Technical Assistance Consultant’s Report€¦ · such that there is a funding gap. The finance to close this gap must be guaranteed by Go through a budgetary allocation to ensure

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 46443 August 2015

Regional: Second Greater Mekong Subregion Corridor Towns Development Project Cambodia - Final Report (Cofinanced by the People’s Republic of China Regional Cooperation and Poverty Reduction Fund)

Prepared by

Groupe Huit Developpement – SCE – CADTIS-Consultant – Lao Consulting Group - SCC

For Asian Development Bank

SECOND GREATER MEKONG SUBREGION CORIDOR TOWNS DEVELOPMENT PROJECT – TA-8425 REG

CAMBODIA – FINAL REPORT

PART 1:

Volume I: The Main Report

Introduction

Rationalized Urban Development Strategy

Strategic Local Economic Development Plans

The Subprojects

The Project Cost Estimates and Financing Plan

Project Implementation Arrangements

Financial Analysis

Economic Analysis

Social, Poverty and Gender Assessment

Land Acquisition and Resettlement

Environment Assessment

Project Benefits, Impacts And Risks

Volume II: The Subproject Components (Conceptual Designs and Costs)

Kampot - Sihanoukville

PART 2:

Volume III: Social Development Plans and Strategies

Summary Poverty Reduction and Social Strategy (SPRSS)

Gender Action Plan (GAP)

The Project Participation Plan

Stakeholder Communications Strategy

Volume IV: The Resettlement Plan

Resettlement Plans: Kampot

Due Diligence Report: Sihanoukville

Volume V: The Environmental Examinations

Initial Environmental Examination – Cambodia

Environmental Management Plans: Kampot - Sihanoukville

PART 3:

Volume VI: Project Plans and Documents

The Project Administration Manual

The Capacity Building Program

Volume VII: Project Assessments

The Financial Analysis

The Economic Analysis

The Proverty and Social Analysis

The Gender Assessment Report

The Stakeholder Analysis

The Procurement Capacity Assessment

SLEDPs- The Project Towns Assessments

Final Report August 2015

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GMS Corridor Towns Development Project 1 Groupe huit/SCE/CADTIS/LCG/SCC

EXECUTIVE SUMMARY

A. FOCUS

The Final Report (FR) is set within the context of a Greater Mekong Subregion (GMS) objective that towns in the economic corridors should have increased economic activity, social benefits and better environments. This specific ADB funded project is therefore expected to contribute to this objective through improved infrastructure in Kampot and Sihanoukville and also enhancing climate resilience and green growth capability.

The FR therefore delivers recommendations regarding three key outputs specified in the “Outline Terms of Reference (ToR) for Consultants”, which are to prepare: (i) a Rationalized Urban Development Strategy for Cambodia; (ii) Strategic Local Economic Development Plans for both of the participating towns; and (iii) Subprojects in the form of feasibility studies and institutional arrangements to support an ADB project loan for infrastructure development in Kampot and Sihanoukville.

B. THE PROJECT CONTEXT

The selection of subprojects in each town has taken account of the following policy and project context:

Strategic Policy

The project is in conformity with the Government of Cambodia‟s (GoC) policy context, including: (i) National Strategic Development Plan; (ii) Various national sector strategies, including the National Policy on Water Supply and Sanitation; and (iii) other relevant policies, including the Policy on Sub-National Decentralization and Deconcentration. The project enhances the policies and sector priorities contained in the ADB “Country Partnership Strategy” (2014-2018), acknowledging strategic pillars in rural-urban links, human and social development and public sector management and is aligned to other ADB priorities in terms of climate change, city greening, social inclusion and stakeholder participation.

Rationalized Urban Development Strategy (RUDS)

Based on a review of GoC urban sector policies and development plans and with specific reference to the GMS economic corridors the draft RUDS for Cambodia recommends priorities for increased investment in the urban sector and the urban planning system, and the implications for local economic development planning over the medium term. It also confirms some of the strategic investments still required to optimize economic growth and social development in the economic corridors, to the benefit of secondary towns.

Strategic Local Economic Development Plans

Updated draft SLEDPs are included in the FR, which emphasize the need for increased planning and investment in local economies to optimize economic competiveness within the GMS corridor context. These plans are built around an extensive process of stakeholder consultation and utilize an evidence base contained in supporting town assessments. Key outputs of the SLEDPs clarify locally identified investment priorities, through Medium-Term Investment Programs (MTIPs), which: (i) confirm the choice of subprojects for inclusion in the ADB project loan; and (ii) set out a series of sector-based projects which should be priorities for further investment by GoC, the donor agencies and the private sector.

C. THE SUBPROJECTS

The final selection and design of the subprojects responds to an extensive process of stakeholder consultation, which included a series of intensive subproject missions to each of


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the towns, and which proved invaluable in securing agreement between the consultant team and the provincial and municipal authorities.

Throughout the period of preparing the project, stakeholders have stressed the need to address a range of existing problems and (i) secure a sustainable environment; (ii) provide better living conditions which are socially inclusive; and (iii) provide a secure investment platform for the private sector and the community. The choice of components included in each of the subprojects is therefore built around a common theme of priority investment in basic environmental infrastructure and urban enhancement as an essential baseline in achieving stakeholder priorities. They are concentrated on new provision for wastewater collection and treatment, urban drainage and flood protection and solid waste management. Each of the subproject components has been chosen to provide a match with the ADBs “Green City Agenda” and to be climate resilient, meeting at least GoC standards, with particular reference to flood protection. Further innovations incorporating provision for better environmental planning and technologies should be considered and incorporated in the detailed design of each subproject.

The consultant team has prepared conceptual schemes in readiness for detailed design for each of the proposed subproject components as part of the project loan Technical feasibility is assessed and optimum design solutions are proposed, together with detailed costs and utilization of sustainable technologies carefully matched to the operation and maintenance (O&M) capacities at provincial and town level.

Unfortunately two potential subproject components one in Kampot and the other in Sihanoukville, which were endorsed at the Interim Workshop and Tri-partite Meeting in Phnom Penh on 10/02/15 (and included in the Draft Final Report (DFR)) have subsequently been excluded from the project loan for policy and administrative reasons. They are the components for wastewater collection and treatment in Sihanoukville and for urban enhancement in the Kampot conservation area. The finally selected subproject components are listed in the “Summary of Subprojects and Costs” table below and explained in more detail in Chapter 4 (The Subprojects) of this Main Report.

D. CAPACITY BUILDING

The proposed Capacity Building Program (CBP) will be “kick started” by advance action to prepare the EA/IAs in understanding project implementation in accordance with ADB requirements (CBP-Subprogram 1). However, the core CBP activities will be geared to strengthening the capacity of the PMUs and the various stakeholders to facilitate subproject component implementation and subsequent O&M (CBP-Subprogram 2). This will be financed as part of ADB project loan amount.

Other activities geared to promoting implementation of the SLEDPs, particularly the proposed MTIPs are specified in a separate module (Subprogram 3), where other sources of funding outside of the project loan will be sought.

E. PROJECT FINANCING

As a result of the loss of two potential subproject components from the project the total ADB loan amount is now USD 33.0million and with counterpart funding amounting to USD 4.9million, equivalent to almost 13% of the total project cost. Land acquisition and resettlement compensation costs will be allocated as part of the counterpart funding for both towns. The project offers the potential for partial cost recovery for the planned additional solid waste collection services in both towns and for the proposed wastewater collection services in Kampot. Both towns will apply and expand an incremental tariff system for all users.


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F. PROJECT IMPLEMENTATION

It is confirmed that the Ministry of Public Works and Transport (MPWT) will be the Executing Agency (EA) for the project in Cambodia and its General Department of Public Works (GDPW) will be its Implementing Agency (IA).

A Project Steering Committees (PSC) will be headed by the Secretary of State for MPWT and will include representation from key ministries and the provincial and municipal governments of both participating towns. The EA will establish a centralized Project Management Unit (PMU) within GDPW and this unit will manage all bidding and supervise the overall management of the subprojects. Project Implementation Units (PIUs) will be established, one for each town and they will be responsible for overseeing the implementation of the subproject investments on a day to day basis, including the implementation of the Project Performance Monitoring System (PPMS). The structure and resources of the PIUs will reflect the needs of the subprojects in each town and will be built around the existing professional, administrative and technical support staff and supplemented as appropriate.

A Project Management and Implementation Support (PMIS) team of international and national consultants will be appointed to assist project management and implementation and to work closely with the PMU/PIUSs and the provincial and town administrations.

G. DUE DILIGENCE AND SAFEGUARDS

The Economic Assessment shows that both of the subprojects are viable. EIRRS for the subproject components are higher than the ADB threshold of 12%, ranging from 13.9% to 18.1%. A Financial Sustainability Analysis shows that revenue generation from selected subprojects in each town (egg wastewater tariffs) will not be sufficient to cover O&M costs, such that there is a funding gap. The finance to close this gap must be guaranteed by Go through a budgetary allocation to ensure proper O&M, such that the investments attain their designed useful life periods.

The Initial Environmental Examination (IEE) shows that the two subprojects are not environmentally critical. The extent of adverse impacts is expected to be local and site specific. Therefore the sub-projects are not expected to have long-term, persistent or permanent/irreversible impacts on human health and safety, air quality, water quality, biodiversity and lifestyles in the local communities. Impacts in most cases will be mainly related to the construction phase. Within the context of ADB safeguards policy and practice the subprojects are classified as category B. Two separate Environmental Management Plans (EMPs) are developed for each of the subprojects, providing impact plans, environmental monitoring plans and specifying the institutional responsibilities and capacity needs for environmental management of the project.

Summary Poverty Reduction and Social Strategies (SPRSS) recommend the projects role in poverty reduction through employment creation; in the short-term through employment in construction related activities and in the medium/long term through job creation from an increase in private investments in both towns as a result of improvements in basic urban services, urban enhancement and improved planning capacities. Although the numbers of poor and vulnerable households are relatively low there are risks that deprivation will grow, particularly in Sihanoukville where the affects of low value tourism has led to social exploitation. Project implementation will ensure social inclusion and participation as far as possible but be concentrated on project related issues to ensure participation by the poor and vulnerable households. For instance subsidy schemes will be implemented to ensure that these groups will benefit from the proposed improvements to wastewater collection.

In the “Global Gender Gap Index (2014)”, Cambodia ranks 108th out of 142 participating countries. On a micro- scale the proposed project activities will seek to reduce gender


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inequalities through a variety of interventions, and where the Gender Action Plan (GAP) proposes a number of action areas mainly in environmental awareness and employment generation. Many of these action areas are appropriate as activities with high level commitment by the Department‟s of Women‟s Affairs (DOWA) and if possible other relevant NGOs and CSOs during project implementation. Regarding land acquisition and resettlement, the subproject in Sihanoukville does not trigger any land acquisition or resettlement and therefore falls into Category C for resettlement as per SPS (2009). It is noted that the proposed improvements of the existing solid waste dumpsite will positively affect the waste picker community with provision of improved basic amenities such as an electricity connection, drinking and sanitation facilities. These improvements being a temporary solution waiting for the identification of a new landfill site by local authorities, the waste pickers will not be relocated under this project. In Kampot the number of families to be resettled as a result of the subproject proposals is small in number, but there are a significant number or properties where land ownership is affected, including a relatively large scale site required for implementation of the proposed wastewater treatment plant. However, in the context of ADB safeguards policy and practice the subproject in Kampot is classified as Category B. The Resettlement Plan (RP) for Kampot shows that the total land acquisition and resettlement costs are estimated at approximately USD2.10million.

H. PROJECT PREPARATION

The PPTA Consultants have included several “Advance Actions” in the FR, such that the Project can be implemented at the earliest possible time, which are included in the: (i) Project Administration Manual (PAM); (ii) Design and Monitoring Framework and (iii) Procurement Plan.


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Summary of Subprojects and Costs

($ million)

Item

Amounts

A. Base Cost

1 Kampot

1.1 Wastewater collection and treatment 9.54

1.2 Solid waste management 2.80

1.3 Urban drainage 1.63

Subtotal Kampot 13.98

2 Sihanoukville



Subtotal Sihanoukville 12.58

3 Project Implementation and Capacity Building 3.78

4 Incremental Administration Cost 0.80

Subtotal (A) 31.15

B. Contingencies

1 Physical contingencies 3.16

2 Price contingencies 2.72

Subtotal (B) 5.88

C. Financial Charges During Implementation 0.87

Total (A+B+C) 37.90

Base cost in April 2015 prices. Includes taxes and duties of $2.62 million; and land acquisition and resettlement costs of $1.55 million.

Physical contingency is 10%.

Price contingency is based on foreign inflation rates of 0.3% in 2015, 1.5% in 2016, 1.4% in 2017 and 1.5% from 2018 and onwards; and local inflation rates of 3.0% in 2015, 2.7% in 2016, and 3.5% from 2017 and onwards.

ADB loan interest at 1% per year.

Source: ADB estimates


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ABRREVIATIONS

ADB

Asian Development Bank

ADF Asian Development Fund

CBO

Community-based Organization

CBP

Capacity Building Program

CPS Country Partnership Strategy

CSARO Community Sanitation and Recycling Organization

CTDP Corridor Towns Development Project

DE Department of Environment

FR Final Report

DMF Design and Monitoring Framework

DMS Detailed Measurement Survey

EA

Executing Agency

ECA Environmental Compliance Audit

EIA Environmental Impact Assessment

EIRR Economic Internal Rate of Return

EMP Environmental Monitoring Plans

EOCC Economic Opportunity Cost Of Capital

FMA Financial Management Assessment

FMM Financial Management Manual

GAEA Global Action For Environment Awareness

GAP Gender Action Plans

GCAP Green City Action Plans

GDP Gross Domestic Product

GDPW

General Department of Public Works (MPWT)

GII Gender Inequality Index

GMS

Greater Mekong Subregion

IA

Implementing Agency

ICT Information And Communications Technology

IEE Initial Environmental Examinations

IOL Inventory of Losses

IRC Inter-Ministerial Resettlement Committee

ISA International Standards of Auditing

MCFA

Ministry of Culture and Fine Arts

MEF Ministry of Economy and Finance

MLMUPC

Ministry of Land Management, Urban Planning and Construction

MoC Ministry of Construction

MoE

Ministry of Environment

MOF Ministry of Finance

MoH

Ministry of Health

MoP Ministry of Planning

MoT Ministry of Tourism

MoWA Ministry of Women Affairs

MPWT

Ministry of Public Works and Transport


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NAA National Audit Authority

NGO

Non Governmental Organization

NSDP National Strategic Development Plan

NUDS-F National Urban Development Strategy Framework

O&M

Operation & Maintenance

PAM Project Administration Manual

PCU Project Coordination Unit

PDWA

Provincial Department of Women Affairs

PIU

Project Implementation Unit

PMIS

Project Management and Implementation Support

PMU

Project Management Unit

PPTA Project Preparation Technical Assistance

PSC

Project Steering Committee

QCBS Quality- and Cost-Based Selection

RCS Replacement Cost Survey

RP Resettlement Plans

RUDS Rationalized Urban Development Strategy

SEZ Special Economic Zone

SLEDP Strategic Local Economic Development Plans

SPRSS Summary Poverty Reduction and Social Strategies

SPS Safeguard Policy Statement

SWOT Strengths, Weaknesses, Opportunities and Threats

ToR Terms of Reference

TSUADF Tonle Sap Urban Areas Development Framework

UMP Urban Management Partnerships


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TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................. 1

PART A - THE PROJECT CONTEXT ............................................................................. 12

1. INTRODUCTION ..................................................................................................... 13

1.1. Background ................................................................................................... 13

1.2. Purpose ......................................................................................................... 16

1.3. The Project – Financial Considerations .......................................................... 17

1.4. Subproject Selection ...................................................................................... 17

1.5. Capacity Building ........................................................................................... 18

1.6. Stakeholder Consultation ............................................................................... 18

1.7. Structure of The Report ................................................................................. 20

2. RATIONALIZED URBAN DEVELOPMENT STRATEGY .......................................... 22

2.1. The Project Policy and Policy Context ........................................................... 22

2.2. Orientations for Urban Development .............................................................. 28

3. THE STRATEGIC LOCAL ECONOMIC DEVELOPMENT PLANS ........................... 37

3.1. Context for the Preparation of Strategic Local Economic Development Plans 37

3.2. Preparing the SLEDPs ................................................................................... 38

3.3. Stakeholder Consultation ............................................................................... 39

3.4. Objectives and Outputs of the SLEDPs ......................................................... 39

3.5. Interpretation of the SLEDPs ......................................................................... 40

3A. THE KAMPOT STRATEGIC LOCAL ECONOMIC DEVELOPMENT PLAN ............. 42

3.6. Overview ....................................................................................................... 42

3.7. Key Development Issues ............................................................................... 42

3.8. Master Planning Intent – Master Plan Summary ............................................ 43

3.9. Local Development Priorities ......................................................................... 46

3.10. Problems and Opportunities for Medium-Term Investment ............................ 48

3.11. Medium-Term Investment Planning ............................................................... 54

3B. THE SIHANOUKVILLE STRATEGIC LOCAL ECONOMIC DEVELOPMENT PLAN 58

3.12. Overview ....................................................................................................... 58

3.13. Key Development Issues ............................................................................... 59

3.14. The Planning Intent – Master Plan Summary ................................................. 59

3.15. Local Development Priorities ......................................................................... 62

3.16. Problems and Opportunities for Medium-Term Investment ............................ 64

3.17. Medium-Term Investment Planning ............................................................... 70

PART B - THE PROJECT DESCRIPTION ..................................................................... 74

4. THE SUBPROJECTS .............................................................................................. 75

4.1. Purpose ......................................................................................................... 75

4.2. Subproject Components Selection ................................................................. 75

4.3. Capacity Building ........................................................................................... 75

4.4. Investment Priorities ...................................................................................... 76

4.5. Subproject Overviews .................................................................................... 76

4A. THE KAMPOT SUBPROJECT ................................................................................. 79


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4B. THE SIHANOUKVILLE SUBPROJECT ................................................................... 85

5. THE PROJECT COST ESTIMATES AND FINANCING PLAN ................................. 89

5.1. Basis of Investment Cost and Financing Plan ................................................ 89

5.2. Investment Cost - Summary .......................................................................... 89

5.3. Investment Cost – by City .............................................................................. 90

5.4. Financing Plan ............................................................................................... 92

6. PROJECT IMPLEMENTATION ARRANGEMENTS ................................................. 93

6.1. Project Management and Implementation ...................................................... 93

6.2. Implementation Schedule .............................................................................. 94

6.3. Project Implementation Support ..................................................................... 96

6.4. Accounting and Auditing ................................................................................ 99

6.5. Reporting ....................................................................................................... 99

6.6. Project Performance, Monitoring, Evaluation and Review .............................. 99

6.7. Stakeholder Participation ............................................................................. 100

6.8. Sector Governance and Corruption Risk Assessment ................................. 101

PART C - DUE DILIGENCE AND SAFEGUARDS ................................................... 102

7. FINANCIAL ANALYSIS .......................................................................................... 103

7.1. Introduction .................................................................................................. 103

7.2. Financial Evaluation of Revenue-Generating Components .......................... 103

7.3. Fiscal Analysis ............................................................................................. 106

7.4. Proposed Covenant ..................................................................................... 107

8. ECONOMIC ANALYSIS ......................................................................................... 109

8.1. Introduction .................................................................................................. 109

8.2. Beneficiaries ................................................................................................ 111

8.3. Sustainability ............................................................................................... 111

8.4. Distribution of Economic Benefits and Poverty Impact ................................. 112

9. SOCIAL, POVERTY AND GENDER ASSESSMENT ............................................. 114

9.1. Social inclusion and poverty reduction ......................................................... 114

9.2. Gender equity .............................................................................................. 115

10. LAND ACQUISITION AND RESETTLEMENT ....................................................... 117

10.1. Kampot ........................................................................................................ 117

10.2. Sihanoukville ............................................................................................... 119

10.3. Conclusions ................................................................................................. 120

11. ENVIRONMENT ASSESSMENT ........................................................................... 121

11.1. Kampot ........................................................................................................ 121

11.2. Sihanoukville ............................................................................................... 122

11.3. Climate Change ........................................................................................... 122

11.4. Conclusions ................................................................................................. 123

12. PROJECT BENEFITS, IMPACTS AND RISKS ...................................................... 124

12.1. Project Benefits ........................................................................................... 124

12.2. Project Risks and Mitigation ......................................................................... 125


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LIST OF FIGURES

Figure 1: Location of the Seven Projects Towns in the Greater Mekong Subregion (GMS) Corridor Towns Development Project (CTDP) ..................................................................... 15

Figure 2: Major Urban Areas in Cambodia (more than 40,000 persons in 2008) ................. 29

Figure 3: The Green City Agenda (Adapted) ....................................................................... 39

Figure 4: Kampot - Spatial Development Strategy ............................................................... 44

Figure 5: Kampot - Land Use Strategy ................................................................................ 45

Figure 6: Sihanoukville – Spatial Development Strategy ..................................................... 61

Figure 7: Sihanoukville - Land Use Strategy ....................................................................... 62

Figure 8: Project Organizational Framework for GMS Implementation ................................ 93

Figure 9: Overall Project Implementation Plan .................................................................... 95

Figure 10: Program Overview ............................................................................................. 98


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LIST OF TABLES

Table 1: On-going Investments under the GMS Program by Sectors in Cambodia ............. 28

Table 2: Summary of Proposed Recommendations ............................................................ 33

Table 3: Priority Investments under the GMS Program by Sectors in Cambodia ................. 34

Table 4: Guiding the SLEDPs Preparation – Primary Themes ............................................ 41

Table 5: Key Development Issues – Kampot ....................................................................... 43

Table 6: Local Development Priorities and Projects ............................................................ 46

Table 7: Preparation of Kampot SLEDP - SWOT Analysis - Kampot ................................... 51

Table 8: Priorities for Medium-Term Investment Program - Kampot .................................... 56

Table 9: Key Development Issues – Sihanoukville .............................................................. 59

Table 10: Local Development Priorities and Projects .......................................................... 63

Table 11: Preparation of Sihanoukville SLEDP – SWOT Analysis ....................................... 67

Table 12: Priorities for Medium-Term Investment Program - Sihanoukville ......................... 72

Table 13: Kampot Project Overview .................................................................................... 76

Table 14: Sihanoukville Project Overview ........................................................................... 78

Table 15: Project Investment Cost ...................................................................................... 89

Table 16: Investment Cost – by City .................................................................................... 91

Table 17: Financing Plan .................................................................................................... 92

Table 18: Summary of Financial Due Diligence ................................................................. 103

Table 19: Proposed Wastewater Tariffs for Households, collected through Kampot WSC 104

Table 20: Kampot Monthly Water and Wastewater Bill vs. Monthly Household Income ..... 104

Table 21: Proposed Solid Waste Management Tariffs – Household (Category 1) ............. 105

Table 22: Solid Waste Monthly Bills / Monthly Household Income..................................... 105

Table 23: Recurrent and Capital Investment Costs (2011 to 2013) ................................... 106

Table 24:Revenues and Costs (2011 to 2013) in KR million.............................................. 106

Table 25: Projected Revenue, O&M and Funding Gap (KR billion) ................................... 107

Table 26: Summary of Economic Capital Costs ($ million) ................................................ 112

Table 27: Economic Viability Results per Component (RIEL billion) .................................. 112

Table 28: Overall Economic Viability Results (RIEL billion) ............................................... 113

Table 29: Projected Beneficiaries ...................................................................................... 113

Table 30: Benefits Accruing to the Poor and Poverty Impact Ratio (RIEL billion) .............. 113

Table 31: Summary of LAR Impacts .................................................................................. 118


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Part A

The Project Context


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1. INTRODUCTION

BACKGROUND 1.1.

This Project Preparation Technical Assistance (PPTA) No 8425-VIE: Second Greater Mekong Subregion - Corridor Towns Development Project (CTDP) is being prepared within the context of the approved “Outline Terms of Reference (ToR) for Consultants” adopted by the Asian Development Bank (ADB).

The PPTA commenced with a Phase 1 - Inception, which was completed at the end August 2014. The primary output of this 1st phase was an Inception Report, which set out: (i) An approach to PPTA preparation, including a work plan and personnel schedule; (ii) Identification of key issues for consideration in the PPTA; and (iii) An overview of the proposed subproject components to be considered in the PPTA. The Inception Report was presented and discussed at a Tripartite Meeting with representatives from the ADB, the Executing Agency (EA), the participating towns and the consultant team. The meeting took place in Phnom Penh on 18th September 2014, where the Inception Report was agreed as an appropriate working context to take the PPTA forward to completion.

Phase 2 (Planning) of the PPTA was completed at the end December 2014 and the outputs presented in an Interim Report, which covered three main sets of activities: (i) recommendations for medium-term development planning and investment programming priorities in the form of preliminary outline Strategic Local Economic Development Plans (SLEDP) for each project town; (ii) recommendations on the selection of subproject components for each project town; and (iii) preliminary sector assessments for the subproject components. The Interim Report was presented and discussed at an Interim Workshop/2nd Tripartite Meeting on 10th February 2015 in Phnom Penh. The Interim Report was endorsed subject to a number of comments from key stakeholders as an appropriate context to take the PPTA forward into Phase 3 (Project Feasibility) of the PPTA. This included a final shortlist of subproject components for inclusion in the ADB Loan, subject to detailed assessment.

Phase 3 (Project Feasibility) activities were largely completed at end March/early April 2015 and the outputs were presented in a Draft Final Report (DFR). This included: (i) a Rationalized Urban Development Strategy (RUDS) at national scale; (ii) an SLEDP for the two project towns; (iii) conceptual designs and costs for the selected subprojects and subproject components in each town; (iv) an assessment of the feasibility of the sub-projects and subproject components in each town; and (v) preparing documentation for project readiness and advance actions. The DFR was subsequently presented at another Workshop/Tri-partite meeting held on 29th May 2015 in Phnom Penh. This meeting generally agreed the recommendations contained in the Final Report, subject to a number of significant changes to the project, which were subsequently agreed between the ADB and the GoC.1 The project changes were primarily concerning: (i) removal of the recommended wastewater collection and treatment subproject component in Sihanoukville; and (ii) removal of the urban enhancement subproject component in Kampot from the project.

The loss of the two subproject components is regrettable. Here it is noted that the GoC authorities are not in a position to guarantee that the land required for the proposed wastewater treatment plant (WWTP) in Sihanoukville can be made available in time for project implementation. As the WWTP is an essential part of the originally proposed

1 ADB Memorandum of Understanding – Loan Fact Finding (21st-27th March 2015).


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wastewater collection and treatment subproject component then it became apparent that it would have to be withdrawn from the project. This is regrettable – Sihanoukville has serious wastewater pollution problems affecting many of the towns residential and tourist environments, including beach areas directly affected by raw sewage. Without investment in new wastewater treatment facilities, these problems will likely get worse, thus placing the tourist potential of Sihanoukville at risk.

Regarding the earlier proposed urban enhancement plan for the conservation area in Kampot, as a result of a written directive from the Ministry of Economy and Finance (MEF) the subproject component is withdrawn from the project. Again this is regrettable, because this subproject component could have laid the foundations for significant environmental enhancement, leading to economic uplift, increased tourism and subsequent restoration of heritage property by private owners. The subproject component was strongly supported by the provincial and municipal governments, such that request for its withdrawal at the last minute of project loan preparation is regrettable.

Fortunately this subproject component was supported by a discrete capacity building package for awareness building and technical advice in building conservation, which will remain as a package in the Capacity Building Program (Subprogram 2 - Package 8).


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PURPOSE 1.2.

The FR reflects the methodology for Phase 3 (Project Feasibility) as set out in the Inception Report. It builds on the outputs of the Interim Report, the DFR and the stakeholder agreements made at the Interim Workshop/Tri-partite Meetings and the DFR Workshop/Tri-partite Meetings. The primary outputs of the consultant team‟s work are:

Prepare Rationalized Urban Development Strategy (RUDS)

The consultant team reviewed the existing range of urban sector policies, development plans and project programs in the context of the GMS economic corridors. The review provides the foundation for preparation of a draft RUDS for Cambodia, which recommends priorities for increased investment in the urban sector and the urban planning system, and the implications for strategic local economic development planning over the medium term.

Prepare Strategic Local Economic Development Plans (SLEDP) for Kampot and Sihanoukville.

The consultant team has built on the preliminary SLEDPs for each town, included in the Interim Report. Draft SLEDPs were included in the DFR, which emphasize the need for increased planning and investment in local economies to optimize economic competiveness within the GMS corridor context. The SLEDPs clarify locally identified investment priorities and the capacity building recommended to bring the investment priorities to fruition.

Prepare Conceptual Designs and Costs for the Subproject Components.

The consultant team has prepared conceptual schemes in readiness for detailed design for each of the components contained in the proposed subprojects. The components are built around a clear rationale and easily identified benefits. Technical feasibility is assessed and optimum design solutions are proposed, together with detailed costs and an associated program of capacity building to ensure sustainable implementation, operations and management.

The consultant team has carried out this work in close co-ordination with potential representatives of potential Project Implementation Units (PIUs) in each of the towns. In particular reference was made to subproject component designs and costs prepared locally by the provincial and municipal government staff.

Assessing the Feasibility of the Subprojects (and the individual components) in each Town.

The consultant team has confirmed the feasibility of the subprojects and the individual components, through a series of sector based assessments meeting ADB policy and guidelines and social safeguards requirements. In response a number of plans are prepared to ensure feasible subprojects during project implementation. They include: (i) Summary Poverty Reduction and Social Strategy (SPRSS); (ii) Gender Action Plans (GAP); (iii) Stakeholder Communications Strategy; (iv) Project Participation Plan; (v) Resettlement Plans; (vi) Environmental Monitoring Plans (EMP) and a (vii) Capacity Building Program (CBP).

