CLOSING ADDRESS OF
SAMDECH HUN SEN
PRIME MINISTER OF THE ROYAL GOVERNMENT OF CAMBODIA
Government-Donor Monitoring Meeting
Phnom Penh, 16 January 2002
Excellencies, distinguished representatives of the donor community
Excellencies, my colleagues from the Royal Government
Excellencies, Ladies and Gentlemen
1. On behalf of the Royal Government of Cambodia (RGC) and on my own behalf, I would like once again to express our profound gratitude to all of you, Excellencies, Ladies and Gentlemen, for attending this important meeting, providing comprehensive, candid and constructive suggestions and recommendations with the view to ensuring that reforms in Cambodia is sustainable, preparing a sound foundation for economic take-off and promoting poverty reduction.
2. You have spent the whole day listening to the presentations and comprehensive comments provided by my colleagues on the main topics related to the government's reform programs, which have been implemented during the last six months following the Tokyo CG Meeting in 2001. Overall, I wish to take this opportunity to make an analysis and sum up the achievements made following the tremendous efforts deployed by the RGC and highlight the strengths and weaknesses in order to work out appropriately improvement measures in a timely manner. This reflects government's resolve and determination to meet all kinds of challenges in order to ensure the dignity, prosperity and the welfare of the Cambodian people and our next generation.
3. Overall, year 2001 is the year of strengthening security and social safety, enhancing democracy and increased respect for the basic rights and dignity of Cambodians from all walks of life and preparing for the devolution of power to the grassroots level through decentralization and commune elections. 2001 also witnessed the strengthening of institutional capacity at both central and provincial levels and gradual improvement in the living standards of the population by embarking on reforms in all sectors and in particular implementing the government's poverty reduction strategy. These achievements have been made possible by active participation of the authorities at all levels, Cambodia's development partners, NG0s and many international organizations, that have displayed their strong commitment to Cambodia.
4. In terms of political developments and the progress in implementing the government's strategy, 2001 reflected our endeavors to prepare the grounds for the following:
First, organizing the commune elections, strengthening democracy, promoting the respect of basic rights and dignity of the Cambodian people at the grassroots level;
Second, pursuing the implementation of the reforms, in particular continuing to implement the Governance Action Plan (GAP);
Third, preparing and commencing implementation of the Second Socio-Economic Development Plan (SEDP 11);
Fourth, implementing the poverty reduction strategy.
Excellencies,
Ladies and Gentlemen,
5. After making the above introductory remarks, I would like to proceed to the evaluation and sum up the achievements made by the RGC in 2001, highlighting the strategies, policies and concrete measures put in place and implemented by the government to accelerate the reform programs. Overall, the performance in fiscal and public administrative reforms, demobilization, legal and land reforms has been good as the reforms in these areas have been moving fast.
6. The performance of economic and fiscal reforms was strong, but economic growth declined in the fourth quarter, owing to the deterioration in the world economic environment and the short-term impact of the terrorist attacks of September 11. To cope with the aftermaths, the RGC has undertaken concrete measures to promote tourism and garment sector, while tremendous efforts have been deployed to improve agriculture, hard hit by last year's floods and drought. As a result, real GDP growth for 2001 is estimated at 5.3 percent compared to 6 percent previously projected, and inflation is anticipated to be very low compared to last year. The international reserves will increase to cover three months of imports by the end of 2001.
7. Considerable progress has been made in bank restructuring by reducing the number and improving the quality of commercial banks in an attempt to instill public confidence. Bank recapitalization and improved management is designed to protect depositors and increase surveillance in banking supervision. Moreover, these reforms are aimed at promoting a strong and well-functioning financial sector that can break down the limitations of self-financing and mobilize idle financial resources for productive investment needs. To this end, the Royal Government adopted the "Vision and Financial Sector Development Plan for 2001-2010", which outlines a long-term vision and strategy for sequencing policy reforms to develop the financial system over the next ten years. We hope that by rigorously implementing this strategy in the next 10 years Cambodia will be able to establish a vibrant, efficient and modem financial sector based on international standards.
8. The 2001 Budget was implemented cautiously to make room for financing the commune elections and to reach the targeted fiscal balance. Moreover, increased spending on flood relief in 2000 has had a major impact on the financing situation in 2001. Domestic tax revenue increased 7 percent compared to 2000, reflecting increased collection of non-tax revenue. Overall expenditure has been contained below targets, thus contributing to the avoidance of domestic budget financing. At the same time, organizing the commune council elections have put an additional constraint on budget execution in 2001. But, the overall fiscal deficit (excluding grants) was contained at 5 percent of GDP, while the current surplus was maintained at ½ percent of GDP.
