Donor Meeting Looks at Wide Range of Reforms

Logging contracts, judiciary reform and the investment law are among the topics that will be discussed today at a semi-annual donors’ meeting at the Council of Ministers.

Anti-corruption measures, transparency in public finance, customs administration and the court system will also be on the agenda. Topics will be based on priorities set in June by the government and the donor nations at the Consultative Group meeting in Tokyo.

Discussions may be held on the upcoming commune elections and accusations of political violence and the upcoming trial of former Khmer Rouge leaders.

These follow-up sessions formerly took place every three months, but it was agreed in Tokyo that there would be only one interim gathering this year before the 2002 donors’ meeting planned for Phnom Penh, probably in June.

Last year, donors pledged $615 million to Cambodia—about $100 million more than the government sought—even though some donors deplored the slow pace of judicial, civil service and anti-corruption reforms.

In December, donor representatives met with Prime Minister Hun Sen to let him know that they were disappointed by the lack of progress made since Tokyo on almost every issue except demobilization and the land law.

Various government branches have prepared reports to submit to the donors today; donors will arrive with their own assessments. The meeting, which is coordina­ted by the UN Development Program, will include representatives from the World Bank, the International Monetary Fund, the Asian Development Bank and about 15 donor countries.

Here is a summary of priorities scheduled to be discussed today:


Adoption of an anti-corruption law—A first draft law was introduced in 1994 and a new version resubmitted by a group of parliamentarians in 1998. The National Assembly has sent this draft to the government for comments, and is still waiting for a reply.

The issue of public officials being paid by businesses they regulate came up in March 2001 when Minister of Posts and Telecommunications So Khun acknowledged getting a monthly salary from Mobitel. A government spokesman said at that time that loopholes in the current laws made it unclear whether this was illegal.

In its Governance Action Plan (GAP) published in April 2001, the government said that an anti-corruption law would be presented to the National Assembly within a year. Such legislation is not on the National Assembly agenda for it next session, scheduled to begin after the Feb 3 commune elections. A code of ethics for public officials also was on the GAP’s list of goals to reach by this May.


Putting the  National Audit Authority to work while reorganizing customs administration—Shortly after the National Audit Authority was created, disagreement arose between CPP and Funcinpec members of the National Assembly when Ut Chhorn, chief auditor and a CPP member, appointed Chan Tany, a legal advisor to Hun Sen, as general secretary, and Lok Nheb as deputy.

The Authority was created last year as a non-political institute  which answers to the National Assembly. It has the power to audit all projects in the public or private sectors that receive state funding. The government stressed in its GAP that “the independence of the National Auditing Authority is a key for establishing financial integrity in the public sector.” The authority has been recruiting its staff and is expected to start operating this year.

Reorganizing all aspects of customs’ administration is described in the GAP as one of the government’s top priorities. Not only is it necessary to set up an international system to meet the standards of the World Trade Organization, which Cambodia hopes to join, but corruption in customs administration is often cited as a major obstacle to business development in Cambodia.

The government is in the process of computerizing customs operations to simplify the process and help eliminate corruption and smuggling. In the meantime, some business people say the practices of  under-the-table payments go on as usual.

The GAP mentions that a new customs code should be submitted to the National Assembly by May. It is yet not on the assembly’s agenda.

The Forest Law and the signing of an agreement by concessionaires—The draft of the Forest Law has been sent to the National Assembly. It has not yet received assembly committee review, and is not on the assembly’s agenda for this session.

The draft of the Community Forestry Subdecree went through what may be its final round of public consultation earlier this month. A final version may go to the Council of Ministers in late February or early March.

In mid-December, Prime Minister Hun Sen declared a moratorium on logging in concession areas until companies produce the forest management plan they were supposed to submit to the government by Sept 30.

Logging was supposed to end Dec 31. Throughout December trucks were observed feverishly hauling timber out of concession areas.

Annual permit requests are usually submitted and papers issued in late January or early February. Negotiations for this year’s permits have begun. The World Bank has asked the government to renegotiate some terms in the 25-to-30 year contracts signed with logging companies; it is not known whether this is currently taking place.

The demobilization program—The government reports it demobilized 15,000 soldiers in 2001. They included 3,180 commissioned officers, 6,449 noncommissioned officers and 5,371 rank-and-file soldiers. Many of them were either ill, disabled or elderly.

In addition, the government reports it has removed from its payroll 15,551 ghost soldiers and 159,587 ghost dependents for whom unnamed individuals were collecting paychecks.