Preparing for Project Implementation (Project Preparation)

The consultant team has also sought to take advance action in readiness for Project implementation. This has included preparation of a number of plans and documents, required by the consultant team‟s ToR including a: (i) Design and Monitoring Framework (DMF); (ii) Procurement Plan; and (iii) Project Administration Manual (PAM).


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THE PROJECT – FINANCIAL CONSIDERATIONS 1.3.

The total ADB loan amount is USD 33.0million and with counterpart funding amounting to USD 4.9million, equivalent to almost 13% of the total project cost. For Kampot the revised loan amount will be USD 16.9million and for Sihanoukville will be USD 15.22million. Land acquisition and resettlement compensation costs will be allocated as part of the counterpart funding for both towns. The remainder including design/construction supervision, capacity building and contingencies will be financed from the ADB loan.

The project offers the potential for partial cost recovery for the planned additional solid waste collection services in both towns and for the proposed wastewater collection services in Kampot. Both towns will apply and expand an incremental tariff system for all users.

SUBPROJECT SELECTION 1.4.

A long list of potential subproject components was identified during Phase 1 (Inception). This list was based on an indication of the potential subprojects contained in the ToR for consultants and subsequent discussions with key stakeholders in each of the towns. As a result the list in Kampot was expanded to include the proposed urban enhancement component.

From the outset of the discussions with the PMUs in the project towns, it was apparent that the value of the long list components would substantially exceed the amount available for ADB funding. It was clear that financial cut-off points would have to be established and some components would have to be dropped, particularly in Sihanoukville. As a result the consultant team developed a simple grading system which allowed the component priorities to be discussed and agreed with the stakeholders in the two towns. The grading system was based around the primary themes guiding the ADB‟s “Green City Agenda” - economic competiveness – equity - environment. The grading system was generally agreed at the Inception Workshop/Tripartite Meeting2 and has subsequently been used to establish which subproject components should be recommended for carrying forward into the project loan.

In parallel to the application of the grading system the consultant team ensured the process of subproject selection accurately reflected stakeholder views and inputs and this was achieved through extensive discussions with the EA, key stakeholders at provincial and municipal/district level and with the wider community. This included a series of focus group discussions and community stakeholder meetings. Adjustments on the final recommendations to the selected subprojects and subproject components were made as a result of these discussions, but as stated above later adjusted by the withdrawal of two of the subproject components; wastewater collection and treatment in Sihanoukville and urban enhancement in Kampot.

The final agreed list of subproject components to be included in the project loan are listed below and described in a summary format in Chapter 4 (The Subprojects) of this Main Report and in detail in Volume II (The Subproject Components - Conceptual Designs and Costs). They are:

Kampot:

KM1 - Wastewater Collection and Treatment

KM2 - Solid Waste Management

KM3 - Urban Drainage

2 Inception Workshop/Tri-partite Meeting – Phnom Penh (18/09/15)


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Sihanoukville:

SHV1 - Solid Waste Management

SHV2 - Urban Drainage

CAPACITY BUILDING 1.5.

The subprojects will be supported by a Capacity Building Program (CBP), which will set out the proposed arrangements to implement and manage the project and in particular the subproject components. The CBP is specifically tailored to the needs of each town and addresses the technical support required to ensure the subprojects are sustainable. The CBP includes measures to ensure that other key project related matters, including poverty, gender and community development are included. Further details of the CBP are given in Chapter 6 (Project Implementation Arrangements) and in Volume VI (The Project Plans and Documents).

Additional to the project loan the CBP recommends the need for funding in the form of “Strengthening Capacities to Implement the SLEDPs”. The main objective would be to strengthen capacity at provincial and municipal/district level to better define and implement local economic plans and to work with more sustainable spatial planning scenarios

STAKEHOLDER CONSULTATION 1.6.

The recommendations contained in this FR directly respond to the results of an extensive process of stakeholder consultation, which provided: (i) further data and information to confirm the consultant team‟s research; (ii) assistance and advice to the consultant team in the design and development of the subprojects and in their assessment; (iii) assistance and advice to the consultant team in preparing the SLEDPs for each town; and (iv) dialogue in progressing the potential project taking into account the Go requirements.

Stakeholder consultation followed the principles set out in the ToR for consultants, the Stakeholder Analysis (Volume VII – Project Assessments refers) and working within the resource and timing constraints imposed on preparation of this PPTA.

Key aspects of stakeholder consultation in the Phase 3 (Project Feasibility) included:

Interim Workshop/Tri-partite Meeting (Phnom Penh – 10th February 2015)

The event was chaired by the EA-Ministry of Public Works and Transport (MPWT), and with attendance from other key ministries and from the provincial and town level government agencies. The Workshop was divided into two main parts, each with a half day agenda.

(a) The Interim Workshop - which considered the strategic and policy aspects of the Interim Report, together with matters of common interest to Kampot and Sihanoukville. The Workshop also agreed the recommendations on subproject selection and a recommended outline for the CBP reported by the consultant team.

(b) The Tri-partite Meeting - where key representatives from the individual towns and representatives from the EA considered the results of the Interim Workshop and focused attention on key policy aspects, outstanding subproject issues and the PPTA preparation process going forward.


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Draft Final Report (DFR) Workshop/Tri-partite Meeting (Phnom Penh – 29th May 2015)

The event was held at the commencement of ADB Loan Fact Finding (28th May – 3rd June) and was attended by key representatives from the EA-Ministry of Public Works and Transport (MPWT), from other ministries, including the Ministry of Land Management, Urban Planning and Construction, the Ministry of Environment and the Ministry of Women‟s Affairs, together with the provincial and district level government agencies from Kampot and Sihanoukville.

The Workshop and Tri-partite Meeting were concluded through a half day agenda which considered the full range of proposals contained in the DFR and the key stakeholder concerns regarding the project proposals and generally agreed the project going forward. A major concern was the lack of conclusion on land availability for the construction the proposed wastewater treatment plant at Sihanoukville.

The key conclusions and recommendations from the DFR Workshop and the Tri-partite Meeting were reported in a Loan Fact Finding – Wrap Up Meeting (3rd June) also held in Phnom Penh. This meeting made a number of changes, which were subsequently agreed by the ADB and GoC.3

The Subproject Missions

Central to Phase 3 (Project Feasibility) the consultant team activities consisted of a set of intensive subproject missions to both towns. The main purpose for each mission was to work closely with the provincial and municipal/district level stakeholders to review the emerging feasibility studies for the subproject components and in particular to: (i) review the design principles and standards for the subproject components and where appropriate make recommendations for improvement; (ii) review and further develop detailed costs for the recommended subproject components; (iii) establish data/information and criteria for the economic, social, resettlement, environmental, institutional and financial/economic assessments of the subprojects; (iv) make recommendations to adjust the selected subproject components in response to the conclusions of assessments; and (v) to ensure the subprojects are fully justified and are beneficial.

As a direct result of the Phase 3 missions and post DFR discussions a wide variety of subproject amendments were agreed between the consultant team and the EA and the provincial and municipal authorities.

Focus Group Discussions/Stakeholder Consultations/Workshops

In conjunction with the subproject missions the consultant team instigated a series of focus group discussions, stakeholder consultations and workshops, with the intention of opinion gathering and the collection of supplementary data/information. The consultations were mainly linked to the subproject components and also to particular stakeholders and sectors in each town. These consultations have been essential to the assessments/plans in support of the social/gender, environment, land acquisition and resettlement, capacity building and financial and economic sectors.

Surveys

Similarly the subproject missions brought the instigation of essential surveys in support of project preparation, including a range of social surveys and the surveys essential to the preparation of the SPRSS, GAP, RPs, EMPs and CBP. For the RPs this has of course included an inventory of losses survey in each town and social surveys of the project affected persons.

3 ADB Memorandum of Understanding – Loan Fact Finding (28th May-3rd June 2015).


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Individual Stakeholder Consultations

Individual stakeholder discussions continued to be held on as needs basis with key stakeholders throughout Phase 3 (Project Feasibility). Typically these discussions took the form of structured discussions on technical, institutional and financial issues related to the subprojects and the provision of data and information to support subproject assessments.

SLEDP Consultations

The preliminary SLEDPs were reviewed in the context of the RUDS and further consultations with officials at the EA and at provincial and municipal/district level in both towns. The review which included a questionnaire survey confirmed the broad direction and priorities of the SLEDPs and the project priorities included in the outline Medium Term Investment Programs (MTIPs).

STRUCTURE OF THE REPORT 1.7.

The FR is structured, such that stakeholders are provided with a comprehensive and detailed picture of the potential project. It consists of seven volumes:

Volume I - Main Report

The Main Report provides an overview of project and is divided into three consecutive parts:

Part A – Project Context – which has two outputs: (i) Rationalized Urban Development Strategy (RUDS) for Cambodia; and (ii) Strategic Local Economic Development Plans (SLEDP) for Kampot and Sihanoukville.

Part B – Project Description – which provides an “easy read” description of the two subprojects and the subproject components, together with the cost estimates, financing plan and the proposed implementation arrangements; and

Part C – Due Diligence and Safeguards - which also provides an easy read description of the analysis and assessment of project feasibility, including the financial and economic analysis, social, poverty and gender assessments, resettlement planning and the environmental assessment. Project benefits and project risks are also described.

Volume II - The Subproject Components

This volume provides a detailed description of the subproject components and their associated development costs, together with a reasoned justification and an indication of the benefits which will ensue.

Volume III – Social Development Plans and Strategies

This volume provides the SPRSS for each town, the GAPs, the Project Participation Plan and the Stakeholder Communications Strategy.

Volume IV – Resettlement Plan

This volume provides a detailed description of the RP for Kampot and Due Diligence Report (DDR) for Sihanoukville, prepared in accordance with ADB procedures and guidelines.

Volume V - Environmental Examination

This volume provides a detailed description of the Initial Environmental Examinations (IEE) and the Environmental Monitoring Plans (EMP) in the two towns, prepared in accordance with ADB procedures and guidelines.


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Volume VI - Project Plans and Documents

This volume is focused on the remaining project plans and project management tools, including the Design and Monitoring Framework (DMF), the Project Administration Program (PAM), the Procurement Plan and the Capacity Building Program (CBP).

Volume VII - Project Assessments

This final volume is devoted to the supporting assessment reports and includes the Financial Analysis, Economic Analysis, Poverty and Social Analysis, Gender Assessment Report, Stakeholder Analysis, Procurement Capacity Assessment and the Town Assessments.


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2. RATIONALIZED URBAN DEVELOPMENT STRATEGY

THE PROJECT POLICY AND POLICY CONTEXT 2.1.

The National Planning and Policy Context 2.1.1.

The Rectangular Strategy for Growth, Employment, Equity and Efficiency, Phase III (RSIII) provides the development policies for the Fifth Legislature of the National Assembly (2013-2018). The government sees the RSIII as the blueprint “to guide the activities of all stakeholders to further pursue and strengthen long-term sustainable development aimed at promoting economic growth, creating jobs, an equitable distribution of the fruits of growth, and ensuring effectiveness of public institutions and management of resources.” The National Strategic Development Plan (NSDP), 2014-2018, which will operate the RSIII, has the overarching objective of reducing poverty to about 15% by 20184. The major strategic thrusts and components are as follows:

Good governance (core reform): (a) fighting corruption; (b) legal and judicial reforms; (c) public administration reforms, including public financial management, decentralization and deconcentration; and (d) reforming the armed forces.

Agriculture: (a) improving agricultural productivity, diversification, and commercialization; (b) focusing on land reform and de-mining; (c) promoting livestock farming and aquaculture; and (d) sustainable management of national resources.

Physical infrastructure: (a) developing transport and urban infrastructure, (b) managing water resources and irrigation systems, (c) developing electricity power and access, and (d) developing information and communication technology.

Private sector development and employment: (a) strengthening the private sector and promoting investment and business; (b) developing industry and SMEs; (c) strengthening labor markets; and (d) enhancing the banking and finance sectors.

Capacity development and human resources development: (a) strengthening education, science and technology, and technical training, (b) promoting health and nutrition, (c) developing social protection, and (d) implementing the population policy and gender equity.

Creation of a conducive environment for the RSIII: (a) promoting peace, political stability, and social order; (b) integrating into the region and the world; (c) creating a favorable macroeconomic and financial environment, and environment sustainability; and (d) developing partnerships in development.

The NSDP, although it is an important policy document and the urban sector accounts for about 50% of the total national GDP, does not yet consider the crucial role of the growing urban sector. The NSDP touches on urban development only implicitly in its emphasis on governance, economic development, and infrastructure.

Until 2008 or 2009, there has not been much in terms of an explicit urban legislation or policy in government documents. However, now there are new developments in the form of laws

4 The National Strategic Development Plan, 2014-2018 was endorsed by the National Assembly on 26 June 2014.


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and sub decrees, policy, and strategy statements that have influence on the emerging urban sector as their implementation begins in 2011.

The government has embarked on a wide range of sub national governance reform, recognizing the need to introduce new systems of governance at provincial, municipal, and district levels. Key legislation on urban development includes (i) the 2008 Organic Law5, which provides direction for decentralized administration and overall management to improve service delivery at the sub national level; (ii) the 2009 Policy on Sub-National decentralization and deconcentration, which recognizes 26 municipalities as the backbone for future urban management; and (iii) the 2011 Law on Administrative Management of the Capital, Provinces, Municipalities, Districts and Khans.

In support of the new decentralized structure, the Ministry of Land Management, Urban Planning and Construction (MLMUPC) has taken several initiatives to set up a framework for urban development where the municipalities eventually have to take on the main role in further planning and implementation. The initiatives include the following draft policy documents: (i) spatial development policy (including regional planning), (ii) national housing policy, and (iii) a working program for the preparation of urban land-use plans. The MLMUPC is also currently developing a National Urban Development Strategy Framework (NUDS-F) which will outline the National Urban Development Strategy (NUDS) but without the details and analytical underpinnings. The MLMUPC is seeking ADB assistance to develop a full blown NUDS.

In terms of basic urban services‟ delivery, the NSDP includes some key actions for water supply which are to (i) develop a legal framework for urban water supply; (ii) promote decentralization and deconcentration; (iii) transfer full autonomy for service delivery to all public waterworks; (iv) increase sector financing; (v) improve sector performance and expand access to safe, affordable, and sustainable water supplies; and (vi) improve water source protection and enforcement of regulations. The 2003 National Policy on Water Supply and Sanitation calls for greater private sector participation, improved cost recovery, cross subsidies where necessary, autonomy of public utilities, and the establishment of a regulatory body.

The GMS Economic Corridors 2.1.2.

The Greater Mekong Subregion (GMS) has been predominantly rural with a majority of the population traditionally depending on agriculture for livelihood and employment. This trend, however, is gradually changing and the countries are shifting from subsistence farming to diversified economies, and from a centrally planned system towards decentralization and market-based systems. This shift calls for cooperation among the Mekong countries in order to enhance their potential, share resources, and to boost competitiveness in the international market (see Box 1).

The participating towns are either strategically located border towns, or important hubs. The long-term approach aims to develop these towns, which lie in major transport corridors, as economic corridors. Adequate investment must be set aside for connectivity and logistic service-related needs, such as those pertaining to information and communications technology (ICT), physical infrastructure linkage, customs and border efficiency, and also sound macroeconomic management with enabling policies and regulatory mechanisms.

The focus on corridor town development is a development approach that will maximize the economic benefits of increased trade and traffic flows along the major transport corridors in the GMS with the expected positive impacts resulting from accelerated investments in strategically located towns and cities, and added value on economic growth through

5 Royal Government of Cambodia. 2008. Organic Law on the Administrative Management of Capital, Provinces,

Municipalities, Districts, and Khans.


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development oriented on green growth and climate resilience. The objective is to strengthen competitiveness of the GMS economic corridors through (i) environmental infrastructure (for instance water supply; waste water treatment; waste management; flood control; or urban roads); (ii) more efficient trade facilities (markets); and (iii) supply chain logistics services (for instance dry ports) in strategically located towns.

Box 1: Greater Mekong Subregion - Economic Corridors

The Greater Mekong Subregion (GMS) comprises Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand and Vietnam. A program of subregional economic cooperation was set up in 1992 with an aim to enhance economic

relations among the countries through, but not limited to, the development of infrastructure. In 1998, the GMS countries adopted the economic corridor approach to development, enhancing investments in transport, energy and telecommunications in order to promote regional economic cooperation.

Three economic corridors have been identified: the North-South Economic Corridor, the East-West Economic Corridor, and the Southern Economic Corridor.

The objectives are: "(i) to facilitate trade and development within the subregion, (ii) to reduce transport costs in the influence area and move goods and passengers more efficiently, and (ii) to reduce poverty, support development of rural and border areas, increase earnings of low-income groups, provide employment opportunities for women, and promote tourism."

The map shows the two different “routes” involved in the North-

South Economic Corridor initiative: (i) the Kunming-Chiang Rai-Bangkok via Lao PDR and Myanmar route, and (ii) Kunming-Hanoi-Haiphong-Nanning which connects the existing highway n°1 running from the northern to the southern part of Viet Nam."

The Southern Economic Corridor links Bangkok to Phnom Penh and Ho Chi Minh and involves the two project cities in Cambodia.

Sihanoukville and Kampot are two neighboring cities located at about 200km southwest of Phnom Penh on the Bangkok-Phnom Penh route. Both of these cities are important seaports from which several economic activities are carried out.

Source: ABD – North South Economic Corridors.

The overall development of the corridor calls for concurrent development of human resources as another main approach. This can be achieved through capacity building, proper education and training, as well as health management. Apart from promoting


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integrated economic growth, this will also allow for collaborative efforts to address overarching issues such as climate change. The areas by the Mekong River are especially susceptible to the impacts of climate change and therefore the Subregion can collectively work towards risk and impact mitigation. By addressing these priorities, and preparing for negative consequences of growth and integration, the GMS corridor towns‟ development initiative can aim for comprehensive and long-lasting development.

The Country Partnership Strategy (CPS) 2.1.3.

2.1.3.1. Key pillars of the CPS

Consistent with the governments economic reform priorities (reflected in the Rectangular Strategy Phase III (RSIII) and the National Strategic Development Plan (NSDP), 2014-2018), the impact of the CPS will be reduction in poverty and vulnerability. To achieve this, the CPS will embed the three strategic agendas of the Midterm Review of Strategy 20206 into all ADB operations: (i) inclusive economic growth; (ii) environmentally sustainable growth; and (iii) regional coordination integration (RCI). For the period 2014-2018, the CPS identifies two strategic pillars for ADB‟s activities in Cambodia: (i) rural-urban-regional links, and (ii) human and social development, and one facilitating pillar: public sector management. It focuses on five sectors (agriculture, natural resources and rural development; water and other urban infrastructure and services; transport; education; and finance) and one cross-cutting sector (public sector management).

The rural-urban-regional links pillar takes an integrated approach to development that targets the areas where most poor people live, and focuses on transport and economic corridor development to link national value chains with the region and the world. This pillar will develop rural–urban–regional infrastructure (including irrigation and water management, rural electrification, rural roads, rural water supply, urban infrastructure, road maintenance, and trade facilitation) and support the commercialization of farms and competitiveness of agribusiness enterprises through improved connectivity. Urban development will be positioned to support agricultural productivity, improve connectivity, and establish markets for agricultural production. The human and social development pillar includes secondary education, skills development, and social protection. The urban sector focus will be on improved urban management capacity. Public sector management will act as a facilitating pillar to improve country and sector governance and mitigate project-level fiduciary risks.

2.1.3.2. ADB assistance program in the urban sector

Mainstreaming cross-cutting issues into water supply and municipal services operations. This will include (i) governance, as service providers (both public and private) move toward autonomy; (ii) climate resilience and environmental protection, to mitigate and adapt to changes in climate in collaboration with the Cambodia Climate Change Alliance and Ministry of Environment initiatives; (iii) gender mainstreaming, particularly through the new gender working groups in each ministry and with the transfer of functions from national to sub national levels; and (iv) green cities initiatives to reduce resource consumption and greenhouse gas emissions, and improve the urban environment through resource management and partnerships.

Integrated urban environmental management. Integrated urban environmental management will focus on environmental sustainability of urban areas around the Tonle Sap Basin. A proposed project will help to introduce an integrated urban environmental management approach through the implementation of the Tonle Sap Urban Areas Development Framework and urban development strategies.

6 ADB. 2014. Midterm Review of Strategy 2020: Meeting the Challenges of a Transforming Asia and Pacific. Manila. See

also ADB, 2008. Strategy 2020: Working for an Asia and Pacific free of Poverty. Manila.


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Development of economic corridor towns. The competitiveness of towns along strategic economic development corridors, rural-urban links, and links to urban centers in neighboring GMS countries will be strengthened, through the formulation of strategic local economic development plans, strategic prioritization of infrastructure investments, and capacity development. Priority infrastructure investments will include urban roads, wastewater management, flood protection and control, solid waste management, public markets, and transport logistics.

Expansion and rehabilitation of urban water supply and sanitation systems. Assistance will include (i) support to the Ministry of Industry and Handicraft and the Ministry of Public Works and Transport to develop policies and implement their strategic investment plans in the water supply and sanitation subsectors; (ii) decentralization of water supply functions and capacity strengthening of water utilities; (iii) investment financing, including cooperation with local private companies in financing water supply infrastructure; and (iv) water operators‟ partnerships, where strong water utilities help weaker utilities improve operational performance and service delivery.

Rural water supply and sanitation. ADB will continue its involvement in rural water supply and sanitation development given that (i) ADB is the leading partner in the subsector, (ii) about 80% of the population is rural and more than 35% of households below the poverty line, and (iii) significant investment and capacity development assistance is required to help the government meet the sector and Millennium Development Goal targets.

Corridor Investment Priorities and Programs 2.1.4.

The GMS program, with the support of ADB and other development partners, helps identify and implement high-priority sub regional projects in a wide range of sectors. Cambodia has been actively participating to this program which is coordinating the investments from multiple funding sources, including the government, the ADB, the World Bank and others.

To realize its vision of a prosperous, integrated, and harmonious sub region, the GMS program has adapted a three-pronged strategy (the 3 Cs):

increasing connectivity through sustainable development of physical infrastructure and the transformation of transport corridors into transnational economic corridors;

improving competitiveness through efficient facilitation of cross-border movement of people and goods and the integration of markets, production processes, and value chains;

building a greater sense of community through projects and programs that address shared social and environmental concerns.

In 2011, the GMS leaders adopted a 10-year Strategic Framework to guide the GMS from 2012 to 2012. The Strategic Framework builds on the member countries‟ commitment and national development plans to promote regional cooperation and integration within and beyond the GMS, and reaffirms the vision and goals that currently guide the program: it will contribute to realizing the potential of the subregion through (i) an enabling policy environment and effective infrastructure linkages that will facilitate cross-border trade, investment, tourism, and other forms of economic cooperation; and (ii) the development of human resources and skills competencies, and it will ensure that this development process is equitable and sustainable.

In December 2013, the GMS leaders endorsed the GMS Regional Investment Framework (RIF), to operate the Strategic Framework by identifying a pipeline of priority investment and technical assistance projects from 2013 to 2022. The RIF contains more than 200 projects across 10 sectors with an estimated investment of more than $50 billion.

The GMS program sectors are:


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Transport: develop the priority transport corridors (the North-South Economic Corridor, the East-West Economic Corridor and the Southern Economic Corridor) and to provide transport links to population centers, tourist destinations, markets, and other centers of economic activity.

Transport and Trade Facilitation: non physical or “software” measures that can enhance connectivity and linkages among the member countries for increased cross-border trade and investment.

Energy: establish a competitive and integrated regional power market that will develop, in a sustainable manner, the rich energy resources of the GMS.

Agriculture: envision a subregion that is globally recognized as the leading producer of safe food using climate-friendly agricultural practices and integrated into global markets.

Environment: create a region where economic growth and environment protection are approached in parallel and focus on three priority thematic issues: biodiversity conservation and poverty alleviation, climate change adaptation and mitigation, and capacity development.

Human Resource Development: focus on promoting cooperation in health, education, labor and migration, and social development.

Urban Development: focus on investments in priority urban infrastructure and services in small and medium-sized cities along the GMS transport corridors, contribute to their transformation into economic corridors, and provide rural areas with greater access to jobs and markets.

Tourism: promote the GMS as a single destination, offering a diversity of good quality and high-yielding subregional products that help distribute the benefits of tourism more widely.

Information and Communication Technology: improve telecommunications linkages, promote information and communications technology applications, and facilitate increased access to information and communications to lower transaction costs.

The GMS Secretariat (Southeast Asia Department, ADB) published after the 5th GMS Summit held in Bangkok, Thailand, on the 19-20 December, 2014, a list of the on the on-going projects in each country by sectors, including the regional projects. Table 1 below shows the total investment by sectors for Cambodia as well as the regional investments. Approved investments under the GMS program represent today a total amount of $1,319.42 million in Cambodia, not including $866.26 million of regional projects, which benefit to Cambodia.

These investments represent a minuscule part of what should be invested in Cambodia. For comparison, it is more than 30 times lower than what is invested in Vietnam However, the government of Cambodia has taken several steps to benefit from participation in the GMS initiative and for the promotion of economic corridors. The rehabilitation and construction of major road networks have been carried out, with the need now to ensure proper maintenance, traffic flow and safety, and the Supreme National Economic Council has prepared a regional development vision for corridor development. The Ministry of Public Works and Transport is simultaneously carrying out efforts to create new border crossings to Vietnam and Lao PDR. Cambodia has also improved its logistics performance by enhancing the ports to handle larger volume of goods, and by signing trade and transport agreements with Vietnam, Lao PDR and Thailand.


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Table 1: On-going Investments under the GMS Program by Sectors in Cambodia

Sector

On-going projects

Cambodia

($ million)

Part of the total (%)

Regional

($ million)

Part of the total (%)

Transport 454.31 34.4% 6.49 0.7%

Transport and Trade Facilitation 24.52 1.9% 111.54 12.9%

Energy 85.87 6.5% 15.17 1.8%

Agriculture 290.19 22.0% 107.49 12.4%

Environment 157.91 12.0% 330.00 38.1%

Human Resource Development 30.80 2.3% 143.50 16.6%

Urban Development 144.65 11.0% 65.40 7.5%

Tourism 19.74 1.5% 1.43 0.2%

Information and Communication Technology

27.56 2.1% 9.75 1.1%

Other Multisector/Cross-Border EZ

83.87 6.4% 75.51 8.7%

Total: 1,319.42 866.28

Source: GMS Secretariat, Asian Development Bank, 5th

GMS Summit, Bangkok, Thailand, 19-20 December 2014.

ORIENTATIONS FOR URBAN DEVELOPMENT 2.2.

Medium and Long Term Planning – Problems and Opportunities 2.2.1.

A fast urban-rural transition underway

In 2013, about 3.14 million of Cambodia‟s 14.68 million people (21.4%) lived in urban areas7. Although this is substantially lower than the worldwide figure of 50%, the rate of growth of the urban population (averaging 2.6% per year during 2004-2013) far exceeds rural population growth and 50% of the nation‟s gross domestic product is produced in urban areas. Rural areas are becoming increasingly integrated with urban development as a result of increased connectivity (roads, communication, and infrastructure), mobility (economic migration), as well as kinship ties and the formation of social networks.

The Phnom Penh capital region, counting for more than half of the urban population, attracts most of the demographic and economic growth in the urban sector. However the small and medium-sized cities and towns8 should not be underestimated as to their role in the growing secondary and tertiary sectors. The bulk of the secondary and tertiary establishments and employment is located in towns and cities, while all primary sector employment is in villages.

7 Royal Government of Cambodia. 2013. Cambodia Intercensal Population Survey 2013. 8 Towns of less than 50,000 inhabitants; without defining a minimum size; among them towns with the administrative status

of municipality (most of which were established in recent years only), but also all capitals of provinces (they do have the

status of municipality) and the centers of districts (they are often typical rural market towns of rather small but growing

population size).


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Urban population growth will continue to follow structural transformation. The next years will see a considerable increase in overall population, with an even greater concentration on urban population to an estimated 30% or 5.6 million in 20209. This constitutes a dramatic increase, which may indicate an urban share of the national economy in the order of 70% by 2020. Urban growth will be especially strong in the capital region, where more than one-half of urban development in the country will take place. Broad population estimates for 2020 are 2.8 million-3.4 million persons in metropolitan Phnom Penh, and 2.2 million-2.8 million in 25 municipalities. The ADB Urban Sector Assessment, Strategy, and Road Map for Cambodia (2012), shows that while Phnom Penh will dominate, population growth in other urban centers in Cambodia will be considerable. Figure 2 illustrates the distribution of the most important municipalities. Most provinces have only one municipality, but their geographic distribution across the country is unequal, with a concentration of the more important larger municipalities in the GMS Southern Economic Development Corridor, Phnom Penh, the port city of Sihanoukville, and near the border with Thailand in the northwest.

Figure 2: Major Urban Areas in Cambodia (more than 40,000 persons in 2008)

Source: Cambodia Urban Sector Assessment, Strategy, and Road Map, Asian Development Bank, 2012.

A recent and uncomplete urban planning system

Cambodia does not have a holistic strategy for integrated urban development, although the proposed Tonle Sap Urban Areas Development Framework (TSUADF) is a first step in demonstrating the importance of an integrated urban environmental management approach in urban planning and development in Cambodia. It seeks to protect the Tonle Sap ecosystems from environmental pollution and potential threats from unregulated growth and

9 Cambodia Urban Sector Assessment, Strategy, and Road Map, Asian Development Bank, 2012.


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urbanization through an agreed vision and approach10 . Similarly, there are no legal or regulatory instruments governing water supply and sanitation, which further constrains private sector interest in the sector. There is also a lack of coordination, responsibilities among government agencies overlap, and jurisdictional and administrative boundaries are seldom clear-cut11.

At the national level, there is none specific body to formulate national policies and strategies for urban development. The MLMUPC has a training institute to build urban management capacity at the sub national level but it is not equipped with the needed funding.

