CAMBODIA DEVELOPMENT WATCH

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Boeung Kak Lake Lease Agreement
Some Questions for Discussion
1. Introduction
The planned developments around the Boeung Kak lease agreement recently made theheadlines in the media and it is well known that it has the potential to impact on the livesof thousands of households in the area of the lease agreement. The current lack of detailed
information on the proposed development plans prevents a good discussion between the
involved stakeholders: the community, authorities, the company and the NGOs working
with the community. However, the little information that is available on the leaseagreement raises several questions about the pattern, process and impacts of thedevelopment.
This article is not an in depth study and analyses but an over view of the questions andconcerns for further discussions such as: What are the development plans for the leased area? What is the objective?
 What is the legal legitimacy for the lease, given that Boeung Kak is public state property
and the lease is not in line with articles 15, 16, and 18 of the Land Law?
 Considering the multi dimensional impact of the proposed filling of the lake, an
Environmental Impact Assessment needs to be carried out in order to get a clear
picture of the impact of the proposed development.
 When and how will the citizens of Phnom Penh be consulted?
 What will the resettlement policy look like in terms of compensation, process, financial
arrangements and consultation with affected families and businesses?
Given the many issues and concerns this paper ends by providing a pro-poor alternative tothe private sector lease in which the Municipality of Phnom Penh gains financially andpolitically, and the local community is empowered and gets tenure security while it also
benefits the environment as the lake does not have to be filled.
2. Background
Boeung Kak Lake is situated in Khan
Daun Penh and Khan Toul Kork ofPhnom Penh. The lake is 90 hasurrounded with residential area,
commercial
activities
assmallbusinesses, restaurants, rental houses,
guest houses, hotels, embassies etc. The
total numbers of families andpopulations is not clear.
On February 6, 2007, the Municipality Tourist Site of Boeung Kak Lake (Photo by NGO Forum)of Phnom Penh (MPP) announced thatit had granted a 99 years lease for US$ 79,002,000 at 0.60 US$/sqm/year to a little known
private developer Shukaku Inc for development of 133 ha of Boeung Kak lake area

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including 90 ha of lake. According to the lease agreement 4,252 families in Sangkat Srah
Chak Khan Daun Penh will be affected.
Later the MPP announced that a private construction company named 7NG has proposeda plan to the MPP for providing alternative housing for thousands of residents due to beevicted from Phnom Penh’s Boeung Kak area1. According to the proposed plan thefamilies will be allowed to stay at current location for 4 years and will pay US$
0.64/day/family for four years to the company as a deposit amount. After four years, thefamilies will move to new houses and will pay an additional US$0.42/day/family for six
years and subsequently get the ownership of the house. The total costs of the new housewill therefore amount to US$ 1,854 measured in 2007 prices.
The alternate housing are said to be composed of 20m x 5m lots but there is no detailavailable about the location of the housing lots. The new housing will be provided with aroad, electricity, water, sewage system, a school, a hospital and a pagoda according to the
proposal. A representative of 7NG said his company is currently working with MPP on a
project involving more than 1000 ha of land which will be used to provide affordable
housing for the poor.
3. What are the objectives?
The primary question is to understand MPP objectives related to this lease agreement anddevelopment of Boeung Kak area. The announcement of the lease agreement did not
mention the objectives of the lease.
•
•
•
•
•

Is this development addressing the housing issue and for whom?
Is this an initiative to generate revenue for the MPP?
Is this an effort towards beautification of the city?
Is this to improve environment of the city?
Or are there other objectives related to this lease?

The objectives are important to understand development vision of the MPP.
Understanding the objectives will provide opportunities for various sectors and citizens tostrengthen MPP efforts for development and poverty reduction.
4. Land Law – Public State Property
According to Article 15 of the Land Law, water bodies,lakes, rivers etc are considered to be public state property.
Article 16 and 18 of sub-decree 129 ANK.BK on Rules
and Procedures on Reclassification of Public State
Properties and Public Entities, states that the leasing of
public state property must: 1) not exceed 15 years, and 2)
must not damage the property or change its function inproviding public services. In context of these two articles,
Boeung Kak is public state property and should not beleased for more than 15 years. Additionally, according to1

Cambodia Daily March 9, 2007

The View of Boeung Kak Lake
(Photo by NGO Forum)

