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Agenda item 1: Impact of the global economic crisis and the government response, specifically in the garment sector, social safety nets, agriculture and foreign direct investment
Comment by Mr. Qimao Fan, World Bank Country Director and Lead DP Facilitator: Mr Fan welcomed opportunity to monitor progress against the goals that were set for both the government and development partners at the last December CDCF. Development partners support the Prime Minister’s call for close collaboration between the government and development partners to manage our way through this crisis. He identified issues for further discussion as follows:
He concluded that both the government and development partners should focus on (1) helping and protecting the poor, the vulnerable and the weak; and (2) turning the crisis to an opportunity for promoting a sustainable and competitive economy that will benefit all Cambodians.
Response from RGC: H.E. Hang Chuon Naron addressed the issue of monitoring of the situation and reported that the government continued to use the existing mechanisms they have set up to monitor all changes caused by the impacts of the global crisis at macro and sector level, and the Committee for Economic and Financial Policy was considered a main actor to monitor the situation. However, RGC needed to receive more regular reports on the disbursement and project status and some bottlenecks of those projects. He also suggested that there should be improved information sharing between the government and development partners.
H. E. Chhieng Yanara addressed the need to monitor projects financed by development partners. The government will work with DPs to identify the prioritized and potential projects/programs that can be able to accelerate the economic growth and provide safety nets; moreover, he asked development partners to expedite the fast-tracking disbursements. The government also proposed that more assistance in investment projects instead of technical cooperation or advisory support would be needed to ensure a strong and immediate response to the impacts of crisis. It was agreed that priority projects would be identified and monitored through the TWG and GDCC mechanism.
Social Safety Nets: The representative of the Council for Agriculture and Rural Development (CARD) and the Ministry of Rural Development revealed the short-term and long-term measures to identify policy options to safeguard the poor and vulnerable. The government would work with development partners to complete the tasks assigned which mainly focused on Social Safety Nets. Moreover, the government has improved the institutional arrangement and developing the Social Safety Net Strategy (SSN strategy). For short-term measures, the government continues to strengthen the existing mechanisms, such as Food for Work program and Equity Fund in rural areas. Furthermore, the representative from MRD added some measures that the government has implemented in order to help increase the living of the people at the rural areas and to contribute to the Social Safety Net System.
Comments by Mr. Jean-Pierre de Margerie, representative from WFP: It was suggested that the government accelerate the process of finalizing the SSN strategy in order to meet the deadline in December 2009 and identify the additional new poor target areas for ID Poor Program, which would be supported by development partners. It was also important to identify the most vulnerable, and then determine what can be done through a Social Safety Net arrangement.
Response from RGC: H. E. Chair referred to the background paper from CARD on Social Safety Net which addressed many of the participants' questions. He reaffirmed the government commitment to quickly resolve this problem.
Comments by H.E. Arjun Goswami: It is necessary that the ID poor program confirm the coverage target areas around Boeung Tonle Sap lack and the timeframe for the expansion of coverage for ID poor program among those target areas.
Response from RGC: Regarding Social Safety Nets, the government had implemented some short-term strategies to solve the problem of the poor and the vulnerabilities. These were as follows:
A representative of MoP added that the target areas for ID Poor Program are Pursat and Kampong Thom, around Boeung Tonle Sap Lake, Banteay Meanchey, Kampot, Svay Reang, and Steung Treng. The timeframe to extend to all these target areas is 2009.
Agriculture Sector: H.E. Chan Tong Yves, Secretary of State, Ministry of Agriculture, Forestry, and Fisheries (MAFF) identified the existing measures that the government has implemented. He noted that RGC has developed some strategies for the agriculture sector to promote development and to reduce poverty. Those strategies are included in the Rectangular Strategy Phase II, NSDP (2006-2010), Strategy for Agriculture and Water (SAW 2006-2010), and Strategy for Food Security and Nutrition (2008-2012). Particularly, the Five National Programs of the Strategy for Agriculture and Water have been developed and are being finalized.
Comments by Representative from AFD: Government agencies in the agriculture sector must accelerate those measures and strategies so that implementation can begin.
Response from RGC: Short-term mechanism to implement the 5 SAW programs had been discussed; due to the fact that agriculture is multi-sector issue, there needed to be close cooperation with concerned agencies to enhance productivity and diversification. The problem that RGC is facing for agriculture is that during the crisis the market for Cambodian agriculture can contract. Thus, both short-term and long-term strategies are needed. The Fisheries TWG is also working with DPs on the preparation of the 10-year Strategies Plan including 3 and 5-year Plan; and on the establishment of Fisheries Operating Group in order to coordinate all activities around a common objective.