A deficient urban services set up

The government has invested and made considerable progress in improving water supply and other municipal services, yet demand far outstrips the government‟s ability to deliver12. In 2012, 94% of the urban population had access to an improved water supply (compared with 66% for rural areas). About 67% of households have access to a piped water supply (5% in rural areas), of which about one-third are supplied by 15 private small-scale providers13. Combined drainage/sewer networks and wastewater treatment are in place in Phnom Penh and some other towns but coverage remains low. About 82% of the urban population has access to improved sanitation and about 7% still practice open defecation. In rural areas only 25% have access to improved sanitation and 66% still practice open defecation. Flooding is an annual threat that most urban areas are poorly equipped to deal with. General observations indicate that the expansion in infrastructure and service provision has not been matched by equitable distribution, with disproportionate access in the capital region and certain municipalities.

The underlying problem of inadequate water supply, sanitation, and municipal service provision stems from a weak regulatory environment, limited government capacity to provide services, and lack of adequate funding for capital expenditures and operation and maintenance of assets. This results in inadequate quality, availability, and accessibility of services, particularly for the urban poor and other vulnerable groups.

The public and private sectors have few experienced managers, engineers, planners, technicians, and social or health specialists working in water supply and sanitation and other municipal services. The general shortage of qualified and experienced staff is even more evident in the provinces. Incentive structures are not in place.

Limited financial resources and revenue streams for urban infrastructure and services is a key constraint, affecting capital investment and operation and maintenance of assets. Sustainability of urban services is constrained by poor cost recovery in urban water supply, which is normally provided through user charges and fees, and other forms of revenue generation such as land and property taxes14. There is no national tariff policy for water supply and government budget and borrowings are limited.

10 The framework is awaiting joint approval by the Ministry of Public Works and Transport and the Ministry of Land

Management, Urban Planning and Construction. 11 For example, the Ministry of Land Management, Urban Planning and Construction is mandated to oversee urban planning,

but no ministry or agency is tasked to implement urban development. For water supply and sanitation, the Ministry of

Industry and Handicraft oversees urban water supply, the Ministry of Public Works and Transport is in charge of drainage

and wastewater management, the Ministry of Health is responsible for potable water supply, and the Ministry of Rural

Development oversees rural water supply and sanitation. 12 Other municipal services include urban roads and drainage, solid waste management, wastewater and sewerage, and flood

protection. 13 World Health Organization and United Nations Children’s Fund. 2014. Joint Monitoring Programme for Water Supply

and Sanitation – Estimates on the Use of Water Sources and Sanitation Facilities, Cambodia. 14 Only the Phnom Penh Water Supply Authority (PPWSA) operates at tariff levels that enable full cost recovery, while the

Siem Reap Water Supply Authority is working toward full cost recovery. Other public water utilities, however, barely

manage to recover operation and maintenance costs.


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Recommendations 2.2.2.

Since the urban areas claim a significant percentage of the national population and continue to grow, identifying and meeting urban needs and challenges through proper institutional, financial and regulatory support is crucial for Cambodia to benefit from the advantages of a globally competitive and attractive urban sector, and to avoid the challenges of poverty, segregation, congestion, etc. of unplanned cities.

Institutional and regulatory framework

The weak institutional framework, especially outside of the major urban centers, needs to be reformed, and the capacity of government needs to be strengthened, both at the national and at the municipal levels. The principal strategic issue is how to distribute urban growth across the country at the earliest possible stage.

The ministries overseeing urban growth and development are under-equipped for preparing programs, and regulation at the national level and the agencies at the provincial and municipal levels lack management capacities.

Cambodia is lacking an urban development policy framework to manage the basics of spatial development, of demographic control, and of infrastructure investments. There is a need to establish an agency at the national level – probably under the Ministry of Land Management, Urban Planning and Construction (MLMUPC) which is supervising urban development with the Ministry of Public Works and Transport15 – which would issue all legal documents and policies on urban development and administers their implementation. It would also work together with municipal governments while supervising their investment activities and master plans.

So far, the initiatives taken by the government include the recognition of the need for capacity building and empowering local governments. Accelerated efforts are required to compensate for existing gaps in administrative and financial capacity and to keep up with the steady increase in population and resource needs in the future.

A National Urban System Plan

At the national level, apart from establishing a legal or regulatory instrument to govern water supply and sanitation provision – which could be implemented at the Ministry of Civil Works and Transport in coordination with the Ministry of Land Management –, there is a need for a strategic document which would give an understanding of the ground reality of the urban development, rationalize the government‟s approach in the urban sector, and formulate the government‟s vision and orientations for the urban system at the national level. The main purpose of this document is to guide resources allocation and to give a framework which would steer urban development in the country.

As mentioned above, the Ministry of Land Management, Urban Planning and Construction is currently developing a National Urban Development Strategy Framework (NUDS-F) which will outline the NUDS but without the details and analytical underpinnings. There is a clear danger in doing so, is that the resulting urban development policy framework will not be meet the ground reality of the urban development and will not be evidence based. The first step in doing a National Urban Development Strategy should be to thoroughly analyze the country‟s current status of urban development. This analytical part16 should determine the economic geography of the preeminent factors of production and further explore the issues of inter-regional mobility/intra-urban mobility, sanitation, drainage, wastewater, housing, current approach to social planning and its challenges, fiscal and administrative framework for municipalities.

15 Responsibilities in the urban sector need to be clarify especially between the Ministry of Land Management, Urban

Planning and Construction and the Ministry of Public Works and Transport. 16 The main constraint to undertake such an analysis is the availibility and accuracy of outdated datas.


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This would lay the foundations to evaluate the opportunity to establish a classification system of urban settlements as one of the central instruments to manage the basics of spatial development, of demographic control, and of infrastructure investments. Furthermore, it would be the basis to prepare an urban development framework for the country, including a scenario of the evolution of the urban system until 2025 with a vision to 2050. This scenario would guide the most important urban development programs and priority investment projects to be implemented during a specific period of time. It would provide an urban development framework for the provinces and orientate them in the implementation of the urban investments. It would help prioritizing the investments and better allocating the resources.

This document should be coordinated with others sector development plans, such as in particular the national transport system plan, and with others development strategies, such as in particular the GMS Corridors Strategy17 and the donors country urban programs. The current orientations are to focus on a balanced regional distribution of viable small and medium-sized cities and towns. The argument in favor of developing such areas is based on the ADB goal of guiding urban development in Cambodia under the overriding goal of being pro-poor and pro-rural, that is, to be inclusive and sustainable. Deliberate urban growth policies in such secondary places are expected to contribute to poverty reduction in those provinces and to avoid en even more staggering dominance by the capital city. Further, rural households in most countries derive a considerable percentage of their incomes from nonagricultural and non-rural activities, mostly in informal employment and petty trade18.

City Development Strategy / Local Economic Development Plan

Up-to-date there is no regulatory framework in Cambodia concerning the urban planning process. An integrated urban planning and development approach is being developed around the Tonle Sap Basin19 and could be a basis to prepare a legal urban planning framework for the whole country.

Observations show that Cambodian cities are too often lacking a strategic vision of their role and position in the national urban system and in their regional context, and of what this implies in terms of local economic development. Master Plans, when it exists, are setting demographic, socioeconomic and physical targets, which (i) are too often not built around a development strategy for the future ; (ii) are fragmented and silo based without links and common objectives between the sectors, (iii) are not evidence-based and are not translated into a priority time-based investment program. Urban planning is currently missing its point in Cambodia – that is first and foremost providing people with better services and jobs, enabling cities to become economic nodes –, and one of the main reason is that not enough thought and analysis is put in the strategic vision that should govern the urban development. Although cities in Cambodia struggle to provide basic urban services to their population, that is considered as a prerequisite, urban investments towards economic development are currently almost inexistent when talking about secondary cities and should be considered as important as investments in basic urban services.

International donors in particular should support more actively urban investments in non usual infrastructure sectors, where their added-value could be more significant. How to achieve economic development and how to translate it into a time-based urban investment program and a spatial plan should be given a central position in the urban planning process, and is so far absent most of the time.

In addition, the lack of investments in urban infrastructures in Cambodia is partly due to the

17 A GMS Urban Development Strategic Framework is under preparation to assist GMS countries coordinate their national

urban strategies; identify priority areas for major investments in urban infrastructure, and promote exchange of knowledge

and good practices on industrialization and urbanization. 18 Cambodia Urban Sector Assessment, Strategy, and Road Map, Asian Development Bank, 2012. 19 Tonle Sap Urban Areas Development Framework (TSUADF).


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lack of capacity of local authorities to attract capital and discipline its use because of the lack of a realistic but challenging development strategy. Local governments alone cannot turn a city around. They control a minuscule portion of the capital available for city building and often have an even smaller proportion of the available talent in urban innovation. Nevertheless, they are important as catalysts and as representatives of the public interest, and should work in partnership with higher government‟s levels, with international donors, with private interests and civil society to change their city‟s developmental direction.

To encourage public, private and civil society partnerships, the key part is the vision that lies behind the master plan. City leaders need a frank and objective city assessment, enabling them to see the future more clearly and to identify the best routes forward. They need to have a clear view on where they want to be in 10 to 20 years, what will exactly be their strategic thrusts, their economic strengths, and how they plan to achieve their goals which should follow a vision and a SWOT analysis.

Table 2: Summary of Proposed Recommendations

Priority actions Level Objective

GOVERNANCE / CAPACITY BUILDING

Create an agency at the ministry level with appropriate capacities

National

Issue legal documents and policies on urban development and administers their implementation

Guide resources allocation between provinces

Collect and monitor updated data on urban areas

Strengthen capacities of local governments

Municipal

Prepare local planning documents, steer investments in the urban sector (managers, engineers, planners...)

Keep up with the steady increase in population and resource needs in the future

PLANNING / REGULATORY DOCUMENTS

Issue a regulatory framework to govern water supply and sanitation provision

National

Strengthen revenue generation such as land and property taxes

Set up minimum water (and other urban services) tariffs to at least cover the operation and maintenance costs of infrastructures

Urbanization review National Understanding of the ground reality of the urban development and shape of the urban system

Urban development strategy

National

Rationalize the government's approach in the urban sector

Formulate the government's vision and orientations for the urban system

Orientate investments in regional projects

Comprehensive and strategic local plan

Local

Provide an integrated assessment of the city situation (infrastructures, economy, population, industries, education, tourism, etc.)

Identify the best routes forward - a vision to 10/20/30 years

Catalyze all stakeholders (public and private sectors, civil society)


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Investment Priorities 2.2.3.

The current ADB Project (CTDP) places priority on a number of baseline environmental infrastructure projects which will provide a more sustainable environmental context and better living standards for the towns‟ residents and visitors. With the SLEDPs, they set the context for achieving more sustainable patterns of urban development in the medium-term, and take account of the ADB‟s GrEEEn City Agenda. (economic competiveness - equity -environment).

In the context of the (i) GMS Economic Corridors Initiative and in particular the North South Economic Corridor Development Program in Cambodia, and (ii) the GoC national orientations on urban development, the Rationalized Urban Development Strategy (RUDS) provides the opportunity to look at regional investments which will aim at promoting urban and economic development.

A preliminary list of priority future strategic investment projects in Cambodia is defined and shown in Table 3 below. The list is not exhaustive, but concentrated on those projects which (i) are localized in the corridors of interest and (ii) directly contribute to economic and urban development. The investments concern the following sectors: urban development, transport (including highway network, international and regional airports, and sea ports), tourism, cross-border cooperation, environment and energy. This project list provides advice on investment priorities, with an indicative funding source and timing, and is taken from a long-list of proposed projects included in the GoC Public Investment Program (PIP) 2013-2015 (Ministry of Planning) in the above-mentioned sectors, and from the proposed pipeline for GMS Corridor Investments agreed between the participating countries at the 5th GMS Summit (Bangkok, 19-20 December 2014).

Table 3: Priority Investments under the GMS Program by Sectors in Cambodia

Priority investments Objective Project Period

Indicative Total Project Cost ($ million)

Primary Investment Source

TRANSPORT: ROADS

01 National Road No. 48 Improvement Project

Strengthen the coastal corridor / link between Bangkok - Sihanoukville

- 75.72 Korea Exim Bank

02 Construction of NR41 from Thnat Toteung to Chum Kiri (Kampot)

Develop the road network

2015 11.5 Government

03 GMS Cambodia Northwestern Provincial Road Improvement Project


2015 13.3 -

04 GMS Southern Coastal Corridor Project


2015 4.6 ADB

05 Improvement of NR31, NR33, PR117 and Kampot Bypass Project


2015 8.8 Government

TRANSPORT: RAILWAY

01 Rehabilitation of the railway in Cambodia

Develop the railway network

2015 36.8 Government


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TRANSPORT: AIRPORTS

01 Preah Sihanouk International Airport

Develop an international airport in Sihanoukville

- - -

TRANSPORT: SEA PORT

01 Sihanoukville Port Multipurpose Terminal Development Project

Construct a deep sea port with international standards

2015 22 Government - Private investors

URBAN DEVELOPMENT

01 Greater Mekong Subregion

Southern Economic Corridor Towns Development Project

Project implementation for selected towns in Cambodia

2013 ADB

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Greater Mekong Subregion Corridor Towns Development Project

Support the development of Kampot and Sihanoukville

2015 50 ADB

03 4th Greater Mekong Subregion

Corridor Towns Development Support the development of towns located in Cambodian economic corridors

2017 57 ADB

ECONOMIC ZONES

04 Kampot Special Economic Zone (145 ha)

Infrastructure development: landfill and construction of deep-sea port

2015 - -

05 Sihanoukville Special Economic Zone (1,688 ha)

Infrastructure development, 20 buildings and plants

2015 - -

06 ATTWOOD Special Economic Zone (750 ha)

Infrastructure development

2015 - -

07 Sihanoukville Port Special Economic Zone

Infrastructure development

2015 - -

TOURISM

08 Preparing the new GMS Tourism Sector Strategy 2016-2026

Steer tourism development in the GMS corridors

2015 0.75 ADB - RCIF

OTHERS

09 Greater Mekong Subregion Health Security

Human Resource Development

2016 10 ADB

10 GMS Biodiversity Conservation Corridors Project

Protect Biodiversity 2015 2.4 Government


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11 Transmission 230 kV Kampot - Sihanoukville

Electricity network 2015 13 Government

12 Transmission Line Takeo - Kampot

Electricity network 2015 10 Government

13 GMS Telecommunication Backbone Network Project

Telecommunications 2015 19 Government


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3. THE STRATEGIC LOCAL ECONOMIC DEVELOPMENT PLANS

CONTEXT FOR THE PREPARATION OF STRATEGIC LOCAL 3.1.

ECONOMIC DEVELOPMENT PLANS

This Strategic Local Economic Development Plan (SLEDP) is prepared within the context of Greater Mekong Subregion (GMS) policy, taking into account the baseline principles of (i) enhanced connectivity, (ii) increased competiveness and (iii) a greater sense of community.

The GMS development program has placed emphasis on the development of strategic infrastructure, mainly in the transport and energy sectors, which has dominated on-going project expenditure in the economic corridors. This is an essential ingredient to the optimization of trade between countries and regions, including the cross-border areas between GMS related countries. It is also the key to facilitating economic growth and improved living standards in the corridor towns. This includes the potential for the development of resource based agri-business and tourism and in selected towns the inclusion of investment in certain demand driven industries, businesses and transport/logistics facilities. There are varying levels of success from town to town in Cambodia, but where many towns are unable to “keep up”, through lack of funding and resource capacities. Consequently, infrastructure and public service provision have lagged behind present and future needs and are characterized by a low level of private sector investment. In most towns this situation is aggravated by the absence of good land use planning and land management/development control, resulting in haphazard and unsustainable patterns of development, leading to worsening levels of environmental pollution and uneconomic forms of urban infrastructure investment.

Current levels of investment in the urban development are very low, and we understand significantly below 10%. To this extent the CTDP project is a very timely development for the selected corridor towns, matching well the national policy intent for investment in the growth corridors, targeting strategic investments to stimulate economic growth. To this extent good progress is being made through the provision of basic infrastructure; thus bettering people‟s lives, improving environmental sustainability, and providing an essential baseline for economic development. Continued assistance over the medium term will be required to complete the job in the corridor towns, although its cost-effectiveness should be improved, such that investment funding is not wasted on unsustainable projects.

Investment in the corridor towns has yet to optimize the potential for strategic local economic development. Again there are varying levels of success across the corridor towns, but generally there is a concern that the structures of governance and the resource capacity of the development agencies is not yet optimizing the potential of their corridor locations in a systematic way that will also address the need for social equity as a prime aim for the medium-term future.

Future planning and investment over the medium-term needs to reflect a broader and more sustainable approach, which is integrated and comprehensive, realizing the links between economic and social development, environmental planning and the needs and aspirations of the stakeholders - community, government and the private sector. The SLEDPs are a next


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step in realizing this approach for the project corridor towns through carefully built strategies and investment programs for the medium-term.

PREPARING THE SLEDPS 3.2.

The SLDEPs are set within the context of:

The National Policy Context, including the: (i) National Strategic Development Plan, and (ii) various national sector strategies, including the National Policy on Water Supply and Sanitation

The ADB‟s “GrEEEn City Agenda”, including pilot Green City Action Plans (GCAP) in Indonesia, Malaysia, Myanmar, Thailand and Viet Nam.

The Green City Agenda is now well established as part of the ADB policy context following the success in developing Green City Action Plans (GCAP) and there are lessons to be learned from the experience so far. For instance in Hue (Viet Nam) the approved GCAP includes recommendations for initiatives in energy efficiency, sustainable transport, tourism enhancement and urban redevelopment. This and other GCAPs are now being carried forward towards on-ground application through a second phase of the ADB‟s Secondary Cities Development Program (Green Cities)20 for application in Hue, Vinh Yen and Ha Giang in Viet Nam and if successful will form blue prints which can be used and further improved elsewhere and particularly in the corridor towns.

The GCAPs are notable for their approach in maximizing the value of Urban Management Partnerships (UMPs) through city to city peer learning and knowledge sharing designed to improve skills and competence in integrated urban development, environment planning and project management in government, the community and the private sector. Research in support of the SLEDPs and the PPTA in general show that UMPs would be valuable in achieving a more embracing multi-sector approach to planning and investment in the corridor towns, where there are large numbers of stakeholders. In particular it would provide the opportunity to learn from successful plans and projects elsewhere, where there has been extensive collaboration with stakeholders. Best practice can be identified as a basis for application of the UMP concept in the corridor towns and for most situations this can be found within the South-East Asian context.

The GrEEEn City Agenda is centered on three primary themes, which are: (i) Economic Competiveness; (ii) Equity and (iii) Environment. For the purposes of this Project we have added two equally important themes of Good Governance and Spatial Planning. Collectively this is illustrated below in Figure 3 (The Green City Agenda - Adapted). Definitions for each of the primary themes are given in Table 4.

In considering the broad direction for the SLEDPs their potential was assessed in the context of the primary themes encased in the GrEEEn City Agenda. This is to ensure the SLEDPs adopt an integrated framework of thinking and in particular include investment programs, which are cross-sectoral and not one-dimensional. This implies a move away from an emphasis on “environment only” (ie making up deficiencies in basic infrastructure), towards a philosophy of “providing opportunities and incentives for economic growth”. This in turn suggests the need for coordinated cross-sectoral planning and investment in a sustainable economic and social framework, which will lead to improved economic performance and better standards of living and social cohesion across the urban community. It is this philosophy which is now reflected in the proposed SLEDPs.

20 ADB PPTA 8671-VIE: Secondary Cities Development Program (Green Cities)


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Figure 3: The Green City Agenda (Adapted)

STAKEHOLDER CONSULTATION 3.3.

The SLEDPs were prepared through an extensive process of stakeholder consultation, where every effort is made to ensure that the policies and proposals contained in each plan are reflective of local needs and aspirations for the medium-term future. A full list of stakeholders is shown in Volume VII – Project Assessments of the FR.

Center stage in the consultation process were Planning Workshops in each project town, attended by around 40 key stakeholders from government agencies, and the community. The primary purposes of the Planning Workshops were to: (i) agree the key issues of concern relevant to the SLEDPs; (ii) define a vision and development priorities for each town; and (iii) identify priority development projects appropriate for inclusion in the SLEDPs.

Additionally senior officials at both provincial and town level gave guidance (through questionnaires) on investment and project priorities in the two project towns. The outputs from the Planning Workshops and from the questionnaires are summarized in the individual SLEDPs contained in Chapter 3.

OBJECTIVES AND OUTPUTS OF THE SLEDPS 3.4.

SLEDPs are therefore founded on: (i) a process of sound technical assessment at town level and in the context of strategic planning and policy with particular regards to the GMS Southern Corridor, which links Bangkok in Thailand to Ho Chi Minh in Viet Nam and; (ii) a process of good local stakeholder participation at provincial and town level, including government agencies, the private sector, the town level community and relevant international funding agencies.

The SLEDPs have two primary objectives:

To provide interim guidance for planning and investment, which support and enhance the socio-economic and master planning strategies for Kampot and Sihanoukville.

Equity

Environment

Economic Competiveness

Spatial Planning

Integrated Governance Public/Private

Investment Planning and Programming

CO

MM

UN

ITY

CO

MM

UN

ITY


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To provide medium-term investment focus and to assist the process of attracting additional investment from government agencies, international donor agencies and the private sector.

To meet these objectives the SLEDPs include the following key outputs:

Key Issues: to advise on the key development issues that need to be addressed in the medium-term.

Problems and Opportunities: to advise, through the use of a SWOT analysis on the problems and opportunities that are relevant to addressing the Key Issues.

Medium-Term Development Strategies: to advise on the broad direction and strategy for planning and investment in the medium-term, including the focus sectors.

Medium-Term Planning and Investment Programs: to propose investment priority lists by sector, indicating project objectives, level of priority and green city credentials.

INTERPRETATION OF THE SLEDPS 3.5.

It is to be anticipated that the SLEDPs inform stakeholders of investment opportunity and provide a platform for further discussion and interpretation between government‟s planning and investment arm and potential investors.

This may have a number of facets and include:

ADB interpretation in the context of the Country Partnership Strategy with a view towards potential inclusion of additional project support and investment.

Donor Agency interpretation with a view to seeking potential planning and investment from other multi-lateral and bi-lateral agencies.

Provincial and Municipal Government interpretation in the context of the social and economic strategies at local level.

Subsequent promotion of private sector investment opportunities by Provincial and Municipal Governments.


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Table 4: Guiding the SLEDPs Preparation – Primary Themes


Improved performance in economic growth in urban communities is dependent on the creation a competitive investment environment, where vibrant economies are built around the natural and man-made assets of a town or city, together with high levels of human resource optimism and capability. It is essential to support improved economic performance through “green light” institutional and financial structures and incentives to create competitive edge. This is turn is reliant on effective urban planning and land management, sustainable transport systems, utilities infrastructure and municipal services and a sustainable operational and working environment.

Equity

The government umbrella provides the context for improved living and working conditions for the expanding populations of towns and cities. This should be inclusive of the needs and aspirations of the urban poor, other under privileged social groups including ethnic minorities, and address gender issues. Secure land tenure, better homes with basic amenities (ie water supply, power supply and wastewater facilities), education, health and recreation facilities and access to employment opportunities comprise the essential base to achieve equity and social cohesion. It is this context which can ensure the whole community in a town/city will be beneficiaries.

Environment

This is an essential medium to long-term goal for towns/cities, where government agencies have the potential to act as the primary facilitator in tackling the core issues of climate change, energy conservation, low carbon practices, natural resource conservation and environmental pollution. It is also essential to optimize the potential of the private sector and the wider community as active participants in achieving this goal and creating high quality physical environments for urban areas, meeting key environmental targets, standards and guidelines for a sustainable environment.

Governance

Good governance is a key to enhancing the capacity for all stakeholders to: (i) take beneficial action in towns/cities in the public interest, which is cost-effective and represents good value for money; (ii) enables collaboration between government agencies; and (iii) optimizes the investment potential of the private sector and the community.

Spatial Planning

Effective spatial planning is an essential first step in the GrEEEn City agenda. It has two linked parts: (i) planning for urban growth and for urban renewal requires a matrix of policies and plans which will provide the platform for sustainable urban form and for maximizing the beneficial use of land and; (ii) ensuring effective development control, such that environmental quality is protected and public investment is cost-effective.


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3A.The Kampot Strategic Local Economic Development Plan

OVERVIEW 3.6.

Kampot is the administrative capital and the urban center of Kampot province in southern Cambodia and situated in the GMS southern economic corridor which links Viet Nam with Thailand. Thus Kampot has good strategic road connections with Ho Chi Minh City and Bangkok and into both Phnom Penh and Sihanoukville. The town is well located alongside the Kampot River and is close to the Bokor National Park and the attractive coastline of the Gulf of Thailand. It has the potential to be a key link port for the outlying islands, including Phu Quoc.

Kampot is a small to medium sized town with a population of some 34,858 inhabitants in 2013 Provincial statistics suggest a low growth rate of between 0.5% and 1%, such that trend based forecasts for 2020 are therefore only 36,159 persons and for 2030 is 38,103 persons. Kampot‟s share of the provincial population has steadily grown since 2000, reflecting the economic development of the provincial capital and the central commercial and administrative role of Kampot in the structure of the province.

Historically, the economy of Kampot has been heavily dependent on traditional forms of agriculture, which is still the primary industry across the province. Over time the staple rice based agricultural economy has seen a process of agricultural diversification and expansion of cash crops and the seafood sector satisfying expanding local markets, other major urban centers including Phnom Penh and Sihanoukville and into southern Viet Nam. Some of the older cash crop traditions, such as peppercorns have been retained and integrated into the product diversification process, as have the large areas set aside as salt pans. However it seems that the amount of investment into related agro-processing and packaging is only in its infancy in and around urban Kampot.

Kampot has seen a steady growth of tourism over the last 10-15 years, based on; (i) the attraction of the town and in particular its architectural and historic importance; and (ii) ease of access to close by tourist attractions (eg Bokor National Park); and (iii) strategic road links to other major tourism related destinations, such as Ho Chi Minh City in Viet Nam. The proposed conservation and enhancement subproject component to be included in the ADB - CTDP Project, will add extra momentum to the attraction of Kampot as a tourist destination as will the proposed new coastal resort, located to the south of the town if this bold venture proves to be viable.

It is reasonable to expect that the pace of urban development will gradually increase in Kampot thus providing opportunities for a higher level of private sector investment in a variety of sectors, including business agriculture, agro-processing and packaging, tourism/hospitality expansion and supporting services. This places focus on the need to continue to priorities investment in the essential supporting infrastructure and services required to support urban growth and ensure the sustainability of Kampot at least in the medium-term.

KEY DEVELOPMENT ISSUES 3.7.

A number of Key Development Issues are identified and which are used as an analytical baseline in the formulation of the Kampot SLEDP. Definition of the Key Development Issues


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is reflective of the process of stakeholder consultation used in the PPTA, including the outputs of the Planning Workshop in Kampot and the general policy orientation of the approved GoC policies and plans.

The Key Development Issues relevant to Kampot are set out below in Table 5 (Key Development Issues – Kampot). They are divided into two main types: (i) Generic, which are typical of most urban situations in Cambodia; and (ii) Specific, which relate to Kampot only.

Table 5: Key Development Issues – Kampot

GENERIC

1) The need to adopt an integrated investment program approach to development planning to ensure cost-effective economic growth and the achievement of environmental targets;

2) The need to implement medium-term development planning proposals, which will benefit all cross-sections of the resident population;

3) The need to identify mechanisms and incentives to ensure that the town is competitive and capable of attracting private sector investment; and

4) The need to ensure that the town will have the resource capacity to achieve medium-term development planning and investment objectives and where capacity building and training will be a paramount consideration.

SPECIFIC

1) Taking up the opportunities for the expansion of tourism in Kampot serving both the international

and the domestic visitor markets;

2) Taking up the opportunities to optimize the value of agriculture in and around Kampot and to invest in a more business orientated approach to agricultural development;

3) The need to identify opportunities to diversify the local economy through investment in other appropriate market driven employment sectors;

4) The need to conserve and enhance the value of the built environment in Kampot as a catalyst for economic growth and to conserve high quality buildings of architectural and historic interest;

5) The need to plan for investment in basic urban services and environmental upgrading with the context of reasonable expectations for medium-term growth;

6) The need to ensure climate change adaptation design factors are integral to river and coastal protection measures in Kampot and its surroundings.

MASTER PLANNING INTENT – MASTER PLAN SUMMARY 3.8.

A future planning and development concept is contained in an advisory study produced by JICA in 2010 as part of a “Study on National Integrated Strategy of Coastal Development and Master Plans for Sihanoukville and Kampot”. The draft Concept Plan for Kampot covers the period up to 2030 and includes a conceptual land use plan and proposed transport and utilities infrastructure plans. The plan was built around the development of Kampot as an agricultural center and a tourist destination. This included the better development of agri and aqua business potential and the recognition of the value of the Kampot conservation area in support of increased tourism.

A proposed land use strategy illustrates concept plans for urban expansion and an associated urban ring road, which in the context of the reality of low population growth rates are unlikely to be implemented in the short to medium term (Figure 4 and Figure 5 refer).


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Figure 4: Kampot - Spatial Development Strategy


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Figure 5: Kampot - Land Use Strategy


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LOCAL DEVELOPMENT PRIORITIES 3.9.

Stakeholder views are an essential consideration in the preparation of this emerging SLEDP and importantly in the strategy to be chosen and the medium-term investment project priorities. These views: (i) provide a consensus on visioning, development and investment priorities and potential projects across all sectors; and (ii) compliment the recommendations contained in relevant government policy documents at national, provincial and local government level.

It is within this context that medium-term priorities and projects have been discussed individually with a variety of relevant stakeholders from government, the community and the private sector. They have also been discussed in the Kampot Planning Workshop. The summary outputs of the Planning Workshop relevant to defining development priorities and projects are shown below in Table 6 (Local Development Priorities and Projects). Liaison with senior provincial/municipal government officials also included a short questionnaire survey geared to confirming investment and project priorities. Where possible the outputs of these consultations are reflected in Table 8 (Priorities for Medium-Term Investment Program).

