Cambodia: Third Financial Sector Program - Subprogram 3

Sovereign (Public) Project | 42305-033

ADB is supporting Cambodia’s reforms to promote the growth of its financial system and make it more resilient and efficient. The project will target improvements in the financial infrastructure and the legal, regulatory, and institutional framework. It will strengthen governance and enhance the efficiency of the financial sector.

Project Details

  • Project Officer
    Aoki, Hiroyuki
    Southeast Asia Department
    Request for information
  • Country
  • Modality
    • Loan
  • Sector
    • Finance
Project Name Third Financial Sector Program - Subprogram 3
Project Number 42305-033
Country Cambodia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3185-CAM: Third Financial Sector Program - Subprogram 3
concessional ordinary capital resources lending / Asian Development Fund US$ 15.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming Some gender elements

ADB has been the leading development partner of the finance sector in Cambodia since 1999. A comprehensive approach was required to rebuild the financial system in a devastated economy that had no finance sector. Responding to the government's needs, the approach has been broadly based so far. After successfully rebuilding the basic foundation of the banking industry under the first and second programs, the third program has begun to support the sector's expansion to cover the important subsectors of nonbanking services and capital markets, and to boost investors' and beneficiaries' confidence in the system with a stronger legal and regulatory framework, necessary infrastructure, and better quality of services, including consumer protection.

The third program has focused on creating an enabling environment for all sector stakeholders, including the various regulators. The scope has shifted from the establishment of regulatory frameworks to their effective implementation and oversight, and more transparency. Proper financial infrastructure is required to meet rising market needs for more efficient and diverse financial services, as is further development of the legal foundations to ensure smooth transactions in the sector. These reforms require coordination within the government and careful sequencing, including dialogue with the private sector. The third program has been facilitating closer coordination.

After completion of the third program, ADB will continue the policy dialogue with the government under the Post-Program Partnership Framework. Also, ADB's technical assistance (TA) for implementing subprogram 2 of the Third Financial Sector Program has been extended to June 2015 to deal with the remaining issues.6 However, for the next round of support, ADB should concentrate on its areas of comparative advantage, in consultation with other development partners and the government. A first dialogue with the government to this end has started in the process of formulating the CPS, sector assessment, and strategy and road map.

The impact will be a sound, market-oriented finance sector that supports the mobilization of financial resources. The outcome will be a growing, resilient, and efficient financial system.

Project Rationale and Linkage to Country/Regional Strategy

Cambodia's finance sector is highly dollarized and fragmented. Under the dollarized economy, the central bank has only limited measures to implement its monetary policies and manage inflation. It also has limited ability to provide liquidity as _lender of last resort._ The finance sector has been growing significantly, although from a small base. The banking industry still dominates the finance sector, accounting for more than 90% of assets in the sector. Moreover, banking itself is both concentrated and fragmented between urban and rural areas. The nonbanking segment and capital markets are at an early stage of development and do not yet have significant macroeconomic impact. Cambodia is now leaving the post-conflict era and faces the dual challenge of ensuring further development of the finance sector to support sustainable economic growth while striving for monetary policy independence.

Past and ongoing efforts to build a more broad-based and resilient finance sector in Cambodia have yielded several lessons. First, as the scope of the sector expands, the need for consultation, coordination, and consensus building between government ministries and agencies, and with the private sector, increases. This will require time and strong leadership in planning and executing policy measures. Second, finance sector development should be based on a sequence of well-planned steps, where each step is supported by solid technical inputs. TA resources are essential in this regard and, given the limited availability of ADB funds, strong donor coordination is essential. The third program experienced some positive outcomes of close donor consultation, whereby completion of policy actions was made possible through timely technical inputs of other development partners. Also, some initiatives developed by ADB have now been implemented by other donor agencies. Third, a long-term engagement establishes understanding and trust, which is vital for any reform program to succeed but indispensable for the finance sector, where policy actions such as those relating to interest rates or foreign exchange may involve significant externalities. Implementation of the third program benefited from the strong relationship that ADB had built with government counterparts in over a decade of engagement in the sector, and the steps taken and progress made under subprogram 3 should be viewed as the building blocks that will need to be assessed in a long-term perspective including the Post-Program Partnership Framework.

Impact A sound, market-oriented finance sector to enhance the 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

Improved financial infrastructure

Improved legal, regulatory, and institutional framework

Strengthened finance sector governance

Enhanced finance sector efficiency

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The program aims at financial sector reform focusing on policy and regulatory framework, supervisory capacity, operational and institutional capacity, and legal infrastructure, and has no and regulatory framework, supervisory capacity, operational and has no environmental threat.
Involuntary Resettlement

The program will not involve construction/civil works. Activities are limited to policy and regulatory framework, supervisory

capacity, operational and institutional capacity, and legal infrastructure, and have no impacts on IRs. This justifies category _C_ for IR. None of the project activities will involve land acquisition or involuntary resettlement which justifies a category _C_ for IR.

Indigenous Peoples

The program will not involve construction/civil works. Activities are limited to policy and regulatory framework, supervisory

capacity, operational and institutional capacity, and legal infrastructure, and have no impacts on IPs. This justifies category _C_

for IP.

Stakeholder Communication, Participation, and Consultation
During Project Design All reform measures have undergone substantive stakeholder consultations before implementation, and the government will continue to host biannual government private sector forums at which the private sector can raise policy issues and the government can address them. Regular policy dialogue with stakeholders will take place during Asian Development Bank (ADB) review missions.
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 03 Jun 2014 to 09 Jun 2014
MRM 13 Aug 2014
Approval 18 Nov 2014
Last Review Mission -
Last PDS Update 20 Mar 2015

Loan 3185-CAM

Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Nov 2014 18 Dec 2014 27 Mar 2015 30 Jun 2015 31 Jul 2015 31 Jul 2015
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 15.00 Cumulative Contract Awards
ADB 15.00 07 Sep 2021 13.80 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 07 Sep 2021 13.80 0.00 100%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.


No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.