The Government of Japan

Japan's Assistance Policy for Cambodia

Table of Contents

  1. Significance of Japan's Assistance to Cambodia
  2. Accordance with the Principles of Japan's ODA Charter
  3. Desired Direction of Japan's Assistance
      3.1 Japan's Assistance Up to the Present
      3.2 Share of Japan's Assistance in the Total Assistance to Cambodia
      3.3 Direction of Japan's Assistance for the Next Five Years
  4. Priority Areas; Assistance Policy for Each Specific Issue
      4.1 Realization of Sustainable Economic Growth and a Stable Society
      4.2 Support for the Socially Vulnerable
      4.3 Measures to Respond to Global Issues
      4.4 Support for the Rectification of Disparities within ASEAN

1. Significance of Japan's Assistance to Cambodia

Japan's assistance to Cambodia, a country that experienced over twenty years of civil war and political unrest since the 1970s and is now earnestly struggling to rebuild itself as a nation, is instrumental in preventing Cambodia from slipping back into political instability. This assistance greatly contributes to peace and stability in Asia, a region of vital importance for Japan's diplomacy.

Japan's position has been to actively expand its diplomatic efforts to help lead the international community in support of the restoration of peace in Cambodia. Japan's first dispatch of PKO personnel in 1992 and its positive contributions to the Consultative Group meetings for Cambodia are the examples of Japan's efforts in this regard.

Moreover, Japanese citizens' keen interest in supporting Cambodia enables many of Japan's NGOs play an active role. The Japanese government recognizes the necessity to further cooperate with these NGOs in order to appropriately respond to the situation.

The Government and the people of Cambodia have expressed their appreciation for Japan's assistance and as a result have strongly supported Japan's policies in international venues. On various levels and occasions, close ties of friendship have taken root between Japan and Cambodia.

From the viewpoint of raising the overall economic level of ASEAN in the context of globalisation, the significance of Japan's assistance to Cambodia should be emphasised.

For ASEAN, the greatest constraints in moving forward with its economic integration such as the abolition of tariff barriers prescribed by AFTA are the continued economic gaps existing within the ASEAN region. Cambodia, as a member of ASEAN and weakened by its long period of internal turmoil, is burdened with a large number of development needs and a marked economic handicap. The effects of assistance for the rehabilitation and development of Cambodia do not stop within the borders of the country alone but also greatly contribute to the development of the Mekong subregion, which is a priority issue for ASEAN, and for the long-term activation of the ASEAN economy as a whole. This assistance will provide the Japanese economy with benefits as well.

2. Accordance with the Principles of Japan's ODA Charter

The international community concluded that the elections in 1998, for the most part, were free and fair, and the government's current policies pay serious attention to democratization. On top of that, the Cambodian government is promoting the transformation to a market-oriented economy and the reduction of its military expenditure. It can thus be said that, in accordance with the principles of Japan's ODA Charter, the Cambodian government is heading in a desirable direction. However, careful attention is still necessary with respect to the securing of basic human rights.

3. Desired Direction of Japan's Assistance

3.1 Japan's Assistance Up to the Present

Based on policy dialogues with the Cambodian government, Japan's assistance to Cambodia, which is mainly grant aid and technical cooperation, has focused on: (i) development of social and economic infrastructure; (ii) improvement of basic social services like health and medical care; (iii) promotion of agriculture and rural development; and (iv) human resources development. Because of Cambodia's status as a Least Developed Country (LDC) and its past political instability, Japan had not extended any yen loans to Cambodia since 1968. In 1999, however, after about a thirty year interval, Japan decided to extend to Cambodia a loan of up to 4 billion yen for the rehabilitation and renovation of the antiquated and deteriorating Sihanoukville Port. This decision was taken in views of the fact that Sihanoukville Port is Cambodia's only deep-sea port and is considered vital for the country's restoration. This decision took into account the fact that the new government was steadily carrying out various policies for rebuilding the economy and that there was a climate of relative political stability in the country.

Since the 1999 Consultative Group (CG) meeting, Japan has also been making positive contributions in the areas of administrative and fiscal reforms, the demobilization of armed forces, and forest preservation (natural resources management), areas which have been identified as priorities by donor countries and the Cambodian government. Japan has also subsequently assisted Cambodia with social services improvement and good governance.

