Document of The World Bank Report No: ICR2439 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H1650) ON A GRANT IN THE AMOUNT OF SDR 6.62 MILLION (US$ 10.00 MILLION EQUIVALENT) TO THE KINGDOM OF CAMBODIA FOR A TRADE FACILITATION AND COMPETITIVENESS PROJECT (TFCP) Poverty Reduction and Economic Management Department Southeast Asia Department East Asia and Pacific Region i CAMBODIA – GOVERNMENT FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of October 1, 2012) Currency Unit = Cambodian Riel (CR) CR 1,000 = US$ 0.25 US$ 1.00 = CR 4,043 (US$ is used widely) ACRONYMS ASYCUDA Automated System for Customs Data BFC Better Factories Cambodia CDC Council for Development of Cambodia CIB Cambodia Investment Board C/O Certificate of Origin DTI Direct Trader Input EAPVP East Asia Pacific Regional Vice-Presidency EDP Export Development Plan EMAF Export Market Access Fund FDI Foreign Direct Investment FMR Financial Monitoring Report GIPB Global Investment Promotion Benchmarking GMAC Garment Manufacturers Association of Cambodia GDCE General Department of Customs and Excise HR Human Resources ICA Investment Climate Assessment ICR Implementation Completion and Results Report I(C)T Information (and Communications) Technology IDA International Development Agency ILO International Labour Organization IPA Independent Procurement Agent ISR Implementation Status and Results Report JICA Japan International Cooperation Agency LPI Logistics Performance Index MEF Ministry of Economy and Finance MOC Ministry of Commerce OECD Organization for Economic Cooperation and Development PAD Project Appraisal Document PDO Project Development Objective PPI Private Participation in Infrastructure SAD Single Administrative Document SDR Special Drawing Right TDSP Trade Development Support Program TFCP Trade Facilitation and Competitiveness Project TIW Trade Information Website TTL Task Team Leader ii UNCTAD United Nation Conference on Trade and Development WCO World Customs Organisation WTO World Trade Organization Vice President: Axel van Trotsenburg Country Director: Annette Dixon Sector Manager: Mathew A. Verghis Country Manager: Alassane Sow Lead Economist: Mathew A. Verghis ICR Team Leader: Huot Chea ICR Primary Authors: Graham R. Smith and Huot Chea iii PREFACE This ICR was prepared by Graham R. Smith (consultant) with a large contribution from Julian Latimer Clarke, and under the guidance and supervision of Huot Chea (ICR Task Leader). We are so grateful for all the great inputs from E. Aldaz-Carroll, M. Verghis, A. Sow, Brendan O’Driscoll, S. Guimbert, L. Kong, L. Ky, A. Khiev, L. Lecuit, and S. Khiev. A list of people met and interviewed during the ICR preparation is attached in Annex 9. The ICR is based on a detailed desk review of materials from the project files, relevant documents and information from Ministry of Commerce, Ministry of Economy and Finance, General Department of Customs and Excise, Council for the Development of Cambodia, Ministry of Justice and the Supreme Court; and reports of the International Labor Organization (Better Factories Cambodia), Emerging Markets Consulting, UNCTAC and Webb Fontaine (consulting firms); and World Bank Aide Memoires. The ICR field mission (including field visits) took place during May–June 2012, and the ICR also benefited from the stakeholder workshop (combined with the final Project Steering Committee meeting) that took place on July 30th , 2012; and from consultations with other Development Partners. iv CAMBODIA IMPLEMENTATION COMPLETION AND RESULT REPORT TRADE FACILITATION AND COMPETITIVENESS PROJECT TABLE OF CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design159 2. Key Factors Affecting Implementation and Outcomes ......................................................... 13 3. Assessment of Outcomes ...................................................................................................... 16 4. Assessment of Risk to Development Outcome ..................................................................... 23 5. Assessment of Bank and Borrower Performance.................................................................. 23 6. Lessons Learned.................................................................................................................... 25 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 26 Annex 1. Project Costs and Financing ...................................................................................... 28 Annex 2. Outputs by Component .............................................................................................. 29 Annex 3. Economic and Financial Analysis ............................................................................. 33 Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................... 34 Annex 5. Beneficiary Survey Results ....................................................................................... 37 Annex 6. Stakeholder Workshop Report and Results ............................................................... 38 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 39 Annex 8. Comments of Co-Financiers and Other Partners/Stakeholders ................................. 41 Annex 9. List of People Interviewed…………………………………..……………...............41 Annex 10 Supporting Documents ............................................................................................. 42 MAP v A. Basic Information Cambodia Trade Facilitation and Country: Cambodia Project Name: Competitiveness (Julian Clarke co-TTL) Project ID: P089196 L/C/TF Number(s): IDA-H1650 ICR Date: 11/30/2012 ICR Type: Core ICR KINGDOM OF Lending Instrument: SIL Borrower: CAMBODIA Original Total SDR 6.62M Disbursed Amount: SDR 6.41M1 Commitment: Revised Amount: SDR 6.41M Environmental Category: C Implementing Agencies: Ministry of Commerce, Ministry of Finance, Ministry of Justice Co-Financiers and Other External Partners: IDA B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/22/2004 Effectiveness: 12/12/2005 12/12/2005 05/02/2008 Appraisal: 04/18/2005 Restructuring(s): 08/26/2008 12/03/2009 May 2008 (see page Approval: 06/02/2005 Mid-term Review: May 2007 14) Closing: 12/01/2009 07/31/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Significant Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies:                                                              1 This has not yet included the final audit report fee 7 Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General public administration sector 20 10 Other domestic and international trade 80 90 Theme Code (as % of total Bank financing) Export development and competitiveness 29 24 Infrastructure services for private sector development 14 7 Other public sector governance 14 4 Technology diffusion 14 40 Trade facilitation and market access 29 25 E. Bank Staff Positions At ICR At Approval Vice President: Axel van Trotsenburg (EAPVP) Jemal-ud-din Kassum (EAPVP) Country Director: Annette Dixon Ian C. Porter Sector Manager: Mathew A. Verghis Homi Kharas Project Team Leader: Huot Chea Magdi M. Amin ICR Team Leader: Huot Chea ICR Primary Authors: Graham R. Smith and Huot Chea 8 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) “The Project Development Objective is to promote economic growth by reducing transaction costs associated with trade and investment, introducing transparency in investment processes, and facilitating access of enterprises to export markets�. The following intermediate objectives were put in place to meet the PDOs:  Reducing transaction costs associated with trade and investment: This aspect of the program focused on border reforms to trade facilitation practices and was headlined by the automation of customs procedures at border checkpoints. The intended objectives were satisfactorily achieved as the customs automation system was rolled out to most major customs sites, covering nearly 100% of customs transactions and associated declarations. The end result surpassed the intended target.  Facilitating access of enterprises to export markets: A grants matching scheme known as the Export Market Access Fund (EMAF) was established to provide financing for SMEs to penetrate export markets that may otherwise have been closed to them. EMAF has made satisfactory progress in helping firms draft export development plans, and helping exporters to access new markets. Although the project assisted a number of firms across several sectors, with generally positive results. The results were extremely good in some sectors, less so in others. The objectives of this component were largely met.  Introducing transparency in investment processes: An investor tracking system was introduced to the Cambodia Investment Board. The program was slow to start and met with some internal resistance within the agency. The intended results were not achieved, despite the fact that substantial training was provided, and an automated system to track potential and current investors was put in.  Legal Transparency: The legal transparency component was designed to provide potential investors with access to information about the judicial process in Cambodia as a means of reassuring foreign investors about the predictability of contract dispute settlement in Cambodia. The small amount of information provided by the Ministry of Justice led to mixed results. This ICR tracks the development and progress of each intermediate outcome to overall project development objectives. A summary of these objectives and results indicators is presented below. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicators Formally Original Target Actual Value Revised Indicator Baseline Value Values (from Achieved at Target approval documents) Completion Values PDOs Indicator 1: Qualitative improvement in investment climate. The number of firms reporting corruption as a moderate, major or severe problem declines by 10% (percentage points). 9 Value 74% (baseline at approval) 64% 53% Date achieved ICA 2012 Comments Preliminary result of the World Bank Investment Climate Assessment at 3rd quarter of (incl. % 2012 reported that 53% of firms reported corruption as a moderate, major or severe achievement) problem Indicator 2: Share of traders considering "Customs and Trade" as a severe or very severe constraint 25.6% (baseline at approval) Value 15% or lower 5% 19.1% (new baseline 2009) Date achieved ICA 2012 Comments Preliminary result of the World Bank Investment Climate Assessment at 3rd quarter of (incl. % 2012 reported that 5% of traders considered “Customs and Trade� as a severe or very achievement) severe constraint (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Intermediate Result Indicators (component 1) Indicator 1: Number of documents required to clear imports. 44 (baseline at approval) Value 8 10 15 (new baseline 2009) Date achieved July 2012 Comments 10 documents are required to clear imports by the closing date (Doing Business Report (incl. % 2013, officially released in October 2012, and it covers the progress over the June 2011 achievement) to June 2012 period). Indicator 2: Share of shipments selected for secondary inspection at the port of Sihanoukville 100% (baseline at approval) Value Below 20% 14.2% 16% (new baseline 2009) Date achieved July 2012 Risk-based selection inspection of the Risk Management System works along the lines Comments of the ASYCUDA, where the red channel is physically inspected (GDCE database). (incl. % The average red channel selection rate for Jan-Jul 2012 period was 10.9% (even better achievement) than the month of July 2012). Indicator 3: Time to clear import declaration 6.5 days (baseline at approval) Value Less than 3 days 5.1 days 5.1 days (new baseline 2009) Date achieved July? 2012 rd Comments Preliminary result of World Bank Investment Climate Assessment at 3 quarter of 2012 (incl. % achievement) 10 Indicator 4: Share of Customs declaration processed through ASYCUDA system Value 29% (new baseline 2009) Above 80% 99.8% Date achieved July 2012 Comments 99.8% of customs declaration applications were processed through the ASYCUDA for (incl. % July 2012 (GDCE ASYCUDA System Database for July 2012) achievement) Indicator 5: Customs automation system availability Value n/a Above 80% 99.8% Date achieved July 2012 Comments The ASYCUDA was available in various customs sites for processing the customs (incl. % declaration applications (GDCE ASYCUDA System Database for July 2012) achievement) Indicator 6: Share of certificates of origin processed electronically Value 0.0% (new baseline 2009) Above 50% 0.0% Date achieved July 2012 Comments (incl. % No progress was made by closing date achievement) Intermediate Result Indicators (component 2) Indicator 7: Number of firms preparing draft export development plans. 