The achievements of the MOH during such a brief period
are particularly striking. It has successfully reasserted technical and
fiscal control over the entire public health system. It has also developed
a national health policy and strategy that includes major financial
reforms (e.g., the introduction of formal user fees) and a national system
of primary health care coverage. The MOH has also made substantial
progress in many critical areas of public health, including polio
eradication, TB and malaria control, HIV/AIDS prevention and in the
introduction of modern birth spacing. The period in which these
achievements have been made is so short and recent that in most cases
their impact is not yet fully reflected in the available survey data.
Perhaps most commendably, the MOH has remained flexible and open to change
and has been truly innovative in some areas. Another noteworthy
achievement is the extent to which the many NGOs working in the health
sector provide their support through the Government’s health care
system. Yet, despite the many achievements, in Cambodia’s newly
established health sector much work remains to be done.
A Strengthened Health Care System 69.
The
Strategic Plan:
Drawing on the experiences
of implementing the 1996-2000 and 1999-2003 Health Policy and Strategies,
during 2001 the Ministry of Health evaluated and revised these policies
and strategies for the health sector in consultation with its partners,
including international organizations and relevant institutions. The
Health Sector Review has been completed and the Report released. Based on
this review, the Ministry of Health is preparing a Strategic Plan for
Health Sector for the 2003-2007 period that will be completed in 2002. The
Review of the Health Sector and preparation of the Strategic Plan will set
the stage for the establishment of Sector Wide Management. 70.
Expansion
of basic health services: During
the year, under the Ministry's Health Coverage Plan, expansion of basic
health services to the remote areas has been continuing. The number of
health centres equipped with materials, drugs and staff, has increased
from 678 in 2000 to 768 in 2001. Now 81 percent of the 940 health centres
that have been planned are completely functioning and providing the
minimum package of activities (MPA). Although the establishment of
referral hospitals is more time consuming, 10 district hospitals are now
providing major or minor surgery under the CPA and qualify as referral
hospitals. 71.
Health technology: While
strengthening health system through health district development, the
Ministry of Health has also promoted health technology expertise. The new
Cardiac Centre in Phnom Penh is a major achievement that will play an
important role in training Cambodian health professionals. 72.
Budgets:
The RGC’s financial reform program has allowed the Ministry of
Health to utilize the budget of the Priority Action Program in seven
provinces and cities, and eight national programs. Meanwhile, we continue
using the Accelerated Developed District budget in 32 districts. 73.
Partnerships: As part of
strengthening the district health system through partnership with the
private sector and NGOs, during 2001 the Ministry of Health evaluated the
two pilot ‘contracting-out’ operational districts, three
‘contracting-in’ operational districts and four ‘control’
districts. The evaluation has shown that both these forms of contracting
have increased the provision of basic health services from two to three
fold over the three year implementation period. Consultations increased
from five to 10 fold within three years, and health expenditure per capita
rose from $2.8 to $4.5. This is a reasonable level of expenditure by
comparison with the per capita health expenditure in the whole country of
$7 (about $2 from the government and $5 from international aid). In some
districts, the health expenditure of the poor has been reduced 60-70
percent within the 3 years of the pilot project. 74.
User fee schemes:
For generating income in order to improve basic health care
services, the Ministry of Health has been piloting various user fee
schemes in a number of hospitals and health centres. The findings of the
evaluation of these schemes shows that while such schemes have contributed
to an improvement of both the quantity and quality of health care at the
health centers, in the case of hospital care, especially for serious
conditions, these could
adversely affect the poor. 75.
Quality assurance: For
quality assurance of public sector health services, the Ministry of Health
has made efforts to improve health legislation. These have included: a
sub-decree on medical professional practice, regulations on public
sanitation, a sub-decree on cosmetic products management, regulation of
dairy milk products, a sub-decree on permission for foreign businesses in
health, the establishment of the Inter-ministerial Committee for Tobacco
Reduction, and a procedure for opening or closing medical services. In addition, the University of Health Sciences has been
adopted by a sub-decree as a public administrative institution. Improved Health Services Delivery 76.
Attendance rates:
In general, the delivery of health care services has increased
significantly. The new
attendance at OPD per inhabitant per year is now 0.51. The utilization
rate of OPD at HCs has doubled over the last two years. 77.
Immunization: During
2001, Cambodia was declared polio free - poliomyelitis has been totally
eradicated from the country. The Ministry has now begun programs for the
eradication of tetanus and measles. The Ministry has also implemented an
immunization program for Hepatitis B in Kampong Chhnang province. 78.
Ante-natal care and birth
spacing: Although there is still insufficient training of health staff
for ANC and delivery, birth spacing activities have increased gradually,
with 96 percent of currently married women knowing at least one method of
family planning, and 24 percent currently using a family planning method
– 19 percent a modern method. 79.
HIV/AIDS:
The declining prevalence rate of HIV/AIDS is a signal of success in
the HIV/AIDS prevention program in Cambodia. The 100 percent condom use
program has been expanded nationally. 80.
