heads of government
agencies, Ambassadors or heads of diplomatic missions, and heads of
multilateral institutions -- have provided an opportunity to both sides to
regularly review progress and be informed about constraints that are being
experienced, and enabled them to take necessary actions.
4.1 Fighting Corruption and Increasing Accountability
44. At the 7th CG Meeting, the following JMIs were agreed to in this area:
45. Significant progress has been made in 2005 in moving forward to deal with the three JMIs in this area. With respect to the first JMI, the Ministry of National Assembly-Senate Relations and Inspection (MoNASRI) was mandated by Samdech Prime Minister to report on cases of corruption. MoNASRI has provided detailed reports at the GDCC meetings on high profile cases such as the missing food-for-work case and case of corruption involving judges, prosecutors and court clerks.
46. After extensive consultations and revisions based on inputs from various parties, the Ministry of National Assembly-Senate Relations and Inspection (MoNASRI) that is responsible for overseeing the drafting of the Anti-corruption Law submitted a draft to the Council of Ministers. The consultation process in 2005 has included:
47. On the third JMI in this area, a number of concrete actions have been taken in 2005 to increase access to information held by public authorities. For example:
4.2 Legal and Judicial Reform and Protection of Human Rights
48. At the 7th CG Meeting, the following JMIs were agreed to in this area:
Fundamental Legal Framework: Adoption of the drafts of the 8 fundamental laws by the Council of Ministers and submission to the National Assembly as a matter of urgency:
49. Significant progress has been made in drafting the Laws in 2005. A total of 45 Laws were approved by the National Assembly in 2005, as compared to a total of 90 Laws over five years from 1993 to 1998. In addition, other Laws have also been submitted to the National Assembly during 2005 that have not yet been approved by the National Assembly. The Royal Government would like to urge all parties to be realistic in setting time frames for the completion of work on the drafting of these Laws taking into consideration the existing capacities of concerned institutions and available resources as well as the complexities of the processes in securing approval of proposed draft Laws at the various levels of the Executive and Legislative branches. The current status on the preparation of these Laws is as follows:
4.3 Public Administration Reform
50. At the 7th CG Meeting, the following JMIs were agreed to in this area:
51. Significant progress has been made in 2005 in moving forward to deal with the five JMIs in this area. With respect to the first JMI, after extensive consultation, the strategy has been finalized and was agreed to by the TWG at a meeting on 26 January 2006. Implementation commenced on 27 January with the information questionnaire being sent to donors, for response by 28 February 2006. The core of the strategy relies on the implementation of PMGs and PMG/MBPIs at the sector level and making supplementation practices more transparent and harmonized.
52. With respect to the second JMI, a new remuneration regime more conducive to performance has been in operation since 2002. Pay reforms must be sustainable and depend essentially on government revenues. The Royal Government's approach has been to target priority functions (management, education, health) and priority missions while increasing base salary as much as possible. Average remuneration has increased by 116% since January 2002. Further allowances will be introduced shortly to enhance mobility and compensate for risks. Ways and means to accelerate the pace are being investigated with three studies on remuneration, employment and the labor market to be completed in time to inform decision making on a medium strategy in June 2006.
53. On the third JMI, progress has gone beyond piloting the Sub-Decree 98, it is now authorized to be implemented across the Administration. PMG and PMG/MBPI are being implemented on a wide front. A first PMG/MBPI is operational to support the PFM. Others are being developed to support reform programs in land, health, commerce and others. More than 10 ministries and agencies are actively involved.
54. With respect to the fourth JMI, the activity under this indicator is being managed in the Ministry of Economy and Finance where good progress is being made.
55. On the last JMI in this area, core HR processes are being strengthened in support of performance and merit. A detailed HRM guide is in the final stage of preparation. Building on the outcome of a national seminar, a HRD Master Plan is being developed. Related HRM and HRD policies are scheduled for discussion by the PAR TWG in March. Effective mechanisms are in place to control the establishment.
4.4 Decentralization and De-concentration
56. At the 7th CG Meeting, the following JMIs were agreed in this area:
57. In 2005, substantial and encouraging progress was made on decentralization and de-concentration reforms, in particular on the two agreed JMIs.