0 (baseline at approval) Value 50 65 19 (new baseline 2009) Date achieved July 2012 Comments This was the number of firms that prepared draft export development plans (EDPs). (incl. % (Based on the Project Implementing Unit of Ministry of Commerce and EMAF achievement) Manager Final Report, August 2012). Indicator 8: Number of new exporters created 0 (baseline at approval) 13 Value 30 0 (new baseline 2009) Date achieved July 2012 Comments This was the number of new exporters created by the EMAF. (Based on the Project (incl. % Implementing Unit of Ministry of Commerce and EMAF Manager Final Report, August achievement) 2012). Indicator 9: Share of non-donor revenues of Better Factories Cambodia 55% in 2011 70% in 2012 Value 26% (new baseline 2009) Above 65% in 2011 (committed budget) Date achieved July 2012 Comments (incl. % Target exceeded. achievement) 11 Intermediate Result Indicators (component 3) Indicator 10: Number of PPI contracts piloted under the new Law on Concessions (including public disclosure and appropriate procurement process) Value 0 3 0 Date achieved July 2012 Comments (incl. % No progress was made by closing date achievement) Indicator 11: Ranking in Global Investment Promotion Benchmarking Value 47% (new baseline 2009) Above 50% 28% Date achieved GIPB 2012 Comments (incl. % Global Investment Promotion Benchmarking GIPB-IFC 2012 (Cambodia) achievement) Intermediate Result Indicators (component 4) Indicator 12: Establishment of well-maintained website and accessible electronic dissemination covering 50% of judgments (Supreme Court and Court of Appeal) Less than 30% Value 0% 50% (Bank staff assessment) Date achieved July 2012 The criminal and civil judgments have been published on the Supreme Court’s website Comments for the period 1997 to 2006. Judgments for the years 2007 to the present are still being (incl. % updated and scanned to PDF, and will be published soon. Some laws were also achievement) published, but overall, the volume and content of information available on the website remained short of the target. Indicator 13: Establishment of Trade Information Website (TIW) compliant with WTO obligations (Ministry of Commerce) All key trade-related regulations available Value No TIW No TIW in a website connected TIW Date achieved July 2012 Comments (incl. % No progress was made by closing date achievement) Both new and old intermediate outcome indicators are recorded in a summarized table in Annex 2. B. 12 G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/08/2005 Satisfactory Satisfactory 0.17 2 06/29/2007 Moderately Satisfactory Moderately Unsatisfactory 1.84 3 06/08/2008 Moderately Satisfactory Moderately Unsatisfactory 2.49 4 09/16/2008 Moderately Satisfactory Moderately Satisfactory 3.25 5 08/05/2009 Moderately Unsatisfactory Moderately Unsatisfactory 3.98 6 01/28/2010 Moderately Satisfactory Moderately Satisfactory 4.41 7 05/09/2011 Moderately Satisfactory Moderately Satisfactory 6.52 8 04/07/2012 Moderately Satisfactory Moderately Satisfactory 8.31 9 10/14/2012 Moderately Satisfactory Satisfactory 9.84 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions To redeploy the funds to: (i) deepen the implementation of the Automated System for Customs Data, or ASYCUDA (to new locations and with new functions); (ii) initiate automation of other 05/02/2008 N MS MU 2.48 trade related-processes (the government-proposed Certificates of Origin); and (iii) create a Trade Information Website (TIW) as a single point of entry for traders to find information. Reallocation of project funds to finance the Trade Information Website/MOC Automation Master 08/26/2008 N MS MU 2.71 Plan Study, and to provide additional support to ILO’s Better Factories Cambodia Programme. The proposed restructuring would mainly reallocate resources from the sub-component on the 12/03/2009 N MU MU 4.31 electronic Single Window (US$3.6 million) to fund (i) further extension of the customs automation system (comp. 1), (ii) 13 ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions automation of Certificates of Origin (C/O) issuance (comp. 1) and (iii) creation of a Trade Information Website (TIW, comp. 4) I. Disbursement Profile 14 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal The project was prepared in 2004 and 2005, starting from a first World Bank investment climate assessment (ICA), released in 2004. At that time Cambodia’s economy, as well as its political systems and administrative structures, were still recovering from a legacy of the decades of civil conflict of the 1970s and 1980s, and the gradual restoration of the rule of law. Most of the population (estimated at 80 percent) was rural and poor; one third of the total population of 13.4 million lived below the poverty line of $0.46-$0.63 per day. The garment industry, which started up in around 1995, grew at a remarkable pace, to reach exports of approximately $2 billion in 2004, employing over 270,000 people and comprising 76 percent of all Cambodia’s exports – the remainder being mostly rice and other foodstuffs, and tourism. However, infrastructure remained very inadequate for the modern domestic sectors and for exports. The 2004 Investment Climate Assessment provided evidence of many weaknesses in the functioning of export markets. In response, the Royal Government of Cambodia took important measures to set up consultation mechanisms to build trust between the public and private sectors, and to build consensus for a national poverty reduction strategy. The present project is a consequence of that initiative, and the demonstration of political will to address the many deficiencies prevailing in the existing supply chain mechanisms – at the same time as Cambodia joined the World Trade Organization (in Oct. 2004). The Government showed its commitment to improving the investment climate and to facilitating trade by formulating a 12-point action plan and asking the World Bank to help in its implementation (see Box 1). The Bank-assisted project was designed in such a way as to help the Government implement many (but not all) of these 12 Actions. The Government sought the World Bank’s assistance in this field, mindful of the Bank’s successful experience in trade facilitation projects focusing on customs reform, modernization and computerization in several other countries and regions. Box 1: Government of Cambodia’s 12-Point Action Plan to Improve the Investment Climate and Facilitate Trade, (July 2004) Action 1: Establish a cross-agency trade facilitation /investment climate reform team. Action 2: Establish transparent performance measurement including private sector monitoring. Action 3: The trade facilitation process, including all licenses, procedures and documents, will be reviewed to remove overlaps and unnecessary approvals. Following the re-engineering, a Single Administrative Document will be implemented and other documents progressively eliminated. Action 4: Introduce an overall risk management strategy to consolidate and rationalize all examination requirements of the different control agencies. Action 5: A strategic review of the role of CamControl will be launched to more productively deploy the organization’s unique knowledge of quality control processes and make optimized use of inputs and resources from other agencies, such as CED [Customs]. Action 6: A Single Window process to manage trade facilitation will be piloted in the Port of Sihanoukville by December 2005. The Trade Facilitation process, once streamlined, will be automated. Action 7: The Government will introduce a WTO-compatible flat fee for service, and the service 15 will be defined by a service-level agreement. The fee structure will be public. Action 8: Streamline the process and reduce the cost of incorporating with the Commercial Register, which is maintained at the Office of the Clerk of the Commercial Court, and costs an average of $650 and 30 days. Action 9: Streamline the process for notifying the Ministry of Labor prior to hiring employees, which costs $250 and 30 days to complete. Action 10: Harmonize registration for VAT, income tax and company registration, using the same form and resulting in the same unique identifier. This would facilitate information-sharing across agencies. Action 11: Implement a national award to promote good corporate citizenship in the private sector. Action 12: Monitoring and reporting will take place through the Private Sector Forum. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) “The Project’s objective was to support the Recipient’s strategy to promote economic growth by reducing transaction costs associated with trade and investment, introducing transparency in investment processes, and facilitating access of enterprises to export markets�. Key indicators by which to measure achievement of this objective were as follows: Table 1: Project key indicators (at approval, before restructuring) Indicator Baseline Status by July 31, 2012 The share of firms reporting corruption as a 74% in 53% (preliminary result of moderate, major or severe problem declines by 2003/04 ICA 2012) 10% (percentage point) ICA A 50% reduction in the number of documents 44 10 documents (DB 2013) required to clear imports documents Share of export shipments that are physically 100% 0.82% (Risk Management inspected less than 40% by December 2006 System, GDCE database) 50% reduction in time required to clear import 6.5 days 5.1 days (preliminary shipments result of ICA 2012) The enabling environment facilitates integration of Zero 65 firms and associations new firms into the global economy, as indicated by prepared draft EDP the number of firms preparing draft export (Project Implementing development plans (EDP). Unit of MOC and EMAF manager final report) Transparency/accountability introduced into private Zero-few Zero participation in infrastructure (PPI). Number of PPI contracts publicly disclosed and subject to competitive procurement processes Number of judicial decisions publicly disclosed Zero-few 30% (Assessment made by World Bank staff) Response time on investor inquiries TBD 28% (Global Investment Promotion Benchmarking GIPB-IFC 2012) 16 1.3 Revised PDO and Key Indicators, and reasons/justification The PDO was not revised, but a few new baselines and target indicators were set after the 2009 restructuring to strengthen project performance. 1.4 Main Beneficiaries, The main beneficiaries were expected to be traders (importers and exporters) and investors (domestic and foreign). Secondary beneficiaries would be those finding jobs in the burgeoning export firms and industries. 1.5 Original Components (as approved) The project financed several initiatives addressing the objective of facilitating both trade and investment in the Cambodian economy. They were clustered into four components, primarily on the basis of the Government agency responsible for managing the main activities (and in declining order of financial size). Component 1: Trade Facilitation ($6.15 million): Information technology was to be applied to border management activities, in the expectation that it would streamline operations, improve the level of transparency and accountability, and facilitate the achievement of all border-related government objectives. Accordingly, the project was to finance: (a) an electronic Single Window, integrating all trade facilitation agencies, including the deployment of ICT for automation of customs functions, linked to complementary improvements in systems, procedures and developments in the various organizations involved in product clearance; (b) adherence to the Kyoto Convention (see below), including the adoption of a risk management capacity; (c) design of a merit-based pay system for Cambodia’s trade regulatory agencies; and (d) development of an Integrity Action Plan for the Customs and Excise Department2 based on a self-assessment. Box 2: The Trade Facilitation Agenda of the WCO’s revised Kyoto Convention (1999) The revised International Convention on the Simplification and Harmonization of Customs procedures (“Kyoto Convention�) was adopted in June 1999 as the blueprint for modern and efficient Customs procedures in the 21st century. Once implemented widely, it will provide international commerce with the predictability and efficiency that modern trade requires. The revised Convention elaborates several key governing principles- chief among these are the principles of:  transparency and predictability of Customs actions;  standardization and simplification of the goods declaration and supporting documents;  simplified procedures for authorized persons;  maximum use of information technology;  minimum necessary Customs control to ensure compliance with regulations;  use of risk management and audit-based controls;  coordinated interventions with other border agencies;  partnership with the trade. The revised Kyoto Convention entered into force in 2006. Component 2: Export Market Access Fund (EMAF) ($2.1 million): Support was to be provided to: (a) the Ministry of Commerce’s Department of Export Promotion to set up a technical assistance window                                                              2 Customs and Excise Department has later been changed to “General Department of Customs and Excise� 17 for exporters; and (b) a matching grant facility for private exporters, that would cover half of the cost of achieving market standards, or evidence of compliance with those standards. As a special case, the Garment Manufacturers’ Association of Cambodia (GMAC) applied for co- financing over three years to finance the International Labour Organization’s Better Factories Cambodia program to achieve socially responsible manufacturing standards. Component 3: Private Participation in Infrastructure and Investment (PPI) ($1.2 million): To implement the Law on Concessions and the Amended Law on Investment, a program of capacity building would be carried out to improve the organizational capacity of the Ministry of Economy and Finance, the Council for Development of Cambodia (CDC), the National Audit Authority, infrastructure regulatory bodies such as the Electricity Authority of Cambodia, and infrastructure line ministries, to manage and deliver PPI transactions. The CDC and the Cambodia Investment Board would also be supported in adopting strategies that would streamline the process of foreign direct investment and make Cambodia more attractive as an investment destination, through improvements in the regulatory environment and in factor markets. Component 4: Legal Transparency ($0.4 million): (a) A website in the Khmer language would be set up and maintained, to make available to the public the final judgments of all cases in the Supreme Court and in the Court of Appeal. (b) Another website would be set up and maintained, to ensure the electronic publication of all Cambodian laws, related regulations and draft legislation in the commercial law field. (c) Training would be provided to use these systems, once set up. Publication of such information was to contribute to increasing confidence in the capacity of the appellate courts to interpret, apply and enforce Cambodian laws generally, and the commercial legal framework in particular, in a fair and consistent manner. An increase in confidence in the transparency and predictability of judgments would reduce the risk associated with private domestic and foreign investments. 