Table 6: Local Development Priorities and Projects

Development Priorities

1 Economic Competiveness

Develop the tourism potential of Kampot and its surroundings, including its weekend

destination capacity.

Promote sustainable tourism in the beach areas, including Kampot Town Coastal

Development Project.

Promote the interpretation of the “salt pans” as an eco-tourism attraction.

Promote a sports and recreation concept for the beach area.

Encourage and provide incentives for higher levels of private sector investment and job

creation in Kampot.

Improve the primary urban road network for Kampot, including additional river crossings

(ie linkage infrastructure).

Improved transport development as a support to economic growth in the City, including an

airport.

Ensure adequate trained personnel to support the tourism and service sectors.

Equity

To create more job opportunities and to raise income levels

Ensure protection of vulnerable people/groups and develop better social welfare facilities.

Environment

Plan and develop Kampot as a model “Green” City.

Increase roadside green cover/tree planting in urban area. Implement City Greening/Tree

Planting Project.

Promote riverside and canal side upgrading and walkways as an improved tourism

attraction.


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Upgrade the appearance of urban streets and the public realm.

Better management and prevention practices in Preah Minivong National Park.

Develop better solid waste treatment facilities and practice for Kampot.

Integrated Solid Waste Management and Sanitary Landfill. (recommended for inclusion in ADB CTDP Project (TA: REG No 8425).

Community awareness building for better use of biogas plant.

Better wastewater collection and treatment for Kampot.

Integrated Wastewater Collection and Treatment Plant (recommended for inclusion in ADB CTDP Project (TA: REG No 8425)

Set-up an environmental awareness campaign for Kampot, to include sustainable and

enforceable community solid waste management practices.

Design and construct a plastics collection and recycling center.

Improve the quality of environmental monitoring, including the quality of food hygiene

monitoring and enforcement of regulations.

Establish Environmental Monitoring Laboratory.

Improve road drainage facilities in the urban area.

Governance

Better environmental management planning and enforcement

Invest in promotion campaign to attract investors to Kampot.

Strive for open/transparent government in Kampot.

Strive for better standards of law and order in Kampot, including a more secure tourism

environment.

Human resource development in the public sector, including urban management and

urban land use planning.

The survey results are significant and consistent in showing the need for on-going investment in basic environmental infrastructure, with particular regard to the improved water quality, urban drainage and flood prevention and expanding wastewater collection and treatment. The questionnaire survey in particular made this the first priority for government, reflecting a situation where investment in basic infrastructure lagged behind the pace of urban growth and stakeholder needs and aspirations.

The survey results also stressed the need more effective economic development and investment in Kampot, centered on the towns natural and locational advantages as a tourism and economic hub in the GMS economic corridor between Thailand and Viet Nam. In turn there is recognition of two key issues which require addressing: (i) the need for skills development and improved business marketing capability to promote new business development in Kampot and the expansion of existing businesses; and (ii) the need to upgrade the value of the urban environment as an essential baseline condition to support economic development. Specific mention was made of priorities for building conservation, and street enhancement including the riverside and city greening/tree planting. Government stakeholders also highlighted the need for a planned and coordinated approach to tourism development, with specific reference to the need to identify investors to plan and develop the planned new coastal community.

The need for better education, health and welfare facilities was also highlighted. Investment in new transport infrastructure was not prioritized, with the exception of planning and


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development for Kampot to be hub location for tourism. The planned ferry port to the south of urban Kampot, which will provide direct access to the outlying resort islands was generally regarded as an investment priority.

Last but not least both the Planning Workshop and the questionnaire survey identified law and order and need for open and transparent government as a priority.

PROBLEMS AND OPPORTUNITIES FOR MEDIUM-TERM 3.10.

INVESTMENT

Kampot has a number of development and investment fundamentals in its favor, principally: (i) its strategic location in key transport corridors linking centers of population and ports together and providing access to larger markets. This is principally into Thailand through the strategic road link to Bangkok and into Viet Nam through the strategic road link to Ho Chi Minh City; (ii) ability to serve the comparatively large population of the Phnom Penh, which has the potential be a two-way economy, both providing goods and services to the capital and providing a satellite community function for Phnom Penh investment; (iii) the potential to better exploit its natural advantages as a center for international and local tourism; (iv) the potential to harness its strong agricultural base to its advantage through a more commercially orientated approach to agricultural production and agro-processing; and (v) a readily available and affordable labor force from the surrounding rural areas in the province.

There are opportunities to better optimize this potential through a comprehensive and integrated Economic Development Strategy, built around the town‟s tourism and business agriculture potential, which can act as catalysts for the expansion of a variety of supporting services and logistics businesses.

Better conservation of the architectural and historic environment can provide a core opportunity for expansion of tourism in and around Kampot. The experience of other cities and towns in South-East Asia shows clearly the social, economic and environmental gains from investment in urban conservation. Perhaps the most notable examples are found at the boat quays in Singapore, which illustrate the benefits of a comprehensive approach to building restoration and public realm enhancement, resulting in major tourist attractions and significant economic and social gain. Similar benefits can be seen in smaller scale projects elsewhere, including the very successful building restoration projects in Hoi An in Viet Nam and Melaka in Malaysia. Very often public realm enhancement can be a 1st phase of a conservation and enhancement project where there are private property owners. Successful enhancement of the public realm can often act as a catalyst to provide confidence to private property owners who come on board later to engage in building restoration. The situation in Kampot offers the same potential gains as elsewhere and to this extent a comprehensive plan and investment strategy for building restoration and public realm enhancement and building restoration is the essential first step.

Based on the evidence of stakeholder discussions there is a need to better interpret and fully realize Kampot‟s “hub function” in providing good linkages to the other surrounding local and regional attractions. The Bokor National Park and the outlying islands are key in this regard, where the ability to introduce direct connections to Phu Quoc Island in Viet Nam would be advantageous. Here, it is understood that the proposed ferry port, on the river and close to the coast will have the capacity for realizing the direct island linkages.

It is assumed the feasibility of promoting the potentially attractive coastal environment within Kampot province should also be explored. In this regard, the proposed new coastal resort to the south of Kampot town is noted21, where there may be a need to test feasibility in detail for a project that would be heavily dependent on private sector investment.

21 Coastal Island Resort Master Plan (Kampot PPC) refers.


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As stated above, agriculture is the primary industry in Kampot Province, where Kampot town acts mainly as an administrative center and a market for the surrounding area. It is understood that opportunities to optimize the value of the agricultural economy in terms of developing a higher level of interest in business agriculture are not yet taken up, both in terms of agricultural produce and the potential for agro-processing and aquaculture. Thus in the medium-term there would seem to be potential for better exploitation of at least the relatively large and markets of the Phnom Penh region and Sihanoukville province. In this context the provincial policy emphasis on the value of SMEs and community related investment to provide opportunities for employment diversification and agricultural expansion. Strengthening the relationship between producers and purchasers will be vital in this regard.

Generally, provincial and municipal governance is under resourced and with insufficient financial capacity. Under resourcing is both a numerical issue and a professional capacity issue, such that skills levels are often inadequate to do the job. At the same time, the regulatory and administrative context in which government operates is clearly not achieving the results it is intended to achieve. This is resulting in stakeholder concerns there should be much more transparency in government and greater attention to law and order. At a professional and technical level there a variety of weaknesses partly founded on resource constraints, for instance the inability to implement an effective system of environmental monitoring, the inability to establish a comprehensive master plan as a context for development and investment prioritization and the inability to be consistent in enforcing design guidance regarding building restoration in the conservation area. Prioritizing investment in human resource development to better manage economic growth and sustainable environmental practices should therefore be a medium-term priority for Kampot. At the same time, the regulatory and administrative context in which government operates is clearly not achieving the results it is intended to achieve. This has led to stakeholder concerns that there should be much more transparency in government and greater attention to law and order.

The current policy emphasis of the Provincial Government lays the foundations for addressing the above problems and opportunities. It is we understand based on four key principles, which are: (i) Health and Living Standards (ii) Economic Development and SME Investment; (iii) Agriculture; and (iv) Environmental Quality, which have the potential to provide the framework for the preparation of a Medium Term Development Strategy and Investment Program to help guide development and investment over the next 10 years.

The current ADB project (CTDP) places priority on a number of baseline infrastructure projects which will provide a more sustainable environmental context and better living standards for the Kampot residents and visitors. The projects in wastewater collection and treatment, urban drainage and solid waste management are essential as a context on which to build a better economy and to invest in the tourism and services sector within urban Kampot. They set a context for a subsequent comprehensive approach to heritage conservation and enhancing the public realm following on from the ADB project and this is realized in the MTIP contained in this SLEDP

The ADB loan and other previous initiatives, in water supply and flood protection for instance have the capacity to provide a strong core in the provision of basic infrastructure for Kampot, but the systems will not be totally complete. It is advisable to extend the program of basic infrastructure provision into other parts of urban Kampot as part of a medium-term investment program, meeting stakeholder priorities. At the same the SLEDP provides the opportunity to move beyond environmental infrastructure into a medium-term investment phase, which addresses the broader aspects of better economic development for Kampot.

It is within this context that there are benefits in expert exploration of a number of linked economic factors, including: (i) improving the local business climate; (ii) investment in sites and premises; (iii) investment in soft infrastructure; (iv) investment in local business growth,


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including SMEs; (v) encouraging new enterprises; and (vi) investment incentives. Output in the form of a local economic development plan22 would be helpful in providing this guidance.

Table 7 overleaf provides more definition to these problems and opportunities in the form of a SWOT analysis.

22 Local Economic Development Plans: Developing and Implementing Local Economic Development Strategies and Action

Plans - The World Bank (January 2006)


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Table 7: Preparation of Kampot SLEDP - SWOT Analysis

Green City

Agenda STRENGTHS WEAKNESSES OPPORTUNITIES THREATS


1. The architectural and historic character of Kampot, the attractive coastline and the surrounding rural landscapes provide a strong catalyst for inward investment in the tourism sector.

2. Kampot is a natural hub for regional tourism development, including established centers such as Sihanoukville and Phu Quoc Island.

3. Kampot is considered to be close enough to the international airport and port facilities in Sihanoukville, and the GMS Corridor related roads to secure economic benefits.

4. Long-standing development in the tourism sector provides a strong base on which to build and expand further.

1. Increased rates of economic growth will place additional pressures on the need for significant increases in investment in urban infrastructure, which has historically lagged behind urban growth.

2. That the apparent lack of development control and enforcement capability, with particular reference to conservation of the built environment is a significant deterrent to the achievement of economic development goals, particularly in the tourism sector.

3. The absence of a modern railway for passenger and freight traffic to/from Phnom Penh and other attractor cities (eg Ho Chi Minh City).

1. The strategic location of Kampot suggests opportunity for economic development and diversification across a wide range of sectors, serving regional markets.

2. Better conservation of the architectural and historic built environment provides an opportunity for expansion of tourism in and around Kampot and for visitor accommodation, which attracts higher revenue generating tourists

3. Growth of the tourism sector will provide opportunity for business agriculture serving an expanding local market.

4. Planned development in the tourism sector (eg river port development) and in particular investment in the proposed coastal resort area.

1. That optimism in the growth potential of Kampot is ill found, such that the expansion and diversification of the local economy cannot be achieved.

2. That the successful conservation of the built environment in Kampot is not achieved such that the targets for tourism development and employment growth cannot be achieved.

3. Expansion of business agriculture to serve local/regional markets is constrained.

4. That continued under-investment in urban infrastructure will constrain the economic growth potential of Kampot in the medium-term.

5. That the full potential of private sector (and community) investment in the tourism, agricultural and other business sectors is restricted by the regulatory and administrative context.

Equity

1. Continued economic growth in the tourism and other sectors will provide new employment opportunity for the existing

1. Economic growth creates additional pressures for the provision of affordable housing (and community services) for both the existing population

1. Conservation of the architectural and historic fabric in Kampot will further enhance the potential for economic development/new to

1. Uncontrolled in-migration from the rural areas surrounding Kampot will be increasingly difficult to predict and manage, leading to social and cultural problems.


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Green City


population in Kampot and its rural hinterland.

2. Potential economic growth should be able to address in part “women in employment” issues and the needs of the urban poor and the under-privileged.

and newcomers.

employment opportunity and to address in part “women in employment” issues and the needs of the urban poor/under privileged.

2. A stronger agricultural business base in areas close to Kampot has the potential to provide improved social and economic stability for the rural population.

2. Essential investment in housing/community and services may not keep pace with the rate of urban growth, resulting in additional threats, affecting the urban poor/low income under-privileged groups.

3. Increased rates of economic growth will result in additional threats to the quality of the urban and coastal environment in and around Kampot.

Environment

1. The architectural and historic fabric of Kampot (and the attractive coastline and natural landscapes) provide a strong catalyst for the attraction of international and national tourists.

1. Environmental quality in the conservation area is damaged by poorly maintained and/or restored buildings and a generally unsightly public realm.

2. The quality of the visual quality is at further risk from the apparent lack of development control and enforcement capability in the conservation area, where owners are in non-compliance.

3. The provision of sustainable wastewater treatment and solid waste management has not been realized and is a significant cause of river-course pollution and generally detracts from the quality of the visual environment.

1. Sustainable economic growth should provide opportunity for planning and investment, which optimizes economies of scale in the provision of urban infrastructure, such as solid waste management.

2. Sustainable economic growth should provide opportunity for a financial regime which exploits the potential for the tourism sector to directly contribute to urban financing (eg accommodation occupancy charging).

1. Essential government investment in infrastructure services may not be able to keep pace with the rate of economic growth resulting in additional threats to the quality of the urban environment in Kampot.

2. Conservation area policy and practice fails to achieve the successful restoration of the buildings of architectural and historic interest and proper maintenance of the public realm.

1. The structure of 1. The actual capacity of 1. Prioritization in 1. That government does not


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Green City


Governance

governance in Kampot province and urban Kampot potentially provide a strong baseline for managing the planning and development of Kampot.

provincial and local government is significantly constrained by shortages of resources and operational and management capability.

2. Inadequate land use planning and development controls fail to prevent unsustainable development in the conservation area.

strengthening the capacity of provincial and local government to provide opportunity for; (a) better performance; and (b) release the full potential of private sector investment in sustainable economic growth.

2. The opportunity to adopt incentive mechanisms to ensure the proper conservation of the architectural and historic fabric of Kampot.

3. The opportunity to enhance income from tourism, through a local tourism tax on hotels and other tourism related businesses.

invest in essential capacity building and in particular in the high caliber resources and supporting soft infrastructure to promote economic development.

2. The Kampot Master Plan is not supported by stringent land use development controls to prevent unsustainable urban development.

3. That the regulatory context remains incapable of addressing non-sustainable development and investment.


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MEDIUM-TERM INVESTMENT PLANNING 3.11.

The development strategy for the short and medium-term periods in Kampot should of course be reflective of the aims and objectives of the approved plans at both provincial and municipal level. The recommended Medium-Term Investment Program (MTIP) is intended to do this.

At the same time the evidence of the consultant team‟s research shows that it is desirable to seek a planning and investment approach which addresses the need to be: (i) more achievable; (ii) environmentally sustainable; and (ii) better meet the needs and aspirations of Kampot‟s residents.

It is within this context it is recommended that investment in the medium-term should incorporate the following five principles:

Reflect the need for sustainable planning and investment and thus be better linked and integrated to stakeholder needs and aspirations, including community and private sector interests.

Build short and medium term planning, development around a realistic plan and program, where on-going investment in basic infrastructure is mirrored by investment in local economic development and other related employment generation activities.

Prioritize “an improved living and working environment” as a key indicator for choice and priorities for short and medium-term investment.

Reflect the full scope of “green city principles” in the choice and further development of investment opportunities.

Utilize scarce resources and investment capital on an “only when it is needed” basis.

1st Priorities (2nd GMS Corridor Towns Development Project Loan) 3.11.1.

In the short-term the project loan will be concentrated on making up deficiencies in basic environmental infrastructure within the Kampot urban area, with emphasis on better wastewater collection and treatment, urban drainage and local flood protection and solid waste management.

Medium Term Investment Program 3.11.2.

The recommended MTIP is founded on the basis of potential new projects that can be sustainable and have the potential to contribute to Kampot‟s green city credentials. It is believed that in practice the project list can be extended.

Its sources of information include: (i) the approved and draft plans and policies for the town and the province; and (ii) official information/data received from government, community and private sector stakeholders. It is believed that in practice the project list can be extended.

The information provided is not yet sufficiently detailed for further prioritization and /or specific timings to be indicated, but there are some key preparatory Program components, which the consultant team would recommend for early implementation and this includes the urban enhancement component which was withdrawn from the ADB project loan. This is to provide a context for refining and further specifying the MTIP and or to indicate components, which are known to be stakeholder priorities.

These components are:

Preparation of a Local Economic Development Plan with the intention of building economic capacity, in an environment, where government, private business and the


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community work together to create better conditions for economic growth and job creation.

On-going new and improved environmental infrastructure for the existing urban area and for proposed urban expansion, with specific reference to water supply, wastewater collection and treatment, solid waste management and land drainage and flood protection.

Implementation of the Phase 1 of the Kampot Conservation and Enhancement Project, with emphasis on “public realm” enhancement.

Design and implementation of Phase 2 of the Kampot Conservation and Enhancement Project, with an emphasis on building restoration.

Coastal New Town – Carry out feasibility study and prepare Master Plan and Development/Investment Strategy.


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Table 8: Priorities for Medium-Term Investment Program - Kampot

Potential Project Objective Green City Agenda

Contribution Primary Investment Source

SECTOR/DISTRICT DEVELOPMENT

1 Conservation and Enhancement

Project (Phase 1)

Implementation of 1st Phase conservation and

enhancement plan With empha i on public

realm enhancement.


Equity

Environment

Government

International Funding Agencies

2 Conservation and Enhancement

Project (Phase 2)

Implementation of 2nd

Phase conservation and

enhancement plan, with emphasis on building

restoration assistance for private property owners.


Equity

Environment

Government


Private Sector Investment

3 Kampot Coastal New Town

Development Project

Preparing Feasibility Study including Master

Planning Strategy and Implementation Program

as appropriate.

Identifying Potential Investors and PPP arrangements for GoC.

Implementation of agreed Plan if appropriate.


Environment

Government


ENVIRONMENTAL INFRASTRUCTURE

4 Wastewater Collection and

Treatment Extension Areas

Extending wastewater connections and treatment

to other urban areas, including west of the

Kampot River.

Equity

Environment

Government


5

Integrated Solid Waste

Management

Expansion Program

Collection system area expansion and sustainable

waste management practice further development.

Controlled landfill expansion site.


Equity

Environment

Government



6 Road Drainage Infrastructure

Extension Areas

Extending urban roads drainage upgrading to

other areas without road drainage or badly

designed drainage facilities.

Equity

Environment

Government



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ENVIRONMENTAL UPGRADING AND PROTECTION

7 City Greening Project

Implement community based city-wide Greening

and Tree Planting Project, plus a tree/plant

nursery.


Equity

Environment

Government



8 Environmental Awareness Plan

Implement a community based approach to the

design and implementation of a town-wide

environmental awareness plan/program and

incorporating WU.


Equity

Environment

Government



SOCIAL DEVELOPMENT

9 Education Service Upgrading Design and construction of new facilities (precise

need to be defined).


Equity

Government


10 Health Service Upgrading Design and construction of new facilities (precise

need to be defined)


Equity

Government


GOVERNANCE

11

Kampot Local Economic

Development Plan

Design of strategy to maximize opportunities for local economic development, including integrated program development for government, private investors and the community, together with capacity development for provincial and municipal governments. To include a tourism/ hospitality sector - human resource development plan.


Equity

Government


12 Resource Capacity Upgrading 1

(General)

Capacity Building and Training in Key

Government Sectors


Equity

Government


13

Resource Capacity Upgrading 2

(DoWA)

Capacity Building and Training Module building on

SLEDP related activities with Women‟s Union Economic Competiveness

Equity

Environment

Government



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3B. The Sihanoukville Strategic Local Economic Development Plan

OVERVIEW 3.12.

Sihanoukville is the administrative capital and the urban center of Sihanoukville Province in southern Cambodia. It received province status in 2008. The town is situated in the GMS southern economic corridor which links Viet Nam with Thailand. Thus Sihanoukville has good strategic road connections with Ho Chi Minh City and Bangkok and into Phnom Penh. Significantly it has an international container port, oil port, an international airport and Special Economic Zone (SEZ) status. The town has a number of internationally known beaches, is close to the Ream National Park and has good access to the outlying islands, including Koh Thmei, Koh She and the established Vietnamese resort island of Phu Quoc. It‟s economic plus indicators are multiple in nature.

Sihanoukville is a medium sized town with a population of 77,657 inhabitants (17,003 households) in 2013. This compares with a province wide total of 208,232, approximately 37% of the total. There is an unusually high proportion of the population of working age, or near working age, which is a reflection of the employment opportunity in Sihanoukville through the on-going expansion of its service, transport logistics, tourism and industrial sectors in recent years.

Population growth rates in urban Sihanoukville between 2006 and 2010 were relatively high at around 3.75% per annum, but since then have been lower at about 2.50%. Trends based population forecasts for 2020 (using a rate of 2.50%) are therefore 92,309 and for 2030 are 118,161 persons. The growth rate for the urban area is generally higher than for the province as a whole, such that Sihanoukville town has absorbed almost 50% of the provincial population increase between 2012 and 2013.

Urban growth has brought with it a number of social problems associated with in-migration leading to a significant aspect of urban poor households, informal housing and we understand difficulties in accessing the full range of community services. There is also evidence of socially undesirable practices including widespread prostitution.

Sihanoukville GDP per capita was USD1,345 in 2013, which was significantly higher than the national average. However, the average annual growth rate since 2005 is similar to the national average and was even higher between 2005 and 2010. The provincial GDP still relies mainly on agriculture of the province in total, compared to urban Sihanoukville, where the service and the industrial sectors dominate GDP per capita.

It is anticipated that the economic success story will continue for Sihanoukville, thus providing opportunities for an even higher level of private investment in a variety of sectors, including port and airport operations, transport related trade/logistics, manufacturing industry, tourism/hospitality and supporting services. This focuses attention on the need to prioritize investment in the essential supporting environmental infrastructure and the services required to urgently meet the current deficiencies and as required to support urban growth and ensure the sustainability of Sihanoukville in the medium-term. The scale and intensity of environmental degradation is critical across most of the city affecting the residential environment and importantly water quality at the tourist beaches. At the same time the quality of the visual environment is poor in most places and plagued by urban sprawl/scattered development, unsustainable land use relationships (eg industry/housing),


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informal settlements and mixed use traffic environments (trucks/residential traffic). The Cambrew brewery is a bad offender regarding transport issues.

KEY DEVELOPMENT ISSUES 3.13.

A number of Key Development Issues are identified and which are used as an analytical baseline in the formulation of the Sihanoukville SLEDP. Definition of the Key Development Issues is reflective of the process of stakeholder consultation used in the PPTA, including the outputs of the Planning Workshop23 and the general policy orientation of the approved GoC policies and plans.

The Key Development Issues relevant to Sihanoukville are set out below in Table 9 (Key Development Issues – Sihanoukville). They are divided into two main types: (i) Generic, which are typical of most urban situations in Cambodia; and (ii) Specific, which relate to Sihanoukville only.

Table 9: Key Development Issues – Sihanoukville

GENERIC

1) The need to adopt an integrated investment program approach to development planning to ensure cost-effective economic growth and the achievement of environmental targets;

2) The need to implement medium-term development planning proposals, which will benefit all cross-sections of the resident population;

3) The need to identify mechanisms and incentives to ensure that the town is competitive and capable of attracting private sector investment; and

4) The need to ensure that the town will have the resource capacity to achieve medium-term development planning and investment objectives and where capacity building and training will be a paramount consideration.

SPECIFIC

1) Continuing to take up opportunities to maximize the potential of private sector investment in

increasing the economic potential of Sihanoukville in the manufacturing, logistics, services and

tourism sectors, fully utilizing the potential of its Special Economic Zone status and the

international port and airport facilities;

2) The need to better recognize the fundamental relationship between environmental sustainability and sustainable tourism and in particular the vulnerability of the coastal ecology and beach environments and visual intrusion due to poor environmental planning and controls;

3) The need to better recognize the medium-long term social and economic advantages of a better environment as the foundation for higher value tourism in Sihanoukville and plan for it;

4) Taking up opportunities to optimize the value of agriculture in the Sihanoukville hinterland and to invest in a more business orientated approach to agricultural development;

5) The need to ensure climate change adaptation design factors are integral to coastal protection measures in Sihanoukville and its surroundings; and

6) The need to plan for investment in basic urban services and environmental upgrading within the context of reasonable expectations for medium-term growth.

THE PLANNING INTENT – MASTER PLAN SUMMARY 3.14.

A future planning and development concept is contained in an advisory study produced by JICA in 2010 as part of a “Study on National Integrated Strategy of Coastal Development and Master Plans for Sihanoukville and Kampot”. The draft Master Plan for Sihanoukville covers the period up to 2030 and includes a conceptual socio-economic framework, an industrial

23 Planning Workshop – Sihanoukville (21st November 2014)


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promotion strategy, land use concept plans and proposed transport and utilities infrastructure plans. The plan was built around the development of Sihanoukville as a national gateway for international trade and concentrating and an economic development strategy based around: (i) export orientated industries located mainly in the SEZ; (ii) resource based investment and industries centered on business agriculture, agro processing and marine fisheries; and (iii) higher value tourism.

The proposed land use strategy places a strong emphasis on environmental and biodiversity protection, including large areas given over to a nature conservation zone, a scenic and water resources zone, a disaster management and agriculture zone and a protected forest zone. (Figure 6 and Figure 7 refer). This effectively restricts urban development to the existing urban framework in the south-western quarter of the city, which relates directly with the beach environments. Naturally proposals for tourism related development, housing and commercial and government/community uses would be concentrated there. Along the northern coastline around the port, it is proposed to concentrate further industrial, port back up and logistics type uses. There are proposals to upgrade both the road and rail infrastructure. This includes a separation of road functions in the urban area, such that road NR4 caters for general town traffic, including tourist arrivals and a separate northern axis will accommodate most of the port related and industrial traffic. Separate strategies are also proposed for the development and expansion of utilities infrastructure.


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Figure 6: Sihanoukville – Spatial Development Strategy


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Figure 7: Sihanoukville - Land Use Strategy

LOCAL DEVELOPMENT PRIORITIES 3.15.

Stakeholder views are an essential consideration in the preparation of this emerging SLEDP and importantly in the strategy to be chosen and the medium-term investment project priorities. These views: (i) provide a consensus on visioning, development and investment priorities and potential projects across all sectors; and (ii) compliment the recommendations contained in relevant government policy documents at national, provincial and local government level.

It is within this context that medium-term priorities and projects have been discussed individually with a variety of relevant stakeholders from government, the community and the private sector. They have also been discussed in the Planning Workshop in Sihanoukville. The summary outputs of the Planning Workshop relevant to defining development priorities and projects are shown below in Table 10 (Local Development Priorities and Projects). Liaison with senior provincial/municipal government officials also included a short questionnaire survey geared to confirming investment and project priorities. Where possible the outputs of these consultations are reflected in Table 11 (Priorities for Medium-Term Investment Program).


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Table 10: Local Development Priorities and Projects

Development Priorities

1 Economic Competiveness

Provide opportunities and incentives for the expansion of SMEs in Sihanoukville.

Develop the tourism potential of Sihanoukville and its surroundings, including its weekend

destination capacity.

Support the tourism sector with good services in transportation, food and accommodation.

Provide a more secure environment for the development of the tourism sector – ensuring

trained personnel in the tourism and service sectors.

Investing in business agriculture/aquaculture to serve expanding local markets.

Increase international and national air flight destinations and frequencies.

Human resource development in the tourism and hospitality sectors – ensuring trained

personnel.

Upgrade transport infrastructure in Sihanoukville, including roads.

2 Equity

To create more job opportunities and to raise income levels

Investment in skills development and employment opportunities for the urban poor women.

Improved education facilities and high quality training. Center for Vocational Training

Introducing community-based solid waste recycling/re-use principles and assisting the urban

poor and poor women headed households.

3 Environment

Introduce “Green” principles into Sihanoukville planning and development – Sihanoukville (and

Kong Kan Forest) Greening/Tree Planting Project

Supporting the tourism sector with a clean environment.

Community awareness building in the solid waste and wastewater management sectors and

the environment in general.

Supply more garbage trucks and equipment for better collection and disposal of solid waste.

Prepare solid waste management – good practice guidelines.

Ensure industries have primary industrial effluent treatment facilities.

Improve clean water supply facilities.

Improve road drainage facilities in the urban area.

4 Governance

Strive for open/transparent government in Sihanoukville.

Strive for better standards of law and order in Sihanoukville, including a more secure tourism

environment.

Ensure better environmental management planning and enforcement

Cut power and/or water supply as a deterrent for non-compliance with environmental law.

Introduce concept of “Good Practice Certificates” for high level performance in the Environment

sector.

Human resource development in the public sector, including urban management and urban

land use planning.


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The survey results are significant and consistent in showing the need for on-going investment in basic environmental infrastructure, with particular regard to: (i) the expansion of wastewater collection and treatment facilities; (ii) improved water quality; (iii) land drainage and flood prevention; and (iv) better solid waste management. Regarding solid waste management there is stakeholder concern to ensure optimization of the basic principles for sustainable solid waste management, reduction, recycling and re-use and for increased levels of community involvement. The questionnaire survey in particular made this a top priority for government, reflecting a situation where investment in basic infrastructure lags significantly behind the pace of urban growth and stakeholder needs and aspirations.

The survey results also stressed the need for more effective economic development and investment in Sihanoukville, centered on the towns natural and locational advantages as an economic hub in the GMS economic corridor between Thailand and Viet Nam. There was concern that although the SEZ was progressing well, more could be done to ensure economic development in the town was able to take better advantage of the international port and airport facilities and its natural assets as a coastal tourist destination.