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the agreement, the company is allowed to fill in 80 ha of lake out of 90 ha. Which means
this will totally change the function and nature as the lake will be transformed into the dryland. On this basis, lawyers and NGOs are considering this agreement illegal.
The lease allocation was approved first by the Council of Ministers (CoM). The conformityof legal aspects is the standard process of the authorities and it is justifiable to assume that
CoM and MPP did the same. So it is interesting to know from the Municipality of Phnom
Penh which laws provide the legitimacy to this lease agreement.
5. Master Plan of Municipality of Phnom Penh
The Municipality of Phnom Penh’s (MPP) Master plan describes six orientations for theapplication. One of the orientations is;
The safeguarding of the great influences: adoption by the municipal Land register of thedelimitation of the influences of the public domain for the passage of the great
infrastructures of roadway system, channels, the reserves of storm, the rivers and thelarge structuring equipment of the metropolis (airport, ports, railroads, logistic
platform, university, stages, great parks, ecological zones).
Comparing above orientation with the land use plan of Master Plan, we can see the masterplan is indicating protection of “reserves of storm” and “ecological zones” lakes and rivers
which includes Pong Peay lake and Boeung Kak lake. But now Pong Peay lake is alreadyfilled in. And current Boeung Kak area lease agreement is allowing to fill in on 80 ha oflake out of 90 ha. This is not in accordance with this master plan. Therefore it is not clear
what plan the Municipality of Phnom Penh is following?
Figure 1: Map of Master Plan for the development of Phnom Penh

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6. Transparency and Competitive Environment and Private Sector
The Royal Government of Cambodia (RGC) has a policy to encourage private sector for
development and its implementation can be easily observed in each sector of our economy.
However, Cambodia still requires more private sector investment for its development asstated in the National Strategic Development Plan 2006-2010 (NSDP). One importantelement of private sector led development is a competitive and transparent process whichallows multiple investors to compete to win a contract or agreement as this is an effective
manner for Government authorities to get good quality for a fair price, which is in theinterest the MPP.
Besides this, the governance section of the NSDP clearly states that the Royal Governmentis determined to "strictly adhere to competitive public bidding and transparency in allcontracts, leases or disposal of state assets" (bullet 4.12). So what criteria and process was
adopted to select Shukaku Inc for this lease provision? Why was the process not public andtransparent as required by the National Strategic Development Plan?
7. Free Market Economy and GovernanceIn contrast to other countries, the majority of the poor communities in Cambodia are legal
according to the 2001 Land Law. There are various types of owners and rentals in Boeung
Kak area ranging from residents to commercial businesses which can fall under various
types of ownership and occupancy rights. It is at the moment not clear how the quoted
number of 4,252 affected families is calculated and how various types of ownership andoccupancy rights are categorized among these families. There is need to clarify how thecompensation can be calculated in relation to:
1. the market value of the land by location
2. size of the occupied area
3. the type of housing structures; etc…
These details are important with respect to the protection of private property which isnecessary for any peaceful environment. It is generally accepted that weak documentationof land use and property is creating land conflicts at every level of society and that the richand powerful are grabbing land everywhere. Private property right is a basic element of
any free market economy. The families work hard, save money and successfully gainedsome property. If this property will be taken away by offering low value compensation
under force and pressure, they will loose trust in the system which is not in favor of longer
term development and a peaceful environment. Market forces should determine the value
and the dealings between the parties involved while the government's role is to provide apeaceful environment in which these market forces can play their role and stakeholders cannegotiate and deal peacefully.
In the case of Boeung Kak area how can MPP play this facilitating role of governance inwhich both the private company and the community can negotiate directly with each-otherwithout using pressure and force, and with respect to the free market principles?

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8. Environmental Impact Assessment (EIA)
Lakes, ponds and rivers are importantparts of Phnom Penh wastewater andstorm water drainage. Additionally, open
spaces in urban dense areas like Phnom
Penh are considered to be lungs of thecity. During rain, the water level in rivers
rises above the ground level of Phnom
Penh which makes it impossible for thedrainage to enter the river. For theinterval where the river water is above
Business Activities around Boeung Kak.
the level of the drainage system of the(Photo by NGO Forum)
city, the rain water requires spaces toretain for this time period. If this space for the retention of rain water will not be available(as would be the case when 90 percent of the lake will be filled up), Phnom Penh will be
flooded even when there is only little rain fall. This early flooding was also observed after
the filling up of Pong Peay. Besides preventing Phnom Penh from flooding, these lakes
provide natural treatment for the wastewater system of the city. Moreover, the open spacethat the lake is providing is considered to be part of the necessary "lungs of the city" thatare needed to clean the air. The observed increasing number of vehicles in Phnom Penhdemands more open space in the city.
The Boeung Kak Lake development plan will have multi dimensional impacts. These
impacts will not be limited to the Boeung Kak area but to the whole of Phnom Penh.
These kinds of project require an “Environmental Impact Assessment” (EIA) prior toapproval of the project. Since the agreement between MPP and Shakau Inc does not
mention anything related to an EIA and since there is no information available that any
company or authority carried out an EIA prior to the agreement, it seems that an EIA has
not been carried out. If this is the case, an EIA needs to be conducted in the short term by
an independent agency. In case an EIA has been conducted, the findings need to be madepublic as soon as possible.
9. Excess Load on City Infrastructure
There is not much information available about the development of Boeung Kak area. But
limited information is indicating housing for the rich and multi storey buildings. The richpeople are consuming more utilities such as electricity and water compared to middle andlow income families. Additionally, multi storey buildings mean more dense population andmore concentration of activities in the city. This kind of development ultimately puts more
load on the city infrastructure which is already overloaded like the city roads.
Existing roads in the city center are not capable of taking care of the current traffic load.
The current city infrastructure road, electricity, water supply, wastewater and storm
drainage etc are not capable to improve at the same rate as the rapid city development. Ith
Praing, secretary of state for the Ministry of Industry, Mines and Energy said the city
(Phnom Penh) will continue to experience a daily 40 megawatt shortage to the next two
years2. Currently the city is already experiencing traffic jam, electric load shedding forhours, flooding and other issues.
2

