World Bank Document · 2016-07-17 · document of the world bank report no: 22869-kh project appraisal document ona proposed credit in the amount of sdr 19.3 million (us$24.3 million

Document ofThe World Bank

Report No: 22869-KH

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 19.3 MILLION (US$24.3 MILLION EQUIVALENT)

TO

THE KINGDOM OF CAMBODIA

FOR A

LAND MANAGEMENT AND ADMINISTRATION PROJECT

January 29, 2002

Rural Development and Natural Resources Sector UnitEast Asia and Pacific Region

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CURRFNCY EQUIVALENTS

(Exchange Rate Effective October 25, 2001)

Currency Unit = Cambodian Riels (KHR)1 Cambodia Riel = US$0.00026

US$1.0 = 3,835 Riels

FISCAL YEARGovernment: January I - December 31 -- IDA: July 1 - June 30

ABBREVIATIONS AND ACRONYMS

CDRI - Cambodian Development Resource InstituteCLF - Council of Land PolicyDANIDA - Danish International Development AssistanceERR - Economic Rate of ReturnIAPSO - Inter-agency Procurement Service OfficeICB - International Competitive BiddingIDA - International Development Association (World Bank)IFI - International Financed InstitutionsLAMDP - Land Administr ation, Management and Distribution ProgramLIL - Leaming and Innovation LoanLMAP - Land Management and Administration ProjectMEF - Ministry of Economy and FinanceMLMUPC - Ministry of Land Management, Urban Planning and ConstructionMOE - Ministry of EnvironmentNCB - National Competitive BiddingNGO - Non-governmental OrganizationNLDSC - National Land Dispute Settlement CommnissionNPV - Net Present ValueOCSPR - Operational Core Services NetworkPMO - Project Management OfficePMR - Project Management ReportPPMO - Provincial Project Management Offices

Vice President: Jemal-ud-din Kassum, EAPVPCountry I)irector: Ian Porter, EACSM

Sector Director: Mark D. Wilson, FASRDTask Team Leader/Task Manager: Wael Zakout, EASRD

CAMBODIALAND MANAGEMENT AND ADMINISTRATION PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 33. Sector issues to be addressed by the project and strategic choices 7

C. Project Description Summary

1. Project components 82. Key policy and institutional reforrns supported by the project 93. Benefits and target population 104. Institutional and implementation arrangements 10

D. Project Rationale

1. Project alternatives considered and reasons for rejection 112. Major related projects financed by the Bank and other development agencies 113. Lessons leamed and reflected in the project design 124. Indications of borrower commitment and ownership 135. Value added of Bank support in this project 13

E. Summary Project Analysis

1. Economic 132. Financial 153. Technical 154. Institutional 165. Environmental 176. Social 197. Safeguard Policies 22

F. Sustainability and Risks

1. Sustainability 232. Critical risks 233. Possible controversial aspects 24

G. Main Conditions

1. Effectiveness Condition 242. Other 25

H. Readiness for Implementation 25

I. Compliance with Bank Policies 26

Annexes

Annex 1: Project Design Summary 27Annex 2: Detailed Project Description 32Annex 3: Estimated Project Costs 47Annex 4: Cost Benefit Analysis Summary 48Annex 5: Financial Summary 53Annex 6: Procurement and Disbursement Arrangements 54Annex 7: Project Processing Schedule 69Annex 8: Documents in the Project File 70Annex 9: Statement of Loans and Credits 71Annex 10: Country at a Glance 73Annex I 1: Environmental Assessment 75Annex 12: Social Aspects 79Annex 13: Highlights of Cambodia New Land Law 89Annex 14: Statement of the Royal Government on Land Policy 91

MAP(S)IBRD No. 31630

CAMBODIALand Management and Administration Project

Project Appraisal Document

East Asia and Pacific RegionEASRD

Date: January 29, 2002 Team Leader: Wael ZakoutCountry Director: Ian C. Porter Sector Director: Mark D. WilsonProject ID: P070875 Sector(s): Bf - Institutional Development, VM - Natural

Resources ManagementLending Instrument: Specific Investrnent Loan (SIL) Theme(s): Poverty Reduction

Poverty Targeted Intervention: N

Program Financing Data] Loan [X] Credit [ Grant [ ] Guarantee [ Other:

For Loans/Credits/Others:Amount (US$m): US$24.3

Proposed Terms (IDA): Standard CreditFinancing Plan (US$m): Source Local Foreign TotalBORROWER 2.60 0.00 2.60IDA 15.70 8.60 24.30GERMANY: BMZ 0.31 3.19 3.50FINLAND: MINISTRY FOR FOREIGN AFFAIRS 0.31 3.19 3.50Total: 18.92 14.98 33.90

Borrower: THE KINGDOM OF CAMBODIAResponsible agency: MINISTRY OF LAND MANAGEMENT, URBAN PLANNING AND CONSTRUCTIONAddress: Monivong BoulevardContact Person: Mr. Sar Sovann, Project DirectorTel: 855-023215659 & 855-023215660 Fax: 855 - 023 215 277 Email:[email protected]; www.mlmupc.gov.kh

Estimated disbursements (Bank FY/US$m):FY 2002 20)03 21)04 2u0 15 1 2 __Ju_

Annual 1.00 2.00 4.60 5.70 5.80 5.20Cumulative 1.00 3.00 7.60 13.30 19.10 24.30

Project implementation period: May 2002 - June 2007Expected effectiveness date: 05/01/2002 Expected closing date: 12/31/2007

OCS PAD Csrn RF s N5.. 200D

A. Project Development Objective

1. Project development objective: (see Annex 1)

The overall goals of the proposed project are to reduce poverty, promote social stability, and stimulateeconomic development. The specific objectives of the project are to improve land tenure security andpromote the development of efficient land markets. These objectives will be achieved through:(a) development of national policies, the regulatory framework, and institutions for land administration; (b)issuance and registration of titles in urban and rural areas; and (c) establishment of an efficient andtransparent land administration system. The proposed project is the first phase of the government's LandAdministration, Management, and Distribution Program (LAMDP), which is expected to be implementedover 15 years. The objectives of the LAMDP program as stated in the Land Policy Statement of the RoyalGovernment of Cambodia (May 2001) are to: (a) strengthen land tenure security and land markets, andprevent or resolve land disputes; (b) manage land and natural resources in an equitable, sustainable andefficient manner; and (c) promote land distribution with equity.

2. Key performance indicators: (see Annex 1)

Key perforrnance indicators include measures of improved land tenure security, such as a reduction inconflicts over land, increase in investment in urban areas, and growth in agricultural productivity. Theyinclude benchmarks of more efficient land markets, like an increase in formal land transactions. Outputindicators include development and approval of land policies, issuance of about one million titles under thesystematic and sporadic registration programs, increase in the number of disputes settled through disputeresolution mechanisms, increase in revenues raised through fees on land transactions, and detailed land useclassification maps produced for several provinces.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: Report No. IDA/R2000-15 [IFC/R2000-23] Date of latest CAS discussion: 02/29/2000

The project supports the main objective of the Bank's CAS of assisting Cambodia to "build the foundationsfor sustainable development and poverty reduction". The proposed project will contribute to two of thethree foundations identified in the CAS: (i) good govemance including an efficient and accountable publicadministration and a credible legal and judicial framework that safeguards basic human and propertyrights; and (ii) greater access for the poor to basic social services and economic opportunities. Theproposed project will contribute to the first foundation by supporting the development of the legalframework for land administration and management and building the institutional capacity of the centraland provincial governments to record and protect rights on land. The proposed project will contribute to thesecond foundation by assisting the government, in partnership with the NGOs and civil society, to developa comprehensive land policy framework, aimed at enhancing an equitable access to land, and henceincrease economic opportunities, especially to the poor and other marginal groups. The CAS highlightedthe lack of access to land as a major contributing factor to rural poverty and income-earning potential. Theproposed project will also complement the activities supported by the on-going IDA-supported North EastVillage Development Project and Biodiversity Project, and the proposed Forestry Project and the proposedRural Infrastructure and Local Governance Project, in addressing land issues and in enhancing sustainablemanagement of natural resources.

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2. Main sector issues and Government strategy:

Historical context. Cambodians have suffered through a tumultuous recent history, during which the rulesgoverning rights to land have been in constant flux. During the precolonial era the sovereign owned allland, but households were free to cultivate as much land as they wished. The French colonists(1864-1953) introduced the system of formal private property rights, but were able to incorporate only themore densely populated rice growing areas into the system. The independent Cambodian governmentretained the French system, but made limited progress on formally registering property rights. The KhmerRouge, which came to power in 1975, collectivized all land and destroyed all land records, includingcadastral maps and titles. The regime, in addition to killing an estimated two million people, brought aboutone of the greatest population displacements in human history, forcing hundreds of thousands to move fromcities and towns to the countryside and from one part of the country to the other. Many thousands also fledacross borders. The right to own land was reestablished in 1989, allowing farmers to claim possessionrights of plots up to five hectares after five years of continuously cultivating fields, and households to gainownership title to residential plots up to 2,000 square meters. Concession rights were granted forplantation plots exceeding five hectares. Land left vacant for more than three years reverted to stateownership. Following the enactment of the 1992 land law, a program was initiated calling for applicationsfor land tenure certificates to confirm occupancy and use rights. More than 4 million applications weresubmitted, but by mid-2001 only 15 percent of them had been processed due to limited capacity ofgovernment.

Current situation and main sector issues

Statistics on land, and mainly its ownership and use, are as yet not too accurate in Cambodia. Informationavailable indicates that the country has an estimated 18.10 million ha of land mass (including rivers andlakes), of which 2.71 million ha are cultivated under subsistence (or peasant) fartning, and 1 million ha aretaken up by towns, infrastructure and waterways (Table 1). It is reported that protected areas cover 3.27million ha, and forestry and fishing concessions are taking up 4.21 million ha and I million ha,respectively. Agricultural concessions cover about 0.83 million ha and land mine contaminated areasaccounted for another 0.10 million ha. Forest lands, not under any concession or protection, cover about3.27 million ha. About 1.73 million ha seem to be scrub land, undergrowth, non-wooded land and similarunused areas not yet declared to be under any specific ownership, control or use.

Table 1: Cambodia - Estimates of Land Tenure/Use, 2001

Category Area (million hectares) % shareCultivated areas 2.71 14.97Towns, infrastructure etc. 1.00 5.52Land mines contaminated areas 0.10 0.55Scrub land, non-wooded land etc. 1.73 9.56

Forests not under concessions 3.25 17.96Forest concessions 4.21 23.26Protected areas/forests 3.27 18.07Agricultural concessions 0.83 4.59Fishing concession lots 1.00 5.52Total 18.10 100.00Source: Land Tenure in Cambodia - Data Update, Cambodia Development Resource Institute (CDRI); July2001.

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The history of land management and administration in Cambodia goes back to the Civil Code of 1920,which established the system of French land law that recognized private property rights. It is reported thatduring the 1960s there was an adequate system of land management, including confirmation of privateproperty rights with land records including cadastral maps and land titles. The land management system issaid to have started deteriorating during the period 1970-1975. Thereafter under the Pol Pot regime(1975-1979), not only were private property rights completely destroyed but all records, including cadastralmaps and titles, were also destroyed. The professionals in land laws and land management, registration andsurveying were either re-deployed to the country side, left the country or were executed. The post-Pol Potregime (1979-1989) organized collectives as a basis of claiming user rights to agricultural land: residentialuse rights were allocated on the basis of occupation while ownership of land still remained in the hands ofthe state. In 1989, the government re-introduced pnrvate property rights, with ownership rights issued forresidential land with an upper ceiling of 2,000 sq. meters, possession rights for cultivated land less than 5ha, and concession rights for plantation land greater than 5 ha.

Now, the administration of property rights is spread widely across several governnent agencies. TheMinistry of Land Management, Urban Planning and Construction (which was established in 1999) is thegovernment agency with primary responsibility for land management, including policy and coordination ofland registration and administration, land use planning, geodetic and cadastral surveying, mapping andproperty valuation. Actual implementation of land registration, administration of land transactions,collection of land taxes (hardly done) and land use planning are carried out by the Provincial and Municipaloffices of the MLMUPC. The Ministry of Agriculture, Forestry and Fisheries has responsibility for themanagement of forestry land and wetlands. The Ministry of Economy and Finance's State PropertyDepartment has responsibility for administration of state immovable properties. Due to the weak capacityof the courts (accentuated by ambiguities in the 1992 Land Law) to deal with land cases, a National LandDispute Settlement Commission (NLDSC), with provincial committees, was set up in late 1999 to resolve,out of court, land disputes. Demining (removal of unexploded ordinance) of land and the allocation of thedemined land is the responsibility of provinces. Similarly, the allocation of forestry and fishing concessionsseem to be undertaken at provincial level or by politicians at all levels.

During 1990s, titles for land ownership on private land were issued mainly in Phnom Penh, but for onlyabout 25% of the land. The 1992 land law did not allow land ownership in rural areas; only possessoryrights. Following the enactment of the 1992 Land Law, a program was initiated to call for applications forland tenure certificates to confirm occupancy and use rights. Apparently more than 4 million applicationswere submitted, but there has not been a capacity to process applications and only about 15% of the ruralpeople have received land use certificates.

As for public land, apparently the state does not know the amount, location and boundaries of the land thatfalls under it; obviously, much of it would not be surveyed, mapped or titled either. According to the 1992Land Law, public land is reported to be of two categories. There is the 'state public land' and 'stateprivate land' where the former cannot be sold or used to create any private land rights (and is thereforeintended only for conservation) but the latter can be sold and is reported to be frequently sold by ministriesand state agencies in an ad hoc manner, with the proceeds not returning to the Treasury for public benefit.It is reported that, out of the public land (presumably state public land), there are 4.12 million of forestsand 1.0 million of wetlands have been given out as forest and fishing concessions, respectively.

It is overwhelmingly clear to both govemment and donors that the overriding problem and the one with thegreatest contribution to poverty is lack of land tenure security (and the associated landlessness) andrestricted access to common property resources. Symptoms of the problem are clear from the rising

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number of landless people due to forced or distressed sales and the high number of land disputes cloggingthe judicial and other institutions for resolving land conflicts. Recent studies have shown a significant andrising trend in landlessness (found to be as high as 20% of the rural population in some sample surveys)and restrictions of access to common property resources (forests and wetlands), areas that provide anestimated 20% of some rural household incomes. There are suggestions that state agents such as themilitary and politically connected people have dispossessed people of their land, which is being facilitatedby the lack of fornal recognition of rights on those lands. In the case of natural resources suitable forcommercial use such as forest land (for logging) or wetlands (for fishing), there are reports that concessionsfor their use have often been offered to investors at very low prices. There is concern that the allocation ofdecontaminated land has been inequitable and ad hoc, and has been complicated by the lack of land titlingservices to formalize the rights of the recipients.

Since 1998, Cambodia has enjoyed peace and stability for the first time in 30 years. Democracy is takingroot, as demonstrated by the government's decision to hold the country's first commune elections inFebruary 2002 and its acceptance of organized peaceful protests by citizens in Phnom Penh and othercenters of government. The economy has also been growing steadily, at an average annual rate of about 5percent per year. However, unclear rules governing rights to land threaten both political stability andeconomic development. Conflicts over land are growing, increasingly involving people or entities fromoutside the community seeking land for commercial purposes. The poor and less educated lose in theprocess because they do not have the access to money and power needed to defend their rights. As a result,land is becoming progressively more concentrated in the hands of influential and powerful people or entitiesand those who can afford informal payments, especially in regions with potential for tourism, logging,industrial or urban development.

Conflicts over land are high in Cambodia for several reasons. Chief among them is uncertainty aboutwhere boundaries of land under the control of various state entities or private individuals lie. This in turn isthe result of unclear policies and regulations about how land should be classified and lack of high qualitymaps that can allow boundaries to be precisely demarcated. This has led to competing claims for the samepiece of land. In some cases the claims are between different government ministries. In others they arebetween farmers who have settled on the land and government agencies that allocate the land as concessionsto commercial interests. In still other cases the disputes are between private individuals. A second reasonis lack of government capacity to resolve disputes through either the courts or land dispute resolutioncommissions, which were established in 1999 to seffle land disputes out of court. This has led to a risingbacklog of cases, with disputes routinely taking several years to resolve. Moreover, people involved withresolving disputes often do not fully understand the relevant laws or procedures involved and issue rulingsthat are inconsistent and legally incorrect. The problems are made worse because of the lack oftransparency in the dispute resolution process. The problems with the dispute resolution mechanisms areundermining confidence of ordinary people in the formal system, who view it as favoring the rich andpowerful. Conflicts over land cannot be reduced without better information on land use, clear policies andregulations, adequate capacity to resolve disputes and, ultimately, demarcation of boundaries generallyaccepted by all.

Lack of clear title is also hindering economic growth in Cambodia by reducing incentives to invest. Farmproductivity in the country is the lowest in all of Southeast Asia, with rice yields averaging 1.8 tons perhectare compared with an average of 3.9 tons per hectare in Vietnam and 2.7 tons per hectare in Laos,countries with a similar climates and resource endowments. Rice output in Cambodia is enough to feed theaverage family for only seven months a year. Low yields are due primarily to low investments in watercontrol technologies, essential to take full advantage of high yielding rice varieties. Around 85 percent ofrice cultivation is rainfed, and generally only one crop is produced each year. Low investment in

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agriculture is in part a result of lack of security over rights to land. Increasing agricultural productivitywould have a significant impact on economic growth and poverty reduction in Cambodia; agriculture is themost important economic sector in the country, accounting for 40 percent of GDP and employing 70percent of the labor force.

Ambiguity about land rights is also inhibiting industrial and urban investment. Lack of secure land tenureis one of the main complaints of foreign investors in Cambodia (the others are high utility costs, inadequateinfrastructure, and excessive bureaucracy).

Finally, lack of clear rights to land has led to widespread destruction of natural resources. In many areas,forests and fisheries are under the control of no one, and are being exploited for short-term gains. Entitiesthat have been granted forest and fishing concessions do not feel sufficiently secure to manage themsustainably for the long-term benefit of the country. People are settling in coastal areas and other placesthat are vulnerable to natural disasters. Some 80 percent of land is estimated to be in the state domain,although this bears little relationship to existing land use or on evidence of its suitability for particular uses.Much of the reserved forest land is actually settled agricultural land. There is a need to reduce the amountof land under state control, coupled with taking more effective efforts to protect core areas. Betterinformation on how and by whom land is currently being used, followed by clear demarcation ofboundaries and distribution of titles will enable government at all levels to better manage land.

Government strategy

The Government has recognized the need to address land issues since late 1989. It enacted the 1992 landlaw and asked for donor support to issue land titles in 1995. In 1999, with improved decision making, thegovermment moved quickly to address the land issues by: (i) establishing in late 1999 the Ministry of LandManagement, Urban Planning and Construction; (ii) requesting during the CG meeting of 2000 donorsupport in addressing land issues; (iii) establishing in late 2000 a Council of Land Policy chaired by theminister of the MLMUPC, and comprising of senior officials from 17 ministries and institutions, includingministries of environment; agriculture, forestry and fisheries; rural development; interior; economics andfinance; and defense; (iv) causing the Council of Ministers to approve in May 2001 a "Statement on LandPolicy" outlining the direction of government policies in the land sector, the text of the" Statement on LandPolicy" is included in Annex 14; and (v) having the national assembly and the senate pass a draft new landlaw which was signed into law on August 30, 2001.

The government's strategy, expressed in its "Statement on Land Policy", articulates government policy onland management, administration and distribution. It calls for the creation of a state land inventory andclassification system; increasing capacity to resolve disputes; registering all land in the nation (both publicand private) over the long-term using both systematic and sporadic procedures; strengthening land tenuresecurity and preventing or speedily resolving land disputes; developing land use plans for priority areas(including areas with potential for tourism, industrial investment, urban areas and major road corridors);improving management of natural resources; and developing procedures for urban land management. Thegovernment recognizes that implementing the strategy will be a long-term process requiring broad publicconsultation and consensus building. It will also require clarifying roles of various government agenciesinvolved with land management, developing mechanisms for improving coordination among them. It willalso involve the creation of accurate geodetic networks, maps and land information systems.

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The government views the proposed project as an important instrument to support the implementation ofthese policies. However, in a weak governance system, actual implementation of these policies will relyheavily on the commitment and capacity of the government to implement these reform areas, yet to be seenduring project implementation.

3. Sector issues to be addressed by the project and strategic choices:

The project will assist the government to develop policies and regulations; strengthen capacity of theministry and its provincial and district offices to administer land; assist with establishing systematic andsporadic titling programs under which over about one million titles will be issued; increase capacity toresolve disputes; and develop the information base government needs to improve land management. It willalso strengthen processes of community participation and encourage development of the private sector tosurvey and demarcate land.

Developing policies and regulations, building institutions and issuing titles for all parcels in the country willtake much longer than the project's 5-year life-span. The project is thus conceived as the first phase of along-term program lasting 15 years.

