Overview

Last updated: April 2015

Cambodia continues to enjoy robust growth, albeit at a slightly slower pace. Real growth in 2014 is estimated to have reached 7%. The garment sector, together with construction and services, in particular finance and real estate, continues to propel growth. However, the 2015 and 2016 projection for economic growth is about 6.9%, as it confronts stronger competition in garment exports, continued weak agriculture sector growth, and softer growth in the tourism sector.

Poverty continues to fall in Cambodia, although the pace has declined significantly. The poverty rate was 17.7% in 2012, with almost 3 million poor people and over 8.1 million who are near-poor. About 90% of them live in the countryside. World Bank estimates suggest that Cambodia achieved the Millennium Development Goal (MDG) of halving poverty in 2009. However, the vast majority of families who escaped poverty were only able to do so by a small margin.

Human development, particularly in the areas of health and education, remains an important development priority for Cambodia. About 42% of children under five-years-old are malnourished and stunted, and more than half of Cambodians do not have access to toilets and appropriate sanitation.

Cambodia has made good strides in improving maternal health, early child care, and primary education programs in rural areas. The number of deaths per 100,000 live births decreased from 472 in 2005 to 170 in 2014, the under-five child mortality rate decreased from 124 per 1,000 live births in 1998 to35 per 1,000 in 2014, and the net primary school admission rate increased from 81% in 2001 to 94.3% in 2012.

Cambodia has also been successful in preventing and treating HIV/AIDS. As of 2011, nearly 90% of AIDS patients in Cambodia have access to antiretroviral treatment. This coverage rate is among the highest in the developing world.

Cambodia still faces a number of development challenges, including effective management of land and natural resources, environmental sustainability, and good governance. Corruption and weak public service delivery impede inclusive development. The key challenge going forward is to stimulate the agricultural and tourism sectors to once again become strong engines of growth supporting poverty reduction, as well as to expand and sustain growth in manufacturing including garments.

Last updated: April 2015

Cambodia received its first credit from the World Bank in 1993. Following decades of conflict in the country, the World Bank’s priority areas were to support the reconstruction of social and economic institutions and the development of physical infrastructure. Since 1999, increasing focus has been placed on governance reforms, macroeconomic stability and sustainable economic growth, private sector development, rural development, sustainable natural resource management, and improving and expanding health and education services.

The World Bank Country Assistance Strategy (2005-2008, extended to 2011) outlined two priority areas: removing governance constraints on growth and poverty reduction and supporting the strategies and investments needed to achieve Cambodia’s development goals. Projects financed by the World Bank under this strategy have been designed to help implement Cambodia’s National Strategic Development Plan for 2006-2011 (extended to 2013) and to help Cambodia achieve the MDGs.

The World Bank Group has provided analytical and policy advisory services to help Cambodia address pressing development priorities – including assessments of poverty and the investment climate, and studies on trade development, water and sanitation, health care, teacher quality improvement, and social protection.  The World Bank works closely together with Cambodia’s development partners as well as the Government, through joint government-donors Technical Working Groups, such as on Planning and Poverty Reduction, Private Sector Development, Public Administrative Reform, and Public Financial Management.

Last updated: April 2015

Education: More than 27,000 lower secondary school students received scholarships to complete all levels of basic education and more than 6,300 primary school teachers were trained to become basic education teachers. Under the Bank-administered Cambodia-Education for All Fast Track Initiative, 1,270 classrooms have been constructed and 900 early childhood education programs have been established to reach 26,042 children. In addition, 11,892 poor primary school students received scholarships, 11,000 teachers were trained to improve teaching quality, and 30 district education office buildings were constructed. Under the Higher Education Quality and Capacity Improvement Project, more than 900 poor and disadvantage students have received Special Priority Scholarships for their university degree.

Health: The Second Health Sector Support Program co-funded by International Development Association (IDA) and a multi-donor Trust Fund administered by the Bank is improving the coverage and quality of health care services by constructing new health facilities, supplying medical equipment, financing health outreach activities, training for health professionals, and co-financing the Health Equity Fund and Service Delivery Grant. The Health Equity Fund is helping the poor access to health care services. By 2014, 1.5 million cases received healthcare services through this fund for the Cambodian poor.  The Service Delivery Grant is leveraging the improvement of health facility management, staff attendance, and the coverage of health services. Under the Second Health Sector Support Program HSSP2  a provincial hospital and the National Laboratory for Drug Quality Control, two regional medical training centers, five health posts, 121 health centers, and 26 delivery rooms have been constructed.

Land: The Government’s land reform agenda includes allocation of social land concessions. The Land Allocation for Social and Economic Development (LASED) project, which the World Bank supports, has provided land and livelihood support to more than 4,700 landless or land-poor families. This is a pilot project to test the design and implementation of a sustainable social land concession program.

Water Supply and Sanitation: Under the Water and Sanitation Program Technical Assistance program. 27,000 families have gained access to sanitation through local markets and 44,900 families have gained access to privately provided piped water

Transport: The Road Asset Management Project has helped rehabilitate some 450 kilometers of Cambodia’s national and provincial road networks. It has also helped improve the efficiency and governance of the transport sector by strengthening capacity within the Ministry of Public Works and Transport for road asset management planning, including budgeting and routine and periodic maintenance.

Trade: Cambodia’s ranking rose 46 places in the World Bank’s Logistics Performance Index between 2010 and 2014. The Bank-managed Trade Related Assistance to Cambodia (TRAC) program contributed to improved cross-border trade times, making it easier for exporters to integrate into regional production networks. Customs clearance fell from 5.9 days to 1.4 days over this period. The automation of Customs was largely responsible for these changes. The ASYCUDA World System has been rolled out to 21 border-checkpoints and will be expanded to 11 additional border posts, mostly in Special Economic Zones, over the next two years. The Ministry of Commerce has adopted streamlined procedures for new company registration, automated Certificates of Origin, developed an online Trademark search facility and is developing a National Trade Portal. The Sub-decrees on Non-Tariff Measures and the National Trade repository and a work program on Non-Tariff measures have been facilitated through this program. These improvements have decreased the transaction times for imports and exports, lowered the costs of doing business, spurred new investment and further integrated Cambodia into regional production networks.

Governance: Under the Demand for Good Governance Project, 36 “One Window” Service Offices have been established at the district level to provide public services closer to citizens and businesses. These offices have provided services, such as motorcycle registration, small business licenses and construction permits, servicing nearly half a million cases over the last five years. Grants that were provided to 35 different NGOs helped 330 schools, 220 commune councils and 150 health centers improve staff performance and local services. The independent Arbitration Council, established under the project in 2009, resolved over 1000 disputes involving more than 700,000, mostly female workers, from the garment industry. The quality of the Council’s decisions has been commended by international experts, and an independent survey indicates that both employers and unions value the Council’s integrity (no informal payments are made), independence and effectiveness.

The International Finance Corporation (IFC) supports Cambodia in the implementation of the rice policy. By improving regulatory framework for agro-processors, providing support to rice millers and exporters, and facilitating access to finance through advisory work, Cambodia was able to double its rice exports within three years, reaching 375,000 metric tons in 2014. As a result, farmers increased their average yields by 20% and revenues by an additional $1.5 million.

In addition, the IFC also supports the government to develop the National Commercial Arbitration Center to settle commercial disputes and provide protection of investments. It also supports the Cambodia Development Center (CDC) to conduct a cost-benefit analysis of current incentives, support revision of investment law, and build capacity of the CDC staff.

 


LENDING

Cambodia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments