Project Number: 38421 Loan and/or Grant Number August 2010

Kingdom of Cambodia: CREST Project - Sanitary and Phytosanitary Standards Phase 2 Subproject

Project Administration Manual

Contents ABBREVIATIONS  

I.  PROJECT DESCRIPTION 1 

II.  IMPLEMENTATION PLANS 3 A.  Project Readiness Activities 3 B.  Overall Project Implementation Plan 4 

III.  PROJECT MANAGEMENT ARRANGEMENTS 6 A.  Project Stakeholders – Roles and Responsibilities 6 B.  Key Persons Involved in Implementation 6 C.  Project Organization Structure 7 

IV.  COSTS AND FINANCING 9 A.  Detailed Cost Estimates by Expenditure Categorya 11 B.  Allocation and Withdrawal of Grant Proceeds 11 C.  Detailed Cost Estimates by Financiera 14 D.  Detailed Cost Estimates by Outputs/Componentsa 13 E.  Detailed Cost Estimates by Yeara 14 F.  Contract and Disbursement S-curve 16 G.  Fund Flow Diagram 14 

V.  FINANCIAL MANAGEMENT 18 A.  Financial Management Assessment 18 B.  Disbursement 19 C.  Accounting 16 D.  Auditing 16 

VI.  PROCUREMENT AND CONSULTING SERVICES 22 A.  Advance Contracting and Retroactive Financing 18 B.  Procurement of Goods, Works and Consulting Services  C.  Procurement Plan 24 D.  Consultant's Terms of Reference 26 

VII.  SAFEGUARDS 35 

VIII.  PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 36 A.  Project Design and Monitoring Framework 36 B.  Monitoring 38 C.  Evaluation 39 D.  Reporting 33 E.  Stakeholder Communication Strategy 33 

IX.  ANTICORRUPTION POLICY 39 

X.  ACCOUNTABILITY MECHANISM 40 

XI.  RECORD OF PAM CHANGES 40 

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Ministry of Industry Mines and Energy (MIME) as Executing Agency and Ministry of Health (MOH) and Ministry of Commerce (MOC) as Implementing Agencies are responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. At the request of the Government, consultants will be selected and administered by ADB in accordance with its Guidelines on the Use of Consultants by the Asian Development Bank and its Borrowers. ADB staff is responsible to support implementation including compliance by MIME, MOH and MOC of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Grant Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Grant agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Grant Agreement, the provisions of the Grant Agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

ABBREVIATIONS

ADB = Asian Development Bank EA = executing agency IA = implementing agency ICB = international competitive bidding ISC = Institute of Standards of Cambodia MEF = Ministry of Economy and Finance MIME = Ministry of Industry Mines and Energy MOC = Ministry of Commerce PAM = project administration manual PED = promoting economic diversification QCBS = quality- and cost-based selection RGC = Royal Government of Cambodia SGIA = second generation imprest accounts SME = small and medium-sized enterprise SOE = statement of expenditure SPS = sanitary and phyto-sanitary standards

I. PROJECT DESCRIPTION

A. Rationale, Location and Beneficiaries 1. The support being provided under the Promoting Economic Diversification (PED) Program which is related to the objectives of this Sanitary and Phyto-Sanitary Standards (SPS) Subproject are twofold: first, to continue to enhance the supply of quality SPS related services to the private sector including internationally recognized standards and SPS related testing services in Cambodia, and second, to assist small- and medium-sized enterprises (SMEs) upgrade quality of food product and management SPS related technologies so that firms can compete in the domestic market and as a platform for competing in the international market, one driver of economic diversification. B. Impact and Outcome 2. The impact of the PED Program is an expanded and diversified private sector. By the end of 2015, the PED the program is expected to have increased investment and economic diversification through more robust competition in domestic markets, lowered regulatory compliance costs, and better investor protection; increased exports and diversification of products through private sector access to better quality SPS services and technology; and reduced customs trade facilitation costs. The outcome of the PED Program will be improved business environment where the private sector operates efficiently and effectively. This will be reflected in improved competition policy framework and institutionalized regulatory review systems in Government that promote better appreciation of the costs and benefits of regulations and greater transparency, strengthened SPS management system, increased Government’s capacity to assess trade policy for Cambodia, and addressed the backlog in World Trade Organization (WTO) compliance and legal notifications. C. Outputs 3. Output 1: SPS Legal Framework Implementation This component will build on achievements under the first phase and support key ministries to implement the Food Safety Prakas on roles and responsibility being endorsed by the concerned ministries. This will involve supporting the work to develop regulations and codes of practices for enforcement. Other activities under this component include: (i) start the advocacy process relating to the Food Policy and Law, particularly with respect to proposing options for the food quality system to be implemented in long term and (ii) upgrading the Ministry of Health (MOH) legal framework to substantiate its food safety roles with the appropriate legal instruments. 4. Output 2: Enhance Capacity of SPS Service Providers. This component will build on accomplishments in phase 1 and support capacity development of the Ministry of Industry, Mines and Energy (MIME) laboratory (ILCC) to implement its action plan to become commercialized by 2013 (policy triggers in Subprogram 2 and 3). This will include assisting the ILCC gain internationally recognized ISO 17025 certification and mutual recognition for a full range of microbiology (food and water) and chemical (heavy metals, pesticides, preservatives and colorants) test results, including pesticide residue analysis, staff training, and establish corporate governance at the ILCC. 5. Output 3: Capacity Development at the Institute of Standards of Cambodia (ISC). This component will continue to assist ISC (i) to complete the process to become an internationally accredited conformity assessment body; and (ii) where possible to become

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commercially-oriented. 6. Output 4: Enhance SPS Market Surveillance and Enforcement Capability. This component will enhance capabilities of relevant SPS enforcement agencies to carry out agreed legal mandates in an efficient, effective and transparent manner. Two key activities will be carried out in this component.

(i) Retail market surveillance for pesticide residues. Pesticide residues in food are considered a major obstacle to Cambodia's access to international market for its processed food products. This component will work with Camcontrol to enhance capacity to survey the market and address this issue. Specifically the Subproject will commission a survey of pesticide residues in fruit and vegetables in the market place to identify the magnitude of the problems, where problems exists, with testing undertaken in an international recognized ISO 17025 accredited regional laboratory. In parallel component 2 above will provide assistance to enhance Camcontrol's laboratory capability in testing for pesticide residues in foods and to gain ISO 17025 accreditation for those tests. This component will also assist with developing and implementing a traceability system for tracking back pesticide problems to the source. Finally the component will work with Camcontrol to design develop and implement a consumer awareness program for market surveillance.

(ii) The Ministry of Health’s Food Safety Bureau (FSB) basic food hygiene and sanitation certification program. Circular 0421 (August 2009) provides the MOH authority to issue kitchen/restaurant hygiene certificates. MOH has begun pilot training programs in Phnom Penh. Activities under this component will include: (i) Training of trainer programs and training FSB/MOH staff in the provinces; (ii) Undertaking a base line survey of catering establishments in targeted towns; (iii) Developing further sanitation and hygiene regulations; (iv) Supporting a voluntary logo/certification scheme in conjunction with consumer/tourist awareness campaigns; (v) rapid test equipment procurement; and (vi) design and implement a consumer awareness program for food safety in restaurants and catering supporting awareness of the certification scheme.

7. Output 5: SME Improved Access to SPS Technologies. This component will establish a pilot matching grants fund to assist SMEs with a proven track record in the food processing sector with a matching grant to upgrade their SPS-related product quality and management processes that would assist them with enhancing competitiveness in the domestic market and the international market. The matching grant would be up to 50% of the SMEs upgrading project cost with a cap at $30,000. The approval of SME submitted technical proposals would be carried out under a Matching Grants Committee established under the Subproject and comprising of a total of five representatives from the EA (Director General of the General Department of Industry, MIME), an IA (1 person), the private sector (2 persons) and academia in the field (1 person). Under the committee, there will be a technical secretariat chaired by the SPS-2 Subproject team leader (in the first of the Subproject period), MIME representative, and a third party expert in the field. Total matching grant fund would be $750,000 plus $80,000 for administration of it including establishing website, communications strategy, events and mentoring gatherings etc).

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Months Indicative Activities 1 2 3 4 5 6 7 8 Who is responsible

Advance contract arrangements x ADB

Establish project implementation arrangements x MIME

ADB Board approval x ADB

Grant signing x ADB/MEF

Government legal opinion provided x MEF

Government budget inclusion request X ADB

Grant effectiveness x RGC/ADB ADB= Asian Development Bank, MEF = Ministry of Economy and Finance, RIA = regulatory impact assessment, RGC = Royal Government of Cambodia. Source: Asian Development Bank.

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B. Overall Project Implementation Plan

Indicative Activities 2010 2011 2012 2013 A. DMF 4 1 2 3 4 1 2 3 4 1 2 3 4 Output 1: Legal framework Implementation Activity 1.1: Develop implementation plan

Activity 1.2: Support development of code of practices of relevant SPS agencies

Activity 1.3: Support for regulatory improvement/development

Activity 1.4: Advocacy and discussion paper on Food Safety legislation

Output 2: Enhance Capacity of SPS Service Providers

Activity 2.1: Assist with implementation of ILCC action plan to commercialize

Activity 2.2: Purchase laboratory equipment

Activity 2.3 Procure services of an internationally recognized accreditation service provider for ISO 17025 for a range of tests including pesticide residue testing

Activity 2.4: Assist a second lab produce action plans for capacity development and ISO accreditation

Activity 2.5: Workshops to discuss SPS developments

Activity 2.6: ILCC technical staff training

Output 3: Capacity Development at Institute Standards Cambodia

Activity 3.1: Develop project implementation plan

Activity 3.2: Support for process standards development at ISC

Activity 3.3: Complete ISC accreditation as a conformity assessment body at ISC

Activity 3.4: Produce and start implementing action plan for commercialization of ISC

Component 4. Enhance SPS Market Surveillance and Enforcement Capability

Camcontrol

Activity 4.1: Procure services of an internationally recognized institution and accredited ISO lab to carry out pesticide residue survey and residue testing.

Activity 4.2: Design, develop and implement consumer awareness program for market surveillance

Ministry of Health

Activity 4.3: Procure services of an internationally recognized service provider to assist MOH in implementing its restaurant and catering certification and inspection program.

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Activity 4.4: Design, develop and implement consumer awareness program for food safety

Component 5: SME Improved Access to SPS Technologies

Activity 5.1: Establish Matching Grants Committee, governance structure, website, and application materials

Activity 5.2: Implement first phase of matching grants fund

Activity 5.3: Implement second phase of matching grants fund

B. Management Activities Procurement of office equipment and software Selection and Engagement of Consultants Advertisement/screening of candidates Contract negotiation Other Reports, communications, and translation Inception report, including detailed schedule Midterm report Regular progress reports Draft final report Final report Final workshop Project completion report

ISC = Institute Standards of Cambodia, MOH = Ministry of Health, SME = small and medium-sized enterprise, SPS = sanitary and phyto-sanitary. Source: Asian Development Bank.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities • Executing agency

MIME Coordinate subproject implementation with the IAs, carry out administrative and fiduciary support, and support both Government and ADB reporting requirements on the progress of subproject. A project implementation unit will be established within the EA. To chair the matching grants committee.