After the discussion, it was agreed that the Five National SAW Programs would be finalized in the middle of this year. SAW issues would be further discussed in the dialogue at TWG on Agriculture and Water.
Garment Sector: H.E. Senior Minister Cham Prasidh, Senior Minister of Ministry of Commerce, shared information on the general status of the garment sector in Cambodia and the measures which RGC has implemented. The export of garment products had slowed down during the global financial crisis. The decrease in garment product demand in June and July which caused 63, 000 jobs loss from the beginning of crisis, decrease in monthly pay-roll and theft of designs and produce were the main challenges for Cambodian garment sector.
Regarding those challenges, the government has taken some measures such as reforms to the taxation regime, trade facilitation to improve import-export, industrial improving, and other measures in order to promote the competitiveness of the garment sector, particularly the approval on the proposed joint-measure for garment sector between Committee for Economic and Financial Policy and Private Sector Development Committee on February 2009.
Comments by ILO: Development partners welcomed those measures and asked the government to continue its efforts to coordinate and facilitate the trade area and ensure commercial operations with low cost and higher productivity in order to be competitive.
Foreign Direct Investment: H.E. Senior Minister Sun Chan Thol, Vice Chairman of CDC, identified the short-term, medium-term and long-term measures of the government to attract foreign direct investment during this period that caused FDI downturn. He added that Cambodia Investment Board (CIB) is playing a role to promote and accelerate foreign direct investment inflow. The Investment Aftercare Unit has been set up with Terms of Reference (ToR) within CIB. For the measures taking, CIB was requesting DPs to provide TA to accelerate those measures and CIB is working with a JICA team to conduct a study on the institutional strengthening and promoting investment in Cambodia which will be finalized by 2010. Development partners welcomed these measures and will support the Investment Aftercare Unit to promote investment and review the incentive program for promoting locally-financed investment.
Comments by DPs: Development partners asked the government to clarify measures to retain existing foreign investors, as well as, identify the roles and responsibilities to support investors to be more actively targeted. Moreover, they asked the government to detail its approach to facilitate the entry of new domestic business, and to position Cambodian market as attractive one in the global economy; and the promotion strategies that will help both FDI and local investment.
Response from RGC: H.E. Senior Minister Sun Chan Thol provided response to the issues raised that the government would encourage Cambodians to invest in the country. Therefore, the government has created a one-stop service to be more efficient in the investment process. He also mentioned that the government would look at the investment strategies at both national and provincial level and needed to make CIB more effective and efficient and to provide more information to those investors.
DPs agreed that they would work with the government in promoting FDI.
Agenda item 2. Progress in the implementation of the Joint Monitoring Indicators agreed at the 2nd CDCF and endorsement of the JMI on Aid Effectiveness
He mentioned that there were achievements in some JMIs agreed at the 2nd CDCF, and progress was being made on some other indicators; capacity and ownership were key factors.
He further stated that CDC/CRDB has worked with TWGs on identifying the priorities for aid effectiveness at the sector and cross-sector level. This work showed the commitment of the government in enhancing aid effectiveness and to respond to the Accra Agenda for Action which focuses on the Program-Based Approach, strengthening Monitoring and Evaluation system, the use of country system and enhancing partnership and mutual accountability. In addition to the priorities set by TWGs, a number of complementary aid effectiveness activities have been identified to strengthen aid effectiveness implementation and to support TWG work.
Comments on JMIs by Ms Carol Rodley, Ambassador USA on behalf of development partners: There were some progress of the implementation of the JMIs set at the CDCF buit further dialogues was requested as follows:
Response from RGC: Representative from CAR responded that MBPI strategy and PMG is on track, MBPI transition strategy needs to wait for Health Sector, and Ministry of Health has prepared sub-decree to set up many SOAs. CAR indicated that a meeting of the PAR TWG would be convened in the near future.
In response to the comments from DPs, H.E HANG CHUON Naron from Ministry of Economy and Finance stated that Medium-term Economic Framework (MTEF) was finalized and PFM Reform Program has proceeded. The government committed to move to further progress and prepare more workshops for line ministries for implementation of PFMRP Phase II. There would be an establishment of the working group that will coordinate this process.
Furthermore, there were two points raised by H. E. representative from CRDB/CDC as (1) PAR TWG has already developed the hierarchy and secretariat and CDC/CRDB has provided both technical and financial supports in order to help it function properly; however, the problem is the absence of the development partner, so we need DPs to nominate a DP facilitator, and (2) regarding the Partnership Principles in the Land sector, the government has been ready to sign this document.