The Cambodia Daily Friday, March 30, 2007

CAMBODIA DEVELOPMENT WATCH

6City Hall has more development plans for Phnom Penh in addition to the Boeung Kak
development. These developments are not only related to land and investment but are
multi-dimensional projects such as infrastructure, traffic management, security etc andtherefore appropriate decisions on new developments includes consulting each and every
department involved. Surely the city hall knows this situation and the processes for
consultation involved. What citizens are interested to know is which departments are being
consulted? What are their views on the existing situation? What are their views on this
rapid development? What future plans are being recommended by these departments?
What measures and finance require the up-grade of existing infrastructure and services todeal with these developments? How and from where finance will be arranged?
10. Public Consultation
As this is clear from above discussion that this development has city level impact and it islogical to provide clear and detail information to the citizens at a large scale. In many
countries it is the normal practice to disseminate information to the citizens through print
and electronic media and invite citizens for their comments. The citizens have opportunity
to express their comments in various ways. A series of public hearings can assist to collectand analyse the plan. This will pave the way for a constructive dialogue and communication
among authorities and citizens and even among citizens themselves.
There are several concerns and rumors concerning the Boeung Kak plan. This is mostly
due to the limited available information about the plan and limited consultation. This city
belongs to all citizens and every citizen is in favor of development. But this requires efforts
to strengthen the constructive environment of communication and dialogue. Is it notpossible to invite MPP and the private company Shakaku Inc to present their plan in an
urban forum consisted of various circles of the city? Is it not possible that print andelectronic media assist City Hall to disseminate the plan to a larger population in Phnom
Penh and collection of their comments? Is it not possible that City Hall encourages “civilsociety” to disseminate and discuss the plan at various circles of the city? Is it not possiblethat MPP with assistance of civil society develop a public consultation and hearing process?
11. Resettlement Policy
Another important aspect of thedevelopment like Boeung Kak plan,
which will affect thousands offamilies, is a resettlement policy
which clearly defines the criteria andprocesses for the settlement to beevicted, compensation details andprocess, financial arrangements andconsultation with affected families
and businesses. Currently there is no
National Resettlement Policy. But the
Arm-force deployed for forced eviction and preventing
Municipality of Phnom Penh (MPP)
residents from gathering. (Photo by NGO Forum)
already experienced excellent examples of resettlement such as Apiwat Meanchey, Korklieng 1 and Korklieng 2 which were
supported by the donors and NGOs. The resettlement practices in these three cases have

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later not been replicated due to the two main reasons. Firstly, these practices nevertransformed in a policy, legal framework, institutional arrangements, capacity building anddelivery arrangements. Secondly, these relocation models did not provide alternate
sustainable financial arrangements which can replace the financial support provided by theNGOs and donors. Later when donors and NGOs became reluctant to provide financial
support to more relocations, there was no alternate financial arrangement for these new
relocations and communities were forced to live on a site with no or improper basic
facilities.
Past experiences are very important for learning if we are ready to evaluate our efforts open
mindedly. Looking at the previous successful relocation examples, what needs to be done
to establish a resettlement policy? What should be the conditions for eviction/relocation as
the last option for any development? How can the compensation/ relocation cost be
incorporated as an essential part of the development project as Boeung Kak development
plan? What should be the legal framework and institutional arrangements? What can be theprocess which can focus community participation as the main element?
12. Land Tenure Security for the poor communities
In May 2003, the announcement of upgrading 100 poor communities per year and tenure
security for the poor settlements by Cambodian Prime Minister Hun Sen was praisedinternationally and nationally by donors, NGOs and communities. Several donors,
International Non Governmental Organizations (INGOs) and Local NGOs (LNGOs) put
millions of dollars in upgrading of hundreds of settlements in support of thisannouncement. Now in March 2007, the same donors, INGOs and LNGOs are shockedwith the wave of evictions/relocations and are questioning the investment they have done
in hope for tenure security for poor communities.
It is important to note that the poor communities
around Boeung Kak also benefited from thisupgrading. Even the pilot project which became thebase for this upgrading initiative was conducted in Ros
Reay settlement of the same Sangkat Srah Chak which
is now leased to the private firm. These communities
were feeling secured due to two reasons. Firstly, they
assumed upgrading means acceptance of their right tolive on this site. Secondly, Boeung Kak is Public State
property and not supposed to be granted to private
sector. Now they are questioning if any law is favoring Building Structures around Boeung Kak Lake.
(Photo by Teang Tnaut Association)
the 99 years lease of Boeung Kak to the private sector,
then why did authorities not consider offering the lease to the local residents prior to theagreement with the private sector?
13. Amount for compensation
If we assumed that whole amount, US$ 79,002,000 million will be used for compensationof 4,252 that each family will get average US$ 18, 588. If we can consider US$400/ sqm(lower than market value) as compensation only for the land, the amount US$18, 588 is