1.6 Revised Components The above components were to be implemented over four years from mid-2005 to mid-2009, with the grant’s closing date set for December 1, 2009. Shortly before the end of this period (by that point only about 40 percent of the grant was disbursed), the project was substantially restructured and the closing date extended by 32 months to July 31, 2012. The restructuring was due in part to a difference of views between the Government and the Bank on how the electronic Single Window should be set up and run. The proposed restructuring reallocated resources from the sub-component on the electronic Single Window (US$3.6 million) to (i) further extension of the customs automated system (comp. 1); (ii) automation of Certificates of Origin (C/O) issuance (comp. 1); and (iii) creation of a Trade Information Website (TIW, comp. 4)3. Early during project implementation, the Government indicated its decision not to proceed with the institutional model initially envisaged for the creation of a Single Window. However, it remained committed to offering much of the functionality initially envisaged under such a Single Window, building on the platform of the customs automated system (the so-called Automated System for Customs Data, or ASYCUDA). The proposed restructuring supported this new approach through redeploying resources that will support further deployment of the customs automated system (US$2.5 million), the automation of Certificates of Origin (one of the critical trade-related processes, especially for the garment industry, US$0.2 million), and the dissemination of trade-related information on a new TIW (US$0.7 million). Other resources were redeployed to continue support to trade-related labor standards in the garment industries (“Better Factories Cambodia�) and additional training4.                                                              3 Allocation of sub component is summarized in table Annex 2.B 4 Approved Project Restructuring Document, November 19, 2009 18 1.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) This restructuring also took into account the slower-than-expected implementation of the Customs automation component. The Automated System for Customs Data (ASYCUDA World), developed and marketed by the United Nations Conference on Trade and Development (UNCTAD), was adopted as the border checkpoint solution. Several factors made for a slow start-up in the procurement of hardware and advisory services, as well as the gradual roll out of the system to the various facilities of additional Customs checkpoints. An extension of the closing allowed GDCE to substantially complete its roll-out. Several of the sub-components suffered long delays, and extra time was important for achieving the intended results. The project made good progress in implementing the ASYCUDA and rolling it out to checkpoints, to the extent that it now covers nearly 100 percent of customs declaration application processes. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable) The Project’s original design was innovative and ambitious, and, in hindsight, it is clear that it stretched the Government’s limited implementation capacity, especially regarding all the IT components. As regards the proposed electronic Single Window, the project design presumed a degree of maturity and cooperation among the various interested government bodies, that experience subsequently showed was lacking. The initial proposal to install an electronic Single Window came from within the Government, modeled on the Singaporean model, and which other ASEAN members sought to emulate as part of their community commitment. Experience showed that it was too broad and complex a concept to implement from scratch in a country at Cambodia’s stage of institutional development. Instead, the restructuring allowed the two main agencies involved in trade and investment – the Ministry of Commerce, and the General Department of Customs and Excise (under the Ministry of Economy and Finance) — to each develop its own capacity to set up and manage electronic data systems and websites, with a view to achieving a national single window at some future date. The trade information website and automation of Certification of Origin (under the Ministry of Commerce) never materialized due to procurement delays. The ICT deployment of ASYCUDA (under the GDCE) has been a success, however. 2.2 Implementation A mid-term review was held in May 2008, a year later than planned at appraisal. Overall the review found overall encouraging progress on customs automation and risk management,5 in particular with the launch of ASYCUDA World at the port of Sihanoukville in May 2008, presided over by the Prime Minister of Cambodia. Sihanoukville is the country largest seaport, where some 50 percent of all imports enter Cambodia, making it GDCE’s most important border checkpoint. The mid-term review concluded that the PDO remained relevant, but it recommended a minor restructuring that was adopted with effect from August that year: funds were reallocated to (a)                                                              5 Japan International Cooperation Agency (JICA) supported risk management implementation and Australian Aid (AusAID) supported the drafting of the risk management strategy 19 development of the Trade Information Website and ICT master plan for the Ministry of Commerce and (b) further support to the ILO’s Better Factories Cambodia program. After that minor restructuring in 2008, GDCE requested Bank support to undertake a detailed review of ASYCUDA implementation in March 2009. Concerns about its quality were largely addressed during that evaluation process, and a baseline evaluation was conducted in October of the same year. The conclusions and lessons of the evaluation were then incorporated into the project restructuring that took place later in 2009. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The M&E design was designed to capture appropriate information about each component of the program. Each component will be dealt with in turn in this section. Component 1: Trade Facilitation. This component relied on measurements of the ease of goods movements extrapolated from figures and data that captured the reduction in cost and transit time for imports into or exports from Cambodia. The overall goal of this component was to bring Cambodia into conformity with its commitments to the WTO and ASEAN. The second goal of this component was to enhance the business climate by increasing transparency and predictability of the trade regime and to address governance concerns related to the imposition of informal or ad hoc payments and processes. The indicators were therefore chosen to reflect progress towards these goals – such as transit time, percentage of goods inspected, and number of document and percentage of goods transacted under the automated system. The data was taken from standard World Bank products such as the Investment Climate Assessments (ICAs) and the Doing Business Report. Component 2: Export Market Access Fund. This component was designed with the overall goal of enhancing the ability of the private sector to create new export markets for their goods. The means by which this goal was to be achieved was through (i) a system of matching grants to exporters for them to promote their goods in overseas markets, (ii) develop rational and succinct export development plans. The number of plans generated and the amount disbursed in matching grants were appropriate outcome indicators for this component. A large part of this component was devoted to funding the Better Factories Cambodia program, managed by the International Labour Organization (ILO), which led to growth in exports by fostering corporate social responsibility. The link between corporate responsibility, higher investment and enhanced exports was not adequately captured in the results indicators. Gender dimenions of this component could have been measured by estimating the number of female owned companies that benefitted from the grants and the number of female employees hired in factories under the Better factories program. Component 3: Private Participation in Infrastructure and Investment. This component was designed to encourage private sector participation in infrastructure projects and sharpen the RGC response to the needs of potential investors and investors already in Cambodia. Progress in this component was hampered by corporate governance issues surrounding the projects that were proposed for private sector participation and, more recently, the project was held back by a complicated country relationship lowered the RGC’s incentive to fully engage on this issue, especially with respect to the sometimes controversial topic of concessions. On the investment side, the RGC updated the existing investor databases and received technical assistance in the form of consultant support to establish and upgrade the Investor Tracking and Aftercare Center. The indicators for public private investment were never met for the reasons mentioned above and therefore the indicator was redundant. On the investment side, Cambodia’s ranking in the Global Investment Promotion Benchmarking did not improve due to slow progress in rolling out the investor tracking project. The indicator may have been poorly chosen, however, as an independent survey of foreign investors (the Foreign Investor Perception Survey) showed an improvement in investor perception of the role of Cambodia’s Investment Board during this period. 