Cambodia has room to improve business climate: WB

PHNOM PENH, Sep. 9, 2009 (Xinhua News Agency) -- Cambodia's ranking has remained low on the global ease of doing business in 2008/2009 while most economies in East Asia and the Pacific strengthened business regulations to help increase opportunities for local firms, the press release from the World Bank (WB) office here said on Wednesday.

"Cambodia was ranked No. 145 out of 183 countries on the ease of doing business as the global economic crisis prompted many countries to accelerate reforms, improving their ranking relative to Cambodia," the World Bank said.

"The World Bank and IFC, the member of the World Bank Group focused on private sector development, are working with the government on improving the business climate."

Between June 2008 and May 2009 a record 131 of 183 economies around the globe reformed business regulations, according to Doing Business 2010: Reforming through Difficult Times, the seventh in a series of annual reports published by IFC and the World Bank.

"The second Investment Climate Assessment, published in 2009 by the World Bank and IFC, identifies priorities to significantly improve the business environment by helping retain existing investors and attracting new ones," said Qimiao Fan, Country Manager for the World Bank in Cambodia.

"This would position Cambodia well to benefit from a recovery in the global economy, and also help its small firms to develop and create jobs."

IFC's Resident Representative in Cambodia, Julia Brickell, noted that Cambodia is making efforts to improve some aspects of the business environment."

According to Julia Brickell, IFC, with support from the European Commission and other donors, is assisting the government to improve commercial dispute resolution mechanisms through the establishment of the National Arbitration Center, which will be a quicker and cheaper alternative to the courts.

"Effective commercial arbitration is crucial in helping businesses enforce contracts in ways that are less costly and time consuming than is currently the case," Brickell said.

World Bank in talks with Cambodia over evictions

Monday, August 31, 2009

PHNOM PENH (Reuters) - A senior World Bank official held talks with the Cambodian government over the forced eviction of people from their homes and said the development bank would continue to work with it on land reform to tackle the problem.

Land ownership is a controversial issue in Cambodia, where legal documents were destroyed and state institutions collapsed under the Khmer Rouge regime of the 1970s and the civil war that followed.

The World Bank joined with other aid donors in July to ask the government to halt forced evictions and the problem was raised again by its vice-president for East Asia and the Pacific Region, James Adams, during a visit last week.

"A major focus of the visit was Cambodia's urban land sector and the increasing numbers of disputes and evictions of poor people in urban settlements," the bank said in a statement.

"The discussions on land reform were constructive and it was agreed to continue these discussions over the coming week to agree next steps," it said.

The bank has provided funding of $24.3 million for a land management and administration project from 2002 to 2009, and an estimated 1.1 million land titles were issued, said Bou Saroeun, a spokesman for the World Bank in Phnom Penh.

Other donors such as Germany, Finland and Canada have together provided more than $14 million to support the land title project, Saroeun added.

(Reporting by Ek Madra; Editing by Alan Raybould)

Negative Growth to ‘Challenge’ Cambodia: World Bank

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
19 May 2009

[Editor’s note: Cambodia was at first insulated from the financial crisis thanks to its lack of ties to the global finance system. However, as the crisis spread, and US and European consumers slowed their spending, Cambodia’s factories began to feel the pinch, along with agriculture and construction. International finance experts now project Cambodia’s economy will shrink in 2009, a major shift from the galloping growth the country had enjoyed in recent years. Cambodia’s World Bank country director, Qimiao Fan, sat in a recent interview with VOA Khmer in Phnom Penh.]

Q. How has Cambodia’s general economy performed since the economic crisis hit the country?

A. As you know, Cambodia’ economy has been growing very rapidly in the last decade. It had experienced double-digit growth before the economic crisis. However, the global economic crisis has impacted Cambodia very significantly, because Cambodia’s economy depends very much on external demand and on the inflow of foreign direct investment. So the global economic crisis is likely to impact Cambodia’s economy growth in 2009. We are now forecasting about minus 1 percent growth in 2009 for Cambodia.

Q. How will a contraction impact Cambodia as a whole?

A. The negative growth in 2009 is going to impact first and foremost on the poor people. Clearly with the slowdown in the economy and with negative growth in a sector like garments, there are going to be significant lay-offs of existing workers from the garment sector, perhaps also from tourism and construction. So those people who used to be earning an income, sending their salary back to rural areas, will no longer have that income. Secondly, as the economy decelerates, there will be few opportunities for new entrance into the labor market. Therefore, these people will find it very difficult to find a job that can earn them a living. They are likely to find less paying jobs in the informal sector.

Q. Do you think the economic crisis will become a challenge for Cambodia to implement its poverty reduction policy?

A. I think the economy has hit small, open economies, like Cambodia, and now the country has to deal with perhaps a negative growth rate in 2009. Clearly this is going to be a challenge, because the economy needs to grow to create employment for the 250,000 or so new entrants into the market. The economy needs to grow in order for the country to achieve its poverty rate further. So it is going to be a challenge for Cambodia, as it is for other countries around the world.