9. Governance has been strengthened in revenue collection through implementation of measures to prevent leakages, especially by combating smuggling and strengthening customs administration. I myself decided to establish an inter- agency cooperation at both the central and provincial levels to combat smuggling, detailing assistance requirements and practical arrangements among the Customs Department, the Armed Forces, the Military Police, the Police and the local authorities to prevent and crack down on smuggling. At the same time, the government has taken steps to increase collection of telecommunications revenue and has worked out rigorous measures to collect more non-tax revenue.
10. On the expenditure side, the Royal Government has spelt out policies and taken steps to shift spending priorities by providing adequate funds for spending on social and economic sectors, increase public investment in rural infrastructure and establish responsibility for performance at the level of spending units. Capital expenditure increased by 4 percent. Therefore, with rigorous fiscal reforms and stringent budget management, we have made encouraging progress in enhancing revenue and containing expenditure at an appropriate level, conducive to macroeconomic stability. At the same time, to strengthen governance in public expenditure management, the RGC decided to fully implement procurement procedures for the four priority ministries: Ministry of Education, Youth and Sports, Ministry of Health, Ministry of Agriculture, Forestry and Fisheries and Ministry of Rural Development.
11. In the area of public administration reform, the RGC has successfully completed the civil service census, issued ID cards to government officials, established a computerized payroll, put in place a classification system for civil servants and introduced a human resource management information system (HRMIS). In this context, on 19 October 2001, the Cabinet approved the strategy for rationalization of civil service. At the same time, within the framework of the 2002 budget the RGC will introduce a new remuneration system increasing salary commensurably with government official's responsibilities. The establishment of the priority mission groups by using the government's budgetary resources will be a pilot project to increase labor productivity and provide incentives to those who work hard. The RGC has also finalized a study on the establishment of social safety nets. Therefore, we have come to the conclusion that the administrative reform, which is key to determining a success in improving public service delivery, has made a big step forwards and created a momentum to support reforms in all areas. This will accelerate economic growth and promote poverty reduction.
12. An important part of the programs for state reforms is the introduction of decentralization and deconcentration in management in order to ensure improvement in governance at the grassroots level. This has been introduced since 1996. Then, the RGC decided to formulate and test systems for decentralized and deconcentrated planning, financing, management and implementation of local development in five provinces: Pursat, Battambang, Siem Reap, Banteay Meanchey and Ratanakiri. At present, Seila is primarily an efficient aid coordination mechanism for mobilization of resources in support for development at the grassroots level in order to build or repair local infrastructure such as roads, bridges, culverts, irrigation structures, schools, health centers and wells.
13. The most important lesson that can be drawn from the implementation of the Seila program is that decentralization and deconcentration, aimed at devolving power from the center to the local communities, has enhanced democracy and improved the efficiency of public services at the grassroots level. Moreover, this development program has increased local ownership and participation of the people in the national development efforts and strengthened the bonds between the State and civil society. However, to make this devolution of power effective, it is necessary to strengthen the capacity of government officials and the people living at the grassroots levels to allow them to make the right decision. In this spirit, the RGC has proposed a strategy that is based on the bottom-up, integrated, participatory, decentralized rural development. The objectives are to expand the number of Village Development Committees (VDCS) - an elected body whose function is to represent the village to government, non-government and international organizations in the management of rural development projects. The RGC intends to increase the coverage of the Seila program to 1,216 villages in 17 provinces by 2005, which will account for 80% of rural communes across the country. This will allow active community participation in grassroots institutions and increase the ownership of development projects, by shifting decision-making and accountability closer to individuals, households and communities.
14. To contribute to the Seila program the RGC has increased its contribution to respond effectively to the above policy. During the last three years, the RGC increased its commitment to Seila more than fivefold. The RGC will deploy further efforts to mobilize additional resources to support the reforms and local development in accordance with the Law on Commune Administration. The Commune Councils will have their own budget, consisting of tax and non-tax revenues and a block grant from the national budget. The councils will have responsibility for delivering services, including social services to the villages. The councils will have a greater say in the development of their regions. At the same time, the RGC has developed strategies and an Action Plan on Decentralization and Deconcentration to strengthen administrative capacity at the provincial and district levels, as well as to support the commune councils.
15. We have prepared for the commune council elections with the attention and commitment to conduct free, fair and non-violent elections. The government has made its utmost to mobilize all its resources and use them for promoting democracy, the respect for human rights and community development through the devolution of power to the people at the grassroots level. We are strongly committed to ensuring peaceful elections without political violence and fulfilling this can be considered as the biggest success for the Royal Government. I wish to stress again and again that the biggest concerns for the government in organizing the forth-coming commune council elections are not what party wins the elections. More importantly is to ensure a peaceful environment, public safety, free and fair elections, as well as social and political stability after the elections. Therefore, the government will not tolerate any violence, especially political violence before and during the elections, whoever get involved.