In turn there is recognition of two key issues which require addressing. First there is an identified need for skills development and improved business marketing capability to promote new business development in Sihanoukville and the expansion of existing businesses that would not be located in the SEZ. Here there is strong support for skills development in the tourism sector, which will be socially inclusive and which should be assisted by the provision of a vocational training center. On a more general note, capacity building leading to better environmental management and protection was a stakeholder concern. Secondly the relationship between the value of the urban environment and the provision of good environmental infrastructure, as an essential baseline condition to support economic development was well understood. Specific mention was made of the need to solve pollution problems affecting the beaches and to generally clean the beach environments as a top priority.

Better urban transport infrastructure was also highlighted in the process of stakeholder participation, with specific reference to new strategic roads provision which will better link together the main urban nodes (eg port and downtown area) and provide improved connections to the regional highway network.

Last but not least both the Planning Workshop identified law and order and need for open and transparent government as a priority.

PROBLEMS AND OPPORTUNITIES FOR MEDIUM-TERM 3.16.

INVESTMENT

Sihanoukville has a number of development and investment fundamentals in its favor, principally: (i) its strategic location in key transport corridors linking centers of population and ports together and providing access to larger markets, principally into Thailand through the strategic road link to Bangkok and into Viet Nam through the strategic road link to Ho Chi Minh City; (ii) ability to serve the comparatively large populations of the Phnom Penh, which has the potential to be a two-way economy, both providing goods and services to the capital and providing a satellite community function for Phnom Penh investment; (iii) the potential to better exploit its natural advantages as a center for international and local tourism; (iv) the potential for employment diversification in the manufacturing and logistics sectors taking advantage of the Special Economic Zone; (v) the potential to harness its strong agricultural base to its advantage through a more commercially orientated approach to agricultural production, agro processing and marine fisheries; and (vi) a readily available and affordable labor force from the surrounding rural areas in the province.

Sihanoukville also has a number of fundamental weaknesses, which are centered on a disability to properly address the fundamentals of sustainability, with regards to


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environmental quality, equity and good governance. To this extent the emerging economic success story of Sihanoukville can only worsen its sustainability credentials unless there is a new emphasis of solving the full range of problems which currently exist in and integrated format.

At the heart of the problem is a provincial and local government structure which is seriously under resourced and with insufficient financial capacity. Under resourcing is both a numerical issue and a professional capacity issue, such that the skills levels are often inadequate to do the job. At the same time the regulatory and administrative context in which government operates is clearly not achieving the results it is intended to achieve, such that an atmosphere of helplessness seems to pervade. There is insufficient government and community intervention to secure a good environment and effective social upgrading. In the environment sector for instance there is a common complaint24 that the ability to plan and control development effectively and in a transparent manner cannot be achieved in Sihanoukville. In the social sector it is noticeable that unacceptable social conditions are tolerated.

Thus the state of the environment in Sihanoukville is poor and characterized by: (i) unsustainable wastewater discharges, which directly affect the coastal and residential areas; (ii) unsustainable solid waste management practices which also affect the coastal and residential areas; and (iii) major areas in the east of the Sihanoukville, which are subject to periodic flooding

None of this is helped by an inadequate master planning regime, which is: (i) not able to direct development into the most appropriate locations; (ii) is unable to prevent unsustainable and ad hoc development; and (iii) is unable to prevent land speculation, such that very large areas of land adjacent to the coastal resorts have become long-term eyesores. In the context of the conceptual master plan (see above) it is fundamentally important that the existing resource wasteful land management practices should not continue. The conceptual master plan very clearly shows that the land area available for new urban uses in Sihanoukville is very constrained by various environment conservation related land management designations (eg Water Resources Management Zone).

In response to Sihanoukville‟s increasing accessibility to international and domestic tourism markets, there is every expectation that the opportunity to develop some of the outlying islands for resort development will occur. There is naturally a concern that these relatively unspoilt islands will also be subjected to a pattern of unsustainable development, perhaps not caused by lack of concern, but more by the apparent lack of ability to plan, design, control and enforce.

There are a number of significant social issues. In-migration, taking up employment opportunities which have arisen as a result of economic growth do not seem to have been supported by active intervention from government or the private sector to provide adequate shelter. Thus there a number of informal housing/squatter areas, where the living environment is clearly poor. It is also apparent that in-migration has led to social deprivation, including prostitution and exposure to a drugs culture, which is an unacceptable social condition. Continued economic growth can only worsen this situation, unless there is a higher level government intervention.

Solutions to aspects of social deprivation to some extent are related to the nature of tourism development, where it is very clear that there are aspects, which have a low economic value and are socially unacceptable, the bar street at Victory Hill for instance. To this extent it is anticipated that the improved connectivity of Sihanoukville and the planned upgrading of environmental infrastructure can provide the medium-term opportunity to upgrade the tourism environment, through an accommodation structure which attracts higher value/revenue

24 Planning Workshop – Sihanoukville (21/11/14)


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generating tourists and through expansion into related sectors such as conferencing, education and health.

This current ADB project (CTDP) is an opportunity and a new starting point in addressing the multiple issues of governance, environment and equity that adversely affect Sihanoukville, through prioritizing project development and capacity building in the environment sector and in particular promoting major improvements in wastewater collection and treatment, urban drainage and solid waste management. These are essential components in establishing a baseline for the sustainability for the town now and setting a platform on which to introduce further phases of infrastructure development to meet significant forecast growth levels.

The SLEDP provides the opportunity to move beyond environmental infrastructure into a medium-term investment phase, which addresses the other fundamental weaknesses identified above. Wherever possible this should continue to include investment in on-ground projects, where wastewater collection and treatment in Sihanoukville should be a top priority replacing the loss of the wastewater component from the project loan. Similarly a sustainable new landfill site relatively close to the main urban area should be an SLEDP priority. .

At the same time much more emphasis should be given to: (i) preparing a better strategic planning and investment context for the town, and (ii) better resourcing and training in both the government and the private sector, particularly in the hospitality/tourism sector. The existing conceptual master plan is a credible starting point in developing an integrated and more sustainable approach for spatial planning, but this alone is very unlikely to lead to a sustainable development and investment regime for Sihanoukville. Thus there are benefits in developing a more integrated planning and investment action plan for Sihanoukville. The aims of such a plan would be to set a socio-economic framework, which addresses the core stakeholder concerns that economic development should be socially beneficial, equitable and environmentally sustainable. This would form the baseline on which to build a practical approach to the application of environmental standards and guidelines and better spatial planning, feeding into a formal master plan to be adopted at all levels of government. The actions required to implement the plan would be spelt out, along with cost estimates and implementation roles and responsibilities. To this extent the plan would require mechanisms to secure cooperation of the key stakeholders – government, community and the private sector.


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Table 11: Preparation of Sihanoukville SLEDP – SWOT Analysis

Green City Agenda

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS


1. The development of

strategic infrastructure

(international port and airport

development) and strategic

road connections to Phnom

Penh and GMS Corridor

related roads into Thailand

and Viet Nam provides a very

strong setting for economic

development, including the

Special Economic Zone

(SEZ).

2. SEZ advantages for investors are successful in attracting manufacturing industry and other business uses to Sihanoukville.

3. Sihanoukville is a natural hub for regional tourism development, including established centers such as Kampot and Phu Quoc Island.

4. Long-standing development in the tourism sector provides a strong base on which to build and expand the tourism sector further.

1. Increased rates of economic

growth will place additional

pressures on the need for

significant increases in

investment capital in urban

infrastructure, which has

historically lagged behind urban

growth.

2. That the apparent lack of development control and enforcement capability is a significant deterrent to the achievement of economic development goals, particularly in the tourism sector.

1. Strong regional transport

infrastructure and the SEZ

should act as a catalyst for

further expansion of the

manufacturing and business

sector including logistics

related uses.

2. There are opportunities to further develop the tourism sector into the outlying islands.

3. There are opportunities to upgrade the tourism environment through visitor accommodation, which attracts higher revenue generating tourists and through expansion into related sectors such as conferencing, education and health tourism.

4. Urban growth and expansion of the tourism sector can provide opportunity for better investment into business agriculture serving an expanding local market.

1. That continued under-

investment in urban infrastructure

will constrain the economic growth

potential of Sihanoukville in the

medium-term.

2. That the underlying constraints (see below) currently affecting tourism development are not properly addressed and: (i) discourage sustainable tourism; and (ii) appropriate new investment in the tourism sector.

3. That the full potential of private sector (and community) investment in the tourism and agricultural sectors is restricted by government regulatory and administrative context. .

1. Economic growth in

Sihanoukville has provided

new employment opportunity

1. Economic growth is creating

additional pressures for the

provision of affordable housing

1. Continued economic growth

will further enhance the

potential to provide new

1. Uncontrolled in-migration from

the rural areas surrounding

Sihanoukville and elsewhere in


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Green City Agenda


Equity

for the existing urban

population and elsewhere

from within the province and

from other areas.

2. Economic growth should address in part “women in employment” issues and the needs of the urban poor and under-privileged.

(and community services) for

both the existing population and

newcomers.

2. The pressures on the provision of affordable housing are characterized by significant areas of informal housing, lacking some basic amenities.

3. That some aspects of tourism and overseas investment in property are socially unacceptable.

employment opportunity in

Sihanoukville and to address in

part “women in employment” issues and the needs of the

urban poor/under privileged.

2. A stronger agricultural base in areas close to Sihanoukville has the potential to provide improved social and economic stability for the rural population and discourage migration into Sihanoukville.

will be increasingly difficult to

predict and manage, leading to

social and cultural problems.

2. Essential investment in housing/community and services may not keep pace with the rate of urban growth, resulting in additional threats, affecting the urban poor/low income/under-privileged groups.

3. That the socially unacceptable aspects of tourism and overseas investment are allowed to expand.

Environment

1. The coastal landscapes

and the offshore islands

provide a very strong catalyst

for the attraction of

international and national

tourists to Sihanoukville.

1. The quality of the public

realm and the visual

environment in Sihanoukville is

very poor in marked contrast to

the high quality coastal

landscapes and may act as a

deterrent to tourism, particularly

repeat visits.

2. The provision of sustainable wastewater treatment and solid waste management has not been realized and is significant cause of coastal pollution and generally detracts from the quality of the visual environment.

3. That the apparent lack of development control and enforcement capability has

1. Sustainable economic

growth should provide

opportunity for planning and

investment, which optimizes

economies of scale in the

provision of urban

infrastructure, such as solid

waste management.

2. Sustainable economic growth should provide opportunity for a financial regime which exploits the potential for the tourism sector to directly contribute to urban financing (eg accommodation occupancy charging).

1. That a lack of implementable

tourism thresholds leads to

exploitation of the tourist market

such that the high quality coastal

landscapes and the urban

environment generally are

seriously damaged.

2. Essential government investment in infrastructure services may not be able to keep pace with the rate of economic growth resulting in additional threats to the quality of the urban environment in Sihanoukville.


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Green City Agenda


resulted in a poor quality and a deteriorating visual environment.

Governance

1. The structure of provincial

and municipal government

potentially provides a baseline

on which to build better

performance.

1. The capacity of provincial

and local government is

significantly constrained by

shortages in resource capacity

and operational and

management capability.

2. Inadequate land use planning and development controls are in place to prevent unsustainable tourism and urban development generally.

3. There are inadequate controls in place to prevent socially unacceptable forms of development and investment in Sihanoukville.

1. Prioritization in

strengthening the capacity of

provincial and local

government can provide the

opportunity for; (a) better

performance; and (b) release

the full potential of private

sector investment in

sustainable economic growth.

2. The opportunity to enhance income from tourism, through a local tourism tax on hotels and other tourism related businesses.

1. That government does not

invest in essential capacity

building and in particular the high

caliber resources and supporting

soft infrastructure to promote

economic development.

2. A Sihanoukville Master Plan is not supported by stringent land use development controls to prevent unsustainable urban development.

3. That the regulatory context remains incapable of addressing socially unacceptable development and investment.

4. The absence of agreed tourism thresholds, built into the provincial and local policy framework risks overdevelopment and the medium/ long-term sustainability of Sihanoukville.


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MEDIUM-TERM INVESTMENT PLANNING 3.17.

The development strategy for the short and medium-term periods in Sihanoukville should of course be reflective of the aims and objectives of the approved plans at both provincial and municipal level. The recommended MTIP is intended to do this.

At the same time the evidence of the consultant team‟s research shows that it is desirable to seek a planning and investment approach which addresses the need to be: (i) more achievable; (ii) more driven by economic development potential; (iii) environmentally sustainable; and (iv) better meet the needs and aspirations of Sihanoukville residents.

It is within this context it is recommended that investment in the medium-term should incorporate the following five principles:

Reflect the need for sustainable planning and investment and thus be better linked and integrated to stakeholder needs and aspirations, including community and private sector interests.

Build short and medium term planning, development around a realistic plan and program, where on-going investment in basic infrastructure is mirrored by investment in economic development and other related employment generation activities, particularly in the resource based industries, the transport and logistics sectors and the tourism business sector.

Prioritize “an improved living and working environment” as a key indicator for choice and priorities for short and medium-term investment.

Reflect the full scope of “green city principles” in the choice and further development of investment opportunities.

Utilize scarce resources and investment capital on an “only when it is needed” basis.

1st Priorities (2nd GMS Corridor Towns Development Project Loan) 3.17.1.

In the short-term the Project Loan will be concentrated on making up deficiencies in environmental infrastructure within the Sihanoukville urban area, with emphasis on urban drainage and local flood protection and solid waste management.

Medium Term Investment Program 3.17.2.

The recommended MTIP is founded on the basis of potential new projects that can be sustainable and have the potential to contribute to an improved economic and social agenda. Table 12 refers

Its sources of information include: (i) the approved and draft plans and policies for the city and the province; and (ii) official information/data received from government, community and private sector stakeholders. It is believed that in practice the project list can be extended.

The information provided is not yet sufficiently detailed for further prioritization and /or specific timings to be indicated, but there are some key preparatory program components, which the consultant team would recommend for early implementation. This is to provide a context for refining and further specifying the Program and or to indicate components, which are known to be stakeholder priorities

These components are:

Green City Action Plan - At the core of these recommendations is preparation of a Green Cities Action Plan (GCAP), to be prepared in the context of ADB policy and practice and which will include: (i) Sustainability Framework and Environmental Thresholds; (ii) Local Economic Development Plan; (iv) Tourism Development Framework (including Beach


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Areas Action Plan and Outer Islands Tourism Master Plan); (iii) Green City Initiatives Plan (including energy, carbon emissions, climate change, bio-diversity etc); (iv) Spatial Framework Plan and Development Controls/Design Guidance; (vi) Proposed Projects Implementation Arrangements and Program (including an organizational framework and implementation mechanisms/incentives); and (vii) Resource Development and Capacity Building Program.

Wastewater Collection and Treatment (Phase 1) for priority urban areas in Sihanoukville and with particular reference to the beach environments.

On-going new and improved Environmental Infrastructure for the existing urban area and for proposed urban expansion, with specific reference to water supply, wastewater collection and treatment (Phase 2), solid waste management and land drainage and flood protection.

Urban Area Upgrading of informal housing areas, including (i) infrastructure and community services provision, and (ii) social/livelihood development initiatives.

Environmental Awareness building through a community based approach to the design and implementation of a town-wide environmental awareness plan/program, including for sustainable waste/wastewater management for beach front businesses.


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Table 12: Priorities for Medium-Term Investment Program - Sihanoukville



SECTOR/DISTRICT DEVELOPMENT

1 Beach Areas Action Plan and

Enhancement Project (see also

Green Cities Action Plan –

above)

Part 1 - Tourism Development Framework for

Waterfront Areas.

Part 2 – Beach Areas Upgrading Action Plan.

Part 3 – Development Guidelines and Controls.


Equity

Environment

Government



2 Outlying Islands Tourism

Master Plan (see also Green

Cities Action Plan – above)

Sustainable Tourism Development Plan for

Outlying Islands


Equity

Environment

Government



3 Tourism/ Hospitality Sector -

Human Resource Capacity

Building Assistance.

Improving resource capacity to meet expanding

employment needs in the tourism sector and

provide better local employment opportunity and

assist “women in employment” objectives.


Equity

Government


ENVIRONMENTAL INFRASTRUCTURE


Treatment – Priority Areas

(Phase 1)

Providing new and improved wastewater

collection and treatment facilities to the main built

up urban areas and with specific reference to the

beach environments


Equity

Environment

Government



Treatment Extension Areas

(Phase 2)

Extending wastewater connections and treatment

to additional urban/ peri-urban areas and outlying

islands.

Equity

Environment

Government


6 Integrated Solid Waste

Management

Expansion Program

Collection system area expansion and

sustainable waste management practice-further

development, including outlying islands.


Equity

Environment

Government



7 Road Drainage Infrastructure

Extension Areas

Extending urban roads drainage upgrading to

other urban areas without road drainage or badly

designed drainage facilities.

Equity

Environment

Government



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ENVIRONMENTAL UPGRADING AND PROTECTION

8 City Greening Project Implement community based city-wide Greening

and Tree Planting Project.


Equity

Environment

Government



9 Environmental Awareness

Planning

Implement a community based approach to the

design and implementation of a town-wide

environmental awareness plan/program,

including for sustainable waste/wastewater

management beach front businesses.


Equity

Environment

Government



10 Urban Upgrading Project Comprehensive upgrading of informal housing

areas: (i) infrastructure and community services

provision, and (ii) social/livelihood development


Equity

Environment

Government


Community

SOCIAL DEVELOPMENT

11 Education Service Upgrading

Design and construction of new facilities (precise

need to be defined).


Equity

Government


12 Health Service Upgrading

Design and construction of new facilities (precise

need to be defined)


Equity

Government


GOVERNANCE

13 Green City Action Plan Comprehensive approach to achieving a

sustainable community (see section 3.16.2 of

text above for full description)


Equity

Environment

Government



(General)

Capacity Building and Training in Key

Government Sectors


Equity

Government



(Women‟s Union) Capacity Building and Training Module building

on SLEDP related activities with Women‟s Union Economic Competiveness

Equity

Environment

Government



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Part B

The Project Description

(Summary)


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4. THE SUBPROJECTS

PURPOSE 4.1.

The purpose of chapter 4 is to provide a summary description of each subproject and the subproject components, together with their development costs and the capacity building measures that will be essential in ensuring sustainability.

SUBPROJECT COMPONENTS SELECTION 4.2.

The recommendations on the subproject components to carry forward into the ADB Project Loan are based around an approach which:

Reflects Go policy on sustainable urbanization and environmental policy in general and will be beneficial to development objectives in the GMS economic corridors;

Reflects the ideals for sustainable urban development contained in ADB policy and in particular the Green City Agenda – economic competiveness, equity and environment; and

Reflects urban priorities and the needs and aspirations of the stakeholders in Kampot and Sihanoukville.

During the course of preparing this PPTA, the stakeholders have stressed the need to address a range of existing environmental problems. These priorities are consistently argued by the stakeholders and are partly a reflection of those indicated in the consultant team‟s ToR.

Importance is therefore placed on addressing existing environmental problems as an essential baseline on which to build for the future. This is required to: (i) secure a sustainable environment; (ii) to provide better living conditions which are socially inclusive; and (iii) provide a secure investment platform for the private sector and the community. Thus priority is given to subproject development in the solid waste collection and management and the urban drainage and flood prevention sectors in both towns. In Kampot emphasis is also given to the importance of investment in wastewater collection and treatment.

The selection of the subproject components therefore provides a careful balance between solving existing environmental issues and helping to pave the way for essential new urban development. The selection also acknowledges the importance of capacity building in both towns to help ensure the successful implementation and long-term sustainability of the subprojects and for the stakeholders in general.

CAPACITY BUILDING 4.3.

The subprojects will be supported by a Capacity Building Program (CBP), which will set out the proposed arrangements to implement and manage the project in Cambodia and in particular the subproject components. The CBP is specifically tailored to the needs of each town and addresses the technical support required to ensure the subprojects are sustainable. To this extent the CBP is component sensitive. It includes strong commitment over time, where this is required, in wastewater management for instance and lesser support where the need is less, urban drainage for instance. The CBP also includes measures to ensure that other key project related matters, including poverty, gender and community development are included. Consequently there is a specific module for improving community


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awareness and livelihood opportunities. The total cost of the CBP is estimated at just over USD1 million (USD1,012,800). Further details of the CBP are given in Chapter 6 (Project Implementation Arrangements) and in Volume VI (The Project Plans and Documents).

INVESTMENT PRIORITIES 4.4.

The recommended subproject components for both towns are summarized in the subproject component summaries (sections 4A-B) below. Costs quoted in the summaries are for base costs (civil works and goods) only and do not include taxes and duties and land acquisition and resettlement costs. They therefore differ from costs shown elsewhere in this Main Report (Volume 1).

SUBPROJECT OVERVIEWS 4.5.

Subproject overviews are illustrated in Tables 13 and 14 below, one for each project town. The tables form a helpful context for better understanding of the individual summary subproject component descriptions.

Table 13: Kampot Project Overview

CHARACTERISTICS KEY DATA/INFORMATION1

Socio-Economic Dimensions

1 Population/Population Growth (Trends Based)

2013 2020 2030

34,858 36,159 38,103

2 Household and Poverty Factors (2013)

Households Occupancy

Rate Poor

3

Households

Poverty rate

6,881

5.06 606 8.8%

3 Gender Factors (urban area) Fem headed households - 29% Mal Headed Households - 71%

4 GDP Status (per capita - 2013) Kampot Province

USD1,345

45,469

5 Proportion of Economically Active by Employment Type

Industry/Manufacturing Agric/For/Fisheries Trade/Services

5% 70% 20%

6 Unemployment Not available

Financial and Economic Status2

1 Revenues – Kampot Province Cambodia (Riel million) 2013

Total Revenues and Transfers

a. Revenues Retained and Grants

b. Central Government Transfers

92,532

14,922

77,610

2 Tariff Collection Performance (Wastewater Collection Tariff ) % of water bill – Riel monthly.

2016 2019 2025

20% (5,800) 40% (13,200) 60%(26,300)

Tariff Collection Performance (Solid Waste Collection Tariff) Riel monthly.

2016 2019 2025

4,400 4,800 5,900

3 Economic Viability (EIRR) Sub-project viability ranges from 14.5% to 18.1%


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Organization and Implementation

1 Executing Agency Ministry of Public Works and Transport (MPWT)

2 Implementation Agency Department of Public Works (GDPW) – MPWT)/Project Management Unit (PMU)

3 Wastewater Collection and Treatment

Project Implementation Unit (Provincial Department of Public Works and Transport) – Project Implementation

4 Solid Waste Management Project Implementation Unit (Provincial Department of Public Works and Transport) – Project Implementation

5 Urban Drainage Project Implementation Unit (Provincial Department of Public Works and Transport) – Project Implementation

Primary Project Beneficiaries

1 Wastewater Collection and Treatment – 13,200 persons/2,700 households

2 Solid Waste Management – 15,000 persons/3,300 households

3 Urban Drainage/Flood Protection – 5,080 persons/1,040 households

1 - All statistics are from secondary data - official GoC public information 2 - All statistics are from secondary data - official GoC public information and from consultant team calculations. 3 - Statistic from Kampot Municipality


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Table 14: Sihanoukville Project Overview

CHARACTERISTICS KEY DATA/INFORMATION1

Socio-Economic Dimensions

1 Population/Population Growth (Trends Based)

2013 2020 2030

77,657 92,309 118,161

2 Household and Poverty Factors (2013) – Urban Villages only

3

Households2

Occupancy Rate

Poor

Households

Poverty rate

17,003 4.56 1,437 8.45%

3 Gender Factors Female Headed Households - 11% Male Headed Households - 89%

4 GDP Status (per capita - 2013)

Sihanoukville Cambodia

USD1,345 USD1,503

5 Proportion of Economically Active by Employment Type

Industry/Tourism/Services Agric/For/Fisheries

86% 12%

6 Unemployment Not available

Financial and Economic Status2

1 Revenues - Sihanoukville Province

Cambodia (Riel million) 2013

Total Revenues and Transfers

a. Revenues Retained and Grants

b. Central Government Transfers

46,169

38,401

7,768

2 Tariff Collection Performance (Solid Waste Collection Tariff) Riel monthly

2016 2019 2025

4,600 5,300 7,000

3 Economic Viability Subproject viability ranges from 13.9-14.3%

Organization and Implementation

1 Executing Agency Ministry of Public Works and Transport (MPWT)

2 Implementation Agency Department of Public Works (GDPW) – MPWT)/Project Management Unit (PMU)

3 Solid Waste Management Project Implementation Unit (Provincial Department of Public Works and Transport) – Project Implementation

4 Urban Drainage Project Implementation Unit (Provincial Department of Public Works and Transport) – Project Implementation

Primary Project Beneficiaries

1 Solid Waste Management – 22,000 persons/4,700 households

2 Urban Drainage/Flood Protection – 15,000 persons/3,200 households

1 - All statistics are from secondary data - official GoC public information

2 - All statistics are from secondary data - official GoC public information and from consultant team calculations.


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4A.The Kampot Subproject

KM1 WASTEWATER COLLECTION AND TREATMENT

1 Rationale/Justification:

There is currently no wastewater treatment system in Kampot, such that vast majority of properties have septic tanks, pit latrines or similar. The proportion of pumpable septic tanks is estimated at 70-80%. Currently wastewater flows directly to the river through combined road drains, or indirectly via a canal behind the town. There are some eight combined drainage outlets into the Kampot river, which are significant sources of pollution and which smell badly during the dry season and at low tides when dilution is diminished.

A wastewater collection and treatment system is required to serve the Kampot urban area, with priority for the relatively high density built up urban area east of the Kampot River.

2 Description of Component and Design Features:

It is proposed to separate the wastewater and stormwater at source, such that the wastewater can be treated at a new wastewater treatment plant (WWTP):

Wastewater Collection: Use of a separated sewer system, has significant environmental and economic advantages and has policy support from the “National Guidelines on Water Supply and Sanitation”. The proposed system will consist of three catchment areas, covering the main built-up urban area, with a current population level of just over 11,000 persons and growing steadily.

Wastewater Treatment Plant: The proposed WWTP is proposed to be of the lagoon type and will be located some 2-5 kms to the south of the built up urban area. The site, which is understood to be in private ownership is largely undeveloped agriculture land and will need to be protected by bunding to meet all appropriate climate resilient standards. The minimum site area required is 6.1ha. The WWTP will be designed to a capacity of 4,500m

3/day to meet the

demands for a 20 year design life. The wastewater will be gravity fed from the catchment areas to pump stations for onward transfer to the wastewater treatment plant.

3 Costs:

Wastewater Treatment Plant

Collection/Pumping/Trunk Mains etc

Septage Treatment

Total Base Costs

USD 1,884,178

USD 5,948,400

USD 180,000

USD 8,012,578

4 Private Sector Participation and Revenue Generation

Direct private sector participation and revenue generation is unlikely, except through user charges. Proposed collection tariffs will not cover O&M costs, such that a funding gap will have to be guaranteed.

5 Implementation Responsibility:

The component owner (Executing Agency) is the Ministry of Public Works and Transport (MPWT) who will establish a coordinating Project Management Unit (PMU). The PMU will oversee a Project Implementation Unit established through the Department of Public Works and Transportation at provincial level in Kampot.

6 Benefits:

Wastewater collection and treatment in Kampot will have the following economic, social and environmental benefits:

Reduced pollution, through higher standards of effluent discharge to the Kampot River from the proposed WWTP.

Reduced pollution load entering the Kampot river as the only untreated water discharging


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directly into the watercourse will be stormwater.

Separate stormwater/wastewater collection system reduces loading at the WWTP, thus leading to significant operational cost savings.

Improved sanitation, providing the potential for better public health, through the reduction of water borne disease occurrence.

Opportunity for cross pollination/lessons learned from the Sihanoukville experience of lagoon based WWTP, resulting in less O&M failure risks at Kampot.

7 Economic Implications

The subproject component is viable. The assessed EIRR is 14,5%

8 Environmental Implications (Operational):

There should be no significant adverse environmental impacts – See Initial Environmental Examination (IEE).

9 Resettlement Implications

The Resettlement Plan indicates 6.1ha of affected land, 13 affected households (65 persons) and 6 severely affected households.

10 Risks:

The following risks are apparent:

1) Lack of funding and management commitment over time may restrict capability to meet the standards required to successfully manage the WWTP, the pump stations and the other supporting infrastructure.

2) The capacity building program is inadequate to secure operation and management in accordance with the Project requirements

3) Reluctance of property owners to participate and pay wastewater tariffs.


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KM2 SOLID WASTE MANAGEMENT


Solid Waste Disposal:

The majority of solid waste is taken to a dump site, which is located in Prey Khom (Teuk Chhou) commune, some 10kms north of Kampot. The relatively flat site is accessed from a 3kms unsealed track. The current facility is an uncontrolled dump with no leachate collection or cell management. Garbage is dumped over a wide area close to the access road. No organized compaction or regular covering with earth is carried out and garbage is periodically burned.

A system of garbage sorting for recyclable materials takes place at the dump site, by informal waste pickers who visit on a daily basis.

Solid Waste Collection:

A collection service is currently contracted out by Government with approx 85% of houses on the current collection route having garbage collected. In some areas waste collection is constrained by narrow alleyways which constrain vehicular access. For the remainder of the urban area garbage is disposed informally. There is a separate composting facility run by an NGO with a consultant project manager, located in Kampot, who currently compost market waste, but would like to expand into other areas. This apart there is little evidence of a managed process of “at source” waste minimization and/or sorting for re-use/re-cycling.

Both collection and dump site management are contracted out to Gaia, a private company. They have reported an interest in expanding the extent of the current collection service.


It is proposed to improve solid waste collection and treatment through provision of a new managed landfill and extended collection services.