• Implementing agency 1 MOH To implement their certification and inspections

programs in restaurants and catering establishments.

• Implementing agency 2 MOC To coordinate with subproject to implement market

surveillance program • ADB Administer the subproject including selection and

engagement of consultants.

B. Key Persons Involved in Implementation

Executing Agency MIME Officer's Name: Meng Saktheara

Position: Director General Telephone: +855 23 Email address: meng_saktheara@mime.gov.kh

Office Address: 45 Preah Norodom Boulevard, Khan Daun Penh, Phnom Penh, Cambodia

ADB

Division Director Staff Name: Jaseem Ahmed Position: Director, Financial Sector, Public Management and Trade Division (SEFM) Telephone No: +632 632 6455 Email address: jahmed@adb.org

Mission Leader Staff Name: Kelly Bird Position: Senior Economist, SEFM Telephone No. +632 632 5214 Email address: kbird@adb.org

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C. Project Organization Structure

8. Project Management. MIME will be the Executing Agency (EA) for the Subproject whilst MOC and MOH will the Implementing Agencies (IAs). MIME will use the same arrangements as under SPS-1 Project. The private sector development sub-steering committee on Manufacturing and Small and Medium Enterprises (PSC) which will be responsible for coordinating the implementation and sustaining the Subproject with the Ministry of Commerce (MOC) (through Camcontrol), MOH (through Food Safety Bureau) and relevant line agencies involved. An inter-ministerial project implementation unit (PIU) will be established within the EA. The PIU will oversee the coordination of key policy reforms under the PED program such as the SPS prakas and establishment of the SPS coordination mechanism in government. This arrangement will minimize transactions costs and provide government-wide synergy as MIME houses the ISC and the industrial laboratory. Vide diagram 1a below:

Figure 1a: Project Structure

EA = executing agency, IA = implementing agency, ISC = Institute Standards of Cambodia, MIME = Ministry of Industry, Mines and Energy, MOC = Ministry of Commerce, MOH = Ministry of Health. Source: Asian Development Bank.

Private sector development sub-steering committee on SME

- Chaired by MIME

MIME (EA) MOC (IA) (Camcontrol)-Component 4a

MOH (IA)

- Food Safety Bureau Component 4b

ISC Component

3

General Department of

Industry Components 1, 2

and 5 Inter-ministerial PIU (within EA)

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8. Matching Grants Committee. Output 5 is the matching grants activity. SMEs operating in the agro-processing sector will be eligible to apply for a matching grant to upgrade product and or management processes to achieve improvement in SPS (food safety) standards. The governance structure is depicted in diagram 2. A matching grants committee (Committee) would select the recipients based on completed application and business proposal. The Committee would be chaired by the Director General of the General Department of Industry, MIME. One representative from an IA, two representatives each from the private sector and one form academia would sit on the Committee. A technical secretariat would screen applicants to ensure it meets the published criteria and evidence of ownership and business proposal with the technology supplier prior to forwarding to the Committee. The SPS-2 Subproject team leader would head the technical secretariat in the first half of the subproject period and then transfer the chair to MIME. A MIME representative and a third party expert in the field would be on the secretariat. The criteria for the matching grants and details of the governance structure will be developed during SPS-2 Subproject mobilization. A complaints and grievance mechanisms will be developed. The complaints mechanism will use the existing MIME mechanism developed for SMEs. Procedures for handling grievances would be developed. In addition, the SPS-2 Subproject would establish an informal Mentors’ Forum: a network of successful business persons that could provide mentoring advice to the successful SME grant recipient (recipient). The recipient would sign a grant award contract with the Project setting out any conditions for the use of the grant and milestone payments. The SME would sign a separate contract with the supplier of services. Disbursements would be done through ADB to the consultants to the SME grant recipient (see figure 3b). Payment would only be made once the evidence of grant award milestones have been met. The total budget for the grants is estimated at $750,000. Maximum grant is $30,000 or 50% of the total cost of the business proposal whichever is lower. Hence a minimum of 25 grant recipients are target during the project period. Administration costs are estimated at $80,000 and include establishing the website, public dissemination of the grants program, logistics for coordinating the Mentors Forum, among others. The matching grants output will provide female entrepreneurs equal access to the matching grant by setting a quota of 45-45% of recipients must be SMEs majority owned by females. The administration of the matching grants output will be equally split between ADB and MIME. ADB will administer 50% of the total expenditure in the first 12-18 months of the SPS Subproject (phase-1 of the matching grants output). MIME will administer the remaining 50% of the total expenditure in the second half of the Subproject period (phase-2 of the matching grants output).

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Figure 1b: Structure of Matching Grants Output

9. Period of Implementation. The SPS Subproject will be implemented over a period of 3 years. Project activities are scheduled to commence in April 2011 and be completed by March 2014.

IV. COSTS AND FINANCING

10. A capacity development project estimated at $2,600,000 is proposed to be provided on a grant basis from ADB’s Special Funds. The Government will finance $215,000 equivalent through in-kind contributions of counterpart staff, other facilities, and all taxes and duties. The cost estimates are summarized in Table 1 below.

Matching Grants Committee Chaired by MIME with reps from

private sector (2) and academia (2)

SME applicant

Technical Secretariat (TS) Comprise of SPS Subproject team leadera, 1 rep from MIME and 1 rep from a research institute

SME proposed contract with SPS related technology supplier

SPS Subproject website – download application SPS Subproject technology consultant – for consultation on application

Select grant recipient

Screen applicants based on criteria

SME grant recipient contracts a supplier

Mentor Group – informal network of successful business

persons in Cambodia to mentor grant recipients

SPS Subproject

team – provide TS

with advisory assistance

MIME = Ministry of Industry, Mines and Energy. Source: Asian Development Bank. a\ Subproject team leader would chair the TS during phase-1 of the matching grants output. MIME would chair the TS in the phase-2

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Table 1: Summary of Cost Estimates ('000)

Item Total Cost

% of Total Base Cost

A. Base Cost 1. Consultants 880 32.2

2. Equipment (standard)a 170 6.7 3. Training and capacity buildingb 1270 47.1 4. Project Management Costsc 290 10.8 5. Others (Taxes, duties and contract negs) c 20 0.7 Subtotal (A) 2,630 97.6 B. Recurrent costs 65 2.4 Subtotal (B) 65 2.4 Base Cost (A+B) 2,695 100.0

B. Contingencies 120 4.5 Subtotal (C) 120 4.5 Total (A+B+C) 2,815 104.5

a Includes the cost of 10 desktop computers, 3 printers, and 3 scanners for activities at MIME, MOH and MOC, and diagnostic analysis equipment for the MIME laboratory.

b Includes provision for 8 training seminars/workshops (60 persons each) per component, exposure visits, course training for ILCC staff, procurement of rapid diagnostic tool kits for MOH.

c Includes counterpart contribution such as accommodation and facilities, and recurrent staff costs. d Ceiling on taxes and duties paid from Subproject grant proceeds is $15,000. Contract negotiation expenses covered

under the grant up to $5,000. Source: Asian Development Bank.

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Table 2: Detailed Cost Estimates by Expenditure Category ('000)

Item Total Cost

% of Total Base Cost

A. Investment Cost a 1. a. Remuneration and per diem (international) 730.0 26.0

b. Remuneration (national) 90.0 3.3 c. Travel (international and domestic) 50.0 1.9 d. Reportsb 10.0 0.4 2. a. Equipment (standard)c 30.0 1.1 b. Laboratory equipment d 90.0 3.3 c. Laboratory materials 50.0 1.9 3. a. In-house training 20.0 0.7 b. Workshopse 60.0 2.2 c. Exposure trips and ILCC staff technical trainingf 60.0 2.6 d. ISO accreditation 50.0 1.9 e. Pesticide residue survey and consumer awareness

campaign 150.0 5.6 f. Restaurant and catering certification and inspection

programg 100.0 3.7 g. Technology matching grants 830.0 30.8 4. Project Management Costs 0.0 a. Office Accommodation and Facilities 150.0 5.6 b. Administrative Support 140.0 5.2 5. Others (Taxes and contract negs) 20.0 0.7 Subtotal (A) 2,630.0 97.6B. Recurrent Costs 0.0 1. Salaries 65.0 2.4 Subtotal (B) 65.0 2.4

Total Base Cost 2,695.0 100.0C. Contingencies 120.0 4.5 Subtotal (C) 120.0 4.5 Total Project Cost (A+B+C) 2815.0 104.5

a In mid-2010 prices. b Includes translation services (3,950 pages of document @ $10 per page). c Includes the cost of 10 desktop computers, 3 printers, and 3 scanners for activities at MIME, MOH and MOC. d Includes diagnostic analysis equipment for the MIME laboratory ($150,000). e Includes provision for 8 training seminars/workshops (60 persons each) per component. f Exposure visits to regional food safety and standards body. It also includes short term formal course training for

technical staff of the ILCC. g Includes procurement of rapid diagnostic tool kits for MOH ($30,000). Source: Asian Development Bank. A. Allocation and Withdrawal of Grant Proceeds

(i) General 11. The table under this section sets forth the Categories of Goods, consulting services and other items of expenditure to be financed out of the proceeds of the Grant and the allocation of amounts of the Grant to each such Category (hereinafter called the Table). (Reference to "Category" or "Categories" in this section is to a Category or Categories of the Table and reference to "Subcategory" or "Subcategories" in this Section is to a Subcategory or Subcategories of a Category).

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(ii) Percentages of ADB Financing 12. Except as ADB may otherwise agree, the items of the Categories and Subcategories listed in the Table shall be financed out of the proceeds of the Grant on the basis of the percentages set forth in the Table.

(iii) Reallocation 13. Notwithstanding the allocation of Grant proceeds and the withdrawal percentages set forth in the Table 3,

(a) If the amount of the Grant allocated to any Category appears to be insufficient to finance all agreed expenditures in that Category, ADB may, by notice to the Recipient, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amount of the Grant which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and

(b) if the amount of the Grant then allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by notice to the Recipient, reallocate such excess amount to any other category.

(iv) Disbursement Procedures 14. Except as ADB may otherwise agree, the Grant proceeds for financing Goods, consulting services and other items shall be disbursed in accordance with the Loan Disbursement Handbook. (v) Imprest Account: Statement of Expenditures

(a) Except as ADB may otherwise agree, the Recipient immediately after the Effective Date shall cause (i) the Subproject Executing Agency to establish a subproject imprest account in Dollars at a commercial bank acceptable to ADB. The initial amount to be allocated to each of the subproject imprest accounts will be based on the estimated expenditures to be financed from the subproject imprest account for the first 6 months of subproject implementation, or 5% of the Grant amount, whichever is lower. The Subproject imprest account will be established, managed, replenished, and liquidated in accordance with ADB's Loan Disbursement Handbook, and detailed arrangements as agreed between the Recipient and ADB. The disbursements from the Subproject imprest accounts will comply with the Recipient's disbursement tracking requirements.