20 Component 4: Legal Transparency. The component was designed to increase legal transparency by making the final judgments of the Supreme Court and Court of Appeals publicly available in Khmer language. The results indicator was based on revealing how many decisions had been disclosed as a proportion of the total number of relevant judgments. Although the results indicator was simple and robust, the result was compromised by the inability of the task team to determine the total number of judgments issued by the courts. Without the total number of judgments, the degree of transparency (measured as a percentage of overall judgments) was impossible to determine. The task team’s best estimate, therefore, was that “less than 30%� of the judgments were made publicly available (for example, court cases after 1997 were never publicly available.) The indicator was therefore valid only to the extent that the overall number of judgments would be made available to the task team. 2.4 Safeguard and Fiduciary Compliance Procurement: Procurement faced repeated challenges including shortages of qualified consulting firms and suppliers to bid for project packages, due to the very specialized nature of the consulting services and goods respectively required for the project. The complex nature of the core customs software and systems, meant that only a few private consulting firms knew the systems, and not many of them firms were willing to bid on a project in Cambodia, which raised a fundamental challenge for procurement of the development of the software and system package. Therefore, a UN Agency – UNCTAD - that developed ASYCUDA software and made it available to governments without charge, was selected on a single source basis to develop the first phase of the system and subsequently train the client staff in its use. Later phases of the system roll-out, and capacity building for the client staff were procured competitively, although certain ‘middleware’ required for the system had to be procured from a sole supplier using the direct contracting method. The procurement to supply a system for automating issuance of Certificates of Origin at the Ministry of Commerce elicited only a few bids, all which were rejected as non-compliant or non-responsive. Re-bidding of this package delayed implementation, and it could not be completed by the time of project closure. The package was eventually supported under the Trade Development Support Program (TDSP), which is a multi-donor funded trade program managed by the World Bank. Complaints were received about the procurement in the first round, and the Bank team handled those complaints according to the Bank’s applicable complaint handling procedures. In December 2007, an Independent Procurement Agent (IPA) was recruited by the Government to carry out procurement under all Bank–financed projects in Cambodia, following instances of fraud and corruption identified in other projects in the portfolio. After a difficult start-up phase, which resulted in the recruitment of another firm in 2009, the coordination between the IPA and the implementing agency has improved. Disbursement: Disbursement was slow before the 2009 restructuring, but picked up quickly after restructuring. The cumulative disbursement at the closing date is close to 100 percent of the total allocated grant proceeds, which can be mainly attributed to progress of the customs automation expansion. Financial Management: Throughout the implementation period, financial management has been satisfactory. No significant issues have arisen. Quarterly financial monitoring reports (FMR) were generally submitted by the due date, except for few instances where the submission was late for a couple of days. Annual audited financial statements, together with management letters, have generally been submitted on a timely basis. Internal audits have been duly conducted, as well as external audits. Following the project failure to sign an auditor contract for the final audit before the project closing date (July 31, 2012), exceptional approval was granted by the Bank to allow the final audit fee to be eligible, even though the audit contract was not signed before project closing date. The final audited financial statements, containing an unqualified (clean) opinion, were delivered to the Bank on time. 21 Safeguards: Environmental and social safeguard issues have not arisen, as the project activity involves only installation of IT systems and related equipment at established sites, and technical assistance. The project triggered no safeguard policies. 2.5 Post-completion Operation/Next Phase A few technical assistance contracts need to be continued beyond the extended closing date of July 31, 2012. It has been agreed that funding for these contracts will, as far as possible, be continued under the on-going World Bank-supported Trade Development Support Program (TDSP). The main candidates are (a) the local team of IT specialists helping the General Department of Customs and Excise (GDCE) complete the last few functions (Direct Trader Inputs, and transit function) of the ASYCUDA World and to cover the postponed automation of Certification of Origin and Trade Information Website at the Ministry of Commerce. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The design of the project responded well to the aims of the National Strategic Development Plan (NSDP 2006-2010), of improving the competitiveness of country’s labor-intensive industries and their exports; building a more conducive climate for the private sector to flourish;, and, generally facilitating trade, through simplification of trading and investment processes, bringing greater transparency and better governance to regulatory agencies, and building investor confidence. The project development objective captured these aims succinctly. The project’s implementation kept focus on this objective, while adjusting the mix of components as needed. 3.2 Achievement of Project Development Objectives The contribution of the project to the promotion of economic growth, and the reduction of associated trade and investment costs (which is the higher order objective included in the PDO formulation), can be measured indirectly through the improved GDP growth and improvements in investors perception of Cambodia. Economic growth averaged 7.9% p.a. over the project life period (which was high). Between 2004 and 2012 the number of firms reporting corruption as a moderate, major or severe problem declined from 74% to 53% (exceeding the target of 10 percentage point decline). Based on the more focused indicator introduced in the 2009 restructuring, the share of traders considering "Customs and Trade" as a severe or very severe constraint declined from 19.1% in 2009 to 5% in 2012 (also exceeding a target of 15% of traders). More specifically, the achievement of the Project Development Objective can be assessed along the three detailed dimensions included in the PDO formulation:  reducing transaction costs associated with trade and investment;  facilitating access of enterprises to export markets; and  introducing transparency into the investment process. Reducing transaction costs associated with trade and investment The project’s main material benefit has been the reduction of associated costs, times and more predictable and accountable processes for Customs to clear import/export declarations and release the goods; related simplification of trade documents and procedures; and greater consistency and transparency in how the responsible government agencies treat traders. The computerized customs clearance system (ASYCUDA World) yielded great success in expediting clearance processes, with less physical interaction with customs officers. This also reflects Government’s commitment to the Kyoto Convention trade facilitation agenda. As a result, growth of trade has been strong, showing 126% increase from 2004 to 2012; customs 22 revenues, projected to increase by 222% between 2004 and 2012; and the economy recorded robust growth, averaging 7.9% p.a. over the 2004-2012 period. 2004 2012 4.5 (WB Exports (days) 2.4 (WB ICA 2012) Average customs ICA2004) clearance time 6.5 (WB Imports (days) 5.16 (WB ICA 2012) ICA2004) Number of documents Exports (docs) n/a 9 (DB 2013 Report) required Imports (docs) 44 10 (DB 2013 Report) Firms’ perception of 74% (WB ICA (Percent) 53% (WB ICA 2012) corruption problems 2004) (imports and Merchandise trades US$ 5.9 bill US$ 13.2 bill exports) 2011: US$ 775 mill 2012 H1: US$ 492 Customs revenues Million US$ US$ 296 mill mill 2012: US$950* mill Total government Percent of GDP 10.3% 13.8%* revenues *Sources: Investment Climate Assessment 2004, 2012, Doing Business Report 2012 and MEF Projection Before the existence of the project, customs clearance at the country's biggest seaport (Sihanoukville) involved multiple steps, documents and hours of waiting that led to lost opportunity of trade and growth. Today, all process goes with a single electronic document (called "Single Administrative Document" or SAD) being deployed at most major customs checkpoints, covering nearly 100 percent of customs declaration clearances. The largest motivational benefit has been the creation of incentives and rewards for ‘good behavior’ on the part of traders, in response to the risk-based management system now applied throughout customs transactions. The ‘green channel/red channel’ concept was new to Cambodian border agencies, but good progress has been made, and the idea of ‘trustworthy traders’ has taken root, and is likely to be embodied formally into a system of ‘authorized economic operators’ on the EU model. Although export processing times continued to improve after implementation of ASYCUDA, the time for imports has not immediately decreased. This is not an uncommon result of automation (Indonesia has had a similar experience with their national single window) and can be attributed to the following issues: (i) it takes time for users to familiarize themselves with the system, (ii) there are some modular components of the automated solution that are still missing, such as direct trader input. Both factors significantly affect time. Another outcome associated with the program has been reflected in the latest World Bank logistics performance ranking in 2012 (LPI 2012), that displayed an improvement of 28 rankings in Cambodia’s position vis-à-vis other countries in the LPI 2012. This makes Cambodia the 12th fastest reformer in the                                                              6 The fact that customs clearance time for imports has not fallen fast enough despite ASYCUDA implementation is unexpected, but it is not an uncommon result of automation (Indonesia had a similar experience with their automation). It takes time for users to familiarize themselves with the system, and also there are some parts of the automation that are still not fully functional, including some that really affect import time, such as the Direct Trader Input (that allows traders to input data from their firms rather than from the port or customs sites). 23 world over two years, one of the star performers among Low-Income Countries (9th place) and the only country of the East Asia region to witness such a dramatic improvement in its trade logistics performance. Various international studies indicate the significant contributions of trade logistics on competitiveness. Sub-Component 1 – automation of Certificates of Origin issuance – has not fully achieved its objective due to a failed procurement (as indicated above) and this component will be achieved instead under the multi-donor trade facility that is managed by the World Bank, called TDSP. However, under the present project, the procedures were substantially simplified and streamlined prior to automation. As a result, the contribution of the AYSCUDA system outweighs some of the few shortcomings discussed above, and the achievement of this part of the PDO is considered to be satisfactory. Facilitating access of enterprises to export markets The EMAF matching grants component encouraged small firms to become exporters by (i) providing technical assistance to draft business plans and (ii) providing matching grants for exporters to promote their products overseas and thereby facilitate the growth of export markets. Over the implementation period, EMAF has promoted exports, succeeded in opening new markets and encouraged new exporters and a greater variety of exported products. Firms that benefitted from grants estimate that they will generate $274.50 for every $1 granted. Female owned companies constituted 33% of EMAF clients and new exporters accounted for 16% of all EMAF clients. The results showed that the return on matching grants was much higher in some sectors (such as rice) than others, leading to the conclusion that an EMAF-style program that focuses on a single sector may exhibit higher returns. A special component of this component was the ILO’s Better Factories Cambodia initiative, which provided reassurance to large foreign buyers as to the social responsibility of factories located in Cambodia. This led to a rapid increase in exports as factories received large orders from international companies for export to overseas markets. The project had an indirect impact on corporate social responsibility among garment factory managers regarding the wages and working conditions of their labor force (mostly young women) and through a quality assurance scheme that has gained the industry wider and deeper access to leading retail chains in the USA and European markets. The sustainability of the Better Factories program increased steadily during the program. By 2011, more than 50% of the program budget was earned from factory subscriptions and support from key industry groups rather than from development partners. Garment exports - the country’s largest foreign exchange earner - rose from US$2 billion in 2004 to US$4 billion in 2011 and are projected to reach US$4.6 billion in 2012. The industry employed 350,000 workers, with US$35 million spent for workers’ monthly wages. Industrial manufacturing continues to be dominated by garment manufacturing, which contributed 26.8% of GDP in 2005 and 28.4% of GDP at the time of project closure. As a result the achievement of this part of the PDO is considered to be moderately satisfactory. Introducing transparency in the investment process Overall the project has been less successful in introducing transparency in the investment process. Under Component 3, managed by the Council for Development of Cambodia (CDC), a Concessions Law was developed and adopted by parliament. Relevant officials were trained, but no transactions involving private participation in infrastructure (PPI) have been piloted under the new law. This is not altogether surprising, as the preparation of the legal framework and procedures, and the corresponding training, were overtaken by the global financial crisis of 2009-2010, which deterred such investment in emerging markets (Cambodia’s FDI inflow fell to its lowest point in four years during the financial