Part 1 – Managed Landfill: In order to find a match between sustainable garbage treatment and the capacity of the operators to successfully manage a new facility it is proposed to construct a managed landfill, rather than a full sanitary landfill. This will include most of the features for a sustainable operation including, planned cell development, clay lining, leachate collection and storage, regular waste covering, surface water management, covered soil storage, surface water management and groundwater monitoring. A separate pit for medical waste will be provided, and a small incinerator with shed for infectious waste. At least for the time being waste sorting can continue to be carried out by waste pickers, but in a better managed environment. To this extent the managed land fill will be fenced, such that access is controlled.

The proposed location of the managed landfill is close to the existing dump site on 19ha of government owned land also in Prey Khmum Commune, Toek Chhou District The existing access road is in good condition, but will be sealed as part of the proposed works.

Part 2 - Dump Site Restoration: The existing dump site will be closed and subject to restoration.

Part 3: Solid Waste Collection: The mechanism proposed for improved waste collection from areas with difficult access will involve setting up transfer stations in each village, with an appointed community member contracted to collect waste from each household and deliver it to the skip located at the transfer station. Either the Province or a contractor will then collect the skip for emptying at the landfill. The component will include a public awareness campaign aimed at increasing the collection service area, and capacity building for the government agencies and the Operators.

It is also proposed to provide as part of the Project Loan equipment and machinery for collection and processing including of 1 bulldozer and 1 open 6m

3 trucks for waste collection, ten steel

bins (skips) of 1m3, 20 hand carts, and 2 skip-carrying trucks equipped with hydraulic lifting

arms.

3 Cost

Solid Waste Management (Total Base Costs)

USD 2,779,353


1) Collection from main roads is currently contracted out to the private sector and this is foreseen


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to continue. A collection fee is charged.

2) There may be further revenue generation potential with through better organized recycling and composting at the proposed landfill site.

3) There may be potential for revenue generation through community based collection by hand carts in selected areas.

Continuing participation by the currently contracted company will need to be supported by more specific contract and performance monitoring to secure proper operations and maintenance of the managed landfill.


The component owner (Executing Agency) is the Ministry of Public Works and Transportation (MPWT) who will establish a coordinating Project Management Unit (PMU). The PMU will oversee a Project Implementation Unit established through the Department of Public Works and Transportation at provincial level in Kampot.

6 Benefits:

Better solid waste management practice in Kampot will have the following economic, social and environmental benefits:

Economic Benefits:

A better managed landfill will provide opportunities for more efficient waste sorting, maximizing the extraction of materials suitable for recycling and re-use. This will create better revenue generation potential for the waste pickers, should they wish to transfer to the new site.

Wider collection coverage will provide increased revenue generation capacity for the solid waste collection company.

Community based collection in selected urban areas/villages will provide revenue generation opportunity for residents and other options for waste sorting and revenue generation at refuse transfer stations.

Social Benefits:

A better managed landfill can provide safer and more hygienic working conditions for the waste pickers.

Environmental Benefits:

A managed landfill site will provide a more sustainable environment for the disposal of solid waste. In particular environmental pollution risk of adjacent watercourses, ground contamination and air pollution will be minimized.

Expansion of the waste collection services can assist in providing a more hygienic and pleasant living environment in the urban areas/villages.

Waste sorting at refuse transfer stations can have the potential to reduce the waste quantities transferred to the managed landfill site.

Better landfill operational conditions for key staff.

7 Economic Implications The subproject component is viable. The assessed EIRR is 18.1%



Potential environmental impacts will be minimized by having all cells lined with clay and bunded. The site will have a drainage system to minimize storm water entering the cells. Two leachate ponds will be provided, and these will be lined with heavy duty polyethylene and be of sufficient capacity to hold a season‟s rainfall without overflowing.


The Resettlement Plan indicates 19 affected households (95 persons), together with 995 trees.

10 Risks:


1) Lack of funding and management commitment over time may restrict capability to meet the


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standards required to successfully manage the landfill in a sustainable manner.

2) Operational and safety controls over the waste pickers are not enforced, such that health and safety are at risk.

3) Community support for local collection services and optimal operations for transfer stations is not realized, thus impacting on the ability of the waste collection company to successfully expand their collection services.

4) The capacity building program is inadequate to secure operation and management in accordance with the Project requirements.


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KM3 URBAN DRAINAGE


The current drainage system is a combined wastewater/stormwater scheme. They are mainly covered roadside drains, which mostly drain to outfalls at the Kampot riverbanks. The drains are of the concrete pipe type and are difficult to maintain or unblock because of the distance between manholes.

Periodic flooding occurs in parts of the Kampot during the rainy season (June-December) and including the town center. The town center in particular is situated in a flat low lying area, which makes the area difficult to drain by gravity. The area around the market is particularly flood prone. This situation is worsened, through the poor regulatory context, such that: (i) building construction through the uncontrolled development of swamp areas reduces drainage capacity; (ii) the construction of buildings and structures across flow paths and drainage channels; and (iv) limited maintenance of existing stormwater channels.

The current proposal to construct a separate wastewater drainage/collection system should result in sewage free open drainage channels with increased capacity to accommodate storm water. This will not on its own provide sufficient stormwater drainage capacity in all parts of the urban area and local flooding is expected to continue. It is also advisable to upgrade the road drainage system, such that it is more efficient, sustainable and resistant to erosion and blockage from vegetation growth.


The planned improvements to urban road drainage will be concentrated on a number of strategic urban roads in and around the main built up urban area east of the Kampot river and also some improvements west of the river. Priority areas include the market area and the tourist market area. The drain types will be open channel drains with concrete covers in the built up urban and open earth lined channels where they extend into the peri-urban areas. These drain types will facilitate easier O&M by comparison with the existing closed and buried concrete pipes.

3 Cost

Urban Drainage Upgrading (Total Base Costs)

USD 1,633,463


Direct private sector participation and revenue generation is unlikely



6 Benefits:

Better urban drainage in Kampot will lead to a significant Reduction of potential economic loss and social disruption to residents and businesses, through less flooding.


The subproject component is viable. The assessed EIRR is 16.2%




The Resettlement Plan indicates 4 affected households (7 persons) and 2 severely affected households.

10 Risks:

The following risk is apparent:

Lack of funding and management commitment over time may restrict capability to meet the standards required to successfully manage the new/upgraded urban roads and drainage facilities


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4B. The Sihanoukville Subproject

SHV1 SOLID WASTE MANAGEMENT


Solid Waste Disposal

The majority of solid waste is taken to a dump site which is located is approximately 25km from the main urban area. The space is limited, the topography is not suited to a landfill or dump site, and the state of the dump site is very poor. Access is along a 1km dirt road from National road 4 which is difficult to access during the wet season. Waste is spread along the access road for a distance of 2-300m, before the actual dump site due to difficulty with wet weather access. Waste is dumped at the side of the access road and is periodically pushed over the side of the hill. There is no leachate collection or periodical covering with earth etc. There are approximately 180 people working on the dump site, many of whom are day visitors, but many are permanent residents, around forty families who earn up to $50/month collecting recyclables and selling on to a dealer. These people live in very un-hygienic conditions.

Solid Waste Collection:

Currently solid waste collection in the urban area is made by the private sector carrying 24 truckloads a day from selected areas only. In those limited areas served the collection rate is close to 100%. The reason that a significant proportion of the urban area does not have a solid waste collection service is due to lack of accessibility by conventional collection trucks.

Both collection and dump site management are contracted out to CINTRI a private company. They have reported an interest in expanding the extent of the current collection service, although it is understood that their contract expires in December 2016.

Managed Landfill:

It is considered that a new site suitable for the construction of a long-term managed landfill should be found. Unfortunately no suitable site on government land could be located in the PPTA period, such that a more modest plan for the improved operation of the existing dump site is proposed. This is anticipated to extend the life of the existing dump site for a period approximately five years. During this period it will be incumbent on the provincial government to identify a new site suitable for the location of a long-term managed landfill. This should be closer to the main urban area to reduce journey length for the waste collection vehicles and thus ensure optimal operational costs of the new site.


It is proposed to improve solid waste collection and treatment through a more sustainable mode of operation at the existing landfill and extended collection services.

Part 1 - Managed Landfill (Temporary Provision):

To enable a more sustainable mode of operation at the existing dump site and other land which we understand is in government ownership it is proposed to: (i) move the existing solid waste into one confined area, compacted in layers and then covered with earth; (ii) open up new cells with a projected 5 year life span and introduce a managed landfill concept; (iii) provide basic amenities to waste pickers (eg clean water supply). Design of the proposed landfill will include clay lining, groundwater monitoring, planned cell development, leachate collection and storage, surface water management, and regular covering of waste and controlled waste picking. A separate pit for medical waste will be provided, and a small incinerator with shed for infectious waste. Thus waste sorting can


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continue to be carried out by waste pickers, but in a better managed environment. To this extent the managed land fill will be fenced, such that access is controlled.

Part B - Solid Waste Collection

The subproject will include a public awareness campaign aimed at increasing the collection service area, and capacity building for the Department of Environment and Operators. The mechanism proposed for improved waste collection from areas with difficult access will involve the setting up of transfer stations at each village, with an appointed community member contracted to collect waste from each household and deliver it to the skip located at the transfer station. Either the Province or a contractor will then collect the skip for emptying at the landfill.

It is also proposed as part of the Project Loan to provide relevant equipment and machinery for collection and processing. This will consist of 1 bulldozer and 1 open 6m

3

truck for waste collection, 10 steel bins (skips) of 1m3, 20 hand carts, and 2 skip-carrying

trucks equipped with hydraulic lifting arms. The 2 trucks will be 4 wheel drive.

3 Costs:

Solid Waste Management (Total Base Costs)

USD 2,902,750


1) Waste collection from main roads is currently contracted out to the private sector and this is foreseen to continue the collection areas expanded. Revenue collection is from individual households.

2) There may be further revenue generation potential with through better organized recycling and composting at the proposed landfill site.

3) There may be potential for revenue generation through community based collection by hand carts in selected areas.

Continuing participation by the currently contracted company will need to be supported by more specific contract and performance monitoring to secure proper operations and maintenance of the managed landfill.



6 Benefits:

Better solid waste management practice in Sihanoukville will have the following economic, social and environmental benefits:

Economic Benefits:

A better managed landfill will provide opportunities for more efficient waste sorting, maximizing the extraction of materials suitable for recycling and re-use. This will create better revenue generation potential for the waste pickers, should they wish to transfer to the new site.

Wider collection coverage will provide increased revenue generation capacity for the solid waste collection company.

Community based collection in selected urban areas/villages will provide revenue generation opportunity for residents and other options for waste sorting and revenue generation at refuse transfer stations.


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Social Benefits:

A better managed landfill can provide safer and more hygienic working conditions for the waste pickers.

Environmental Benefits:

A managed landfill site will provide a more sustainable environment for the disposal of solid waste. In particular environmental pollution risk of adjacent watercourses, ground contamination and air pollution will be minimized.

Expansion of the waste collection services can assist in providing a more hygienic and pleasant living environment in the urban areas/villages.

Waste sorting at refuse transfer stations can have the potential to reduce the waste quantities transferred to the managed landfill site.

Better landfill operational conditions for key staff.



8

Environmental Implications (Operational):


Potential environmental impacts will be minimized by having all cells lined with clay and bunded. The site will have a drainage system to minimize storm water entering the cells. A leachate pond will be provided, and will be lined with heavy duty polyethylene and be of sufficient capacity to hold a season‟s rainfall without overflowing.


There are no adverse impacts. Land acquisition and resettlement will not be required.

10 Risks:


1) Lack of funding and management commitment over time may restrict capability to meet the standards required to successfully manage the landfill in a sustainable manner.

2) Operational and safety controls over the waste pickers are not enforced, such that health and safety remains at risk.

3) Community support for local collection services and optimal operations for transfer stations is not realized, thus impacting on the ability of the waste collection company to successfully expand their collection services.

4) The unusually long travelling distances between the main urban area and the managed landfill, even on a temporary basis, proves to be a significant financial burden for the private company operating solid waste collection and disposal.

5) The capacity building program is inadequate to secure operation and management in accordance with the Project requirements.

6) The provincial authorities are unable to allocate a suitable replacement managed landfill site and plan and development in the medium term.


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SHV2 URBAN DRAINAGE


There are roadside drains along some sealed roads in the urban area, but others are either missing, are blocked, or are of a type that is difficult to maintain and need replacement. Many older drains are of a concrete pipe type, which get blocked with sand during heavy rainPeriodic flooding occurs in much of the Sihanoukville during the rainy season (June-December) and including the town center. The town center in particular is located in an area, which is difficult to drain by gravity. This situation is worsened, through the poor regulatory context, such that: (i) building construction through the uncontrolled development of swamp areas reduces drainage capacity; (ii) the construction of buildings and structures across flow paths and drainage channels; (iii) the absence of drainage channels alongside roads; (iv) limited maintenance of existing stormwater channels; and (v) lack of proper discharge outlets to nearby streams and or the sea.

There is an urgent need to upgrade the existing stormwater drainage system, to mitigate sever environmental problems.


It is proposed to construct new road drains in the main built up urban areas on the basis of the six priority strategic links. The roads are mainly situated in flood prone areas close the coastline and or in valley areas. The total road length is some 24.85kms.

3 Costs:

Urban Drainage (Total Base Costs)

USD 9,676,813


Direct private sector participation and revenue generation is unlikely.


The component owner (Executing Agency) is the Ministry of Public Works and Transportation (MPWT) who will establish a coordinating Project Management Unit (PMU). The PMU will oversee a Project Implementation Unit established through the Department of Public Works and Transportation at provincial level in Sihanoukville.

6 Benefits Better urban drainage in Sihanoukville will result in a reduction of potential

economic loss and social disruption to residents and businesses, through less flooding.

Economic Implications




Resettlement Implications

There are no adverse impacts. Land acquisition and resettlement will not be required.

10 Risks:


Lack of funding and management commitment over time may restrict capability to meet the standards required to successfully manage the new/upgraded urban roads and drainage facilities.


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5. The Project Cost Estimates and Financing Plan

BASIS OF INVESTMENT COST AND FINANCING PLAN 5.1.

The infrastructure cost, land acquisition and resettlement, capacity building, project management support and incremental administration cost is based on April 2015 prices. The assumed physical contingency is 10%. Price contingency is based on foreign inflation rates of 0.3% in 2015, 1.5% in 2016, 1.4% in 2017 and 1.5% from 2018 and onwards; and local inflation rates of 3.0% in 2015, 2.7% in 2016, and 3.5% from 2017 and onwards. Finance charges during implementation are based on ADB loan interest at 1% per year.

The financing plan is based on the following fund sharing: land acquisition and resettlement, taxes and duties will be financed by the government while infrastructure, capacity building, incremental administration cost, project management support and finance charges during implementation will be financed by ADB.

INVESTMENT COST - SUMMARY 5.2.

The project is estimated to cost $37.90 million including taxes and duties, physical and price contingencies, and financial charges during implementation (Table 15).

Table 15: Project Investment Cost

($ million)

Item

Amounts

A. Base Cost

1 Kampot

1.1 Wastewater collection and treatment 9.54



Subtotal Kampot 13.98

2 Sihanoukville


2.2 Roads and drainage 9.68

Subtotal Sihanoukville 12.58

3 Project Implementation and Capacity Building 3.78

4 Incremental Administration Cost 0.80

Subtotal (A) 31.15

B. Contingencies

1 Physical contingencies 3.16

2 Price contingencies 2.72

Subtotal (B) 5.88

C. Financial Charges During Implementation 0.87

Total (A+B+C) 37.90


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Base cost in April 2015 prices. Includes taxes and duties of $2.62 million; and land acquisition and resettlement costs of $1.55 million.

Physical contingency is 10%.

Price contingency is based on foreign inflation rates of 0.3% in 2015, 1.5% in 2016, 1.4% in 2017 and 1.5% from 2018 and onwards; and local inflation rates of 3.0% in 2015, 2.7% in 2016, and 3.5% from 2017 and onwards.

ADB loan interest at 1% per year.


INVESTMENT COST – BY CITY 5.3.

Total investment cost for Kampot is $19.49 million, to be financed by ADB $16.91 million and government $2.58 million. For Sihanoukville, total investment cost is $17.54 million, to be financed by ADB $15.22 million and by the government $2.32 million (Table 16).


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Table 16: Investment Cost – by City

constructi

on cost

land

acquisitio

n &

resettlem

ent

capacity

building

project

managem

ent

support

base cost

physical

contingen

cy

price

contingen

cy

total

conting

encies

total ADBGovern

mentTotal

Kampot wastewater collection and treatment 8.017 1.52 0.33 1.32 11.19 1.134 0.98 2.11 13.30

solid waste management 2.803 - 0.10 0.39 3.29 0.333 0.29 0.62 3.91 13.2%

urban drainage 1.634 - 0.06 0.23 1.92 0.194 0.17 0.36 2.28 16.91 2.58 19.49

Sihanoukville solid waste management 2.903 - 0.10 0.40 3.40 0.345 0.30 0.64 4.05 13.2%

urban drainage 9.677 - 0.33 1.34 11.35 1.150 0.99 2.14 13.49 15.22 2.32 17.54

finance charges during implementation 0.87 0.87 0.87

Total 25.034 1.52 0.91 3.676 31.15 3.157 2.72 5.88 37.90 33.00 4.90 37.90

Source: Consultant estimate.

PROJECT COST ($ million) FINANCING PLAN

Subproject Component


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FINANCING PLAN 5.4.

The project investment cost will be financed by an ADB loan of $33.00 million (87.1% of total project investment cost) and by the government, $4.90 million (12.9%). The ADB loan has a term of 32 years, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter (Table 17).

Table 17: Financing Plan

($ million)

Source Amount % of Total

ADB 33.00 87.1%

Government 4.90 12.9%

Total 37.90 100.0%

Includes taxes and duties of $2.62 million; and land acquisition and resettlement of $1.55 million.

Includes finance charges during implementation.



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6. PROJECT IMPLEMENTATION ARRANGEMENTS

PROJECT MANAGEMENT AND IMPLEMENTATION 6.1.

General Arrangement Planned 6.1.1.

The general arrangement for GMS is summarized in Figure 8 below.

Figure 8: Project Organizational Framework for GMS Implementation

The Ministry of Public Works and Transport (MPWT) will be the Executing Agency (EA) for the project and its General Department of Public Works (GDPW) will be its Implementing Agency (IA). The MPWT intends to establish a Project Steering Committee (PSC) which will comprise representatives of the main ministries concerned with the subprojects, including: Ministry of Economy and Finance (MEF), Ministry of Land Management, Urban Planning and Construction (MLMUPC), Ministry of Construction (MoC), Ministry of Planning (MoP), Ministry of Environment (MoE), Ministry of Tourism (MoT) and Ministry of Women‟s Affairs (MoFA). The PSC, to be headed by the Secretary of State of the MPWT will coordinate the initiatives of the different ministries with regard to the implementation of the subprojects, including orienting actions to ensure its sustainability and overseeing the project activities at the national level. The EA will establish a PMU, within the GDPW, which already has extensive experience of international projects. The PMU director will be designated by the PSC chairman. The PMU will act as secretariat and will manage all bidding and supervise the overall management of the subprojects. In the implementation and management of the project, Project Implementation Units (PIU) will be established at provincial level to assist the PMU in the day-to-day management and operations of the project. The PIUs will be responsible in overseeing and coordinating the implementation of the subproject, investments including: (i) promoting the project to the targeted beneficiaries, (ii) assist in

Executing Agency MPWT

Ministry of Public Works and Transport

Steering Committee Proposed Representatives of:

PIU (P-DPWT)

PIU (P-DPWT)

Central level

Provincial level

MLMUC MoT MoP MoWA MoE MoC MoI

Governor of Kampot

Technical Facilitation Committee

Governor of Preah Sihanouk

Technical Facilitation Committee

Implementing Agency DPWT

Department of Public Works

PMU


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subproject development and implementation, (iii) evaluate the technical, financial, economic, social, and environmental viability of proposed subprojects, (iv) undertake project supervision and monitoring, (v) establish and implement the Project Performance Management System (PPMS), (vi) prepare community action plans, bidding arrangements, and bid documents; (vii) evaluate bids; (viii) award and supervise construction contracts; (ix) and exercise quality control. The PIUs should also assume tasks related to public consultation and disclosure, administer the grievance redress mechanisms and prepare quarterly environmental reporting at the subprojects level.

The MPWT will interact, through the Governor, of each province, but will keep the exclusive control of the bidding process and in accordance with the regulations related to public bidding in Cambodia.

The smooth implementation of the project in both provinces will not only require a good understanding of the technical aspects related to the sub-project components, but also the motivation to arrange proper O&M of the facilities once constructed and a capacity to interact easily with the MPWT and other provincial departments and stakeholders. It is important therefore that the PIUs are established in the context of a number of key principles to be applied from project start: (i) specific training of PIU staff on ADB requirements; (ii) the need to interact with the private sector; (iii) ensure that the PIUs will have the capacity to ensure compliance with environmental safeguards; (iv) ensure good quality administrative staff (accountants etc); (v) Ensure a tight high quality team, rather than a large low level team and; (vi) Strengthening awareness of provincial and municipal/town level agencies regarding environment and social safeguards.

IMPLEMENTATION SCHEDULE 6.2.

The Project Implementation Schedule is illustrated on Figure 9.

The project in Cambodia is estimated to be implemented in less than 5 years. This is the time period necessary to move from loan effectiveness through detailed engineering design, bidding, and construction and onto completion. The project loan signing between the ADB and GoC is expected to be during December 2015, such that loan effectiveness should be in January 201625. Prior to this there will be opportunity for advance actions, including the recruitment of consultants.

25 ADB Memorandum of Understanding – Loan Fact Finding (28th May-3rd June 2015).


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Figure 9: Overall Project Implementation Plan

Key Milestones

Project Component 2015 2016 2017 2018 2019 2020

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3

Project Start-Up 1. Recruit Design Consultants A. Kampot – All Subproject

Components

1. Detailed Engineering

Design

2. Bidding and Award 3. Construction and

Implementation

4. Restoration of Dumpsite 5. Land

Acquisition/Resettlement

B. Sihanoukville – All

Subproject Components

1. Detailed Engineering

Design

2. Bidding and Award 3. Construction and

Implementation

4. Land

Acquisition/Resettlement

C. Project Management,

Implementation and

Institutional Strengthening

(Both Cities)

1. Recruit Implementation

Support Consultants

2. Recruit Fiduciary

Consultants

3. Training and Capacity

Building

4. Institutional Strengthening

Note: Defects Liability Periods for Civil Works Contracts Intermittent Inputs of Various Consultancies

Loan Effective Midterm Review Project Close


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PROJECT IMPLEMENTATION SUPPORT 6.3.

Project Implementation Assistance 6.3.1.

Consulting services for the GMS – 2nd Corridor Towns Development Project (the Project) will be provided over a period of five years from 2016 to 2020. The services will be provided by an association of an international consulting company and a national consulting company. The consulting package will assist project management and implementation generally and with specific reference to: (i) reviewing the feasibility studies prepared under ADB TA-8425 REG 2nd GMS CTDP; (ii) helping ensure that project implementation will fully comply with ADB‟s policies and operational requirements in terms of detailed designs, procurement, construction supervision, disbursement, financial management, and social and environmental safeguards; (iii) assist the Project Management Unit (PMU) and the Project Implementation Units (PIUs) in detailed design and construction supervision, (iv) strengthen the institutional and operational capacity of provincial and district administrations, and (v) provide general assistance to the PMU/PIUs.

All the consultants will be recruited in accordance with the ADB Guidelines on the Use of Consultants (March 2013 and as amended from time to time) and shall therefore use quality-cost-based selection (QCBS) methods with a standard quality-cost ratio of 90:10. The firm shall be selected in the six months after project loan effectiveness.

A total of approximately 360 person months of consulting services, including 115 person months of international consulting and 245 person months national consulting will be required to support the project. To help ensure that all the project outputs are properly integrated and coordinated there will be a single international level Team Leader and two national level Deputy Team Leaders who will (i) assist in the overall organization of the project; (ii) guide, supervise, and coordinate the work of all team members; and (iii) take overall responsibility for preparing reports and consolidating reports prepared by all team members. The Team Leader will report directly to the PMU within MPWT (GDPW). Each of the Deputy Team Leaders will be allocated to a particular town. Monthly coordination meetings will be held between the PMU, the PIUs and other relevant stakeholders to ensure project progress and quality control in accordance with the project implementation program and timeline.

The consultants‟ Team Leader and the Deputy Team Leaders will (i) assist in the overall organization of the project; (ii) guide, supervise, and coordinate the work of all team members; and (iii) take overall responsibility for preparing reports and consolidating reports prepared by all team members. The Deputy Team Leaders will assist the Team Leader to accomplish these tasks. Specifically the Team Leader will assist in the coordination between subproject components and between the various levels of government – national, provincial, district and local community levels.

Consulting services will also include individual consultant contracts/service contracts for project accounting, external resettlement monitoring and project audit requirements.

Summary ToRs for the various recommended consultant positions are structured under (i) project management; (ii) project implementation; and (iii) capacity building and are included in the PAM (Volume VI – Project Plans and Documents).

The Capacity Building Program 6.3.2.

A Capacity Building Program (CBP) is defined and presented in Volume VI (Project Plans and Documents). It is composed of 3 sub-programs:

Sub-program 1: Advance assistance to strengthen capacities to implement the project. This Subprogram is very short-term oriented and should prepare both Provinces to implement of the GMS 2 Subproject in accordance with ADB requirements. Sub-


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program 1 will be financed separately by the ADB (not part of the project loan) by an appropriate expert(s). There will be some 10 training sessions as part of this Subprogram.

Sub-program 2: Strengthening capacities to implement and manage subproject components. This Subprogram is medium-term oriented and will help facilitate subproject components implementation and pave the way for their smooth O&M. Subprogram 2 will be financed from the project loan

Sub-program 3: Strengthening Capacities to Implement the SLEDPs. Subprogram 3 is more medium and long-term orientated and tackles the wider non-project needs of the two towns with particular regard to local economic development, medium-term investment programming and community development/participation in improved standards of living. There is currently no financing for Subprogram 3.

Subprograms 2 and 3 consist of a series of carefully structured technical packages, shown in Figure 10 and full details for each package are contained in the CBP (Volume VI – Project Plans and Documents).

Subprogram 2 will be supported by 76 months of specialist consultants of which there will be 24 months of international consulting and 52 months of national consulting. Specific specialist advisors will be attached to each package and sometimes working on more than one package. Central to the program will be the proposed international and national Capacity Building and Training Specialists who will act as advisors across all the individual packages. The total length of Subprogram 2 is estimated at up to 3 years and the total allocated budget is just over USD1 million. This is mostly composed of consulting services.Subprogram 3, if financed will be supported by an estimated 28 months of international consulting and 48 months of national consulting. It would be implemented over an 18 month period. The total estimated budget for this Subprogram is estimated at approximately USD 910,000.


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Figure 10: Program Overview

Sub- Program 1:

Capacity Strengthening

for Project

Implementation

Sub- Program 2:

Strengthening Capacities to

Implement and Manage

Subproject Components

Sub- Program 3:

Strengthening Capacities

to Implement the SLEDP

P1: Lessons Learned

(Experiences, Cooperation, and

Cross Pollination)

P2: Managed Landfills - O&M

P3: PDWTs – Pilot Corporate

Business Plans

P4: Revenue Action Plans

P5: Physical Assets Management

P6: Improved Business Climate for

SSPs

P7:Conservation and Enhancement

- Good Practice

P8: Improving Community

Awareness and Livelihood.

P1 SLEDP

Implementation

P2 Local Economic

Development Plans

(case studies)

P3 Strengthening Urban

Spatial Planning

P4 Community

Initiatives in Local

Economic Development

P5 Towns

Development,

Protection of Natural

Surroundings and

Adaptation to Climate

Change

Training Session 1 (TS1)

TS 2

TS 3

TS 4

TS 5

TS 6

TS 7

TS 8

TS 9

TS 10

TS 11

TS 12

P9: Enabliing Strategic Local

Economic Development Plans


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ACCOUNTING AND AUDITING 6.4.

The PMUs, with assistance from the consultants, will set up a project accounting system in accordance with government regulations. The consultants will provide training and operating support to the accounting staff of the PMU/PIU regarding the use of the system during the initial stage of project implementation. Imprest accounts will be established to ensure the timely release of loan proceeds and to expedite project implementation.

REPORTING 6.5.

The PMU, 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 EA annual financial statements, together with the associated auditor's report, should be adequately reviewed.

PROJECT PERFORMANCE, MONITORING, EVALUATION AND 6.6.

REVIEW

Project Design and Monitoring Framework 6.6.1.

A draft Design and Monitoring Framework (DMF) has been prepared, which will be used by the EAs/IAs and the respective PMUs for monitoring and assessment of the technical, social, environmental and progress indicators. The various performance targets and indicators included in the draft DMF will need agreement from the ADB and the EAs prior to finalization and inclusion in the Project Administration Manual. The draft DMF is part of the Project Administration ManuaI (Volume VI – Project Plans and Documents).

The DMF identifies the principal performance targets for the impacts, outcomes and outputs of the subproject. Disaggregated baseline data for impact, output and outcome indicators will be gathered prior to the project implementation, and will be updated and reported through the project quarterly progress reports and after each ADB review mission. These quarterly progress reports will provide information necessary to update ADB's project performance reporting system, including (i) project implementation progress, (ii) problems and constraints, and (iii) proposed actions and solutions.

Monitoring 6.6.2.