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sufficient for only 46.47 sqm. If we add the value of structure addition to the land, thenthis amount not seems to sufficient for better compensation.
The agreement is not indicating total amount allocated for compensation. But agreement
mentioned that compensation amount will be paid from the deal amount US$ 79,002,000,
which means only a part of deal amount will be allocated for compensation. So what willbe the criteria and process for compensation? How this can be possible to compensate
affected families from such a small amount?
14. Better Revenue for MPP with “Pro Poor Development Approach”
According to the agreement, the total lease amount US$79,002,000 will be paid in 10 years
to MPP. Dividing same amount among 4,252 families the amount is US$18,579.96/family.
Taking span of 10 years this is US$1,858/family/year in current prices. One possible
option is to offer the same lease to the existing occupants who are most likely to beinterested in paying this amount. This alternative scenario would be good for MPP's local
and international image as it avoids evicting thousands of families. By offering lease it will
create a win– win situation to both the MPP and the current inhabitants as MPP can get
net same amount, providing tenure security to local occupants and getting “pro poor”
friendly image at local and international level.
Additionally, many donors will come forward to assist MPP plan to convert Boeung Kak as
symbol of “Development and Beautification” of the city with “Pro Poor Development
Approach”. There are various low tech and low cost options available for this. In Thailand,
there are several examples, in which community had taken the responsibility to clean canaland change the canal from black water to green water. Community can do the magic, but
the important question is how much we are committed to “Pro Poor Development
Approach” for “Poverty Reduction”.
More information, please contact:
Housing Rights Task Force:
Mr. Rashid Kharti
Tel: 012-472-909
Email: khatriab@yahoo.com

Mr. Phann Sithan
Housing Rights Task Force Secretariat
C/o Office:#54, Street 306,
P.O.Box: 1120, Phnom Penh, Cambodia
Tel/Fax: (855) 23 211 723
Office: (855) 23 215 590
Mobile: (855) 12 707 960
E-mail: cam.hrtf@gmail.com

CAMBODIA DEVELOPMENT WATCH

9The Cambodian National Budget and Development:
Translating the Policies into Action, Prioritize the Priorities!!

EXECUTIVE SUMMARY
NGO Forum’s Budget Monitoring Project analyzed Government’s commitment to its pro-poor policies
through allocations and disbursements of the national budget during 2006 and its allocations for 2007.
The analysis brings the following findings to the fore:
1. Allocations in the 2007 Budget Law are an improvement when compared to 2006 as there are
increased allocations for expenditure (current and capital) in certain priority sectors;
2. These increased allocations do however not necessarily translate into actual expenditure as can beconcluded from the 2006 expenditure data;
3. While expenditure on salaries and other current expenditures in the seven priority sectors have been
generally on target during 2006, disbursements for capital expenditure in these sectors have been
lagging;
4. Analysis of Government's spending reveals that the “non-priority” ministries/agencies overspent morethan US$ 90 million in 2006.
This article concludes with the observation that, the Ministry of Economy and Finance provides only limited
information on budget allocations and expenditures; a narrative that explains RGC's choices on the budget
is missing altogether. With this scarce information it is difficult to evaluate the "pro-poorness" of the 2007
Budget Law and NGOs call upon the Ministry of Economy and Finance to provide more data on
allocations and implementation and suggests that the 2008 Budget Law is accompanied with a detailed
narrative that explains Government's choices and priorities. Concerning the current 2008 Budget Law, theNGOs request the Royal Government to implement the budget according to the Budget Law and prioritize
its priorities.
INTRODUCTION
An exact definition as to what expenditures3 in the budget are "pro-poor" is not available;
however, there is a general consensus that expenditures that seek to stimulate small scale
agriculture, promote basic health care, support primary and secondary education, improveaccess to drinking water and improve sanitation fall into this category. Attempting to aligngovernment's policies and the pro-poorness concept above, the article examines theexpenditures of the 2007 Budget on the seven priority sectors set by the Royal
Government which are Health, Education, Women Affairs, Agriculture, Rural
Development, Public Works, and Labor & Vocational Training. Furthermore, the article

3
Within expenditures, two key terms need clear explanation—current expenditure and capital expenditure.
Current expenditure relate to payments for goods and services consumed within the current year such as wages,salaries, pensions, and stationary; Capital expenditure relate to payments assets that are used repeatedly in the
production process during more than one year. It incorporates the expenses such as construction, renovation,and major repair of buildings and replacement of equipment.