Q. Under the circumstances, with the economic hit hard by the crisis, what should the Cambodian government do to cope?

A. What I think it would be important for the government to do is to be able to continue to maintain the kind of public expenditure, such as in agriculture, infrastructure and a social safety net. Secondly, I think the crisis is also an opportunity. The country should take this opportunity to further improve its investment climate, so that when the global economy rebounds, Cambodia will be in a better position for that rebound and can become a favorable destination for foreign direct investment.

Q. Do you think it is necessary now for the Cambodian government to plan any stimulus package?

A. Like many other poor developing countries, the country doesn’t…have a lot of money to stimulate the economy. The government needs to make sure whatever expenditure it has goes to priority sectors like agriculture, infrastructure and training workers who have been laid off from the garment sector.

Q. What is the role of the World Bank in helping Cambodia fight the crisis?

A. The World Bank is helping Cambodia in three ways. First, we are working with the government and other development partners to try to have a better understanding of the impact of the crisis, particularly on poverty, on employment and on growth.

Second, at the request of prime minister, the World Bank, together with other development partners, are examining our existing support programs to Cambodia to see if we can accelerate the implementation of existing programs, because we believe it is the best way to help a response to the economic crisis. At the same time, we are currently working with the government, and we will soon be negotiating a $13 million budget support program to Cambodia to help small-holder agriculture and social protection.

Third, we are also working to provide timely advice and analysis to the government to deal with the short-term impact of the crisis, to see how we can help to position Cambodia better when the economy rebounds.

East Asian economies Under pressure

Apr 14th 2009
Economist.com

East Asia has been hard-hit by the global economic slowdown

EAST ASIA was once one of the world economy's brightest regions. Some even reckoned that “decoupling” might allow the region to ride out the storm that began in rich-country financial markets. But the global economic crisis is hitting the East Asia hard. The World Bank's forecasts for economic growth have been downgraded steeply. Excluding China, which will announce first quarter GDP figures later this week, the bank now expects developing countries in the region to grow by 1.2% in 2009, down from an estimate of 4.8% in 2008. Some economies will even contract this year. The bank predicts that the GDP of Malaysia and Cambodia will shrink by 1% and Thailand’s economy will shrivel by 2.7%.

This is a return to earth with an alarming bump. In 2007 Cambodia’s economy expanded by 10.2% and Malaysia’s by 6.3%. Other economies will grow, but at nothing like the pace of recent years. China's economy is likely to expand by 6.5% in 2009 compared with 13% in 2007. The Philippines will see growth of 1.9% this year, compared with 7.2% in 2007.

The World Bank points out that most countries in East Asia were relatively well placed to withstand the financial turmoil that has swept through developed countries. This is partly a result of learning the lessons of a financial crisis of 1997-98, which originated in the region. They have used the decade since then to build up reserves of foreign currency and strengthen external balances (which, in part, helped to finance the West’s spendthrift ways and hasten the crisis). They have also reduced government debt and strengthened bank regulation.

However, some of these changes were aided by a boost in exports, both within the region and to the rest of the world. But heightened integration with global markets through trade has exposed the region to the effects of the recession in rich countries. This has led to a dramatic fall in exports that has battered regional economies. In fact, the World Bank reckons that the effects of the crisis have been more severe in countries most open to trade and whose exports are concentrated in particular industries such as electronics, garments and textiles.

The drop-off in trade has been dramatic the world over, but parts of East Asia have felt the pain more than most. In January, Taiwan and the Philippines saw the value of exports plummet by over 40% compared with a year earlier. Electronics, which account for a quarter to two-thirds of exports from most of the larger economies in the region, have been hard hit.

Poorer countries in the region, whose export sectors are dominated by garments and commodities, have been hurt badly too. Cambodia, the country most dependent on garments, endured a 31% fall in exports in January compared with a year ago. As the World Bank puts it, the region, which prospered through exporting, is now suffering for the same reason.

The collapse in exports is leading to a jobs crisis, though this is not necessarily reflected in official figures. Less-developed countries in the region have a greater share of employment in the informal export sector. This makes it harder to obtain reliable data. But reports suggest huge job losses. In Cambodia 50,000 garment workers, 17% of the workforce in the industry, have been laid off since September. In Vietnam, 100,000 garment workers lost their jobs in January and February. And in China some 2.7m garment industry job may have gone.

Years of rapid growth have allowed the richer countries in the region the room to use monetary and fiscal policy to contain the crisis. Some countries, notably China, Malaysia and South Korea, have announced substantial stimulus packages, including big spending on infrastructure. However, Indonesia and the Philippines have to rely more on tax cuts than on public spending, partly because “shovel-ready” projects are lacking. Monetary policy has been eased in all the countries of the region.

Some good news exists. The bank's assessment is that China’s fiscal stimulus (amounting to spending worth around 12% of GDP spread over two years) is beginning to take effect. The bank predicts that the Chinese economy will bottom out by the middle of the year. The fortunes of other economies in the region are tied up with those of China. Many export parts and components that are then assembled in China for re-export. But the Chinese stimulus package cannot hope to fix the problem of contracting demand for the region's output in the rest of the world. The bank points out that a more complete bounce back from the economic crisis still depends on a broader worldwide recovery.

World Bank Offers [$2.6 million] Rural Telecom Grant

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
08 January 2009

The World Bank announced Thursday a $2.6 million grant to the government to build up telecommunications access in rural areas.

The World Bank said in a statement up to 52,000 poor households, or 260,000 Cambodians, would benefit from the grant, which will provide a subsidies for telecom providers in otherwise “commercially unviable” areas.

The grant, which will go toward developing the provinces of Banteay Meanchey, Oddar Meanchey, Preah Vihear and Pursat, “some of Cambodia’s poorest,” said Qimao Fan, the World Bank’s Cambodia manager.

“The project will focus both on landlines and mobile phones, but the government wants more in mobile phones than landlines, because the installation of hand phones is a lower cost than landlines,” La Narath, secretary of state at the Telecommunications Ministry, said.

Users of mobile phones and landlines in the cities and towns are higher than in rural areas, he said. “But now we it is very difficult to estimate between rural and city residents mobile phone users,” he said.

Chin Bunsean, another secretary of state for the ministry, said in a statement “bridging the ‘digital divide’” was a priority of the government.

“It’s time that the people in rural areas are able to benefit from the same services, at the same quality and prices, that the people in the cities have been enjoying for so many years,” he said.

Funding to Boost Telephone Services in Rural Cambodia

08 Jan 2009
cellular-news.com

­Poor families in four of the poorer provinces of northern and northwestern Cambodia – Banteay Meanchey, Oddar Meanchey, Preah Vihear, and Pursat – will benefit from a US$2.6 million grant to increase access to telecommunications services signed by the World Bank, acting as administrator for the Global Partnership on Output-Based Aid (GPOBA), and the Royal Government of Cambodia.

Up to 52,000 poor households or 260,000 Cambodians are expected to benefit from the scheme, through improved telecommunications network coverage and the installation of public access points where people will be able to make and receive telephone calls on a regular and reliable basis.

“Ensuring access to telecom services to all people in Cambodia and bridging the ‘digital divide’ is one of the priorities of this Government,” said His Excellency, Mr. Chin Bunsean, Secretary of State of the Ministry of Post and Telecommunications of Cambodia which will oversee implementation of the project. “It’s time that the people in rural areas are able to benefit from the same services, at the same quality and prices, that the people in the cities have been enjoying for so many years.”

Despite improvements in telecommunications services and an increase in the number of telecommunications companies, rural access is still a challenge in Cambodia. The National Institute of Statistics estimates that only one in six rural households owns a phone, compared to over 30 percent of urban households. Rural and remote communes tend to be less commercially attractive to service providers because of higher operating costs and lower average revenues per user.

The GPOBA grant will provide a one-time capital subsidy for the provision of telephone services in locations that would otherwise be considered commercially unviable. Potential service providers will be selected competitively through an open bidding process. They will be free to use any technology, but must provide full network access and service at a quality and price similar to the rest of the network in Cambodia. The winning service provider will be the qualified bidder who offers the required services in the target areas for the lowest subsidy, and will sign a performance- or “output”-based contract with the Government. In line with the output-based approach, most of the GPOBA subsidy will be paid only after the services have been delivered and verified by an independent agent.

“By making telephone services available to poor households in remote rural villages, the GPOBA project will help to improve access to markets and economic opportunities in some of Cambodia’s poorest provinces,” said Mr. Qimiao Fan, World Bank Country Manager for Cambodia.

The GPOBA project will draw on funds from the Australian Agency for International Development (AusAID) and the Swedish International Development Cooperation Agency (Sida).

WB provides $30 mln credit in health support for Cambodia

PHNOM PENH , July 17 (Xinhua) -- The World Bank (WB) here Thursday signed agreements with the Cambodian government to provide 30 million U.S. dollars of credit for the second phase of the Health Sector Support Program for the kingdom.

The program, approved by WB in June 2008, aims to improve health care and preventive health services for the Cambodian people, with particular emphasis on women, children and the poor, said a press release from WB's resident office.

At the signing ceremony, Keat Chhon, Cambodian Minister of Economy and Finance, expressed his appreciation for the support, saying that this project will contribute towards the government's Rectangular Strategy and National Strategic Development Plan from 2006 to 2010.

WB Country Director for Cambodia Ian Porter said that Cambodia is internationally renowned for policy innovations in the health sector and WB is proud to join other development partners in supporting its efforts.

The program will improve the quality of training of health professionals, strengthen health service delivery at health centers and referral hospitals and support the government in its role as the steward of the health system, said the press release.

More poor people will benefit from the program as it intends to scale up support to the Health Equity Funds to help the poor access essential health care, it said.

World Bank Grants $41 Million for Poverty Plans

By Heng Reaksmey, VOA Khmer
Phnom Penh
22 May 2008

The World Bank announced Thursday it would provide Cambodia $41.5 million in renewed funding to help it fight poverty for strategies planned from 2007 to 2011.

The funding was approved after a review found a relevance for the strategies in improving governance and development, the World Bank said.

Cambodian People’s Party lawmaker Chiem Yeap, chairman of the National Assembly’s finance and banking committee, welcomed the World Bank money, saying Cambodia needs a larger budget to fight poverty.

