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Country Operational Strategy - Cambodia : V. ADB Strategy in Operation
A. Issues Cutting Across Priority Area Interventions1. Governance140. Governance is the primary crosscutting theme of the COS and the determining factor in whether Cambodia can achieve sustainable development or will remain dependent on aid. Appendix 1 discusses issues in governance and recommended actions to improve governance. A large number of aid agencies support capacity- and institution-building efforts in Cambodia as well as engage the Government in policy dialogue. The Government will need assistance for some time until sufficient capacity is built to sustain effective governance. 141. The key agencies with which ADB must coordinate activities are IMF, the World Bank, and UNDP. The World Bank is expected to facilitate government leadership of development of a governance action plan. The Government's 2000-2002 Macroeconomic Policy Framework outlines several medium-term objectives in the areas of public expenditure management (revenue enhancement, increased spending on social development, and enhanced public resource management) and private sector development (banking reform, adopting a commercial code, legal and judicial reform, public enterprise reform, and trade policy reform). 142. ADB's program of assistance in governance will involve two modalities. First, in each sector of operations, ADB will focus on promoting transparency through frequent and thorough project reviews and program reviews. This will be accompanied by ample assistance in capacity building. Ideally, a TA accompanying each major project will have components to improve governance and will involve training. ADB will also continue to hold workshops and seminars through which to improve government officials' understanding of ADB operations. Second, ADB intends to support the Government's efforts to improve governance through a package of TA in the areas of macroeconomic management (policy advice, public financial management, and public investment planning) and legal and judicial reform. In addition, ADB may play a relatively smaller role in supporting public administration reform (local governance, decentralization, civil service reform). 2. Regional Cooperation143. One key element of the enabling environment for private sector development is regional and global integration, which is a high priority of the Government. In addition to participation in the GMS Economic Cooperation Program, Cambodia recently joined ASEAN and applied for membership in the World Trade Organization. ADB intends to support continued efforts to broaden Cambodia's reintegration into the global economy by assisting its participation in the GMS Program through TAs and selected ADF investments compatible with ADB's overall program in Cambodia. 144. The first regional project under the GMS program was the 1998 Phnom Penh-Ho Chi Minh City Highway project, currently under implementation. The Primary Road Restoration Project indirectly supports the GMS regional transportation program. The road project scheduled in 2002 might also support GMS objectives. The Integrated Natural Resource Management Project scheduled in 2002 is being prepared under a GMS regional TA. In addition to these ADF-financed investments, Cambodia will continue to benefit from GMS regional TAs designed to enhance regional development opportunities, encourage trade and investment among GMS countries, resolve or mitigate cross-border problems, and meet common resource and policy needs. There is potential for private sector-funded GMS projects in telecommunications, tourism, and energy. 3. Women, Children, and Vulnerable Groups in Development145. The legacy of conflict in Cambodia is the substantial number of vulnerable groups that are in danger of being excluded from access to the opportunities and benefits of economic growth. In addition, there is significant gender inequality in educational achievements, political representation, income, and legal rights. Inadequate reproductive health and domestic violence are also serious social problems. ADB will support these groups in two ways. First, it will provide technical support to MWVA to enhance its role as an advocate for the empowerment of women and as a technical adviser to the Government on how to enhance the role of women in development. Second, ADB will integrate gender and vulnerable group issues into its program whenever possible. For example, rural infrastructure and rural credit activities provide good income-generation opportunities for women. The basic education interventions will strive for increased enrollment for girls, and the primary health interventions will include components to address infant and maternal mortality. More details on ADB's gender strategy are in Appendix 2. 4. Special Postconflict Considerations146. Given the unique historical crossroads at which Cambodia finds itself, there are several pressing issues that ADB may want to consider over and above normal programming. Given the critical need for Cambodia to make the transformation from conflict to cooperation, and in recognition of the impatience that the Cambodians themselves feel, close monitoring of the massive reform effort the Government is attempting will allow ADB to respond quickly with encouragement and assistance for timely needs. For this purpose, ADB may consider (i) allocating additional staff to the Cambodia Resident Mission, (ii) addressing governance issues through a series of cluster TAs that can be adjusted to respond to rapidly changing circumstances as the reform process unfolds, and (iii) incorporating a certain amount of flexibility in the scope of the program to accommodate special circumstances. 147. As a special postconflict issue, demobilization is a critical process that requires considerable aid agency technical and budgetary assistance. With the goal of reducing the influence of the military on both the budget and society, the Cambodia Veteran's Assistance Program being implemented by the Council of Ministers, with advice from the World Bank, has the potential to significantly impact the development process in Cambodia. A successful program could reward reform efforts with a peace dividend that would contribute substantial domestic resources to poverty-reducing social development. A faltering demobilization program, however, could undermine the credibility of the Government with both domestic and international observers. 148. ADB will play a role in this program by supporting the process through assistance scheduled in 2001. While the final design of the assistance will depend on the specific program needs as determined in consultation with the Government, this assistance could focus on the reintegration phase of the demobilization program. This would entail elements of a rural development project for a strategic area in which demobilizing soldiers are relocated. Other components of the project could include aspects of social integration services for program participants in the project area.
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