Your Excellency, Samdech Prime Minister,
Royal highness and Honorable Colleagues in Government,
Your Excellencies and Representatives,
Distinguished Guests,
Ladies and Gentlemen,

Over the past few months, the CAR Secretariat has had extensive discussions with individual partners and with the PAR working group to explain the reform, reach agreement on the next steps and mobilize necessary resources. I believe there is agreement to accelerate pay and employment reform and on the CAR work program for 2003 in this regard. The CAR and its partners are now finalizing the specifics of projects to be launched as soon as possible.

In a spirit of partnership and transparency, the Royal Government circulated a rather extensive series of documents used to plan and manage the reform. They cover such topics as

• the strategy, the current situation and key priorities actions;
• an updated progress report;
• an overview of the CARS work program for 2003;
• a TA requirement matrix;
• an outline of external partners involvement.

In addition, the CAR circulated a short document addressing most frequently asked questions to clarify aspects of the pay and employment reform of interest to our partners.

The PAR Working Group’s "Benchmark Status Report", a compendium of comments by CAR partners takes due note of progress and underlines issues which are important to the success of the reform supporting the Royal Government policy objectives, particularly those relating to poverty reduction. It essentially shows that we are on target to meet the benchmark set at the last CG for the Administrative Reform although delays were incurred in mobilizing the necessary funding. Now, the study program is poised to start in earnest.

Pay and employment reform is a strategic aspect of the National Program for Administrative Reform from the outset. Indeed early-approved initiatives were designed to overhaul the pay and classification regimes. We all agree that accelerating pay and employment reform is a key to success and that the solution will involve difficult political and policy choices about the composition and size of the workforce, and the level and sources of resources to be made available. The CAR work program for 2003 including the study program being launched with the support of the World Bank, the UNDP, France and Canada, is about informing the government on options and their implications.

Please allow me to stress a few points we consider important in the design of the Strategy to Rationalize the Civil Service and our actions to date which, I think, will help to understand the reform and better appreciate its complexities.

1. From the very start, the SRCS was developed within the approved Fiscal Framework and the wage envelope was considered a given. The strategy is articulated along three sets of considerations: the needs, the current situation and available resources. The sustainability of the reforms is vital.

2. The pay and employment reform adopted by the Royal Government in October 2001, as part of the SRCS, seeks to raise the basic pay of the vast majority as much as possible to levels sufficient to meet costs of living and to meet urgent priority needs to attract, retain and motivate qualified personnel. It also seeks to maintain the size of the Civil Service at current levels and accommodate urgent needs particularly in Education.

3. The government had envisaged to do more to increase salaries but was advised to limit options to those that could be financed within available known means. Thus the innovative approach adopted: a remuneration package made of a basic salary and a set of allowances targeted at priorities (teachers, senior management for example). The PMG program will usefully complement these efforts in support of priority missions at the operational level.

4. The changes that have been introduced do the maximum possible to be sustainable out of the government own resources. Significant investments over and above the planned Fiscal Framework and MTEF, will be required to facilitate the transition in reconfiguring the Civil Service and to accelerate the pace of pay reform.

5. The Royal Government has urged repeatedly that everything be done to turn rapidly the Civil Service into a potent partner in the development of the country, including raising salaries, in ways that are sustainable, that respect relativity among state officials and employees, and that enhance ownership. The study program being undertaken by CAR and its partners is to inform on how best to proceed now that core elements are in place. Time is short. We look forward to reaching agreement on urgent projects before mid-February and to launching them urgently, thereafter.

6. The Royal Government set out to overhaul remuneration in the Civil Service using a prudent, conservative approach taking the planned salary envelope as a given. We can only welcome the willingness of our partners to investigate the ways and means of a more pro-active approach that would align resources to needs.

7. We all recognize the complexity and urgency of the reform’s next steps. However, the most difficult problem will be to secure adequate financing up-front. Experience shows that initiatives such as those being envisaged but inappropriately funded, often are counter-productive and unduly disruptive.

Please allow me to address briefly some of the issues raised in the context of the PAR Working Group in the last few months.

• We just completed the first year of the strategy with great success. Naturally, lessons have been drawn and instruments and tools will continue to be improved. Ongoing and new well-targeted assistance is necessary.

• The Expenditure Framework will reflect needs associated with pay and employment once the studies are completed and decisions are made. Both in 2002 and 2003, the National Budget covers the costs of planned remuneration incentives.

• We all agree on the end. It is more a matter of practicality in the Cambodian context. It is also a matter of not upsetting achievements relating to peace, security and socio-economic stability.

• In pay reform, the timeliness of payments is as important as the payment itself. Bottlenecks and inefficiencies will be resolved.

• The implementation of the PMG program will start before the end of February, once the management framework is in place and ministries and reform councils have been fully briefed.

• We are all striving to improve the quality of our partnerships and communications. This can only be done in a context of trust and in the respect of Cambodia reality and interests.

The most frequently ask questions document we circulated addresses general and technical issues regarding pay and employment reforms, of interest to internal and external partners.

Samdech Prime Minister, Excellencies, ladies and gentlemen

Now that key foundations to reforming the Administration are in place, attention has turned to 1) strengthening management tools further; 2) accelerating pay and employment reforms; 3) significantly improving service delivery through such tools as deconcentration and the use of alternative service delivery mechanisms including the use of One-Window Services; and, 4) building capacity including HRD and implementing the Priority Mission Groups Program .

In closing, I would like to quote from the NPRS referring to the Administrative Reform.

" The needs are clear – quality public services when and where needed and effective implementation of laws and regulations, foundations to poverty reduction and social development. The means are also clear – they include a transformed public administration, closer to the people, more effective, accountable and transparent."

Thank you very much for your kind attention.

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