Excellencies,
Ladies and Gentlemen,
16. I think that the legal reform has been on track, since the RGC has been successful in enacting laws and regulations. However, the judicial reform appears to be moving slowly compared to six months ago. Indeed, the Council of Ministers has prepared a Joint Master Plan for Legal and Judicial Reforms. Given the importance and the sensitivity of the legal and judicial reforms, I urge the Council for Legal and Judicial Reform to launch in-depth discussions and conduct extensive consultations on the draft Master Plan in order to identify effective and efficient measures and improve the quality of this important document for submission to the Council of Ministers as soon as possible.
17. At the same time, I think that the RGC is required to take necessary steps to strengthen the institutional capacity of the Council for Legal and Judicial Reforms by establishing a working group, whose members will be drawn from legal experts working in various institutions, such as the Parliament, government ministries and agencies and the court to speed up the reform in this area. It is true that budget resources are an important element in expediting this task. The RGC will make its utmost to provide additional budget resources to the support the operations of the Council for Legal and Judicial Reforms. Moreover, the legal and judicial sector is a hot issue. I order the Council for Legal and Judicial Reform to develop a need assessment study to accelerate the reform, including the needs for human, financial and material resources. And I urge Cambodia's development partners, including relevant local and international organizations to consider providing technical and financial assistance, if we really want to see tangible progress in implementing legal and judicial reforms. Indeed, a lot remain to be done and it requires close cooperation between the RGC, the Parliament, the courts and all our external partners, who always want to see Cambodia's judicial system independent, impartial and professional.
18. The most important government agenda during the next two years left for this second term of office is the implementation of the reform and restructuring of the Royal Cambodian Armed Forces (RCAF), as specified in the Defense White Paper adopted by the Royal Government in February 2001. The reform process aims at a substantial reduction in current manpower levels so that RCAF's strength will be appropriate allowing the RCAF fully and efficiently discharging their own duties as stipulated in the Constitution and also in line with regional and world developments in the 21st century. Moreover, we will turn all demobilized soldiers into a powerful force to contribute to sustainable economic development and poverty reduction of the Cambodian people.
19. To this end, the RGC has implemented a number of concrete actions, such as registration to determine the real strength of the RCAF. During the registration phase, 15,551 ghost soldiers and 163,346 ghost dependents were identified and removed from the military payrolls. After that, the RGC has successfully implemented the Pilot Demobilization Program financed by donor assistance and government budget, when another 15,000 soldiers were demobilized. Based on the experience gained from the pilot program, the RGC has proceeded to implement in October 2001 the first phase of full demobilization program for 2001, during which 15,000 soldiers will be demobilized. During the second phase, some more soldiers will be demobilized in 2002 in order reach the target of 30,000 demobilized soldiers.
20. Prompt implementation of the full military demobilization program is crucial for budget savings and redirecting resources to the priority sectors: physical infrastructure, social and economic sectors, especially education, health, agriculture and rural development. Hence, this demobilization program will create favorable conditions for the government to implement the reform of public expenditure, especially focusing on shifting resources from non-productive to priority, productive sector.
21. Rigorous implementation of the forest policy is the top priority, thus the RGC should be vigilant in this area. In this sense, the RGC established and has provided full support for the Forest Crime Monitoring Unit (FCMU), which acts as a watchdog and assists the RGC in monitoring illegal logging in order to effectively stamp out corruption from this sector. Moreover, to ensure efficient forest concession management and sustainable forest exploitation, the Ministry of Agriculture, Forestry and Fisheries (MAFF) imposed a moratorium on logging in forest concessions until the concessionaires have fully abided by the laws, as well as technical and logging practices. To establish a comprehensive legal framework for forest management, the RGC issued a governmental Decree on Forest Concession Management in February 2000. To establish a comprehensive legal framework for forest management, the RGC has drafted, with technical assistance from the ADB, a Forestry Law, and prepared a government Decree on Community Forestry to be submitted to the Council of Ministers in the near future.
22. The plight of the poor can be improved by widening their access to forest, fisheries, water resources and other public goods. Therefore, providing access to fisheries and water resources is critical to improve the living standards of the people living in the Tonle Sap and riparian regions. Realizing the importance of such actions, the RGC cancelled or reduced the size of official fishing lots to improve access by the poor to traditional fisheries in some areas. The RGC cancelled a total of 495,000 ha of fishing areas, accounting for some 53 percent of the total fishing lots to allow the poor free access in order to eke out their existence from fisheries. To shore up the legal framework for fisheries, the MAFF has drafted a new Fisheries Law, a Fisheries Master Plan, a governmental Decree on Community Fisheries and Fishing Lot Auctions with extensive consultation with all stakeholders.