TB:
Implementation of DOTS for treatment of TB has been extended to
many new HCs, and the cure rate is being maintained at a high level (85
percent). However, the new case detection rate remains low. In addition,
there is a need to pay particular attention to the increasing impact on TB
of HIV infection rates in the country. 81.
Malaria: In general, both
new cases and the mortality rate of Malaria decreased from the previous
year. But incidence remains high, particularly in provinces which are
close to the Thai, Vietnam, and Lao borders. Malaria outbreaks have been
managed effectively and activities against schistosomiasis have been
performed effectively. 82.
Blood donation: The blood
donation system has been extended to provinces and RHs at OD level and
blood collection activities have been encouraged. All donated blood is now
strictly tested by laboratories.
83.
Other public health services:
Other public health service activities such as oral and dental health,
mental health, blindness prevention, food safety and nutrition, have also
been delivered with good results during the year. 84.
The private sector: Regulation
of private sector services, both pharmacies and clinics, has been promoted
to ensure they conform to legal regulations. The number of illegal
pharmacies and clinics remains high, however.
In 2001, 11 new drug companies were registered, making a total 82
in the country. The Ministry approved 33 pharmacies, and 16 illegal
pharmacies were closed. It was estimated that there were 1,876 places
providing private sector health care services, including medical care,
dental care, laboratory services and cosmetic surgery in 2001, of which 80
percent are illegal. There
are a total of 114 private hospitals, though these have fewer than 500
beds. Some well-off patients travel to Thailand or Vietnam for treatment. 85.
Other interventions:
The Ministry has also established preventive health services for
military engineers who are working on construction of bridges, roads
and/or are posted at the borders; health consultations for demobilized
soldiers; emergency health services in areas affected by natural disasters
such as floods and fires; border health programs at the borders with
Vietnam, Laos, and Thailand; and ensured that Cambodia is integrated into
ASEAN by participating in, and conducting, regional conferences. Improved Management of the Health System 86.
Supply of drugs and
equipment: During 2001, the Ministry of Health received 1,162 tons of
drugs worth 14 million $US, of which, 60 percent was funded by the
government, 33 percent by international aid funds, and seven percent from
other sources. These drugs have been distributed quarterly to Operational
Districts, National Hospitals, Referral Hospitals, and Health Centres. For
distant provinces, the drugs have been distributed semi-annually. The
prioritized target for these drugs and medical equipment is to support the
basic health services at HCs, RHs, National Programs and all outreach
activities. The Ministry of Health has also developed guidelines for using
the drugs for all health staff and organized teams to train health staff
at their facilities in using the guidelines effectively. 87.
Regulation
of the drug in the private sector:
To support the private sector health services the Ministry of
Health has provided training on its policies to drug sellers in Phnom Penh
and operators of private pharmacies. The Ministry has also emphasized
regulation of all pharmacies and pharmaceutical companies. 88.
Human
resource development: The
Ministry of Health has promoted training activities, local and
international, in order to strengthen the human resource base of the
health system. In 2001, 134 medical doctors, 32 pharmacists, 26 dentists,
289 nurses, 11 midwives, 11 physiotherapists, and 20 laboratory
technicians have graduated from Cambodian education institutions. The
Ministry, and particularly the Human Resources Department, has provided
continued training on the Minimum Package of Activities to 357 health
staff. For international training activities, 393 staff has received short
course overseas training and 45 received long-term overseas training from
6 months to 2 years. 89.
Staff
Management: During
2001 the Ministry recruited 489 additional new staff, dismissed 412 staff,
and allowed leave of absence without salaries to 1215 staff. In addition,
the Ministry, in collaboration with the Council of Ministers, Secretary of
State of the Public Functions, and other Ministries has developed and used
a staff information management system and job analysis. As a result, the
number of medical doctors and medical assistants per 1,000 population has
decreased from 0.4 in 1998 to 0.3 in 2001, and the number of nurses and
midwives per 1,000 population has decreased from 1.2 to 0.9. There remains
an imbalance between medical doctors, medical assistants and nurses, and
the shortage of nurses and midwives has resulted in insufficient staff at
HCs and RHs. It is important to note, however, that during this year, the
number of new staff recruited and staff resuming their work is less than
one third of the staff that left their jobs for retirement, leave of
absence, disabilities, attendance at long-term training, work in other
Ministries, and leave for other reasons. In general, the number of medical
doctors and medical assistants per 1,000 habitants in 2001 of 0.3 is not
significantly less than our neighboring countries: Vietnam (0.48),
Thailand (0.24), and Laos (0.24), Indonesia (0.16) and Myanmar (0.30). 90.
Budgeting:
In 2001, expenditure by the Ministry of the funds allocated in the
National budget was high (83.7 percent of the allocated budget).
Expenditures of the allocated budget at the central level was 91.3 percent
and 83.7 percent at provincial level. There was an improvement in
expenditures from the PAP budget; on the other hand expenditure from the
ADD budget was a lower percentage than last year. 91.
Coordination:
The Ministry had excellent coordination and international
collaboration to support the delivery of health services during the year.
In 2001, the Ministry signed 8 MoUs with NGOs, and 10 with bilateral
donors. To ensure integration of the country into ASEAN, the Ministry
participated in four technical meetings, of which one was held in Phnom
Penh. The Ministry has maintained its existing coordination mechanisms of
regular Cocom and Prococom meetings. 92.
