Southeast Asia

With the country’s overall incidence of poverty at 34.7% and rural areas’ at 39.2%, ADB’s overarching goal is poverty reduction. The country strategy and program for 2005–2009 emphasizes support for broad-based economic growth, inclusive social development, and good governance. It focuses on the Tonle Sap basin, one of the poorest and most environmentally sensitive areas of Cambodia, as well as on the subregion so that the country can benefit from the broader opportunities provided by the GMS program. Four crosscutting themes—governance, private sector development, gender, and the environment—are incorporated to support the poverty reduction objectives of the country strategy and program. ADB’s program in Cambodia for 2007–2009 will focus on agriculture and natural resources, education, finance, small and medium-sized enterprises, rural water supply and sanitation, and interventions in the Tonle Sap basin.

The Government has continued to adopt laws and regulations to increase private sector activity and fulfill its commitments to the World Trade Organization. The Commercial Arbitration Law, adopted in May 2006, is expected to promote confidence in financial transactions and commercial activities, and will help reduce lending costs. The law also provides an alternative dispute resolution mechanism, and ADB is helping the Government set up a national arbitration center. ADB’s ongoing Financial Sector Cluster Program has directly contributed to the passage of these laws. An online secured-transaction filing system has been developed and is ready for launch in 2007. The National Bank of Cambodia changed its regulations in the last quarter of 2006 to allow banks and microfinance institutions to have licenses for an unspecified duration. The Government has also adopted a licensing review plan that would pave the way to remove duplicate and unnecessary licenses for businesses.

A participatory poverty assessment of the Tonle Sap was done in partnership with national research and statistics institutes. It included long village stays by researchers in 24 sites in 6 provinces. The participatory nature of the research enabled detailed interactions with the poorest and most vulnerable sections. The output consists of a wealth of data on the extent, nature, causes, and manifestations of poverty in the areas around the Tonle Sap. Serious issues regarding obstacles to poverty reduction have been highlighted by the poor themselves. There are also remarkable suggestions for empowering the poor to enable them to participate effectively in decision making, and for allocating resources. The outputs of the technical assistance have been presented at a national launch workshop with high-level government participation. These will form part of a national poverty data base for systematic monitoring of the Government’s National Poverty Reduction Strategy.

The total assistance program reached $76.1 million (including $42.0 million from the GMS program), with an emphasis on easing critical infrastructure transport and energy bottlenecks and on supporting the Government’s decentralization and deconcentration initiative. ADB approved a $7.8 million grant for the Commune Council Development Project Phase II, a $20.0 million loan for the Second Power Transmission and Distribution Project, and a $42.0 million loan to rehabilitate the railways in Cambodia. ADB also provided $6.3 million for three project preparatory technical assistance grants for agriculture and natural resources, education, and finance; and five advisory technical assistance grants for education; energy; industry and trade; transport and communications; and law, economic management, and public policy. ADB approved Cambodia’s first indicative rolling country operations business plan for 2007–2009.

Four crosscutting themes—governance, private sector development, gender, and the environment—support the poverty reduction objectives of Cambodia’s country strategy and program