(b) ADB's statement of expenditure procedures may be used for reimbursing eligible expenditures and liquidating of advances to the subproject imprest accounts. The maximum payment for any individual items using these procedures is $10,000 equivalent per individual payment.

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Table 3: Allocation and Withdrawal of Grant Proceeds Proposed

Allocation ($'000) Category Name Category % of ADB Financing

1. Consultants

Output 1 180 100% of the total expenditure Output 2 270 100% of the total expenditure Output 3 270 100% of the total expenditure Output 4 60 100% of the total expenditure Output 5 100 100% of the total expenditure 2. Equipment Output 1 — Output 2 b 145 100% of the total expenditure Output 3 10 100% of the total expenditure Output 4 10 100% of the total expenditure Output 5 20 100% of the total expenditure 3. Capacity

Development etc

Output 1 30 100% of the total expenditure Output 2 35 100% of the total expenditure Output 3 125 100% of the total expenditure Output 4 250 100% of the total expenditure

Output 5

830 50% of the total expenditure – administered by ADB

50% of the total expenditure – administered by the EA

4. Miscellaneous operating costs

Output 1b 30 100% of the total expenditure Output 2 30 100% of the total expenditure Output 3 30 100% of the total expenditure Output 4 10 100% of the total expenditure Output 5 40 100% of the total expenditure 5. Contingency Output 1 24 100% of the total expenditure Output 2 24 100% of the total expenditure Output 3 24 100% of the total expenditure Output 4 24 100% of the total expenditure

Output 5 24

50% of the total expenditure – administered by ADB

50% of the total expenditure – administered by the EA

6. Contract neg Output 1 5 100% of the total expenditure

TOTAL 2600 — = no data available. a For outputs see paras 3-7. b Includes taxes and duties estimated at $15,000. Source: Asian Development Bank.

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Table 4: Detailed Cost Estimates by Component and Financier

— = no data available. Source: Asian Development Bank.

ADB Project Outputs ($) Government Project Outputs

Item Cost $

% of Cost Category I

II

III

IV V $

% of cost Category I II III

IV

V A. Investment Costs

1. Consultants 850 850 100 180 270 270 60 100 — — — — — — —

a. Project Management 290 140 48 30 30 30 10 40 150 48 30 30 30 20 40

b. Capacity Development and Training 1270 1270 100 30 35 125 250 830 — — — — — — —

2. Equipment and Materials 200 200 100 — 140 10 10 20 — — — — — — —

3. Others (taxes and contract negs) 20 20 100 20 — — — — — — — — — — —

Subtotal (A) 2630 2480 94 260 465 435 330 990 150 6 30 30 30 20 40 B. Recurrent Costs

1.

Salaries and Counterpart Staff Allowances 65 — — — — — — — 65 100 13 13 13 14 12

Subtotal (B) 65 — — — — — — — 65 100 13 13 13 14 12 Total Base

Cost 2695 2480 91 260 465 435 330 990 215 9 43 43 43 34 52 C. Contingencies 120 120 100 24 24 24 24 24 — — — — — — —

Subtotal (C) 120 120 100 24 24 24 24 24 — — — — — — —

Total Project Costs (A+B+C) 2815 2600 91 284 499 459 354 1014 215 9 43 43 43 34 52

% Total Project Costs 100 100 91 10 18 16 13 36 9 0 2 2 2 1 2

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Table 5: Detailed Cost Estimates by Year

Source: Asian Development Bank.

Total Cost Item 2011 2012 2013 2014

A. Investment Cost 1. a. Remuneration and per diem

(international) 375 200 100 25

b. Remuneration (national) 50 50 10 10 c. Travel (international and domestic) 20 15 10 5 d. Reports 3 4 2 1 2. a. Equipment 30 0 0 0 b. Laboratory equipment 0 90 0 0 c. Laboratory materials 17 17 16 0 3. a. In-house training 14 6 0 0 b. Workshops 20 30 10 0 c. Exposure trips 50 20 0 0 d. ISO accreditation 30 20 0 0 e. Pesticide residue survey 100 50 0 0 f. Restaurant and catering certification

and inspection program 50 30 20 0

g. Technology matching grants 230 300 300 0 4. a. Project Management Costs 0 0 0 0 b. Office Accommodation and Facilities 50 50 50 0 5. a. Administrative Support 40 50 45 5 b. Others (Taxes and contract negs) 13 7 0 0

B. Subtotal (A) 1112 934 563 46 1. Recurrent Costs Salaries 20 20 20 5

Subtotal (B) 20 20 10 0C. Total Base Cost 1122 954 573 46 Contingencies 0 30 90 0 Subtotal (C) 0 30 90 0

Total Project Cost (A+B+C) 1122 984 663 46

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E. Contract and Disbursement S-curve

Figure 2: Disbursement

0

200

400

600

800

1000

1200

2011 2012 2013 2014

Year

Dis

burs

emen

ts

Source: Asian Development Bank.

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Figure 3a: Fund Flow Diagram

Asian Development Bank

Consulting Services (one procurement package)

Equipment: standard equipment, laboratory equipment materials and rapid testing tool kits.

Training: Workshops, Seminars, exposure visits and course training for technical staff.

Contingency

Miscellaneous administrative expenses

MIME = Ministry of Industry, Mines and Energy. Source: Asian Development Bank.

Remuneration, travel, reports

MIME

Grant Imprest Account

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Figure 3b: Fund Flow Diagram for Matching Grants

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

16. An assessment of the country’s financial management systems has been carried out to improve the understanding of fiduciary risks and determine appropriate fiduciary arrangements for the purpose of the Promoting Economic Diversification Subprogram 2 (PED-SP2). This assessment was based on the sector work of ADB’s proposed PFMRD, as well as the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) for 2003 and the Country Procurement Assessment for 2004, both led by World Bank. These assessments identified core areas to address with development partners’ support. The IFAPER determined that the fiduciary risk in the use and management of public funds was high. As a consequence, the Government developed and began implementing a medium-term public financial management reform program (PFMRP) from 2004 to 2012, supported by development partners. This program increases the amount of public resources allocated to planning and management to overcome the significant weaknesses in the basic systems and processes for budget preparation, execution and control, reporting, and oversight. It comprises a series of four sequenced platforms, of which platform one was completed in 2007 and platform two beginning in 2008 with the rollout of public financial management reforms to the line ministries. ADB,

SME grant recipient

Phase -2 of the matching grants – administered by the EA

Asian Development Bank

Notes: Phase-1 covers the disbursement of the first 50% of total expenditure of the matching grants output. Phase-2 covers the next 50% of the total expenditure of the matching grants output. Asian Development Bank.

SPS Subproject provides grant to the successful recipient based on the grant award contract and evidence of payments to suppliers.

Supplier to SME

Phase-1 of the matching grants – administered by ADB (SPS Subproject consulting firm)

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World Bank, and other development partners are working closely with the Government to implement improved public sector financial management systems. ADB has supported the Government’s program through debt management technical assistance (TA) at MEF and the PFMRD to support the rollout of the second platform.

17. Financial risk is mitigated. At the request and on behalf of the Government, ADB will select and engage the consultants and administer the consultancy contracts of the SPS Subproject in accordance with the Guidelines on the Use of Consultants by Asian Development Bank (2010 as amended from time to time) and other arrangements satisfactory to ADB. This arrangement continues the one established for the SPS-1 Project (first phase and ongoing) approved under PED-SP1 in December 2008. This arrangement is designed to address governance issues in the sector. As the SPS-2 Subproject deals with MIME, MOC, MOH, MAFF in areas where there is continued agency duplication and unclear delineation of agency functions along the agro-based product supply chain, the Government believes that ADB administration of the SPS-2 Subproject would ensure SPS priorities and reforms are synchronized across agencies. In this way, the SPS-2 Subproject will improve capacity among the agencies to coordinate SPS-related functions necessary for an effective SPS management system. The PED program is addressing the governance problems through a set of policy triggers in PED-SP2 and PED-SP3 (expected to be submitted to BOD for approval in 2012) and capacity development. Under the PED-SP2 policy trigger, the Government has drafted an inter-ministerial prakas on delineation of roles and responsibilities of relevant SPS agencies (MAFF, MOH, MIME, and MOC). The prakas includes an inter-ministerial coordination mechanism. Once approved (expected later in 2010) the prakas will be the first step in laying out a more effective coordination mechanism. The SPS-2 Subproject will assist the Government with implementing the prakas. Under PED-SP3, the Government will develop a food safety policy and the food safety inter-ministerial coordination mechanism. The PED is also addressing capacity at MIME to administer ADB funded projects in accordance with ADB procurement guidelines in two ways. First, the Subproject will address capacity through day-to-day training to the EA on administration of ADB funded projects. Second, the Subproject will transfer to MIME administration of 50% of the matching grants output. For this purpose the EA will establish an imprest account to administer a total of $415,000 to finance the matching grants and its administration. This is expected to occur about mid-way through the Subproject period once the governance structure for the matching grants output has been operationalized and the first 50% of grants have been disbursed by under ADB administration. It is intended that once these systems are established the Government (EA) would be in the position to fully administer any subsequent SPS-3 project under PED-SP3. B. Disbursement

18. The grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),1 and detailed arrangements agreed upon between the Government and ADB.

19. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),2 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB.

1 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf. 2 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf.

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(i) For the Consulting Firm and consultants:

20. The TA Disbursement Handbook (2008, as amended from time to time) disbursement procedure will be followed. At the request of the Government, consultants will be selected and administered by ADB in accordance with its guidelines on the Use of Consultants. Payment to the consulting firm will be paid by ADB like a technical assistance project. ADB will share with the Recipient the signed contracts between ADB and the individual consultants and consulting firms.

(ii) Imprest Fund Procedure

• Description. The imprest fund procedure is one where ADB makes an advance disbursement from the grant account for deposit to an imprest account (the Account) to be used exclusively for ADB's share of eligible expenditures.

• Basic Requirements. A signed withdrawal application for imprest account (see Appendix 7) must be submitted to ADB together with a statement of the estimated ADB share of project expenditures form ADB-IFP-EES (see Appendix 29).

• Using the Account. The EA/IA uses the account to pay suppliers and others for ADB's share of eligible project expenditures incurred in local and foreign currency. EA and ADB shall maintain close monitoring of its operation and turnover ratio. For slow-moving imprest account and/or advanced amount not being utilized within reasonable time, the imprest fund ceiling shall be reduced to the appropriate level in line with project activities and surplus fund shall be returned to ADB immediately. Any use of the imprest funds for activities other than the eligible project activities will invoke corrective action deemed appropriate by ADB.

21 General Instructions for Preparing the Withdrawal Application for Imprest Fund (ADB Form No. ADB-IFP)

• Number withdrawal applications consecutively, not exceeding 5 digits or

characters. • Establishing the Account. Executing/Implementing Agency is required to open,

for the exclusive use of the project, a separate bank account for depositing advances. The imprest account shall be maintained in current account only and opened in the Borrower's name.

• Location of the Account. The account may be opened at a commercial bank in Cambodia. The account will be denominated in US dollars.