3.2 Share of Japan's Assistance in the Total Assistance to Cambodia

Devastated by its internal upheavals, Japan has been active in extending assistance for the restoration of Cambodia. Japan's ODA to Cambodia in the past ten years has totalled (on a net disbursement basis) $720 million ($170 million through international organizations and $550 million on a bilateral basis). Japan is the top donor country to Cambodia, accounting for 25 percent of all assistance to Cambodia.

3.3 Direction of Japan's Assistance for the Next Five Years

As mentioned above, Japan has been consistently taking the lead in the international community in assisting Cambodia towards the steady reconstruction of the country. As a result, it is expected that Japan's future assistance to Cambodia's socio-economic development will play, -as it has played until the present-, a key role. This assistance should continue to be carried out in an effective and efficient manner.

Having endeavoured to rehabilitate and rebuild itself, Cambodia is currently making efforts at further promoting its basic socio-economic development and faces a number of difficulties. It is true that Cambodia must make its own efforts to overcome these difficulties, but for its part and in order to continue to take a leading role in the international donor community, Japan should respond appropriately to support such Cambodian efforts. Moreover, Cambodia's pressing needs include human resources development, necessary for making up for the shortfall caused by the civil war, the reconstruction of institutions, the development of basic infrastructure, and so on. It is essential that Japan, while giving due consideration to security and the goal of sustainable development, extend its assistance with a view to achieving sustained economic growth and poverty reduction.

On this basis, Japan's policy is to provide assistance that contributes to Cambodia's sustained economic growth and poverty reduction, keeping it fully in line with the Socio-Economic Development Plan (SEDPII) and Cambodia's Poverty Reduction Strategy Paper (PRSP) through closer consultations with the Cambodian government in policy dialogue and other appropriate occasions.

*Cambodia's PRSP has already formulated as National Poverty Reduction Strategy Paper (NPRS) in 2002.

3.3.1 Continuation of Assistance for Reconstruction Efforts
    It goes without saying that aiming for sustained economic growth and making further efforts for the development of basic socio-economic sectors such as education and vocational training, health care, etc., with particular attention to the poor, are essential for Cambodia to achieve the further development. In order to push forward these endeavours smoothly and effectively, the assistance for Cambodia's efforts to clear away the negative legacies, whose deep scars in the country have not healed so far, is still indispensable.

With this in mind and taking into consideration the vital importance of Japan's assistance to Cambodia, Japan will continue to provide assistance, particularly its grant aid and technical cooperation, for Cambodia's reconstruction efforts from the damage caused by the civil war and the political turmoil.

3.3.2 Support Based on Economic Trends
   Although Economic growth is indispensable for the further development of Cambodia, the appropriate assistance in response to economic growth (economic trends, foreign debt situation, etc.) should be considered.

Classified as a Least Developed Country (LDC) , the amount of Cambodia's foreign debt was approximately $2.26 billion, with a debt-to-GNP ratio of around 73.4 % and a debt-to-export ratio of 194 %. Therefore Cambodia does not belong to the Heavily Indebted Poor Countries (HIPC). The concessionarity of almost all of Cambodia's foreign debt is high, and its debt service ratio (DSR), after agreements on repayment rescheduling, is expected to remain at a stable level, at one to two percent.

However, Cambodia has ruble-denominated debts and has not reached a reschedule agreement with Russia. As a result, it needs to use assistance funds and foreign investment to make up for its current account deficit. With regard to the yen loan project, it is necessary to prudently consider carrying out small-scale infrastructure projects on a trial basis, taking into account the progress of economic reforms and current economic trends. On this basis, it is necessary to carefully deliberate the effective usage of grant aid and technical cooperation.

3.3.3 Assistance for the Balanced Development of Urban and Rural Areas
   One of the most important aspects for development that requires serious consideration is to promote a balanced development between urban and rural areas. Because of security concerns, Japan's assistance has been concentrated so far in the region of Phnom Penh, which has a population of around one million. Other donor countries assistance is also focused on Phnom Penh so that the basic economic and social infrastructure in the capital is being improved, while the gap between the urban and rural areas has been widening. To promote this balanced development, it is important to strengthen support for the rural areas where many poor people live. The expansion of support to the rural areas is particularly needed in sectors such as agriculture and rural development, basic human needs (BHN), and demining, with due consideration of the security situation in each region. It is important to promote close cooperation and unity between the central government and the regional governments by promoting assistance to these regions. Due consideration should also be given to strengthening collaboration with NGOs carrying out activities in rural areas.