Cambodia’s poor number almost 4.8 million, and 90 percent of them live in rural areas, where they depend on agriculture using traditional, unproductive methods.

In June 2006 the World Bank suspended the government’s rights to funds for three project.

World Bank Extends Cambodia Country Program, Approves Two New Projects to Help Govt. Fight Poverty

5/22/2008
Macro World Investor

The decision to extend the current CAS three more years resulted from extensive consultations with the Government and other stakeholders, including the donor community, the private sector, and the civil society. These consultations confirmed the continued relevance of the CAS strategy of improving governance through a wide range of development initiatives, said Ian Porter, Country Director for Cambodia. 'The Bank's assistance strategy recognizes the positive changes in Cambodia over the past three years, and the solid progress the Government has made in implementing the ambitious reform agenda,' Porter said. 'This progress has enabled the World Bank and other donors to continue working with the Government to deepen their reform efforts.' First approved in 2005, the Cambodia CAS provides support for tackling some of the critical governance issues threatening the country's ability to reduce poverty and achieve Millennium Development Goals. It aims to improve governance through private sector development for growth; public financial management for better service delivery; land administration, management and allocation for agricultural investments and growth; and decentralization and social accountability for better governance and empowerment of communities.

The Cambodia CAS was the first Bank Group CAS produced jointly with the Asian Development Bank, the UK Department of International Development, or DFID, and the UN system, which have all endorsed the extension.

Together with the CAS extension, the World Bank's Board of Executive Directors also approved two lending projects for Cambodia, aimed at helping the government fight poverty by improving access to roads, as well as providing poor people with land for agricultural development.

Under the Road Asset Management Project (RAMP), the Bank will provide $30 million worth of financial and technical support to help the government perform periodic maintenance on selected sections of the country's road network, as well as establish related systems. Studies have shown that road access helps reduce poverty as it allows poor people easier access to the markets. An improved road system also enables the government to bring social services to remote, rural areas.

This five-year project also receives financial support from the Asian Development Bank, and the Australian Agency for International Development. The Royal Government of Cambodia also contributed toward the project cost, which stands at $56.1 million.

The second project, the Land Allocation for Economic and Social Development Project (LASED) will receive a total of $11.5 million in funding from the World Bank, which complements technical cooperation support from the Government of Germany. LASED will support the Government's social land concession program.

Under the project, local communities will identify appropriate state land, and select poor, landless families to receive land as well as livelihoods assistance within their own communities. The five-year project will be implemented by the local communities, with assistance from the Government's land and decentralization support agencies.

CONTACT: Elisabeth Mealey, World Bank Group Tel: +1 202 458 4475
e-mail: emealey@worldbank.org

World Bank urges aid over food prices

April 14, 2008
Washington Times (USA)

From combined dispatches - The president of the World Bank, calling for a "New Deal" in global food policy, yesterday urged immediate action to deal with mounting food prices that have caused hunger and deadly violence in several countries.

Robert Zoellick said the international community has "to put our money where our mouth is" and act now to help hungry people. "It is as stark as that."

He called on governments to rapidly carry out commitments to provide the U.N. World Food Program (WFP) with $500 million in emergency aid it needs by May 1.

"It is critical that governments confirm their commitments as soon as possible and others begin to commit," Mr. Zoellick said. Prices have only risen further since the WFP issued that appeal, so it is urgent that governments step up, he said.

Rising prosperity and demand for grain in countries such as China and India, as well as the diversion of crops to make biofuels, are stoking dramatic increases in most agricultural commodities and analysts see no end in sight. Rice prices hit a record last week, and have doubled over the past year and risen fivefold since 2001.

China, Egypt, Vietnam, Cambodia and India, accounting for more than a third of global rice exports, curbed exports in order to tamp local prices this year. Indonesia said Friday it soon will ban rice exports except through a government agency. Global rice stockpiles have been cut nearly in half. Australia's rice crop was withered by drought this year.

China and India are the world's largest producers of rice, but because of strong internal demand, only India is among the top five rice exporters. India ranks fourth behind Thailand, Vietnam and the United States.

Unrest has spread from Asia to South America.

After a meeting of the bank's policy-setting committee, Mr. Zoellick said that the fall of the government in Haiti after a wave of deadly rioting and looting underscores the importance of quick international action. A U.N. police officer was killed Saturday in Haiti's capital.

Mr. Zoellick said that international finance meetings are "often about talk," but he has noted a "greater sense of intensity and focus" among ministers. Now, he said, they have to "translate it into greater action."

He said the bank is granting an additional $10 million to Haiti for feeding programs, "and I understand others are looking to help."

Mr. Zoellick said the bank was responding to needs in a number of other countries with conditional cash transfer programs, providing food in workplaces and seeds for planting in the new season.

He said by a rough analysis the bank estimates that a doubling of food prices over the past three years could potentially push people in low-income countries deeper into poverty.

Mr. Zoellick spoke as the bank and its sister institution, the International Monetary Fund, wound up two days of meetings that dealt with the financial crises roiling global markets and rising food and energy prices.