Other activities:
Other supporting activities included: Supervision, Inspections,
Regular meetings, Health information Systems, Laboratories, Research,
Procurement, General administration and Construction and provision of
material and equipment for ODs. 93.
Overall achievement:
Overall, with the strong support of the RGC, the Ministry of Health
has achieved remarkable results during 2001. These results reflect the
physical and moral effort of health staff at all levels and excellent
cooperation of the relevant institutions, the external development
partners, NGOs, the private sector, and the society at large. 2.4.2 ECONOMIC SECTORS AGRICULTURE, FORESTRY AND FISHERIES 94.
The
Agriculture, Forestry, and Fisheries, combined, contribute about 43
percent of GDP and provide direct employment to nearly 80 percent of the
labor force. Since 85 percent of the population lives in rural communities
and 75 percent of the poor
are farmer-headed households, the performance of the agriculture sector
remains a key element for achieving sustained economic growth, poverty
reduction, and development of the rural economy. The development of the
agriculture sector is principally constrained by low productivity, which
will require concerted efforts to overcome structural constraints.
Inadequate transportation and irrigation infrastructure, lack of
agriculture inputs, inefficient marketing and inconsistent institutional
support remain immediate concerns. The RGC recognizes that its own
capacity to provide efficient and effective support services has been a
problem and is seeking increased private sector involvement. In recent
years, reforms have focused on removing state responsibility for
production to market-based agriculture resulting in land reform, price
liberalization and adoption of legislation to permit joint ventures
between the state and foreign investors. The MAFF was re-organized in
collaboration with the FAO and additional capacity building is currently
being provided by WB under its Agricultural Productivity Improvement
Project. Extension services have been expanded to research on rice
varieties and transfer of agriculture technology to farmers with the
support of AusAid. Under the ADB’s ongoing Agriculture Sector Program,
the RGC has taken actions for (a) wider dissemination of agricultural
marketing and technological information, (b) liberalization of fertilizer
pricing and marketing, (c) formulation of rural finance strategy, (d)
divestment of the rubber sub-sector, and (e) establishment of local rural
development committees. Policy and institutional reform is being supported
by strategic public investment including village water supplies and rural
roads to support the restoration of essential rural infrastructure and to
generate rural employment. For the Government, raising farm and rural
incomes is essential if widespread poverty is to be reduced and
rural-urban migration is to be kept within manageable proportions. 95.
Forest Management Reform.
The RGC has made significant progress since the fifth CG meeting in
2001, in its efforts to ensure sustainable management of forest resources.
In order to improve the performance of forest concessionaires conducting
commercial logging activities, the RGC has introduced several rigorous
measures, including the suspension of logging activities from January 1,
2002 until such time that a concessionaire would have a new forest
management plan approved by DFW/MAFF consistent with international
standards and would have renegotiated a model forest management investment
agreement with the RGC. A significant reduction in the annual allowable
cut was also imposed on forest concessionaires in 2000/2001. During the
past year, there has also been continued progress
in reducing the incidence of forest crimes. To strengthen the
effectiveness of the partnership between project components further, the
RGC has established an inter-ministerial Technical Working Group to
improve information exchange and resolve internal differences between
project components, and initiated plans to incorporate a bar-coding system
that will strengthen the ability of project components to monitor the
chain of custody of logs from forests to final users. 96.
The legislative and policy
framework that is indispensable to achieving sustainable resources
management has been strengthened considerably with the passage of the
long-awaited new forestry law. In addition, with the support of GTZ, a
sub-decree on community forestry has been developed through a nationwide
participatory multi-stakeholder consultative process to enhance local
community participation in forest management decision-making processes.
The initial steps to develop of a forest policy statement and a
restructuring of the forest administration have been carried out by DFW/MAFF.
The RGC is committed to complete the reform process in the forestry
sector. It will continue its efforts to eliminate illegal logging, to
enhance capacity building for DFW's staff and public awareness,
strengthening forest rehabilitation and reforestation activities and to
enlarge natural forest conservation for eco-tourism with the assistance of
various donors. These efforts will ultimately stabilize the annual revenue
stream received by the Government that will enable the Government to
achieve the long-term sustainable forest resources management. 97.
Fisheries Reform: Since the
last CG meeting, the RGC has initiated a number of reforms to achieve
sustainable use of natural resources that will also assist in the
alleviation of rural poverty. These include the fishing lot reforms
accomplished towards the end of 2001.
The establishment of community fisheries is now underway in both
inland and marine fisheries areas. The Sub-degree for the management of
community fisheries has been drafted after extensive consultations with
stakeholders, Government agencies and NGOs. The establishment of community
fisheries will also provide opportunities to these communities to
participate in fisheries management and in the attainment of the goal of
sustainable use fisheries resource. The
Fisheries Law is also being reviewed by the Ministry of Agriculture,
Forestry and Fisheries (MAFF)/Department of Fisheries (DoF). The MAFF has
also launched initiatives on the conservation and management of fisheries
resources, administrative reforms and capacity building. The DoF is
seeking external technical assistance for fisheries management
(monitoring, control and surveillance programs), the demarcation of
fishing lots boundaries, fish sanctuaries and rehabilitation of freshwater
fisheries and for building capacity of the DoF. The Department of
Fisheries is also considering declaring the biosphere reserve core areas
as fish sanctuaries in the future. For the time being, fishing in these
areas will be restricted inside, while fishing operations will continue
outside to protect the sanctuaries. A Master Plan for fisheries covering
the 2001-2011 period is currently being prepared to guide the development
of the fisheries sector.