crisis, 24 accounting for only 5% of GDP in 2009). It was not even possible to pilot a low risk operation under this component. Similarly, the Investment Tracking System's roll-out to departments of CDC had not been effected by the project’s closing date. The Investor Tracking System can be considered operational in one key department only (the Project Evaluation and Incentives Department. Associated with the slow progress demonstrated under this component, Cambodia's Ranking in the Global Investment Promotion Benchmarking 2012 fell to 28% (well short of the PDO target of 50%). This fall in ratings indicates that Cambodia performance was weaker relative to its peers and may be correlated with the meager results of this component of the project.. The last activity, under Component 4, aimed at disseminating important information to potential investors about the rule of law and civil and criminal judgments, has had little discernible impact. The websites for the Ministry of Justice http://www.moj.gov.kh/ and the Supreme Court http://www.supremecourt.gov.kh/ have been set up and are accessible online. Successful training sessions have also been conducted. But the volume and content of information available on those websites falls well short of expectations. Those sites are supposed to make all cases available to the public. Despite an encouraging start made by the Supreme Court in posting a selection of its civil and criminal judgment cases up to 1997, no cases after that date have been made publicly available. Even the total number of cases processed by the courts during that period is unavailable, therefore an estimate of the publicly available cases as a proportion of the total number of court cases (less than 30%) has been used here (the Ministry of Justice has promised to continue updating the website with translated court cases in future); Despite recent transparency measures enacted by Ministry of Justice include releasing updated hearing schedules to the public and improving the Ministry of Justice's web site, the volume of information remains short of the targeted PDO. The Trade Information Website (TIW), which was added to this component during the 2009 restructuring, to be administered by the Ministry of Commerce, was not established before the project closing date. This latter component will be completed under the World Bank-managed Trade Development Support Program. As a result, the achievement of this part of the PDO is considered to be unsatisfactory. 3.3 Efficiency The nature of many of the project’s components makes it hard, for several reasons, to calculate a net present value, or an economic rate of return, not least because of the difficulty of defining a plausible counter-factual: what would have happened in the absence of the project. The PAD included such an analysis for simplification of the import process. Studies indicated that every day of delay caused by red tape increases production costs by 1 percent. In general, improving logistics performance of low income countries to the level of middle income countries will increase trade on average by 15 percent 7 . A quantitative analysis of historical data by the Organization for Economic Cooperation and Development (OECD), estimates that, on average, each day saved results in an economic gain equal to the value of 0.5% of imports8. The indicated reduction of the number of documents and clearances, along with risk- based inspection processes and lowered perception of corruption in trade, have shown great economic return. Time of import was not reduced since the project restructuring, but it fell 1.4 days compared to the time at approval9.                                                              7 Logistic Performance Index 2010, World Bank 8 Project Appraisal Document, p. 50 9 The fact that customs clearance time for imports has not fallen fast enough despite ASYCUDA implementation is unexpected but it is not an uncommon result of automation (Indonesia had a similar experience with their Automation) as it takes time for users to familiarize themselves with the system, and also there are some parts of the 25 The most efficient outcome of the project was the introduction of the customs automation system. That led to institutional and systemic changes in the General Department of Customs and Excise (GDCE) – both in the way it operates and clears imports and exports – leaving no doubt that the economic and financial return will be very high. The automation of Customs procedures makes compliance easier, since the previous array of officials and agencies was replaced by an automated system, requiring a single entry of information and decreasing opportunities for discretion, direct interface, and corruption. On the aim of export promotion with matching grants, EMAF surpassed the target by supporting 65 firms and associations (representing small and medium enterprises) to prepare draft export plans, 13 of which are new exporters (short of the 30-firm target). EMAF is helpful in the context of Cambodia, as the export community suffers from the lack of trade finance/export credit, due to the high interest rates of commercial banks, and the absence of a domestic Exim Bank, or other guarantee facilities such as are available in some other countries. Another indicator, not included at appraisal, is the value of incremental exports achieved, relative to the cost of managing the program (cost of international consulting firm), and each dollar disbursed by the Government to beneficiaries. The international consulting firm evaluated proposals, provided technical assistance to the beneficiaries, and helped prepare the firms’ export plans. Despite the successful outcome, it leaves open the question of whether the consultant could have set up and tested a ‘model’ approach; so that similar benefits could have been achieved at less operating cost, by relying more on Ministry of Commerce staff rather than the international consulting firm, whose fee was nearly double the amount of all EMAF disbursements to beneficiaries. Another key beneficiary of the EMAF was the ILO’s Better Factories Cambodia (BFC) program, which assessed working conditions in about 350 apparel factories with employment of some 350,000 workers. Its staff offers a regular menu of 10 different training courses, in addition to advisory services. Monitoring labor and working conditions, and reporting to buyers, provided the quality assurance that has gained the industry access to the US and European retailers. But the BFC remains largely reliant on donor funding (54% in 2011 and expected to fall to 30% in 2012). It is advisable for BFC to develop a detailed transition strategy that includes a feasible plan for achieving full sustainability in the future (not dependent on donors). The US Trade Representative, Mr. Ron Kirk, visited Cambodia in August 2012, and participated in the ASEAN–US Business Forum. He applauded Cambodia on doing well with its administration and leadership, by putting in place and adding to the number of labor protection agreements in the textile industry - which has greatly enhanced Cambodia’s attractiveness to US companies 10 . Despite these encouraging outcomes, the project has been less efficient in promoting transparency in investment processes, as illustrated earlier. 3.4 Justification of Overall Outcome Rating Rating: moderately satisfactory Overall, the achievements of the two parts of the PDO (reducing transaction costs associated with trade and investment, and facilitating access of enterprises to export markets) outweighs the shortcomings in the last part of the PDO (introducing transparency in investment process). This is confirmed by the fact                                                                                                                                                                                                   automation are still not fully functional, the ones that really affect import time such as the Direct Trader Input (that allows traders to input data from their firms rather than from the port or customs sites). 10 Phnom Penh Post September 5, 2012 26 that the target for the PDO indicator was exceeded. Given the overall continued relevance of the PDO, and the fact that efficiency is considered moderately satisfactory, the overall outcome rating is considered Moderately Satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The customs automation led to improving the trade facilitation environment and, in turn, contributed to increased exports of rice, garments and handicrafts, all of which rely for labor predominantly on the rural population (by definition poor), low-income urban dwellers, and women (both rural and urban). The Better Factories Cambodia initiative likewise has improved labor conditions where poor segments of society are employed, including large numbers of women (83 percent of this workforce)11. (b) Institutional Change/Strengthening The automation of Customs has substantially enhanced the capacity and professionalism of customs officers by introducing institutional reform and systemic change of the agency. It has built momentum for reform and modernization. When the project was started in 2004 there was no automation, no green/red/ yellow channels, no risk management, and intense rivalry between approval agencies, each of which were reluctant to relinquish direct contact with traders. The system has now helped to streamline and facilitate many of these procedures. While the EMAF matching grant was a useful tool to help shape the vision and design strategy of businesses to access export markets, it remains unsustainable without financial support from development partners, as the Government’s fiscal position remains weak. (c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops A stakeholder workshop was held on July 30th 2012 at the Sunway Hotel, Phnom Penh, with some 70 participants and was also joined by Project Steering Committee members. The workshop was organized by the General Department of Customs and Excise, with representatives from all customs directors of the automated customs sites; and representatives from government line ministries, Chamber of Commerce, private sector, transport and freight forwarders association, national project team members, technical advisory group members, PIU and donors (mainly World Bank, ADB, JICA, AusAID and EU) and the experts from the IT consulting firm, Webb Fontaine. Progress of the ASYCUDA system was presented by the project director, documenting the success of having the automated system run smoothly with coverage of nearly 100 percent of customs declaration process; and the risk management system is also in place, running alongside the system. The customs representatives rated themselves as satisfactory in the achievement of their objectives, with some challenges remaining to be addressed such as direct trade input, manifest and transit functions. The Royal Government of Cambodia thanked the World Bank and other development partners who participated and assisted the GDCE in its Reform Strategy 2009-2013, of which customs automation is part. The customs representatives concluded by saying that the computerization helped reduce documentation and time and                                                              11 Lopez Acevedo and Robertson, 2011, Sewing Success: Employment and Wage Effects of the End of Multi-fibre Agreement (MFA). Vol. 1 Main Report. World Bank. 27 improved trade facilitation with clearance procedures becoming more expeditious and transparent, and revenue increasing12. 4. Assessment of Risk to Development Outcome Rating: Significant The risk associated with sustainability of the customs automation system remains high as it involves high operation costs, for example the costs of outsourcing work to local IT consultants, software maintenance and upgrades in the case where a new version is released. However, there have been indications of strong will and commitment from the government to pursue its reform and modernization strategy. The government revealed that the system had become comfortable now and it had reached a point of no return (to manual processes). The strong political will from the government would help mitigate many of the risks and challenges. In addition, the continuous support from the Trade Development Support Program (TDSP) played an important role in helping maintain and sustain the system after the project ended, and would help update the system should it have a new version from the software owner (UNCTAD). On the other hand, the feedback from the private sector (such as the Second Investment Climate Assessment and the views summarized in from Annex 8) points out the continuing concern of traders and investors regarding the quality of governance and transparency in key parts of the Government (despite the finding that their perception of corruption fell from 74 percent in 2004 to 53 percent in 2012). However, this will likely be mitigated by the establishment of formal consultation mechanisms between the government and the private sector. These include the Government - Private Sector Forum13 held semi- annually and chaired by the Prime Minister; the Customs-Private Sector Partnership Mechanism that meets quarterly; and other relevant Technical Working Groups that meet regularly or on urgent basis. These mechanisms have been taken seriously by both sides over recent years, and have removed many obstacles and solved multiple trade-related issues. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately satisfactory Feedback from the Government tells us that the Bank was seen as helpful in designing an innovative project, responsive to the Government’s priority needs and capacity. At the same time, it should have been recognized at appraisal that a Single Window, while effective and valued in countries with high- performing public institutions, such as Japan and Singapore, would demand far more than could reasonably be expected of it when proposed for a far poorer country with weak government capacity and poor governance. The project was also overly ambitious in scale, given counterpart capacity and the complexity of the components to be supervised. (b) Quality of Supervision                                                              12 PowerPoint presentation of project director of Customs Automation Component, Dr. Kun Nhem (Deputy Director General of GDCE, Cambodia) July 30, 2012 13  The Government Private Sector Forum is held bi�annually and chaired by the Prime Minister of Cambodia. The G� PSF  has  the  status  of  a  Cabinet  Meeting  and  the  decisions  made  in  the  Forum  are  binding  as  such.  The  Forum  is  attended by the RGC ministers in charge of private sector related topics.  28 Rating: Satisfactory Implementation of the project spanned seven Bank fiscal years. Over those seven years 16 Bank supervision missions filed ISRs, and Aide-memoires recorded their findings and were shared with the Government after consultation. This frequency of supervision was adequate. 2009 was a year of intensive attention while the restructuring was being defined and negotiated. Since March 2008 the Task Team Leader has been based in Phnom Penh, allowing close and frequent exchanges with the various implementing agencies, which facilitated the Mid-Term Review of May 2008, and led to the key restructuring in 2009, that addressed some of the design flaws. (c) Justification of Rating for Overall Bank Performance Rating: Moderately satisfactory – This rating integrates the quality at entry (MS) and the quality of supervision (S). 5.2 Borrower Performance (a) Government Performance Rating: Moderately satisfactory The Government has been an active partner in defining the project content, and in assigning implementation to motivated, generally competent agencies, supported by coordinating committees and other mechanisms to ensure the involvement of all relevant public–sector bodies, and by formal consultation mechanisms (mentioned above) that give voice to the private sector and stakeholders. Regular progress reports were submitted to the Bank (including FM and audit reports). In addition, close cooperation and support was provided by all the relevant government agencies to all implementation support missions, including the ICR mission. (b) Implementing Agency or Agencies Performance Rating: Moderately satisfactory The project teams of the GDCE and the Ministry of Commerce (on the EMAF segment, not on CO automation) have performed satisfactorily, even highly satisfactorily in some respects. On the other hand, the implementation performance of the project teams of the Ministry of Justice and the Supreme Court has been considered by the ICR team as moderately unsatisfactory, because of long delays in setting up their respective websites and uploading content. Similarly, the ICR team has viewed the Council for Development of Cambodia (CDC) performance as unsatisfactory, due to its failure to introduce PPI pilot activity and to roll out the Investment Tracking System, a failure which largely resulted from coordination issues rather than design flaws in the project. The Ministry of Economy and Finance have been extremely supportive over the project life period, and actively engaged in problem solving and in facilitating all processes effectively. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately satisfactory 29 The quality of performance has varied among the several implementing agencies. This rating is a weighted average of them all, and of the four components. 6. Lessons Learned 1. Computerization of customs has introduced significant changes. The radical reduction in the number of documents – from 44 during the time of project design to 11 documents14 during mid-term review (in 2008) – show the value of automation in motivating a coordinated simplification of trade procedures and the elimination of overlapping permits and other documents, as a prerequisite to the automation itself. Another major accomplishment by the GDCE is the successful implementation of an automated risk management system that has radically reduced the frequency of physical inspection of imported shipments, from 100% to fewer than 20%, – approaching what is generally considered international good practice, namely 10-15%. One complication that has yet to be resolved is that JICA designed one set of risk management criteria, which GDCE adopted early in the project implementation period, while UNCTAD, through ASYCUDA, designed another set, and on occasion the two sets give varying results. It is appropriate that GDCE should adjust its risk management criteria periodically in the light of on-going experience, and taking into account the frequency of fraud and other irregularities. But the essence of the automation is that traders with a good track record should be rewarded with predictable, favorable treatment. 2. Risks associated with IT projects are normally higher than most Bank projects that finance infrastructure and services. Procurement is more demanding, because of concerns about intellectual property rights, and the limited number of suppliers and of qualified consultants. Delivering such a project to a government with very limited institutional capacity is taking a big risk, but, thanks to the support and strong commitment from the government, it was eventually achieved, despite some over- reach – such as financing the electronic single window, which was later dropped to focus on customs automation. A key lesson for future similar activity, would be to focus on designing a less ambitious project that fully takes into account the client’s capacity. 3. The higher risk can sometimes produce higher return; the success of customs automation has led to systemic and institutional changes in the way customs clearance is operated. IT may be a good tool for institutional and structural changes. It can bring about a more transparent and predictable way of conducting transactions which can lead to growth of trade and of the economy. The crucially important factor in this success was the strong ground team, with close and frequent exchanges with the client. The Bank may not want to implement the same type of project in a country where there isn't such a strong field presence. 4. This kind of customs automation/modernization project serves and supports the backbone of the private sector, and Cambodia’s national poverty reduction strategy emphases that the private sector is the engine of economic growth. The project responded well to that. It may be useful for other LDCs to learn from that approach. 5. Another lesson was learned when stakeholders in this project accused the Bank of excessive rigidity in its management of procurement, resulting several times in the rejection of all bids. In such cases rebidding delayed implementation by 6-12 months, which has been costly to the Government. 6. The EMAF matching grant system can be effective in encouraging and supporting innovative efforts of the private sector to expand exports and access new markets. However, designing and                                                              14 Doing Business 2009 30 implementing the approach to be applied may involve substantial testing and learning on the part of the agency charged with evaluating the grant requests. Ample time should be allowed for the development and testing. The future lesson might be to simplify the process and involve the Ministry in the entire process, so as to increase capacity and sustainability, instead of employing consulting firms to screen proposals, which makes the activity unsustainable if not financed continuously by DPs. As mentioned above, fees for the international consulting firm was nearly double the amount of EMAF disbursements to beneficiaries. However, given the high risk environment, the project teams of both Bank and Government have delivered a very good outcome. As the government has gained a lot of experience from this innovative practice and had there been sufficient time for longer implementation of EMAF (i.e. 5 years), the operating cost of managing the process by using a consulting firm would have been much lower, and efficiency would have been much greater. This reflects the conclusion in the final EMAF-II report, pointing to the benefits of having a longer timescale in order to allow EMAF to work with less developed companies. This is important, because the decision to export for the first time is necessarily a strategic decision for companies’ management. 7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors (a) Grantee/Implementing agencies The government has prepared its own implementation completion report (ICR). On their own initiative, an international individual consultant was hired as their main author. The report is of high quality: very thorough, well documented, thoughtful in its evaluations, and drawing its own conclusions and recommendations for future priorities. This gives grounds for optimism that what has been achieved so far will be sustained, and indeed expanded. The government view is that progress made in the Trade Facilitation (component 1) and Export Market Access Fund (component 2) was satisfactory, and that led to an overall outcome rating of satisfactory in their ICR. The position is supported by the fact that development objectives of many key actions have been met or are close to being met, and by including progress that is not monitored by the indicators (e.g. the customs progress in adhering to the Kyoto Convention’s trade facilitation agenda, the progress of reducing documents for exports etc.). While it is understandable that the nature of many IT projects is very challenging for long-term development and sustainability, the government considered the evidence of outcomes accomplished should be rated satisfactory. For one of the project objectives (under component 3 “PPI and Investment� is to introduce transparency in investment process), the government assessment credited the Investment Tracking System (ITS) being introduced, up and running; and noted that the piloting for 3 PPI projects had actually been considered, but was not carried out due to high associated costs. The Bank view was that the ITS wa sonly implemented in one of the seven departments that are critical to the functioning of the system. Similarly, the pilots of PPI projects were not advanced, thus mitigating the developmental result of that component of the project. In the case of Legal Transparency (component 4), while the government assessment rated the progress of websites of the Ministry of Justice and the Supreme Court as up and running, the Bank view is that the contents of the sites fall short of expectation and that the Trade Information Website remains incomplete. 31 (b) Co-Financiers/Donors There was no co-financier15 on this project, but there were a number of development partners working on activities complimentary to the success of Customs reforms and its automation system. These included the risk management strategy (AusAID and JICA) and the Customs technical assistance advisors (IMF) and the early support of reviewing imports and exports documents (EU). All of the complementary activities were complementary to the GDCE Strategic Reform and Modernization Work Program. Donors appreciated the customs automation works led by the World Bank and assistance provided to GDCE to realize its objectives, but suggested that there was still room to improve the quality of the ASYCUDA World system and its data recording. Overall, Donors were complimentary on what has been put in place, as the Bank has built a culture of proper documentation and rules compliance. Donors also commended the Bank for proactively working with the government and putting in place a system that simplifies procedures and facilitates trade in Cambodia (risk-based judgment function, for instance, replaced the concept of physical inspection). Donors suggested that the remaining functions of ASYCUDA may need to be pursued, including the Direct Trader Input function. (c) Other partners and stakeholders The ICR mission team met and discussed the project with the Secretary General of the Garment Manufacturers Association of Cambodia (GMAC), the largest employing industry sector in Cambodia, who also partly benefited from the project. GMAC reiterated the usefulness of having the customs automation system in place, serving primary needs of the private sector as it facilitates import and export processes and eliminates unnecessary signatures/stamps. In addition, the GMAC appreciated the support of BFC in monitoring working and labor conditions in the garment industry, enhancing Cambodia’s brand name, and facilitating access to the US and EU markets.                                                                