The head of the IMF also sounded the alarm on food prices, warning that if they remain high there will be dire consequences for people in many developing countries, especially in Africa.

IMF Managing Director Dominique Strauss-Kahn said progress in recent years on development can be destroyed by rising food prices, which can lead to starvation and shake the stability of governments, even if they have nothing to do with the increase in food costs.

"We are facing a huge problem," he said.

2007 GDP: $580 per capita and 31% of Cambodians still live less than $0.75 per day

2007 GDP: $580 per capita

09 April 2008
By Alain Ney
Cambodge Soir Hebdo
Translated from French by Luc Sâr

For the first time, the Cambodian government is giving out its outlook regarding the country’s GDP.

The government outlook on the country’s GDP appears in a report written by Hang Chuon Naron, the general secretary of the Ministry of Economy and Finance. During the past 10 years, the per capita GDP has doubled in Cambodia to reach $589 at the end of 2007. Because of the maintained economic growth in the last few years, the poverty index fell from 35% in 2004 to 31% in 2007 (see note below).

Nevertheless, even with $8.4 billion, the Cambodian GDP remains modest, but this index of the national wealth will keep on increasing. According to the projections included in Hang Chuon Naron’s report, the GDP should reach $1,000 per capita in 2015, and maybe more, if the oil and gaz revenues are accounted for.

All will depend on the economic growth rate in the country. If this rate still hovers around 10%, the GDP could reach $3,000 in 2028. On the other hand, if the economic growth rate drops to 7%, the GDP would only be $1,500 per capita in 2025.

Regarding the reliability of such long term prediction, it remains to be seen still. However, in 2008, The World bank predicts a growth rate of 7.5% in 2008, and 7% in 2009. But there again, the WB numbers are also predictions.

------------
KI-Media Note: The "national poverty line" in Cambodia is defined as $0.75 of income a day. The 31% of Cambodians identified above through our "national poverty index", are actually those who survive under a "starvation line" of $0.75 a day.

World Bank: Growth Despite Inflation [... but inflation is a concern for poor Cambodians]

By Mean Veasna, VOA Khmer
Original report from Phnom Penh
01 April 2008

Cambodia's economic growth is expected to remain positive, despite nettling concerns over inflation, World Bank officials said Tuesday.

Inflation has increased in recent months, and it is not likely to decrease to its original level, which is a concern of the poorest Cambodians, a World Bank official said, following a semiannual report.

Cambodia's economy grew by 9.6 percent in 2007, according to the World Bank. That growth rate is expected to shrink in 2008, even as inflation hit a nine-year high at the end of 2007, the World Bank said.

"As we said in the report, the high inflation rate will not pose any serious threat to Cambodian economic growth for 2008, but it does impact the poor," said Huot Chea, a economist for the World Bank's Cambodia office.

Inflation will not decrease to its original level, but is likely to increase next year, from 5 percent to 10 percent.

"I guess about 25 percent of the poorest people in our country spend 70 percent of their total income on food," Huot Chea said. "So as long as food prices are rising, it automatically has a worse impact on their daily living standard."

Earnings that once bought 2 kilograms or 3 kilograms of rice can only buy 1 kilogram, he said.

The government has responded positively on inflation, he said, citing as example the recent ban on rice exports, the lifting of a ban on imported pigs and pork products and the release of a rice surplus on the market at a subsidized price.

However, sustained inflation could further hamper the government's poverty reduction efforts, said Tim Conway, a senior poverty specialist in the World Bank's Cambodia office.

Chea Peng Chheang, secretary of state for the Ministry of Finance, said Tuesday that estimates of the World Bank echoed predictions of the ministry.

Cambodia's high economic growth rate is sustainable, he said, because the growth is based mostly on agriculture, as well as tourism and construction.

"Of course, there will be an impact from inflation," he said. "But this inflation mostly affects countries that have important business with America."

Poverty reduction is not likely to be affected, he said, because the government has a strategy to prevent and delay the rate of inflation.

Rocketing inflation hurting Cambodia's poor, World Bank says

Tue, 01 Apr 2008
DPA

Phnom Penh - Double-digit inflation would not hurt the Cambodian economy overall but could have a dire affect on the country's millions of poor, a World Bank economist said Tuesday. Like most of East Asia and the Pacific, Cambodia had been badly hit by inflation with the year-on-year rate at the end of 2007 reaching a nine-year high of 10.8 per cent, Huot Chea said.

However, the bank said Cambodia's economy continued to grow rapidly with gross domestic product (GDP) up an estimated 9.6 per cent last year.

"High inflation rates will not pose a serious threat to the Cambodian economy but will impact on the poor," Chea told journalists.

"About 25 per cent of poor people spend 70 per cent of their income on food," the economist said. "As long as food prices keep rising, this will automatically impact on the poor."

He said inflation had pushed the price of the national staple, rice, up so far that what would have once bought 3 kilograms in some cases now just bought 1 kilo.

Hikes in international oil prices, which have put the cost of petrol up to 1.25 dollars a litre in a country where millions earn less than a dollar a day had also contributed, he said.