58. As regards the first JMI, a draft of the RGC’s Strategic Framework for D&D was prepared, reviewed at the highest levels of the RGC, and discussed at a national workshop opened by Samdech Prime Minister and co-chaired by the two Deputy Prime Ministers and Co-Ministers of the Ministry of Interior. The Strategic Framework was later revised and adopted by the Council of Ministers on 17 June 2005.
59. The Strategic Framework sets the policy and principles for restructuring and reformation of all levels of sub-national administration (provinces, municipalities, districts, khans, communes, and sangkats) and corresponding adjustments to the national administration. The essential purpose is to establish and promote democratic development at the sub national levels through decentralization and de-concentration, and the better delivery of programs, services and infrastructure.
60. With respect to the second JMI, the drafting of the Organic Laws was started in 2005. The first drafts will be completed by the end of the first quarter of 2006 and will be discussed with stakeholders, including the TWGD&D that was established on 25 November 2005.
61. Another encouraging development on D&D, initiated by the Ministry of Interior through the IMC Task Force, was the commissioning in September 2005 of an Independent Study to undertake a comparative review of donor funding support and services for decentralization and de-concentration, including all funding programs; institutional arrangements for funding; funding mechanisms; and Seila.
62. The study, which will be completed by the end of the first quarter of 2006 in consultation with development partners, is expected to provide essential inputs for improving cooperation, understanding and consultation between the Government and the donor community on the methods, modalities and mechanisms for ensuring optimum long-term donor support for democratic development at sub-national level.
4.5 Public Financial Management
63. At the 7th CG Meeting, the following JMI was agreed to in this area:
64. The Public Financial Management Reform Program (PFMRP) is being successfully implemented to complete the activities planned for the first 12 months of platform one. Although this comprehensive and long term PFMRP is still at an early stage of the implementation, progress over the first year has been satisfactory and significant impact is being noted on both revenue and expenditure sides. Specifically, substantial progress has been made in several areas such as change management (especially in institutional change and ownership and responsibility building), capacity development, macro-fiscal forecast and management, budget formulation and execution, procurement procedures, internal audit, cash management, and a significant improvement in both tax and non-tax revenue collection.
65. The PFMRP consists of 27 activities which break down into 254 actions that were planned to be implemented in stage one. Out of the 254 actions, 224 actions were planned to be carried out in 2005 of which 208 (93%) activities were implemented as scheduled and the implementation of 16 (7%) actions was delayed. Of the total planned activities, work on 35 (16%) of the planned activities was completed in 2005, while implementation of 173 (77%) activities was on-going at the end of 2005. Of these on-going activities, progress on 25 activities was judged to be below expectations. The delays in implementation and slow progress in some actions/areas were mainly due to several reasons such as inappropriate sequencing of actions, cross-cutting actions/activities, additional analysis and/or consultation requirement, additional technical assistance need, better cooperation and coordination and pro-active of all key players/stakeholders requirement.
66. Due to the comprehensiveness and complexity, the program is managed and monitored based on a management framework and a set of performance measurement indicators which monitor and review monthly, quarterly and annually. Under the umbrella of Public Financial Management Technical Working Group (PFMTWG), a Reform Committee (RC) has been established to lead and coordinate on the Government side as well as a Development Partner Committee has also been established to lead and coordinate on the development partners side. The RC and DPC meet monthly and the PFMTWG meets quarterly. Currently the program is subject to be reviewed two times a year (mid-year and annual) by the PFMTWG and through an external independent evaluation. The first annual review of the program is being carried out to assess progress and challenges, to review action plan and performance measurement indicators, to review the first phase implementation of Merit Based Pay Initiative (MBPI), and finally to agree on the revised action plan and performance measurement indicators and the second phase of MBPI implementation which is scheduled to be completed in late March 2006.
4.6 Cross-cutting for Agriculture and Natural Resources Management
67. At the 7th CG Meeting, the following JMIs were agreed in this area:
68. Significant progress has been made on all JMIs in this area since the last CG meeting. The TWGs in this area have played an important role in moving forward the reforms and have tried to follow the principle of mutual accountability in their work.
