Regions and Countries

	Table of Contents
p. 9 of 22 BACK | NEXT I. Country Performance Assessment II. Poverty Reduction and Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance E. Gender Dimensions of ADB Operations F. Private Sector Development IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work IX. Local Cost Financing

Country Assistance Plans - Cambodia : III. Sector Strategies

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A. Agriculture

1. Agriculture and Rural Development

55. Agriculture, the main activity of the majority of the rural poor, suffers from low productivity. To enhance agricultural productivity the Government is targeting structural reforms to improve social stability in rural areas, enhance farmers’ access to markets and market information, increase farmers’ access to inputs, technical advice and management expertise, and expand rural financial services. ADB provided support for structural reform through the Agriculture Sector Program. Under this program, the Government took actions for (i) wider dissemination of agricultural marketing and technological information, (ii) liberalization of fertilizer pricing and marketing, (iii) formulation of a rural credit policy and strategy, (iv) divestment of the rubber subsector, (v) establishment of local rural development committees, and (vi) improvement of property rights through preparation of a new land law.

56. An agriculture sector intervention is proposed in 2003, with a project preparatory TA (PPTA) in 2001, to sustain and continue progress in agriculture reform. The sector development loan would provide both project funding and budget support for specific structural reforms. It is expected that the intervention will continue to support market reforms, providing continuity in the program by following up on previous policy support. Although secure land rights, clear land usage regulations, and extension services are potential areas of assistance, the 2001 PPTA will further clarify priority unmet needs consistent with the overall strategy, ongoing program of assistance, and activities of other aid agencies.

57. Most of the poor live in rural areas with poor infrastructure and limited access to social, economic, government, and financial services. Government and aid agencies emphasize a decentralized process to improve targeting of development projects towards the needs of poor communities. The implicit strategy in most rural development programs of reaching the poorest through support for the whole community can be successful if these programs are of sufficient size to have a significant impact on the village economy. A number of important rural development programs are currently being implemented in Cambodia. The best known is the UNDP Cambodia Area Rehabilitation and Regeneration Project, begun in 1996, which built on a program started in 1992. This program, supporting the national Seila program and primarily concentrated in Northwestern Cambodia, uses village development committees for decentralized, participatory planning of investments in rural infrastructure, extension services, health and education.

58. Ongoing ADB assistance complements the efforts of these programs by supporting small-scale investments in market centers, drainage structures, wells, irrigation canals, social services facilities, and particularly in rural roads. Rehabilitation of these roads can provide the rural population with better access to income-generating employment and marketing opportunities.¹⁵ This offers tremendous potential for effective poverty-alleviating income generation through the type of public works program that has had success in other countries. ADB assistance to strengthen the national institutional mechanisms to support rural financial services is another important element of the efforts to sustain the activities of rural development programs. The Government established the Rural Development Bank as a wholesaler to channel funds for rural credit. Complementing these efforts, ADB’s Rural Credit and Savings Project and accompanying TA will promote effective rural financial services through provision of funds and institutional development.¹⁶

59. Building on the foundations established under these two interventions, ADB will move towards support for participatory rural development starting with a planned intervention in 2001. This intervention will focus on areas in the Tonle Sap region in which significant numbers of soldiers are demobilized in support of the reintegration phase of the national demobilization program. It is expected that ADB’s assistance in this area will continue to support employment generating rural infrastructure provision as well as providing more targeted poverty-alleviating community support. A PPTA is programmed in 2003 in anticipation of a follow-up rural development project in 2005. Important policy considerations in agriculture and rural development include effective implementation of the draft land law, budget support for rural road maintenance, and the institutionalization of the role of the Rural Development Bank as credit wholesaler.

2. Natural Resource Management

60. Apart from an irrigation component under Loan No. 1199-CAM: Special Rehabilitation Assistance Loan, for $67.7 million, approved on 26 November 1992, ADB has not yet provided loan assistance for natural resource management. Future ADB assistance in this area will focus on management of water resources and the critical wetlands of the Tonle Sap Lake. Management of water resources has received relatively little attention from the international community as compared to forestry. Yet this is a high priority for the Government with great potential impact on the poor. Moreover, relatively little effort has been devoted to improve management of fisheries resources, particularly commercial fisheries concessions.

61. The Government is at a crossroads with respect to the development of water resources. There is a large amount of uncoordinated donor assistance planned for the near future, a lack of strategies, policies and laws to guide development of water resources, and competition between government agencies for control of various subsectors. The Government’s primary objective of poverty alleviation through growth of the rural economy together with the high proportion of farming households among the rural poor, lend urgency to the task of rationalizing the development of water resources particularly for improving agricultural productivity.

62. ADB will play a major role in water resource management, facilitating Government ownership of sector development. This will include donor coordination in the water sector to promote a consistent approach in areas such as farmer organizations for operation and maintenance of irrigation infrastructure, water policies and laws, and sector responsibilities across government agencies. ADB’s first stand-alone water resource management project is the proposed 2000 Stung Chinit Water Resources Development Project, for $16 million. This project, located in the Tonle Sap Region, will rehabilitate an irrigation scheme, invest in rural infrastructure, facilitate land titling, and coordinate agricultural extension in the project area.

63. ADB’s efforts to build capacity include an ongoing TA to (i) provide a detailed water sector profile, (ii) formulate investment strategies, (iii) establish an institutional framework for sustainable operations and maintenance of irrigation systems, (iv) identify an action agenda for the draft National Water Sector Policy, and (v) strengthen project planning and implementation capacity.¹⁷ A TA planned for the latter half of 2001, Capacity Building in Water Resources and Irrigation, will assist the Government in implementing the National Water Policy action agenda. This will include the development of policies and plans for urban and rural water supply, integrated water resource management using a river basin approach, flood control, and irrigation. In 2001 ADB will also provide a PPTA to develop an investment project for small- scale and medium-scale water resource development, targeting the rural poor, to commence in 2003. The proposed project will likely take a sector approach to maximize the geographic distribution of benefits in terms of increased agricultural productivity.

64. A second area of ADB involvement in natural resource management, complementary to ADB activities in water resource management, is critical wetland management in the Tonle Sap area. This involves a host of issues including management of fisheries, agro-chemical and pesticide use, and community forestry. The GMS: Integrated Natural Resource Management Project, scheduled for 2002 may use the sector development approach, include elements of rural development, and will involve strategic policy dialogue in agro-chemical use, forestry and fisheries management. A PPTA is planned in 2003 in anticipation of a follow-up intervention in 2005. It is important, in the area of natural resource management, that ADB support efforts to develop and implement a comprehensive policy for water resource management and to improve management of the resources, particularly fisheries, of the Tonle Sap.

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