• Basic Requirements. A signed withdrawal application for imprest account (see Appendix 7) must be submitted to ADB together with the statement of the estimated ADB share of project expenditures on form ADB-IFP-EES (see Appendix 29). In addition, the following documents need to be submitted as well (i) bank details of account opened; and (ii) specimen signatures of authorized signatories.

• Ceiling of Advances. The maximum amount to be deposited to each of the project imprest accounts will be based on the estimated expenditures to be

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financed from the project imprest account for the first six months of project implementation, or 5% of the Grant amount whichever is lower. The Borrower must obtain prior ADB approval for any upward changes in the approved ceiling. Requests for changes are sent to ADB for approval by the Assistant Controller, CTLA and the sector division director concerned.

• Separate imprest accounts should be established and maintained by funding source. The maximum ceiling of the EA's' Imprest account(s) "in aggregate" {if more than one imprest account} will not at any time exceed the estimated ADB financed expenditures to be paid from the imprest account for the next 6 months or 5% of the grant amount, whichever will be lower. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet3 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the EAs/IAs will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA’s records.4

(i) The statement of expenditure (SOE) procedure may be used when

seeking reimbursement of eligible expenditures and liquidating advances made into the project imprest accounts. The maximum payment for any individual item using these procedures is $10,000 equivalent per individual payment. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.5

(ii) Before the submission of the first withdrawal application, MEF (the Borrower) should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the Borrower, together with the authenticated specimen signatures of each authorized person. The maximum value per withdrawal application is US$100,000, unless otherwise approved by ADB. ADB will transfer the funds through the pass-through account held by MEF at NBC to the EAs’ Imprest Accounts. MEF are to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.

3 Available in Appendix 29 of the Loan Disbursement Handbook. 4 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 5 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

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C. Accounting

21. The EA, assisted by the team leader, will maintain separate project accounts and financial statements in accordance with the provisions of the Grant Agreement and Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB (2002). D. Auditing

22. The EA, assisted by the team leader, will maintain separate project accounts and financial statements in accordance with the provisions of the Grant Agreement and Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB (2002) and will have them audited annually by auditors acceptable to ADB. During subproject implementation, within 6 months of the end of each fiscal year, the EA will submit to ADB certified copies of the annual audited subproject accounts and financial statements, as well as the auditor’s report. The EA will submit quarterly and annual reports to ADB, indicating progress made, problems encountered, and steps taken to remedy the problems, a program of activities, and expected progress during the implementation period. The reports will incorporate the subproject performance monitoring data and all relevant financial data. The EA will also provide reports and information relating to the RIA Subproject as ADB reasonably requests. Within 3 months after subproject completion, the EA will submit to ADB a project completion report detailing information on subproject implementation and accomplishment of the subproject activities.

VI. PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting 23 All advance action, advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time) and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). The issuance of RFP under advance action will be subject to ADB approval. The Borrower has been advised that approval of advance action does not commit ADB to finance the Project.

24 The advance payment facility (ADF) may be used for project administration and operations costs, including translation of manuals, preparation of training materials, cost of training, seminars, conferences, exposure visits, workshops, matching grants, and public awareness campaign. All such procurement of items/services shall be carried out by the consultants and EA (under the Imprest Account) by following ADB procurement procedures. First set of document of any such procurement under shopping shall be prior reviewed by ADB.

B. Procurement of Goods, Works, and Consulting Services 25. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). 26. All consultancy firms will be selected, engaged, and administered by ADB on behalf of the Government according to ADB’s Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers (2010, as amended from time to time). As the SPS sub-project deals with MIME, MOC and MOH in areas where there is agency duplication and unclear delineation of agency functions along the agro-based product supply chain, the Government

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believes that ADB administration of the SPS subproject would ensure SPS priorities and reforms are synchronized across agencies. In this way, the SPS subproject will improve capacity among the agencies to coordinate SPS-related functions necessary for an effective SPS management system. A Consultancy firm will be engaged using the quality and cost-based selection method (80:20), full technical proposal. A total of 91 (30 international and 61 national) person-months will be required. As part of TORs of the firm, the firm will provide a subcontract to a specialist firm/agency to implement component 4 due to its specialty skill requirement by following ADB procedures. Project equipment will be procured by the consultants in accordance with ADB’s Procurement Guidelines (2010 as amended from time to time). Small or off-the-shelf goods and materials valued at less than $100,000 may be procured by following shopping. The firm will provide a subcontract to a specialist firm/agency to implement component 4 due to its specialty skill requirement. The terms of reference for the consulting services and their duration are in detailed below. The Initial Procurement Plan is in Table 6. A. Counterpart Funds

27. Ensure sufficient counterpart funds including all Government allocations for implementation, staffing and operation and maintenance (O&M) of project facilities will be readily available and the submission of budgetary allocation requests are made in a timely manner. These counterpart funds will be transferred to project accounts at the commencement of each quarter and will be supplemented each month thereafter in an amount adequate to cover the ensuing three months requirement.

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B. Procurement Plan

Table 6: Initial Procurement Plan for the SPS Management Systems Project Cost Component and Indicative Cost Per Componenta Procurement Needs

Implementing Agenciesb

Procurement Modec

A1. Consultants –remuneration, per diem, travel etc ($910,000)

30 person-months of international consulting services (6 international consultants) 61 person-months of national consulting services (6 national consultants)

MIME,MOC (Camcontrol)

Consultant firm through QCBS, selected by ADB - Total contract $2.16 million

A2. 2 or 3 packages of capacity development for ISO advisory support, and training (about $50,000)

Contracts to international specialists in ISO international accreditation, and specialists for training for Conformity Assessment Bodies and Accreditation Boards. Consultant to follow ADB procurement guidelines.

MIME MOC (Camcontrol)

A3. Two packages of capacity development for SPS enforcement, advisory support and training: (1) pesticide residue survey at Camcontrol at $150,000 and (2) restaurant and catering certification and inspection program at MOH at $100,000

Contract(s) to international specialists in food safety analysis and policy advise in the areas of surveillance/enforcement at the market/retail level. Consultant to follow ADB procurement guidelines.

MOC (Camcontrol) MOH

A4. One package of laboratory diagnostic equipment ($100,000)

Consultant to follow ADB procurement guidelines

MIME

A5. One package of laboratory diagnostic equipment and rapid test kits ($25,000)

Consultant to follow ADB procurement guidelines

MOH

A56. One package for Laboratory materials - reagents (approximately $50,000)

Consultant to follow ADB procurement guidelines MIME

A7. One package of standard equipment (computers, photocopiers, scanners, etc. – approximately $25,000)

Consultant to follow ADB procurement guidelines MIME

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Cost Component and Indicative Cost Per Componenta Procurement Needs

Implementing Agenciesb

Procurement Modec

A8. Several packages for miscellaneous administration expenses, including translation of manuals, preparation of training materials, cost of training, seminars, conferences, workshops, and public awareness campaigns (approximately $330.000)

Consultant to follow ADB procurement guidelines

MIME, MOC, MOH

A9. Matching grants phase-1. Several grants each up to 50% of the proposed cost or $30,000, whichever is lowest submitted by a privately owned SME in the food processing sector for upgrading SPS related product and or management process quality ($440,000).

Consultant to follow ADB procurement guidelines

MIME

B1. Matching grants pahse-2. Several grants each up to 50% of the proposed cost or $30,000, whichever is lowest submitted by a privately owned SME in the food processing sector for upgrading SPS related product and or management process quality ($440,000).

MIME to follow ADB procurement guidelines

MIME MIME administered through Imprest Account. First set of document in English of any such procurement shall be prior reviewed by ADB. This procurement commences in the phase-2 about mid-way through the SPS Subproject period.

ADB = Asian Development Bank; MIME = Ministry of Industry, Mines, and Energy; MOC = Ministry of Commerce; QCBS = quality- and cost-based selection; CQS = consultant quality selection. a Includes contingencies. b The project management unit at the Executing Agency (MIME) will coordinate all project activities. c The documentation requirements for QCBS (three submissions) are as outlined in paras. 2.3, 2.24, 2.28, and Appendix 1 of ADB’s Guidelines on

the Use of Consultants, February 2007. Source: Asian Development Bank.

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C. Consultant's Terms of Reference

a. International Experts

1. International SPS Management Systems Expert – Team Leader (12 person-months)

28. Candidate Profile. The expert will have experience in all aspects relating to SPS measures particularly when related to SPS management systems in countries that have achieved recent accession to WTO. The candidate will have proven capability in managing projects concerned with food safety and food safety management systems. He or she will have strong managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing.

29. Job Description. The expert will be the Team Leader and will undertake the following activities:

(i) In conjunction with the national executing agency develop a project implementation plan, highlighting activities to be undertaken, timeframe which will relate to policy matrix triggers and milestones for PED subprogram 3, equipment procurement and expert mobilization. Make periodic adjustments to the plan in relation to changing institutional and implementation factors, if or when necessary.

(ii) In conjunction with the national executing agency and the relevant international expert and national advisors draw up documentation for the tendering of study and capacity building outsourcing, including the two packages for SPS enforcement (Camcontrol and MOH), testing and laboratory equipment in accordance with ADB Guidelines on Procurement. The Camcontrol (pesticide residue survey and ISO accreditation) and MOH (restaurants and catering certification and inspection program) capacity building activities with be subcontracted to a firm or institute.

(iii) In conjunction with the national executing agency and the experts concerned with conformity assessment and accreditation draw up documentation for the procurement of services of an internationally recognized accreditation body in accordance with ADB Guidelines on Procurement.

(iv) Ensure effective mobilization of experts to meet project implementation plan targets and revise schedules and TORs in light of changing SPS needs.

(v) Continue to work closely with government implementation agencies that are in the process of commercialization to ensure they are well supported, have sound business practices and the outcome is sustainable.

(vi) Develop the governance structure for the matching grants component as sketched out in this PAM, including the structure of the matching grants committee, technical committee, the application approval criteria, application templates, grants award contracts, development of Project website for downloading applications, grievance resolution mechanism, support for the matching grants committee meetings to be held each quarter for approvals, disbursement of grant awards, and tracking recipients progress.

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(vii) Working with the national monitoring expert and the EA establish and facilitate the Mentors Forum.

(viii) Ensure the quality and substance of periodic monitoring and evaluation requirements, particularly relating to progress on policy development, development of standards, analytical and inspection activities and the commercialization of government agencies supported is to a high standard.

(ix) Assume responsibility for liaison with the Asian Development Bank, including the preparation of periodic progress reports and support to visiting missions. Facilitate quarterly private sector and development partners meetings on SPS.

30. Qualification. The Expert will have a university degree or equivalent qualification in biological sciences and or business management and experience in agribusiness development, with training in food safety.

2. International SPS Legal Framework Expert (4 person-months) 31. Candidate Profile. The expert will have experience in all aspects relating to SPS measures, international compliance and legal framework harmonization. He or she will have strong managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing. Experience in South East Asia and in particular within the Greater Mekong Sub-region countries would be a distinct advantage.

32. Job Description. The expert will:

(i) In anticipation of the inter-ministerial Prakas on the Implementation and Institutional Arrangements of Food Safety Based on the Farm to Table Approach being endorsed6 the expert will work closely with the relevant ministries and agencies cited in the Prakas to implement the articles particularly developing regulations and codes of practice.