23. To maintain social order, the RGC has accorded priority to the preparation and implementation of land policy, which focuses on land distribution, land management and land administration. After the enactment of the new Land Law, attention has been given to the establishment of a mechanism for systematic enforcement of this law with a view to securing land tenure, providing a basis for reduction in land ownership conflicts, and facilitating land management. To ensure efficient enforcement of the Land Law, nine governmental decrees have been drafted. At the same time, the priority is given to strengthening institutional capacity in land dispute resolution by organizing seminars to train government officials in techniques for land dispute resolution.
24. The RGC approved a Declaration on Land Policy and is preparing a framework for land policy. The core program of the RGC land policy consists of the systematic land registration, tax reform, the establishment of a legal framework to enforce property rights, the establishment of provincial, municipal and national master plans and zoning and the development of rural housing. With technical assistance from the Federal Republic of Germany and Finland, the RGC conducted a pilot systematic land registration project using state-of-the-art technology and delivered land title certificates for the first time to the inhabitants of Samrong District, Takeo Province. Overall, 15 percent of land in the Kingdom of Cambodia has been registered and the RGC has proceeded to cadastrial mapping. To fully implement this daunting task, we have organized training courses for government officials on the methodology to address cadastral mapping and land registration. The next step, the RGC will develop and Action Plan for Land Use in provinces and cities. As a pilot project, we have developed a master plan for Sihanoukville and prepared for developing land use plan along National Route 4.
Excellencies,
Ladies and Gentlemen,
25. The RGC recognizes that transparency is an efficient mechanism to fight corruption, which takes a toll on economic performance, undermining its efforts to reduce poverty of the population. For those without money and connections, corruption in public services can have debilitating consequences. Corruption biases government spending away from socially valuable goods, such as education and health. It diverts public resources from infrastructure investments that could benefit poor people, such as roads, bridges, dikes and canals. To this end, streamlining bureaucratic procedures, simplifying and modernizing the tax system, eliminating excessive regulations, and motivating public servants by giving them a decent level of salaries can help reduce the opportunities and intention for corruption. Enacting anti- corruption laws and regulations is just one part of the equation. Rigorous implementation of those laws and regulations is another part. And we know very well that changing the mentality of the people takes quite some time.
26. Notwithstanding tremendous difficulties and impediments, the RGC has made encouraging progress in combating corruption. Cracking down on illegal logging, the increase in tax revenue, the removal of ghosts from the army payrolls and the confiscation of land, which has been sold off or held illegally, were among the measures aimed at tackling corruption. The Audit Law was past two years ago by the Parliament and the National Audit Authority has been established and will become fully operational. These measures will substantially contribute to fight corruption. The government is committed to rigorously improving governance by implementing principles and measures as stipulated in the Governance Action Plan (GAP).
27. From the above recap, it is my conviction that you can be sure that the Royal Government is firm in fulfilling its commitments made in Tokyo in June 2001. The Royal Government has scrupulously implemented all the ten recommendations made during the Tokyo CG meeting. It is true that for different reasons we are moving faster in some areas than the others and the RGC has undertaken serious strides to improve and accelerate these complex reforms in all areas. Nevertheless, I am convinced that, with all these achievements, you can trust that what we have said is the truth. It is because the policies and many measures proposed by us then have turned out to be concrete actions, which begin to come to fruition in all areas.
28. Indeed, in implementing the GAP we have encountered many challenges and obstacles. However, we should double our efforts in achieving our policy goals and programs that we have adopted in order to lift Cambodia to a higher destiny, to a new plateau of sustainable development. The results that we have received so far have encouraged us to work unceasingly hard. On behalf of the RGC and on my own behalf, I take this auspicious opportunity to express our deep gratitude to the donor community and all Cambodia's external partners, including the private sector and the civil society for making valuable contribution to Cambodia's development. We strongly hope that our development partners would continue to join us in overcoming all obstacles and difficulties in order to help Cambodia and Cambodian people attain progress, prosperity and welfare.
29. I also take this opportunity to sincerely thank the management and officials of all government ministries and agencies, the armed forces and Cambodians from all walks of life for providing full support for government's policies and for actively participating in all reform efforts, the development, rehabilitation and reconstruction of Cambodia after going through many decades of destructive wars. These efforts aim at allowing Cambodia, before the first decade of the new century ends, to fully reclaim its destiny, be a real partner in regional and global affairs and be well on its way to becoming a truly free nation, free from want and poverty above all.
30. In conclusion, I extend to the distinguished Representatives of the donor community, all Members of the Royal Government of Cambodia and government officials here the five gems of Buddha's wishes.
31. Thank you for your kind attention and I am delighted to announce the closing of this Monitoring Meeting between the Royal Government of Cambodia and the Donor Community.