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assesses the credibility of the budget in the priority sectors and compares this with budget
implementation in “non-priority” ministries / agencies.
THE 2007 BUDGET LAW

Budgeted Capital Expenditure for 2007

62,31460,29997,7395,084

543,756
424,027

63,84083,682

110,407148,264

150,495
291,994

347,511402,599

Compared to the 2006 Budget Law, real capital expenditures in the 2007 Budget Law
increased by 25 percent,Figure 1. Allocations for Capital Investment in Priority Sectors '06 and 07'
which means that overall
in 2007 prices (in Million Riels)
there is more money
600,000
available for issues as
500,000
construction, renovation,
400,000
major repairs of buildings
300,000
and the purchase of
200,000
equipment.
Generally
100,000
this is seen as a positive
sign, as capital expenditMoH
MoEYS MoAFF
MoRD MoPWT MoLVT MoWA
ure is regarded as a driver
2006 2007of real development.
Sources: Budget Laws 2006 and 2007
However, as illustrated in figure 1, the picture for the priority sectors in the 2007 Budget
Law is mixed. Of the seven priority ministries, only three experiences an above averageincrease, one priority ministry receives a less than average increase, while another three see
their capital budgets for 2007 decrease compared to 2006. In nominal terms4, the 2007
Budget Law shows increases in capital expenditure the Ministries of: Health (+16 percent),
Education Youth and Sports (+94 percent), Agriculture Forestry and Fisheries (+34percent), and Rural Development (+31 percent) while the decreased allocations areprovided for the Ministries of: Labor and Vocational Training (- 95 percent), Public Works
and Transport (- 22 percent), and Ministry of Women Affairs (- 3 percent).
Although no detailed analysis can be made concerning the exact pro-poorness of theplanned expenditures in health, education, agriculture and rural development, the increased
allocations seem to be a step in the right direction. However, Government's intentions forthese increased allocations should be publicized in a narrative that accompanies the Budget
Law, in which the reductions in the capital budgets for the three priority ministries
mentioned above are also explained.

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Budgeted Current Expenditure for 2007

19,032
21,13034,20237,26058,52459,474

21,611
29,093

13,845
16,400455,260
546,000

268,802336,926

Although it is reasonable
Figure 2. Allocations for Current Expenditure in Priority Sectors '06 and '07
to expect that the annual
in 2007 prices (in Million Riels)
budget increase in the
600,000
seven priority ministries
exceeds the average level, 500,000
this is not the case for 400,000
the current expenditure 300,000
in the 2007 Budget Law. 200,000
Compared with the real 100,000
average current expenditMoH
MoEYS
MoWA
MoLVT MoAFF
MoRD MoPWT
ure increase of 14 percent,BL 06 BL 07
only four priority ministSources: Budget Laws 2006 and 2007
ries received more than
the average increase in current expenditure which are the ministries of: labour andvocational training (+ 35 percent), health (+25 percent), education, youth and sports (+ 20
percent), and women’s affairs (+ 18 percent). Receiving a less than average increase incurrent expenditure are the ministries of: public works and transport (+ 11 percent), ruraldevelopment (+ 9 percent), and agriculture (+ 2 percent).
Although only one third of the current expenditures compromises wages, the increased
allocations for labour and vocational training, health, education is seen as a positive
development as it hints at an increase in the number of service providers in these sectors
and/or better working conditions for the service providers.
A possible concern is the limited increase in current expenditure for the Ministries ofAgriculture and Rural Development which deserves an explanation by the Ministry of
Economy and Finance.

Credibility of the 2007 allocations
Although overall the 2007 allocations are seen as a positive step towards a better budget forthe poor, experience tells us that the allocations in the budget law may differ substantiallyfrom the actual expenditure pattern, especially for capital expenditure. To illustrate thispoint figure 3 below provides the shares of actual expenditure from the priority ministries
for both capital and current expenditure during 2006.

4
When an amount is quoted in “nominal terms”, it is not yet corrected for inflation. With an mount isquoted in “real terms”, inflation has been taken into account and the price has been adjusted accordingly.

