Your Royal Highnesses,
Ladies and Gentlemen,
Today, it is my great pleasure to join you all in the launching of the 2006 Poverty Assessment, which has been prepared by the World Bank over the past 6 months. On behalf of the Royal Government of Cambodia (RGC), may I congratulate the World Bank on the successful completion of this very important document!
At the same time, I am really excited by the results of the recent Cambodian Socio-Economic Survey, which shows that poverty in Cambodia has fallen by 10-15 percent between 1994 and 2004. If based on the 1993 survey which covered 56% of Cambodia’s territory, there has been a rapid decline in poverty levels from 39 to 28 percent. This implies that there was a decline of at least 1 percent every year as expected by the RGC. Moreover, per capita daily consumption of the people has increased by 32% in real terms.
Politically, this assessment can help clarify the misperception by some international and national circles who believed that Cambodia’s robust growth over the past decade did not contribute to poverty reduction in the country, and that the RGC’s determined efforts in implementing comprehensive and in-depth policy reforms, strongly supported by our development partners, did not produce significant results in reducing the poverty. Thus, before the release of this assessment, the possibility in attaining the Cambodian Millennium Development Goals (CMDGs) was dominated by pessimistic views, and the political commitment and efforts of the Royal Government and all the development partners were undermined by this unfounded perception.
In addition to the change in perception, this Poverty Assessment would give a boost to the Royal Government’s and Development Partners’ efforts over the past decade for choosing the right ways in developing our country. Thus, our active efforts have indeed resulted in fruitful outcomes, though potentials have not been fully realized. On this ground, there is room for us to improve our performance in the future. Therefore, we should not be overwhelmed by our past performance, but shall double our efforts in order to achieve better results in light of our vast existing potentials.
All these require us to carefully review our past decade policy and implementation as well as to efficiently adopt corrective and/or additional reinforcing measures. In response to this need, the RGC adopted the “Rectangular Strategy”, which is now being vigorously implemented. Moreover, we have completed the formulation of the “National Strategic Development Plan 2006-2010”, which clearly states strategic objectives, policies and specific measures including the need for investments and the mechanisms for resource allocation in order to successfully implement this important plan. I believe that the Report on Cambodia Poverty Assessment 2006 will provide much more value added to the efforts in ensuring the perfection, comprehensiveness, appropriateness and accuracy of the Royal Government’s policies and strategies to speed up the poverty reduction process.
Furthermore, this positive result prompted me to set another ambitious objective of moving Cambodia out of a Least Developed Country (LDC) status by 2020. I know that this objective is of great ambition! However, with our recent achievements and the strong commitment of the Royal Government and Cambodian people at all walks of life in implementing our own adopted policies and with the active and generous support from our development partners, I am convinced that this objective is not an illusion, but it is attainable.
Taking this opportunity, I would like also to thank the bilateral and multilateral donor community for their contribution and proactive approach in helping Cambodia to move out of poverty and to promote sustainable and broad-based economic growth.
I would like to thank the World Bank, especially Mrs. Nisha Agrawal and her Cambodia’s Team, for preparing this excellent report.
The Royal Government will take the results of this assessment seriously. Poverty reduction is always at the core of all the Royal Government’s development policies and strategies, especially its “Rectangular Strategy” which targets to promote economic growth, generate full employment for Cambodian workers, enhance social equality and justice as well as strengthen efficiency of the public sector through implementation of in-depth and comprehensive reform programs.
As I have mentioned above, it is my hope that the Poverty Assessment will guide us in our future actions in halving the poverty level in Cambodia as set by the Millennium Development Goals.
The most important development for Cambodia and Cambodian people over the past decade is the change in attitude and virtue as well as the tolerance and national reunification policy, which become our philosophy and critical path for peace, progress, prosperity and sustainability in Cambodia. Realizing peace and stability in Cambodia is the most important achievement of the Royal Government of Cambodia in recent years. Without stability, there can be no development or progress. Thanks to strengthened peace, stability, national reconciliation, democracy respect for human rights and human dignity as well as the efforts in sustainable and equitable socio-economic development, Cambodia has gained in confidence and is ready for its quest toward a bright future. The people of Cambodia can now foresee an optimistic and hopeful future.
Indeed, all options that we have adopted and the development milestones that we have achieved reflect the seized opportunities and positive contributions by all of us for laying the foundations of development in the decades to come. Now is time to choose options and take difficult steps decisively and cautiously with self-confidence and determination.
Now, let me turn to elaborating some priority areas of the Royal Government in accelerating poverty reduction.
We have surely seen without a doubt that the overall policy message is that peace and international recognition have made possible trade, investment, rapid growth and relatively rapid poverty reduction. Cambodia has made good progress towards meeting the CMDG target of reducing poverty to half its 1993 level by 2015. Within this context, the National Strategic Development Plan provides a clear framework for pro-poor Government policies over the next five years.
The “Rectangular Strategy” and NSDP have adopted policies to widen the pattern of economic growth so that the poor gain more from each point of GDP growth. International experience suggests that, with such policies, an acceleration of the rate of poverty reduction is possible.