3.3.4 Assistance to Rectify Regional Gaps Within ASEAN countries
   Another important consideration for the development of Cambodia is what position Cambodia's development occupies in the context of the whole of ASEAN's economic growth.

Within ASEAN, the economic disparity between the Indochina countries and the rest of the ASEAN countries tends to widen. Therefore, it is important that the assistance for promoting the sustained economic growth of Cambodia be also carried out with the aim of reducing this regional gap. From this point of view, the development of the Mekong subregion, which is beneficial for all the Indochina countries, and the improvement of telecommunications infrastructure to promote IT might be adequately considered. It is also necessary to take steps to improve the institutions related to a market-oriented economy, a legal and judicial system, a financial system and suitable conditions to attract foreign investment, and the efforts for human resources development.

4. Priority Areas; Assistance Policy for Each Specific Issue

Cambodia's development needs are wide-ranging and considerable. Consequently, it is all the more essential that Japan's assistance should be implemented efficiently and effectively by clarifying important sectors and priorities and respecting Cambodia's traditions and sense of values. Based on the direction of Japan's assistance for the next five years described above, Japan will give priority in its assistance to the four areas stated below. Japan regards sustainable economic growth and poverty reduction as the most important goals, and its assistance will be focused on the improvement of the basic economic infrastructure damaged by civil war over the long years, the rehabilitation of various weakened institutions and systems and the development of human resources whose shortage is one of Cambodia's more serious problems. In other words, in order to deliver balanced assistance and carefully considering the "hardware" and "software" needs, Japan has carefully considered its allocation of assistance. The four priority areas of Japan's assistance will be:

    (1) the realization of sustainable economic growth and a stable society;
    (2) support for the socially vulnerable;
    (3) measures to respond to global issues; and
    (4) support to rectify disparities among the ASEAN countries.

4.1 Realization of Sustainable Economic Growth and a Stable Society

The most essential factor for Cambodia's development is sustainable economic growth. For this goal to be achieved, social and economic infrastructure needs to be efficiently improved, while various reforms are smoothly carried out and good governance is encouraged. In providing the assistance for this, the promotion of agriculture, which is the main industry of Cambodia, and the rectification of regional gaps must also be taken into account. At the same time this assistance will contribute to solving the poverty issue. Furthermore, in the process of these development efforts, full attention should be paid to the landmine issue.

4.1.1 Assistance for Reform and Good Governance
  The promotion of reform such as administrative reform, financial and fiscal reform, the demobilization of the armed forces, natural resources management, and the improvement of social sector, as well as the strengthening of good governance are all essential in order for Cambodia to achieve steady economic growth and to fully function as a state. With this in mind, during then-Prime Minister Keizo Obuchi's visit to Cambodia in January 2000, he affirmed to Prime Minister Hun Sen that Japan would strengthen its technical cooperation including the dispatch of experts, the acceptance of trainees in Japan and other forms of support. Prime Minister Obuchi stated that Japan had been extending support to Cambodia and would extend additional, flexible and prompt assistance, utilizing various applicable cooperation schemes, in order to further assist with the country's reforms. Following this statement and regarding the current reform of Cambodia's legal and judicial system, Japan has been providing assistance for the drafting of a civil code and a civil procedure code and is continuing this assistance for the prompt completion of the drafting of these codes and there enactment into law. In addition and to complement this, Japan will support the training of legal personnel through various training programs.

4.1.2 Improvement of Social and Economic Infrastructure and Conditions for Economic Progress
  Cambodia continue to strive to strengthen its capacity as a state, while the socio-economic infrastructure that forms the foundation of the country's development still need to be significantly improved. In order to help Cambodia revitalize its agriculture and its rural areas, activate industrial development, boost tourism and so forth, it will be important for Japan to continue to provide assistance in areas such as the establishment of the Centre for Road Construction and to widen the targets of assistance in the provinces. Japan will also consider providing assistance for the areas of transportation and traffic from a country-wide perspective.