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Figure 3 below clearly indicates that current expenditure (of which approximately one third
consist of salaries) was spent as outlined in the 2006 Budget Law, which gives reason for
optimism concerning the actual delivery of the higher wage bill (current expenditure) for
the Ministries of: Health, Education, and Labour and Vocational Training seen in figure 2.
For capital expenditure, theFigure 3. Implementation of the 2006 Budget for priority sectors
figure shows that all priority
200%
183%
Ministries, with the noticeable 180%
exception of the Ministry of 160%
140%
Education Youth and Sports, 120%
98%
103%
96%
99%
101%
94%
87%
81%
spent less than budgeted 100%
74%
80%
67%
during 2006.
Information
60%
49%
38%
40%
from the Ministry of Economy
20%
0%
and Finance on the reasons
0%
MoH
MoEYS MoWA MoLVT MoAFF
MoRD MoPWT
for this under expenditure
Current expenditure Capital expenditure(and over expenditure in the
Sources: Ministry of Economy and Finance, Budget Law 2006
case of Education) in anarrative expenditure report would be welcomed by the NGO community. The pattern ofunder-expenditure in figure 3 should be considered a warning that the increased capital
allocations for the Ministries of Health, Agriculture Forestry and Fisheries, and Rural
Development may not be translated in increased expenditure for these ministries. The
NGO Community would like to urge the Ministry of Economy and Finance and thesethree line ministries to work towards a 100 percent disbursement rate in these three priority
sectors.
GOVERNMENT'S COMMITMENT TO PRO-POOR POLICIESGranting a particular ministry / agency the label of "priority" raises the expectations that its
budgets are given precedence over "non-priority" areas. For instance, it is reasonable toexpect that budgets of "priority" ministries / agencies receive first priority in case there isadditional money available for the National Budget.
Table 1 below provides an overview of the top five ministries / agencies that spent a higher
share than budgeted in the 2006 National Budget Law on salaries, travel, small officeequipment etc. that encompass the category of current expenditure. It is clear from thistable that Government should provide explanations of why this top-five spent more than
25 million US Dollar on salaries, etc. while this money could have been spent on salaries ofteachers, health personnel, extension workers, which are officially labeled as "priority".

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Table 1: Top five "non-priority" overspending ministries/agencies in current expenditure in 2006
Ministries/Agencies

Overall Spending
Percentage(In nominal
figures)339%

In Million Riel
(In nominal
figures)

In Million US$(In nominal
figures)

21,838

5.3

191%

18,1044.4

173%

46,422

11.3

Ministry of Economy and Finance156%

21,920

5.3

Public Function Secretariat

143%

659

0.2

Ministry of Industry, Mines andEnergyMinistry of Interior-General
Administration
Council of Ministers

Total

108,943
26.5
Sources: Budget Law 2006, Budget Law 2007, Ministry of Economy and Finance

Table 2 provides the top five "non-priority" ministries / agencies that overspent on capitalduring the 2006, which is expenditure on buildings, construction of infrastructure, large
equipment etc. The table shows that there is considerable over expenditure (almost 65
million US$) in 2006, while the priority sectors generally receive less than budgeted, with
the notable exception of the Ministry of Education as shown in figure 3.
Table 2: Top six "non-priority" overspending ministries/agencies in capital expenditure in 2006
Overall Spending
Percentage(In nominal figures)

In Million US$(In nominal figures)

Ministry of Environment

1145%

15

Ministry of Interior

458%

14.7

Ministry of Justice

364%

2.6

Ministry of Economy and Finance

318%

4.3

Ministry of Land, Urbanization, andConstruction
Ministry of Industry, mines and energy

246%

4.3

244%

23.3

Ministries/Agencies

Total

64.2

Sources: Budget Law 2006, Budget Law 2007

The discussions on expenditure in "non-priority" ministries above clearly shows that
Government's commitment to pro-poor policies should be higher since the revealed overexpenditure in the "non-priority" sectors (approximately US$ 90 million) would have amuch greater impact on poverty reduction if they were spent on real priority sectors, suchas agriculture, rural development, health and education.

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CONCLUSION
The analysis in this paper is based on the 2006 and 2007 Budget Laws and informationfrom the Ministry of Economy and Finance on execution of the 2006 Budget. Together,
these sources only provide limited information on budget allocations and expenditures; anarrative that explains RGC's choices on the budget is missing altogether. With this scarce
information it is difficult to evaluate the "pro-poorness" of the 2007 Budget Law and wewould like to call upon the Ministry of Economy and Finance to provide more data on
allocations and implementation, and a detailed narrative that explains Government's
choices and the priorities for the 2008 Budget Law.
Although the available data is scarce, some general observation on the 2007 National
Budget and Government's commitment to pro-poor expenditures can be made.
Firstly, the NGO community would like to congratulate the Royal Government for its
efforts in increasing budget allocations in 2007, for some of the seven priority sectors.
Increased allocations in the 2007 Budget Law for capital expenditure in health, education,
agriculture, and rural development signal that more real investments in equipment,
construction, and renovation in these sectors will be made in 2007. Another developmentthat indicates a positive development is the more than average, increased allocations for
current expenditures (such as wages, pensions etc.) in the Ministries of Health and
Education.
Secondly, while so-called priority sectors (with the notable exception of education) spent
either close to the amount allocated in the budget law or significantly less, a number of
non-priority ministries overspent more than US$ 90 million without the Royal Government
providing any justification for this to the public. The NGOs call on the Royal Government
to provide an explanation for this over-expenditure in "non-priority" ministries.
Thirdly, for the current 2008 Budget Law, the NGOs request the Royal Government toimplement the budget according to the Budget Law and in case additional funds become
available we urge Government to prioritize its priorities and increase expenditures in for
instance health, education, agriculture, and rural development.
For more information
NGO Forum on Cambodia
Mr. Ou Sivhuoch, Budget Monitoring Program Project Officer
Tel: 023 - 214 429, Ext 107
Email: sivhuoch@ngoforum.org.kh

