Your Royal Highnesses, Excellencies, Members of the Royal Government of Cambodia
Excellencies, Ladies and Gentlemen
1. Today, it is my great pleasure and honor to join you all, Excellencies, Ladies and Gentlemen, in this important National Conference on “Strengthening Good Governance for Poverty Reduction and Development” organized just right after the Consultative Group Meeting with the donors, which took place on 6-7 December. At that time, the donor community has promised to provide 504 millions dollar for 2005 per request of the Government to support its efforts.
2. Most importantly, the recent Consultative Group Meeting recognized that Cambodia is at the difficult crossroads in its efforts to develop and reduce poverty. In general, we have agreed that reform of governance in all sectors is the most urgent priority for Cambodia to move forward in order to speed up economic growth and reduce poverty, in particular, we have to focus on promoting good governance by fighting corruption, increasing transparency, accountability and responsibility, eliminating the culture of impunity, reforming Judicial and Legal system, public administration including decentralization and de-concentration as well as reforming public financial management.
3. In this regard, I would like to emphasize that this conference is an appropriate reaction of the Royal Government, which clearly represents our ownership and responsibility for the destiny and prosperity of our nation and people, including our accountability to the international community, who are always willing to participate in the rehabilitation and development of Cambodia.
4. As this conference will focus on the implementation and the formulation of action plans for all government institutions and all sectors related to strengthening governance and its link to poverty reduction and development, I would like to share views and provide recommendations as a guiding basis and direction for discussions for the next three days.
5. Only recently, we can speak with strong confidence that Cambodia has revived as a real nation which unites to stay out of conflicts and internal rifts happened in the past and step forwards with unity and democracy, with ambition and pride to appropriately fulfill its role in the international community for the prosperous future of Cambodia, the region and humanity as a whole. The 2003 general election was internationally recognized as a free, fair, peaceful and orderly conducted election. Although there were some delays, the Royal Government has finally been formed, and the throne was transferred in dignity, peace and good order. This once again shows that the People of Cambodia are mature enough in the process of making their decision properly and consistently based on democracy, consultation, and peaceful reconciliation. These are the most important factors for “Good Governance”.
6. Thus, at this time the People of Cambodia can look to their future with full optimism based on achievements that we have made, through national reunification, compromise, mutual tolerance, adherence to a long term national interest rather than a short term interest of political party, and through a strict implementation of socio-economic policy of the Royal Government.
7. However, opening up the horizon of a new hope for the future has not denied challenges that we have to exert efforts to overcome. The configuration of the region and the world has changed since the Asian Financial Crises. The change of economic aspect in East Asia, the rising uncertainties resulted from terrorism around the world, war and unrest in some part of the world, infected diseases, rise in oil prices, have tabled new issues of challenge for Cambodia. Even though Cambodian trade regime is strongly liberal up to regional standard, the obligations related to the economic integration in the region and the world, in particular the obligations within the ASEAN and WTO frameworks require many reforms in order to gain benefits and attain maximum prosperity for the country. In the face of tough competition in attracting foreign direct investment from abroad and Official Development Assistances (ODA), the progress of Cambodia at this stage is depend on our capacity to implement reform at all levels. In this sense, our biggest challenge is to strengthen administrative institutions and enhance governance, which is the main subject for the discussion in this conference.
8. The topic on the good governance is a hot issue both in Cambodia and in the international arena. It has been the subject for discussion almost everywhere, especially at the fora of international organizations such as the United Nations, World Bank, IMF, OECD and other big gatherings. Specifically, in Cambodia given a special circumstance of the present situation, this topic has become even more actual. As I have emphasized above, at the recent Consultative Group Meeting, both the Royal Government and major development partners including donors, civil society and private sector, all have considered “Good Governance” as a main key factor for the Economic Reform and Poverty Reduction.
9. In the context of development, “Good Governance” is the manner or ways of implementation and the use of authority to manage, the provision of public service and distribution of social and economic resources. Indeed, the Government plays a major role in society and economy. Besides the general role regarding management and administration, Government is a big economic agent that provides important public goods such as physical infrastructure, health and education services. Government is the one that make decision on social and macro-economic policy, which has direct impact on health and national economic competitiveness in the long term. Government makes decision on the reallocation of resources through monetary policy, taxation and budgeting. Moreover, government is the one who sets the “rule of the game” in the market by formulating legal framework and regulations to facilitate private sectors and all economic operations. Under all these processes, the quality of the policy and the general environment that the government adopted are undisputedly very significant. In addition, manner and ways that the government implements policy and new laws enacted are even more important. In short, there is a need for an appropriate policy and properly implemented.