(ii) In consultation with the government agencies concerned develop a comprehensive food policy, as a basic common reference document containing the guidelines for food safety as a precursor to a national food law.

(iii) In consultation with the government agencies concerned provide assistance to the establishment of the inter-ministerial coordination committee for SPS (food safety).

(iv) Coordinate with other donors that are working in supporting the institutional and legal framework concerned with SPS activities, WTO and ASEAN compliance.

(v) Identify focal points concerned with implementing SPS related legal and regulatory documentation in MAFF, MOC, MoH and MIME and provide training for the personnel identified in the writing up of regulations and legal documents and work closely with them in activities related to Regulatory Impact Assessment.

(vi) The Expert will elaborate a report at the end of each mission detailing work undertaken and specific findings and recommendations in relation to the terms of reference listed above.

6 Supported by the SPS Management Systems Project (Grant 0136-CAM).

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33. Qualification. A university degree or equivalent qualification in Law or Legal Studies, with experience in SPS legal framework and regional integration.

3. International Microbiology and Chemical Laboratory Expert (6 person-months)

34. Candidate Profile. The expert will have experience in food safety and quality assurance laboratories, within the European Union or OECD countries with involvement in establishing laboratory systems under ISO 17025 guidelines and equipment procurement. The individual must be proficient at undertaking a range of bacteriological and chemical tests. He or she will have worked on mutual recognition arrangements for laboratory testing and have strong managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing. Experience in managing a commercial food testing laboratory will be a distinct advantage. 35. Job Description. The expert will:

(i) Continue the work undertaken by the Sanitary and Phyto-Sanitary Management Systems Project (SPSMSP) in expanding the microbiology and chemical testing capability at the Industrial Laboratory Center of Cambodia (ILCC) and ensuring ISO 17025 accreditation of the expanded range.

(ii) Contact ISO 17025 accreditation bodies and call for their proposals to undertake the accreditation process of the selected tests within specified laboratories in Cambodia.

(iii) Support the Camcontrol laboratory in gaining ISO 17025 accreditation of pesticide residue analysis tests in foods for market surveillance utilizing the government procured Gas Chromatography – Mass Spectrometry (GC-MS).

(iv) Provide guidance to Camcontrol and the survey sub-contractor in implementing the pesticide residue survey in fruit and vegetables on the market place.

(v) In conjunction with the National Executing Agency and Team Leader draw up documentation for the tendering of equipment and make recommendations on any changes that need to be made in the equipment required, in light of newly developed international standards and analytical requirements. Procurement will be the responsibility of the team leader and in accordance with ADB Guidelines on Procurement.

(vi) Make recommendations on training laboratory staff in line with ISO 17025 guidelines and based on the new testing equipment procured and wherever possible lead the training activities. Identify regional laboratories that could cater for exposure and capacity building activities and if required arrange secondment of staff to those location when required.

(vii) Continue to identify and enroll in inter-proficiency laboratory testing programs for the expanded range of tests.

(viii) Continue to support the commercialization process of the supported laboratories or tests.

(ix) The Expert will elaborate a report at the end of each mission detailing work undertaken and specific findings and recommendations in relation to the terms of reference listed above.

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36. Qualification. A lead assessor for ISO 17025 and a university degree or equivalent qualification in biochemistry or similar.

4. International Conformity Assessment and Accreditation Expert (6 person-months)

37. Candidate Profile. The expert will have experience in the conformity assessment for bodies providing audit and certification of management systems under ISO 17021 guidelines, in this case in Food Safety Management Systems (FSMS). He or she will have in-depth experience in gaining international mutual recognition of Conformity Assessment Bodies (CAB) and Accreditation Bodies (AB) within Southeast Asia particularly within ASEAN. The candidate will have strong managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing.

38. Job Description

(i) Continue to build on the Sanitary and Phytosanitary Management Systems Project’s (SPSMSP) initiative on developing a Food Safety Management Systems (FSMS) conformity assessment body (CAB) at the Institute of Standards Cambodia (ISC) of the Ministry of Industries, Mines and Energy (MIME).

(ii) Determine the feasibility of establishing an independent Accreditation Board or Body (AB), with particular reference to the actual and future national demand for process and systems standards.

(iii) Contact and liaise with international ISO 17021 accreditation bodies and call for their proposals to undertake the accreditation process for a CAB in FSMS.

(iv) To ensure free competition in conformity assessment elaborate guidelines for the establishment of private sector CABs, possibly in conjunction with the SME association or chamber of commerce.

(v) Review the draft of the Organization and Functioning of the Institute of Standards and make recommendation regarding the restructuring of the ISC departments to comply with recognized international norms.

(vi) In conjunction with ISC staff, prepare a business plan to provide guidelines on cost recovery for the CAB to provide product and process standards advice and certification. Work towards full commercialization implementation of ISC.

(vii) In conjunction with ISC and MIME staff design and develop a standards awareness campaign for implementation to be funded by the project.

(viii) The Expert will elaborate a report at the end of each mission detailing work undertaken and specific findings and recommendations in relation to the terms of reference listed above.

39. Qualifications. A qualification in Business Management or Life Sciences with sound knowledge of the functioning of Conformity Assessment Bodies and Accreditation bodies and boards, with experience in working within such agencies on a commercial basis.

5. Food Safety and Hygiene Capacity Building Expert (2 person-months)

40. Candidate Profile. The expert will have experience in catering establishment (restaurants, hotels, caterers and street food vendors) hygiene and food safety practices and has experience in setting up food safety campaigns through voluntary commercially orientated

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schemes for the private sector whose participation will provide a comparative advantage. He or she will have strong managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing. Experience in Southeast Asia would be an advantage.

41. Job Description. The expert will:

(i) Review the existing legal framework and assess the Food Safety Bureaus (FSB) mandate to undertake the catering hygiene and food safety certification activities, particularly assessing circulars 0330 and 0421 relating to the Food Hygiene Sub-decree 47.

(ii) Assess the Food Safety Bureau’s (FSB) pilot catering hygiene certification in Sihanoukville and work with FSB staff to develop an expanded scheme in Sihanoukville and roll out the scheme to other locations within the country; Siem Reap town, Kampot, Svay Rieng, Phnom Penh and Koh Kang. In this context, the expert will work with the team leader to develop a bid document for the expanded program. The team leader will recruit a subcontractor to assist FSB to implement the expanded program.

(iii) In parallel to the scheme make recommendations and implement a consumer awareness campaign that provides the consumers with information on those catering establishments that have gained certificates and an awareness campaign that has scope for consumer feedback.

(iv) In conjunction with the National Advisor provide training to the trainers in hygiene and food safety practices and monitor trainer the trainer capacities.

(v) Design and undertake a baseline survey relating to current hygiene practices in catering establishments in the targeted locations for an expanded scheme.

(vi) The Expert will elaborate a report at the end of each mission detailing work undertaken and specific findings and recommendations in relation to the terms of reference listed above.

42. Qualification. A university degree or equivalent qualification in Law or Legal Studies,

with experience in SPS legal framework.

a National Advisors

1. Senior Project Administrator (National/international – 24 months)

43. Candidate Profile. The Candidate must have a minimum of 3 years of professional work experience in administration, accounts and internal control, and at least Bachelor in accounting or business administration. Ability to work in a cross-cultural environment and under time constraint is essential. Experience working on ADB funded projects and familiar with ADB procurement systems is required. The project administrator will report to the team leader, EA/PIU Head and TASU. 44. Job Description. The Project Administrator will work closely with the Team Leader and EA PIU on establishing accounting system, maintaining accounts and payments. S/he will provide on the job training to EAs on ADB procurement guidelines and assist them with their administering of selected activities under the matching grants phase-2 output. The duration of this assignment will be 24 months, starting in early April 2011.

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45. Proposed assignment:

The candidate will assist the Team Leader and EA:

• Set up the Project accounting system and software • Maintain records of accounts and responsible for payment of invoices for Project

activities. • Responsible for procurement of equipment, services and other packages under

the consulting contract and keep accounting records for all Project transactions and reporting to the EA and ADB task manager on a monthly basis. This includes arranging logistics overseas exposure visits etc.

• Produce monthly statement of accounts for EA and ADB • Work with and train EA staff on the accounts system and ADB procurement

guidelines • Assist the EA to meet ADB procurement rules on administering the EA’s Imprest

Account for the matching grants phase-2.

2. National Legal Advisor (9 person-months; intermittent inputs) 45. Candidate Profile. The National Legal Advisor will have at least three years experience in the legal field in Cambodia, skills in legal drafting and a good command of English. He or she must have strong communication and arbitrational skills particularly when dealing with inter-ministerial conflict/disagreements that may arise.

46. Job Description. The advisor will work closely with the International Legal Expert and in his or her absence with the Team Leader to undertake the following tasks:

(i) Make recommendations on the legal framework required to implement the inter-ministerial Prakas on the Implementation and Institutional Arrangements of Food Safety Based on the Farm to Table Approach.

(ii) Provide assistance to legal and regulation drafting and national support in SPS, but particularly in food safety and the roles and responsibility legal framework.

(iii) Be responsible for collecting relevant laws, regulations and other legal documents relevant to the drafting of SPS laws and regulations. Also provide English translations of such documents.

(iv) When required participate in bilateral meetings between the concerned ministries and agencies and to assist in addressing contentious issues when they arise.\

(v) Assist the Team Leader and the International Legal Expert in organizing retreat or retreats for key policy makers to develop and gain compromise/consensus relating to legal framework decisions that result in institutional delineation of responsibilities.

47. Qualifications. A university degree or equivalent qualification in Law or Legal Studies, with some experience in SPS legal and institutional framework.

3. National Microbiology and Chemical Testing and Laboratory Management Advisor (7 person-months; intermittent inputs)

48. Candidate Profile. The candidate will have proven experience in microbiology and chemical testing and has experience in the commercialization of a testing laboratory. The

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Advisor will have good managerial, analytical and interpersonal skills and a proven ability to communicate clearly in English both verbally and in writing. Regional laboratory experience or training would be an advantage. 49. Job Description. The advisor will work closely International Microbiology and Chemical Testing Expert and the Project Team Leader to undertake the following tasks:

(i) Assist the international expert to continue the work undertaken by the Sanitary and Phyto-Sanitary Management Systems Project (SPSMSP) in expanding the microbiology and chemical testing capability at the Industrial Laboratory Center of Cambodia and ensuring ISO 17025 accreditation of the expanded range.

(ii) Support the Camcontrol laboratory in gaining ISO 17025 accreditation of pesticide residue analysis tests in foods (primarily fruit and vegetables) for market surveillance utilizing the government procured Gas Chromatography – Mass Spectrometry (GC-MS).

(iii) In conjunction with the international expert and the Team Leader draw up documentation for the tendering of equipment. Procurement will be in accordance with ADB Guidelines on Procurement.

(iv) Assist in the training of laboratory staff in line with ISO 17025 guidelines and based on the new testing equipment procured and wherever possible lead the training activities in Khmer.