CAMBODIA DEVELOPMENT WATCH
ACRONYMS
BL: Budget Law
CDCF : Cambodia Development Coordination ForumMoAFF : Ministry of Agriculture Forestry and Fisheries
MoEYS : Ministry of Education Youth and Sports
MoH: Ministry of Health
MoLVT : Ministry of Labor and Vocational Training
MoPWT : Ministry of Public Works and Transport
MoRD : Ministry of Rural Development
MoWA : Ministry of Woman Affairs
NEP: NGO Education PartnershipNGO: Non-Governmental Organization
NGOF : NGO Forum on Cambodia
RGC: The Royal Government of Cambodia

15

CAMBODIA DEVELOPMENT WATCH

16

Some Selected Joint Monitoring Indicators from the 2007 CDCF
To be implemented and monitored in the period between the first and second meetings of the CDCF*

The below table is the list of selected 2007 Joint Monitoring Indicators (JMIs) which are related to the priority issues and concerns raised by**
the NGO community in the NGO Statement to the 2007 Cambodia Development Cooperation Forum (CDCF).
TargetAction Needed

NSDP Economic Sector Priorities
7. Implement and monitor a
1. Progressive implementation of the Strategy for Agriculture and Water,
partnership-based approach toas required by the NSDP:
agriculture and water sectora) Reaching agreement by the end of June 2007 on a Statement ofpriorities.
Principles to guide donors and Government agencies working the inagriculture and water sectorsb) Obtaining approval by MAFF, MOWRAM and donors on the terms ofreference for the design of the 5 National Programs under the SAW,
by July 2007c) Completing the design of two National Programs by the end of
December 2007, andd) Completing design of all 5 National Programs by the end of July
2008.

Responsible
Government
Institution

Concerned
TWG

MAFF
MOWRAM

TWG-AW

MLMUPCTWG-Land2. Improved donor and government coordination

8. Implement the legal framework
established by the Land Lawa) Ensure relevant stakeholders have up to date information on
activities by posting twice each year (at end June and end
December) on the TWGAW website an updated project databaselisting the donor and government activities in the agriculture andwater sectors.
1. To adopt RGC's Policy on Registration and Use Rights of Indigenous
Communal Land and pilot interim protective measures (identification,
mapping, classification and provisional endorsement of indigenous
land legal claims) to safeguard the indigenous community's land in
two provinces within the framework of provincial level state land
management committees and district working groups as per SubDecree #118).
2. To improve the livelihoods of the rural poor, i.e. 500 eligible
households are settled on social land concessions with livelihood
support and at least 10,000 hectares of suitable land confirmed asavailable for social land concessions

Resources Required
to Achieve Target
AmountSourceCAMBODIA DEVELOPMENT WATCH

17

TargetAction Needed

9. With the aim of stopping theloss of Cambodia's forest
resources, the legal frameworks
established by the Forestry Law
and in particular the Sub-Decree
on Economic Land Concessions
must be fully implemented at alllevels of Government agencies.
10. Take appropriate action toreflect the priorities of theFisheries sector to improve thelivelihoods of rural communities incommune, district and provincial
development plans as well as
donor funding levels.

1. Implement all provisions of the sub-decree on ELCs, including
establishing and making public log book of ELCs, including thoseissued at provincial level, and review a minimum of 5 economic land
concessions over 10,000 hectares, taking appropriate action
consistent with Chapter 6 of the Sub-Decree on ELCs.

Responsible
Government
Institution

Concerned
TWG

MAFF

TWG-F&E
TWG-L

MAFF

TWG-Fisheries

MRD

A sub-working
group is to beestablishedunder a relevant
TWG to be
identified

CAR

TWG-PAR

2. Rapid implementation across Cambodia of forest demarcation inaccordance with the sub-decree No. 53, dated 1 April 2005.
1. Cambodian Code of Conduct for Responsible Fisheries (CamCode)drafted by the end of 2007
2. Work with the government agencies/ revenue authorities and donors
to ensure the FiA is adequately funded including the revenue from thesector to carry out its mandate with reference to Article 14 of theFisheries Law.