The bank also expressed concern about Cambodia's growing trade deficit, which it estimated would grow from 6.8 per cent to 7.3 per cent of GDP this year.

However, overall, it said Cambodia's economy was in good shape and was mainly being impacted by outside factors, including the rising world price of oil and the crisis in the US economy.

"Although risks have increased, economic prospects for 2008 remain strong," the bank said in a press release.

World Bank approves 6 mln USD grant for Cambodia to fight bird flu

PHNOM PENH, March 26 (Xinhua) -- The World Bank Group on Wednesday approved a six million U.S. dollars grant to support Cambodia's efforts to implement a national plan to minimize the threats from avian and human influenza, and to prepare its health systems to respond to any possible outbreak in the future.

The grant, provided by the International Development Association (IDA), will be used to finance the Avian and Human Influenza Control and Preparedness Emergency Project (AHICPEP), a press release said.

Designed in support of Cambodia's Comprehensive Avian and Human Influenza (AHI) National Plan, this project aims to help the government contain the spread of the H5N1 virus, reduce livelihood losses among commercial and backyard poultry growers, limit damage to the poultry industry, diminish the viral load in the environment and prevent or limit human morbidity as well as mortality, it added.

In addition to the IDA grant, the Government of Japan has provided a three million U.S. dollars grant from its Policy and Human Resources Development (PHRD) Fund. A grant of two million U.S. dollars was approved by the Avian and Human Influenza (AHI) Facility, a multidonor grant-making mechanism supported by the European Commission and eight other donors, it said.

Both grants will co-finance AHICPEP, the press release said, adding that the PHRD Fund and AHI Facility are both administered by the World Bank.

The combined 11 million U.S. dollars project will be implemented by units within the Ministry of Agriculture, Forestry and Fisheries, Ministry of Health, and the National Committee for Disaster Management of Cambodia.

World Bank launches accountability program

By Brendan Brady
Phnom Penh Post, Issue 16 / 25, December 14 - 28, 2007

"Good governance is part of our culture, and that's why there's so little corruption," HE Ngy Champal, Undersecretary of State, Ministry of Interior, told a full house attending the launch of a new World Bank "social accountability" program.

He may have thought so, but the some 400 hundred students as well as local and international NGO officials attending the launch of the World Bank's Program to Enhance Capacity in Social Accountability (PESCA) didn't agree and were eager for change in the Kingdom's performance in governance.

World Bank country manager Nisha Agrawal said there is a "climate of fear" regarding efforts to hold government officials accountable.

"In the villages, you can do this in a way that is non-threatening. Invite the village chief, invite the police - they will see you are helping everyone," she said.

Addressing concerns of government reprisal, PECSA program coordinator Dinky Solomon said, "We all know there are risks involved because there are interests that could be threatened."

Heng Monychenda, Director of Buddhism for Development, cautioned the audience to seek lawful governance in baby steps. "Please believe me, we cannot eliminate corruption. We can reduce it but we cannot eliminate it," he said.

The launch of the program December 3 came just three days before the release of a new Transparency International bribery survey, in which Cambodia finished second-to-last out of 60 countries.

PECSA sets out to strengthen civil society as a watchdog and provider of public services through training programs in global best practices and grants for pilot initiatives to monitor government spending and private sector transactions, according to the program's mandate. PESCA organizers also hope the program will encourage more networking amongst activists and social accountability practitioners.

The event drew particular attention to hot button issues such as the management of Cambodia's national budget and natural resources, and heard repeated encouragement to use media to publicly voice grievances. While PESCA seeks to expedite drastic improvement in the Cambodian government and private sector's governance practices, local participants had curbed expectations.

Discussing funds allocated for grass roots spending, NGO Forum representative Ou Sivhouch said, "If the government spends what it says on paper that it will spend, that would be great. Even if they spend 50% or 60%, that would be great. But when they spend around 30%, it's a problem."

Student-essay contest winner Chan Rotha encouraged young Cambodians to use all media outlets to voice their opinion. He criticized the country's entrenched patron-client system and hierarchical culture wherein "subordinates tend to find it socially unacceptable to show any contempt for the actions and decisions of their leaders."

World Bank Parliamentary Panel to Review Cambodia

By Sok Khemara, VOA Khmer
Original report from Washington
09 November 2007

"They will clearly learn about the realities on corruption and poverty, where people are victimized by land grabbing and the privatization of public property, which causes the poor to be poorer and poorer" - Opposition leader Sam Rainsy

A 14-member World Bank parliamentary delegation will arrive in Cambodia later this month to review some of the lending body's policies there.

The delegates, from 12 different countries, are part of the Parliamentary Network of the World Bank, which is tasked with strengthening accountability and transparency in lender countries.

The World Bank's programs have come under fire in Cambodia for widespread corruption. A Wall Street Journal editorial in October accused the World Bank in Cambodia of "smiling past corruption."

In response, the World Bank said bank staff had raised concerns about corruption in the first place, and in 2006 the bank suspended funding for three projects.

The delegation's six-day field visit will include meetings to determine Cambodia's development priorities and look at the work of the Consultative Group on International Agricultural Research, Cambodia World Bank spokesman Bou Saroeun said.