(v) Assist in supporting the participatory laboratories in inter-proficiency laboratory testing programs for the expanded range of tests.

(vi) Utilize local experience to assist the laboratories to further develop the commercialization process to encourage sustainability.

(vii) When the international expert is not in-country provide the team leader with information for the period reporting requirement of the project and contribute to the activity monitoring requirements.

50. Qualifications. A science degree in the biological sciences and practical laboratory capacity building experience.

4. National CAB and Standards Business Development Advisor (7 person-months; intermittent inputs)

51. Candidate Profile. The candidate will have some experience in Food Safety Management Systems (FSMS) or has undertaken training in HACCP or ISO 22000. He or she will have knowledge of the importance of gaining international mutual recognition of Conformity Assessment Bodies (CAB) and writing quality and procedure manuals to gain accreditation and will be able to communicate clearly in English both verbally and in writing.

52. Job Description. The advisor will work closely with the International Conformity and Accreditation Expert and the Team Leader to undertake the following tasks:

(i) Work with ISC and the international expert to build on the Sanitary and Phyto-Sanitary Management Systems Project’s (SPSMSP) initiative on developing a Food Safety Management Systems (FSMS) conformity assessment body (CAB) at the Institute of Standards Cambodia (ISC) of the Ministry of Industries, Mines and Energy (MIME).

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(ii) Determine the feasibility of establishing an independent Accreditation Board or Body (AB), with particular reference to the actual and future national demand for process and systems standards.

(iii) Contact and liaise with international ISO 17021 accreditation bodies and call for their proposals to undertake the accreditation process for a CAB in FSMS.

(iv) To ensure free competition in conformity assessment elaborate guidelines for the establishment of private sector CABs, possibly in conjunction with the SME association or chamber of commerce.

(v) Review the draft of the Organization and Functioning of the Institute of Standards and make recommendation regarding the restructuring of the ISC departments to comply with recognized international norms.

(vi) In conjunction with ISC staff, prepare a business plan to provide guidelines on cost recovery for the CAB to provide product and process standards advice and certification. Work towards full commercialization implementation of ISC.

(vii) In conjunction with ISC and MIME staff design and develop a standards awareness campaign for implementation to be funded by the project.

(viii) When the international expert is not in-country provide the team leader with information for the period reporting requirement of the project and contribute to the activity monitoring requirements.

53. Qualifications. A qualification in Business Management or Life Sciences with knowledge of standards and conformity assessment in the field of food safety.

5. Catering Food and Hygiene Trainer (8 person-months; intermittent inputs)

54. Candidate Profile. The trainer will have experience in training in catering hygiene and food safety practices and has some experience in consumer food safety awareness campaigns. He or she will have a proven ability to communicate clearly in English both verbally and in writing. 55. Job Description. The advisor will work closely with the Food Safety and Hygiene Capacity Building Expert and the Team Leader to undertake the following tasks:

(i) Assist in the review the existing legal framework and assess the Food Safety Bureaus (FSB) mandate to undertake the catering hygiene and food safety certification activities, particularly assessing circulars 0330 and 0421 relating to the Food Hygiene Sub-decree 47.

• Provide national support to the Food Safety Bureau’s (FSB) pilot catering hygiene certification in Sihanoukville and the rest of the targeted locations.

• Elaborate training guidelines for the certification scheme in Khmer and in conjunction with the international expert provide training to the trainers in hygiene and food safety practices and monitor trainer the trainer capacities.

• Support the international expert in making recommendations and implementing a consumer awareness campaign that provides the consumers with information on those catering establishments that have gained certificates and a consumer awareness campaign that has scope for consumer feedback.

34

• Implement a baseline survey relating to current hygiene practices in catering establishments in the targeted locations for an expanded scheme.

• When the international expert is not in-country provide the team leader with information for the period reporting requirement of the project and contribute to the activity monitoring requirements.

56. Qualifications. Formal qualification in food safety or food science with experience in health and hygiene and consumer awareness programs.

6. National Technology Fund Advisor (6 person-months; intermittent inputs)

57. Candidate Profile. The candidate will have proven experience in assessment of business plans, financing of SMEs and has experience with a financial institution financing SME technological development. He or she must have proven ability to communicate clearly in English both verbally and in writing.

58. Job Description. The advisor will work closely with the International SME Technology Finance Expert and the Team leader, as well as coordinating with the Matching Grant Program Management Team to undertake the following tasks:

(i) In line with the technology development expert’s report7 (June 2010) work closely with the international expert in: • Identifying the fund management team and the fund steering committee

members • Developing and implementing an awareness campaign and communication

strategy • Developing SME eligibility criteria, determining funding limits and

prequalification procedures • Elaborating process and procedures to include an operations manual with an

internal audit requirement • Monitoring and evaluation and risk assessment guidelines

(ii) Utilize the national technology provider network and government facilitators to identify companies and individuals that can supply technology advice and or equipment and materials.

(iii) Work with the team leader to establish the matching grants component. (iv) Assist the international expert to identify and review donor partner previous and

ongoing work in supporting technology development. (v) When the international expert is not in-country provide the team leader with

information for the period reporting requirement of the project and contribute to the activity monitoring requirements.

59. Qualifications. A formal qualification in business finance or accounting.

7 Medium Term Technology Adaption Framework, June 2010.

35

III. SAFEGUARDS

60. The SPS subproject will not entail any involuntary resettlement or have a negative impact on indigenous people or the environment. It is classified category C for involuntary resettlement, impact on the indigenous people, and impact on the environment. The SPS subproject is a general intervention aimed at supporting implementation of the SPS policy reforms and institutional capacity development which will increase market access for Cambodia's food exports and is therefore expected to have an indirect positive effect on poverty reduction.

36

IV. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. Project Design and Monitoring Framework

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting

Mechanisms Assumptions

and Risks Impact Expanded and diversified private sector

By 2015: • Increased share of

nontraditional sectors in non-agriculture GDP (baseline 2007 = 42% of non-agriculture GDP)

• increased non-garment exports (processed foods and beverages, handicrafts, etc) by 5–10% per year (baseline 2007)

National income accounts from NIS

Assumption • External economic

environment continues to improve to support domestic macroeconomic stability and growth

Risk • Macroeconomic instability

linked to budget deficits

Outcome Improved business environment where the private sector operates efficiently and effectively

By the end of 2012: • 25% increase in the number of

registered enterprises (baseline 2007 = 16,450)

• Increase in investment by more than 10% per year

MOC business registry data NIS national income data, NBC capital account data

Assumption • Government stays on

course with key business regulatory reforms.

Outputs 1. Competition in the domestic market increased and regulatory efficiency improved

• Increase number of line

ministries with RIA action plans (baseline 2009 = 1 ministry)

• Line ministries with action plans produce at least 5 RIA impact assessments per year and posted on respective websites and the Office of RIA website

• At least one of the RIA focal point persons at each participating ministries is female. (base line 2009=0)

RIA Subproject PIU data on MOUs between line ministries and ECOSOCC RIA Subproject PIU data

Risk • The capacity of agencies to

implement reforms may be constrained by resources and other emerging priorities

• Resistance to some of the reforms from vested interests, especially in institutionalizing RIA in Government and competition policy.

2. Investment climate strengthened

• Increase number of investment agreements (baseline 2007 = 20)

• Complete one double taxation agreement with a major trading partner (baseline 2007 = 0)

• Reduce number of days to launch a business (baseline 2007 =)

Cambodian Development Council (CDC) MEF IFC doing business

37

3. Trade policy and facilitation enhanced

• At least 50 firms accessed new technology through matching grants scheme, of which 45-55% of grant recipients are enterprises majority owned by females.

• Reduced time to prepare documents for exporting goods by 20% (baseline 2007 = 37 days)

• Reduced time to prepare documents for importing by 20% (baseline 2007 = 46 days)

• At least 5 firms SPS-related ISO accredited (baseline 2008 =1)

• ILCC’s ISO accredited for at least 10 tests (baseline 1998=0)

Activities with Milestones (during Subprogram 2) 1.1 Government upgraded OBSES to ECOSOCC with higher level policy status,

increased personnel, and broader policy mandate including regulatory impact assessment. (Feb. 2009).

1.2 Government endorsed ECOSOCC strategy to institutionalize RIA in the national government including the preparation for and establishment of the Office of Regulatory Impact Assessment (ORIA) at ECOSOCC. (July 2010).

1.3 Ministry for Industry, Mines and Energy (MIME) implemented the first pilot RIA action plan starting with the Department of Industry. Actions included issuing ministerial prakas mandating RIA and action plan, and Department of Industry established RIA taskforce and designating members, and initiating a RIA on a sub decree. (Dec. 2008).

1.4 Ministry of Environment (MOE) prepared and endorsed RIA action plan. MOE initiated a RIA reviewing the cost of business compliance with a sub-decree. (July 2010).

1.5 Government in collaboration with ADB and other development partners undertook several RIA awareness raising activities including workshops, senior executive retreat, exposure visit to overseas offices of better regulatory practice and a red tape survey of enterprises (Nov. 2009 to Feb. 2010).

1.6 Ministry of Commerce established working group on competition policy and drafting on competition law. (May 2010).

2.1 Prepared draft double tax agreement (DTA) model as the basis for future DTA

negotiations. (Dec. 2009). 2.2 Cambodia strengthened investor protection through investment chapters of regional

agreements including the Agreement establishing the ASEAN-Australia-New Zealand free trade area (Feb. 2009), ASEAN-PRC (Aug. 2009) and ASEAN-Rep. Korea (June 2009).

2.3 MIME established taskforce on national technology policy and produced an appropriate draft policy framework for technology and innovation for the SME sector (July 2010).

3.1 Ministry of Commerce produced a draft bill on trade remedies consistent with best

international practice and economy-wide perspective. Inter-ministerial discussions to refine the bill's language and clarify technical terms started (2010).

3.2 Cambodia requested WTO for a trade policy review (TPR) and has substantially completed preparation for the review. These activities included reconvening the Inter-Ministerial Coordination Committee on Cambodia's obligations under WTO (IMCC); completion of the WTO questionnaire for data, and hosting the WTO mission in the first week of June 2010. (Nov. 2009 - June 2010).

3.3 The Department of notification and legal compliance (WTO department) strengthened its notification systems within the department as the focal point, Camcontrol as the inquiry point for SPS and MIME for TBTs. (2009).

3.4 Produced draft Inter-ministerial prakas clarifying delineation of various SPS (food

Inputs • ADB PED-SP2 loan of $10

million equivalent • ADB-PED-SP2 ADF grant

of $9.0 million equivalent • Capacity Development

Project (CREST) funded under ADF grant of $5.0 million. CREST project has two subprojects as follows:

• SPS Management systems Subproject ($2.6 million).Five outputs: (i) SPS Legal Framework

Implementation (ii) Enhance Capacity of

SPS Service Providers (iii) Capacity Development

at the Institute of Standards of Cambodia

(iv) Enhance SPS Market Surveillance and Enforcement Capability

(v) SME Improved Access to SPS Technologies through matching grants

• Government co-financing for SPS - $215,000

• RIA Subproject ($2.4 million) allocated across three components as follows: (i) Build Capacity of ORIA (ii) Support for Line

Ministries' RIA Action Plans

(iii) Develop a Community of RIA Practitioners

• Government co-financing for RIA - $215,000

38

safety) related ministries legal responsibilities and enforcement (Camcontrol, MIME, MOH, and MAFF) and initiated inter-ministerial discussions. (April 2010).