Moreover, as large-scale flooding occurs in the Mekong River regions and results in serious damage to the road and other facilities, due consideration must be given to the improvement of the infrastructure so that is made more resistant to natural and other disasters. On the other hand, Phnom Penh presents different challenges, as environmental problems are anticipated in response to deteriorating urban problems caused by the rapid activation of economic activities and an increasing population. Therefore, support should be extended for strengthening administrative capability in urban areas. The disparity in existing infrastructure development for power generation, telecommunications, etc. between the capital and the rural areas, is striking, and from the mid- to long-term, Japan will provide technical and financial assistance for policy planning and the training of engineers and technicians.

4.1.3 Agriculture and Rural Development and the Improvement of Agricultural Productivity
  Eighty four percent of the Cambodian people live in the rural areas, and around forty percent of this rural population suffer from impoverished conditions as a result of the destruction of agricultural facilities during the civil war. Therefore cooperation and assistance for agriculture, and rural and regional development is essential for the goal of poverty reduction. Moreover, as the agricultural sector accounts approximately for forty percent of Cambodia's GDP, agricultural and rural development is also indispensable for raising the level of the entire Cambodian economy. Concretely, Japan will positively provide financial and technical assistance for the provision of irrigation facilities, the improvement of water management systems, the development of water users associations for irrigation, the improvement of agricultural productivity, the diversification of crops, the improvement of infrastructure for agriculture, micro financing, the development of the livestock and fishery industries, and the reinforcement of rural development administration, including the advancement of farmers' organizations.

Furthermore, in order to implement more finely tuned assistance, it is important to cooperate with NGOs operating in rural areas and to provide assistance through grassroots grant aid for the improvement of basic small-scale social-economic rural infrastructure (small-scale irrigation facilities, agricultural roads, etc.).

However, adequate attention still needs to be paid to the security situation in Cambodia, particularly in the implementation of assistance in the rural areas.

4.1.4 Comprehensive Assistance for Landmine Problems
  The existence of landmines is a great impediment to the reconstruction and development of Cambodia, and the problems caused by landmines cannot be neglected when Japan extends the support mentioned above for the improvement of social-economic infrastructure and agricultural and rural development.

Japan has actively been providing assistance for Cambodia's landmine problems, appreciating its ownership and considering Cambodia as a pilot country for Japan's assistance on this problem.

With respect to support for demining activities, Japan will offer support to make these activities easier to be implemented through the development and introduction of more efficient demining technology. This is in addition to the provision of financial assistance to the UNDP Trust Fund and the provision of equipment in the bilateral assistance that Japan has made so far. For landmine victims, in addition to the improvement of health care institutions, Japan will consider a form of cooperation where victims can reintegrate back into society following a period of rehabilitation. Education on landmines and efforts at the community level to solve landmine problems are also important. It is crucial to actively collaborate with and support NGOs deeply involved in the rural areas in carrying out their vital demining activities.

4.2 Support for the Socially Vulnerable

The most important factor for sustainable economic growth is the improvement of Basic Human Needs (BHN). The improvement of BHN directly provides benefits to the lives of the poor, and is also important as it provides a social safety net to deal with the social costs brought by economic growth.

Japan has provided assistance for BHN sectors such as education, health and medical care, water and sanitation improvement, and other priority sectors for cooperation. These sectors are very important from the viewpoint of humanitarian concerns and poverty reduction, and the demand for assistance is still very high. Moreover, it is anticipated that the number of the so-called socially vulnerable will increase as Cambodia makes economic progress, and Japan will continue to positively support the foundation of a social safety net for these people.

In the education sector, Japan will continue to provide assistance through grassroots grant aid for the construction of schools, the absolute number of which is still greatly lacking, and technical assistance for improving the quality of teachers' capacity and the administrative capacities of the education authorities. Assistance will particularly focus on improving science and mathematics education, subjects which are vital for economic growth and achieving sustainability.

