Cambodia: Third Financial Sector Program - Subprogram 1

Sovereign Project | 42305-013

ADB is supporting Cambodia’s reforms to promote the growth of its financial system and make it more resilient and efficient. The project will maintain stability in the financial sector, improve market confidence and financial intermediation, promote good governance, and enhance the efficiency of the financial sector.

Project Details

  • Project Officer
    Aoki, Hiroyuki
    Southeast Asia Department
    Request for information
  • Country
  • Modality
    • Loan
    • Technical Assistance
  • Sector
    • Finance
Project Name Third Financial Sector Program - Subprogram 1
Project Number 42305-013
Country Cambodia
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2815-CAM: Third Financial Sector Program - Subprogram 1
Asian Development Fund US$ 15.00 million
TA 7934-CAM: Implementing Subprogram 2 of the Third Financial Sector Program
Technical Assistance Special Fund US$ 800,000.00
Cooperation Fund for Regional Trade and Financial Security Initiative US$ 300,000.00
TA 7934-CAM: Implementing Subprogram2 of the Third Financial Sector Program
Financial Sector Development Partnership Fund US$ 500,000.00
TA 7934-CAM: Implementing Subprogram 2 of the Third Financial Sector Program (Supplementary)
Technical Assistance Special Fund US$ 300,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming Some gender elements
Description The sequence of financial reforms in Cambodia has been guided by the Government's 10-year FSDS. A project preparatory technical assistance (PPTA) for $850,000 ($700,000 from ADB TASF IV) was approved in April 2010 to help the Government update the FSDS 2006-2015 and formulate the next cluster program. IMF and World Bank have recently completed the first financial sector assessment program (FSAP) on Cambodia that will provide useful inputs to the update of the 10-year FSDS. While FSP I has been rated successful by the independent evaluation department (IED), some of the reform measures were not widely enforced due to weak interministerial coordination and capacity constraint. Prepared within the framework of the updated FSDS, the next program cluster (FSP III) will help complete some of the reform programs that commenced during FSP II, strengthen the enforcement of completed activities, and commence reform activities in leasing, capital market, and pension fund. The expected overall impact of the cluster program is a sound, market-based finance sector to enhance mobilization of financial resources to support sustainable economic growth. The expected outcome of the FSP III is a growing, resilient, and efficient financial system. FSP III is expected to be approved in November 2011. The National Bank of Cambodia will be the Executing Agency, and the Ministry of Economy and Finance (MEF) and Ministry of Commerce (MOC) will be the Implementing Agencies.
Project Rationale and Linkage to Country/Regional Strategy

The Government of Cambodia requested a program loan from the Asian Development Bank (ADB) during program consultations in 2009 to support Cambodia's on-going reforms of its finance sector. ADB has supported reforms in Cambodia's finance sector since 1999. As the finance sector moves towards a sound market oriented system, the proposed program will ensure that the momentum will not be lost on reforms initiated under the two ADB Financial Sector Programs (FSP I and II). The development of Cambodia's finance sector is one of five core areas that best support ADB's Strategy 2020 and its goal to reduce poverty in Cambodia. This is in line with the priority outlined in the Government's 5-year National Strategic Development Plan (NSDP) 2006-2010 and the draft NSDP 2011-2013. The proposed program cluster for a total of $45 million (ADF) was included in the country operations business plan (COBP) 2009-2012.

The development framework for Cambodia's finance sector is based on the 10-year Financial Sector Development Strategy 2001-2010 that was updated as the FSDS 2006-2015 and adopted by the Government in February 2007. Through ADB's first Financial Sector Program (FSP I) that commenced in 2001 and concluded in August 2007, the Government was able to lay the legal and regulatory foundations necessary for a sound, market-oriented financial sector. The government also took strong measures to consolidate the banking system and introduce more stringent requirements for capital adequacy, governance, and risk management. With positive results after FSP I, and to ensure the durability of its reform program and greater accessibility to financial services by ordinary citizens, the Government requested continuing ADB support to the sector. This led to the design and approval of the FSP II in 2007. FSP II with a series of four single-tranche subprograms, commenced in September 2006 and completed in December 2010. FSP II helped to strengthen resilience, improve public confidence, improve financial intermediation, strengthen competition in the financial markets, ease financing constraints, update the associated legal and regulatory framework, and establish key financial infrastructures.

Impact A sound, market-oriented finance sector to enhance mobilization of financial resources
Project Outcome
Description of Outcome A growing, resilient, and efficient financial system
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Maintain stability in the finance sector

1.1 Updated legal and regulatory framework for banks and microfinance institutions

1.2 Strengthened bank supervision capacity and measures adopted to sustain financial stability

1.3 Prudential supervision and regulations for MFIs strengthened

1.4 Legal foundation to support financial and commercial transactions enhanced

Improved confidence and financial intermediation

2.1 A modern payments, clearance, and settlement system

2.2 Consumer access to credit, customer protection and market confidence enhanced

2.3 Interbank market and tradable government securities operationalized

2.4 Developed domestic securities market

Promoted good governance

3.1 International initiatives on anti-money laundering and combating the financing of terrorism promoted

3.2 Corporate governance and transparency in the finance sector enhanced

3.3 Commercial dispute resolution mechanism established

3.4 Accounting and auditing profession developed

Enhanced efficiency in the financial sector

4.1 Business registration system updated and modernized

2.5 Developed Insurance industry

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 No environmental impact anticipated
Involuntary Resettlement The program requires no construction or rehabilitation work. It is not expected to require land acquisition and it has no potential to cause loss of assets, resources or income
Indigenous Peoples The program has no component that would impact indigenous people
Stakeholder Communication, Participation, and Consultation
During Project Design Wide stakeholder consultation during factfinding from 18-28 July 2011. Prior to that, a series of workshops with government, private sector and development partners were held to discuss the draft financial sector development strategy (FSDS) 2011-2020. The program will be designed within the approved framework of the FSDS 2011-2020.
During Project Implementation
Responsible ADB Officer Aoki, Hiroyuki
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
National Bank of Cambodia
Tal Nay Im
P.O. Box 25
22-24 Norodom Blvd.
Phnom Penh, Cambodia
Concept Clearance 16 Apr 2010
Fact Finding 17 Jul 2011 to 29 Jul 2011
MRM 06 Sep 2011
Approval 29 Nov 2011
Last Review Mission -
PDS Creation Date 16 Apr 2010
Last PDS Update 11 Jul 2011

Loan 2815-CAM

Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Nov 2011 20 Dec 2011 08 Feb 2012 31 May 2012 - 31 May 2012
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 15.00 Cumulative Contract Awards
ADB 15.00 18 Nov 2021 14.74 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 18 Nov 2021 14.74 0.00 100%

TA 7934-CAM

Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Nov 2011 30 Dec 2011 30 Dec 2011 14 Jul 2013 30 Nov 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,100,000.00 800,000.00 150,000.00 0.00 0.00 0.00 2,050,000.00 18 Nov 2021 1,472,031.10

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