3. Donors in fisheries use the planning, accounting and monitoring
systems of the Fisheries Administration to be in line with MTEF and
MBPI by the end of 2007.
NSDP Infrastructure Sector Priorities
14 Increase use of improved
Develop and adopt a rural water supply and sanitation (RWSS)
sanitation, hygiene and drinking
strategy and budget that is based on the official RWSS policy andwater supply, especially in ruralaligned to the NSDP
areas
NSDP Governance and Cross-Sectoral Priorities
15. Further develop the Public
1. Implement the approved "Joint Government-Donor Strategy for
Administration to serve people
Phasing Out Salary Supplementation Practices in Cambodia" by:better and to become an effective
a. implementing approved sectoral action plans; anddevelopment partner.
b. establishing Priority Mission Groups (PMGs), and PMG/Merit Based
Pay Initiatives (PMG/MBPIs) in MOH, and at least one otherministry/agency.
2. Improve pay and employment conditions in the civil service bydeveloping and implementing:a. a medium term strategy and action plan to enhance remuneration;
andb. a redeployment policy and action plan.
3. Design and implement an HRM policy and action plan to improve merit

Resources Required
to Achieve Target
AmountSourceCAMBODIA DEVELOPMENT WATCH
Target18
Action Needed

Responsible
Government
Institution

Concerned
TWG

and performance management by introducing an HRM Guide andfurther developing the Human Resource Management Information
System (HRMIS) for the Civil Service.

16. Establish a well functioning,transparent and accountable legal
and judicial system that protects
individual rights as defined in theConstitution

4. Enhance service delivery though developing a One Window Offices(OWOs) policy, legal framework and implementation plan, including
establishment of at least 5 OWOs across Cambodia.
1. LJRS Strategic Objective 2. Complete the drafting and approval of theremaining fundamental Laws (Penal Procedure Code, Penal Code, Civil
Code, Law on the Statute of the Judges, Law on Court Organization
and Functioning, Law on the Amendment of the Law on the
Organization and Functioning of the Supreme Council of theMagistracy).

MoJ

LJR-TWG

MONASRICOM

LJR-TWG

NCDD

TWG-D&D

NCDD

TWG D&D

NCDD

TWG D&D

MEF

TWG-PFM

2. LJRS Strategic Objectives 2 & 7. Review and finalise guidelines for thelegislative drafting process that draws on lessons from pastexperience. Guidelines should seek to inform externally mobilised TA,with an emphasis on building the capacity and ownership of therelevant Ministry’s legal unit.

17. Combat corruption

3. LJRS Strategic Objectives 7 & 4. Ongoing training and transparent
selection of judicial professionals to improve the supply of judicial
services and the functioning of the courts.
1. Finalize and approve Anti-Corruption Law, based on best international
practices.
2. Prepare an implementation plan to enforce and manage theimplementation of the Anti-Corruption Law.
3. Disseminate information on reported cases on corruption andconviction on semiannual basis.

18. Preparation made for full
implementation of the RGC's
Strategic Framework fro
Decentralisation andDeconcentration (D&D) reforms.

19. A more credible budget and4. Develop a clear policy framework on Access to Information.
1. Continue preparation and initiate broad stakeholder consultations on
the organic laws on democratic development at sub-national level
during Q4 of 2007.
2. National programme design process and modalities developed, agreed,
and resourced for implementation to begin in 2nd quarter of 2008.
3. RGC and development partners design the principles of engagement insupport of D&D reform in Cambodia.
Continue implementing the PFMRP by:

Resources Required
to Achieve Target
AmountSourceCAMBODIA DEVELOPMENT WATCH
Targetmore effective financial
accountability

19
Action Needed

Responsible
Government
Institution

Concerned
TWG

Resources Required
to Achieve Target
AmountSourcea) sustaining actions already implemented and completing theremaining key actions necessary for Platform 1;b) preparing the consolidated action plan for implementation of Stage
2/Platform 2), including to make recommendations on theendorsement of EITI; andc) continue monitoring impact through the agreed PFM Performance
Indicators.

NSDP Social Sector Priorities
3. Improved opportunities forprimary education
4. Increase the proportion ofdeliveries attended by skilled
health personnel in the public
sector to 45% by December
2007 (38% in December 2006)

6. Food security and nutrition
integrated into relevant sector
strategies

1. Increase the net enrolment in primary school (total, and by sex).

MOEYS

TWG Education

2. Increase the survival rate from grades 1 to 6.
1. Recruitment and deployment of at least 68 midwives for 68 healthcentres that do not yet have any midwife by the end of 2007

MoH

TWG Health

MoP

TWG-FSN

2. Provide salary incentives to midwives – an incentive based on thenumber of deliveries was adopted under the Inter-Ministerial Prakas of
the MEF and the MoH No 268, April 2 2007 and the adapted midwife
salary scales and compensation payments for professional related
health risks as proposed by MoH are to be endorsed at a full session of
the Cabinet of Ministers.
Under RGC leadership, a Strategic Framework to mainstream foodsecurity and nutrition is developed by TWG-FSN and endorsed byrelevant ministries.

CARD* The full list with Joint Monitoring Indicators can be obtained from Mr. Ngo Sothath, Development Policy Project officer of the NGO Forum on Cambodia. Please contact at sothath@ngoforum.org.kh** Full document can be downloaded from http://www.ngoforum.org.kh/Development/Docs/doc.htm