Other donors are supporting the project. The German and Finnish governments have supported pilotprojects in Kampong Thom, Sihanoukville, Kandal, Kampot, and Takeo provinces to test approaches andrefine procedures. The lessons learned from these pilots form the basis of the proposed project. Both theGerman and Finnish governments will continue to support the project, assisting first withpre-implementation activities and then becoming full partners in implementing the project. The AsianDevelopment Bank is supporting the overall objectives of the program by financing the review and draftingof subdecrees and other legal instruments needed to implement the land law, providing training in the landlaw, and disseminating information to citizens on the new policies, laws and procedures.

Strategic choices

Phased Implementation. Although the exact number of land parcels in the country is not known, it isestimated that titling the whole country will involve the issuing of titles for some 6 to 7 million parcels ofland. In a cost estimate for a National Land Titling Program prepared in 1999, it was estimated that acomplete program would take 10 years. Based on experience in other titling projects in the region and,given the current lack of capacity within MLMUPC, it is likely that it will take longer than 10 years; 15years may be a more realistic figure.

Consequently, the proposed project would be the first five-year phase of a longer term program. In thisphase the emphasis would be on capacity building and development of policy, legal and institutionalaspects of land management and administration that would support a longer term program which goesbeyond this project's timeframe.

Charging fees for property titles rather than issuing them at no charge. There is considerable evidencethat people in Cambodia want titles and are willing to pay for them. People already pay US$200 toUS$300 and more (in infornal fees) for titles to land in urban areas. While the German and Finnishsupported projects do not charge for the issued titles as these are pilot projects, it is important that there besome charge back for the titles in order for the beneficiaries to appreciate their value. Discussions withsome urban people and poor farmers indicate that most are willing to pay around US$20 per title for urbanland and around US$2.00 for agriculture land. Recovering costs from beneficiaries will also help ensure

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the long-term financial viability of land titling and registration services. Cost recovery will be strengthenedfurther through charging additional fees on registration of land transactions.

Supporting NGOs to execute activities related to community participation, rather than relying on thegovernment's adjudication teams. Evidence from other land titling programs in the region indicates thatcommunity participation activities are best handled by NGOs that specialize in this field. This freesgovernment staff to concentrate on their key responsibilities; adjudication and demarcation of boundaries.Cambodian villagers interviewed for the social assessment said they enjoy working with NGOs and trustthem. To build confidence among villagers in the process of adjudication, it is important that people whooffer an independent perspective and can work directly on behalf of the villagers be involved.

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

1. Project components

The Cambodia Land Management and Administration Project will comprise the following components:

Component 1: Development of land policy and regulatory framework(a) Development of the capacity of the Secretariat of the Council of Land Policy.(b) Formulation of key policies for land administration and management.(c) Development and drafting of legal instruments.(d) Dissemination of policies, laws, rules and regulations.

Component 2: Institutional development(a) Long-term institutional development of the MLMUPC at all levels.(b) Project management.(c) Development of land management and administration education program.(d) Development of a private surveying industry.

Component 3: Land titling program and development of a land registration system(a) Information dissemination and community participation.(b) Systematic land titling program.(c) Sporadic land titling program.(d) Development of a modem land registration system.

Component 4: Strengthening mechanisms for dispute resolution(a) Strengthening the national cadastral commissions.(b) Strengthening the provincial cadastral commissions.(d) Legal assistance for disadvantaged.

Component 5: Land management(a) Clarification of procedures for defining different classes of land, such as forest land, protected area

land, private land, and public private land(b) Procurement of aerial photographs and satellite images as needed.(c) Preparation of land classification maps for each of the project provinces showing boundaries of

forests, protected areas, land under private use, land under public use, land under concession, andother types of land use.

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Indicative j Bank- % ofComponent Sector Costs % of financing Bank-

(US$M) Total (US$M) financing1. Development of land policy and Judicial Reform 2.80 8.3 1.80 7.4regulatory framework2. Institutional development Institutional 6.40 18.9 3.70 15.2

Development3. Land titling program and Other Public Sector 20.40 60.2 16.70 68.7development of a land registration Managementsystem.4. Strengthening mechanisms for Institutional 1.70 5.0 1.00 4.1dispute resolution Development5. Land management Natural Resources 2.60 7.7 1.10 4.5

ManagementTotal Project Costs 33.90 100.0 24.30 100.0

Total Financing Required 33.90 100.0 24.30 100.0

Project Costs will be reviewed and revised during appraisal.

2. Key policy and institutional reforms supported by the project:

Through project preparatory activities (financed by a Japanese PHRD grant), the Government receivedassistance to develop a comprehensive land policy framework. Further assistance would be providedduring project implementation to support formulation of broad areas of land policy, and in coordinationwith the ADB-financed "the implementation of land law TA", the drafting of subdecrees and regulationsneeded to support implementation of the new land law. Specific areas of support would includeformulation of policies to: delimit and administer state land; allocate land to farners with little or no land;register land of comrnunities and of indigenous peoples; register land in and around conservation areas; anddetennine and collect fees for land titling and the registration of land transfers. The project would alsosupport the development of policies, regulations and procedures for classifying land.

The project would support also major institutional reforms. It would assist the Secretariat of the Councilof Land Policy to undertake its tasks of overseeing the development of policies and regulations. It wouldalso help improve the capacity of the MLMUPC at the central level with advice and training in planning,budgeting, procurement, financial management and monitoring and evaluation. At the provincial anddistrict levels, it would build capacity for surveying, adjudication and boundary demarcation and thecreation and maintenance of a land registration system. Outside the ministry, the project would help buildprivate sector expertise in surveying, land management and land administration through support for auniversity degree program. It would also train private surveyors and award them small contacts as part ofthe systematic adjudication work on a per parcel basis. The people trained under the program would forma cadre of professionals who would work directly in key areas of land administration and management formany years and would ultimately train others. Finally, the project would help strengthen mechanisms fordispute resolution from the village level to the central level.

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3. Benefits and target population:

By securing land tenure rights, the project will help to promote social stability, contribute to povertyreduction and stimulate economic growth. By improving the land administration system, the project willstimulate the development of more efficient land markets, thereby facilitating the allocation of land to itshighest and best use. By helping to develop capacity for land management, the project will contribute toimproved environmental management. The entire population of Cambodia will benefit from these generalimprovements. About one million household in both rural and urban areas will also receive titles to landunder the systematic and sporadic titling programs. The beneficiaries of land titles would enjoy the benefitsassociated with land titles, in the way of increased tenure security, access to credit and opportunities toincrease investments and productivity (see Section E for details). Many of the expected beneficiaries arepoor and vulnerable to being dislodged from the land where they live and farm. Providing them with securetitles would sharply reduce the risks of dispossession that they now face.

4. Institutional and implementation arrangements:

Project implementation period. The project will take place over five years, during Cambodian fiscal years2002-2007. It will be completed by June 2007 and the Credit will be closed by December 31, 2007.

Project coordination. The MLMUPC will be responsible for overall project implementation. A projectmanagement office (PMO) will be established within MLMUPC to coordinate project activities. The PMOwill be headed by a project director who will report to the Minister of the MLMUPC on matters of projectimplementation, and to the Land Policy Council through the Secretary General for policy guidance. Theproject director will convene the project technical committee comprised of the general directors of thevarious departments implementing the project. The PMO will be responsible for project planning andbudgeting, coordination, monitoring, accounting, financial management and procurement. It will includefive units: administration and finance; procurement; planning, budgeting and monitoring; public relations;and technical audit. Each will be headed by a qualified unit head and staffed with qualified technicalpersonnel. Various departments of the MLMUPC will implement aspects of the project. For example, theSecretariat of the Land Policy Council will implement the policy development component, the GeneralDepartment of Cadastral and Geography will be responsible for production of aerial photographs andorthophotos, the General Department of Land Management will implement the land managementcomponent, and the General Department of Construction will plan and supervise the construction of thebuilding for the ministry and the renovation and construction of provincial and district offices. The PMOwill be supported by technical assistance (to be financed by the governments of Germany and Finland). Inaddition to the TA team leaders who will advise the project director, there will be regional and local TAadvisors supporting the various units in the PMO. There will also be several intemational and national TApersonnel supporting the Ministry in implementing the project.

Project oversight. The Land Policy Council will act as steering conmmittee for the Project. The Councilwill convene at least once every six months to review progress made and to assist in resolving any policyissue that arises and that may affect project implementation.

Executing agency. Small provincial (or municipal) project management offices (PPMO) will beestablished in each of the ten provinces and one municipality (Phnom Penh) where systematic registrationwill be undertaken. The PPMOs will support the systematic and sporadic land adjudication teams. Thedirector of the provincial or municipal departments of land management will also serve as the provincial ormunicipal project manager and report to the project director at the PMO on all project matters. The fieldmanagers of the systematic adjudication teams will report to the appropriate provincial project manager.The PPMOs will be responsible for (a) coordination and management of provincial/municipal project

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activities, (b) preparation and submission of periodic and technical reports as required to the projectdirector, and (c) liaison with other provincial/municipal officials.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Financing the project through a learning and innovation loan (L[L) or an adjustable program loan(APL). Although the project is envisaged as the first phase of a long-term program lasting 10-15 years, aspecific investment credit is the appropriate instrument to support the project. The focus of the project ison development of the policy and regulatory framework and building institutions (in addition to issuance ofabout 1 million titles), which often take a long time, beyond the timeframe of a learning and innovation loanor the first phase of an APL. Moreover, government's commitment to tackle the most difficult policyreform is not yet known, so clearly identifying triggers for an APL is difficult.

Including a land distribution component. Careful consideration was given to supporting a landdistribution component under the project. However, discussions with government officials and othersrevealed that there is not yet a national consensus on how such as program would work, nor adequateinformation on how land is currently being used and administered and therefore what land is available fordistribution. The project includes support for policy development in this area, which will involveinvestigation of the potential for land distribution, consensus building on its scope and implementationarrangements, and preparation of the legislative instruments needed for implementation. The landmanagement component will provide information about land use/status at the provincial level and provideinfonnation about land which could be made available for distribution.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

Latest SupervisionSector Issue Project (PSR) Ratings

____________ __________ (Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Land Management, Administration and Lao PDR Land Titling Project S STitling

Thailand Land Titling I, II, III S SIndonesia Land Administration S SProject IPhilippines Land S SAdministration andManagement ProjectIndonesia Land AdministrationProject II (under preparation)

Rural Development North East Village S SDevelopment Project

Natural Resource Management Biodiversity and Protected Area S SProjectProposed Forestry Project

Other development agenciesDraft a revised land law and Asian Development Bank andsubdecrees, and provide legal training Oxfam (UK) supportedPilot a land titling program Land Management Project

(German government throughGTZ)

Pilot a land titling program Cambodia Cadastral Project(Finnish government)

Piloting cadastral mapping Cadastral Mapping of PhnomPenh (French government)

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

Including land titling as part of a comprehensive program. Experience shows that projects focusednarrowly on titling before a national consensus on land policy has been reached rarely succeed in meetingtheir objectives. A better approach is to include land titling as part of a comprehensive policy andinstitutional framework for land management and administration. The proposed project takes acomprehensive approachi, supporting policy and regulatory reforms, consensus building and institutionaldevelopment along with land titling. It carefully sequences activities so that systematic titling does not takeplace on lands with unclear status until after the status is agreed with all stakeholders and boundariesbetween private and state domains demarcated.

Establishing the project on strong government commitment. A lesson of previous projects is that stronggovernment commitment at the highest level is required to build consensus on sensitive issues of land rights.The Cambodian prime minister has repeatedly emphasized the importance of securing land rights byformally titling and registering land. Other members of govemment, including leading members of theopposition, have similarly declared their commitment to formalizing rights to land. Demonstrating thiscommitment, the Council of Ministers has approve a Statement on Land Policy in May 2001, and the newland law was enacted in August 2001.

Basing project design on experiences of pilot projects. With politically sensitive land titling projects,piloting is especially important to discover potential issues and to develop appropriate and efficientarrangements for adjudicating boundaries. The proposed project is based on the lessons learned from boththe Finnish and German government's pilot projects in land titling in five provinces of Cambodia, includingthe need to thoroughly plan the systematic registration process, and the need to issue titles quicklyfollowing completion of adjudication to ensure that the agreements reached do not disintegrate. The twopilot projects will be merged with this project once IDA credit becomes effective, to provide the TechnicalAssistance needed to implement the project.

Emphasizing stakeholder participation. Experience shows that active participation of all stakeholdersduring policy formulation, demarcation of boundaries between private and state domains, and systematicadjudication is critical to the success of the program. The proposed project contains measures forparticipation during each of these processes. During policy formulation, the project will support a publicinformation campaign through radio, television, newspapers and other appropriate measures to informcitizens of the provisions of the new land law and will invite public comment on drafts of land policies asthey are formulated. During the process of classifying land and demarcating boundaries, all stakeholderswill participate in a process of public consultation to ensure general agreement with decisions. During

- 12-

systematic adjudication, NGOs with specialized training in participation will work closely with villagers,explaining the process, producing village land files, and ensuring that all members of the community whoare eligible for a land title will benefit from the Project.

Promoting private sector participation. Projects elsewhere show that involving the private sector insurveying and other technical tasks can substantially speed up the process of titling. Using privatecontractors has several advantages. They can be hired to perform specific tasks, rather than as part of thecivil service, and therefore can be used flexibly. They can also be offered performance incentives (such aspayment based on number of parcels adjudicated) that cannot be offered to the government staff.Currently, Cambodia has little private sector capacity in surveying and mapping. The project will thereforehelp to create private sector capacity by training private individuals together with staff from the ministry sothat all will have the same knowledge, and then use both private and ministry teams for systematicadjudication. The project will also promote development a private sector through its university degreeprogram in land administration and management.

4. Indications of borrower commitment and ownership:

The government has showed its commitment to the project in several ways. It included a discussion of landpolicy in its recently approved Interirn Poverty Reduction Strategy Paper. In September 1999, it createdthe Ministry of Land Management Urban Planning and Construction. In December 2000 it created aninterministerial body, the Land Policy Council (as part of the Supreme Council of Reform), to manage theprocess of fornulating a new land policy. In May 2001, the Council of Ministers approved a Statement onLand Policy; the Statement, while concise and short, provides a clear direction to the government policy onland administration, management and distribution. The new land law was enacted in August 2001 (Seeannex 13). The Government has also developed draft forestry, fishery, and water laws to deal with specificcategories of state land, to be implemented once the land law passes. The Prime Minister already approvedUS$3 million as counterpart for the project in the next five years. And finally, the government hasexpressed a desire to continue to refine its land policies and regulations, and to move forward with thedifficult process of classifying land and demarcating the boundaries between the state and private domains.

5. Value added of Bank support in this project:

The World Bank has supported many land management and administration projects throughout the world,including in four countries within the East Asia and Pacific Region (Lao People's Democratic Republic,Philippines, Thailand and Indonesia). Through these projects, the Bank has developed considerableexpertise in integrating the policy, institutional and technical aspects required to improve land tenuresecurity. IDA has also developed a good working relationship with the government, which makes itpossible to maintain the dialogue needed to resolve the difficult issues that inevitably will arise duringimplementation of the project. Finally, IDA has developed effective relationships with other donors inCambodia working on both land issues and issues closely related to land, including govemance,environment, poverty reduction, and resettlement. IDA involvement would also bring coherence to thedonor's program supporting land issues in Cambodia.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):* Cost benefit NPV-USS million; ERR = % (see Annex 4)O Cost effectivenesso Other (specify)

- 13 -

The main benefits of the project are:

(a) Improved land tenure security through issuance of around 1 million titles;(b) Increased investment, both domestic and international, due to a better access to credit and

establishment of a more secure, stable and predictable investmnent climate;(c) Greater efficiency of land use because of the development of land markets in both rural and urban

areas;(d) Improved tax collection and land use planning due to information generated from an improved land

registry and cadastre system and the titling process; and(e) Improved natural resources management by private operators who take a long-term view and invest

in measures such as soil conservation and sustainable forest management.

These benefits are expected to be fully realized over the long term extending to 30 years. During the life ofthe project, however, the expected benefits are not likely to be evident. There are two main reasons. First,most of the titles distributed under the program are likely to be issued during project years three and four,which is not enough time for benefits to be measurable. Second, along with titles, the generalmacroeconomic environment and the development of relevant institutions will also influence investorbehavior. If the macroeconomic situation is unstable or fonnal banking institutions fail to emerge in ruralareas, then expected investment may not materialize.

Methodology of economic analysis

An economic analysis for such a land management and administration project would follow theconventional approach to economic evaluation of investments, which proceeds by estimating a futurestream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and aneconomic rate of return (ERR). In urban areas, gross economic benefits can be measured through landprice changes due to titling while holding other factors constant. In rural areas (where land markets areunderdeveloped), the gross economic benefits can be measured by the incremental increase in productionand the associated income from titling, less the value of the production inputs. Net economic benefits andreturns would be derived by subtracting project costs from the gross economic benefits.

At this stage, providing quantitative estimates of project benefits is not possible. First, information on howfarmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported bythe German and Finnish governments have not yet generated information on the response of title holders.Moreover, the experiences and data of neighboring countries with long-running land titling programs, suchas Thailand, do not offer a good guide because conditions in these countries are quite different from thosein Carnbodia. For example, the land administration system in Thailand is much more developed thanCambodia's. Consequently, an estimation of project benefits would be based on questionable assumptionsand therefore serve no purpose. Second, the focus of the project, which is the first phase of a long-termnprogram lasting 15 years, is on institutional development (one-half of project costs), which is a necessaryfoundation for a land admninistration system and whose benefits are not easily quantifiable. For thesereasons, neither an NPV nor an ERR has been computed for the proposed project.

Plan to conduct an ex post quantitative economic analysis

Baseline and impact socioeconomic surveys will be conducted in selected project areas duringimplementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia landprojects. In rural areas, enumerators will collect baseline data for selected households before the projectstarts. Data will include current investments in agriculture (fertilizer and pesticide use, tools and

- 14 -

machinery, water control technologies, soil conservation measures), plot characteristics (such as, size,irrigation status, fertility and the like), and household characteristics (education, age structure), cropsgrown and yield and others. In urban areas, data about changes in land prices with the plot (or house)characteristics (such as access to transportation) will be collected. Ideally, panel data will be collected. Inaddition, in both rural and urban areas, information on groups that do not receive title will be collected toprovide data for use as a control. As the proj ect is just the first phase of a long-term program, the findingsfrom the baseline and socioeconomic impact surveys will also be used to justify possible follow-on projects.

2. Financial (see Annex 4 and Annex 5):NPV=US$ 15.4 million; FRR = 22 % (see Annex 4)In most systematic land titling programs, to ensure high voluntary participation, landholders are chargedonly a fraction of the full cost of titling. A main concern is that the poorest landholders can not afford theregistration fee. For example, in Thailand, landholders are charged less than US$5 per title, compared withan average cost of US$36 per title. In Indonesia, landholders are charged about US$2 per title comparedwith an average cost of about US$26 per title. The gap is covered by charging registration fees onsubsequent land transactions. This arrangement has worked well in Thailand.

This arrangement will be followed in this project. Current estimates are that the average cost per title isUS$38. A fee of US$2-5 per title will be charged to landholders in rural areas, and a fee of US$15-25 pertitle to landholders in urban area. Interviews during field visits and other anecdotal evidence indicates thatthese fees would be reasonable. Unofficial fees range generally between US$200 and US$500. This costrecovery arrangement for the project will have a positive impact on distribution of project benefits and willpromote an efficient use of the output (titles) from the project.

However, a careful study of fee structures and levels of land-related taxes will be undertaken as apre-implementation activity. The purpose of the study will be to develop a system that balances the need toattract people to register land for the first time and again when it is sold on the one hand and the need torecover costs of land titling and registration and generate government revenue on the other.

Fiscal Impact:

In the short term, the fiscal impact of the proposed project will be neutral given that less than 10 percent ofthe total project cost will be financed by the government. In the long term, the fiscal impact of the projectis expected to be highly positive, as government revenues from fees and taxes from first-time titling andsubsequent transactions of land rise. The NPV is US$15.4 million and the FRR is 22 percent. Annex 5presents a detailed financial analysis.

3. Technical:The pilot projects financed by the German, Finnish and French governments tested several mapping andsurvey technologies similar to those used in other titling projects in the region. The technologies providingappropriate levels of accuracy at the minimum cost have been adopted. However, the pilots have differedfrom some of the other regional projects by producing digital mapping and computerized title productsfrom the outset. This is a reflection of the advances being made in technologies, which have greatlysimnlified and reduced the cost of these processes. The cadastre geographic information system (GIS) ordigital mapping system uses simple PC technology that is cheap to maintain, with GIS software and adatabase program that are commonly available. The choice of technology was reviewed during projectpreparation by carefully assessing the experience of the pilot projects and a proposed technical approachwas recommended as part of the project design.

