Cambodia: Promoting Economic Diversification Program - Subprogram 3

Sovereign Project | 38421-072 Status: Closed


ADB is helping Cambodia promote private sector growth by improving competitiveness throughout the supply chain. The last of a three-part program will help lower regulatory compliance costs and provide the private sector with access to better sanitary and phytosanitary facilities. It will also assist the country with its trade policy reforms and participation in global and regional integration.

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Project Name Promoting Economic Diversification Program - Subprogram 3
Project Number 38421-072
Country Cambodia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2904-CAM: Promoting Economic Diversification Program - Subprogram 3
Asian Development Fund US$ 25.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development

Public sector management - Economic affairs management

Gender Equity and Mainstreaming Effective gender mainstreaming

The program seeks to improve business environment where the private sector operates efficiently and effectively. This will be reflected in an improved competition policy framework and institutionalized regulatory review systems in the government that promote better appreciation of the costs and benefits of regulations and greater transparency, strengthened food safety management system, increased government capacity to assess trade policy for Cambodia, and addressed the backlog in WTO compliance and legal notifications.

The government has requested that ADB fund from its Special Funds resources (ADF) a loan of $25 million equivalent to finance Subprogram 3 of the program cluster.

Project Rationale and Linkage to Country/Regional Strategy The Promoting Economic Diversification Program cluster approved by the ADB Board of Directors in December 2008 is designed to support the government priorities and promote economic diversification by (i) enhancing competition in domestic markets and lowering cost regulation, (ii) strengthening investor confidence in the regulatory environment and promoting market-based innovation, and (iii) strengthening trade facilitation measures along the entire supply. The program comprises three subprograms from 2008 to 2012. Under subprogram 1, financed by ADB in 2008 (SDR13.419 million), the government implemented a series of investment and trade facilitation measures that laid the foundation for a more competitive and diversified economy in the longer term. The subprogram included a $2 million SPS capacity development project (footnote 4). Subprogram 2, which is financed by ADB (SDR6.565 million as a loan and $9 million as a grant), responds to new policy challenges arising from the impact of the global financial crisis, such as the need for competition policy, regulatory efficiency, and innovation to promote private sector competitiveness. Similar to subprogram 1, subprogram 2 included a capacity development project for SPS and regulatory impact assessment (RIA).
Impact Expanded and diversified private sector
Project Outcome
Description of Outcome Improved business and regulatory environment where the private sector operates efficiently and effectively
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Competition in the domestic market increased and regulatory efficiency improved

2. Investment climate strengthened

3. Trade policy and facilitation enhanced

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The proposed subprogram 3 will include policy reforms to promote diversification of Cambodia's economy and will have no direct impact on the environment.
Involuntary Resettlement The proposed program will not involve any construction or rehabilitation, no land will be acquired, and it has no potential impact to cause loss of assets, resources, or income.
Indigenous Peoples The proposed program is intended to promote economic diversification in Cambodia and will have no component that will negatively impact indigenous people.
Stakeholder Communication, Participation, and Consultation
During Project Design

In implementing the program, ADB has closely coordinated with development partners, such as the European Commission, the International Finance Corporation, the United Nations Development Programme, the United Nations Industrial Development Organization, the United States Agency for International Development, the World Bank, and the World Trade Organization. This provides holistic support for private sector development in Cambodia (Appendix 3).

Subprogram 3 is the last subprogram of the program cluster. It is built on progress made under subprograms 1 and 2 for investment climate, trade policy, and trade facilitation. Subprogram 3 draws on best international practice for a comprehensive trade and investment program. Activities include (i) establishment of an office of regulatory impact assessment (ORIA) to be responsible for regulatory review and thus decrease the regulatory burden for the private sector, (ii) capacity development assistance to address constraints of SPS service providers for small and medium-sized enterprises (SMEs), (iii) implementation of a pilot SPS technology matching grants component that aims to address demand-side issues of SMEs, and (iv) assistance for Cambodia's global and regional integration efforts via support for World Trade Organization's trade policy review (TPR) on Cambodia and its participation in the Association of Southeast Asian Nations (ASEAN) regional trade agreements and ASEAN commitments to develop competition policy and law.

During Project Implementation MOC, the executing agency for the subprogram, will be responsible for overall implementation of subprogram 3, including carrying out all policy actions, program administration, and maintenance of program records. The implementation arrangements under subprograms 1 and 2 will continue under subprogram 3. MOC will use a steering committee chaired by the minister of commerce and comprising senior officials from MEF and MIME. The steering committee is responsible for coordinating implementation and sustaining the program cluster policy actions with MOC and relevant line ministries and agencies involved in supporting the program (MEF, MIME, the Ministry of Environment, MOH, MOT, and ECOSOCC). The committee will meet quarterly to monitor progress and oversee program implementation. ADB may be invited to participate in the meetings as an observer. English translations of the minutes of these meetings will be forwarded to ADB within 2 weeks of each meeting. MOC will be responsible for day-to-day program implementation activities, and report on implementation progress. MEF will be responsible for subprogram 3 disbursements.
Responsible ADB Officer Rabin Hattari
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
Ministry of Commerce
20 A/B Preah Norodom Blvd
Phnom Penh, Cambodia
Concept Clearance 20 Feb 2012
Fact Finding 02 May 2012 to 11 May 2012
MRM 09 Aug 2012
Approval 27 Sep 2012
Last Review Mission -
Last PDS Update 14 Dec 2012

Loan 2904-CAM

Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2012 17 Jan 2013 12 Apr 2013 31 Mar 2013 02 May 2013 02 May 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 25.00 Cumulative Contract Awards
ADB 25.00 27 Sep 2012 24.87 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 27 Sep 2012 24.87 0.00 100%

Safeguard Documents

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Evaluation Documents

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