15 Except some government financial contribution used for salary supplement of their project staffs. 32 Annex 1. Project Costs and Financing (at Appraisal and Completion) Project Costs and Disbursements by September 30, 201216 ($000) No. Category Description Amount New Final Disbursed Undisbursed of the proposed Allocation Grant allocation (some (4) (5) Allocated under categories restructure re- (1) d Project allocation) (2) (3) SDR SDR 000 SDR 000 SDR 000 SDR 000 % 000 1. Goods 3,840 2,834 2,694 2,669 25 0.93 2A Consultants’ Services 870 1,788 2,166 2,148 18 0.83 under Project Parts A, B, C.2 and D 2B Consultants’ Services 400 125 125 128 -3 -2.4 under Part C.1 of the Project 3. Training, Workshops and 70 319 287 209 78 27.18 Incremental Operating Costs 4. Sub-Grant 1,060 1,471 1,265 1,163 102 8.06 5. Refunding of PPF 380 83 83 83 0 0 6. Designated Account 0 0 0 10 -10 0 Total 6,620 6,620 6,620 6,410 210 3.28 ***References: (1) Development Grant Agreement dated 14 June 2012, page 12 (2) Proposal to Restructure dated 19 November 2009, page 14 (3) Approval from TTL: Email dated 12 July 2012 (4) World Bank Client Connection (5) World Bank Client Connection                                                              16 This table has not yet included the final audit report fee. 33 Annex 2. Outputs by Component A. Definition and Current Status Component 1:  Installation and start-up of Customs Automation System ASYCUDA World:  Geographic roll-out is almost complete: of the 21 government self-planned stations, 20 are up and running. One station at a dry port was closed down due to losing a legal battle between their business partners, unrelated to the project, but the coverage of the system remains close to 100 percent of all customs declaration processes (well above the PDO target).  Functional expansion: Export and Bonded Warehouse functions are operational at Phnom Penh International Airport customs site. Transit and manifest functions are still under development and testing.  Direct Trader Input system – to which traders attach high importance - is being pursued and developed by the GDCE,C as there are some additional technical supports that the customs would need from the original software owner (the UNCTAD). GDCE is seeking their support.  Certificate of Origin Automation (added in 2009): A wide effort has been made to rationalize and simplify procedures for would-be exporters to document the local content in their products. Plans have been drawn up to automate the processing of certificates of origin, but implementation has been delayed because all bids in a recent tender were rejected as unresponsive and non-compliant. It is being re-tendered after the project closure and being funded by another World Bank program (Trade Development Support Program). Component 2:  Export Market Access Fund (EMAF): EMAF has been operational for about three years, in two phases. Phase 1 ran for two years, with MOC staff making allocation decisions on the advice of a private consulting firm. To speed up decision-making and disbursement under Phase 2, the consulting firm evaluated and approved individual beneficiary proposals, within guidelines and objectives set by MOC. Requests were processed far faster under Phase 2 and achieved better outcomes due to lesson learned from Phase 1. The final EMAF report pointed to the greater efficiency of having a longer timescale to implement the program, to allow EMAF work with less developed companies whose first time exports are their major strategic decisions.  Better Factories Cambodia: BFC has been operational for 5.5 years. Factories seeking an export certification of origin are required by MOC to allow expert monitors, trained under the ILO Better Factories Cambodia program, to conduct random evaluation visits to their plants, to assess working and labor conditions, including fair wages and employee health and safety. The program has been regarded as a major contributor to the great success of Cambodia’s garment industry, in maintaining and accessing wider and deeper access to the leading retail chains in USA and European markets. Component 3:  Private Participation in Infrastructure: Legal documentation (implementing rules and regulation) has been prepared for the adopted Concessions Law, and relevant officials were trained and are expected to manage future PPI project. But no pilot transaction of private participation in infrastructure (PPI) was launched by the project closing date, and there appears to be no concrete plan to pursue this initiative. 34  Investor Tracking System: The Council for the Development of Cambodia (CDC)’s Cambodia Investment Board (CIB) – the Government’s main agency for promoting private investment and approving FDI application in Cambodia - is putting in place a computerized Investor Tracking System that interacts with the various government offices within the CDC, to allow wider and more reliable access to relevant information about them. Hardware was installed in 2010 and a local consulting firm helped in setting up the database, assembling information from various government sources. Prospective users have been trained, and the system was launched at one key department (Project Evaluation and Incentives Department), but the rolling out to 6 other CDC departments had not materialized by the project closing date (July 31, 2012). Component 4:  Ministry of Justice website (http://www.moj.gov.kh/) is operational but so far offers only limited content of information, falling short of expectations.  Supreme Court website (http://www.supremecourt.gov.kh/) is operational but so far it displays only a selection of civil and criminal judgment of the Court made up to 1997; more recent decisions are being reviewed by a group of legal experts to determine what is appropriate to make public. Despite the encouraging progress made, the volume of information remained short of targeted PDO.  Ministry of Commerce’s Trade Information Website (added in 2009): This is conceived as a trade portal (Single Window for information) under the Ministry of Commerce website. Relevant documents and a prospective system have been designed, but its installation was delayed when all bids were rejected as unresponsive and non-compliant. It is being re-tendered after the project closing date, and will be funded under a separate World Bank’s managed Trade Development Support Program. 35 B. Performance Indicators, by July 31, 2012 Intermediate Original Original Component Revised Achievements Results Outcome Indicators Indicators after Indicators Indicators restructuring As of July 31, 2012 After Restructuring Base- Tar- Base- Tar- line get line get Component A 50% 44 8 Number of 15 8 10 documents are required to 1: Trade reduction in documents clear imports (Doing Business Facilitation the number of required to clear Report 2013, officially released documents imports in October 2012). Time and required to cost to import clear imports. and export products Share of 100% 40% Share of 16% Below 14.2% (Red channel) Risk- reduced and export shipments 20% based selection. Risk made more shipments selected for Management System works predictable. that are secondary along the line of ASYCUDA physically inspection at the System (GDCE database at inspected less Port of July 2012). The average red than 40% by Sihanoukville channel selection rate for Jan- December Jul 2012 was 10.9% . 2006. 50% 6.5 3.25 Time to clear 5.1 Less 5.1 days (Preliminary result of reduction in days days import days than 3 World Bank Investment time required declarations days Climate Assessment at 3rd to clear quarter of 2012). export shipments. Share of Customs 29% Above 99.8% of Customs declaration declaration 80% processed through ASYCUDA processed through for July 2012 (GDCE ASYCUDA ASYCUDA System Database). system Systems n/a Above 99.8% of Customs declaration Availability 80% processed through ASYCUDA for July 2012 (GDCE ASYCUDA System Database). Share of 0% Above Electronic processing of certificates of 50% certificates of origin has been origin processed discontinued under TFCP due electronically to failure resulting from unresponsive and non- compliant bids but will be 36 pursued under TDSP. Component Number of 0 50 Number of firms 19 50 65 (Project Implementing Unit 2: Export firms preparing draft of Ministry of Commerce and Market preparing export EMAF Manager Final Report, Access Fund draft export development August 2012). development plans (EDPs). The enabling plans. environment facilitates Number of 0 30 Number of new 0 30 13 (EMAF Manager Final integration of new exporters created, Report, August 2012) new firms exporters volume of new into the created, exports. global volume of economy. new exports. Non-donor 26% Above Non-donor funding for BFC revenues of Better in 65% in operations reached 55% in Factories 2009 2011 2011 and 70% in 2012 Cambodia (BFC) (Committed Budget). 37 Intermediate Original Original New Revised Indicators Achievements Results Outcome Indicators Component Indicators Indicator After Restructuring as of July 31, 2012 Baseline Tar- Baseline Target get Component 3: Number of Electricity All Number of PPI None 3 No pilot transaction of PPI and PPI sector contracts private participation in Investment contracts only piloted under infrastructure (PPI) was publicly new Law on launched. disclosed Concessions and subject (including to public competitive disclosure and procuremen appropriate t processes. procurement processes) Response To be 50% Ranking in 2006: Above 28% (Global times on measured reduct Global 50% Investment Promotion investor ion in Investment 28% Benchmarking GIPB- inquiries baseli Promotion IFC 2012) ne Benchmarking 2008: (IFC) 47% Component 4: Electronic No 100% Establishment 0% 50% Less than 30% Legal publication website of all of well- (estimated by Bank Transparency in Khmer decisi maintained Staff). A selection of language of ons website and cases up to 1997 has judgments accessible been published on the of the dissemination MOJ website. Supreme covering 50% Court and of the the Court judgments. of Appeal Establishment No TIW All key No TIW compliant with of Trade trade- WTO obligation Information related Website (TIW) regulations compliant with available in WTO a website obligations connected to TIW 38 Annex 3. Economic and Financial Analysis The World Bank’s Logistics Performance Index (LPI) shows a modest improvement on customs performance with scores increased from 2.19 in 2007 to 2.30 in 2012. The gains in clearance time compare favorably with good practice elsewhere. The rate of physical inspection is close to the international ‘good practice’ norm of below 15%. An increase in Customs revenue was also discerned over this project period. Table 2. Number of SAD Processed Through ASYCUDA (in unit) Jan- Jul-Dec July 2009 2010 2011 Jun 2008 2012 2012 Imports 56,927 104,002 119,747 130,708 73,703 12,456 Phnom Penh Int'l Airport (PPIA) 9,253 16,396 19,868 20,271 11,391 2,075 PPIA via ASYCUDA 0 0 19,868 20,271 11,391 2,075 Dry Ports 3,118 8,247 15,277 17,822 10,298 1,964 Dry Ports via ASYCUDA 0 0 10,707 14,202 8,689 1,764 Sihanoukville Port via ASYCUDA 25,701 43,325 44,348 49,815 27,081 4,842 Other Checkpoints via ASYCUDA 0 0 0 7,750 19,028 3,736 % of Import SAD via ASYCUDA 45% 42% 63% 70% 90% 99.7% Exports 36,734 63,818 72,613 87,864 51,808 9,864 Phnom Penh Int'l Airport 7,078 10,085 14,049 14,113 9,211 1,875 PPIA via ASYCUDA 0 0 14,049 14,113 9,211 1,875 Dry Ports 417 954 895 1,200 538 108 Dry Ports via ASYCUDA 0 0 337 554 237 36 Sihanoukville Port via ASYCUDA 630 1,429 1,792 2,705 1,433 300 Other Checkpoints via ASYCUDA 0 0 0 344 885 7,650 % of Export SAD via ASYCUDA 2% 2% 22% 20% 23% 100% Grand Total 93,661 167,820 192,360 218,572 125,511 22,320 Total SAD via ASYCUDA 26,331 44,754 91,101 109,754 77,955 22,278 % of total SAD via ASYCUDA 28% 27% 47% 50% 62% 99.8% Customs Revenues (mill USD) 342 582 678 769 412 82.4 39 Source: Cambodia GDCE ASYUCDA On EMAF, some assessment of clients done by the EMAF manager suggested that EMAF clients saw the value in the activities in achieving their export goals. Graph below illustrated the questions to EMAF clients of their willingness to conduct activities without EMAF Support17. Average Return on Investment for every $1 granted (estimated export revenues directly generated by EMAF grants) $274    $32    To date (July 2012)                                                       12 Months  EMAF client Willingness to Conduct Activities without EMAF Support                                                              17 EMAF 2 Final Report, prepared by the Emerging Market Consulting (EMAF manager), August 2012 40   With respect to the Better Factories Cambodia project, the trajectory of the program toward full  sustainability (from dependence on the assistance of development partners) is well illustrated in the  following table. By 2011, the Better Factories program was mostly supported by buyer’s subscriptions  and industry groups rather than the contributions of development partners, thus indicating that  sustainability of the program can be achieved over the medium�term.    