- 15 -

4. Institutional:

Sustainability of the land administration system will depend, among several factors, on the ability ofMLMUPC and their provincial and local offices to undertake institutional and human resources reform toadopt to their new expanded mandate in the coming years. To identify policy and institutional constraints,an institutional assessment for the ministry and their local officers was undertaken during projectpreparation. Reconumendations of this assessment were incorporated in the design of the project and a fullcomponent was devoted to long term institutional strengthening to MLMUPC and their provincial and localoffices.

4.1 Executing agencies:

The MLMUPC will execute the project. This is a new ministry, created in 1999, with no experienceimplementing Bank projects other than what was gained while executing activities for project preparationunder Japanese PHRD grant support. The work load of the Ministry will expand by five folds (accordingto budget figures) during project implementation. The current structure and physical facilities are notadequate. Therefore, the project will provide the necessary support to construct an office building for theMinistry to move all their various departments in one building. The project will also provide support to theMinistry to review its current structure, staffing and human resource policies, and develop and implement anew structure and a human resources plan to enable the Ministry to adequately support its expandedmandate. The project will also support the Secretariat of the Council of Land Policy to enable it to developland policies and regulations in a transparent and participatory manner.

4.2 Project management:

A project management office (PMO), to be established within the ministry, will coordinate projectactivities. The PMO will be headed by a project director and will report directly to the minister onadministrative issues and to the Council of Land Policy for policy guidance. He or she will also convene aproject technical committee comprised of the general directors of the various departments implementing theproject. Small provincial (or municipal) project management offices (PPMO) will be established in each ofthe ten provinces and one municipality (Phnom Penh) where systematic registration will be undertaken.They will be headed by directors of the provincial or municipal departments of land management and willreport to the project director at the central PMO on all project matters.

As described above, MLMUPC has little experience with implementing Bank projects. Because of this, thePMO will be supported by technical assistance to manage the project. The team leader of TA will advisethe project director and several international, local and regional advisors will be provided to support thevarious units of the PMO.

4.3 Procurement issues:

The procurement system in Cambodia is based primarily on the Sub-Decree dated July 31, 1995 GoverningPublic Procurement. The Sub-Decree has a waiver, which mandates the application of InternationalFinanced Institutions (IFI) procurement rules and regulations for IFI-financed procurement. In generalterms the system is consistent with the Bank's guidelines, with some exceptions. Some of the most notableand unacceptable deviations from Bank policy are the liberal use of the Direct Purchase Method;negotiations with the lowest bidder to reduce the price when all bids exceed the cost estimates; theprerequisite requirement for the prior registration of foreign firms to be able to participate in NCBprocurement; the use of the merit point system for pre-qualifying firms instead of pass/fail minimumcriteria for pre and post qualifications; the obligatory requirement for a foreign contractor to enter into ajoint venture with a local firm. Because of the waiver noted, the draft CPAR (Mar. 1997) recommnends a

- 16-

'side letter' for public procurement of goods and works, and consulting services.

An assessment of the procurement capacity of MLMUPC was carried out in accordance with the OfficeMemorandum from the Manager of the World Unit of the Operational Core Services Network (OCSPR)dated August 11, 1998. The assessment involved a review Bank Procurement of the procurement policiesand procedures adopted and implemented by the central office involving purely locally funded projectssince MILMUPC has not had the opportunity to handle foreign assisted project, having been establishedonly recently.

In general, the rules and regulations relating to procurement implemented at MLMIUPC adhere to theprinciples of competition and are intended to promote fairness, economy, efficiency and transparency.However, there are certain rules, regulations and practices which may not fully support these principles inprocurement transactions. The project should not be affected because the country's Procurement Law andits internal rules and regulations contain a waiver for foreign funded projects. The MLMUPC ha's not hadthe experience in implementing projects funded by international financing institutions. This will be the firstBank financed project it will implement. The overall procurement risk assessment is high. The main risksconcern the inadequate procurement staffing and knowledge, absence of formal and integrated procurementoperating system, and lack of an internal audit function to carry out effectively the implementation ofprocurement for the project.

To mitigate these risks, a series of actions will be undertaken by the project. These actions are included inAnnex 6.

4.4 Financial management issues:

A financial management assessment of the implementing agency, MLMUPC, was carried out by a Bankfinancial management specialist. The project financial management risks were rated high due to (a)inexperience of the MLMUPC in managing foreign funded projects; (b) more than five fold increase in thebudget managed by MLMUPC as project implementation begins; (c) significant amount of project activityat the provincial level; and (d) likelihood of politicization due land disputes. In order to minimize the aboverisks, technical assistance under the Project will be provided to establish a financial management functionin the PMO and recruit and train adequate and competent staff. A Financial Advisor (funded out of TA)will be employed at least for minimum period of two years. The financial management arrangements agreedinclude (a) approval by IDA of a Financial Management Manual establishing financial policies, proceduresand accountabilities; (b) establishment of an internal audit function to audit provincial activities; (c)centralized accounting function to record and report all project activities; and (d) regular ProjectManagement Reporting. The internal auditor will submit semi-annual reports to MLMUPC, the LandPolicy Council and the World Bank. The financial management assessment and the arrangements agreedare given in Annex 6.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for enviromnental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The project is classified as category B because it is not expected to have significant adverse environmentalimpacts. Other than rehabilitation/construction of project office buildings, training facilities and institutebuilding, the project will not support civil works, land conversion, resource extraction, industrialproduction or any activity that could potentially damage the environment. Technical designs and locationsof civil works have not been finalized. Thus it is not possible to evaluate possible effects at this time. Allbuildings will be desigped and constructed in accordance with sound architectural and engineering practiceand will make appropriate arrangements for dust and noise control, solid waste disposal, sanitary facilities

- 17 -

and worker safety. Contracts for civil works will be screened for environmental impacts. All policy andinstitutional development activities will solicit stakeholder input on environmental implications throughpublic review procedures. The project will also support the development of procedures and undertaking thepreparation of land classification maps in project provinces which define the boundaries between variouscategories of land use, such as urban, agriculture forest, and protected areas. The preparation of thesemaps will be done through a participatory process among local government officials, NGOs, and variousnational government agencies to ensure proper protection of the environment and natural habitats.

5.2 What are the main features of the EMP and are they adequate?

The project has been designed to promote sound environmental management and mitigate potentiallynegative affects arising directly from project activities. To promote sound environmental management, theproject includes support for land classification and delimitation of boundaries between the public andprivate domains, and creation of capacity for land management. To minimize negative irnpacts on theenvironment, titles will not be issued for land in potentially environmentally-sensitive areas until the landshave been classified and the boundaries between the state and private domains agreed. In addition, policiesand regulations formulated under the project will include environmental input. Finally, the process ofdelimiting boundaries between public and private land, which will not always be smooth, will involvesystematic consultations with the public, including environmental groups. The measures are adequate topromote sound environmental management. The EA and EMP appear in annex 1.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: July 9, 2001

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

Environmental NGOs and bilateral donors (including DANIDA, UNDP/GEF, the European Union, and theNGO Forum) have helped in identifying the project's environmental impacts, specifying measures toaddress them and reviewing the EA and EMP.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Most of the positive environmental impacts of the project will result from classifying land and delimitingthe boundaries of land to be set aside for conservation purposes, and developing policies that reflectconcems for improved environmental management. The key output indicators include number of areasdelimited and their total size, and the number of policies developed with environmental input. It is notexpected that outcomes, such as evidence of irnproved environmental management will be measurableduring the project lifetime, as the delimitation process is not expected to be completed until project yearthree or four. It is expected that the project's environmental impacts will ultimately be measurable throughmonitoring of environmental indicators planned by DANIDA (National Capacity Development Project) asinput to the state of the environment report that will be produced every few years, and through research andqualitative monitoring of assumptions and trends that the Cambodian Development Research Institute(CDRI) is carrying out with support from DANIDA.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

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systematic adjudication, NGOs with specialized training in participation will work closely with villagers,explaining the process, producing village land files, and ensuring that all members of the community whoare eligible for a land title will benefit from the Project.

Promoting private sector participation. Projects elsewhere show that involving the private sector insurveying and other technical tasks can substantially speed up the process of titling. Using privatecontractors has several advantages. They can be hired to perform specific tasks, rather than as part of thecivil service, and therefore can be used flexibly. They can also be offered performance incentives (such aspayment based on number of parcels adjudicated) that cannot be offered to the government staff.Currently, Cambodia has little private sector capacity in surveying and mapping. The project will thereforehelp to create private sector capacity by training private individuals together with staff from the ministry sothat all will have the same knowledge, and then use both private and ministry teams for systematicadjudication. The project will also promote development a private sector through its university degreeprogram in land administration and management.

4. Indications of borrower commitment and ownership:

The govemment has showed its commitment to the project in several ways. It included a discussion of landpolicy in its recently approved Interim Poverty Reduction Strategy Paper. In September 1999, it createdthe Ministry of Land Management Urban Planning and Construction. In December 2000 it created aninterministerial body, the Land Policy Council (as part of the Supreme Council of Reform), to manage theprocess of formulating a new land policy. In May 2001, the Council of Ministers approved a Statement onLand Policy; the Statement, while concise and short, provides a clear direction to the government policy onland administration, management and distribution. The new land law was enacted in August 2001 (Seeannex 13). The Government has also developed draft forestry, fishery, and water laws to deal with specificcategories of state land, to be implemented once the land law passes. The Prime Minister already approvedUS$3 million as counterpart for the project in the next five years. And finally, the government hasexpressed a desire to continue to refine its land policies and regulations, and to move forward with thedifficult process of classifying land and demarcating the boundaries between the state and private domains.

5. Value added of Bank support in this project:

The World Bank has supported many land management and administration projects throughout the world,including in four countries within the East Asia and Pacific Region (Lao People's Democratic Republic,Philippines, Thailand and Indonesia). Through these projects, the Bank has developed considerableexpertise in integrating the policy, institutional and technical aspects required to improve land tenuresecurity. IDA has also developed a good working relationship with the government, which makes itpossible to maintain the dialogue needed to resolve the difficult issues that inevitably will arise duringimplementation of the project. Finally, IDA has developed effective relationships with other donors inCambodia working on both land issues and issues closely related to land, including governance,environment, poverty reduction, and resettlement. IDA involvement would also bring coherence to thedonor's program supporting land issues in Cambodia.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):* Cost benefit NPV-US$ million; ERR = % (see Annex 4)O Cost effectivenessO Other (specify)

- 13 -


(a) Improved land tenure security through issuance of around 1 million titles;(b) Increased investment, both domestic and international, due to a better access to credit and

establishment of a more secure, stable and predictable investment climate;(c) Greater efficiency of land use because of the development of land markets in both rural and urban

areas;(d) Improved tax collection and land use planning due to infornation generated from an improved land

registry and cadastre system and the titling process; and(e) Improved natural resources management by private operators who take a long-term view and invest

in measures such as soil conservation and sustainable forest management.

These benefits are expected to be fully realized over the long term extending to 30 years. During the life ofthe project, however, the expected benefits are not likely to be evident. There are two main reasons. First,most of the titles distributed under the program are likely to be issued during project years three and four,which is not enough time for benefits to be measurable. Second, along with titles, the generalmacroeconomic environment and the development of relevant institutions will also influence investorbehavior. If the macroeconomic situation is unstable or formal banking institutions fail to emerge in ruralareas, then expected investment may not materialize.


An economic analysis for such a land management and administration project would follow theconventional approach to economic evaluation of investments, which proceeds by estimating a futurestream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and aneconomic rate of return (ERR). In urban areas, gross economic benefits can be measured through landprice changes due to titling while holding other factors constant. In rural areas (where land markets areunderdeveloped), the gross economic benefits can be measured by the incremental increase in productionand the associated income from titling, less the value of the production inputs. Net economic benefits andreturns would be derived by subtracting project costs from the gross economic benefits.

At this stage, providing quantitative estimates of project benefits is not possible. First, information on howfarmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported bythe Gernan and Finnish governments have not yet generated infonnation on the response of title holders.Moreover, the experiences and data of neighboring countries with long-running land titling programs, suchas Thailand, do not offer a good guide because conditions in these countries are quite different from thosein Cambodia. For example, the land administration system in Thailand is much more developed thanCambodia's. Consequently, an estimation of project benefits would be based on questionable assumptionsand therefore serve no purpose. Second, the focus of the project, which is the first phase of a long-termprogram lasting 15 years, is on institutional development (one-half of project costs), which is a necessaryfoundation for a land administration system and whose benefits are not easily quantifiable. For thesereasons, neither an NPV nor an ERR has been computed for the proposed project.


Baseline and impact socioeconomic surveys will be conducted in selected project areas duringimplementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia landprojects. In rural areas, enumerators will collect baseline data for selected households before the projectstarts. Data will include current investments in agriculture (fertilizer and pesticide use, tools and

- 14 -

machinery, water control technologies, soil conservation measures), plot characteristics (such as, size,irrigation status, fertility and the like), and household characteristics (education, age structure), cropsgrown and yield and others. In urban areas, data about changes in land prices with the plot (or house)characteristics (such as access to transportation) will be collected. Ideally, panel data will be collected. Inaddition, in both rural and urban areas, information on groups that do not receive title will be collected toprovide data for use as a control. As the project is just the first phase of a long-term program, the findingsfrom the baseline and socioeconomic impact surveys will also be used to justify possible follow-on projects.

2. Financial (see Annex 4 and Annex 5):NPV=US$ 15.4 million; FRR = 22 % (see Annex 4)In most systematic land titling programs, to ensure high voluntary participation, landholders are chargedonly a fraction of the full cost of titling. A main concem is that the poorest landholders can not afford theregistration fee. For example, in Thailand, landholders are charged less than US$5 per title, compared withan average cost of US$36 per title. In Indonesia, landholders are charged about US$2 per title comparedwith an average cost of about US$26 per title. The gap is covered by charging registration fees onsubsequent land transactions. This arrangement has worked well in Thailand.

This arrangement will be followed in this project. Current estimates are that the average cost per title isUS$38. A fee of US$2-5 per title will be charged to landholders in rural areas, and a fee of US$15-25 pertitle to landholders in urban area. Interviews during field visits and other anecdotal evidence indicates thatthese fees would be reasonable. Unofficial fees range generally between US$200 and US$500. This costrecovery arrangement for the project will have a positive impact on distribution of project benefits and willpromote an efficient use of the output (titles) from the project.

However, a careful study of fee structures and levels of land-related taxes will be undertaken as apre-implementation activity. The purpose of the study will be to develop a system that balances the need toattract people to register land for the first time and again when it is sold on the one hand and the need torecover costs of land titling and registration and generate government revenue on the other.

Fiscal Impact:

In the short term, the fiscal impact of the proposed project will be neutral given that less than 10 percent ofthe total project cost will be financed by the government. In the long term, the fiscal impact of the projectis expected to be highly positive, as government revenues from fees and taxes from first-time titling andsubsequent transactions of land rise. The NPV is US$15.4 million and the FRR is 22 percent. Annex 5presents a detailed financial analysis.

3. Technical:The pilot projects financed by the German, Finnish and French governments tested several mapping andsurvey technologies similar to those used in other titling projects in the region. The technologies providingappropriate levels of accuracy at the minimum cost have been adopted. However, the pilots have differedfrom some of the other regional projects by producing digital mapping and computerized title productsfrom the outset. This is a reflection of the advances being made in technologies, which have greatlysimplified and reduced the cost of these processes. The cadastre geographic information system (GIS) ordigital mapping system uses simple PC technology that is cheap to maintain, with GIS software and adatabase program that are commonly available. The choice of technology was reviewed during projectpreparation by carefully assessing the experience of the pilot projects and a proposed technical approachwas recommended as part of the project design.

- 15 -

4. Institutional:

Sustainability of the land administration system will depend, among several factors, on the ability ofMLMUPC and their provincial and local offices to undertake institutional and human resources reform toadopt to their new expanded mandate in the coming years. To identify policy and institutional constraints,an institutional assessment for the ministry and their local officers was undertaken during projectpreparation. Recommendations of this assessment were incorporated in the design of the project and a fullcomponent was devoted to long term institutional strengthening to MLMUPC and their provincial and localoffices.

4.1 Executing agencies:

The MLMUPC will execute the project. This is a new ministry, created in 1999, with no experienceimplementing Bank projects other than what was gained while executing activities for project preparationunder Japanese PHRD grant support. The work load of the Ministry will expand by five folds (accordingto budget figures) during project implementation. The current structure and physical facilities are notadequate. Therefore, the project will provide the necessary support to construct an office building for theMinistry to move all their various departments in one building. The project will also provide support to theMinistry to review its current structure, staffing and human resource policies, and develop and implement anew structure and a human resources plan to enable the Ministry to adequately support its expandedmandate. The project will also support the Secretariat of the Council of Land Policy to enable it to developland policies and regulations in a transparent and participatory manner.

4.2 Project management:

A project management office (PMO), to be established within the ministry, will coordinate projectactivities. The PMO will be headed by a project director and will report directly to the minister onadministrative issues and to the Council of Land Policy for policy guidance. He or she will also convene aproject technical committee comprised of the general directors of the various departments implementing theproject. Small provincial (or municipal) project management offices (PPMO) will be established in each ofthe ten provinces and one municipality (Phnom Penh) where systematic registration will be undertaken.They will be headed by directors of the provincial or municipal departments of land management and willreport to the project director at the central PMO on all project matters.

As described above, MLMUPC has little experience with implementing Bank projects. Because of this, thePMO will be supported by technical assistance to manage the project. The team leader of TA will advisethe project director and several intemational, local and regional advisors will be provided to support thevarious units of the PMO.

4.3 Procurement issues:

The procurement system in Cambodia is based primarily on the Sub-Decree dated July 31, 1995 GovemingPublic Procurement. The Sub-Decree has a waiver, which mandates the application of IntemationalFinanced Institutions (IFI) procurement rules and regulations for IFI-financed procurement. In generalterms the system is consistent with the Bank's guidelines, with some exceptions. Some of the most notableand unacceptable deviations from Bank policy are the liberal use of the Direct Purchase Method;negotiations with the lowest bidder to reduce the price when all bids exceed the cost estimates; theprerequisite requirement for the prior registration of foreign firms to be able to participate in NCBprocurement; the use of the merit point system for pre-qualifying finms instead of pass/fail minimumcriteria for pre and post qualifications; the obligatory requirement for a foreign contractor to enter into ajoint venture with a local firm. Because of the waiver noted, the draft CPAR (Mar. 1997) recommends a

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'side letter' for public procurement of goods and works, and consulting services.

An assessment of the procurement capacity of MLMUPC was carried out in accordance with the OfficeMemorandum from the Manager of the World Unit of the Operational Core Services Network (OCSPR)dated August 11, 1998. The assessment involved a review Bank Procurement of the procurement policiesand procedures adopted and implemented by the central office involving purely locally funded projectssince MLMUPC has not had the opportunity to handle foreign assisted project, having been establishedonly recently.

In general, the rules and regulations relating to procurement implemented at MLMUPC adhere to theprinciples of competition and are intended to promote fairness, economy, efficiency and transparency.However, there are certain rules, regulations and practices which may not fully support these principles inprocurement transactions. The project should not be affected because the country's Procurement Law andits intemal rules and regulations contain a waiver for foreign funded projects. The MLMUPC ha's not hadthe experience in implementing projects funded by international financing institutions. This will be the firstBank financed project it will implement. The overall procurement risk assessment is high. The main risksconcern the inadequate procurement staffing and knowledge, absence of fonnal and integrated procurementoperating system, and lack of an intemal audit function to carry out effectively the implementation ofprocurement for the project.

To mitigate these risks, a series of actions will be undertaken by the project. These actions are included inAnnex 6.

4.4 Financial management issues:

A financial management assessment of the implementing agency, MLMUPC, was carried out by a Bankfinancial management specialist. The project financial management risks were rated high due to (a)inexperience of the MLMUPC in managing foreign funded projects; (b) more than five fold increase in thebudget managed by MLMUPC as project implementation begins; (c) significant amount of project activityat the provincial level; and (d) likelihood of politicization due land disputes. In order to minimize the aboverisks, technical assistance under the Project will be provided to establish a financial management functionin the PMO and recruit and train adequate and competent staff. A Financial Advisor (funded out of TA)will be employed at least for minimum period of two years. The financial management arrangements agreedinclude (a) approval by IDA of a Financial Management Manual establishing financial policies, proceduresand accountabilities; (b) establishment of an internal audit function to audit provincial activities; (c)centralized accounting function to record and report all project activities; and (d) regular ProjectManagement Reporting. The intemal auditor will submit semi-annual reports to MLMUPC, the LandPolicy Council and the World Bank. The financial management assessment and the arrangements agreedare given in Annex 6.

5. Environmental: Environrmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The project is classified as category B because it is not expected to have significant adverse environmentalimpacts. Other than rehabilitation/construction of project office buildings, training facilities and institutebuilding, the project will not support civil works, land conversion, resource extraction, industrialproduction or any activity that could potentially damage the environment. Technical designs and locationsof civil works have not been finalized. Thus it is not possible to evaluate possible effects at this time. Allbuildings will be designed and constructed in accordance with sound architectural and engineering practiceand will make appropriate arrangements for dust and noise control, solid waste disposal, sanitary facilities

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and worker safety. Contracts for civil works will be screened for environmental impacts. All policy andinstitutional development activities will solicit stakeholder input on environmental implications throughpublic review procedures. The project will also support the development of procedures and undertaking thepreparation of land classification maps in project provinces which define the boundaries between variouscategories of land use, such as urban, agriculture forest, and protected areas. The preparation of thesemaps will be done through a participatory process among local government officials, NGOs, and variousnational government agencies to ensure proper protection of the environment and natural habitats.

5.2 What are the main features of the EMP and are they adequate?

The project has been designed to promote sound environmental management and mitigate potentiallynegative affects arising directly from project activities. To promote sound environmental management, theproject includes support for land classification and delimitation of boundaries between the public andprivate domains, and creation of capacity for land management. To minimize negative impacts on theenvironment, titles will not be issued for land in potentially environmentally-sensitive areas until the landshave been classified and the boundaries between the state and private domains agreed. In addition, policiesand regulations formulated under the project will include environmental input. Finally, the process ofdelimiting boundaries between public and private land, which will not always be smooth, will involvesystematic consultations with the public, including environmental groups. The measures are adequate topromote sound environmental management. The EA and EMP appear in annex 1 1.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: July 9, 2001

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

Environmental NGOs and bilateral donors (including DANIDA, UNDP/GEF, the European Union, and theNGO Forum) have helped in identifying the project's environmental impacts, specifying measures toaddress them and reviewing the EA and EMP.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Most of the positive environmental impacts of the project will result from classifying land and delimitingthe boundaries of land to be set aside for conservation purposes, and developing policies that reflectconcerns for improved environmental management. The key output indicators include number of areasdelimited and their total size, and the number of policies developed with environmental input. It is notexpected that outcomes, such as evidence of improved environmental management will be measurableduring the project lifetime, as the delimitation process is not expected to be completed until project yearthree or four. It is expected that the project's environmental impacts will ultimately be measurable throughmonitoring of environmental indicators planned by DANIDA (National Capacity Development Project) asinput to the state of the environment report that will be produced every few years, and through research andqualitative monitoring of assumptions and trends that the Cambodian Development Research Institute(CDRI) is carrying out with support from DANIDA.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

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Social Assessment

The Royal Government of Cambodia has embarked upon a reform agenda designed to promote sustainableeconomic and social development, poverty alleviation, and peace. The Land Policy Framework is one ofthe most significant initiatives and includes accelerated land titling, establishing a legal framework forgoverning property rights, and setting up territorial master plans and zoning rules. As a prelude to thetitling program, a social assessment was conducted during project preparation. The main objectives of thesocial assessment were to (1) identify different stakeholders of land and the project, (2) examine the socialand institutional capacity at the local level for governing land rights, (3) forecast possible negative impactsof the program, and (4) make relevant policy recommendations. The study was qualitative in nature andwas conducted in five provinces, as well as one urban case study in Phnom Penh which focused on squattersettlements. Various qualitative methods were used, such as small group discussions and individualinterviews with farmers, migrants, demobilized soldiers, women's groups, officials from the landmanagement departments, provincial land dispute settlement commissions, chiefjudges at provincial courts,tax departnent officials, as well as village, commune, and district chiefs. In Phnom Penh, a day-longseminar in February 2001 that involved municipal officials and NGOs was organized to elicit informationon land issues in the city. The findings and final analysis of the SA were presented at a stakeholderworkshop on July 9, 2001 sponsored by the MLMUPC and Cambodia Research Development Institute.Participants came from NGOs, provincial land departments and governors' offices of the 24 Provinces.

The key findings from the SA showed that disputes over land are growing, as land values rise, especially inareas with potential for development such as lands near roads and in or near urban areas or market centers.While communities recognize land rights according to traditions and customs, increasingly people andentities from outside the communities are claiming land according to formal laws and procedures.Operating within an informal system, ordinary people often cannot defend themselves successfully usingformal dispute resolution mechanisms, which rely on presentation of formal documentation and requiremoney and time. A major social development outcome of the project is to help one million families, mostlysmallholders, to obtain formal titles to land, and thereby reduce their vulnerability from being dislodged.There are a large number of squatters in Phnom Penh and other major cities and an increasingencroachment on public land. Women, especially women-headed households, are vulnerable and lackknowledge of land rights and land titling procedures.

The key findings and recommendations from the social assessment are listed in the matrix at the end ofAnnex 12, Attachment 1. The full social assessment is available in project files. The findings of the socialassessment have been used in designing the project, especially in the areas of participation, informationdissemination and education on land rights; land dispute resolutions; and future policy studies andimplementation guidelines.

Measures to Help the Disadvantaged

Community Outreach by NGOs. During project implementation local NGOs will be contracted to facilitatecommunity participation during systematic adjudication. They will be responsible for field work prior tothe commencement of systematic adjudication. Their scope of work will include the following tasks:information dissemination, targeting women for education campaign on land laws and titling procedures,conducting village baseline profiles, entering field data into the registration database, analyzing registrationrecords, producing consolidated village land files, explaining the benefits of and procedures for registeringsubsequent transfers and provide support for local land use planning and evaluation and monitoring. Theproject will provide the contracted NGOs with orientation and training, including on gender-specificmethods and tools for participation.

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Legal Assistance for the Poor by NGOs. A major social development outcome of the project is to help onemillion families, mostly smallholders, to obtain formal titles to land, and thereby reduce their vulnerabilityfrom being dislodged. To assure that the poor and marginal groups fully benefit from the process, theproject will provide legal aid to the poor and will contract NGOs to work in communities and involve alleligible households in the program. The ministry will also conduct a public information campaign toexplain the new land law, regulations and procedures.

Partnership with Development Groups. The Municipality of Phnom Penh and NGOs, with technical andfinancial assistance from UNCHS/UNDP and DFID (British Aid), have been actively engaged in theinformal settlement program and in improving the lives of squatters households by providing security oftenure. The program is based on the UNCHS intemational principles for shelter-i.e., a) provide securityof tenure; b) promote the right to adequate housing; c) provide equal access to land; d) promote equalaccess to credit; and e) promote access to basic services. UNCHS has developed several innovativeapproaches for the program in Cambodia. Neither the World Bank nor the Ministry of Land has thecomparative advantage in dealing with informal settlers and squatters. It is better for the Project to supportthe development groups currently working in this field.

Informal Settlers. Agreement has been reached with the Ministry (MLMUPC) regarding the approach tobe used in the case of informal settlers including squatters. The project (a) will issue land titles wherethere is agreement by the government to provide the land to be registered to informal settlers, (b) willfacilitate the provision of services and titling where the municipality is working with development groups toprovide land to informal settlers through land sharing and/or relocation programs based on the UNCHSprinciples, and (c) will not issue titles where there is no agreement to allocate the land to informal settlersor through land sharing and/or relocation programs. The Project has developed procedures for screeningand consultation to ensure that the above conditions are agreed before provision of land registration andtitling services.

Resettlement

A Resettlement Policy Framework has been prepared for the Project. It provides the principles andprocedures to be followed to compensate people who may be negatively affected by the Project so as toensure that they will be assisted to improve, or at least restore their living standards, income and/orproduction capacity to pre-project levels. While no eviction, involuntary resettlement or land acquisition isanticipated under the project, a policy framework has been developed to protect people who may benegatively impacted from three possible sources.

Indigenous Mnorities

The new Land Law for Cambodia was enacted into law in August 2001. Among the articles in the new laware several pertaining to indigenous communities which allow for collective ownership. However,sub-decrees and other implementing rules and regulations have yet to be developed. This will be at leasttwo or three years before clear guidelines will be available for communal titling in indigenous areas. Whilethis project will not undertake individual titling in areas inhabited by indigenous minorities, an IndigenousMinority Policy Framework has been prepared which will guide the preparatory work for the secondproject in this long term program of land management and administration. Where opportunities anddemand emerge for communal titling, the Project will coordinate with the relevant government ministriesand consider selective requests.

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The area to be covered by the Project comprises ten provinces and the municipality of Phnom Penh(Attachment III of Annex 2). These areas do not include provinces in the northeast where the indigenousminorities live'. According to the available information, there are small numbers of indigenous minoritiesin two of the ten proposed project provinces. In anticipation of including the northeast area in the secondproject of the program, several studies will be undertaken during the Project . The proposed reviews andimplementation guidelines for land titling for indigenous minorities will take as its basis the policycontained within the draft land law 2001 and lessons learned from ongoing projects for indigenouscommunities in the northeast area.

1/ In Cambodia indigenous people are variously-referred to 'Khmer Loeu' (upper Khmer), 'highland peoples' or 'hilltribes.' These groups make up a large part of the population in the northeast region; in the provinces Ratanakiri (62,000 or 66percent of the total population, according to the 1995 census), Mondolkiri (23,000 or 71 percent), Stung Treng (5,000 or 6.6percent) and Kratie (21,000 or 8.3 percent). Estimated figures set the total population of indigenous minorities toapproximately 120,000, or about one percent of the total population in Cambodia; they comprise of approximately thirteen mainlanguage groups.

2/ The new land law (Annex 13) provides for the recognition of inalienable communal land rights of "ethnic minoritycommunities" over residential areas and traditional cultivation lands within forests. Additional policy work and furtherelaboration of the legal framework will be required before the govemment will be able to implement this section of the newland law.

6.2 Participatory Approach: How are key stakeholders participating in the project?

During project implementation. Local NGOs will be contracted to facilitate community participationduring systematic adjudication. They will be responsible for field work prior to the commencement ofsystematic adjudication, conducting village baseline profiles, explaining the legal rights of the individualsand communities under the Cambodian laws, promoting the participating of women and otherdisadvantaged groups in land registration, producing consolidated village land files, explaining the benefitsof and procedures for registering subsequent transfers and provide support for local land use planning andevaluation and monitoring. The project will provide the selected NGOs with orientation and training,including on gender-specific methods and tools for participation.

Following project completion. Providing a title by itself does not necessarily lead to immediateimprovement in social welfare and economic livelihood for households. For rural households, people needthe support of extension services, credit, access to markets and other social services, in addition to securityof tenure if they are to improve their incomes and quality of life. The project will link titled communitieswith nongovernmental organizations working in the area that can provide further support services. NGOshave indicated that they prefer to work with people who have secure land tenure because such people aremore willing to invest time and resources into their land and communities.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

NGOs, academic institutions, donors, indigenous rights' groups, and other civil society organizations wereconsulted during preparation of the social assessment. They are also involved in drafting and inconsultations about the land law, and the subdecrees and regulations needed to implement it. They haveinfluenced major aspects of the project design, for example the decision to include the Legal Assistance forthe Disadvantaged subcomponent. They will also be heavily involved during project implementation,providing inputs to and comments on draft policies and regulations being developed under the project, aswell as working with communities as detailed above.

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6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

As described above, NGOs will be contracted to work with communities during the process of systematicadjudication. Their involvement should ensure that no social or income groups are excluded from theirrights to receive a title. The project is also supporting the provision of legal assistance to the poor, whichshould help strengthen their position in land disputes.

6.5 How will the project monitor performance in terms of social development outcomes?

Monitoring indicators will include the number of titles issued under the project and the percentage of titlescollected by households. They also include qualitative measures that conflicts over land are falling and thatland grabbing is diminishing.

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 NoForestry (OP 4.36, GP 4.36) 0 Yes 0 NoPest Management (OP 4.09) J Yes * NoCultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) * Yes 0 NoInvoluntary Resettlement (OP/BP 4.12) * Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes * NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

The project has been carefully designed to ensure compliance with the Bank's applicable safeguardpolicies. Contracts for civil works (which involve rehabilitation/construction of office space and relatedfacilities) will be subject to environmental screening and will have to comply with the resettlement policy,where required. Land offices will be built on vacant government land, whenever possible. The project willalso avoid titling in areas of potential environmental significance until the boundaries of different categoriesof land are agreed. The project will not involve resettlement nor issuance of individuals land titles in areasinhabited by indigenous minorities. Institutional arrangements will be in place for project implementationwhere staff will be designated and trained to guide and monitor for environmental and social safeguards.

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F. Sustainability and Risks

1. Sustainability:

A number of actions will be taken to ensure project sustainability. First, to ensure that benefits offirst-time titling are sustained through registration of subsequent transactions, the project will includepublic information campaigns to explain the importance of fonnal registration for maintaining land tenuresecurity and gaining access to credit. NGOs working in villages during systematic adjudication willreinforce the message. Second, the project will support a study to develop appropriate tax and fee structureon registration of land transactions, taking into account the impact of the level of these taxes on people'sdecisions to formally register transactions. Third, the project will support the development of institutionaland human resource capacity that will sustain titling and registration activities after the project iscompleted. In particular, the project's support for development of an efficient land registration system willhelp build capacity to manage title transfers on an ongoing basis once properties are registered in the landoffices.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth columnn of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveAll necessary sub-decrees identified in the S Continuous dialogue with the government on thenew land law approved and enacted. land law and related sub-decrees. Technical

assistance will be provided to the government todraft these sub-decrees.

Judicial system is not strengthened S The judicial reform project, currently underpreparation, will assist in strengthening thejudicial system. Also, the ADB financed TA willinclude a substantial component to train judgeson the new land law.

Governance does not improve. H There are several projects supported by IDAand other donors with an aim to improvegovernance.

The financial sector continues to be weak. S ADB is supporting the financial sector.

Secure land transaction law is not enacted. S Dialogue with other donors to encourage themto support the secure transaction law.

Economy growth slows down. S External to the project.From Components to OutputsSecretariat of the Council of Land Policy M The project includes support to the secretariat todoes not have capacity to oversee the ensure it is able to perform its responsibilities.fornulation of policies and regulations.Council of Ministers does not support S IDA is maintaining an active dialogue with theinstitutional reforms. MLMUPC to keep abreast of developments in

government. The project will be scaled back ifcommitment to reforms flags.

Counterpart funds are not available. M Continued dialogue with the Ministry of

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Economy and Finance to explain the fiscalbenefits of the project on government revenues.

NGOs capacity is inadequate to M The project will provide training to NGOs onsuccessfully mobilize communities to participatory tools, land issues and other topicsparticipate in systematic adjudication. and support them throughout the adjudication

process.

Govermment lacks commitment to S The project includes support for strengtheningensuring disputes resolution mechanisms mechanisms of dispute resolution. IDA willfunction efficiently and fairly. maintain an active dialogue with government

and development partners to remain abreast ofchanges in commitment. The project will bescaled back if commitment to a fair process ofdispute resolution is inadequate.

Government entities and other S The project is supporting a systematic publicstakeholders are not able to reach consultation process to build broad consensusagreement on the process of land for decisions and will provide technicalclassification. assistance to the council of land policy to reach

consensus among the various governmentagencies.

Overall Risk Rating SRisk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

Classifying land and demarcating the boundaries between the public and private domains, and, for land inthe public domain, tracts under the control of various government entities will often be difficult and mayincrease disputes in the short-run. The project will not title lands in areas where disputes are likely untilagreements are reached on the status of the land. The project will support a systematic public consultationprocess to help build consensus for decisions and will ensure continuous discussions and consultations withNGOs and civil society. It is anticipated that some land now nominally under state control (about 80percent of the total) will be released to the private domain. This will free government resources to bettermanage the lands that remain under its control.

G. Main Loan Conditions

1. Effectiveness Condition

* The establishment of an adequate financial management system, satisfactory to the Association, toensure proper accounting, monitoring and reporting of Project operations, resources and expenditures;

* The adoption of the Project Implementation Manual by MILMUPC in from and substance satisfactoryto IDA; and

* Opening of the project account and deposit of US$100,000 of government counterpart fund.

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2. Other [classify according to covenant types used in the Legal Agreements.]

Board Conditions

* The adoption of the Environmental and Social Guidelines by the Borrower.

Other Conditions

* MLMJUPC will, by July 1, 2002, issue the sub-decree referred to in Article 228 of the Land Law,setting forth the organization and functions of the cadastral administration, which shall be satisfactoryto the Association, and by December 31, 2002, issue a ministerial instruction, satisfactory to theAssociation, setting forth the detailed implementation arrangements for the said sub-decree;

* MLMUPC will, by July 31 of each year, starting July 31, 2002, furnish to the Bank for its review andcomments, an annual work plan and budget, and implement it, taking into consideration the commentsfrom the Bank;

* Annual financial audit will be conducted by an independent auditor acceptable to the Bank and willfollow the terms of reference in accordance to the appropriate auditing principles, as approved by theBank, and such audits will be submitted to the Bank within six months of the close of each fiscal year;

* MLMUPC will ensure the following reports are submitted to the Bank: (i) semi-annual progress reportson April 30, and October 30 of each year, commencing on October 30, 2002; (ii) a report on theproject's mid-term review by September 30, 2004; and (iii) within six months after project completion,the Government contribution to the Implementation Completion Report evaluating the project'sperformance;

* A mid-term review will be conducted no later than October 31, 2004;* A Monitoring and an evaluation system will be developed to monitor project performance, will be

developed by December 31, 2002;* Six-monthly Progress Report format will be developed by December 31, 2002; these reports will be

submitted to the Land Policy Council, the governments of Germany and Finland and to the Bank. Thereports will summarize progress in the project implementation for the reported period, physicalachievements, and financial data for all sources of funds under the project, including those from thegovernments of Germany and Finland;

* The establishment of the Provincial Management Offices in the remaining project provinces byDecember 31, 2002; and

* MLMUPC will develop and complete the implementation of a restructuring plan of the Ministry byDecember 31, 2003.

H. Readiness for Implementation

0 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

[ 1. b) Not applicable.

O 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

D 4. The following items are lacking and are discussed under loan conditions (Section G):

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1. Compliance with Bank Policies

Vi 1. is prject cOmplic with all applicabic Bank policisEi 2. The fohlowing excecpions to Bank policies arc rtcommended ror appmval. The projed complies With

all other applicabic Daik policies

Wadc Zakout iak D. Ian C. PoncrTeam Leader Sector Director Country Director

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Annex 1: Project Design SummaryCAMBODIA: Land Management and Administration Project

Key Perfornance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)1. Improve governance and Enactmnent of sub-decrees to MLMUPC and other reports. Government can buildpublic administration. implement the 2001 land law. consensus to enact new land

policies and associatedReduce in number and volume sub-decrees.of land disputes.

Reduce cases of landgrabbing.

2. Improved access of the poor Decrees in landlessness.to basic social services andeconomic opportunities.

Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:1. Land tenure security for Conflict over land falls. Socioeconomic impact study. Judicial system isurban and agriculture land strengthened.holders improved.

Land grabbing falls. Govemance in the country isimproved.

Agriculture productivity rises.

Access to (cheaper) credit The financial sector isincreases. strengthened.

Investment in the property Secure land transaction law issector increases. enacted.

2. Land markets operate more Number of land transactions Socioeconomic impact study Economy continues to grow.efficiently. increases.

Taxes and Fees collected fromland transactions increase.

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:Component 1. Land policies Delimitation and MLMUPC reports. Secretariat of the Council offormulated and regulatory administration of state land Land Policy has capacity toframework in place. policy approved by the CLP. oversee the formulation of

policies and regulations.Tax and fees structure on landtransactions policy approvedby the CLP, regulatoryframework signed, and thenew tax and fees structureimplemented by year 3 of the

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project.

Land accessibility anddevelopment policy isapproved by the CLP andregulatory framework is inplace.

Registration of and aroundnatural resources policy isapproved by the CLP.

Registration of communal andindigenous peoples' landrights policy approved by theCLP and regulatoryframework in place.

Component 2. MLMUPC is Ministry building is complete Project progress reports, Council of Ministers supportsundertaking its mandate and occupied by year 3 of the supervision, midterm and institutional reforms.effectively and efficiently. project. completion reports.

Counterpart funds areRestructuring of the ministry available.is complete and a humanresources development plan isdeveloped and implementedby year 3 of the project.

Surveying and landmanagement educationprogram is established in anational university.

Licensed private surveyors arehandling 10 percent of titlingactivities by year 3 of theproject and 20 percent by year5.

Map shop is fully operational.Component 3. Titles are One million titles issued Progress reports, supervision NGOs can successfullyissued effectively and une the tetic Itling reports, mid term report and mobilize communities.efficiently. under the systematic titlig ICR.

program.

95 percent of titles collected Progress reports, supervision Counterpart funds areby beneficiaries. reports, mid term report and available.

ICR.

Average cost of issuing title is MLMUPC monitoring report.less than US$30 per title.

Issuance of titles throughsporadic adjudication takesless than 2 months from start

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to finish.Land registration system Provincial and district land No informal fees are requestedfunctioning well. offices are built. for registration.

75 percent of landtransactions are registered.

Registration of landtransaction in Phnom Penh iscompleted in one day by year4 of the project.

Computerized landregistration database system isoperational in Phnom PenhLand Office and access toinformation in the registry isavailable online togovernment, financialinstitutions and individualsfor a charge.

Component 4. Disputes are Enactment of a sub-decree on MLMUPC reports. Government is committed toresolved quickly and to the the establishment of the ensuring fair process.satisfaction of the parties cadastral commissions.involved.

Establishment of theCadastral Commissions in thecentral MLMUPC office andin the project provinces.

Increase in percentage ofcases resolved by the cadastralcommissions.

Component 5. The Land classification policy is Progress reports, supervision Various government entitiesinformation basis for approved by the CLP and reports, mid-term report and are able to reach agreement onimproved land management is guidelines to develop ICR. boundaries of land classifiedcreated. provincial land for different purposes.

use/classification maps aredeveloped and approved.

Land use/classification mapsare produced for the projectprovinces.

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Key Performnance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Development of US$2.8 million Supervision reports everyland policy and regulatory six months.framework(a) Development of the Midterm review.capacity of the Secretariatof the Council of LandPolicy.(b) Formulation of key Implementation completionpolicies for land report.administration andmanagement.(c) Development anddrafting of legalinstruments.

2. Institutional development US$6.4 million Systems of appropriatelyremunerating staff can beestablished.

(a) Long-term institutionaldevelopment of theMLMUPC.(b) Project management.(c) Development of landmanagement andadministration educationprogram.(d) Development of a privatesurveying industry.

3. Implementation of a land US$20.4 million Provincial and district officestitling program and are able to build capacity todevelopment of land survey and adjudicate land.registration systems NGOs can successfully

mobilize communities.(a) Information disseminationand community participation(b) Systematic land titling(c) Sporadic land tilding(d) Development of landregistration systems

4. Strengthening US$1.7 million Government is committed tomechanisms for dispute ensuring that the process isresolution fair.

(a) Strengthening the nationalcadastral commission

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(b) Strengthening theprovincial cadastralcommissions

(c) Legal assistance to thedisadvantaged

5. Land management US$2.6 million

(a) Clarification ofprocedures for definingdifferent classes of land, suchas forest land, protected arealand, private land, publicprivate land, and the like.

(b) Procurement of aerialphotographs and satelliteimages.

(c) Preparation of landclassification maps for each ofthe project provinces.

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Annex 2: Detailed Project DescriptionCAMBODIA: Land Management and Administration Project

By Component:

Project Component 1 - US$2.80 million

Development of Land Policy and Regulatory Framework

This component will support the formulation of land policies for land administration, management anddistribution through: (a) development of the capacity of the Secretariat of the Council of Land Policy inpolicy analysis and development; (b) formulation of key policies in the areas of land management,administration and distribution based on studies and pilots; (c) drafting of sub-decrees for implementationof the new land law and other legal instruments needed to implement the project; and (d) dissemination ofpolicies, laws and procedures.

A. Development of the Capacity of the Secretariat of the Council of Land Policy

The project will support the Secretariat of the Council of Land Policy (CLP) in policy analysis andformulation using a participatory process. The Secretariat is currently managed by a Secretary Generalwho is also a State Secretary in the Ministry of Land Management, Urban Planning and Construction(MIMUPC) and a few part time professional staff. Under the proposed project, management of theSecretariat will be enhanced by appointing a full time Senior Staff to assist the Secretary General inmanaging the Secretariat. Furthermore, a minimum of two qualified and experienced staff will be assignedto work in the Secretariat on a permanent basis and to get on-job and other training in policy analysis anddevelopment. These will be augmented by staff seconded from other Departments of MLMUPC and fromthe 5 core ministries (out of the 17 agencies) represented on the CLP. The expertise of the seconded staffwould depend on what particular policy issues are being addressed at the time.

The project would support: (i) 24 person-months (part-time) of an international policy advisor provided bythe German Government; (ii) 4 person - months of an intemational expert provided by the government ofFinland to support work on drafting sub-decrees on land registration during pre-implementation period; (iii)24 person-months of a full time local policy advisor to be funded by the German Government; (iv) 12person-months of short term international consultants and 24 person-months of local consultants funded byIDA to support the review and processing of the recommendations of policy studies and the preparation ofa comprehensive land policy framework; (v) training and study tours to be funded by IDA; (vi) workshopsto be funded by IDA; (vii) office equipment and furniture, vehicles and computers, library facilities,printers, and related accessories funded by IDA; (viii) travel costs and allowances funded by the IDA; (ix)an incentive payment for each staff seconded from the 5 core ministries, to be funded by the CambodianGovernment; and (x) an incentive payment equivalent to salary allowances for staff of CLP Secretariat thatwork full time on the project also, to be funded by Cambodian Government.

B. Formulation of Key Policy Areas in Land Management, Administration and DistributionBased on Studies and Pilots

The project will support the formulation of policies in key areas of land management, administration anddistribution including: (i) delineation and administration of state property; (ii) land accessibility anddevelopment; (iii) registration of community and indigenous people's land rights; (iv) registration of land in

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and around natural resources; and (v) fees and charges for first time land titling, transaction taxes and otherland registration taxes. The project will also support the building of consensus and dissemination offindings from the policy studies. Outline Terms of Reference of these studies is included in Attachnient Ito this annex.

C. Development and Drafting of Legal Instruments

The project will finance the development (including studies, consultation and related processes asnecessary) of the laws, sub-decrees and regulations needed to achieve the objectives of the project. Workwill focus initially on the development of sub-decrees and regulations essential for the implementation ofthe new Land Law, with particular attention to the sub-decrees and regulations directly affecting theinitiation and work of survey, titling and registration of land rights under the project. This work isproceeding in the pre-implementation phase using PHRD funds and funds of the bilateral partners undertheir ongoing projects. It is being closely coordinated with the ADB's technical assistance forimplementation of land legislation.

D. Dissemination of Policy, Laws, Rules and Regulations

The effectiveness of the above legislation will depend upon how well expectations and requirements arecommunicated to the public and throughout government. The ADB is taking primary responsibility forbasic messages about the new Land Law, but there will need to be training and public education activitieson the subsidiary legislation, especially in those areas where the systematic survey and titling will beinitiated. The project will finance the preparation and dissemination of educational and training materials.This work will also be coordinated closely with the work funded by the ADB.


Institutional Development

This component will provide support to four main areas: (a) long term institutional development toMLMUPC; (b) project management to implement the project; (c) establishment of a land management andadministration education program in an established university; and (d) development of the private surveyingindustry.

A. Long Term Institutional Development to MLMUPC

MLMUPC was established in 1998 by merging several departments from different ministries under the newministry. The existing structure, staff numbers, skills and incentives are not adequate to support the newlyexpanded mandate of the ministry during project implementation. Further, the ministry offices aredispersed in several buildings around Phnom Penh which will make it very difficult to properly coordinatethe implementation of the land management and administration project.

The project will support the ministry in reviewing its structure and human resources development plan,provide funds to build a new building to house the various departmnents of the ministry in one building, andprovide financing for furniture, office equipment and vehicles. The project will support the establishmentof a modem administrative and financial control system in the ministry. The project will also develop andimplement a comprehensive training plan for ministry staff at all levels. Further, the project will supportthe training center and fund the establishment of a map shop to be located in the ministry to sell the mapsand aerial photographs that will be produced under the project to public and private entities. The projectwill also finance maintenance costs of the equipment and buildings.

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B. Project Management

A project management office (PMO) will be established to coordinate and manage the project activities,which will be implemented through the various departments of MLMUPC. The project will support thePMO with the necessary furniture, office equipment and vehicles. The project will also provide the PMOwith the adequate technical assistance and training in project management, procurement and financialmanagement, planning, budgeting and monitoring, and reporting. The project will establish a computerizedaccounting system, linked to provincial offices and capable of generating project monitoring reports. Theproject will also support travel cost and per diem of the PMO and other staff participating in projectimplementation. One round of social assessment was done during project preparation. A second round ofsocial assessment will be done in year 3 of the project in areas awarded with titles to draw lessons about theimpact of the project on the beneficiaries. The project will also support undertaking socio-economic andenvironmental impact assessment and studies, as needed to monitor the long term socio-economic andenvironmental impact of the project.

C. Development of Land Management and Administration Education Program

The project will support the development of a land management and administration institute in the RoyalAgriculture University in Phnom Penh. The support will cover curriculum development, a professorexchange program, a new building or renovation of an existing building, furniture and office equipment,and equipment to train students in surveying and land management.

D. Development of a Private Surveying Industry

The project will provide support to the development of private surveying profession through training andcapacity building. The project will train private surveyora-aiid award them small contracts as part of thesystematic adjudication work on a per parcel basis (with equipment provided to them by the project). Theproject will also support the ministry to prepare a draft private surveying sub-decree to provide the legalbasis for the private sector profession with a goal that all subdivision survey will be done by the privatesector.

Project Component 3 - US$ 20.40 million

Land Titling Program and Development of Land Registration Systems

The component will support the issuance of first time land titles and the establishtnent of land registrationsystem to register land transactions, and will include: (a) information dissemination and communityorganization; (b) systematic land titling program; (c) sporadic land titling program; and (d) development ofan efficient, transparent and effective land registration system.

A. Information Dissemination and Community Participation

This sub-component will support information dissemination through mass media (television, radio andnewspapers) and posters about systematic, sporadic land titling program, and land transaction registration.The information dissemination also includes support information dissemination to villagers undergoingsystematic adjudication. Prior to the commencement of the land titling activities in the village, the projectwill organize an infornation campaign, through focus groups discussions and workshops to explain theproject objectives, rationale and benefits, and also explain the forms, the procedures and legal rights to eachhousehold. The information campaign will commence about one month before the surveying and

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adjudication starts. The project will hire and train local NGOs in the project provinces to undertake thevillage level information dissemination and community organization campaign including training andparticipation of mass organizations such as farmers associations.

This sub-component will also include support for the collection of village land profiles to define villageboundaries, describe land distribution, land market activity and identify any pre-existing land disputes.These information will be used in the planning of the titling program and later for monitoring thesocioeconomic impacts of the project. A standard form for gathering the data will be developed during thepre-implementation period. These data will be inputted in a computerized database for easy reference anduse.

B. Systematic Land Titling Program

This sub-component will support the current initiatives of the MLMUPC in land titling (first-time land titleregistration) with further development and acceleration of the ongoing two pilot projects financed by theFinnish and German governments. The land titling program will cover ten provinces and Phnom Penhmunicipality (Attachment 11) and will cover both urban and rural areas. The sub-component will includethe following activities:

Geodetic network control and base mapping. The project will support the densification of thegeodetic network to support the existing primary network and to provide suitable geodetic control forthe systematic registration activities. The project will also support aerial photography and theproduction of orthophotos maps to support the systematic land titling.

Training in support of accelerated land titling. This project will support training (i) in the use ofglobal positioning system (GPS) and other survey equipment; (ii) for systematic adjudication teamsin systematic registration processes, land law, participation facilitation and dispute mediation; and(iii) training of provincial and district staff in legal, technical, and management subjects.

Field survey/adjudication. This include the staffing and deployment of systematic adjudicationteams and involves: (i) refnement of the existing systematic registration procedures; (ii) field workincluding surveying and land adjudication in project areas; (iii) preparation of records anddistribution of certificates to land holders; (iv) distribution of cadastral index maps and village landfiles to village leaders and commune councils to support their functions; (v) follow-up publicinformation sessions on registration of transactions; and (vi) transfer of land records to the districtand provincial offices.

The project will issue an estimated one million titles. Attachment III to this annex includes the number oftitles to be issued in each of the project provinces per year. This number will be refined later during theannual planning cycle, taking into account the capacity of government to implement the project.

The project will finance cadastral mapping, aerial photographs and orthophoto maps, land titles production,vehicles, motorbikes, firniture, survey and photomatric equipment, and geodetic network densification;training to systematic adjudication teams, provincial, district and village officials, and NGOs; travelallowances to adjudication teams; salaries and travel allowances of contractual staff, operational costs ofadjudication teams; village profiling, information dissemination and community organization. Thetechnical assistance (both international and national) for this sub-component will be financed by the Finnishgovernment.

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C. Sporadic Land Titling Program

The sub-component will support the issuance of titles (first-time issuance and registration of land titles) ondemand in the project provinces. This support will include (i) review of the current procedures for issuanceof land titles and provide modification if necessary, (ii) preparation of sporadic adjudication manual, (iii)training for staff of provincial and district land offices in the new procedures, and (iv) some surveyequipment and aerial photographs.

The project will finance training, surveying equipment, and aerial photographs, and travel allowances toadjudication teams and salaries and travel allowances of contractual staff. The technical assistance (bothinternational and national) for this sub-component will be financed by the Finnish government.

The project will promote HIV awareness among project staff, with particular emphasis being paid to staffwho are expected to spend lengthy periods of time in the field, away from their families.

D. Development of a Modern Land Registration System

This sub-component will support the development of a sustainable, efficient, transparent and effective landregistration system that will ensure the security of titles and transactions records, full participation inregistration of land transactions, and efficient service delivery. It will include the following:

Review of land registration system and operational procedures. The project will support thereview of the existing procedures of land registration and develop new procedures for landregistration based on the new land law and the land registration sub-decree (see component 1). Itwill also include preparation of new instruction manual and provision of training for land officestaff.

Improved office facilities, equipment furniture and materials. Many provincial offices and mostdistrict offices lack the adequate space and facilities to cater for the systematic adjudication activitiesunder the project or the increased activity after the project. The project will support the construction,renovation or upgrading of provincial and district offices in the project areas and provision ofnecessary furniture and office equipment. New construction of these office buildings will only besupported on unoccupied public land. Funding for maintenance of the facilities and equipment willalso be provided.

Establishment of land registration database system. While the land records will be kept in paperform, it is important to develop a computerized database to keep basic information about landparcels. Access to the information should be available to other government agencies, banks andprivate citizens and firms on a fee basis. The database will include information about the parcelnumber, current and previous owner, area, location, zone, property value, date of registration, anymortgage or lien on the parcel, and the like. The project will support the design and insulation of thesystem. The system will be installed first in Phnom Penh and then expanded to other projectprovinces.

The project will finance the new construction or renovation of the land office buildings, furniture and officeequipment, and the design and installation of the land registration database system, office building andequipment maintenance. The technical assistance for this component will be financed by the Finishgoverrnent.

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Strengthening Mechanisms for Dispute Resolution

The component will strengthen dispute resolution by MLMUPC as an element in provision of tenuresecurity by the titling process.

Disputes over land are endemic in Cambodia and reflect the pervasive tenure insecurity. Under the 1992land law, rights to land depend largely upon short-term occupation. This was a reasonable strategy forre-establishing a property rights system after the legal chaos and large-scale population movements of pastdecades. Now LMAP will record and confirm those rights as ownership through systematic survey ofholdings and adjudication of title. Disputes will arise because there are many fraudulent and overlappingclaims.

In the long run, the project will reduce the number of land disputes. But in the short term, systematicadjudication of land rights under the project will "flush out" many disputes: the prospect of a finalsettlement of rights will prompt the bringing forward of claims not previously articulated or not activelybeing pursued. The objective under this component is to increase the fairness of the titling process. Thisrequires adequate and impartial dispute resolution institutions and processes.

The GTZ pilot project has gained valuable experience with dispute settlement through local conciliation,and it has proved possible to resolve the vast majority of disputes at this level. But where conciliation fails,the disputants must take their claims to other dispute resolution institutions. Rule of law outcomes for thosedisputes and fairness for project beneficiaries will depend upon the quality of the dispute resolutionprocesses, and this component seeks to strengthen these as a means of securing the benefits of the project tolandholders.

Efforts will focus on the Cadastral Commissions. The courts of Cambodia have very limited capacity andcredibility, and in 1999 the Government instituted a system of dispute resolution commissions at national,at provincial and in some cases at district level. These commissions have investigated, mediated andarbitrated land disputes. They have been managed and chaired by the officials of the Ministry of Interior,but have involved officials of several ministries, and have been supported by the MLMUPC, which has hada growing presence on the commissions. Under the new Land Law, the MLMUPC will take over andreconstitute these commissions as the Cadastral Comrnission. Unlike its predecessors, the CadastralCommission makes decisions, rather than simply mediating.

LMAP will support the development of the new Cadastral Commission at national and provincial levels,and to a lesser extent at district level. This assistance will be limited to the provinces where the project isoperating. There are three sub-components:

A. Strengthening the National Cadastral Commission

The Cadastral Commission will be established according to a framework approved by the Land PolicyCouncil, under one or more sub-decrees prepared by the Ministry with TA provided by the ADB's LandLegal Project and LMAP. The support provided by the project will build capacity and realize hopes for amore effective and impartial style of dispute settlement. The Commission and its secretariat will benefitfrom the project-supported expansion of office space. Vehicles and motorbikes will be provided. Theproject will fund provision for computers, office furnishings, and orthophoto maps; preparation of training

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materials and training in investigation of disputes; public education to make citizens aware of the newdispute settlement system; and incremental operating expenses, in particular those associated withinvestigations and costs of mediators and witnesses. Public education efforts would be carried out under acontract with a national NGO.

B. Strengthening Cadastral Commissions at Provincial and District Levels

As MLMUPC offices assumes this new role: Decentralization of the work of the Cadastral Commission toprovide better access to effective dispute settlement is essential to achieve tenure security. The project willsupport MLMUPC at provincial and in some cases at district level as it takes over dispute settlement in thenew Cadastral Commissions. Motorbikes will be provided, and travel allowances. The project will providecomputers and office equipment, orthophoto maps, office costs,, needs assessments, and meeting costs.Training for both Ministry staff and other officials and local leaders would be provided through a contractwith a national NGO or qualified local consultants for staff of MLMUPC, staff of other concemedministries, and local leaders and educators. For some training activities, trainees from areas not yet reachedby the project will be included. Costs of workshops and training programs will be covered, including costsof participants. Some sessions will focus on specialized audiences, such as judges and lawyers.

C. Legal Assistance for the Disadvantaged

The parties who will bring their disputes before the Commission have vastly unequal resources to devote topressing their claims. The poor will be at a critical disadvantage if they cannot access legal assistance. Theproject will provide this assistance, seeking to level the playing field by funding an expansion of theactivities of national legal NGOs currently providing such legal assistance to the poor. The RCG enjoysunusually good relations with the NGO community, and is supportive of donor funding of NGO activitiesin this area. The project will provide funds for the MLMUPC to contract with selected legal NGOs forinvestigation, counseling and representation services for the disadvantaged. Detailed discussion of thissub-component is included in Attachment IV to this Annex.


Land Management

Currently, there are no maps showing the different classes of land tenure and land use arrangements. Theproject will support MLMUPC in preparing land use and classification maps in the project provinces. Theproject will support (i) clarification of procedures for definition of different classes of land, such as forestland, protected area land, private land, public private land, and others; (ii) procurement of aerialphotographs and satellite images as needed; and (iii) preparation of land classification maps for each of theproject provinces showing boundaries of forests, protected areas, land under private use, land under publicuse, land under concession, and the like.

The project will finance aerial photography and satellite images, training, furniture and office equipmentfor the provincial land management offices, and operation cost for the compilation of land classificationmaps. Technical assistance for this component will be provided by the German government.

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ATTACHMENT I: OUTLINES OF TERMS OF REFERENCE FOR THE POLICY STUDIES

1. Delineation and Administration of State Property (US$100,000)

Objective: The study, initially focused on 2-3 provinces, will aim to improve the administration of stateproperty by recommending options for approval by CLP in 5 areas: (a) clarifying the legal definitions ofstate immovable property; (b) integrating state property in a land-use planning process; (c) identifying stateproperty spatially and administratively according to the new Land Law 2001 and others; (d) defining theauthority of different levels and agencies of government to manage different state properties; (e) registeringstate immovable property and related concessions; (f) converting state public to state private immovableproperty; and (g) transferring state private immovable to private ownership.

Methodolo v. The study will involve consultants working with inter-agency working groups and will becoordinated with similar forthcoming studies on land use planning, registration of natural resources rightsand registration of economic concessions. The study will cover 2-3 provinces as pilot areas to improve theadministration of state land.

Expected Outputs. There will be 3 sets of outputs to be produced: (i) a proposal and recommendations forapproval by the CLP, with a time-bound action plan (short term output); (ii) inputs for the preparation ofany implementing regulations to the Immovable Property Law (short term output); (iii) draft guidelines andprocedures for the registration of state properties and concessions (long term output).

Timing of the Study. Costs and Financing. Initial work on the study was done during September andOctober 2001, with TA from GTZ. The main study under the project, to be funded from the IDA Credit,will start from around May 2001 when IDA funds are available to September 2002. The total cost of thestudy is estimated at US$100,000.

2. Land Accessibility and Development Study and Pilot (US$1.3 million)

Obiective: The study will aim to identify available productive land for allocation to farmers (and otherpeople with potential to do farming) with little or no land, and to develop modalities for allocating land andenhancing its productivity and the incomes of the recipients. With the passage of the new Land Law,acquisitive possession of land is no longer permitted. However, other means have been provided for in thenew law. For example, through social concessions, land for social development can be provided. The lawalso provides a maximum limit of 10,000 ha for land to be used under economic concessions, therebymaking it possible for larger concessions to give up land which could be allocated for farming by those thathave little or no land.

Methodology. . In the quest for improving access to and developing of land, the study will attempt toanswer the following questions: (a) where are lands, suitable for allocation, located? (b) who should makesocial concession decisions; (c) what should be an appropriate decision-making process? (d) how shouldthese decisions be made? (e) when should he decisions be made? (f) how should these decisions beenforced? The study will be followed by a pilot to test the granting of social concessions and productiveuse of that land in one or more districts.

Expected Outputs. There will be 3 sets of outputs: (i) an initial review (report) of experiences in grantingland, particularly in de-mining regions; (ii) a reconnaissance survey of unused lands suitable fordistribution and, where possible, marking them on a base map; (iii) draft policy recommendations for the

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CLP; (iv) a draft Operations Manual with procedures on land allocation and development; and (v) anevaluation report on the pilot.

Timing of the Study. Costs and Financin . The study and pilot would be done over 2 years starting fromaround July 2002 and ending around June 2004. The total cost of the study is estimated at US$300,000,plus US$1 million for the Pilot. The study and pilot would be funded from the IDA Credit.

3. Registration of Community and Indigenous Peoples' Land Rights Study (US$100,000)

Objective: In anticipation of including the northeast area in a follow up project to the LMAP, a study willbe undertaken in the LMAP to: (i) understand land tenure arrangements in indigenous communities; (ii)develop methods, procedures and guidelines to register community and indigenous peoples land rights; and(iii) develop and support the preparation of any related implementing regulations. The first part of thestudy will be a review of the land tenure arrangements in indigenous communities. This will be basedmainly on the extensive work on land issues undertaken by Oxfam in 1999. The second part will reviewprojects implemented by NGOs working in the northeast area with indigenous communities and withcommunal land rights with a view to drawing relevant lessons for LMAP. The third and main part of thestudy will be to develop methodologies and procedures to undertake titling and registration of communityand indigenous peoples land rights and to prepare relevant implementing regulations. Specific objectiveswill be to identify options and make recommendations to CLP on: (i) interim measures to be used to protectindigenous peoples lands from expropriation or capture by private individuals; (ii) the policy implicationsof implementing the land law provisions for recognition of perpetual "ethnic minority community landrights"; (iii) incorporation of de jure recognition of "ethnic community" land rights into the draft nationalpolicy on "highlands peoples" and taking the elaborated policy forward to a fully endorsed national policy;and (iv) an implementation plan for a national indigenous peoples action plan.

Methodology. This would be done as a combination of studies and a pilot. The studies will reviewresearch initiatives and pilots to identify land tenure pattems and structure, map and protect land rights ofindigenous communities and peoples. They will then design and pilot a sporadic or pseudo-sporadicapproach to titling community land as well as indigenous peoples' lands under the LMAP. They will thenpropose a systematic registration program for community and indigenous peoples' land rights forimplementation in the latter part of the LMAP.

The study should recognize that any proposed approach for working with indigenous minorities should bebased on the policy guidance which (a) ensures that indigenous people will benefit from developmentprojects, and (b) potentially adverse effects on indigenous people caused by project activities will beavoided or mitigated. Included among the steps when working with indigenous minorities will be thefollowing:

* meaningful consultation with affected indigenous peoples;* mechanisms incorporated into project design and implementation to foster the informed participation of

affected indigenous peoples;* avoid, minimize or mitigate adverse impacts upon them; and* ensure that benefits intended for them are culturally appropriate.

Expected Outputs. The expected outputs are: (a) a strategy and draft guidelines and procedures for titlingcommunity and indigenous peoples lands; (b) inputs into the preparation of relevant implementingregulations; and (c) inputs into the preparation of an Indigenous Peoples Development Strategy or Plan.The Indigenous Peoples Development Strategy or Plan will be prepared based on the policy of the New

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Land Law (2001), the draft policy of the Inter-Ministerial Committee on Highland Peoples Development(1997) and the Operational Directive 4.20 of the World Bank, whichever is appropriate, for the follow upproject. Proposals and recommendations on the above will be presented to the CLP for approval.

Timing of the Study, Costs and Financing. The study would start in May 2003 and be completed aroundApril 2004. The total cost of the study is estimated at US$100,000, and would be funded from the IDACredit.

4. Registration of Rights in Natural Resources (US$100,000)

Objective: The study will aim to develop methodologies, procedures and guidelines for the registration(sporadic and systematic) of private land adjacent to natural resources and the registration of naturalresources, namely, forests, wet lands and fisheries. Another objective is to explore how information derivedfrom registration of these natural resources can be used to facilitate the integration of local land useplanning and decentralized natural resources management. The study will go closely with that on theadministration of state lands (under this project) and with initiatives supported by the Ministry ofAgriculture, Forestry and Fisheries aimed at promoting community-based management of forests and othernatural resources.

Methodolog. The study would involve taking stock of the patterns of rights, both individual and commnonas well as clear and overlapping, present in and around natural resources. It would also assess the extent ofsecurity of these rights and any related disputes as well as the desire, if any, of stakeholders to register thenatural resources. It would review international experience in titling these rights and set out to developprocedures for titling the natural resources as well as the individual or community lands adjacent to theseresources. It would then conduct and evaluate a pilot as part of the LMAP.

Expected Outputs. There will be 3 sets of outputs: (i) a proposal and recommendations for approval by theCLP; (ii) draft guidelines and procedures for titling natural resources and the private lands next to them;and (iii) evaluation report on the pilot; (iv) inputs for the preparation of relevant implementing regulations.

Timing of the Study. Costs and Financing. The study would start in December 2002 and be completedaround June 2004. The total cost of the study is estimnated at US$100,000, and would be funded from theIDA Credit.

5. Fees for Land Titling, Transaction Tax, and Other Land-Related Tax (US$50,000)

Objective: The study will airn to recommend revisions in the structure and levels of taxes (for example,unused land tax and general land tax) and charges in the titling and transfer of land. The review of thecharges on titling and transfer of land would be guided by the need to strike a balance between creatingadequate incentives for land titling and registration on the one hand and meeting the needs for cost recoveryon the other. The proposed review, particularly on the land taxes, would take into account relatedgovernment policies including fiscal policy.

Methodolo . The study would review current land tax structure and levels in Cambodia, how they arebeing assessed and administered and the willingness and ability to pay. There should also be a comparativeanalysis with countries at similar levels of development. The study should also examine at what levels ofgovernment the taxes and charges should be collected and spent, i.e. the revenue sharing arrangementsbetween local and central government on one hand and between MLMUPC and the Ministry of Economy

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and Finance on the other. Estimates should be made on how much revenue can be raised, under variousassumptions and scenarios, and the adequacy to meet the costs of operation and maintenance of landadministration.

Expected Outputs. There will be 3 sets of outputs: (a) a proposal and recommendations for approval bythe CLP on: (i) fees for first time systematic land titling; (ii) a new fee or reconfirmation of current fees forsporadic land titling; and (iii) a new rate for the transaction tax. Recommendations should take intoaccount current and proposed taxes on land and buildings including property tax-type, and taxes onincomes and rent from immovable property.

Timing the Study. Costs and Financing. The study would be undertaken during December 2001 to April2002 as part of the pre-implementation activity with financing from the German Govenmuent. The totalcost of the study is estimated at US$50,000.

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ATTACHMENT II: PROJECT PROVINCES

TakeoPhnom PenhPrey VengKandalKampong SpeuSihanoukvilleKampong ThomKampong ChamKampotSiam ReapBattambang

ATTACHMENT III: NUMBER OF PARCELS TO BE SURVEYED AND ADJUDICATED

Province 2002 2003 2004 2005 2006 2007 Total

Takeo 2,0( 16, 24, 36,OOC 36,000 6,C 120,OOCph-oPnr% 2,00t 16, 42,OOC 60, 60,O00 18,OC 198,0CKaidal 2,00O 16,00C 36,000 48,000 42,OOC 12, 156,OOCSihanoukville 2,00t 10,OOC 12,00C 12,000 12,00( 48,00CKaropar Thorn 2,OO2 10,0OO 12,0OO 12, 12, 000 48, C

Ktot 2,00t 10,00C 18,00C 24,000 36,000 6,0C 96,00CPrey Veng ( 12,OOC 12,00t 24,000 36,000 ( 84,00CKarrvorig Clrnm 12,00C 24, 0 0t 36,000 36,00 18,KaTf fS speu 12,00C 24,000 12,00O ( 48,00CSiem P__ap I_C__ 12, 24,OOC 12,00t 48,00CBatrbang 12,000 24,OOC 12,0I 48,000Total 12, 102, 192,00 300, 330,000 66, 1,002,00C

* It is assumed that 80% of the surveyed and adjudicated parcels shall be registered by the end of theproject.This will be due to pending disputes, non-payment of fees or backlogs in the registry.

ATTACHMENT IV: LEGAL ASSISTANCE FOR THE DISADVANTAGED

Land disputes are endemic in Cambodia, the result of the abolition of property rights under the previousregime and the re-establishment of property rights through prescription. Competing prescriptive claims anddisputes between government entities and between governnent entities and private entities. The courts haveproven inadequate to the task, and the new Cadastral Commissions of NLMIUPC will take over from the

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Dispute Resolution Commissions of the Ministry of Interior which have been mediating these disputes.Disputes can be taken to the courts, but there appears a strong public preference for the commissions.

The RGC is anxious to improve the quality of dispute settlement by making available to the disadvantagedinvolved in disputes more adequate legal advice and representation. This is especially true since thesystematic adjudication of land rights under the project will "flush out" many disputes; the prospect of afinal settlement of nights will prompt the bringing forward of claims not previously articulated or notactively being pursued. One of the objectives of the project is reduction of the number of land disputes, andthis will be a long-term impact of the project. But in the short-term the number of disputes will grow. In theprocess of dispute resolution there will be winners and losers, and some displacement of land users willresult. Legal assistance will provide support to disadvantaged who are involved in land dispute, such as thepoor, who would otherwise be disadvantaged in presenting their claims.

LMAP will support better dispute settlement only in the provinces and regions within which titling is goingon under its project. There are several dimensions to this effort. The ADB Land Law Project and LMAP'sComponent I will support public education on rights awareness and general understanding of the new LandLaw and related legislation. Under Component 3, LMAP will support NGO activities to increase publicunderstanding of the land survey and titling processes, as a preliminary to field operations. Under thiscomponent 4 of LMAP, NGOs will be supported in carrying out public education on the new cadastralcommissions. All these activities would be carried out by NGOs specializing in community education whowill have had training in the new Land Law, the titling process, and the reformed dispute settlementprocesses.

There are other needs, however, which will need to be met by legal NGOs. National legal NGOs such asLegal Aid of Cambodia and Cambodia Defenders Project have been providing critical assistance todisadvantaged parties in land disputes before the commissions, but they lack the resources to assist withmore than a subset of important cases in each province. Other NGOs such as Ad Hoc and Vigilance assistwith investigation of land disputes as part of their human rights brief. There is legal expertise available tothe concessionaires, government agencies and the wealthy, but the NGO community is providing essentialsupport for the disadvantaged. This helps "level the playing field", and adequate presentation of the claimsof the disadvantaged result in fairer dispute outcomes.

Activities in this area have been supported by a variety of bilateral donors and UN agencies. The RGC hasan unusually positive attitude towards its NGO community, and supports donor funding of NGO activitiesin this area.

Under LMAP's component 4, the Legal Assistance to the Disadvantaged sub-component, one or morecontracts for legal services to the disadvantaged would awarded to legal NGOs. This legal assistanceinitiative is one of several in recent land titling projects funded by the Bank, including projects inGuatemala, Moldova and Peru. The contracts would allows the NGOs to assist disadvantaged disputantswith investigations, with documentation of their claims, and with articulation of their claims before thecadastral commissions.

Such NGOs have received extensive donor support but under capacity-building, non-competitive contracts.Contracts under this project would be on a provincial basis and allocated non-competitively to two or moreNGOs without competition in the first year, but competed in subsequent years. Criteria for selection of theNGO will include experience in the land disputes area, legal competence, and effectiveness at provinciallevel.

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The contracts would provide for representation by the NGO on only one side of a dispute, and only on thedisadvantaged side. The criteria for eligibility cannot be framed in terms of income or other individualwealth indicators, because most clients of these NGOs are groups, extended families or villages, rather thanindividuals. Those receiving assistance will be to some extent self-selected, but will be accepted forassistance only if 1) the claim seems legally viable; and 2) the claimant(s) are at a disadvantage in relationto the other disputant(s). It will be important to leave the NGOs some latitude to use their knowledge oflocal interests in making these determinations.

Payment would be made in recognition of services provided. It is anticipated that the contracts will beawarded on an annual basis. Qualifying services will be defined in terms of number of consultations,investigations, and hearings, and standards for quantification of delivery of those services and costs per unitwill be specified in the contracts. Subsequent payments will be based upon reporting of provision of theseservices.

It will be necessary to establish a baseline of assistance already being provided by the NGO(s) selected, andensure that under the contracts they are providing an increment over and above that, Such statistics areavailable. Standards for reporting performance as a basis for incremental payments under the contract willbe included. More general performance evaluation indicators will be specified, including number ofhousehold assisted and number of disputes resolved. The NGOs will undertake to maintain statistics thatallow monitoring and evaluation, including statistics that distinguish disputes coming out of the systematicsurvey and titling process from other land disputes.

ATTACHMENT V: Tentative Technical Assistance Input to be Finance by the Government ofGermany(For components 1, 2, 4, and 5)

Position Person month Person/MonthInternational National/Region

Teamleader 60Assistant to TL 57M&E/Moderator 60Project review team 4HRD advisor 7 13Organizational advisor 4 8Specialized advisors 20Accountancy specialist 16PR specialist 4 21Legal advisor 1 1 32Mediation advisor 5 15Photogrammetric/RS Advisor 6 12Land Policy Advisor 6 12Land Management Advisor 16 38Land Classification Advisor 10 24GIS Advisor 5 14

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ATTACHMENT VI: Tentative Technical Assistance Input to be Financed by the Government ofFinland

(For component 3)

Position Person month Person/MonthInternational National/Region

Team Leader/Adjudication Advisor 60Adjudication Advisor 60Assistant Team Leader/Land Registration Advisor 52Participation/Gender Advisor 4Participation/Gender Advisor 60Land Survey Advisor 21Land Survey Advisor 28Photogramuetric Advisor 9Photogrammetric Advisor 21Geodetic Advisor 4Mass Media AdvisorMass Media Advisor 3Information Technology Advisor 17

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Annex 3: Estimated Project Costs

CAMBODIA: Land Management and Administration Project

Local Foreign TotalProject Cost By Component US $million US $million US $million

Development of Land Policy and Regulatory Framework 1.37 1.43 2.80Institutional Development 2.70 3.11 5.81Land Titling Program and Development of a Land Registration 11.30 6.80 18.10SystemStrengthening Mechanism for Dispute Resolution 0.65 1.01 1.66Land Management 0.36 2.17 2.53Total Baseline Cost 16.38 14.52 30.90

Physical Contingencies 0.18 0.12 0.30Price Contingencies 2.36 0.34 2.70

Total Project Costsl 18.92 14.98 33.90

Total Financing Required 18.92 14.98 33.90

Local Foreign TotalProject Cost By Category US $million US $million US $million

Goods 0.94 3.98 4.92Works 2.93 1.99 4.92Consultant Services 0.38 7.98 8.36Training, Workshops, Forum and Study Tours 1.48 0.20 1.68Title Development Costs 11.19 0.00 11.19Incremental Operating Cost 2.00 0.83 2.83

Total Project Costs 18.92 14.98 33.90Total Financing Required 18.92 14.98 33.90

Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 33.9 (US$m). Therefore, the project cost sharing ratio is 71.68% of totalproject cost net of taxes.

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Annex 4: Cost Benefit Analysis SummaryCAMBODIA: Land Management and Administration Project

Summary of Benefits and Costs:

Expected benefits:


(a) Improved land tenure security through issuance of around 1 million titles, reducing the risks of landgrabbing, encroachment, land disputes, and expropriation. Lack of tenure security has beenidentified by both the govermnent and donors as an overriding problem greatly contributing topoverty in Cambodia;

(b) Increased investment, both domestic and international, due to an better access to credit andestablishment of a more secure, stable and predictable investment climate;

(c) Greater efficiency of land use because of the fonnation of land markets in rural areas andimprovements in the functioning of land markets in urban areas;

(d) Improved tax collection and land use planning due to information generated from an improved landregistry and cadastre system and the titling process; and

(e) Improved natural resources management by private operators who take a long-term view and investin measures such as soil conservation and sustainable forest management.

These benefits are expected to be fully realized over the long term extending to 30 years. During the life ofthe project, however, the expected benefits are not likely to be evident There are two main reasons. First,most of the titles distributed under the program are likely to be issued during project years three and four,which is not enough time for benefits to be measurable. Second, along with titles, the generalmacroeconomic environment and the development of relevant institutions will also influence investorbehavior. If the macroeconomic situation is unstable or formal banking institutions fail to emerge in ruralareas, then expected investment may not materialize.


An economic analysis for such a land management and administration project would follow theconventional approach to economic evaluation of investments, which proceeds by estimating a futurestream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and aneconomic rate of return (ERR). In urban areas, gross economic benefits can be measured through landprice change due to titling while holding other factors constant. In rural areas (where land markets areunderdeveloped), the gross economic benefits can be measured by the incremental increase in productionand associated income from titling, subtracting the value of the investment inputs. Net economic benefitsand returns can be derived by subtracting project costs from those gross economic benefits.

At this stage, providing quantitative estimates of project benefits is not possible. First, informnation on howfarmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported bythe Gernan and Finmish governments have not yet generated information on response of title holders.Moreover, the experiences and data of neighboring countries with long-nmning land titling programs, suchas Thailand, do not offer a good guide because conditions in these countries are quite different than inCambodia. For example, the land administration system in Thailand is much better developed than that in

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Cambodia. The analysis would thus have to be based on questionable assumptions. Second, the focus ofthe project, which is the first phase of a long-term program lasting 15 years, is on institutional development(one-half of project costs), which is not subject to economic analysis. For these reasons, neither a NPV noran ERR will be computed for the proposed project.


Baseline and impact socioeconomic surveys will be conducted in selected project areas duringimplementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia landprojects. In rural areas, enumerators will collect baseline data for selected households before the projectstarts. Data will include current investments in agriculture (fertilizer and pesticide use, tools andmachinery, water control technologies, soil conservation measures), plot characteristics (such as, size,irrigation status, fertility and the like), and household characteristics (education, age structure), cropsgrown and yield and others. In urban areas, data about changes in land prices with the plot (or house)characteristics (such as access to transportation) will be collected. Ideally, panel data will be collected. Inaddition, in both rural area urban areas, information on groups that do not receive title will be collected toprovide data for use as a control. As the project is just the first phase of a long-term program, the findingsfrom the baseline and socioeconomic impact surveys will also be used to justify possible follow-on projects.

A financial analysis needs to be conducted to assess whether the net financial benefits expected from theproject are attractive enough for the project participants. There are two key project participants: thelandholders and the government.

Financial benefits and costs for landholders

As in many other countries, there are two major incentives for landholders to obtain a land title throughparticipating in the project: (a) to improve the security of land ownership or possession, and (b) to improvethe access to credit from formal financial institutions by using the land titles as collateral. As a result of animproved land tenure security and better access to formal credit, the landholders will increase investmentsin their land and hence increase productivity and income. If landholders were to be charged the full cost ofland titling (as in the case of sporadic adjudication), the decision by a landholder to participate in theproject would depend on whether the expected financial returns are higher than the payment for a title.Under the normal situation where titles are issued upon request by landholders, who then pay the full costof the services, the landholders do so with the expectation that the financial return from acquiring the titlewill exceed the cost of the title.

In most cases, land titling projects include systematic adjudication to title all parcels in a given areaquickly. To ensure the high voluntary participation of landholders, the charge to landholders of land titlinghas been kept at a level significantly lower than the cost of producing a title. The affordability of thepoorest landholders is one of major criterion of setting an appropriate registration fee. For example, in thecase of Thailand, landholders are charged less than US$5 per title, compare to the average cost of US$36per title. In the case of Indonesia, landholders are charged about US$2 per title while the average cost isaround US$26. The difference between the actually cost of titling and the fee charged to landholders is thesubsidy from the government. Often government recovers the subsidy by charging registration fees onsubsequent land transactions. This arrangement has worked well in Thailand.