69. With respect to the first JMI is this area, the:
70. On the second JMI in this area concerning the moratorium on logging and transport of logs, the TWG on Forestry and Environment has reported to GDCC that the targets of this JMI have been met. It has also raised a concern that available wood supply might not meet the increasing domestic demand due to logging moratorium.
71. The third JMI in this area concerning the transparency of state management of natural resources, the TWG on Forestry and Environment has reported to GDCC that the targets of this JMI have been met. It has reported that:
72. The fourth JMI in this area concerning the application of sustainable management planning, the TWG on Forestry and Environment has reported to GDCC that the targets of this JMI have been met. It has reported that:
73. With respect to the fifth JMI in this area,
4.7 Private Sector Development
74. At the 7th CG Meeting, the following JMIs were agreed in this area:
75. Significant progress has been made on all JMIs in this area. For the Royal Government the private sector is the engine of growth. The Royal government's policy with respect to fostering private sector development is to play a strategic role in creating an enabling environment for the development of private enterprise, and to manage the development process. As further support to the Government-Private Sector Forum mechanism on policy guidelines a Private Sector Development Steering Committee was established in July 2004 that is Chaired by the Senior Minister and Minister of Economy and Finance. Under the Steering Committee, three Sub Steering Committees have been established: one dealing with Investment Climate and Private Participation in Infrastructure (PPI) that is chaired by Senior Minister, Minister of Economy and Finance, second on Trade Facilitation that is chaired by Senior Minister and Minister of Commerce, and third on SME's that is chaired by the Minister of Industry, Energy and Mines. In the area of trade facilitation, a strategy on administrative document, single window and risk management is currently being prepared and will be finalized in 2006.
76. Following the recommendations of the 8th Government-Private Sector Forum, the Ministry of Economy and Finance issued Prakas Number 298, dated 17 June 2005, on the implementation of VAT for supporting industry or subcontractors who are supplying goods or services for garment export, textile, and shoe industries. As provided in this Prakas, for supporting industry, the duty on inputs for the calculation of VAT on the import of production inputs and equipment used for direct supplies to the garments, textile and the shoe industries should be born by the Government. The VAT on products and services used for exports is at the zero percent rate.
77. As for the enterprises under the real regime of taxation, supplying directly 80 percent of its production or services to exporters of the garments, textiles and shoe industries, the VAT on their production outputs is at a zero percent rate.
78. Investment related regulations have been promulgated i.e. the Sub Decree on the implementation of the Amendment to the law on Investment, the Sub Decree on the establishment of provincial-municipal investment Sub Committees, and the Sub Decree on the establishment and management of Special Economic Zones.
79. The RGC has also developed other key legal infrastructure to sustain the development of the financial sector such as the Law on Commercial Enterprises. This Law can be implemented without Sub-Decree. The Draft Law on Government Securities, the Draft Law on Issuance and Trading of Public Securities, and the Draft Law on Bankruptcy will soon be submitted to the Cabinet. The Draft Law on Secured Transactions has been already adopted by the Cabinet. Meanwhile, the Ministry of Economy and Finance and the National Bank of Cambodia are preparing the Draft Law on Leasing.
80. With respect to the first JMI, "establish a single entry point, or Single Window” due to the complexity and cross cutting nature of the task, more time will be needed before the implementation of the Single Administrative Document (SAD), the Single Widow and the Risk Management Strategy. It is expected that the aforementioned activities will take place in 2006.
81. The Trade Facilitation & Competitiveness Project initiated by the Royal Government of Cambodia in 2005, incorporates a number of components which collectively define a broad range of reforms to be implemented. These reforms, which impact and require the support of a number of government agencies, will affect numerous stakeholders within the private sector and government. However, pre-dating the current project, several changes have already been instigated, in particular since the Investment Climate Assessment study conducted for Cambodia in 2003.