About 35 percent of Cambodians still live below the poverty line, living on about $0.45 per person per day, despite billions of dollars in aid and grants from donor countries and lending groups like the World Bank.

"They will clearly learn about the realities on corruption and poverty, where people are victimized by land grabbing and the privatization of public property, which causes the poor to be poorer and poorer," opposition leader Sam Rainsy said.

CPP lawmaker Cheam Yiep welcomed the visit. Such delegations were common in other countries that received aid from the World Bank, he said.

"When the World Bank [delegation] arrives, it is to scrutinize their work, and we welcome that," he said.

World Bank's Jim Adams rebuttal to The Wall Street Journal article on Corruption in Cambodia posted on KI-Media

Original article:
http://ki-media.blogspot.com/2007/10/world-bank-confronts-cambodia.html

I'm Jim Adams from the World Bank. I'm the Vice President who has responsibility for the East Asia and Pacific region so I keep a close eye on what's been happening in Cambodia. The Wall Street Journal's second editorial --published today-- about corruption in Bank projects in Cambodia yet again needs some clarifying since their writers have never bothered to contact me.

If they had asked, this is how I would have answered the questions they raise:

The WSJ says seven projects were identified by the Institutional Integrity Department (INT, the Bank's anti-corruption unit) as corrupt, but that we suspended only three. True. Why? Because three other projects were already closed and one was about to close at the time we received the reports from the investigation.

The WSJ also asks why is it that, if US$8.2 million were disbursed from US$12.2 million worth of contracts, only US$2.5 million were cancelled out of the remaining US$4 million.

Answer: the Bank doesn't finance the full value of contracts. In this case, the Bank's share was to fund US$10.8 million, and the Government to fund the rest. The Bank cancelled the US$2.55 million that it had not disbursed yet.

Based on that last point, the WSJ wants to know why didn't Cambodia reimburse US$8.2 million, instead of US$2.89 million, and asks what happened to the remaining US$5.3 million.

Answer: the remaining US$5.3 million are being paid following the regular schedule for the repayment of loans. Let me explain how this works:

When the Bank presented to the Cambodian Government the evidence of corruption, some evidence had to be withheld because it was given on a confidential basis. Reflecting this limitation, Paul Wolfowitz --who was the Bank's President at the time-- agreed that if the Government refunded 1/3 of the total amount immediately and took measures to address corruption, the rest could be paid back according to the normal schedule.

The Government has both paid the US$2.9 million we agreed on and has put in place the broader anti-corruption strategy that was agreed. The rest of the payments will follow, as I indicated, the regular schedule.

I very much appreciate that your site is so open to quickly publish all information and voices on this matter.

Thank you.

Jim Adams
Vice-President, East Asia and Pacific Region
The World Bank

World Bank Confronts Cambodia Corruption

October 18, 2007
The Wall Street Journal (USA)

Far from "Smiling Past Corruption" (Review & Outlook, Oct. 11) in Cambodia, the World Bank is confronting corruption head on in that country. In fact, it was bank staff in Cambodia who first raised concerns about corruption in projects there. Following World Bank investigations, in June 2006 the bank suspended the government's right to draw funds for three projects where we had identified problems.

In response, the Cambodian government agreed to new anti-corruption measures for each project, including intensified audits and the hiring of an international procurement agent. In February 2007, after the government completed all the anti-corruption measures and made substantial progress in hiring the agent (who has now been selected), former President Wolfowitz agreed to lift the suspension on the affected projects. The bank cancelled over $2.5 million in project funding, and the government subsequently repaid the World Bank $2.89 million and agreed to incorporate anti-corruption action plans into all existing and future bank legal agreements. The bank's Institutional Integrity office has initiated the process of debarring firms involved in the affected projects, working through the Sanctions Committee.

Cambodia, which suffered a genocide, needs help both to strengthen its capacity for good governance as well as to build the foundations for inclusive growth. Today, our projects are helping build roads, bring water to poor communities and enable poor people to secure ownership of their land and homes for the first time.

While in Cambodia in August, the new World Bank president, Robert Zoellick, coordinated with the donor community to make the case to the prime minister and other senior officials on the need to stay the course on governance, anti-corruption and strengthening the legal system. The Institutional Integrity office will visit Cambodia this month to follow up.

Marwan Muasher
Senior Vice President
External Affairs
World Bank
Washington

World Bank Runaround

October 18, 2007
The Wall Street Journal (USA)

The world's finance ministers descend on Washington this weekend for the annual meetings of the World Bank and the International Monetary Fund. And true to type, bank officials and their media Boswells are doing their best to sweep the issue of corruption under the carpet. A letter from the bank published today on the preceding page illustrates the point.

The letter from external affairs vice president Marwan Muasher responds to our October 11 editorial "Smiling Past Corruption," which reported the conclusions of seven internal investigations into bank projects in Cambodia. The investigations, conducted by the bank's anticorruption unit (INT), revealed stunning levels of fraud, extortion, bid-rigging, bribe-taking and what the bank euphemistically calls "misprocurement" in nearly every aspect of the examined projects. Yet far from acting decisively to recover its stolen assets, debar corrupt companies and penalize the Phnom Penh government, the bank did what it could to return quickly to business as usual.