The spokesman from the Agriculture and Water TWG answered to the development partner that although Agriculture and Water Strategy has been approved, the development of the 5 programs was still on the process. Program 5 has not yet been sufficient, thus they needed more financial support so that the program can be finalized by mid 2009. Besides, A&W TWG has also committed to move from project-based approach to the program-based approach. Development partners further suggested that the cooperation and coordination between the Ministry of Agriculture, Forestry and Fisheries and the Ministry of Water Resources and Meteorology should be strengthened such as to increase the effective interventions in the development of agriculture and water sectors. Regarding this, H. E. Chair responded that the government has already set up the responsibility for each ministry.
Official from Forestry TWG mentioned about the progress on Forestry that they have regularly updated the website of MAFF in every three months, and there were some measures taken in order to maintain the forestry coverage area up to about 60% to 70%.
The representative from the Legal and Judicial Reform TWG replied to the issue of the submission of the four fundamental laws that three of them were sent to the Council of Ministers for endorsement prior to being sent to the National Assembly.
The spokesperson from the Land TWG provided a brief overview of progress that (1) they are ready for the signing of the Partnership Principles with the DP side; (2) there is special training policy regarding the enhancing urban land-tenure security; and (3) there is a draft policy for the land-tenure registration of the minority groups. Development partners provided feedback that they also agree to sign the paper, so they will meet and discuss this.
H. E. Chair noted that there was some progress on the reduction of the cost and time spent for clearing the imports and exports at the Sihanoukville Port, and the government will provide detailed explanations and discussions at the seminar on the Investment Climate that will be held soon. Concerning the cross-border agreement with Vietnam, it can be done; however, the agreement with Thailand was unlikely to be completed in the near future.
H. E. Chairman also added that there is lack of information sharing within TWGs and between DPs. He suggested that we further enhance this sharing and work harder to make partnerships efficient and focused on results.
Comments on aid effectiveness by UNDP and EC: Ms Ricarda Rieger, Deputy Country Director, UNDP spoke on behalf of DPs as follows:
There were three questions for further discussion as follows:
Response from RGC: H. E. Chhieng Yanara provided feedback regarding the significance of the commitment from policy level on the identification of the aid effectiveness priorities. He stated that the process of setting up the priorities was approved by the TWGs and then the ministers of the line ministries and development partners before they were presented for endorsement. However, there were some TWGs that haven't finished their discussion, so they should continue their meetings and discussions. The second point of his feedback was to respond to how to monitor the implementation of the priorities. The ministries and agencies of the government would be the ones who implement those set activities, and TWG and development representatives would coordinate the process. And the government was going to use TWG mechanism to help this process with reporting to the GDCC through existing mechanisms; TWG P&H would provide a forum to discuss implementation and share experience while CRDB/CDC, as the GDCC secretariat, will report on the result of the implementation at the next GDCC meeting and at the next CDCF. Moreover, the government would also prepare training on results-based management related to the JMIs. The Chair responded to the EC question on inter-Ministerial coordination by noting the importance of using the TWGs to address these coordination issues, with the addition possibility of using the Council of Ministers for internal RGC deliberations.
Agenda item 3. Update on the integration of planning, budgeting and aid management processes and NSDP extension to 2013
Regarding the extension of the NSDP 2009-2013 so as to make it synchronized to the RS-II and the mandate of the government, the Ministry of Planning was preparing the details of preparation process that would be described in an RGC Circular to be issued soon. This was done to respond to "the need to ensure consistency in terms of hierarchy, role, substance, coherence and synchronization between the Rectangular Strategy, the National Strategic Development Plan and the Sectoral Development Strategies, as well as other policy documents, investment programmes and the nation budget" as articulated in the Rectangular Strategy, Phase II.
Comments on Integration of planning budgeting reforms by WB: How does the government perceive the scope and timeframe of the integration agenda? How is it proposed to frame relatively quick technical reforms that can be carried out over the current year within a longer-term program for improvement? How can DPs help, within and between TWGs?
Comments on NSDP extension to 2013 by UN: The DPs looked forward to the forthcoming circular and information on the process for preparing the extension phase. The Development Partners emphasised the need for broad and effective consultation and enquired about how to best support the government to ensure broad consultation and to ensure that policies can draw on best available analysis.
Response from RGC: Concerning the process of budget integration, a representative from MEF observed that the process of planning and budgeting requires a sustained effort. The PFM Reform Program Platform II supports the line ministries and agencies inintegrating all resources in to the Budget, domestic and external, through the use of Budget Strategic Plans. MoP will therefore articulate institutional arrangements for the integration work but the Budget Strategic Plan is how all resources will be integrated and this will be managed by MEF. One of the challenges RGC is facing is that there are many PIUs which led to difficulty for line ministries to systematically consolidate all of their resource flows. Based on sector policy, we must link MTEF to NSDP well so that we get a comprehensive MTEF that is aligned to national priorities.
The meeting was adjourned at 1:30pm.