Within this framework, the first priority is to create the conditions that allow agriculture to grow as fast as industry and services have grown. The growth and poverty reduction that has occurred over the last ten years were felt firstly and most strongly in the towns. Garment exports and tourism have created jobs in Phnom Penh and Siem Reap Provincial Town (and also to a lesser extent other towns) – but have not created many jobs or opportunities in the countryside, where 91 percent of Cambodia’s poor now live.
Analysis of the 2004 survey data clearly shows that small farms are much more productive than large farms. Small farms not only employ more people than large farms, they also generate greater production given the same amount of land. Creating policies and programs that help small farmers to produce and market their crops should be the priority for economic growth and poverty reduction. In this context, I think that a clear study on the existing structure of agriculture models in Cambodia and the sector comparative advantage in international market, and the lessons learned from international best practices, especially those of neighboring countries in the region which have similar conditions as Cambodia’s and successful in agricultural development, are important to the formulation of Cambodia’s agriculture strategy. I hope that the World Bank and other development partners will support the Royal Government in this work.
In order to resolve this issue, the social land concession program is thus very important. Identifying non-functioning economic concessions and supporting the orderly redistribution of this land to landless farmers would transform non-productive land into productive land, solving both social and economic problems. The project for Land Allocation for Social and Economic Development (LASED) – which aims to help local administrations develop capacity in implementing the Social Land Concessions Sub-decree – needs to be implemented fully and effectively.
The Government needs to continue on schedule with transparent, decentralized and efficient implementation of systematic land titling. Our experience in the 80s and 90s shows very clearly that if farmers lack clear title and cannot be confident about holding on to their land, they hesitate to invest in improving the productivity and profitability of their land. Thus, granting safety on land ownership increases agricultural productivity significantly.
With resolving the land disputes, the building of rural infrastructure for irrigation will change the traditional ways of cultivation that is dependent on rainfalls, the “unpredictable power of nature”, thus helping farmers overcome their production risks. Moreover, improving roads – and reducing the costs levied for moving goods along these roads – will then help them get their crops to market.
The poor depend critically upon access to “common property resources” such as forests and fishing waters. Once communities are granted use rights over these resources, they then need to be helped to develop the local management structures that will allow them to use these resources sustainably to reduce poverty over the long term.
More broadly, the Government needs to ensure that its policies and institutions foster rather than impede economic growth. Enactment of Government commitments to reform of trade facilitation procedures will ensure that Cambodian businesses can export and import their goods easier and faster without paying for excessive regulation – and associated informal costs – that makes Cambodia less competitive, and less attractive to investors, than its neighbors. At the same time, the Royal Government will intensify its efforts in improving the entrepreneurship and developing the SMEs.
In the area of public service delivery, the Government has made significant advances in primary school enrolment and primary health services, particularly preventive health services. More progress will require improvements in the quality of education and the affordability of health care. The Royal Government will also commit to an adult literacy campaign. Those who can read and write have far greater options for making a living. In general, reducing illiteracy would improve household incomes and accelerate economic growth.
To achieve improvements in the delivery of all these poverty-reducing and growth-supporting services requires that public money is efficiently allocated and effectively spent. Teaching Cambodia’s youth, supporting irrigation investments, and maintaining national and rural roads all ultimately depend on a well functioning public financial management (PFM) system. The Royal Government has embarked on an extensive reform of its PFM system and some progress has been noted since I launched the program in December 2004. I hope that implementation will now be accelerated, given that all the prerequisites are in place: political commitment, managerial and technical ownership, improved staff incentives, internal Government’s coordination mechanisms; donor coordination mechanisms; and funding.
Reducing poverty more quickly will also require that expenditure policy supports the most efficient allocation of resources. The resources of the Royal Government are scarce, and efforts need to be made to reallocate spending from lower priorities to higher priorities, particularly reducing the administrative overhead in government and reducing spending on the general government administration sector, while increasing spending on roads and irrigation. Indeed, increasing spending must go hand in hand with priorities of our overall plan and strategy.
At the same time effectively managing and spending public resources requires that Cambodia’s civil servants have the right incentives to do their jobs. Cambodia needs qualified and effective civil servants who report to schools, health centers, and offices for a full day of work, at all levels of service delivery. We are now developing a new approach to address these problems. The Merit Based Pay Initiative (MBPI), which is currently operating in the Ministry of Economy and Finance, is an official government program that rewards civil servants with higher pay while also requiring a merit-based management and performance system. Civil servants are selected to participate based on their merits in a competitive process. Those selected and those who perform well will stay in the program. Those who do not perform will be removed from the program. We shall learn from this pilot program, while seeking the possibility to expand the opportunity to other government’s ministries/institutions.
Clearly this Assessment will have the most critical influence on how Cambodia can accelerate its development and reduce the poverty. Thus, allow me to again congratulate and appreciate the World Bank for the Assessment and its support for the further poverty reduction and development of Cambodia.
Moreover, I would like also to thank all our development partners who have exerted their utmost efforts to support Cambodia’s rehabilitation and development process in their respective areas of interest and competence. I very much look forward to more in-depth and comprehensive partnership and cooperation.
Finally, I wish you all the five gems of Buddhist blessing.