10. From here, it is not hard to see the importance of good governance for the success of national economic development and poverty reduction. I would like to highlight a number of key points in order to promote good governance remained a core priority of development:
First, The current experiences of economic development have revealed many evidences, which clearly reflected the effect of governance on national economy. In many cases, negative factors of governance are the causes of loss in government revenue, loss in investment quality and public services, weak in state properties management, and diffusion of corruption. Those are the causes of losing public confidence on government; and reducing inflow of foreign direct investment and official development aid. In this regard, good government plays a very important role to mobilize domestic and international resources to attain development goals and ensure the efficiency of state institutions, equity and social justice that are important to strengthen social cohesion, stability and peace in the country.
Second, Honestly speaking, the prioritization of good governance by developing countries like Cambodia is an appropriate response to the concern of donors. Given that the budget of many donor countries are under heavy pressure, each donor has to pay attention on the efficiency of their aid utilization. Before providing aid, they need confidence and certainty that their aid is efficiently and effectively utilized in the right targets to improve productivity, stimulate growth and ensure social development; and the aid can be controlled and monitored in the manner of transparency and full accountability. Therefore, good governance has become an important benchmark for donor to assess and determine size and type of aid to poor recipient country like Cambodia. Another relevant point is that the donors observe the behavior of beneficiary countries in mobilize, manage and utilize their domestic resources before deciding to provide aid. If the beneficiary is corrupt, wasteful, and unable to mobilize and efficiently use their domestic resources, they would not provide aid or their money to the beneficiary.
11. Nevertheless, I would like to point out that good governance is the policy of the Royal Government, which we laid out in order to achieve the important national agenda: poverty reduction and sustainable development and equity. This policy does not intend to neither comfort nor satisfy anyone, but because we see the real and necessary need of Cambodia in strengthening good governance, and we have committed to bringing success to this policy even with or without aid. Moreover, although the policy has faced many obstacles and difficulties, the government has made some remarkable progress. Indeed, the eradication of anarchy in forestry, the increase in fiscal revenue, elimination of ghost soldiers and civil servants, and confiscation of illegal sales or occupation of land signified the concrete attack by the Government on corruption. These actions should be recognized and encouraged.
12. However, the Royal Government frankly admits the importance to continue to broaden and deepen governance reform, thereby producing actual outcome that can be monitored and measured. To my understanding, the most dangerous land mine on the road of Cambodian reforms is the good governance. To be short and easy to understand, weak governance hinders the healthy development of private sector; weakens government institutions; creates corruption; complicates legal system, procedures and administrative procedures; misinterpret and wrongly enforces the law; loses government revenue; utilizes government expenditure in wrong direction; and loses the efficiency and quality of public services. By the end of the day, investors and businessmen, international community and its people are going to lose confidence on government institutions and the country. All of these analogize to a severe cancer that needs to be operated if it exists in one’s body.
13. Clearly, while we emphasize on the importance of “good governance” in public sector, we should not forget the necessary requirement to build and strengthen “good governance” in private sector and in civil society. Indeed, “Good governance” in the three sectors is “oxygen” which is prerequisite for a healthy living society as the whole.
14. Through the “Rectangular Strategy”, the Royal Government adopted its precise economic policy agenda in which governance is the core or the backbone of the strategy, and by paying special attention on four important reform sectors: (i) the fight against corruption; (ii) legal and judicial reform; (iii) public administration reform including decentralization and deconcentration; and (iv) armed forces reform particularly military demobilization.
15. To combat corruption, we have to formulate a well and flawless law as well as establishment a mechanism to monitor corruption in order to ensure that the enforcement will result in fruitful outcome through minimizing as much as possible opportunity to engage in corruption, and encouraging public scrutiny especially through media that are professional and highly accountable. Therefore, we should continue to work carefully with all partners concerned in accordance with the existing rule of law. It is no doubt that when we consider the adoption of Corruption Law as a key step, we have to recognize also that capacity development to enforce the law appropriately and effectively is equally essential. In this regard, I would like to request all ministries/institutions present here to figure out together concrete measures, aimed at actively tackling the corruption, by proposing some concrete actions such as an improvement of administrative procedures, facilitation and modernization of management system, strengthening of public procurement, audit, and inspection, the abolition of unnecessary rules and regulations, and introduction of merit base system in civil service in order to reduce opportunity for corrupt practice etc.