To implement the project, both the government and IDA have agreed that a similar arrangement will beintroduced in Cainbodia. Current estimates show that the actual cost to produce a title is around US$38Based on the estimated project cost and the total numbers of title will be issued under the project, the average cost

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of per title is about US$29.3. However, this average cost does not include the government's futuremanagement costs associated with each title. To calculate the actual cost of each title, we assume that (i)government will spend about 3% of the current cost each year after the project implementation period toensure each title still valid and (ii) the discount rate is 10%. Based on these two assumptions, the actualtotal cost of each title is 29.3+(29.3x 0.03)/0.1-38.1.

A fee of US$2-5 per title will be charged to landholders in rural area, and a fee of US$15-25 per tile willbe charged to landholders in urban area. Discussions with farmers and government officials and otheranecdotal evidence indicates that the fee arrangement would be reasonable. This is far less than theunofficial fee said to be between US$200 and US$500.

A careful study of the fee structure and levels of land-related taxes (for example, 4 percent land transfertax, unused land tax, and the like) will be undertaken as a pre-implementation activity. The objective of thestudy is to find a balance between the need to encourage people to register subsequent transactions on onehand and the need for cost recovery and government revenue on the other.

Financial benefits and costs for the government

Civen that there is no system of annual land tax and capital gain taxes, and it is uncertain when the systemwill be established, the expected financial benefits of the project would come from the following sources:

(a) Initial registration fees collected by the MLMUPC

(b) Subsequent transaction registration fee collected by the MLMUPC

(c) Increased revenue from the land transaction tax (4% of transaction value); and

(d) Possible increases in the unused land tax to discourage warehousing of land forspeculative purposes.

The financial costs to the government are the direct project cost and the government's future managementfees associated with each title issued under the project.

Fiscal Impact

In short run, the fiscal impact of the proposed project will be neutral given that less than 10 percent of thetotal project cost will be financed by the government. In the long run, it is expected that the fiscal impactof the proposed project will be highly positive as shown by the NPV of around US$15.4 million (at adiscount factor of 10%) and the financial rate of return (FRR) of 22 percent (Annex 5 Table 1).

The cost recovery arrangement (fee structure) will strengthen the demand for the services provided by theproject, and the affordability of the poorest has been taken into account. Therefore, the cost recoveryarrangement of the project will have a positive impact on distribution of project benefits and will promotethe efficient use of the output (titles) from the project.

Major assumptions of the FRR calculation

1. Distribution of 1.1 rmillion titles: rural 50 percent, urban 50 percent.2. Registration fee structural:

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Rural agricultural US$2, rural residential US$5Urban noncommercial US$15, urban commercial US$25

3. Average price per square meter: rural US$0.35, urban US$25.4. Average size of per parcel: rural 3,333 square meters, urban 200 square meters.5. Turnover rate: 3 percent.6. The estimated benefits are assumed to take 30 years to be fully realized, and to

increase linearly beginning with the year in which each plot is titled.7. Subsequent transaction registration fee: Rural area US$22.8; Urban area US$25.8

(as proposed by MLMUPC).8. No benefits from increase of unused land tax are included due to lack of data.

Sensitivity Analysis

The land price, turnover rate (proportion of titled land transacted) and initial registration fee are parameterswith significant potential to affect the success of the project and are also of the highest concern to both thegovernment and landholders. Therefore, there is a need to conduct a sensitivity analysis to test the financialrobustness of the project. The following results show that, with significant changes of these key parameters(for example, 20 percent decrease or increase) and using a discount factor of 0.1, the project would remainfinancial attractive to the government.

1. If price of land price increases 20%, NPV will be US$21.6 million; FRR will be 27%;

2. If price of land price decreases 20%, NPV will be US$9.3 million; FRR will be 17.6%;

3. If turnover rate increases 20%, NPV will be US$22.8 million; FRR will be 27.9%;

4. If turnover rate decreases 20%, NPV will be US$8.8 million; FRR will be 16.7%;

5. If registration fee increases 20%, NPV will be US$17.3 million; FRR will be 25.3%;

6. If registration fee decreases 20%, NPV will be US$13.5 million; FRR will be 19.9%.

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Annex 5 Table 1 Calculation of Financial Rate of Return (US$'000)

Year Cost BenefitsSubsequent Transaction Transfer Tax

Registration Fee Registration fee (4% of land value1 5450 987 61 3112 7200 1833 175 8883 7200 2679 342 17324 7300 3525 561 28425 6230 4371 832 42186 1000 832 42187 1000 832 42188 1000 832 42189 1000 832 421810 1000 832 421811 1000 832 421812 1000 832 421813 1000 832 421814 1000 832 421815 1000 832 421816 1000 832 421817 1000 832 421818 1000 832 421819 1000 832 421820 1000 832 421821 1000 832 421822 1000 832 421823 1000 832 421824 1000 832 421825 1000 832 421826 1000 832 421827 1000 832 421828 1000 832 421829 1000 832 421830 1000 832 4218

NPV=US$15.4 million (discount factor of 0.1)FRR=22.3%

Main Assumptions:Not applicable

Sensitivity analysis / Switching values of critical items:Not applicable

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Annex 5: Financial Summary


Years Ending

IMPLEMENTATION PERIOD

Year I Year 2 | Year 3 Year 4 Year 5 | Year 6 | Year 7Total FinancingRequiredProject CostsInvestment Costs 3.9 5.8 6.0 5.9 6.4 3.1 0.0Recurrent Costs 0.3 0.4 0.6 0.6 0.6 0.3 0.0

Total Project Costs 4.2 6.2 6.6 6.5 7.0 3.4 0.0,Total Financing 4.2 6.2 6.6 6.5 7.0 3.4 0.0

FinancingIBRD/IDA 2.5 4.0 4.7 4.8 5.5 2.8 0.0Govemment 0.2 0.5 0.6 0.5 0.5 0.3 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 1.5 1.7 1.3 1.2 1.0 0.3 0.0User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Financing 4.2 6.2 6.6 6.5 7.0 3.4 0.0

Main assumptions:Not Applicable

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Annex 6: Procurement and Disbursement ArrangementsCAMBODIA. Land Management and Administration Project

Procurement

Introduction

The procurement of civil works and goods will follow the "Guidelines for Procurement under IBRDLoans and IDA Credits" dated January 1995 and revised in January and August 1996, September1997, and January 1999. Standard Bidding Documents will be used for all Bank-financed procurement.Selection of consultants and formats for consultants' contracts will be done in accordance with the "Selection and Employment of Consultants by World Bank Borrowers" dated January 1997 and revisedin September 1997 and January 1999, and on Standard Request for Proposal dated July 1997 andrevised in April 1998 and July 1999. The procurement methods to be used for the Project are indicatedin Table A of this Annex.

Implementation The Ministry of Land Management, Urban Planning and Construction (MLMUPC),supported by a core Project Management Office, will carry out all procurement under the Project. ThePMO procurement staff, with the support of an international Procurement Advisor, will be responsiblefor the implementation of the agreed procurement plan for the Land Management and AdministrationProject (LMAP). The concerned departments within the MLMUPC are expected to provide technicalsupport for their respective areas of specialization.

Advertisement. A General Procurement Notice will be published in the Development Businessannouncing works, goods and consultants services to be procured and inviting eligible contractors,suppliers and consultants to express interest to contracting opportunities, and to request anycomplementary information from MLMUPC. In addition, specific procurement notices will bepublished in newspapers and/or Development Business, depending upon the value of the contracts.

Summary Procurement Assessment

An assessment of the procurement capacity of MLMUPC was carried out in accordance with theOffice Memorandum from the Manager of the World Bank Procurement Unit of the Operational CoreServices Network (OCSPR) dated August 11, 1998. The assessment involved a review of theprocurement policies and procedures adopted and implemented by the central office involving purelylocally funded projects since MLMUPC has not had the opportunity to handle foreign assisted project,having been established only recently.

In general, the rules and regulations relating to procurement implemented at MLMUPC adhere to theprinciples of competition and are intended to promote faimess, economy, efficiency and transparency.However, for NCB, since the Bank 's Guidelines allow the use of public procurement procedures in thecountry, there are certain government rules, regulations and practices which are inconsistent with theBank procurement Guidelines and thus such exceptions are required to be incorporated in the SideLetter to the Development Credit Agreement. Some specific areas that deviate from the Bank 'sguidelines are (a) negotiation with the lowest bidder to reduce the price when all bids exceed the costestimates; (b) the prerequisite requirement for the prior registration of foreign fimns to be eligible toparticipate in NCB; (c) permit different deadlines for submission of bids and for bids opening; (d)bidder may withdraw bids without forfeiting bid security, if they disagree with the correction ofarithmetical errors in their bids; (e) the obligatory requirement for a foreign contractors for entering

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into a joint venture with a local firms; (f) the use of merit point system for pre-qualifying firms insteadof pass/fail criteria for pre-qualification; (g) price adjustment provisions does not use in local bidding;(h) for selection of consultant, provision for negotiation with the second ranked firm when negotiationwith the first ranked firm fail, is silent. --- For procurement of items financed in whole or part underICB, MLMUPC agree to follow the Bank's Guidelines and Standard Bidding Documents since itsImplementing Rules and Regulations Governing Public Procurement (IRRPP) contain a waiver forforeign funded projects.

The MLMUPC has not had the experience in implementing projects funded by international financinginstitutions. This will be the first Bank financed project it will implement. The overall procurementrisk assessment is high. The main risks concern the inadequate procurement staffing and knowledge,absence of formal and integrated procurement operating system, and lack of an internal audit functionto carry out effectively the implementation of procurement for the project.

To mitigate these risks, a series of actions will be taken undertaken by the project. These include:

* Engaging the services of a procurement advisor to provide support on procurement process,contract administration and procurement monitoring at least during the first year ofimplementation, and to provide and/or identify training opportunities for MLMUPCstaff (by January 15, 2002);

* Finalize the procurement operating manual (by March 2002) based on the Credit Agreement,and the MOU between MLMUPC and the Ministry of Economy and Finance;

* Regularly update the procurement plan (at least every quarter), starting April 1, 2002;

* Setting up a systematic and comprehensive system for procurement and contract documentationand filing (by May 2002); and

* Setting up an internal audit function and arrangement within the MLMUPC to (a) provide checksand balances and (b) ensure that procurement transactions are all in order, and that the deliveriesof goods, works and services are in accordance with contract quantities and quality.

Procurement Methods (Table A)

Procurement of Works (US$ 4.92 million)

Works include construction of new ministry office, land management training center, andconstruction/renovation of provincial and district offices of the ministry, and provisions of aerialphotography and satellite images. The Procurement Operations Manual to be developed will includesample procurement documents in accordance with the World Bank Standard Bidding Documents.

(a) International Competitive Bidding (ICB) ICB procedures will be used for contracts for theconstruction of new ministry building, training center, and the provisions of aerial photography andsatellite imaging. The Bank's Standard Bidding Documents (Procurement of Works for SmallerContracts) will be used. The estimated total value for this procedure is about US$ 2.34 million.Domestic Contractors and joint ventures between domestic and foreign firms with no more than 10%subcontracting to foreign firms, would be eligible for a domestic preference of 7.5 percent, whencomparing bids from eligible domestic Contractor with those from foreign firms..

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(b) National Competitive Bidding (NCB). Works involved small valued contracts dispersedgeographically, and spread over time which can only be suitably package on a limited scale ofprovincial basis. It is unlikely that the size of the works would attract much interest outside ofestablished construction companies in Cambodia. Contracts for the construction/ renovation ofprovincial and district offices of the ministry up to less than the equivalent of US$300,000 will beprocured using NCB procedures acceptable to the Bank. The estimated total value for this procedure isabout US$ 2.22 million.

(c) Civil Works Shopping. Very Small works for renovation of offices up to a maximumUS$20,000 per contract will be procured using simplified procurement procedures for works similar toshopping by seeking quotations from at least three contractors. The estimated value for this procedureis about US$.36 million.

Procurement of Goods (US$ 4.92 million)

Goods to be procured under the Project will include vehicles, motorbikes, mapping and geodeticequipment, computers and other office equipment, and furniture.

(a) International Competitive Bidding (ICB). ICB procedures will be used for contracts for theprocurement of surveying and mapping equipment. The Bank's Standard Bidding Documents(Procurement of Goods) will be used. The estimated total value for this procurement is about US$1.39 million. Domestic manufactured goods with local content at more than 30 percent would beeligible for a domestic preference of 15 percent over foreign bid price or custom duties, whichever islower.

(b) Procurement through LAPSO. Procurement of utility vehicles and motorcycles may be donethrough the Inter-agency Procurement Service Office (LAPSO) of the United Nations. There is a widerange of specifications of vehicles available to choose from at standard advertised prices. The estimatedtotal value for this procurement is about US$ 1.10 million. Procurement of vehicles and motorcycleswill be done by ICB if IAPSO procurement method is not pursued.

(c) National Competitive Bidding (NCB) Goods consisting of computers and office equipment,and furniture costing less than the equivalent of US$100,000 per contract will be procured using NCBprocedures acceptable to Bank. The estimated total value for this procurement is about US$ 1.44million.

(d) Shopping. Shopping will be used for computers and office equipment, and furniture costing lessthan the equivalent of US$50,000 per contract, and which will be procured over time. These contractswill be awarded after solicitation and evaluation of written price quotations from at least threesuppliers in accordance with articles 3.5 and 3.6 of the guidelines. The estimated total value for thisprocurement is about US$0.84 million.

(e) Direct Contracting (DC). GIS software, reference books and journals of proprietary nature andobtainable only from one sources, may with the Bank's prior agreement, be procured following directcontracting procedures acceptable to the Bank up to a maximum aggregate amount of US$0.15 million.

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Consultant Services (US$1.35 milion)

About US$ 8.36 million would be allotted to consultants services and technical assistance. Themajority of the contracts, estimated at US$ 7.01 million, will be financed by the governments ofGermany and Finland, according to their own procurement guidelines. These would include technicalassistance on the different components. Consultant services, mostly surveys and informationdissemination, auditing, and individual consultants, financed by the Bank totaling US$ 1.35 million,shall be procured in accordance with the Bank's "Guidelines for Selection and Employment ofConsultants by World Bank Borrowers" published in January 1997 and revised September 1997, andJanuary 1999. The Bank's latest Standard Requests for Proposals (dated July 1997, revised April 1998and July 1999) will be used for the selection of consultants. Any contract above US$200,000 must beadvertised in the Development Business requesting an Expression of Interest prior to developing ashortlist.

(a) Quality and Cost Based Selection (QCBS). Selection of firms for some of the policy studies andNGOs for community participation in the second year will follow Quality and Cost Selection. Thevalue of contracts awarded through QCBS should not exceed US$0.32 million.

(a) Selection under Fixed Budget (SFB). The selection of finms to conduct household andinstitutional surveys will be undertaken through Selection Under Fixed Budget. These assignments aresimple, and scope of services can be precisely defined with a fixed budget. The value of the contractsawarded through SFB should not exceed US$0.12 million.

(b) Least Cost Selection (LCS). LCS procedures would be used for selection of a qualified auditor tocarry out the extemal audit of the Project. The value of the contracts awarded through LCS should notexceed US$0.05 million.

(c) Single Source Selection (SSS). Because of their involvement and knowledge of local issues,community needs, and participatory approaches, NGOs may be engaged to conduct informationdissemination on the basis of single source selection. The value of the contract(s) awarded through SSSshould not exceed US$ 0.30 million.

(d) Selection Based on Consultants' Qualifications (SBCQ). The selection of NGOs estimated tocost less than $ 50,000 per contract, whenever competition is possible, may be procured by usingSBCQ in accordance with paragraph 3.7 of the Guidelines. The value of the contracts awarded throughSBCQ is about US$ 0.20.

(e) Individual Consultants. The Project would need individual advisors and consultants to carry outsome of the more complex and specialized tasks of the Project, such as policy and strategy studies,legal aid and review, case studies and other tasks. These will be done by individual consultants whoseexperience and qualifications are the paramount requirements to the assignment. The selection ofindividual consultants would be in accordance with Section V of the Guidelines. The aggregate cost ofthe contracts should not exceed US$0.36 million.

Training, Workshops, Forum and Study Tours (US$ 1.68 milion)

Expenses for training, workshops, forum and study tours will be procured and disbursed with prior

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approval of the Bank based on annual implementation plans. The costs will cover training, workshop,forum and study tour activities in the areas of land policy, drafting and implementation of sub-decrees,public relations, monitoring and evaluation, systematic registration, facilitation, GIS and GPS,mapping, cadastral commissioning, and dispute resolution among others. The aggregate cost of trainingactivities and workshops is estimated at about US$1.70 million. These would be procured according tonormal commercial procedures acceptable to the Bank.

Title Development Cost (US$ 11.19 million)

About US$ 12.19 million would be allocated to cover the costs related to activities in land titling, landrecording, infornation management and include transport cost and training allowances to adjudicationteams and PPMO staff, salaries and transport cost of contractual staff, materials used in adjudicationand surveying, and gasoline and vehicle maintenance incurred by the adjudication teams and PPMOs.These would be procured according to normal commercial procedures acceptable to the Bank.Contractual staff will be selected in a competitive and transparent manner according to clear guidelinesacceptable to the Bank. These guidelines will be included in the procurement manual. Government staffon leave without pay are not eligible for contractual positions under the Project.

Incremental Operating Costs (US$ 2.83 million)

About US$ 2.83 million would be allocated to covering the incremental operating costs related tomanaging the project, including:

a. Operating costs incurred by MLMUPC to manage the project. This includes, operating andmaintenance of vehicles, equipment and office buildings, transport costs and training allowances forproject staff (other than the adjudication teams), communications, office consumables, and utilities.This will be paid 100% by the Credit till December 31, 2004; and 50% starting from January 1, 2005.

b. Financial audits. this will be paid 100% by the Credit; and

c. Salary supplements to MLMUPC core staff who will be working full time for the project. This willbe paid entirely by the Government counterpart contribution.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

Procurement MethodExpenditure Category ICB NCB Other N.B.F. Total Cost

1. Works 2.34 2.22 0.36 0.00 4.92

(2.11) (2.00) (0.32) (0.00) (4.43)2. Goods 1.39 1.44 2.09 0.00 4.92

(1.39) (1.30) (1.96) (0.00) (4.65)3. Services 0.00 0.00 1.35 7.01 8.36Consultant Services (0.00) (0.00) (1.35) (0.00) (1.35)4. Miscellaneous 0.00 0.00 1.68 0.00 1.68Training, Workshops, and (0.00) (0.00) (1.68) (0.00) (1.68)Study Tours5. Title Development Costs 0.00 0.00 11.19 0.00 11.19

(0.00) (0.00) (1 1.19) (0.00) (1 1.19)6. Incremental Operating 0.00 0.00 2.83 0.00 2.83Costs (0.00) (0.00) (1.00) (0.00) (1.00)

Total 3.73 3.66 19.50 7.01 33.90(3.50) (3.30) (17.50) (0.00) (24.30)

"Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.

Includes civil works and goods to be procured through national shopping, consulting services, services ofcontracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the project, and (ii) re-lending project funds to local governmentunits.

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

Selection MethodConsultant Services

Expenditure Category QCBS QBS SFB LCS CQ Other N.B.F. Total CostA. Firms 0.32 0.00 0.12 0.05 0.20 0.30 7.00 7.99

(0.32) (0.00) (0.12) (0.05) (0.20) (0.30) (0.00) (0.99)B. Individuals 0.00 0.00 0.00 0.00 0.36 0.00 0.00 0.36

(0.00) (0.00) (0.00) (0.00) (0.36) (0.00) (0.00) (0.36)Total 0.32 0.00 0.12 0.05 0.56 0.30 7.00 8.35

(0.32) (0.00) (0.12) (0.05) (0.56) (0.30) (0.00) (1.35)1\ Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines),Commercial Practices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Credit.

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Prior review thresholds (Table B)

Table B indicates the thresholds for prior review. The Bank will conduct prior review of procurementdocuments and actions in accordance with procedures set forth in paragraph 2 of Appendix I to theProcurement guidelines for:

all works contracts procured through ICB, and all contracts for NCB above $ 100,000;

all goods contracts procured through ICB and LAPSO, all goods contracts procured through NCB,the first goods contract per year procured through shopping and all goods contracts procuredthrough Direct Contracting;

all consulting contracts costing more than or equal to US$100,000 for firms and US$50,000 forindividuals; and

all single source selection contracts for frms.

The total amount of contracts/procurements subject to prior review is US$9.08 million, or 37 percentof the value of the Credit.

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Table B: Thresholds for Procurement Methods and Prior Review'

Contract Value Contracts Subject toThreshold Procurement Prior Review

Expenditure Category (US$ thousands) Method (US$ millions)1. Works >300,000 ICB 2.34

<300,000 NCB 1.52. Goods >100,000 ICB 1.39

IAPSO 1.44<100,000 NCB 1.5<50,000 NS 0.50

DC 0.153. Servicesa. Firms >100,000 All methods 0.5

SSS 0.1b. Individual >50,000 CQ 0.16

4. Miscellaneous5. Miscellaneous6. Miscellaneous

Total value of contracts subject to prior review: US$9.08 million (38percent of the Credit)

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every 4 months (includes specialprocurement supervision for post-review/audits)Ex-post procurement and SOEs reviews will be done every six months as part of the supervision missions.