82. The results of the Reform Score Card survey undertaken by Emerging Markets Consulting show that government agencies have made strong improvements in the eyes of the private sector in terms of, among others, costs, time and information dissemination:
83. There has been a sharp drop in the number of firms reporting problems with their documentation during the importing and exporting process. In 2003, roughly 49 percent of firms reported encountering problems that has significantly declined to only 13 percent of firms who have recently reported encountering difficulties. The average costs have also decreased from $2,477 per import transaction in 2003 to about $673 per transaction in 2005, and for exports, from $942 in 2003 to $598 per transaction in 2005. The private sector perception of the amount of time required to process transactions has also improved, with respondents reporting a reduction in processing time of over 20 percent from 2003. Concerning government’s dissemination of information – an important capability assessed via the survey – 84 percent and 91 percent of respondents said they were at least adequately informed about fees and documentation respectively.
84. With respect to the second JMI, the Law on Concessions was adopted by the Cabinet on July 15, 2005.
85. With respect to the third JMI, the SME development framework was adopted by the Cabinet on July 29, 2005. The activities in the action plan to implement the SME Development framework are now aimed at streamlining and simplifying administrative procedures for SME registration and operations.
86. With respect to the fourth JMI concerning the Law on Commercial Arbitration, the draft Law is now being reviewed by the Commission No. 9 of the National Assembly.
4.8 Gender, Poverty and HIV/AIDS
87. At the 7th CG Meeting, the following JMIs were agreed in this area:
88. With respect to the first JMI in this area related to addressing the cross-cutting issues in the formulation of the National Strategic Plan (NSDP) 2006-2010, the concerned TWGs have reported that the NSDP that has been formulated by the Royal Government in close consultations with all development partners and civil society representatives is more responsive to cross-cutting issues than any of the previous Socio-economic Development Plans.
89. The Royal Government is pleased to report that significant progress has been made on the second JMIs in this area. The "Law on Prevention of Domestic Violence and Protection of the Victims" was promulgated on 5 November 2005. A Sub-decree is being drafted and a prevention plan is being developed. The "Law against Trafficking in Person and Sexual Exploitation" is being reviewed by the Ministry of Justice in close consultation with the Ministry of Women Affairs. Also, the UN protocol on Prevention, Intervention and Punishment of Human Trafficking was ratified by National Assembly on 25 November 2005.
4.9 Health and Education
90. At the 7th CG Meeting, the following JMI was agreed in this area:
91. In 2005, total disbursements of the budget to the Ministry of Health were as follows:
92. In its report to the GDCC, the Ministry of Health has noted that the reason for delays in disbursements to provinces is the weak budget management capacity at MOH, especially at the provincial level, and the complexities of disbursement process at the central-provincial level. The Royal Government urges the development partners working with the MOH to give a priority to strengthening the MOH's budget management capacity at both the central and provincial levels.
93. In the case of the Ministry of Education, the overall budget for PAP 2005 of the Ministry of Education, Youth and Sports was 86.7 billion Riels. As of 25 January, 2006, some 70.3 percent or 61 billion CRs were disbursed. These included:
94. The Ministry of Education, Youth and Sports has reported to the GDCC several reasons for delays in disbursements of PAP budget allocations. These include: late submission of requests, need to improve submission process, need to follow MEF procedures consistently, and delays in the utilization of PAP budget for the year until the start of the school year i.e. the month of October. The need for more negotiations with MoEF to improve cash flows systems by reducing the number of disbursement tranches is also identified. The MoEYS's priority is to strengthen its budget planning and management capacity at both the central and provincial levels. The Royal Government urges the development partners working with the MOEYS to give a priority to strengthening its budget planning and management capacity at both the central and provincial levels.
4.10 Harmonization and Alignment
95. At the 7th CG Meeting, the following JMI was agreed in this area:
Royal Government is pleased to report that the JMI in this area has been
met. Cambodia's Report on "Progress Toward Enhanced Aid Effectiveness" was
presented by H.E. Senior Minister Keat Chhon, Minister of Economy and
Finance, and the First Vice Chairman of the Council for the Development of
Cambodia at the Second High Level Forum held in Paris on 28 February - 2
March 2005, at the close of which the Paris Declaration was issued. The
six month progress report was presented and discussed with development
partners at the Partnership and Harmonization TWG meeting on 4 July 2005
at the Council for the Development of Cambodia. More details on recent
developments in this area and the progress made in 2005 are presented in