16. The Royal Government adopted a strategy for legal and judicial reform in June 2003, aimed at enhancing basic rights and freedom, modernizing legal framework, improving the quality of legal enforcement, and relevance services, and strengthening judicial and institutional services. The short-term action plan (2004-2005) has been prepared with 33 priority activities under 7 strategic goals. The medium-term action plan is going to set another 27 priority activities that have to be achieved by 2008.
17. We established the Supreme Court of Magistracy and a secretariat to provide technical support. Since January 2003, salary of judges and prosecutors has been increased. The Royal School of Magistracy and Lawyer Training Center are actively operating with support from France. On the other hand, we are in progress to establish specialized court to handle business and minority cases. The draft law on judge statute and the law on the establishment and functions of the court are going to submit to the national assembly in 2005.
18. The Royal Government has given high priority to an establishment of main legal elements in order to facilitate the fulfillment of Cambodia’s obligation within the WTO framework. Moreover, judiciary reform is very important for regaining confidence of investors through enhanced application of intellectual property law and contract law. In a simple way, improved access to legal and judiciary services of the poor is the most important to address their concerns related to social inequality and vulnerability and to enhance community confidence on rules of law and quality of people’s livelihood as well as poverty reduction. In ensuring success, we need administrative capacity and enormous resources. In this sense, I urge all development partners to consider more technical and financial supports for this initiative, especially for the implementation of action plans that we adopted together.
19. As part of rationalization strategy of the public function, the Council for Administrative Reform (CAR) has carried out six studies to gather information and prepare analysis based on other decisions in order to push payroll and employment reform as well as to strengthen public function management. These studies include: (i) enhanced public service, (ii) defined valuating condition of labor market, (iii) review of process and operations, (iv) enhanced remuneration for support of job functioning, (v) enhanced job for support of service delivery and (vi) strengthened labor force management in the public function.
20. Relating to payroll policy of the public servants, the Royal Government’s action plan will be prepared based on two principles: (i) the focus on a balanced approach of payroll for politicians, public servants, military and security personnel and soldiers, (ii) payroll reform must be sustainable within the tax framework. In this regard, the Royal Government pledges to increase annually the payroll by 10 to 15%. At the same time, existing resource will be used to fill priority needs through mechanisms such as the Priority Mission Groups (PMG) and merit based incentive program etc.
21. Allow me to briefly elaborate our strategy for some priority sectors that have strong repercussion on governance and economic growth:
22. Even in the second term, the RGC has brought about progress in macroeconomic management by ensuring macroeconomic stability, strengthening financial and banking institutions and implementing tax reform measures, ensuring continuity of this context is always the constant and main concern of the RGC. The end of the Multi-Fiber Agreement in 2005 can negatively affect growth and employment in medium term. This factor, in hand with low level of development in agriculture sector due to low productivity, lack of physical infrastructure, especially irrigation system, narrow and unstable market as well as unfavorable natural conditions have constituted challenges of concern for future vision of national economic growth. In response to these spiky challenges, the RGC must adopt rigorous measures in order to enhance Cambodia’s competitiveness in attracting source of resources from abroad, both ODA and investment from the private sector, especially through governance promotion, improved investment environment and trade facilitation. This also includes reduction of operation cost, administrative spending and expenses on labor etc.
23. Another major challenge is increased revenue mobilization to address increased development needs. “Governance in revenue collection” needs further tightening through implementation of preventive measures against revenue losses, especially anti-corruption measures within revenue collection authorities, prevention and cracking down smuggling, measures for the strengthening of customs and tax administration as well as measures to amplify transparency in state property management, especially concession contracts management.
24. Within the expenditure framework, the RGC must continue to implement prioritized expenditure rationalization policy by providing more fund to potential sectors for growth and poverty reduction in the longer term, such as increasing public investment capital in rural infrastructure, especially water supply for farmers and through increasing accountability of spending unit.