At the start of the Project, the PMU with assistance from the Project Management Implementation Consultants (PMIS) consultants, will develop a Project Performance Monitoring System (PPMS) to generate data systematically on the inputs and outputs of the subprojects, as well as the agreed socio-economic, environmental, and health indicators to be used to measure the project impacts, taking into account the scope of subproject components. During this time, the PMU will: (i) refine the PPMS, as needed; (ii) confirm baseline figures and targets; (iii) determine monitoring and recording arrangements; (iv) confirm data sources; (v) check assumptions and risks; and (vi) establish systems and procedures. The PMU will submit the final PPMS, with revisions and recommendations for improvement (if any) to the ADB for approval within 12 months of effectiveness. The PMU will be responsible for managing the PPMS and compliance monitoring, including the policy, legal, financial, economic, environmental, social, and other covenants contained in the loan


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and project agreements. In particular this will include environmental and resettlement safeguards monitoring.

The PMU will assess (i) compliance with the Project‟s environmental assessment and review framework, initial environmental examinations, and Environmental Management Plans (EMPs), (ii) the availability and efficient use of personnel, material and financial resources; and (iii) identification of any problems and the need for remedial actions to correct any problems that arise.

The PIUs will report semi-annually against resettlement activities. The PMU will consolidate the reports and attach them to the second and fourth quarterly progress reports. This consolidated report includes information on key monitoring indicators and will also assess (i) compliance with the project‟s involuntary resettlement framework and resettlement plans; and (ii) the availability and efficient use of personnel, material and financial resources; and (iii) identification of any problems and the need for remedial actions to correct any problems that arise.

Gender and social dimensions (not covered by resettlement documents) will be monitored internally through the PPMS, where the DMF contains specific indicators and targets from the Gender Action Plan (GAP). The PMU will consolidate quarterly PIU reports on the gender and social dimensions in the quarterly project progress reports submitted to the ADB

Evaluation 6.6.3.

The ADB and government will jointly review the project at least every six months. This will include (i) achievement of contract awards and disbursements; (ii) physical progress of each project output; (iii) effectiveness of capacity development programs; (iv) compliance with social and environmental safeguards; (v) progress of gender and social dimensions; (vi) compliance of project covenants; and (vii) performance of government agencies, implementation units and consultant and contractor performance. In addition to the regular reviews, the ADB and GoC may conduct special project administration reviews to address and resolve specific administration problems.

Apart from regular reviews GoC will jointly with the ADB undertake a midterm review of the project which will be conducted at about 24 months after the start of project implementation. The mid-term review will cover a range topics and issues similar in nature to the six month reviews, but more from an overview dimension. This mid-term review will record any changes necessary to improve project relevance or effectiveness, or accelerate project progress. The ADB may recruit a staff consultant to help provide an external assessment of the project at this time.

In addition to the regular reviews, the ADB and the GoC may conduct special project administration reviews to address and resolve specific administration problems

Within 6 months of physical completion of the Project, the PMU will conduct an end-of project survey and submit a project completion report to ADB. The information that will be included in the project completion report shall be discussed and agreed upon with ADB in advance.

STAKEHOLDER PARTICIPATION 6.7.

Mindful of the above objectives and principles, a Stakeholder Analysis was undertaken in the lead up to the preparation of a Project Participation Plan to identify key stakeholders that have a stake or interest in the project. These are the government and their representatives; private service companies, particularly in the solid waste sector, the business sector, and microenterprises, civil society/NGOs/community based organizations and affected residents/women/vulnerable groups.


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Key informant interviews, focal group discussions and consultation meetings were undertaken with stakeholders in the early stage of the study. The analysis was focused on their interests, perception of the problems, current resources and their mandate. Solutions to perceived problems were also solicited from a full range of stakeholders and their respective interests and concerns.

The Project Participation Plan (together with the Gender Action Plan) is intended to ensure inclusiveness, transparency, timeliness and the meaningful participation of stakeholders in the project. Essentially, it provides a communication platform for all key stakeholders, particularly between the project‟s affected groups and the EAs and IAs, to ensure that the former‟s views and interests are fully integrated in the project design, implementation and monitoring systems through a regular flow of information and a two-way exchange. The Project Participation Plan ensures that vulnerable groups, such as the poor and women, who risk being marginalized, are provided with opportunities for communication and feedback during detailed design, implementation and O&M. In this way, the Project Participation Plan serves to inform and support community development, enhance GoC capacity to manage project outcomes, enhance project benefits and mitigate negative impacts. It outlines key project stakeholders and their interests and identifies key messages, means of communication and a delivery timeline during the project cycle.

SECTOR GOVERNANCE AND CORRUPTION RISK 6.8.

ASSESSMENT

The GoC remains vigilant in its approach to stamping out corruption (see Law on Anti-corruption, 2010) and there have been many well publicized accounts of action taken against those who have been caught undertaking unacceptable project and business practices. The national regulations for bidding, (as resulting from the Procurement Law, 2012) must be followed for all construction projects funded by the GoC and all external donors.

Public procurement in Kampot and Sihanoukville has to be carried out in accordance with the Cambodian regulation (see GoC, Procurement Manual and Standard Operation Procedure for all Externally Financed Projects/Programs in Cambodia, 2012). The PMU, PIUs, IAs and other relevant project agencies must be familiar with these requirements and their practical application. Importantly, most of these regulations are recent and possibly not necessarily easy to understand/comply with for public officers.

In Cambodia the official position requires that good governance remains at the core of achieving social justice and sustainable and equitable socio-economic development. In order to further strengthen good governance, the GoC has firmly implemented key reform programs, including: 1) the fight against corruption; 2) legal and judicial reform; 3) public administration reform; and 4) reform of armed forces. GoC has achieved tangible progress in tackling corruption, including the adoption of Anti-corruption Law in April 2010, the establishment of the Anti-corruption Institution which consists of the National Anti-corruption Council and the Anti-corruption Unit, and the introduction of anti-corruption mechanisms both in terms of institutional arrangements and regulations. These reform programs will be applied during the course of this ADB project loan implementation.

ADB‟s Anticorruption Policy (1998 and 2010, as amended to date) needs to be explained to the provincial and district administrations. In this regard the ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the project. To support these efforts, relevant provisions of ADB‟s Anticorruption Policy are will be included in the loan regulations and the bidding documents related to contract packaging. ADB will retain the right to audit and examine the records, the PCU and all contractors, suppliers, consultants, and other service providers as they relate to each civil works and goods contracts.


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Part C

Due Diligence and Safeguards


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7. FINANCIAL ANALYSIS

INTRODUCTION 7.1.

The project‟s components and the financial analysis undertaken are summarized in the table below (Table 18)

Table 18: Summary of Financial Due Diligence

The national government intends to on-grant the proceeds of ADB‟s loan to the two provincial governments. The provincial governments will be obligated to provide the funds required to properly operate and maintain the urban drainage components, and for other components, will be encouraged to raise/increase tariffs to gradually achieve cost recovery, and to provide any subsidies required to cover O&M costs.

FINANCIAL EVALUATION OF REVENUE-GENERATING 7.2.

COMPONENTS

Wastewater and solid waste management are under the Department of Public Works and Transport (DPWT) of each province while the Department of Environment of the province monitors the impact to the environment of these two sectors.

Wastewater Component 7.2.1.

Kampot Wastewater Collection and Treatment. Kampot City currently has no wastewater treatment plant (WWTP) with wastewater discharged to individual septic tanks of residential and commercial buildings or to canals and open spaces. No wastewater fees are collected at present.

Billing and Collection Options – Wastewater Fees. An increasing number of utilities across Asia collect wastewater fees through the water supply company (WSC) bill (e.g. a surcharge on top of the water bill), capitalizing on the WSC‟s existing customer base and reducing administrative costs. Alternatively, the wastewater utility can bill customers separately and collect directly, or have a separate bill collected through the WSC. Regardless of the option taken, DPWT needs to embark on a campaign to market its services to the population in order to gain more acceptance especially for the payment of the services provided. Discussions with the officers of Kampot WSC revealed that its current billing system can be

City Component Executing

Agency

Implementing

Agency

Fiscal

Analysis

Undertaken

Project

Funds from

National

Government

Revenue-

Generating

Potential

Tariff

required to

cover

Recurrent

Costs

Affordability

Analysis

Sihanoukville

Solid Waste

Management

SW waste and

fees collected by

private operator

Yes Yes

Urban Drainage No No No

Kampot Wastewater

Collection and

Treatment

No WW fees

collected at

present

Yes Yes

Solid Waste

Management

SW waste and

fees collected by

private operator

Yes Yes

Urban Drainage No No No

Source: Consultant.

MPWT DPWT,

Kampot

Kampot

Province

Assumed

100% grant to

province

Ministry of

Public Works

and Transport

(MPWT)

Department of

Public Works

and Transport

(DPWT),

Sihanoukville

Sihanoukville

Province

Assumed

100% grant to

province


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modified to accommodate collection of wastewater fees by Kampot WSC on behalf of the provincial DPWT. A 10% surcharge on the water bill could generate annual wastewater fees of about KR252 million (based on Kampot WSC‟s about 5,300 water supply customers as of October 2014). The final decision about fees and billing and collection options has to be made at the ministry level as the wastewater sector is under the MPWT while urban water supply sector is under the Ministry of Industry and Trade.

Proposed Wastewater Fees. For the wastewater component, the following are the assumptions: the wastewater bill will be collected as surcharge on the water bill; the water tariff will increase every three years by 15% starting in 2016; water consumption will remain the same as the 2014 level; the number of water supply connection will increase 3.5% every year; annual O&M cost is 4% of capital expenditure; and the WSC has only one customer category, hence the water and the wastewater tariff is the same for all customer categories. Proposed tariffs to cover an increasing portion of the O&M costs of Kampot‟s wastewater operation are shown in Table 19. The projected wastewater revenues assume the WSC‟s customers number of 5,676 in 2016 (53% service coverage), increase to 8,569 by 2028 including 5,227 households (75% service coverage), and a gradual increase in the wastewater tariff as a % of the water bill. If such tariffs are implemented, revenues would cover 57% of the estimated O&M costs for the wastewater component in 2019, with the percentage increasing to 140% by 2028.

Table 19: Proposed Wastewater Tariffs for Households, collected through Kampot WSC

2016 2019 2022 2025 2028

% of water supply bill 20% 40% 50% 60% 65%

KR/month 5,800 13,200 19,000 26,300 32,700

Source: Consultant.

Affordability Analysis (Table 20). The proposed wastewater tariff will result in a bill equivalent to 0.70% to 2.64% of monthly income of low-income households in Kampot. Taking into account the projected water bill of 3.44% to 3.97% of monthly income, the total water and wastewater bill will gradually increase from 4.14% in 2016 to 6.61% in 2028.

Table 20: Kampot Monthly Water and Wastewater Bill vs. Monthly Household Income26

Expense (% of Monthly Income) 2016 2019 2022 2025

2028

Wastewater 0.70% 1.45% 1.88% 2.35% 2.64%

Water 3.44% 3.56% 3.69% 3.83% 3.97%

Total 4.14% 5.01% 5.57% 6.18% 6.61%

Source: Consultant.

Solid Waste Management Component 7.2.2.

Kampot: The provincial government operates the dumpsite and contracted solid waste collection and transport to the dumpsite to Global Action for Environment Awareness (GAEA), a private company, until 2019. GAEA has about 2,519 customers as of December 2014 including 1,246 households and 931 households/business27 (an estimated 33% service coverage). GAEA also brings daily biodegradable waste to a composting facility located near

26 Lowest 10% quantile monthly household income. 27 House that is used also for business.


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the dumpsite, managed by Community Sanitation and Recycling Organization (CSARO), an NGO. GAEA‟s monthly tariffs are (effective since 2007): KR3,500 (Category 1) to 12,500 per month for households; and KR8,000 to 1,600,000 per month for other customers. According to GAEA‟s branch manager in Kampot, it picks up solid waste two to three times per week in each zone, as revenues are not enough for more frequent service. GAEA does not pay a tipping fee to the provincial government.

Sihanoukville: The provincial DPWT operates the dumpsite and engaged until December 2015 Cintri, a private company, to collect and transport solid waste from urban areas of the city to the dumpsite. Cintri collects the solid waste two to three times per week in each zone, and also serves the port area and the special economic zone. Cintri‟s existing tariffs are as follows: KR3,000 (Category 1) to 6,000 per month for households; and KR12,000 to 6,000,000 per month for other customers. Total number of customers as of December 2014 was 3,761 including 2,118 households (an estimated 22% service coverage). The provincial DPWT plans to start charging a tipping fee to cover at least a portion of the O&M costs of operating the dumpsite.

Proposed Solid Waste Management Fees. Assuming the operating arrangements remain broadly the same, it is proposed that the provincial government start charging the private company collecting and transporting the waste, a tipping fee to cover at least a portion of the O&M costs of operating their dumpsites and enhance financial sustainability. Tariffs would be expected to increase to cover such additional cost to the waste collectors, as summarized in Table 21. For Kampot, it is assumed that the tariff will increase 10% every three years starting in 2016; number of customers will increase 5% for residential and 5 to 10% for other customers every year. For Kampot, the projected number of customers served is assumed to increase from 2,750 in 2016 to 4,706 in 2028 including 4,064 households (58% service coverage). For Sihanoukville, the tariff will increase 15% every three years starting in 2016; number of customers will increase 5% for residential and 4% for other customers every year. For Sihanoukville, the projected number of customers is projected to increase from 3,949 in 2016 to 6,969 by 2028 including 6,525 households (29% service coverage). Annual operation and maintenance is 4% of capital expenditure. If such tariffs are implemented and the customer numbers are as projected, the revenues would cover 108% of the estimated O&M costs for the solid waste component in 2019, with the percentage increasing to 117% by 2028 for Kampot; and 97% in 2019, with the percentage increasing to 113% by 2028 for Sihanoukville.

Table 21: Proposed Solid Waste Management Tariffs – Household (Category 1)

Tariff (KR/month) 2016 2019 2022 2025 2028

Kampot 4,400 4,800 5,300 5,900 6,400

Sihanoukville 4,600 5,300 6,100 7,000 8,000

Source: Consultant.

Affordability Analysis. The solid waste monthly bill is between 0.38 to 0.52% of monthly income of low-income households in Kampot and between 0.19 to 0.22% in Sihanoukville (Table 22).

Table 22: Solid Waste Monthly Bills / Monthly Household Income28

% of Monthly Income 2016 2019 2022 2025

2028

Kampot 0.52% 0.48% 0.44% 0.41% 0.38% Sihanoukville 0.22% 0.21% 0.20% 0.19% 0.19%

Source: Consultant.

28 2014 financial data and 2015 budget are not available during project preparation


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FISCAL ANALYSIS 7.3.

The financial analysis of the local governments includes review of the past financial performance for the last three years. 29 The provincial governments in Kampot and Sihanoukville are responsible for the operation and management of the proposed components while the city governments are only in charge of administrative activities. Therefore the financial analysis is limited to the provincial governments. The provincial government collects two types of revenues: local revenues which are retained in the province, and national revenues which are transferred to the national government and to be shared by all the provinces. Annual fund requirement of the province, therefore, is financed by revenues retained and transfers from the national government.

The revenues collected include local revenue and revenues collected by the province on behalf of the national government (e.g. custom, tax, domestic tax, fines and penalties). The revenues retained and transfers are funds available for disbursement annually. Expenditures are composed of recurrent cost that includes regular maintenance of infrastructure and capital investment. Major capital investments are funded directly by the national government.

From 2011 to 2013, Kampot and Sihanoukville provinces were able to cover between 2% to 83% of annual recurrent cost. For the same period, recurrent and capital investment costs covered by retained revenues ranged from 1.7 to 83%. Tables 23 and Table 24 show the summary.

Table 23: Recurrent and Capital Investment Costs (2011 to 2013)

Province

% Covered by Revenue Retained

Recurrent Cost Recurrent and Capital Investment Cost30

Kampot 2 to 18% 2 to 18%

Sihanoukville 55 to 83% 55 to 83%

Sources: Provincial Governments.

Table 24:Revenues and Costs (2011 to 2013) in KR million

PROVINCE 2011 2012 2013

KAMPOT

Total Revenue and Transfers 66,817 84,931 92,532

Expenditure 66,817 84,931 92,532

SIHANOUKVILLE

Total Revenue and Transfers 30,922 36,786 46,169

Expenditure 30,922 36,786 46,169

Sources: Provincial Governments.

Revenues were projected for the next 10 years starting in 2019 for the revenue-generating components. The total O&M cost of all project components (revenue and non-revenue generating) are projected for the next 10 years starting in 2019. The resulting net cash flow indicates the level of the funding gap, if any, that needs to be covered by the provincial government annual budget.

29 2014 financial data and 2015 budget are not available during project preparation. 30 Very minimal capital expenditure funded by the city from 2011 to 2013


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Projected cash flows for Kampot shows that the total revenue from the wastewater and solid waste (assumed 20% of total revenue to finance O&M of landfill) components ranged from KR1.84 to 5.28 billion per year from 2019 to 2028. Wastewater and solid waste landfill O&M requirement are projected to range from KR2.83 to 4.04 billion for the same period, resulting to a funding gap of KR0.47 to 1.06 billion per year (14 to 35% of O&M) from 2019 to 2024. This is the incremental amount that needs to be covered by the Kampot provincial government. Starting 2025, revenues will be able to cover wastewater and solid waste landfill O&M cost. The KR1.06 billion funding gap is about 1.2% of Kampot province‟s total recurrent cost for 2013. If nonrevenue components are included, total funding gap is between 0.14 to KR 1.48 billion from 2019 to 2027. Starting 2028, no funding gap is projected.

For Sihanoukville, projected revenue for solid waste (assumed 30% of total revenue to finance O&M of landfill) ranged from 0.70 to KR0.95 billion from 2019 to 2028 while the O&M requirement for all components is projected to range from 1.63 to KR2.53 billion from 2019 to 2028, resulting to a funding gap of 0.93 to KR1.58 billion for the same period. This funding gap should be covered by the Sihanoukville province annual budget. The KR 1.58 billion funding gap is about 3.4% of Sihanoukville province‟s total recurrent cost for 2013 (Table 25).

Table 25: Projected Revenue, O&M and Funding Gap (KR billion)

PROPOSED COVENANT 7.4.

Government Commitment on Fund Allocations. Government funds are needed to finance the project implementation (counterpart funds) and to cover the incremental O&M cost that cannot be covered by the incremental revenues generated by the wastewater and solid waste components. These fund requirements were discussed with the government and the government agreed 31 to do so during project implementation and operation of the infrastructure.

Target Increasing Cost Recovery. Financial sustainability of the proposed subprojects is highly dependent on the resolve of the local governments to cover the total O&M cost. Implementing the proposed tariffs will reduce the funding gap required. For the wastewater and solid waste components, the provincial governments will be encouraged to raise/increase tariffs to gradually achieve cost recovery.

31 Refer to the Memorandum of Understanding (MOU) of the ADB mission fielded last May to June 2015.

KAMPOT 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Inflow: Wastewater Revenue 1.30 1.34 1.39 2.07 2.14 2.21 3.16 3.27 3.39 4.37

Solid Waste Revenue 0.54 0.70 0.72 0.75 0.77 0.80 0.83 0.86 0.89 0.92

Total Inflow 1.84 2.04 2.11 2.81 2.91 3.01 3.99 4.13 4.27 5.28

Outflow (O&M): Wastewater (2.29) (2.37) (2.45) (2.54) (2.63) (2.72) (2.82) (2.91) (3.02) (3.12)

Solid waste (0.54) (0.70) (0.72) (0.75) (0.77) (0.80) (0.83) (0.86) (0.89) (0.92)

Urban drainage (0.31) (0.41) (0.42) (0.43) (0.45) (0.47) (0.48) (0.50) (0.52) (0.53)

Conservation enhancement (1.31) (1.36) (1.41) (1.46) (1.51) (1.56) (1.62) (1.67) (1.73) (1.79)

Total Outflow (3.14) (3.47) (3.59) (3.72) (3.85) (3.98) (4.12) (4.27) (4.42) (4.57)

Net Cash Flow (1.31) (1.43) (1.48) (0.91) (0.94) (0.97) (0.14) (0.14) (0.15) 0.71

Funding Gap 1.31 1.43 1.48 0.91 0.94 0.97 0.14 0.14 0.15 -

SIHANOUKVILLE

Inflow: Solid Waste Revenue 0.70 0.72 0.75 0.77 0.80 0.83 0.86 0.89 0.92 0.95

Outflow (O&M): Solid Waste (0.70) (0.72) (0.75) (0.77) (0.80) (0.83) (0.86) (0.89) (0.92) (0.95)

Urban Drainage (0.93) (1.20) (1.24) (1.29) (1.33) (1.38) (1.43) (1.48) (1.53) (1.58)

Total Outflow (1.63) (1.92) (1.99) (2.06) (2.13) (2.21) (2.28) (2.36) (2.45) (2.53)

Net Cash Flow (0.93) (1.20) (1.24) (1.29) (1.33) (1.38) (1.43) (1.48) (1.53) (1.58)

Funding Gap 0.93 1.20 1.24 1.29 1.33 1.38 1.43 1.48 1.53 1.58

Source: Consultant.


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“Ring Fencing” of Revenue Generating Activities. Parallel to the implementation of the required tariffs, steps should be taken to ring fence the activities and financial records of the revenue generating activities. Ring-fencing leads to establishment of a more accurate information that can be used for making decisions about resources allocation, operational and management changes and improvements, and tariff setting. Separate financial recording of activities can be done easily starting with the project financial data while opening of a separate bank account, depending on the legal requirements, may need approval from higher authorities in each province.

.


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8. ECONOMIC ANALYSIS

INTRODUCTION 8.1.

The urban population of Cambodia, 21.4% of total population in 2013, showed rapid increase in the last decade putting a strain on the government‟s capacity to provide public services and infrastructure. The regional cooperation and globalization, while strengthening the links between Cambodia‟s towns and the Greater Mekong Subregion (GMS), further strained the government‟s capacity to finance, operate and maintain public services and infrastructure in order to accommodate increases in trade and the flow of goods and people from neighboring countries. The lack of funds and the inability of the government to implement tariffs to attain financial sustainability are attributed to the limited role of the private sector in urban services provision. Where private sector initiatives do exist , its performance is not well regulated. This results in inadequate quality, availability, and accessibility of public services, particularly for the urban poor and other vulnerable groups.

For Cambodia to benefit from the current economic development in the GMS, the government needs to improve the competitiveness of the cities along the strategic economic corridors through investment in priority infrastructure (i.e., water supply, sanitation, roads, drainage, and solid waste management) and at the same time, improve the investment climate in order to attract more private sector participation in the provision, operation and maintenance of public services and infrastructure.

Two of the cities along the GMS southern economic corridor are Kampot and Sihanoukville. Kampot city, the administrative capital and urban center of Kampot province in southern Cambodia, has good strategic road connections with Ho Chi Minh, Bangkok, Phnom Penh and Sihanoukville. Located along the Kampot River, close to the Bokor National Park and the Gulf of Thailand‟s attractive coastline, it has the potential to be a key link port for the outlying islands, including Vietnam‟s established resort island of Phu Quoc. Sihanoukville city, the administrative capital and urban center of Sihanoukville province also in southern Cambodia, has good road connections with Ho Chi Minh City, Bangkok and Phnom Penh. It has an international container port, an international airport and Special Economic Zone status. The city has some internationally known beaches, with good access to the outlying islands including Koh Thmei, Koh She and Phu Quoc. It is also close to the Ream National Park. Despite its strategic location within the GMS southern economic corridor, both cities have received minimal capital investment to improve its public infrastructure in the last three years. Demand, therefore, for public services and infrastructure far outpaced the supply.

The methodology used in the economic analysis is based on the Guidelines for the Economic Analysis of Projects (ADB 1997). The economic analysis includes the following: (i) economic viability assessment of each component; (ii) sensitivity analysis ; and (iii) distribution of economic benefits to the different stakeholders, particularly the poor. For the economic viability assessment, the economic internal rate of return (EIRR) is used as the indicator. A project is considered economically viable if the EIRR is equal to or greater than economic opportunity cost of capital assumed at 12%. The economic projections, using a 25-year project horizon, took into account the “without-project” and “with-project” situation. Total investment costs are expressed in constant April 2015 prices. Costs include construction, land acquisition and resettlement, capacity building, project management support and physical contingencies. Economic costs, expressed in domestic price “numeraire”, are derived from the financial cost by removing taxes, duties and cost of land, adding opportunity


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cost of land, and applying a shadow exchange rate factor of 1.1032, shadow wage rate factor of 0.75 for unskilled labor and 1.0 for other costs. The total economic cost of all components, including opportunity cost of land and resettlement cost of $0.047 million, is $25.63 million (Table 26). A socio-economic survey, conducted in February 2015, is the source of economic data on consumer surplus and flood damage used in the quantification of some economic benefits.

Kampot City 8.1.1.

Wastewater Collection and Treatment. Although the vast majority of properties have septic tanks and pit latrines, there is currently no wastewater treatment system in the city. Wastewater flows directly to the river through eight road drainage outlets, or indirectly via a canal behind the city. Kampot river is heavily polluted and smells badly during the dry season and at low tides when dilution is diminished. The proposed system, considered the least cost technical solution, will consist of a separate wastewater collection system and a lagoon-type wastewater treatment plant (WWTP). Benefits identified are reduced pollution of Kampot river through higher standards of effluent discharge, and improved sanitation and better public health with less water-borne disease occurrence. In the absence of a reliable data on water-borne diseases occurrence in the area, wastewater revenues and consumer surplus are used as the surrogate value of the economic benefits. Consumer surplus is based on the willingness to pay (WTP) for the wastewater services of RIEL3,500 per month per household (69% of respondents willing to pay) while the proposed initial wastewater tariff is RIEL2,000. The EIRR is 14.5% for the base case and from 12.8 to 14.3% for the sensitivity tests.

Solid Waste Management. Solid waste is currently collected by the private company from about 2,750 customers and taken to a dumpsite (operated by the province) in Prey Khom commune. The current facility has no leachate collection or cell management system, and no organized compaction or regular earth-covering. The proposed project will close the existing dumpsite, and establish a new facility with planned cell development, clay lining, leachate collection and storage, regular waste covering, covered soil storage, surface water management and groundwater monitoring. Equipment for waste collection and handling will be purchased. The component will also include a public awareness campaign to increase the use of solid waste collection service. Benefits identified are reduction in environmental pollution risk in the service area, and to adjacent watercourses, groundwater and the air. Surrogate values to quantify the economic benefits include solid waste revenues and consumer surplus. The WTP for solid waste service is RIEL4,500 per month per household (73% of respondents willing to pay) while the current solid waste fee is RIEL4,000 per month per household. The EIRR is 18.1% for the base case and from 15.9 to 17.9% for the sensitivity tests.

Urban Drainage. Kampot city has a combined wastewater/stormwater drainage system composed of covered roadside drains which mostly drain to outfalls at the Kampot riverbanks. The city center including the area around the market is particularly flood-prone during the rainy season (June-December) because it is in a flat low lying area which is difficult to drain by gravity. The proposal is to construct a separate stormwater drainage/collection system to reduce loading in the proposed WWTP (i.e., wastewater component). These drains will reduce operating costs compared with the existing closed and buried concrete pipes. Better urban drainage in Kampot will lead to less flooding and significantly reduce potential economic losses and social disruption to residents and businesses. Benefits identified and quantified are reduction flood damage to the affected community. Estimated damage 33 due to flooding is RIEL1.44 million per year per household/business. The EIRR is 16.2% for the base case and from 13.4 to 15.8% for the sensitivity tests.

32

Based on the GMS 1 Project 33

Damage due to flood x frequency =RIEL 0.48 million x 3.


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Sihanoukville City 8.1.2.

Solid Waste Management. The majority of solid waste is taken by a private company to a dumpsite (operated by the province) approximately 25kms from the main urban area and accessed from a 1km dirt road from National Road 4. Number of customers is about 3,949 at present. The dumpsite‟s physical condition is very poor; space is limited and the topography, not suited to a landfill or dumpsite. Because the dumpsite is difficult to access during the wet season, waste is dumped at the side of the access road. There is no leachate collection or periodical covering with earth. The project will: (i) move existing waste to a confined area where it will be compacted in layers and covered with earth; and (ii) open new cells in a managed landfill. The proposed landfill will feature clay lining, groundwater monitoring, planned cell development, leachate collection and storage, surface water management, and regular covering of waste and controlled waste-picking. There will also be a public awareness campaign aimed at increasing the use of solid waste collection services. Benefits identified are reduction in environmental pollution risk in the service area, and to adjacent watercourses, groundwater and the air. Surrogate values to quantify the economic benefits include solid waste revenues and consumer surplus34. The WTP for solid waste services is 4,000 to RIEL7,000 per month per household (64% of respondents willing to pay) while the current solid waste fee is RIEL4,000 per month per household. The EIRR is 13.9% for the base case and from 12.2 to 13.7% for the sensitivity tests.

Urban Drainage. There are roadside drains along some sealed roads in the urban area, but others are blocked, need replacing or difficult to maintain. Much of Sihanoukville including the town center suffers from periodic flooding during the rainy season. New road drains will be constructed in flood-prone areas, especially on priority strategic link roads. Benefits identified and quantified are reduction flood damage to the affected community. Estimated damage35 due to flooding is RIEL2.24 million per year per household/business. The EIRR is 14.3% for the base case and from 12.2 to 14.1% for the sensitivity tests.

Overall EIRR for Kampot and Sihanoukville is 14.9% for the base case and from 13.0 to 14.7% for the sensitivity tests (Table 27 and Table 28).

BENEFICIARIES 8.2.

Economic benefits identified are the following: wastewater collection and treatment – The project beneficiaries are shown in Table 7.4. Urban drainage beneficiaries refer to households/businesses whose potential losses to the annual flooding will be minimized. For Kampot, incremental beneficiaries for the wastewater component is about 15,204 persons by 2028, 1,956 customers for solid waste and 1,043 households for urban drainage component. Non-incremental beneficiaries include 2,750 customers for solid waste component. For Sihanoukville, incremental beneficiaries are about 3,020 customers for solid waste services and 3,220 households for urban drainage. Non-incremental beneficiaries are 3,949 customers for solid waste services.

SUSTAINABILITY 8.3.