INDUSTRIAL
SECTOR 98.
The Industrial sector in Cambodia consists mainly of manufacturing
enterprises (73.5 percent) and construction activities (18.8 percent).
Mining activities are quite minimal. Value added in the manufacturing
sub-sector is comprised mainly of food processing and garment
manufacturing. The textile & garment sub-sector led this spurt,
displaying a remarkable dynamism. The industrial sector’s share in GDP
has increased from 12.7 percent in 1993 to about 18.3 percent in 1998, and
to 23.5 percent in 2000. 99.
In
2001, the Cambodian Investment Board at the Council for the Development of
Cambodia (CDC/CIB) approved a total of 51 new investment projects that are
expected to create about 28,347 jobs. These projects will have US$130
million registered capital and US$230 million fixed assets. Although FDI
approvals by CDC declined by 14% from 2000 levels, other new private
sector investments, which did not apply for incentives, have been
established through agreements with relevant sectoral ministries/agencies.
The main areas of new investments were: plantations/agro-industry,
garments and textiles, food processing, telecommunications, tourism and
Infrastructure construction. More
than 90 percent of FDI is in light industry services and Infrastructure
construction. More
investments in manufacturing activities are now taking advantage of
special trading rights under the Most Favoured Nation (MFN) and the
Generalized System of Preferences (GSP) that has now been extended to
Cambodia by many industrialized countries. The fixed assets of proposed
industrial sector projects, mainly garment factories, accounted for 44
percent of CDC investment approvals in 2001, while new tourism projects
accounted for 32 percent, infra-structure for 20 percent, with the balance
in agriculture/agro-industry. The CDC approved some 14 new garment
factories and 12 expansion projects with a registered capital of US$17
million and fixed assets of US$36 million. These garment projects would
create 24,392 jobs, accounting for 86 percent
of expected jobs to be created. As an important element of the
local economy, the informal sector continues to be active and to grow,
with small and medium enterprises expanding and expected to graduate to
higher levels of organization, production levels and size.
100.
The RGC recognizes that improving the business climate and creating
an enabling environment for private sector development are key
prerequisites for fostering growth, reducing poverty and achieving
sustainable economic development. Challenges for the development of
private sector include: weaknesses in the legal system, costs of and
access to finance, inadequate market information on consumer trends,
shortages of skilled labor, inadequate infrastructure that restrict access
to markets and raw materials, the quality of the ports, the high cost of
essential services namely electricity, water supply, and
telecommunications service. Land issues for agriculture investment
projects remain an obstacle for the Royal Government of Cambodia to be
surmounted. Agriculture sector that has a real potential for growth cannot
be developed if our focus remains only on food production utilizing
traditional methods and technique. The RGC intends to consider a fiscal
stimulus package, and will formulate policies and strengthen the legal
framework for SMEs to create an enabling business environment for these
enterprises. The level of SME activities in Cambodia is still low,
accounting for 8.3% of GDP, compared to the average of 20-25% of GDP in
the region. 101. Even though, several countries in the region have taken bold measures to attract investment, the Investment Law of the Kingdom of Cambodia is still generous in comparison with the investment regimes of other countries in the region. However, tax incentives alone - without an overall environment comprising adequate political stability, physical security, social order, legal and institutional frameworks, infrastructure (water, electricity, road), human resources and external markets - cannot attract investments. The RGC has been vigorously implementing revenue-enhancing measures by tightening and rationalizing incentives to generate additional resources to strengthen government institutions, increase investment in infrastructure, human resources, security, social order and market expansion research. In line with these initiatives, a review of investment incentives has been undertaken in conjunction with the removal of the 1 percent minimum tax on business turnover, which was considered distortionary. The MEF and the CDC working closely with the Foreign Investment Advisory Services (FIAS) of the World Bank Group as well as with other International Financial Institutions and private sector have completed the review of the Law on Investment and the draft Law is awaiting approval of the legislature. This Law will ensure the maintenance of balance between the need for increased revenues and Cambodia’s competitiveness with countries in the region. Thus, the draft amendment to the Law on Investment while rationalizing the investment incentives, provides a simplified and transparent mechanism to automatically qualify investment projects for incentives. The amendment to the Law on Investment, includes provisions for :
102.
In addition to these measures for increasing State revenues and
attracting more FDI, the RGC has strengthened fiscal and economic
management by focusing especially on the management of budget,
strengthening tax and customs administrations and the national treasury.