3.5 Ministerial circular 0421 developed and approved to authorize MOH Food Safety Bureau (FSB) to undertake catering and restaurant food safety inspection and certification scheme in compliance with Food Hygiene sub decree 47. (2009).

3.6 MIME developed and endorsed an action plan to commercialize the Industrial Laboratory of Cambodia Center (ILCC) by 2013. The action plan covers corporate governance, strengthening technical capacity of staff and measures for ISO accreditation for major food safety tests. (May 2010).

3.7 MIME started implementation of ILCC action plan (Jan. 2010). 3.8 Satisfactory progress made in developing the ISC Conformity and Assessment Board

(CAB) for management and process standards (ongoing). 3.9 The National Standards Council (NSC) established with members from the

government, academia and private sector. Five standards committees (TC) approved and established. TC 3 on Food and Prepared Foodstuffs includes Food Safety Management Systems (FSMS) and food laboratory techniques. (2009).

3.10 The General Department of Customs and Excise has implemented and operationalized ASYCUDA at three other major ports. These include the Phnom Penh international airport and two dry ports (Tech Srun and Teng Lay). As part of the customs system expansion Project, the General Department of Customs and Excise undertook needs assessment for national rollout of ASYCUDA. (Dec. 2009).

3.11 Substantial progress made in implementing customs transaction valuation in line with WTO commitments (Dec. 2009).

ADB = Asian Development Bank, CDC = Council for Development of Cambodia, GDP = gross domestic product, IFC = International Finance Corporation, ISC = Institute of Standards of Cambodia, ISO = International Organization for Standardization, MEF = Ministry of Economy and Finance, MIME = Ministry of Industry, Mines and Energy, MOC = Ministry of Commerce, NBC = National Bank of Cambodia, NIS = National Institute of Statistics, SPS = sanitary and phyto-sanitary standards, TA = technical assistance.

B. Monitoring

61. Monitoring of the subproject will be done through three mechanisms. First, the subproject will provide MIME, the relevant agencies and ADB monthly progress reports on implementation. Second, through the establishment of a private sector forum comprising of key entrepreneurs in the sector, the forum will meet quarterly with the subproject team to discuss implementation and monitoring progress. In addition, the subproject will coordinate key development partners engaged in SPS, the coordination meetings will be carried out every quarter. Third, the Government and ADB will undertake joint reviews of the SPS subproject every 6 months to assess progress in component and activities, the quality of activities and the outputs produced, the performance of the subproject and identify issues and challenges. The EA and ADB will conduct a midterm review covering a comprehensive assessment of achievement against the SPS subproject's expected impact and outcomes, and the modification of implementation arrangements where necessary for the successful completion of the SPS subproject. The Government and ADB will continue to engage in active policy dialogue throughout implementation of the subproject on sector issues, policy reforms and other measures that may affect the subproject and on additional reforms that may be necessary or desirable for the successful implementation of the subproject. 62. In addition, the Government will inform ADB of outcomes of policy discussions with the IMF, World Bank Group and bilateral funding agencies having implications for the implementation of the subproject.

39

C. Evaluation

63. Within 6 months of physical completion of the Subproject MIME will submit a project completion report to ADB.8 D. Reporting and Review

64. MIME will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed. 65. The Government and ADB will continue to engage in active policy dialogue throughout implementation of the subproject on sector issues, policy reforms and other measures that may affect the subproject and on additional reforms that may be necessary or desirable for the successful implementation of the subproject. Keep ADB informed of policy discussions with other stakeholders about measures to ensure effective implementation of the PED Program. In addition, the Government will give ADB the opportunity to comment on relevant studies and draft laws or decrees that are likely to impact on RIA subproject objectives and implementation and inform ADB of outcomes of policy discussions with the IMF, World Bank Group and bilateral funding agencies having implications for the implementation of the subproject.

E. Stakeholder Communication Strategy

66. Whilst formal stakeholder analysis or a participation strategy was not produced as a discrete output, the scope of the RIA subproject was conceptualized and formulated based on extensive formal and informal stakeholder consultations. These included a series of workshops in Phnom Penh with government agencies in late 2009 and early 2010, an executive retreat of senior policy makers in February 2010, an exposure visit to Australian offices of better regulatory practices for senior officials from the Office of Council of Ministers in February 2010. Thus, as part of the processing for the grant support, extensive consultations were held with a wide range of stakeholders, including central ministries and development partners. The donor coordination is described in web-linked document 5.

V. ANTICORRUPTION POLICY

67. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.9 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.10 8 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar. 9 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf. 10 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp.

40

68. To support these efforts, relevant provisions are included in the {loan agreement/regulations or grant agreement/regulations} and the bidding documents for the Project. {Further detail on how the borrower and ADB discussed and addressed anticorruption policy issues may be provided here including a description of key anticorruption risks and the specific mitigation measures the project will implement as identified in a governance risk assessment was conducted as part of program preparation as per the Second Governance and Anticorruption Action Plan.11}

VI. ACCOUNTABILITY MECHANISM

69. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.12

VII. RECORD OF PAM CHANGES

11 GACAP II Guidelines available at: http://www.adb.org/Documents/Guidelines/GACAP-II-Guidelines.pdf. See also

Sourcebook: Diagnostics to Assist Preparation of Governance Risk Assessments: http://www.adb.org/documents/books/Diagnostics-to-Assist-Preparation-of-GRAs/default.asp. 12 For further information see: http://compliance.adb.org/.

Promoting Economic Diversification Program Good Governance Framework for the SPS-2 Subproject

In all instances, the Grant Agreement shall be the overriding legal document. ADB’s Procurement Guidelines, 2007, as amended from time to time (“Procurement Guidelines”), and ADB’s Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers, 2007, as amended from time to time (“Consulting Guidelines”), shall be applied pursuant to the Grant Agreement as they may be modified by that Grant Agreement. The Government’s policies and procedures shall be applicable to the extent there is no discrepancy with the Grant Agreement or ADB’s Procurement Guidelines and Consulting Guidelines. In the event there is a discrepancy, then the Grant Agreement, the Procurement Guidelines and the Consulting Guidelines shall apply. No. Issue Action to Mitigate Risk Responsibility Target/Frequency Element 1: Procurement 1.a Risks of corruption and

fraud

MIME as the EA for the Project of Strengthening SPS Management Systems will use the PSD Sub-Steering Committee for Small and Medium-sized Enterprises Trade for providing project oversight. ADB administration of the SPS-2 Subproject – ADB on behalf of Government select, engage and administer consulting services. F\In the event a SPS-3 Subproject under PED-SP3 (2012) is agreed on, the EA will fully administer the project. The EA and the Implementing Agencies (IAs) will be trained to Government’s Standard Operating Procedure and Procurement Manual (SOP/PM), mandated on February 26, 2007.

Project EA: MIME and the IA comprising MOC (camncontrol), and MOH.

At effectiveness

ADB administration. Specifications for equipment provided by EA/IAs.

MIME will monitor for compliance with the Grant Agreement, ADB’s Procurement Guidelines and the Procurement Manual.

Throughout Project duration.

1.b Procurement procedures

The Project EA is to adhere strictly to the procedures and guidelines set forth in the Grant Agreement and ADB’s Procurement Guidelines.

EA and IAs. MIME and IAs will

Throughout Project duration.

39 Appendix 1

Appendix 1 42

No. Issue Action to Mitigate Risk Responsibility Target/Frequency monitor for compliance

with the Grant Agreement, ADB’s Procurement Guidelines.

1.c Procurement capacity The EA and IAs will receive hands-on training and technical assistance from consultants recruited under the Project. Training will cover Government procurement procedures and the SOP/PM. Project to closely monitor and review procurement activities, and where necessary, take measures to improve procurement procedures based on lessons learnt from each successive procurement activity.

EA and IAs EA, IAs, and ADB.

Throughout Project duration. Throughout Project duration.

1.d Procurement Plans Preparation of realistic annual Procurement Plan as guided by the Procurement Guidelines and assisted by ADB and the team of consultants engaged, tied to annual work plan and budget.

EA, and IAs. Procurement Plan attached to Minutes of Grant Agreement

1.e Informal payments by contractors, suppliers and consultants

All contractors, suppliers and consultants – firms or individuals, national and international – bidding for contracts under the Project shall sign the Declaration on Ethical Conduct and Fraud and Corruption in the SOP/PM.

EA, and IAs Throughout Project duration.

Element 2: Financial Management (FM) 2.a Internal controls

Strengthen internal controls which cover: • financial policies and standards; • elements of internal control; • financial accounting system, ledgers, journals; • bank accounts and credit/grant withdrawals; • Project expenditure, payroll, petty cash, advances; and • FM reports, audit, counterpart funds withdrawals.

EA and IAs. EA and IAs will monitor for compliance with Grant Agreement and ADB’s Anticorruption Policy.

Continue throughout Project duration.

Appendix 1 43

No. Issue Action to Mitigate Risk Responsibility Target/Frequency 2.b Financial management

capacity The EA and IAs will receive hands-on training and technical assistance from consultants recruited under the Project. Project to closely monitor and review financial management conduct and make necessary improvements as required.

EA and IAs. EA, IAs, and ADB

Throughout Project duration. Throughout Project duration.

2.c Minimize cash transactions

Project to make all progress payments to contractors and suppliers– firms, individuals, national and international – by check or transfer to bank accounts, and retain evidence for audit and donor supervision missions.

EA, and IAs. Throughout Project duration.

2.d Uniformity in allowances paid to Government staff attending training, workshops and study tours

Project to follow Governments policy on Project Operating Costs effective 1 July 2010. Government finance the Project Operating Costs (POC) which has become effective 1 July 2010. Project to establish Annual Training and Workshop Plan with estimated budget. Each training or workshop to have a detailed budget and expenses approved by the EA

EA and IAs to submit POC proposals to MEF for the next year budget. Annual Training and Workshop Plan. Approved by EA and IAs with ADB no objection. EA and IAs.

Throughout Project duration. 4th QTR annually. Throughout Project duration.

Project to set eligibility rules for attending training, workshops and study tours. Attendees must: • be engaged in work relevant to the training, and • be competent in the language used.

EA and IAs in consultation with ADB.

Before first training, workshop or study tour.

Project to ensure that training, workshops, study tours and other similar activities: • are in line with Project aims and objectives

At time of annual work plan preparation, and again before each

Appendix 1 44

No. Issue Action to Mitigate Risk Responsibility Target/Frequency • meet identified needs within the subproject plans, and • have budget in line with planned expenditure approved

by the IAs and EA. Project to seek IAs and EA prior approval for any significant plan changes or departures.

training, workshop or study tour.

Project to set cost guidelines for selected training/workshop activities, including: • venue rental with refreshments/meals • sound and projection equipment hire • stationery/hand-outs • Project-specific training and workshop materials • simultaneous translators, and • photocopying, reproduction, translation.