Mr. Muasher nonetheless insists "the World Bank is confronting corruption head on" in Cambodia, and we really wish we could believe him. In 2007, Transparency International ranked Cambodia 162 on its corruption perception index, next to such all-stars as the Central African Republic. In 2005, Cambodia was ranked 130; whatever the bank is doing doesn't seem to be helping.

Mr. Muasher also says "it was bank staff in Cambodia who first raised concerns about corruption in projects there." That is true in some cases though not all, but the real issue is how the bank responds once the nasty details are laid before it. Also slippery is his remark that the bank suspended the Cambodian government's "right to draw funds for three projects where [the bank] had identified problems." But seven projects were identified by INT as rife with corruption, and it would be good to know why the other four fell from the bank's radar screen.

Similar questions hang over the funds Mr. Muasher says were either cancelled by the bank ($2.5 million) or refunded to it by the Cambodians ($2.89 million). In a February letter to the Cambodian Finance Minister, James Adams, the bank's vice president for the East Asia and Pacific region, tallies the contract values of just five of the troublesome projects. His numbers add up to $12.2 million in contracts, of which $8.2 million had already been disbursed.

That ought to mean that at least $4 million dollars, not $2.5 million, should have been cancelled -- a discrepancy presumably explained by the bank's decision to shut down only three projects instead of five or seven. It also ought to mean that the Cambodians should have refunded $8.2 million, and not $2.89 million. Here the discrepancy is explained by an arrangement worked out by Mr. Adams (and described in his letter) to demand the "accelerated" repayment of only a portion of the funds. So what happened to the remaining $5.3 million? Our sources say that whenever the matter is raised at the bank, "the topic is changed."

These sums may seem small compared to the bank's grand moral ambitions. However, total bank lending to Cambodia between 2003 and 2006 was $220 million, and the INT lacked the resources to investigate every project. What the INT found -- one project after another corrupted root-to-branch -- was almost certainly symptomatic of what happens across the board.

Not to worry, adds Mr. Muasher, because Cambodia's government has "agreed to incorporate anti-corruption action plans" in the future. Thus the bank is resuming business as usual first, on the hope that the government keeps its promises. We'd have thought the better way to reduce corruption would be to withhold money until the government proves it will in fact do something.

The bank is ignoring some of its own not-so-distant experience here. In July 2003, the bank cancelled a portion of funds for a "demobilization project" -- involving the distribution of cash, free motorbikes and other goodies to former soldiers -- after the Cambodian government inflated the list of those who were supposedly eligible for the handouts. Yet by February 2005 all was forgiven, with Cambodia country director Ian Porter telling Associated Press that "the government has taken significant steps toward resolving these issues." Perhaps they were even "action plans."

In his letter, Mr. Muasher reminds us that Cambodia is still recovering from its 1970s genocide. All the more reason, then, for the bank to ensure that the money it spends goes to benefit the people of Cambodia, not corrupt middlemen. Its smooth assurances notwithstanding, the bank's behavior in Cambodia looks like a classic example of downplaying corruption as rapidly as possible so the bank can get on with shoveling ever more money out the door, regardless of results.

Click here to read Marwan Muasher's Letter to the Editor
Click here to read INT's letter to Cambodia

World Bank rebuttal of Wall Street Journal article posted on KI-Media

Original comment posted in:
http://ki-media.blogspot.com/2007/10/smiling-past-corruption-sr-world-bank.html

Hello, this is Jim Adams at the World Bank and I'd like to follow up on the article from the Wall Street Journal that you reproduce in this page.

The Bank feels that the Journal left out many details regarding what happened after the investigation of those projects, and we have sent a letter to the editor where we make some clarifications. The letter will likely be posted on www.wsj.com soon, but since you're discussing this matter, I thought I'd advance the main points of the letter:

• The Bank didn't ignore those cases of corruption, it was in fact Bank staff who first raised concerns about them.
• After investigations were made, the Bank suspended the Government's access to funds for those three projects.
• The Government then agreed to new anti-corruption measures for each project and to hiring an international agent (now selected) who would manage the award of contracts for Bank-funded projects.
• Only after the Government completed the anti-corruption measures and moved ahead on hiring the agent did the Bank lift the suspension on the affected projects.
• The Bank cancelled over US$2.5 million in project funding and the Government subsequently repaid the World Bank US$2.89 million.
• The Cambodian Government agreed to incorporate anti-corruption action plans into all existing and future Bank legal agreements.
• The Bank is in the process of suspending (debarring) the firms involved in the projects where corruption was detected.

Also, the WSJ criticizes the Bank for being "ready to forgive" the Cambodian government, but that's just not what happened, as you can see from the list above.

Corruption is a sad reality in many countries --as some other posters in this blog have said-- and very difficult to address. I think it is the Bank's duty to try to remedy it to the extent that it can, not to pack up and leave the country when we see signs or evidence of it. That's what we set out to do in this case.

Best,

Jim Adams
Vice President, East Asia & Pacific Region
The World Bank