In its 2001 Governance Action Plan, the government set a goal of reducing the armed forces to about 100,000 by the end of 2002. The defense budget for 2002 is $65.38 million, which is $5 million less than in 2001.

Last November, Hun Sen asked donors for an additional $42 million to complete demobilization. The government has so far obtained $18 million for the project.


Public Administrative Reform—The census of public servants who are not in the police or military forces has been completed. The information collected on each employee—such as name, education, qualifications, marital status and dependents—has been entered in a databank. Identification cards with a public servant’s name, photo, fingerprints and service have been issued to employees in Phnom Penh, and are in the process of being distributed in the provinces. The payroll list is now produced by computer.

In addition, a classification system with a salary scale for employees has been developed. Minister of Cabinet Sok An last month announced selective wage increases of 38 to 100 percent based on this new pay scale, starting with 1,500 employees this year and 500 employees in subsequent years.

The census uncovered 9,000 “irregular” individuals who were removed from the payroll, saving the government about $1.2 million per year.

Other projects in the works include giving more decision-making power to public servants outside of ministry headquarters in Phnom Penh, and offering more services regionally.


Procurement policy—The government admits in its GAP that the 1995 Subdecree on Public Procurement has not been enforced. Government contracts often are awarded directly to companies without any bidding or through irregular bidding procedures, and details of contracts are often not revealed.

As a first step to remedy the situation, efforts will be made this year to enforce the procurement subdecree in four ministries—the Ministry of Education, Youth and Sports, the Ministry of Rural Development, the Ministry of Health, and the Ministry of Agriculture, Forestry and Fisheries.


Judiciary and legal reforms—After his meeting with donor representatives in December, Prime Minister Hun Sen said more attention will be paid to judiciary reform because it lags behind other reforms in the country.

One court observer said that while nothing has really changed in the justice system, at least court clerks seem to use more discretion when they collect bribes. Other observers says they have noticed a slight improvement in the awareness by court staff and police officers of people’s rights.

Describing corruption as systemic, the government said in the GAP that a code of ethics for judges and a detailed judiciary reform plan would be ready by May.

Planned legal reform measures include developing models and procedures to help ministries develop comprehensive legislation; current draft laws tend to contain only general concepts requiring subsequent decrees and subdecrees to remove ambivalence.

Also planned is the creation of a master list of legislation being drafted, with priorities and deadlines, and regular publication of the official journal to expedite the release of new laws to the general public.


The Investment Law—The government has been caught between the International Monetary Fund, which demands a reduction of tax exemptions in order to raise government revenues, and business people who say Cambodia needs these incentives to attract investment and keep companies already operating in the country.

The government has been reviewing the Investment Law with these two goals in mind—increasing revenues and stimulating the business sector—and intends to submit amendments to the National Assembly by May.

The government is working on procedures that would ensure transparency and accountability in tax collection procedures, but businessmen complain that irregular requests for tax payments continue.             A report of the Cambodian Development Research Institute published in September showed that the garment industry had paid $70 million in official and irregular fees in 2000—an amount well above bureaucracy costs, a government official said.

In December, the Council for the Development of Cambodia warned 37 foreign companies that they would lose their licenses to operate if they did not properly explain why their projects were stalled. The CDC took this action based on a 1997 subdecree designed to prompt investors to launch projects without undue delays. The 37 companies obtained their licenses between 1994 and 1999.


The Land Law—Adopted last July, the Land Law was the end result of several years of drafting and redrafting and an extensive public consultation process. Subdecrees now are being written to define broad concepts within the law, such as the procedure to resolve land disputes.             Government employees, judges and attorneys are being briefed on the new law as part of an Asian Development Bank project.

A program is also underway to survey, register and enter in a databank all parcels of land in the country.  Financing is coming from the World Bank and donors.

These efforts are designed to remove the confusion about land rights and procedures that has caused thousands of Cambodians to lose their land. It’s too early to measure results.


Government funding for education and the social sectors—There’s more money in the 2002 budget for education and health care. Now observers are waiting to see how the money trickles down to actual programs.

The government intends to ask the Ministry of Health for monthly spending plans, budget allocations and actual disbursements from headquarters and provincial offices as part of a pilot reform project.

In addition, the government plans to convert budgeting in the Education and Health ministries so it is done based on entire projects, rather than allocating money based on line items within the ministry’s budget.


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