Before first training, workshop or study tour.

Project to define evidence to be submitted by attendees for reimbursement of expenses which may include: • proof of attendance for period claimed with signed

statement by the workshop, training or study tour organizer or host

• proof of travel by air – ticket stubs, travel agent’s receipt, airline boarding passes

• receipted hotel bills (for proof of stay) • receipts for incidental traveling expenses • receipted invoices for venue rental, food and beverage,

sound/projection equipment, hire of simultaneous translator, stationery and handouts, use of photocopying facilities.

Project to reimburse against receipts except where covered by fixed allowances in MEF’s Letter No. 2000. Project to retain evidence of attendance and payment of attendees’ per diem and allowances.

Each occasion. Each occasion. Each occasion.

2.e Delayed or non-existent reconciliation of advances for operating

Project to reconcile operating expenses to staff or field offices within one week of the end of each month.

IAs and EA.

Each month.

Appendix 1 45

No. Issue Action to Mitigate Risk Responsibility Target/Frequency costs and expenses No further advances to be paid until previous advance

reconciled and cleared against documentary evidence. IAs and EA. Throughout Project

duration. Element 3: Disclosure 3.a Conflict of interest

among Project staff Project staff to disclose private and public affiliations or personal interest before becoming involved in any Project-related transaction, such as contract award. IAs and EA will prepare a declaration statement for staff’s signature.

IAs and EA will ensure all Project staff sign the disclosures.

Throughout Project duration.

3.b Adequacy of transparency and disclosure

For all contracts subject to prior review, within two weeks of receiving ADB’s no-objection letter to the recommendation of contract award, IAs/EAs will publish the results of the bid evaluation, identifying the bid and lot numbers, and providing information on: (i) name of each bidder who submitted a bid; (ii) bid prices as read out at bid opening; (iii) name and evaluated prices of each bid that was evaluated; (iv) name of bidders whose bids were rejected and the reasons for their rejection; and (v) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded. For contracts subject to post review, IAs/EA will publish the bid evaluation results no later than the date of contract award. At a minimum, the Project will disclose the information required by the Grant Agreement.

IAs and EA will arrange disclosure.

Throughout Project duration

Element 4: Complaints and Remedies Mechanism 4.a Adequate complaints

and remedies mechanisms

Project to build well-defined complaints and remedies mechanism into Project documents. Complaints procedures regarding procurement to follow process set out in Grant Agreement.

IAs and EA in consultation with ADB. IAs and EA

Effectiveness Throughout Project duration

Appendix 1 46

No. Issue Action to Mitigate Risk Responsibility Target/Frequency Element 6: Code of Ethical Conduct 5.a No overall Code of

Conduct for civil servants

Project to design ethical code, acceptable to ADB, for all Project staff, including contracted staff, to sign individually.

IAs and EA Effectiveness

Element 7: Sanctions 6.a Inadequate sanctions

for fraudulent and corrupt activity by Project staff, contractors, suppliers and consultants

The Project to identify and apply sanctions available under current law and regulations of Cambodia, ADB’s Grant Regulations, the Grant Agreement, and ADB’s Procurement Guidelines and Consulting Guidelines. Sanctions for individuals may include transfer of duties, retraining, suspension, dismissal, re-grading, and prosecution under Cambodian Law. Sanctions for firms may include: termination of contract, debarment or blacklisting under ADB’s Procurement Guidelines and Consulting Guidelines or prosecution under Cambodian Law.

IAs and EA

Effectiveness

Element 8: Project Specific Elements 7.a Poor enforcement of

contract terms and needing to conduct contractors performance evaluation

IAs and EA will ensure that contract terms are strictly enforced and the Grant consultant will be a party to ensuring quality control of contract outputs, include acceptance of completion of works and services. The IAs and EA to conduct performance evaluation of all contractors providing all types of services under the Project.

IAs and EA

Throughout Project duration.

7.b Poor quality of products

IAs and EA will ensure that approved specifications are strictly followed in the procurements. IAs and EAs will development specifications for all procurements of goods under the Project.

IAs And EAs IAs and EA with ADB no objection.

Throughout Project duration. Contract signed immediately after effectiveness.

Appendix 2 47

Sanitary and Phytosanitary Standards Subroject – Second Phase (SPS-2 Subproject) Cambodia –Project Readiness Filter

Stage of Project Preparation

Key Project Preparation Elements13

Identification/preparation

Appraisal/ Fact-Finding Negotiations Effectiveness Current Status (7 July 2010)

Project is consistent with RGC’s development plans and DPs assistance strategy

Confirmed X Confirmed. The Project builds on achievements under the currently ongoing SPS-1 to further strengthen SPS management systems in Cambodia through five critical areas.14 These will contribute to private sector development through improved firm competitiveness in the domestic and export markets, in line with the government’s National Strategic Development Plan (NSDP) 2006-2010 and the draft NSDP 2011-2013, particularly in strengthening the private sector and promoting SMEs.

Project Implementation Plan (PIP)or Project Operations Manual(POM) or Project AdministrationManual (PAM)

PAM Drafted Completed and agreed

The Mission prepared the draft PAM during the Fact-Finding mission. The PAM has since been updated, and will be finalized and agreed during the negotiation.

Project Good GovernanceFramework

Broad content defined

Drafted Completed and agreed

GGF for the current SPS-2 Subproject will use the SPS-1 Project GGF.

Procurement Capacity Assessment

Not required

PCA not required per COSO discussions. ADB will continue the same arrangements as under SPSS-1 Project. ADB will administer the project – select, engage and administer the SPS-2 Subproject

13 In general, the costs associated with the preparation of these elements can be in part funded through PPF and PPTA, based on Government request. 14 (i) SPS legal framework implementation; (ii) enhance capacity of SPS service providers; (iii) capacity building at the Institute of Standard of Cambodia; (iv)

enhance SPS market surveillance and enforcement capability; and (v) SME improved access to SPS technologies.

Appendix 2 48

Procurement Plan (PP) - TOR and RFPs for consultants

- First year bidding documents for

goods and works

Agreed

TORs agreed.

Not

applicable

Confirmed

RFP Initiated

Not applicable

RFP issued Not applicable goods)

Procurement of goods and services will be included in consultants TORs. As ADB administration the RFP will be posted on ADB opportunities after loan/grant negotiations.

Financial Management Capacity Assessment

Completed PAM paras. 16 and 17.

Auditing arrangements including TOR Agreed Confirmed

It will be ADB administered. The EA however will be required to audit accounts annually as part of capacity building efforts. Auditors engaged to be acceptable to ADB. The EA will then submit to ADB certified copies of the audited accounts and financial statements, as well as the auditor’s report. The EA will submit to ADB a PCR within three month of project completion.

Environment Impact Assessment (EIA), Social Impact Assessment, Land Acquisition & Resettlement Plan and Indigenous People Action Plan (where applicable)

Completed Classification C. No actions required.

Project Implementation Arrangements Agreed Confirmed In place

The project implementation arrangements are in place under the current SPS-1 will be continued under the SPS-2 Subproject.

RGC Project Preparation/Management Team

EA staff assigned to lead project preparation

Core Project Management Team starts

implementing PP and other

advanced actions

Full Project Management

Team assigned

Full Project Management Team in place

This is in place under the current SPS-1 and will be continued under the SPS-2 Subproject.

Budget & funding from DP and RGC for the 1st year of project

Needs Confirmed Available Detailed project cost estimates funded by ADB and the government,

Appendix 2 49

implementation defined broken down by year for 2011-2013, is available in the PAM (first year 2011: $1,122,000; 2012: $984,000; 2013: $663,000, and 2014: $46,000).

Monitoring and evaluation requirements

Agreed. Baseline data collected as part of DMF.

Confirmed Baseline data within 9 months

Baseline data is available in the PAMunder the project DMF.

Appendix 3

50

Grant XX-CAM

Sanitary and Phytosanitary Standards -2 Subproject, Cambodia

Progress Report, Month Year

Prepared for

Asian Development Bank

By

Ministry of Industry, Mines and Energy In association with

[consulting firm)

Appendix 3

51

ABBREVIATIONS

AB - Accreditation body ADB - Asian Development Bank ASEAN - Association of South East Asian Nations CAB - Conformity Assessment Body Camcontrol - Import-Export Fraud Suppression Department EA - Executing Agency EU - European Union FAEA - Food and Agriculture Export Alliance FAO - Food and Agriculture Organization of United Nations GHP - Good Hygiene Practices GMP - Good Manufacturing Practice GTZ - Deutsche Gesellschaft für Technische Zusammenarbeit HACCP - Hazard Analysis Critical Control Point IFC - International Finance Corporation ILCC - Industrial Laboratory Center of Cambodia ISC - Institute of Standards Cambodia ISO - International Organization for Standards MAFF - Ministry of Agriculture, Forestry and Fisheries MIME - Ministry of Industry, Mining and Energy MOC - Ministry of Commerce MOH - Ministry of Health NZAID - New Zealand’s International Aid and Development Agency NSC - National Standards Council PIU - Project Implementation Unit QA - Quality assurance SME - small and medium-size enterprise SOA - Special Operating Agency SPS - Sanitary and phytosanitary measures SPSMSP - Sanitary and Phytosanitary Standards Management Systems ProjectTA - Technical assistance TBT - Technical Barriers to Trade

TDSP - Trade Development Support Project WTO - World Trade Organization UNIDO - United Nations Industrial Development Organization USAID - United States Agency for International Development USDA - United States Department of Agriculture

NOTES

(i) In this report “$” refers to US dollars. (ii) The Government is the Royal Government of Cambodia. (iii) The Fiscal Year (FY) of the government ends 31 December.

Appendix 3

52

Contents Page

I. PROJECT MANAGEMENT AND ADMINISTRATION 1 A. Office establishment 2 B. Coordination 2 C. Consultant Mobilization 3 D. Dates for the Succeeding Month 3

II. COMPONENT ACTIVITIES AND ISSUES 4 A. Component 1 Institutional Framework for SPS Management Systems 5 B. Component 2 Capacity Development in SPS Service Providers 5 C. Component 3 Capacity Development Institute of Standards Cambodia 6 D. Component 4 Capacity Development in SPS Enforcement E. Component 5 Matching Grants to Access SPS Technologies

Appendix 3

53

I. PROJECT MANAGEMENT AND ADMINISTRATION

Introduction A. Office establishment B. Coordination

1. Project Implementation Unit

2. Subproject Private Sector Forum

3. Matching Grants Committee and Technical Sub-Committee 4. SME Mentoring Group 5. Development Partners

C. Consultant Mobilization D. Dates for the Succeeding Month

II. COMPONENT ACTIVITIES AND ISSUES A. Component 1 Institutional Framework for SPS Management Systems B. Component 2 Capacity Development in SPS Service Providers C. Component 3 Capacity Development Institute of Standards Cambodia D. Component 4 Capacity Development in SPS Market Surveillance and Enforcement E. Component 5 Matching Grants for SME Access to SPS Technologies

III. SUMMARY OF EXPENDITURES FOR THE MONTH