It has also shortened the length of approval process of new investments by
simplifying administrative procedures. TOURISM 103. Tourism plays a very important part in the rebuilding of the Cambodian economy. Cambodia has world-famous attractions including the archeological sites of Angkor Wat, world-class hotels in Phnom Penh and in Siem Reap, a rich history, and a culture that dates back to thousands of years. The number of tourists coming to Cambodia has been steadily growing over recent years. In 2001, visitor arrivals are estimated to be over 600,000. Since 1998, the number of tourists have increased at an average annual rate of 25-30 percent, and we hope to achieve a target of 1 million tourist arrivals by 2003. 104.
Government
has adopted an open skies, roads and water policy. Siem Reap Airport is
undergoing a US$14 millions expansion. Phnom Penh's Pochentong
International Airport is planned to be expanded. Highway six will reopen
in 2002, allowing direct travel from Thailand to Angkor . Recently,
Southeast Asian leaders have given the go-ahead for a US$2.5 billion 5,500
km rail link from Singapore to Kunming which will include stretches
between Thailand and Cambodia and between Cambodia and Vietnam. At the
same time, the Mekong River and Tonle Sap are being promoted by the
government as waterways for cruise operator itineraries. 105.
Preparation for staging ATF 2003 is picking up momentum and
there is progress in infrastructure development and tourism facilities.
Plans to build the new Phnom Penh Exhibition and convention center (PECC)
in the Capital is on track. This facility will support more national and
international events of this stature in the future. TRADE 106.
The
Royal Government’s effort in Trade Sector Strategy formulation is part
of its ongoing work for designing a National Poverty Reduction Strategy.
At the national level, the work started with the formulation of the
Second Five-Year Socio-Economic Development Plan, and the Interim PRSP.
For the trade sector, the effort started with the preparation of a "Preliminary
Concept Paper for the Formulation of a Pro-Poor Trade Sector Strategy for
Cambodia" followed by our "Tokyo Road Map: Mainstreaming
Trade for Poverty Alleviation" which was tabled at the July 2001
CG meeting in Tokyo. The aim of the trade strategy is to fully
“mainstream” it into the PRSP. 107.
The early efforts of the Royal Government to formulate the pro-poor
trade sector strategy – initially under the umbrella and with the
support of the Integrated Framework for Trade Related Technical Assistance
(IF) – coincides closely with the PRSP effort. The IF is the outcome of
a commitment made by six multilateral Agencies (IMF, ITC, UNCTAD, UNDP,
World Bank, and WTO) to ensure better
integration of trade policies
with national development strategies and to
increase the benefits that Least Developed Countries (LDCs) derive
from trade-related technical assistance made available to them by the
international community. On
April 17, 2001, Cambodia was designated as one of the three pilot
countries for pro-poor trade sector strategy formulation under the IF
initiative. 108.
The Tokyo Road Map essentially provides all the necessary
inputs required to formulate a robust pro-poor trade sector strategy for
Cambodia that can become a critical cornerstone of the country’s poverty
reduction strategy. It tackles some cross-cutting
policy and institutional issues aiming at improving the overall
environment for a successful pro-poor trade strategy. It focuses on what
must be done to strengthen and
develop a number of product-sectors for exports, especially
product-sectors whose development will have a strong positive impact on
Cambodia’s poor and will help decentralize the export base from the two
or three cities where it is concentrated at the moment. It involves
building solid mechanisms for participation
and ownership by all
the relevant stakeholders. Last,
it reviews a number of initial
interventions in areas that are considered as serious bottlenecks.
109.
Following the presentation of the Tokyo Road Map, the Royal
Government and donors agreed to conduct a Diagnostic Study of Cambodia’s
Integration and Competitiveness into the international trading system.
This study identifies obstacles and institutional development needs to
address the demands of increased engagement in the international economy
facing Cambodian households and firms and focuses on strengthening and
developing a number of product-sectors for exports, especially
product-sectors — rice, diversified agriculture, fisheries, garments,
tourism, labour services. 110.
Cambodia has made considerable progress in establishing a modern
trade regime. Over the
last several years the Royal Government has embarked on a comprehensive
program of economic and trade policy reforms. On the trade side, all
quantitative restrictions limiting the ability of firms and individuals to
engage in international trade were largely removed. More recently, the
tariff regime has been significantly simplified with the number of rates
falling from 12 to 4 in April 2001 and the top rate reduced to 35 per
cent. The currency is convertible with dollarization pervasive.
Thus in many respects the trade regime is relatively open. 111.
The economy has responded well to this opening of trade. Growth
rates of 5 per cent are good compared with those achieved in Cambodia’s
recent past. However they fall short of the performance achieved by
neighboring countries. Moreover, these growth rates are insufficient to
make a dent in the incidence of poverty. 2.4.3 PHYSICAL INFRASTRUCTURE TRANSPORTATION 112.