In the health sector, Japan will continue to actively support the improvement of maternal and child health care and medical technology, as well as supporting countermeasures against infectious diseases, particularly HIV/AIDS, tuberculosis, and complications arising from the contraction of these diseases, and others such as malaria, parasitic diseases and so on. Assistance to the health sector will be implemented under the framework of a Japan-US partnership in identified areas. As the number of health workers is still scarce, Japan will put priority on technical cooperation, while collaborating with NGOs to help improve primary health care services.

4.3 Measures to Respond to Global Issues

Cambodia faces wider the issues that impact not only on Cambodia but also neighbouring countries. These "global issues" are extremely difficult for Cambodia to deal with alone. For example environmental issues related to the preservation of forests and other resources and the illegal drugs issue. It is necessary that assistance to deal with these concerns extended as the problems grows globally.

4.3.1 Environmental Preservation
  Taking steps to achieve sustained economic growth, Cambodia should avoid the destruction of one of its great assets of its rich natural environment. Unfortunately as that is occurring at present and as a measure to promote the sustainable development, Japan will continue to extend support for environmental preservation. Concretely, Japan will provide assistance for the surveillance and monitoring project, that Cambodia is undertaking to monitor illegal logging. Japan will offer assistance with the regeneration of devastated forest resources, the promotion of sustainable forest management and afforestation, the preparation of seedling fields and the promotion of community forestry, etc. Japan will also provide active assistance for the implementation of a forestry vocational training project to develop human resources, the formulation of forest management plans, and the transfer of afforestation technology.

With regard to fisheries resources, the preservation and sound management of the unique fisheries resources in the Tonle Sap Lake have become urgent issues, and Japan is promoting a Master Plan for the preservation of the lake's surrounding environment, giving due consideration to the security situation in those areas. In addition, Japan will dispatch experts to Cambodia to investigate the current situation of fisheries resources and consider means of cooperation for the preservation and appropriate management of those resources and the protection of the country's biodiversity. This assistance will take into account the existing collaboration in this area with the Southeast Asian Fisheries Development Centre (SEAFDEC). Japan will also deliberate the cooperation from a mid- and long-term viewpoint for improving environmental management and transferring the technology of sound environmental management to Cambodia.

4.3.2 Measures against Illegal Drugs
  Located just south of the "Golden Triangle" region of drug production and hampered by inadequate laws and enforcement against drugs, Cambodia also faces the problem of the illicit drug traffic and the smuggling and use of drugs within the country. Neglecting this situation will weaken the effects of measures against the illegal drug traffic taken by other countries in the region, and bring the threat of a serious negative impact on Japan. Recognizing the seriousness of this drug problem, Japan is extending possible assistance in this area, while acting as a co-chair with Australia in the Mini-Dublin Group Meetings.

4.4 Support for the Rectification of Disparities within ASEAN

Another important aspect for the development of Cambodia is related to the rectification of economic gaps within ASEAN. Economic disparity between the countries in Indochina, including Cambodia, and other ASEAN countries is tending to widen, and to rectify this gap is an important issue for the development of ASEAN itself. Japan is actively moving forward with assistance to support the efforts made by ASEAN as a whole, and this positive action is significantly contributing to the stability and further development of the region.

In the formation and implementation of this assistance, Japan gives due consideration to the development of the Mekong subregion, which benefits all of Indochina, and the diffusion of Information Technology (IT) in Cambodia.

4.4.1 Mekong Subregion Development
  The development of the Mekong subregion is a vital goal for the economic development of Cambodia and, at the same time, is important for the rectification of the economic disparities among the ASEAN countries and the strengthening of ASEAN integration. Japan is pursuing specific and positive measures to support this development, starting with the improvement of the Second East-West Corridor, including assistance for both "hardware" (infrastructure development) and "software" (development studies, technical cooperation, etc.) aspects. Japan is also providing assistance in the preparation of legal codes and procedures to promote private-sector investment in the region.

4.4.2 Assistance for IT Development
  Information Technology (IT) can bridge the international digital divide and provide developing countries with great opportunities. Japan is fostering comprehensive cooperation including the formulation of long-term development strategies, human resources development for IT, and the development of telecommunications infrastructure. However, due consideration must continue to be given to balancing the economic development of Cambodia as a whole.

Copyright(C): Embassy of Japan in Cambodia