International Labor Organization (ILO) Better Factories Cambodia (BFC) BFC Funding Sources for 2008 and 2011 (USD) Fuding Sources (BFC) 2008 2009 2010 2011 2012 Non-donor funding 456,579 355,708 449,292 703,867 770,650 (% of non-donor funding) 36% 27% 36% 54% 100% Buyers' subscription 188,646 146,289 71,764 418,685 267,750 RGC 264,895 155,765 212,113 222,904 200,000 GMAC 2,584 53,654 165,415 61,013 302,400 Trade Union 454 - - 1,265 500 Donor funding 818,829 959,139 815,887 595,179 - (% of donor funding) 64% 73% 64% 46% 0% AFD 294,703 455,852 627,923 - - Dutch 243,858 154,255 - - AusAID - - - 118,650 - USAID 172,106 - - - - NZAID 138,101 5,989 98 - - IDA (World Bank) 213,919 253,440 33,611 476,529 - Total 1,275,408 1,314,847 1,265,179 1,299,046 770,650 (% of total funding) 100% 100% 100% 100% 100% Source: ILO-BFC 41 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Hamid R. Alavi Senior Private Sector Development Spec. EASFP Consultant (former Staff of IFC James Phillip Brew CLALA Cambodia) Chinnakorn Chantra Procurement Specialist EAPPR Huot Chea Senior Economist EASPR Gerard McLinden Senior Trade Facilitation Specialist PRMTR Laura A. Mitchell Temporary LCRCE Francois Nankobogo Senior Operations Officer ECSO1 Maria Lourdes Pardo Senior Counsel LEGCF De La Pena Denis Robitaille Chief Information Officer OKIMT Michael Schur Senior Infrastructure Specialist PPIAF Katie S. Shaw Senior Executive Assistant FFSDR Nipa Siribuddhamas Financial Management Specialist EAPFM Supervision/ICR Hamid R. Alavi Snr Private Sector Developmt Specialist EASFP Magdi M. Amin Snr Private Sector Developmt Specialist CMEIC Ex-TTL 1 Albert Zeufact Senior Economist EASPR Ex-TTL 2 Stephane Guimbert Senior Country Economist EASPR Ex-TTL 3 current TTL and ICR Huot Chea Senior Economist EASPR Team Leader Julian Latimer Clarke Trade Specialist EASPR Co-TTL 42 Kannathee Danaisawat Financial Management Specialist EAPFM Thomas Doyle Consultant PRMTR Eric Haythorne Consultant ECSF2 Seida Heng Consultant (FM Specialist) EAPFM Hans Korb Consultant (LEG) LEGJR EASSO- Teck Ghee Lim Senior Social Sector Specialist HIS Priya Mathur Operations Analyst ENVCF Tadatsugu Matsudaira Senior Trade Facilitation Specialist PRMTR Gerard McLinden Senior Trade Facilitation Specialist PRMTR Maiko Miyake Head, Dakar, Senegal (IFC) CAFJ2 Oithip Mongkolsawat Senior Procurement Specialist EAPPR Graham R. Smith Consultant ICR Author John Richardson Consultant EASTS Michael Schur Senior Infrastructure Specialist PPIAF Eric Sidgwick Senior Economist EASPR Nipa Siribuddhamas Financial Management Specialist EAPFM Ramesh Sivapathasundram Lead Information Officer TWICT Sreng Sok Procurement Specialist EAPPR Jennifer K. Thomson Manager, Financial Management SARFM (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY04 4 47.80 FY05 57 256.13 FY06 39 111.28 43 FY07 11 40.12 FY08 0.00 Total: 111 455.33 Supervision/ICR FY04 0.00 FY05 0.00 FY06 19 102.98 FY07 14 66.38 FY08 12 86.15 FY09 31 0.00 FY10 41 141.40 FY11 27 86.60 FY12 30 102.11 FY13 (as of September) 6 9.98 Total: 180 683.73 44 Annex 5. Beneficiary Survey Results Refer to section 3.6 and graph in annex 3 – or simply delete this and annex 6 altogether 45 Annex 6. Stakeholder Workshop Report and Results A stakeholder workshop was held on July 30, 2012 and the workshop reports / results / comments have been incorporated under “Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops� section. 46 Annex 7. Summary of Grantee's ICR and/or Comments on Draft ICR Even before the Bank started preparing its Implementation Completion and Results Report (ICR), the Cambodian Ministry of Commerce, the lead implementing agency, had compiled its own ICR in semi- finished form, so that it was available as a central reference work for the benefit of the Bank’s ICR mission. For this purpose the Ministry hired an international consultant (an individual) to write the report, but the text he drafted drew on conversations with and contributions from, a large number of key managers and stakeholders of the several government agencies involved in the project’s implementation. The resulting report is exceptionally thorough and detailed in its content, running to 90 pages. It is also very thoughtful in its assessment of the extent to which the project objective was achieved, and in its evaluation of performance by the agencies implementing the various components. This annex can summarize only the main features and conclusions, and acknowledge the strong sense of ownership and commitment to the project objective that runs through it, reflecting with credit on the National Project Team that has overseen the project’s design and implementation. The Government’s ICR reviews the process by which the project design and objectives were developed, the restructuring that proved necessary after three years of implementation, the results achieved and the lessons learned. The main starting point was the Government’s 12-Point Action Plan adopted in 2004 and pursued since then, and the setting up of a Special Inter-Ministerial Task Force to bring together the government ministries and other agencies involved in varying ways with the promotion of investment and the facilitation of trade, and to ensure coordination among donors. The project, funded by the IDA grant, was an instrument to help the government carry out this Plan of Actions. The report documents the process followed when the Government and the Bank concluded that the creation of a national single window, one of the main instruments foreseen for attracting investment and facilitating trade, was premature, and that instead the key agencies would develop their own ‘windows’ (in the sense of websites bringing together all information relevant to the agency’s mandate) within a common framework of sub-objectives and markets for that information. Thus computerization of customs processing of import and export clearances became the project’s core activity. The reallocation of the IDA grant that accompanied the restructuring of the project gave primary attention to trade rather than to investment. The Government’s ICR is structured in a similar way to that of the Bank’s. The Report concludes with annexes similar to those of a Bank ICR, including a tabulation of all procurement transactions, a review of the status of compliance with the grant agreement, and an economic analysis of the project’s impact. Economic Analysis includes a review of findings by the IFC’s Doing Business for each year from 2008 to 2012 and the World Bank’s Logistics Performance Index for 2012, as well as other third-party analyses of the Cambodian economy in general, and trade in particular, over the period of the Project. It ends with a tabulation of trade facilitation issues identified by the private sector, and a matrix reviewing achievements between 2004 and 2012 in implementing the Government’s 12-Point Action Plan. 47 Annex 8. Comments of Co-Financiers and Other Partners/Stakeholders The draft ICR has been discussed with the other development partners and stakeholders and their comments have been incorporated in the final version. 48 Annex 9. List of People Interviewed Government: 1. H.E Ly Phanna, Director and the PIU team of Trade Facilitation and Competitiveness Project, Ministry of Commerce 2. Dr Khun Nhem, Deputy Director, General Department of Customs and Excises (GDCE) 3. Mr. Terence Chapman and Mr. Alistair Gall, Webb Fontaine Team Leader and expert for ASYCUDA Customs Automation Expansion 4. Meeting Cambodian team (local supporting staff) hired by Webb Fontaine to support the Customs ASYCUDA Automation 5. H.E. An Sophanara, project coordinator, the Council for Development of Cambodia (CDC) and Mr. Youn Heng, Director, Evaluation and Incentives Department, CDC where the Investor Tracking System is deployed and Mr. Ken Rith, local consultant 6. H.E. Chan Sotheavy , Secretary of State, Ministry of Justice 7. Mr. You Ottara, and Mr. Yet Rithiya of Supreme Court 8. H.E. Sok Sopheak, Director General, Ministry of Commerce 9. Dr. Renato Lee, Government ICR Consultant for the project (TFCP) DPs (co-financiers): 1. Mr. Faisal Ahmed, Resident Representative in Cambodia, International Monetary Fund (IMF) 2. Mr. Yasuo Isome, JICA Advisor on Customs Policy and Administration, General Department of Customs and Excise, Ministry of Economy and Finance. Private Sector: 1. Ms. Jill Tucker, Program Manager, ILO’s Better Factories Cambodia 2. Mr. Ken Loo, Secretary General of Garment Manufacturer Association of Cambodia (GMAC) 3. Mr. Trent Eddy and Gordon Peters and team members, Manager of the Export Market Access Fund 4. Visit EMAF beneficiaries Sites – field visits 1. Visiting Customs Automated Site at PP International Airport 2. Visiting Customs Automated Site at Phnom Penh Port 3. Visit new Automated Customs site at Bavet (Cambodia-Vietnam border). 4. Visit Automated Customs site at Sihanoukville 49 Annex 10. List of Supporting Documents Arnold, John and Christian Ksoll, 2012, “Improving Trade Competitiveness in Cambodia: An Analysis Using TTFA�, prepared for World Bank Cambodia Ministry of Commerce, Project Coordination Unit, July 24, 2012, “Trade Facilitation and Competitiveness Project: Grantee’s Implementation Completion and Results Report: Final Report� Cambodia’s Export Market Access Fund (EMAF 2 Final Report), prepared by the Emerging Market Consulting (EMAF manager), August 2012. Emerging Markets Consulting, March 2010, “Trade Development Support Program: Mapping of Trade Processes – Cambodia, Final Report� HR Inc and Emerging Markets Consulting, 2007, “Diagnostic Trade Integration Study, Trade Facilitation Reform – Update: “12-Point Reform Action Plan�, draft final report, commissioned by World Bank HR Inc, 2007/2008, “Impact Assessment of the Public-Private Dialogue Initiatives in Cambodia, Lao PDR, Vietnam�, for IFC IDA, December 2009, “Trade Facilitation and Competitiveness Project� IDA Grant No. H165-KH Amendment to the Development Grant Agreement (letter) IDA, December 2010, “Trade Facilitation and Competitiveness Project: Implementation Support Mission, Dec 13-17, 2010: Draft Aide-memoire� IDA, December 2011, “Trade Facilitation and Competitiveness Project: Implementation Support Mission, Dec 5-13, 2011: Draft Aide-memoire� IDA, June 2005, “Trade Facilitation and Competitiveness Project� Development Grant Agreement between Kingdom and Cambodia and International Development Association IDA, June 2005, “Cambodia Trade Facilitation and Competitiveness Project Appraisal Report�, World Bank IDA, November 2009, “Cambodia Trade Facilitation and Competitiveness Project: Proposal to Restructure� IDA, October 2009, “Trade Facilitation and Competitiveness Project: Supervision and Restructuring Mission, Oct 5-27, 2009: Draft Aide-memoire� Lopez Acevedo and Robertson, 2011, Sewing Success: Employment and Wage Effects of the End of Multi-fibre Agreement (MFA). Vol. 1 Main Report, World Bank. PPIAF, August 2004, “Cambodia – Seizing the Global Opportunity, Investment Climate Assessment and Reform Strategy for Cambodia�, World Bank Group WBG, April 2009, “Second Investment Climate Assessment: A Better Investment Climate to Sustain Growth in Cambodia�, World Bank and IFC 50 103° E 104° E 105° E 106° E 107° E 0 20 40 60 80 Kilometers THAILAND L A O P. D . R . To CAM BODIA 0 20 40 60 Miles To Pak Charang Khu Khan To SELECTED CITIES AND TOWNS Champasak Kon ODDAR To PROVINCE CAPITALS g Samraong Phiafai Cheom Ksan MEANCHEY Siem Pang Kompong Sralao NATIONAL CAPITAL ng Sre ng 14° N 14° N RATANAKIRI Ko RIVERS PREAH VIHEAR To To Buri BANTEAY Phum Kompadou Play Cu MAIN ROADS n Phnum Tbeng Sa MEANCHEY Meanchey Melouprey STUNG TRENG Bun RAILROADS Kralanh Long Sisophon PROVINCE BOUNDARIES SIEM REAP Stung Treng Srepok Lomphat Siem Reap INTERNATIONAL BOUNDARIES Rovieng Battambang Tonle Se n 13° N B AT TA M B A N G 13° N g ng Sap Kohnieh Mekon Poro Pailin Chas KAMPONG THOM MONDOL PA I L I N Kampong Thom K R AT I E K I R I Chbar Pursat Kratie Senmonorom Peam Ton le P U R S AT KAMPONG To KAMPONG CHAM Duc Lap Sap Kampong 12° N Ca Phnum CHHNANG Mekong Cham 12° N rd Aoral am (1,810 m) To om Ba Ra PHNOM PENH M Krong Koh Kong t KAMPONG PHNOM PENH s. SPEU To Prey Veng KOH KONG Kampong Speu Ta Khmau SVAY Tay Ninh G ul f of KANDAL PREY RIENG V I E TN AM Thailand VENG Ba k Chambak To Svay ssa Ho Chi Minh City Rieng Takeo 11° N 11° N Chhak Kampong CAMBODIA Saom TAKEO This map was produced by the Map Design Unit of The KAMPOT To Cao Lanh World Bank. The boundaries, Sihanoukville colors, denominations and Kampot any other information shown on this map do not imply, on SIHANOUK- Kep To IBRD 33381R the part of The World Bank VILLE Long Xuyen Group, any judgment on the To JUN E 2006 legal status of any territory, or any endorsement or Rach Gia acceptance of such KEP boundaries. 103° E 104° E 105° E 106° E 107° E