Cambodia's transportation infrastructure as well as public sector
management capacities were severely damaged by years of war and neglect,
unrest and intentional disruption. The problems have been exacerbated in
recent years because of chronic budget constrains which have resulted in
almost a complete cessation of maintenance activities on all modes of
transport. Inadequate support services have created huge operational
problems. The operational, policy and institutional constraints render the
present transport system inadequate to meet the present and future needs
of a growing economy. RGC’s first priority in rebuilding the
transportation infrastructure has been the reestablishment of the road
network. 113. The RGC with external assistance from ADB, UNDP, World Bank, USAID, Japan, EU and other bilateral agencies and several NGOs has been focusing development efforts on the rehabilitation of the primary road network, including bridges and ferry crossings, in order to facilitate goods transport and the integration of markets. Significant projects in this category have included the reconstruction of the Cambodia-Japan Friendship bridge across the Tonle Sap at Phnom Penh, the upgrading of the first section of NR6 and NR7 and the construction of the Mekong Bridge at Kampong Cham, the reconstruction of NR4 to Sihanoukville, as well as the rehabilitation of long sections of NR 1,2,3,5 and 11. The Government has also from its own limited budget resources financed the repair and rehabilitation of some primary and secondary roads which link isolated areas (e.g. NR56, 58,59,67, 69a) to promote socio-economic development in rural areas. Other projects within the transport sector include improvements to the international ports in Phnom Penh and Sihanoukville. Renovations of the Pochentong airport with new traffic control and passengers facilities and upgrading of the Siemreap airport and facilities through a BOT arrangement and emergency repairs to key rail lines. The Construction of a bridge across the Mekong at Kopongcham was completed in December 2001. 114.
The Road Transport is the only mode, which has nation-wide
coverage, and it carries about 90 percent of the freight moved within the
country. Within the road network system, primary routes connecting to
neighboring countries such as Vietnam, Lao and Thailand have not yet been
rehabilitated. The rehabilitation, improvement and connection of the main
national roads/corridors and of transport system is a high priority of the
RGC. 115.
Within the domestic transport network, almost 65 percent of
passenger kilometers per year and 69 percent of freight are carried by
road. Boats account for about 15 percent of passenger and 20 percent of
cargo traffic. The rail network carries the remaining 20 percent of
passenger and 10 percent of the total cargo traffic. International
seaports at Sihanoukville and Phnom Penh are the key gateways linking
Cambodia to the regional and international markets. International Airports
in Phnom Penh and Siemreap are also important gateways for growing
passenger traffic. 116.
The
railways are limited to 2 lines, both of which are in poor
condition due to acts of sabotage and
limited maintenance activities. The northern line is from Phnom Penh
to Poipet (385km), however, the last section from Sisophon to
Poipet has not been used since the early 1970's. The southern line is from
Phnom Penh to the port of Sihanoukville (263km). 117.
River transport was the main means of travel in the past.
Inland ports and waterways play a very important role in the country.
Agriculture and forest products, oil and bulk cargo, and heavy machinery
can be transported by inland navigation. Passenger water transport is also
important because of poor land transportation service. However, inland
ports and waterways have been left unimproved. Inland ports, such as
Kompong Cham and Kratie, and inland waterways development projects are
being seriously considered by the RGC. Historically, Phnom Penh has played
an important role, being strategically located at the waterway junction of
the Mekong, Tonle Sap and Bassac rivers. In recent years, there has been a
continuing shift from river transport to vehicular transport as the main
mode of travel. 118.
Most of the waterways traffic is on the Mekong river between Phnom
Penh and Ho Chi Minh city and from Phnom Penh upstream to Kratie. Vessels
of up to 5,000 tones can navigate along the Mekong up to Phnom Penh for
most of the year. Traffic on waterways other than the Mekong is by mean of
small craft and constitutes a very small volume. International ports play
an important role and are expected to increase in importance not only for
traffic within the country but also to neighboring countries WATER
RESOURCES MANAGEMENT AND SANITATION 119. As Cambodia rebuilds its society and economy, obstacles to the Royal Government’s goal of poverty alleviation and economic development must be identified and addressed. Water is of fundamental importance in many sectors, although many people take water for granted. A sector-wide analysis just completed by the Royal Government has revealed many areas in which water – too much water, too little water, or water of inadequate quality – may soon limit the Nation’s development efforts. Cambodia has abundant total water resources, however rural and urban population growth and growing affluence in urban areas has placed unprecedented demand for water resources. Deforestation, soil erosion and sedimentation in the Great Lake, changes in the hydrologic regime cause by ill-advised Khmer Rouge projects, and sedimentation of waterways have resulted in abnormal floods and droughts. Nevertheless, Cambodia has substantial potential to meet its needs by developing major streams for multi-purposes including irrigation, water supply and hydropower. 120. Water demand and use: Total use of water is estimated to be 0.75 km3/year, of which 94% is for agriculture. There are more than 1,000, and possibly as many as 2,000 irrigation systems fed by surface water abstractions. The ADB, WB, EU, France, Japan, and Italy are active in the development and capacity building in this sector, but there is still a large need to be met. With assistance from ADB, Japan and WB, the Ministry of Water Resources and Meteorology (MoWRM) is formulating a new water resource development policy including a National Water Strategy and Legislation. MoWRM, however, requires assistance in building its capacity to manage the implementation of policies. 