Project sustainability 36 is highly dependent on the implementation of the proposed wastewater and solid waste tariffs, the regular collection of solid waste and expansion of the service coverage to increase the customer base.

34

The willingness of the beneficiary to pay for the services, above the existing/proposed tariff rates is taken as the value of the consumer surplus. Consumer surplus is computed as follows: number of household customers (i.e., with project - without project) x (WTP / existing tariff – 1).

35 Damage due to flood x frequency=RIEL 0.56 million x 4.

36 Details are in the financial analysis appendix


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DISTRIBUTION OF ECONOMIC BENEFITS AND POVERTY 8.4.

IMPACT

The economic benefits are distributed to the different stakeholders for each subproject. In Kampot, the projected economic benefits for the three components are as follows: government – negative RIEL 20.7 billion, labor – RIEL 3.5 billion, public – RIEL 7.3 billion, and consumers – RIEL 26.8 billion. Poverty impact ratio (PIR), or the proportion of economic benefits that will go to the poor, is estimated at 44% of total economic benefits.

For Sihanoukville, the projected economic benefits for the two components are as follows: government – negative RIEL 32.7 billion, labor – RIEL 2.8 billion, and consumers/public – RIEL 36.6 billion. PIR is estimated at 41% of total economic benefits.

The projected benefits to the poor and the PIR are shown in Table 29.

Table 26: Summary of Economic Capital Costs ($ million)

Subproject Component Capital Cost

Kampot City wastewater collection and treatment 9.21

solid waste management 2.71

urban drainage 1.58

Sihanoukville City solid waste management 2.80

urban drainage 9.34

Source: PPTA Consultant.

Table 27: Economic Viability Results per Component (RIEL billion)

Source: PPTA Consultant. EIRR-Economic Internal Rate of Return. NPV-Net Present Value.

EIRR NPV EIRR NPV EIRR NPV EIRR NPV EIRR NPV

Base Case 14.5% 9.0 18.1% 6.5 16.2% 1.4 13.9% 1.9 14.3% 4.8

10% Increase in Capital Cost 13.6% 6.2 17.0% 5.7 14.5% 0.9 13.0% 1.1 13.0% 2.1

10% Increase in O&M Cost 14.3% 8.2 17.9% 6.3 15.8% 1.2 13.7% 1.7 14.1% 4.4

10% Decrease in Benefits 13.3% 4.5 16.7% 4.8 14.0% 0.6 12.7% 0.7 12.6% 1.2

1-Year Delay in Benefits 12.8% 3.0 15.9% 4.3 13.4% 0.5 12.2% 0.2 12.2% 0.6

Switching Value-Capital Cost 32% 82% 30% 23% 18%

Switching Value-O&M Cost 113% 282% 101% 79% 121%

Switching Value-Benefits -20% -39% -19% -15% -13%

Wastewater Solid Waste Urban Drainage Urban Drainage

SIHANOUKVILLE

Scenario

KAMPOT

Solid Waste


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Table 28: Overall Economic Viability Results (RIEL billion)

Source: PPTA Consultant. SV-Switching Value.

Table 29: Projected Beneficiaries

Subproject Component

Beneficiaries

2028

Coverage

Remarks 2016

(non-incremental)

2016 to 2028 (incremental)

2028

Kampot City wastewater collection and treatment

15,204 15,204 40% persons

solid waste management 2,750 1,956 4,706 58% customers

urban drainage

1,043 1,043

households

Sihanoukville City

solid waste management 3,949 3,020 6,969 29% customers

urban drainage

3,220 3,220

households


Table 30: Benefits Accruing to the Poor and Poverty Impact Ratio (RIEL billion)

Subproject Item Government / Economy

Labor Public/

Consumers Total

KAMPOT Benefits to the poor (7.3) 1.8 12.9 7.4

Poverty Impact Ratio

0.44

SIHANOUKVILLE Benefits to the poor (11.4) 1.4 12.8 2.8

Poverty Impact Ratio

0.41


Item EIRR NPV SV

Base Case 14.9% 23.6

10% Increase in Capital Cost 13.9% 16.0 31%

10% Increase in O&M Cost 14.7% 21.8 131%

10% Decrease in Benefits 13.5% 11.9 -20%

1-Year Delay in Benefits 13.0% 8.6


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9. SOCIAL, POVERTY AND GENDER ASSESSMENT

SOCIAL INCLUSION AND POVERTY REDUCTION 9.1.

Overview 9.1.1.

The goal of the project is to strengthen the economic performance of the selected transport corridor towns while enhancing the urban environment in order to promote trade, tourism and investment. Well functioning basic urban services are a pre-requisite for a healthy work force and a pleasant urban environment, which are essential elements in attracting investments. Basic infrastructure for urban services will be provided through priority investments in better solid waste collection and landfill management and urban drainage systems in both towns, together with a new wastewater collection and treatment system for Kampot. The services provided by the urban infrastructure are inclusive of socio-economic and social groups. The technical design features are socially inclusive, making it feasible to provide for households are inclusive of all social and socio-economic groups within the service areas.

Urban Poverty 9.1.2.

The income dimensions of poverty will be addressed, as relevant considering the low levels of poverty in the towns, The poverty rate in the two towns at 8% according to official data, measured by the national poverty line, is lower than the national average of 19% for urban areas outside Phnom Penh (Ministry of Planning, 2013). Specifically related to the project simple subsidy schemes for poor households will be implemented to ensure they are able to freely participate, by subsidizing solid waste collection charges for instance. The extent of the new service areas for solid waste collection have as far as possible prioritized areas with relatively higher levels of poor/near poor households. To this extent 100% of poor and vulnerable households in the collection areas will be serviced.

The project is likely to contribute to poverty reduction through employment creation, in the short term through employment in construction activities, where preference for employment of local and unskilled labor from poor and vulnerable households will be preferred. In the medium and long-term through job creation from an increase in private investments in the towns that are expected as a result of improvements in basic urban services and enhanced planning capacities. Project Actions The following are the main actions addressing social inclusion and poverty reduction in the context of project loan implementation

Subsidy schemes/mechanisms for wastewater collection fees will be put in place to ensure that poor and vulnerable households within service areas get access to the services. The DMF target is that 100% of poor and female-headed HHs in the service areas will receive services.

Poor and vulnerable households will be given preference for employment as unskilled labor in project construction. Some75% of all laborers/staff should be of local origin.


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GENDER EQUITY 9.2.

Overview 9.2.1.

The nation-wide „Cambodia Gender Assessment‟37 notes that Cambodia in 2012 ranked 96th out of 148 countries on the Gender Inequality Index (GII). On the Global Gender Gap index Cambodia is ranked 108th of 142 countries (2014).

Project activities will therefore seek to systematically reduce gender inequalities in the project areas through a variety of interventions. Women‟s involvement in the detailed planning, implementation and monitoring of project components will be ensured. Increased representation of women in decision-making bodies at all levels will be promoted. Female-headed households will receive special attention in case they are negatively impacted. The capacity of the Department‟s of Women‟s Affairs (DoWAs) to mobilize and intensify the contribution of women in urban services will be strengthened. Local women will be trained and supported in specific local activities (product diversification, product quality and marketing). Information about laws and documentation related to the rights and protection of children and women, awareness will be disseminated.

The DoWAs (together with selected NGOs/CSOs) will be actively engaged in the project ensuring that gender issues, women‟s equity, and citizens‟ participation are mainstreamed and implemented throughout the project. The project is to provide sufficient capacity building and institutional strengthening support to the LWU to enable their effective engagement. Gender sensitization training will be provided to all leaders, officers, and consultants involved in project implementation and delivery, where there are concerns for: (i) greater environmental awareness and practices; (ii) prevention of social exploitation; and (iii) better exploitation of livelihood opportunities. In the project context a number of gender related targets are contained in the Gender Action Plan and include: (i) 30% of unskilled laborers employed in construction are women; (ii) 30% of staff employed in O&M are women; and (iii) Provincial/district governance shall target recruitment of 30% female staff, including 20% in decision making positions.

Capacity Building 9.2.2.

The CBP – Subprogram 2 includes an extensive range of activities supporting gender equity and women‟s economic empowerment, which are specified in the Gender Action Plan (GAP) contained in Vol III (Social Development Plans and Strategies). These activities are mainly geared to opportunities provided for short-term action within the context of the project loan and also touching on other medium to long term initiatives. In the short-term the CBP includes a package entitled “Improving Community Awareness and Livelihood”, which has an emphasis on initiatives in support of gender related opportunity. To this extent the CBP package will provide the opportunity for the DoWAs (and relevant NGOs/CSOs) to play a lead role in working with community leaders and local women in ensuring that their objectives will be met by the project and/or that the package is able to lay the foundation for better definition of medium and long-term gender related projects and potential funding sources.

Justifications 9.2.3.

Other gender related targets will also be directly transferred into the CBP and where at least the following actions should be implemented.

Capacity building to women focal persons at district, city, commune and Sangkat level and relevant stakeholders in the target areas, including (i) refreshment course to focal

37 Attitudes, Gender relations and attitudes. Cambodia Gender Assessment, 2014. Policy Brief 2. Ministry of Women’s

Affairs. http://bit.ly/1w9gjbe


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persons for: training on solid waste, waste water and clean water management; and (ii) refreshment course on gender and reproductive health and HIV/Aids.

Assistance to PDWA and DoWA (and selected NGOs/CSOs) to organize a campaign for increasing understanding about the “Clean City” concepts and risks associated at community level. This includes public forums at community level on: (i) importance of participation in cleaning and improving hygiene in the city; and (ii) importance of accepting tariff payments for solid waste and wastewater collection services. Assistance to PDWA and DoWA to design a Communications Strategy for a “Clean City” campaign

Assistance to PDWA and DoWA to prepare an Action Plan for Women‟s contribution to EEE-oriented local urban services and management.

Assistance to each PDWA and DoWA (and selected NGOs/CSOs) to conduct a limited pilot survey, for instance in relation to health/revenue/education/tourism and bridging with urban services quality issues and job opportunities for women.

Funding of vocational training for poor girls (Kampot).

Lessons learned through exposure visits for PWDA/DoWA staff to study best practice elsewhere.


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10. LAND ACQUISITION AND RESETTLEMENT

In Cambodia, the recommended subprojects to be carried forward are located in Kampot and Sihanoukville and components for each town were agreed by the Ministry of Public Works and Transport (MPWT) and senior provincial and municipal/district representatives.

The Resettlement and Land Acquisition Assessment of the two subprojects in Kampot and Sihanoukville has been carried out. The Resettlement Plans (RP) for Kampot and the Due Diligence Report for Sihanoukville are presented in Volume IV (The Resettlement Plan). Both subprojects consist of small infrastructure and environmental improvement investments that are being implemented to respond to the immediate and ultimate goals of improving urban environments and of promoting socio-economic development. The summaries of the field survey findings regarding the impacts on land acquisition and resettlement and the associated costs that are developed in the resettlement plan are presented hereafter.

KAMPOT 10.1.

The subproject in Kampot at the feasibility design stage is summarized by the components listed below.

Kampot subproject components

Wastewater Collection and Treatment

Solid Waste Management

Urban Drainage

As per the subproject description of the recommended components, only land, trees and some very limited number of structures will be affected. Therefore resettlement in Kampot is classified as category B due to limited impacts.

Scope of Land Acquisition and their Impacts 10.1.1.

Based on preliminary engineering design and field visits, it has been found that one component will have permanent LAR impacts, the Waste Water Collection and Treatment Component. For the urban drainage component, the LAR impacts are limited to the loss of two temporary shelters and one pig shelter and for the solid waste management component, LAR impacts are limited to the loss of trees and one temporary shelter on public land.

The inventory of losses (IOL) and census of affected persons (APs) and affected households (AHs) were conducted between on the 16th and 20th January 2015 in Kampot. Summary of impacts includes the following (see in Table below summarizing LAR impacts): (i) an area of 6.1 ha of private agricultural land required for the component of Wastewater Collection and Treatment - this will affect 13 households (HHs) (65 APs); (ii) 03 HHs (7 APs) along the drainage channels, two wooden tin sheds and one pig shelter, will be removed and compensated; (iii) for the solid waste management component, 19 HHs (95 APs) will be affected with loss of trees such as 628 mangos, 233 cashews, and 133 other trees, and 01 HH (05 APs), a temporary resting shelter, will be removed and compensated. Among the AHs, 6 HHs with 30 APs will be severely affected in the WWTP area as they will lose more


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than 10% of their total income through the acquisition of agriculture land and 2 HHs with 5 APs will be severely affected due to removal of their living wooden tins shed within the right of way of the channel.

Table 31: Summary of LAR Impacts

Component

Area affected m

2

Type of land

Structures

Trees No AHs

No APs

Severely affected

Wastewater Collection and

Treatment

61,000 Agriculture

land 00 00 13 65

6 HHs,

(30 APs)

Solid Waste

Management 00 00

One

temporary

resting

shelter

994 19 95

Urban drainage 00 Live on the

canal ROW

2 wooden tin

sheds and

1 pig pen

00 3 7 2 HHs

(5APs)

Total 61,000 4 00 35 167 8 HHS

(35 APs)

Legal Framework and Resettlement Policies 10.1.2.

In order to plan the compensation of affected households, the project resettlement policy accounts for types, characteristics, and severity of project impacts on assets and living conditions of the affected population. This policy document is guided by the Constitution of the Kingdom of Cambodia, prevailing legal and government procedures and policies and resettlement policies adopted by GoC for specific development projects that have been funded by multi-lateral and bi-lateral development partners, such as the ADB.

Since Cambodia has yet to pass a law addressing involuntary resettlement, the government has been adopting, as a stop-gap measure, project-specific resettlement policies that mirror those of development partners. Projects funded by such development partners are governed by the resettlement policies of these agencies and relevant laws and government regulations not consistent with these are waived.

One key objective of the project resettlement policy is to avoid or minimize impacts on people‟s sources of livelihood. To achieve that objective, the affected persons will be compensated at replacement cost in order that they are able to continue with their livelihood during and after construction with minimal, or no disruption to their business operations.

Consultations, public meetings and village discussions with the AHs and the local governments were conducted before and during the surveys so as to assess the losses. These activities will continue during the update and implementation of the RP. A grievance mechanism has been designed to ensure that all concerns and complaints of the APs are readily addressed at the village level in a timely and satisfactory manner.

For components such as the construction of the wastewater treatment planned on agriculture land; the core resettlement strategy of the project is geared towards ensuring that the AHs will be able to continue with their present livelihood activities. MPWT), through its Project Implementation Unit (PIU) and the Resettlement Department of the Inter-ministerial Resettlement Committee (IRC), will ensure that this resettlement strategy is carried through diligently. The full identification of the AHs will be determined during the update of the RP when a detailed measurement survey (DMS) will be carried out. The AHs will be provided with cash compensation at market price value for loss of land as per the entitlement matrix. Standing perennial trees and timber trees will be allowed to be cut and harvested by their


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owners and the felled trees will be compensated at prevailing market rates. The same rule will apply for structures that will need to be relocated.

During the inventory of losses survey, several public consultations were carried out with different groups of stakeholders; the preparation and distribution of project information leaflets written in Khmer will be carried out at the time of DMS.

Resettlement Cost for the Losses and Compensation 10.1.3.

The compensation and other entitlements will be provided to eligible AP/AHs in accordance with the following principles: (i) for land acquisition at replacement value and for (ii) compensation of losses at market prices. The total cost of resettlement for Kampot subproject is estimated at US$ 2,131,753.80. This amount includes: (i) compensation cost, (ii) administration cost, including costs for consultation and grievance redress mechanism; (iii) monitoring cost, and (iv) contingencies.

The MPWT and the IRC will ensure the timely availability of funds for resettlement, including unforeseen costs in excess of resettlement budget estimates in order to satisfy the project resettlement objectives.

The RP will be updated by the PIU, in close collaboration with the Resettlement Department of the IRC, after the detailed engineering designs have been completed. A replacement cost survey (RCS) will be carried out in parallel with the DMS. The updated RP will be submitted to the ADB for review and approval. MPWT will not allow construction activities in a specific section to commence until the APs have been fully compensated in accordance with the project resettlement policy.

SIHANOUKVILLE 10.2.

The subproject in Sihanoukville at the feasibility design stage is summarized by the components listed below.

Sihanoukville subproject components


Urban Drainage

The subproject in Sihanoukville does not trigger any land acquisition or resettlement and therefore falls into Category C for resettlement as per SPS (2009).

The selected subproject, including several components that will be beneficial for the town, have been reviewed and based on preliminary engineering design and physical visit was found to include no resettlement direct impacts. Only one component, which is the improvement of the management of the existing the solid waste dump site, is going to be developed near the settlement of waste pickers. This community is not directly affected by the project but they are living in very poor condition in terms of housing and sanitation and they are assisted by NGOs to improve their livelihoods. The renovation of the existing dumpsite in Sihanoukville to a more modern landfill will not create significant construction disturbances to them. Moreover, within the project design, basic amenities will be provided such as electricity connection, drinking and sanitation facilities.


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CONCLUSIONS 10.3.

The description of the feasibility designs of the two subprojects in Cambodia combined with available information on the boundaries of the components is sufficient to identify the scope of potential resettlement impacts of the project. Providing that significant changes do not occur to the design of one or more of the subproject components, and that new significant changes in location or size are not discovered, the subprojects will remain resettlement category B for Kampot and category C for Sihanoukville.

The separate RP and DDR developed for the subproject provide all the legal aspects, the guideline for updating and implementation as well as the institutional responsibilities and the monitoring and evaluation indicators for the project. They will need to be reviewed and updated at the detailed design phase to ensure that they fully address the potential resettlement impacts of the final subproject designs.


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11. ENVIRONMENT ASSESSMENT

The Initial Environmental Examination (IEE) of the two subprojects in Kampot and Sihanoukville, Cambodia, and the individual Environmental Management Plans (EMP) for each subproject are found in Volume IV of the FR. Both subprojects consist of small infrastructure and environmental improvement investments that are being implemented with the immediate and ultimate goals of improving urban environments, and promoting socioeconomic development. Presented herein are summaries of the findings of the IEE.

KAMPOT 11.1.

The subproject in Kampot at the feasibility design stage is summarized by the components listed below.

Kampot subproject components

Wastewater Collection and Treatment


Urban Drainage

Potential Impacts and Mitigations 11.1.1.

The subproject in Kampot is Category B for environment. The examination of the subproject indicates that potential environmental impacts are largely restricted to the construction phase of the subproject components. Construction-related disturbances such as noise, dust, erosion, surface water sedimentation, tree removal, solid and liquid waste pollution, worker camp disturbances, increased traffic and risk of worker and public injury can be managed with standard construction practices and guidelines (e.g., IFC/World Bank 2007).

Construction of the new WTTP in Kampot must include construction management measures to prevent or contain soil erosion and prevent sedimentation of the Teuk Chhou River. Standard mitigation measures such as berms or plastic sheet fencing should be used to contain loose soil created from the civil works. Similarly, erosion caused by construction of the WW pipeline to the WWTP must by managed and carefully contained to the sites. The quality of the treated effluent from the new WWTP will need to be regularly monitored after commissioning to ensure that effluent quality meets design criteria, and the designated government standards for wastewater quality.

The elevation grading of the WWTP needs to be resilient to the present lowland flood events to which the site is currently exposed, and also to be resilient to climate change-induced seasonal increases in flooding from the Teuk Chhou River from basin rainfall or from sea level rise and storm surge from Kampot bay.

The existing dumpsite in Kampot must be closed with an internationally accepted closure procedure that is timed with the commissioning of the nearby replacement new landfill so that garbage services and waste picker livelihoods are not disrupted. A groundwater study at the new landfill site and at old dumpsite must be conducted during the detailed design phase to determine the depth of the water table and quality of groundwater. The results of the study are needed to complete the detailed design of the new landfill, and for post-closure groundwater quality monitoring of old landfill.


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Similar to the new WWTP, construction of the new landfill must apply standard construction management techniques to prevent local solid and domestic waste pollution and erosion. Potential traffic disruption, noise, and dust caused from landfill construction and access road upgrades can be managed to a minimum. A tree replacement program should be implemented to offset the trees that must be removed for the subproject components. Drainage around the new landfill will be designed to accommodate increases in the frequency and severity of flood events. The new and upgraded drainage in town must be constructed large enough to be able to contain and convey increased flood volumes as a result of climate change-induced increases in rainfall.

Overall the subproject will greatly improve the urban environment of Kampot. The construction of the new more modern landfill, the addition of first active WWTP, and the improved drainage will greatly improve the quality of life in Kampot which eventually should stimulate socio-economic development.

SIHANOUKVILLE 11.2.

The subproject in Sihanoukville at the feasibility design stage is summarized by the components listed below.

Sihanoukville subproject components


Urban Drainage

Potential Impacts and Mitigations 11.2.1.

The subproject in Sihanoukville is also Category B for environment as per SPS (2009). The examination of the subproject indicates that potential environmental impacts are largely restricted to the construction phase of the subproject components. Construction-related disturbances such as noise, dust, erosion, surface water sedimentation, tree removal, solid and liquid waste pollution, worker camp disturbances, increased traffic and risk of worker and public injury can be managed with standard construction practices and guidelines (e.g., IFC/World Bank 2007).

Associated Subproject Facility 11.2.2.

The renovation of the existing dumpsite in Sihanoukville to a more modern landfill will not create significant construction disturbances. Ongoing dump operations and waste picker activities will likely be delayed for short periods which can be managed.

The only potential induced or cumulative environmental impacts of the two subprojects concern increased natural resource consumption, and pollution that could arise from the target goal of increased socioeconomic development the three corridor towns.

CLIMATE CHANGE 11.3.

Of the subproject component in Kampot and Sihanoukville it is the proposed WWTP in Kampot that is the most sensitive to climate change. The sensitivity is to sea level/river level rise, typhoon surge and inland flooding from increased frequency and severity of rainfall events. This is a result of the WWTP location on low lying land adjacent to the river, which is tidal at this point. Therefore climate resilience and proofing measures will be in the facility designs such as elevated facility foundations, use of berms and bunds, sufficient drainage,


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and adequate training and capacity of staff for managing WWTP operations in severe flood events.

CONCLUSIONS 11.4.

The description of the feasibility designs of the two subprojects in Cambodia combined with available information on the affected environment is sufficient to identify the scope of potential environmental impacts of the project. Providing that significant changes do not occur to the design of one or more of the subproject components and that new sensitive environmental or social receptor data are not discovered, the subprojects will remain Category B for environment and will not require further detailed environmental impact assessment (EIA).

The two separate EMPs developed for the subprojects provide impact mitigation plans, environmental monitoring plans, and specify the institutional responsibilities and capacity needs for the environmental management of the subprojects. The EMPs will need to be reviewed and updated at the detailed design phase to ensure that they fully address the potential impacts of the final subproject designs.


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12. PROJECT BENEFITS, IMPACTS AND RISKS

PROJECT BENEFITS 12.1.

The Project proposals will support the broad intention of the PPTA, to address urban issues, promote balanced development, prepare the towns for larger economic roles in the corridor context, ensure environmental sustainability and ensure that all sectors of the urban population benefit equally from the project. It will address primary impact in ensuring that both corridor towns will have increased activity, social benefits and a better environment. In doing so the project proposals are set within the context of the ADB‟s GrEEEn Growth Agenda and also meet the challenge of climate resilience38

Specifically the project will improve the quality of life for people in both towns, through an emphasis on investment in basic environmental infrastructure. This is a number 1 priority for stakeholders, such that both of the towns will invest in: (i) better solid waste collection systems and landfills management; and (ii) new urban drainage and flood protection facilities. Kampot will also invest in a new urban wastewater collection and treatment facility.

As outlined in Chapter 4 (and elsewhere in Volumes II and III of the FR) the proposals for improved wastewater collection and treatment in Kampot will have direct social, economic and environmental benefits. Significantly residents and businesses in priority urban catchment areas will enjoy the benefits and convenience of a sustainable new system, which will result in better standards of sanitation, less public health risk and providing a sense of security and safety for residents and businesses - reducing economic losses through better protection of property and belongings. At the same time through meeting recognized international and national standards of effluent discharge significant levels of watercourse pollution will be eliminated. The various proposals for improving urban drainage in Kampot and Sihanoukville will improve flood protection for the project affected people, their homes and their property at a local level. The improvement works will cover the most densely populated urban areas which are currently those worst affected by local flooding.

In both Kampot and Sihanoukville the proposed improvements to the solid waste collection systems will broaden coverage of the collection service and thus providing social benefits and a higher degree of social inclusion in both towns. Expansion of the collection service should also offer the potential for better financial operating conditions for the private collection companies. At the same time the closure of the existing dumpsites and the opening of the engineered landfills will provide a sustainable environment for solid waste management in-directly benefitting the rural environment by cleaning up local sources of pollution.

The design of each of the subproject components ensures the use of appropriate technologies geared to matching current and future expectations of the relevant GoC government departments and agencies. Thus in the design of the wastewater treatment system for Kampot the recommendation is to use the simple lagoon based technology, which has already proved to be successful at Sihanoukville. Thus the technology is already understood and knowledge/lessons learned can easily be transferred to Kampot. Regarding solid waste management it is not proposed to introduce technologies based on achieving full sanitary landfill standards where there would be relatively high operating costs, leading to increased tariffs. Importantly there would also be a high risk factor that the O&M capability, of 38 ADB PPTA No7856 – Outline Terms of Reference for Consultants


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the private service companies would not be able to sustain landfill standards in the medium and long-term. It is therefore proposed to prevent existing bad practice at the existing dumpsites and replace them with relatively easy to operate and maintain managed landfill at Kampot and improved operational practices for Sihanoukville where the life span of the existing upgraded dumpsite is likely to be short-tem.

Further innovations incorporating provision for better environmental planning and technologies will be considered and incorporated in the detailed designs of each project sub-component. This will allow scope for any key issues related to climate change resilience to be further addressed during project implementation.

Most of the subproject components affect the whole built up urban areas or significant portions of them and will therefore benefit the full range in social strata, including the urban poor and other vulnerable groups in each town. The design is therefore socially inclusive. Where affordability is an issue for potential beneficiaries, payment of wastewater and solid waste collection tariffs for instance then the project will have an intervention capability to ensure participation for low income and other vulnerable groups. Here, the project is gender sensitive and has set clear aims and objectives, which are reflected in the SPRSS and the GAP and also reflected in the DMF. In both towns, but particularly Sihanoukville the subproject recognizes the importance of sustaining the waste-picking communities‟ in-situ and at the same time improving basic amenities, through the provision of clean water and improved sanitation as a short-term improvement.

The nature of some of the subproject components provides opportunities for significant levels of community participation and/or private sector investment. The proposed expansion of the solid waste collection services will certainly enhance the tariff potential of the two private sector collection service companies. There should also be opportunities for local community based collection and 3R related activities, particularly in areas which cannot be accessed by conventional private sector run collection services.

The EAs and the IAs will directly benefit from the proposals contained in the supporting capacity building program, where the overriding aim is to ensure good project implementation and O&M. Additionally and subject to financing there will be significant benefits from the proposed program of assistance to the DoWAs in each of the towns, which are geared to medium and long term sustainability as well as short-term project implementation assistance. There may also be opportunities for participation by relevant local NGOs and CSOs.

Finally the PPTA emphasizes the value of the project as a “stepping stone” to GMS corridor town sustainability in the medium and long-term. This has 1st stage recognition through the Strategic Local Economic Development Plans (SLEDPs) and the recommendations for a bold approach to capacity building in local economic development planning and green initiatives. It is therefore recommended that this wider vision for the future should be realized by development of a Green City Action Plan (GCAP) for Sihanoukville which will address the potentially conflicting interests of environmental conservation, economic development and social deprivation. It is envisaged the GCAP can be a role model approach for other corridor towns in Cambodia and should be financed outside of the project loan as part of capacity building Subprogram 3 (Strengthening Capacities to Implement the SLEDPs).

PROJECT RISKS AND MITIGATION 12.2.

In general terms this is a relatively low risk project, where there are the normal concerns regarding the capacity of the EAs/IAs to procure, implement, operate, maintain and monitor the subproject components. This is self evident from the on-ground investigations of this PPTA, which showed significant resource constraints in O&M capability in both towns.

The consultant team is aware of the these risks and as a result there are specific capacity building components to: (i) assist project implementation generally; (ii) assist specific concerns, such as the capacity for good O&M where new technologies are being introduced,


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wastewater treatment for instance; and (iii) address areas where there is a need for community awareness building and participation in support of a subproject component. Thus the project will need to ensure there is sufficient resource and financial allocation such that these problems do not occur and/or can be overcome. It is essential therefore that: (i) the proposed CBP financial allocations for capacity building and training must be seen as minimums.

Regarding O/M issues, there is evidence to suggest from the relative success of the existing WWTP in Sihanoukville that where there is a well trained resource base, managing appropriate technologies that project sustainability can be assured. Capacity building should therefore have a commitment level over the project implementation period to ensure the WWTP successful experience can be repeated in Kampot.

Project preparation has identified a wide range of social development issues, some directly related to the subproject components and others of a more general societal nature. They are clearly identified in the SPRSS and the GAP and for matters which are project related there are proposals to address them within the context of the proposed subprojects to be included in the project loan. In this context there is emphasis on use of the CBP to do this, but at the same time there are risks that in practice: (i) the allocated financial and professional resources may be insufficient to meet the project targets; (ii) the proposed role for the DoWAs (and other relevant NGOs/CSOs in the project cannot be fully resourced; (iii) community interest, therefore cannot be maintained over the project period; and (iv) longer term sustainability beyond the project life-cycle for some of the initiatives will not be possible.

This last point is particularly important in Sihanoukville, where some of the social problems identified in the SPRSS, will not be addressed by the project, and which are arguably of more significance than those that are being tackled. Such problems include social deprivation, social exploitation and poor housing and where through continuing in-migration there is a risk of a worsening situation.

The project risks are further listed in the DMF contained in Volume VI (Project Plans and Documents) and spelt out in more detail for each subproject component in Chapter 4 (The Subprojects).