25. The RGC is well aware of the role of the public financial management in development and poverty reduction. For this reason, we have jointly prepared with development partners and in the spirit of ownership and high sense of accountability on the Public Financial Management Reform Program (PFM) since the new government in the third legislation was not formed yet. This program was officially launched on the 05th of December 2005.
26. Cambodia’s past achievements and rigorous implementation of all policies clearly highlight challenges and tasks to be addressed and completed ahead. We must further improve governance if we want to resolve poverty issues. Moreover, we must uphold the ownership spirit in development process and of all of our achievements among the people at all levels of social strata.
27. Indeed, policy reform in all sectors is the nature and essence of our development. We have to recognize that in hand with good policy implementation, rigorous and consistent implementation is even more important. We must improve cooperation and information sharing among and within ministries/institutions. Our challenge is to ensure efficient operation of governance system in order to increase access to knowledge and modern technology.
28. Furthermore, reform implementation does not require only political will but also sufficient financial and human resources. At the same time, one must also consider political and cultural context as well. I acknowledge the great scale of efforts and challenges ahead of us. This requires participation from all stakeholders and not only those who only observe and criticize.
29. In order to address these challenges, we need a public function system that bases on merit of our public servants. We undoubtedly need efficient government who can actively respond to the needs of rapid changing international environment. We also need strong and active private sector and civil society that jointly develop the country by strictly adhering to good governance principles both public governance and cooperation and private governance.
30. To conclude, all that I have mentioned today undoubtedly highlight tasks ahead for us to carry out in order to transform Cambodia from a country suffered from all kind of hardship and poverty rooted issues to a stronger situation that leads us to progress and to achieve our true potential. Indeed, as I often mention that Cambodia has not just begun reform works since the last few years. We have actively started reform in all sectors since the end of the 80s, especially macroeconomic reform program and comprehensive structural reform and integration of Cambodia’s economy into the region and the world. The situation in those days was much harder then what Cambodia is facing today. Yet, the RGC gradually achieved positive results, especially liberalization reform and economic stabilization that has underpinned rapid economic and social progress within two decades from the 90s till now. Above all, all of our steps always reveal new challenges. Nevertheless, we clearly see our future and we have adopted measures to take Cambodia to a better stage of progress for Cambodian people.
31. Before I conclude, I would like to take this opportunity to thank the management and public servants at all levels of the Council of Ministers as well as other line ministries/institutions, who have contributed to the facilitation and organization of this national conference. In particular, I would like to welcome and encourage the Your Royal Highnesses, Excellencies, Ladies and Gentlemen members of the RGC to participate in the discussion on governance issues, which directly relate to your own institutions. The discussions should be straightforward, open and with constructive manner in order to jointly explore approaches and strategies to resolve and improve governance within the framework of and for the success of the implementation the “Rectangular Strategy”.
32. As I have mentioned in the first meeting of the Council of Ministers on the 16th of July 2004 that “we cannot move with normal track”. We all must exert full efforts to successfully speed up the implementation of political platform, strategy and reform measures that we have adopted among ourselves for the best interest of Cambodian people and nation. In this spirit, even before the new government took over the office, we gathered consideration and attention on resolving governance issues that is the core of the “Rectangular Strategy”. Within this framework, priorities are formulated in particularly in two sectors namely public financial management and private sector development. The RGC considers that the two sectors are most important for enhanced sustainable growth in the long term and poverty reduction of our people. Throughout this conference, I expect that we will be able to shed the light in all other sectors and adopt clear action plan with concrete indicators to monitor and measure progress.
33. I would like to urge a special attention on measures that the RGC has jointly adopted with development partners at the CG Meeting, which are the indicators for measuring effectiveness of reform implementation in Cambodia. May I stress again that reforms are not only beautiful words or to please anyone. Reform is the question of “Life and Death” of Cambodia. Reform is the implementation showing concrete progress that provides positive benefits to the people and the nation. In this regard, today discussion is not only a good show or another accumulation of documents for pleasant reading. It is also not a forum of complaints and fault pointing. But importantly today’s discussion is to strengthen the will, unity and shared commitment in defining concrete and progressive measures that we all go for rigorous implementation with spirit of high responsibility for the benefit of our beloved nation and country.
34. Finally, I deeply thank your attention and wish you all Your Royal Highnesses, Excellencies, Ladies and Gentlemen, success in this conference as expected.