121. In addition to MWRM, which has primary responsibility for water resources and meteorology, other agencies with responsibilities in the sector include the Department of Provincial Water Supply (DPWS) of the Ministry of Industry, Mines and Energy (MIME), which is responsible for urban water outside Phnom Penh. Formal sanitation and drainage in the provincial towns and Phnom Penh rests with the Ministry of Public Works and Transport (MPWT). Water supply in Phnom Penh is the responsibility of the Phnom Penh Water Supply Authority (PPWSA). Management of urban water resources is the responsibility of the Municipality of Phnom Penh (MPP), and the Ministry of Rural Development (MRD) is responsible for the rural water supply. 122. Over the years a number of studies have been carried out, the results of which have been summarized in a report commissioned by the Interim Mekong Committee (WATCO, 1984). In this process, a number of promising irrigation, power and multi-purpose (irrigation and power) projects were also identified that have a total irrigation potential of 358,900ha in wet season and 318,220ha in dry season and a potential for power generation (1,522 GWh/year). There is now an urgent need to develop a Master Plan for the development of the basin to begin the process of implementing these projects. 123. Irrigation and Flood Control Development – Cambodia is an agricultural country in which 85% of population consists of farmers. At present, however only 18% of the total rice growing area is irrigated and 82% of the total cultivated area is dependent on rains. Given the temporal variability of rainfall patterns, crop production is often threatened by drought that causes reduced yields and sometimes a complete loss of the crop. Development projects to control floods and to optimize the use of available water resources are important for reducing poverty in both the rural and urban communities. The Emergency Flood Control and Irrigation Rehabilitation Projects supported by the ADB and World Bank are making an important contribution in protecting communities from the adverse effects of floods, which cause loss of life and social disruption on almost an annual basis. The benefits of these projects can be seen in terms of reduced social disruption and annual damage to property as well as in restored and improved agricultural production where irrigation systems have been rehabilitated. The increased crop cultivation reduces dependence on emergency food distribution during the flood season, and improves the overall social and health situation of the communities. Elimination of the damaging effects of floods permits the establishment of permanent improvements within the communities, including schools, clinics and hospitals, as well as other Government facilities. Employment opportunities increase with the flood alleviation measures, leading to overall social benefits to the community and Cambodia. 124.
Water Supply and Sanitation. The current situation has harmful implications for public
health. Diarrhoeal diseases derived largely from drinking unsafe water are
a leading cause of morbidity among the population, especially among
children. The lack of proper sanitation, inadequate water supply and poor
hygiene practices are the primary causes of diverse water borne diseases
and various parasitic infections. Moreover,
in rural areas women and children often have to walk long distances,
especially in the dry season to fetch water that, given the time and
energy expended on meeting this need, has significant negative effects on
health, nutrition and productivity. With external assistance the
Government has focused efforts to rehabilitate production and distribution
facilities. Technical assistance has been important in identifying issues,
building institutional capacity, developing technical skills and improving
operational performance. On-going development projects have included
rehabilitation of sanitation and sewerage systems in Phnom Penh, including
collection and treatment, introduction of a charging system, and
installation of 12 new pumping stations to reduce flooding in low lying
areas. For the rural areas, the plan is to increase access to sanitation
facilities from 6-22% covering an extra 1.5 million people by constructing
135,000 latrines on a flexible cost sharing basis as well as providing
support for community education in hygiene and sanitation. 125.
The Urban Water Supply and
Sanitation sector is weak in terms of both its technical capacity and
financial performance as manifested in low coverage and inadequate service
of poor quality. About 75 percent of the population in Phnom Penh and 13
percent in other Provincial and District towns have access to piped
potable water supplies. This leaves about 9 million people in rural areas
without access to clean water. Rehabilitation in Phnom Penh is on-going
with financial support from ADB, WB, France, Japan, and other donors.
Under WB Urban Water Supply project, the Sihanoukville Water Supply
Authority has begun construction to be finished in 2003 to provide water
to about 50 percent of Sihanoukville. Under ADB credits, partial
rehabilitation of Battambang, Pursat Kampong Thom, Kampong Cham, Kampot,
and Svay Rieng is being carried out and community sanitation and health
awareness will be improved in the center of Sihanoukville, Battambang, and Kampong Cham. Another project in Siem Reap provincial town
will be implemented through a JICA Grant. Also, under the Cambodia
Provincial and peri-Urban Water Supply and Sanitation Project supported by
the World Bank a study covering 149 Provincial and District Towns has been
completed. Sewerage systems are largely absent in Cambodia with the
exception of Phnom Penh and Sihanoukville where limited systems combine
rainwater drainage and domestic sewage. A water supply and sanitation
sector policy framework has been prepared that focuses on financial
autonomy, tariff adjustment to initiate cost recovery, private sector
participation, donor co-ordination, water resources allocation, and
regulatory responsibilities. A regulatory law is being prepared to
supervise all water supply and sanitation operators in this sector.
Priorities include making better use of Cambodia's significant water
resources, institutional strengthening and bringing production levels of
existing plants back to design capacity and improving operational
performance. Attention is being given to the rehabilitation of existing
networks including connections to end-users. Rural wells are being
expanded in support of rural infrastructure programs based on
participation of beneficiaries. The RGC will yield managerial autonomy to
utilities to enable them to achieve financial independence and to finance
their maintenance and investment programs.
126.
Preparatory work is also being undertaken to allow water supply
authorities in urban areas to eventually graduate into self-financing
units. The Phnom Penh Water Supply Authority (PPWSA) introduced a new
water tariff in 1997 to permit recovery of operations, maintenance and
plant replacement costs, while providing cross-subsidies from industrial
and commercial, high consumption users to low-income, low-consumption
residential users. Tariffs are reviewed yearly to assess the necessity and
feasibility of introducing credit to low income households for payment of
connection fees. To allow low income households to connect to the piped
water supply, PPWSA reduced connection fees by 25%, as previous charges
discouraged low income groups from gaining access to piped water supply,
which increased dependency on unsafe water sources that are often more
expensive. PPWSA is installing meters to all connections, implementing
procedures for leakage detection, for removal of unauthorized connections,
and for disconnection and dispute settlement. 127.
Meteorology. Cambodia
frequently suffers from natural disasters like heavy rain, torrential and
flash floods, thunderstorms, strong winds, drought, etc. The measurement
and interpretation of river height and discharge (quantity) and associated
climatic parameters are critical. The annual rise and fall of rivers and
inundation of wetlands are vitally important for agriculture and
fisheries, urban and rural water supply, and hydroelectricity. As the
hydro-meteorological network has not received adequate financial support,
what is now required is a sustained effort to re-establish the physical
and infrastructure base in order to generate useful data. ENERGY 128.
Electricity: The
electricity supply in Phnom Penh has improved over the last 3 years,
although supply in other provinces remains limited. The current power
supply deficiencies reflect years of neglect and lack of investment in
new plants as well as lack of maintenance. Because of dependence on small
oil based power generating units, the cost of electric power in Cambodia
is the highest in the region. In some rural areas, private operators have
installed generating units with simple distribution networks to supply
electricity to households at high operating costs. Larger capacity power
generation plants in Phnom Penh are being established through external
assistance and private sector funds. The power transmission and
distribution system has been rehabilitated in Phnom Penh with assistance
from bilateral and multilateral donors. Private sector participation is growing with agreements reached on planned
construction of Phnom Penh IPP-1 (35MW) and short term IPP-2 (15MW).
Rehabilitation of 8 provincial towns is on-going under the ADB credit and
AFD's grant aid for Stung Treng province. This project is planned to be
commissionedt in 2004. The Kirirum mini hydropower system of 12 MW is
being rebuilt with financing from a Chinese private company. The project
was commissioned in May 2002 and will contribute to supply power to Phnom
Penh and Kampong Speu provincial town. The planned Power Purchase
Agreements with Vietnam and Thailand together with rehabilitated units of
the Electricite du Cambodge (EDC) are expected to meet the anticipated
peak demand in Phnom Penh in year 2004. The RGC’s priorities are to establish a reliable supply of electricity through the development of a
power sector open to private participation. Government’s priority is to
improve the reliability of power supply and to improve the efficiency of
operations of power production in rural electrification, strengthening the
capacity of EDC as well as development of the self-financing capacity of
the sector. The RGC is committed to the expansion of power generation
capacity with maximum efficiency at the lowest costs to consumers in order
to serve the expanding needs of industry. POSTS,
TELECOMMUNICATIONS, AND NATIONAL INFORMATION SERVICES 129.
As recently as 1999, communications to and from the provinces
relied on out-of date, worn-out VHF radio links in poor condition. This
system had about several thousand subscribers in provinces and districts
who received a very poor quality of service with less than 50%
availability. These links have been supplemented by temporary satellite
links with a limited number of voice circuits, soon to be replaced by
higher capacity terrestrial equipment. Short-term solutions have been by
the operation of high-cost mobile/cellular phone services.
Postal services remain disrupted due to the lack of reliable road
transport and deficiency in the internal air services. Provincial and
district post office buildings have suffered from lack of maintenance and
equipment. The speed and reliability of services will improve directly as
a result of improvements in transport infrastructure. 130.
For Postal Services, the
Ministry of Posts and Telecommunications (MPTC) has focused on developing
postal and journal distribution network services. Postal revenues
increased have increased at an average annual rate of around 16.5 percent
since 1994. For Telecommunications Services, MPTC
is currently responsible for the regulation, administration and management
of public telephone network and licensing of other related services
supplied by joint venture partners. In
order to increase efficiency, the RGC is committed to creating an
autonomous state telephone corporation “Cambodia Telecommunications“. As
of December 31, 2000, national telephone density is about 0.26 sets per
100 users, with Phnom Penh having 2.83 sets per 100 users for a total of
150,285 telephone subscriber lines: MPTC Land-line phones: 19,408 lines;
Public telephones: 329, and Mobile Phones (Private Operators): 130,547
lines. 131.
Regarding Information,
the role of the Ministry of Information (MoINF) is to keep people informed
to the fullest extent possible regarding domestic, regional and
international news, and to assist through the available media in the
upgrading of their general, technical and scientific knowledge.
A particular objective is to reach people in areas of the country
not covered by television by means of radio, and press.
Cambodia has an independent press and 39 different newspapers and
magazines are currently published. |
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