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of credit proceeds (Table C)Introduction

IDA is proposing to finance a Land Administration, Management, and Distribution Program (LAMDP) inCambodia. The proposed Project will cover the first five years of a 15-year program. The objective of theproject is to improve land tenure security and promote an efficient land market. The Project will beimplemented by the Ministry of Land Management, Urban Planning and Construction (MLMUPC). AProject Management Office will be established in MLMUPC to coordinate project activities. A financialmanagement capacity assessment of the Project was carried out in accordance with the Bank's FinancialManagement Assessment Guidelines. The assessment included visit to the MLMNPC and discussions withconcerned staff of Ministry of Economy and Finance (MEF). The main findings of the assessment and theproposed financial management arrangements are described below.

Financial Management Assessment of MLMUPC

Organization and staffing. MLMUPC is a recently created ministry by amalgamating several governmentagencies concerned with land management, urban planning and construction. The Department of Planning,Economy & Financial Affairs is responsible for the financial management of the ministry and the Directorof the Department reports to the Head of the General Department of Administration. The Director issupported by two deputies and 28 supporting accounting and administrative staff.

Responsibilities. The Department is responsible for preparing the annual budget by incorporating centralministerial budgets and provincial budgets. The approved budget for year 2001 amounts to about Riel 5000million (US$ 1.25 million) split between the center (R3000 million) and provinces (R2000 million). Thebudget execution and monitoring is split between the center and the provinces. A Financial Controller ofthe Ministry of Economy and Finance (MEF) is responsible for approval of expenditures incurred by theMLMUPC. All payments are made directly to the suppliers by the MEF (Treasury). MLMUPC is givenan imprest account advance (limited to an eighth of about 30% of non-salary expenditures ) for day to daysmall expenditures. MLMUPC does not maintain any bank accounts for managing budget expenditures.The expenditures incurred by the provincial departments of MLMUPC are approved and paid by theProvincial Treasuries of MEF.

There are no accounting records maintained at the ministry in a traditional sense. MLMUPC maintainscopies of all expense vouchers processed, advice of MEF approving payment and based on these prepares aspread sheet analysis of approved budget, cumulative expenses to date and the budget balance. Any budgettransfers between expense categories have to be approved by MEF.

The budget management at the provincial level is reported to be similar. Each provincial department ofMLMUPC is allocated a budget and all payments have to be processed through the provincial Treasury.The MLMUPC department of finance does not monitor the provincial expenditures.

MLMUPC currently does not manage any foreign funded projects except for the PHRD grant for projectpreparation. Two other grants: Finland and Germany, are managed by the donors. The transactions on thePHRD grant are limited as the bulk of the grant is paid directly from IDA.

Assessment The current system appears to be working well for the management of the administrative costsfunded by the national budget. The staff understand the procedures well and the spread sheet analysis of

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budget actual expenditure provides adequate information for control of budget expenditures. As theaccounting and cash flow management is centralized at the MEF, there is no need for the MLMUPCfinance staff to maintain accounts, prepare cash forecasts or manage bank accounts. There is also noanalysis of expenditures beyond that is necessary for budget line item management. A considerable amountof technical assistance and training will be required to prepare the MLMUPC finance staff to handle theproject related financial management. The planning, budgeting and reporting requirements under the Projectwill be more complex than the current requirements of MLMUPC. The volume of financial transactionsunder IDA financed project alone will be more than five times the budget managed by the ministry atpresent. In addition, the fnance department will be expected to manage the provincial accounting andfnancial control. Therefore, the financial management arrangements described below are designed to buildcapacity in the longer-term while providing assurance that adequate safeguards are in place at the start ofthe Project.

Financial Management Arrangements.

Organization and staffing. The financial management function for the Project will be located within theproposed Project Management Office (PMO). The PMO will ensure that a Project Financial ManagementOfficer (PFO) and adequate and competent staff are appointed to carry out the project fnancial andaccounting functions. During the first two years of Project implementation, a Financial Advisor (funded byTA) will be appointed to train and guide the project financial staff. Given disbursement activities at theprovincial level, an accountant/cashier will be appointed at each of the provincial project managementoffices. The accountant/cashier will report to the PFO. The following actions were completed before Creditnegotiation:

a) Appoint a Project Financial Officer who will be the Head of the finance section of theProject Management Office; and

b) Appoint an advisor to the Project Finance Officer under the GTZ technical assistanceprogram.

Project Financial Management ManuaL As part of the project preparation, a Financial ManagementConsultant assisted the Project Team in designing a Financial Management Manual for the Project. Thedraft Manual covers project management, procurement, financial management, monitoring and evaluationaspects of the Project. The manual lays down general principles governing the above aspects of the Project.The draft Manual was used as a training manual for eleven staff selected from various divisions ofMLMUPC.

The mission discussed the draft Manual with MLMUPC finance staff and advised that much detailed workin designing the financial management system and training staff still remains to be done. The action planagreed during pre-appraisal to appoint staff, design and install the accounting system and train staff is stillnot accomplished. Revising of the draft Manual and setting up the accounting system are priority activitiesthat would be undertaken during the pre-implementation period and will be completed by March 2002.

Fund Flow. IDA will establish a Special Account with an initial deposit of $ 1 million at MLMUPC forfinancing IDA's share of eligible expenditures of the Project. Financing of all major procurement contracts,consulting appointments and civil works will be financed through this account. As Title Development Costswill largely be incurred in the provinces, MLMUPC may open a Second Generation Special Account(SGSA) at a commercial bank in Phnom Penh which has retail banking branch offices in the provinces to

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facilitate withdrawal of cash at the provinces to meet the payment of costs incurred at the provinces as andwhen they fall due. The Government will establish a Project Bank Account for funding the Governmentcounterpart funds. The Government counterpart fund will have an initial deposit of $100,000. Of this, a floatof $5,000 is to be made available to each province to enable it to pre-finance travel per diems and othersmall items of expenditure before these amounts are subsequently reimbursed from the SA or SGSA.

All disbursements at the provincial level for title development costs will require prior authorization of thePMO. Disbursements for field travel per diems and other operating costs will be authorized by the head ofeach PPMO. Each provincial project office will employ an accountant/cashier who will be responsiblefor withdrawing funds and disbursing and maintaining accounting records. If payment is made out of thecounterpart funds, the accountant/cashier will submit reimbursement requests to the PMO with supportingdocumentation periodically but at least once a month; If payment is to be made from SGSA funds,transfers will be made directly to the provincial branch of the bank from the SGSA based on fullydocumented payment requests. The accountant/cashier will be authorized to withdraw such transfers anddisburse funds as authorized by PMO. The provincial accountant/cashier will maintain records of allwithdrawals and disbursements made and will submit a statement of expenditures to PFO with supportingdocumentation. The details procedures to be followed for accounting and reporting at the provincial andcentral level for the above transactions will be included in the Financial Management Manual.

Accounting. PMO will be responsible for maintaining separate project accounts and will establish acomputerized accounting system to record and report financial transactions at the central and provinciallevel. All accounting will be centralized at the PMO. Provision should be made to incorporate projectrelated expenditures financed by Finland and GTZ. The accounting system will feature a chart of accountsthat would facilitate reporting to IDA, the other donors and the Government as well as providing themanagement information needs of the PMO. A simple system, based on spread sheet analysis, will beestablished to monitor payments at the provincial level. Establishment of all systems and training of staffwill be completed by March 2002.

Planning, Budgeting and Reporting. The PMO will be responsible for preparing annual plans andbudgets and establishing project management reporting. As the project is implemented through severalDepartments of the MLMUPC and the provinces, the plans and budgets should be prepared in such detailto facilitate monitoring of expenditures by individual implementing units as well as by project activities.The system of planning, budgeting and reporting will be described in the proposed Project FinancialManagement Manual. The project management reporting (PMR) will include financial and projectmonitoring reports acceptable to IDA.

PMO will also be responsible for preparing annual project financial statements, PMRs and any othermonitoring reports that IDA would reasonably request.

Risk Assessment. The project financial management risks are rated high due to (a) inexperience of theimplementing agency in managing foreign funded projects; (b) more than five fold increase in budgetmanaged as the project implementation begins; (c) significant amounts of activity at provincial level; and(d) likelihood of politicization due to land disputes. The procurement assessment has also rated the projectas high risk. Measures to minimize risks will be taken through technical assistance and training funded byFinland and GTZ and establishment of an independent intemal audit function.

Parallel Financing of Technical Assistance. Technical assistance (TA) including financial andprocurement management advisors will be provided by the governments of Germany and Finland. Theprocurement, disbursement and accounting for TA will be done in accordance with procedures applicable

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to each of the TA funds. It is the practice of both governments to disburse funds using their own staff.Therefore, the TA fund management will not be handled by the PMO. The mission agreed that a quarterlyand annual statements of disbursements will be provided to PMO for incorporating these in the PMRs. Inaddition, the annual financial statements will include IDA, Donor and government funds.

Audit Given that a significant amount of project funds will be incurred at the provincial level, PMO willestablish an intemal audit function to carry out audit of provincial activities. The organization, staffng andresponsibilities of the internal audit function will be described in the Project Financial ManagementManual. The intemal auditor will submit semi-annual reports to MLMUPC, the Land Policy Council andthe World Bank.

The annual project financial statements will be audited by an independent auditor acceptable to IDA onterms of reference acceptable to IDA. The auditor shall be required to express an opinion on (a) projectfinancial statements; (b) eligibility of expenditure disbursed under statement of expenditures; and (c)operation of the Special Account and Second Generation Special Account.

Financial Management Action Plan

The following financial management action plan is agreed:

Action Responsible Due dates will bereviewed andrevised duringappraisal *

1. Appoint Project Financial Management Officer MLMUPC December 1,2001

2. Appoint Financial Advisor MLMUPC December 1, 20013. Revise draft Project Financial Management PMO January 31, 2002Manual4. Appoint accounting staff PMO/Provinces PMO February 1, 20025. Design and install computerized project accounting PMO arch 31, 2002system6. Central and provincial staff training PMO February - May 20027. Appoint Internal Auditor PMO July 1, 2002

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Table C: Allocation of Credit Proceeds

Expenditure Category Amount in US9million Financing Percentage1. Works 4.10 90%2. Goods 4.20 100% CIF, 85% local3. Consultant services 1.35 100%4. Training, workshops, forum and 1.50 100%study tours5. Title development cost 10.15 100%6. Incremental operating costs

6.A Financial audit 0.07 100%6.B Other 0.93 100% till December 31, 2004

50% after January 1, 2005Unallocated 2.00

Total Project Costs 24.30

Total 24.30

Use of statements of expenditures (SOEs):

Withdrawal applications will be supported by Statement of Expenditures (SOEs) for civil works contractsbelow U$100,000 equivalent; goods contracts below $50,000 equivalent; consulting firm contracts belowUS$100,000 equivalent; individual consultants contracts below US$50,000 equivalent; training,workshops, forums and study tours; title development costs; and operating costs.

All other Withdrawal Applications will be supported by full documentation.

Special account:To facilitate credit disbursement, MLMUPC will maintain a separate US dollar Special Account in theNational Bank of Cambodia, on terms and conditions satisfactory to IDA including appropriate protectionagainst set off, seizure and attachments. The Special Account will have an Authorized Allocation ofUS$2,000,000 with the initial deposit being restricted to US$1,000,000 until amounts withdrawn from theCredit total SDR 5 million. Applications to replenish the Special Account should be submitted regularly,preferably monthly.

A Second Generation Special Account will be opened by MLMUPC to facilitate the flow of funds toproject provinces. The account will receive funds from the Special Account and be opened in the PhnomPenh branch of a commercial bank with a retail banking network which covers substantially all projectprovinces, and on terms and conditions satisfactory to IDA. Details of the maximum advance to the SecondGeneration Special Account and other procedures for the operation of the Second Generation SpecialAccount will be laid out in the Financial Management Manual.

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Retroactive Financing

The project will provide retroactive financing to a maximum of US$400,000 starting from January 1, 2002against eligible expenditures procured according to the agreed procurement arrangements. Retroactivefmancing will enable the government to undertake pre-implementation activities necessary to ensure smoothstart up of the project once the Credit becomes effective. Pre-implementation activities include the settingup of the PMO office including some refumishing of the office facilities, the procurement of some officeequipment and furniture, the development of the administration, financial and management systems in thePMO; and the selection and initiating of the training activities for the adjudication teams in Phnom Penh,the purchase of some surveying equipment and financing the incremental operating costs.

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Annex 7: Project Processing ScheduleCAMBODIA: Land Management and Administration Project

Project Schedule Planned ActualTime taken to prepare the project (months) 7 7First Bank mission (identification) 07/01/2000 07/01/2001Appraisal mission departure 10/03/2001 10/19/2001Negotiations 12/05/2001 12/11/2001Planned Date of Effectiveness 05/01/2002

Prepared by:

The Ministry of Land Management, Urban Planning and Construction

Preparation assistance:

Japanese Population and Human Resources Development (PHRD) Grant

Bank staff who worked on the project included:

Name SpecialityWael Zakout (EASRD) Task Team LeaderFrank Byamugisha (EASRD) EconomistMary Judd (EASES) AnthropologistJohn Bruce (LEGEN) Land LawyerHassane Cisse (LEGEA) Country LawyerGuo Li (EASRD) EconomistWijaya Wickrema (EAPCO) Financial Management SpecialistMimi Ladipo (LOAG3) Financial Management/Disbursement SpecialistGlenn Morgan (EASES) Environmental SpecialistDominic Aumentado (EACPF) Procurement OfficerWendy Ayres (AFTT2) Environmental Specialist/ConsultantOithip Mongkolsawat Procurement OfficerBrenda Phillips (EASRD) Program AssistantCecilia Tan Team AssistantEvelyn Bautista Laguidao Program Assistant

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Annex 8: Documents in the Project File*CAMBODIA: Land Management and Administration Project

A. Project Implementation Plan

Project Preparation Report including detailed implementation plan.

B. Bank Staff Assessments

Draft Project Concept Document (PCD) and Departmental Review Meeting Minutes(December 14, 2000)

C. Other

* Social Assessment* Institutional Assessment* Working Paper on Land Policy* Land Tenure/Status Study* Identification mission BTO including aide-memoire* Preparation missions BTO including aide-memoire* Pre-appraisal BTO including aide-memoire* Appraisal mission BTO including aide-m6moire* Project Information Document* Environmental and Social Guidelines

*Including electronic files

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Annex 9: Statement of Loans and Credits

CAMBODIA Land Management and Administration Project07-Nov-2001

Difference between expectedand actual

Original Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'dP071445 2002 Demobizatonand ReirnteogrbnPronPec 0.00 18.40 0.00 0.00 18.76 0.00 0.00P073394 2001 Flood Emegency Rhiab8italon Projec 0.00 35.00 0.00 0.00 32.91 -1.27 0.00P058O 4 2000 SAC -CAMBODiA 0.00 30.00 0.00 0.00 14.02 20.04 0.00P05f971 2000 KH-EDUCATION QUALITY IMPROVEMENT 0.00 5.00 0.00 0.00 2.65 0.49 0.00P060003 2000 Forest Conoession Mgt and Control Pilot 0.00 4.82 0.00 0.00 4.32 -0.29 0.00

P065798 2000 EtO & PROTECT AREAS M 0.00 1.91 0.00 0.00 1.53 0.56 0.00P052006 2000 KHB10&PROTAREAM 0.00 0.00 2.75 0.00 2.21 3.13 0.00

P05s881 1999 KH NORTHEAST VILLAGE 0.00 s.00 0.00 0.00 3.58 3.34 0.00

P050061 199 KH-SOCLALFUNDII 0o00 25.00 0.00 0.00 11.36 -2.80 0.00

P004030 199 KH-Road Rehab. 0o00 45.31 0.00 0.00 38.68 24.82 0.00

P045629 1998 CAM-URBAN WATER SUPPLY PROJECT 0.00 30.96 0.00 0.00 13.53 14.54 4.47P004033 1997 AGRI.PRODUCTIMP. 000 27.00 0.00 0.00 16.84 18.18 9.15P004034 1997 KH-DISEASE CONTROL & HEAL 0.00 30.40 0.00 0.00 6.76 9.91 0.00P034755 1995 TECHNICAL ASSISTANCE 0o00 17.00 0.00 0.00 0.12 4.43 0.00

Total: 0.00 275.80 2.75 0.00 167.25 95.09 13.62

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CAMBODIASTATEMENT OF IFC's

Held and Disbursed PortfolioMAY-2001

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

2000 SEF ACLEDA Bank 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.00

Total Portfolio: 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic2000 SEF ACLEDA Bank 1.00 0.00 0.00 0.00

Total Pending Commitment: 1.00 0.00 0.00 0.00

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Annex 10: Country at a GlanceCAMBODIA: Land Management and Administration Project

EastPOVERTY and SOCIAL Asia & Low-

Cambodia Pacific Income Development diamond1 999Population, mid-year (millions) 11.8 1,837 2,417 Life expectancyGNP per capita (Atlas method, USS) 260 1,000 410GNP (Atlas method, US$ billions) 3.1 1,833 988

Average annual growth, 1993-99

Population t%) 2.6 1.2 1.9Labor force (%) 2.6 1.3 2.3 GNP i Gross

per primaryMoat recent estimate (latest year available, 1993499) capita enrollment

Poverty (% of Dopulation below national poverty tine) 36yrban population (% of total population) 16 34 31Life expectancv at birth (years) 54 69 60Infant mortailtv (per 1.000 live births) 102 35 77Child malnutrition (X of children under 5) 22 43 Access to safe waterAccess to Improved water source (I% of population) 13 64 64Illiteracy (% ofpopulation age 15+) 61 15 39 - CambodiaGross primary enrollment (%ofschool-age population) 113 119 96

Male 123 121 102 Low-income groupFemale 104 121 86

KEY ECONOMiC RATIOS and LONG-TERM TRENDS

1979 1989 1998 1999Economic ratios

GDP (USS billions) 1.1 2.8 3.0

Gross domestic investment/GDP 11.0 12.0 18.4 TradeExports of goods and services/GDP 5.6 35.9 37.2Gross domestic savings/GDP 3.4 1.7 6.4Gross national savings/GDP 5.0 6.8

Current account balance/GDP -8.3 -9.2 -11.5 Domestic vInterest Pavments/GDP 1.0 0.2 SavingsTotal debtGDP 156.9 78.6Total debt service/exports 14.6 1.3Present value of deWbGDP 62.2Present value of debt/exports 176.1

Indebtedness1979-89 1989-99 1998 1999 1999-03

(average annual growth)GDP 4.9 1.8 5.0 - CambodieGNP per capita 1.7 -2.3 2.2 -- Low-income groupExports of goods and services

STRUCTURE of the ECONOMY1979 1989 1998 1999 Growth of investment and GDP (%)

(% of GDP)Agriculture 52.3 41.9 39.6Industry 15.4 17.4 18.8

Manufacturing 7.5 12.8 13.1Services 32.3 40.7 41.6 2

Private consumption 88.9 92.7 87.3 94 55 96 97 9s 99General government consumption 7.7 5.6 6.3 -GD C GDPImports of goods and services 13.2 46.2 49.1

1979-89 1989-99 1998 1999(average annual growth)Agriculture 2.3 2.5 1.5Industrv 9.4 8.6 11.4

Manufacturinq 8.3 16.4 9.0Services 6.3 -1.3 5.8

Private consumptionGeneral aovernment consumptionGross domestic investmentImports of aoods and servicesGross national product 4.7 -0.1 4.5

Note: 1999 data are preliminary estimates.

The diamonds show four key indicators in the country (in bold) comDared with its income-grouD averaqe, If data are missing, the diamond willbe Incomplete.

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Cambodia

PRICES and GOVERNMENT FINANCE1979 1989 1998 1999 Inflation (%)

DomesUc prices'(% change) 150

Consumer prices 12.6 5.0 100Implicit GDP deflator 19.0 13.1 3.8

Government finance 0o_-_ _(% of GDP, includes current grants) oCurrent revenue 7.6 9.0 11.5 94 95 56 97 9S 9Current budget balance 4-0.1 -0.3 1.8 - GDP deflator CPIOverall surplusideflicit -1.6 46.0 -4.4

TRADE

(US$ mdllions) 1979 1989 1998 1999 Export and Import levels (USS mill.)Total exports (fob) 79 855 933 1,500

Rubber 24 33 30Logs and sawn timber 8 88 36 1c-* Manufactures 392 536 _,0 0

Total imports (cif) .. 176 1,139 1,334 0JFood . 0

Fuel and energy __Capital goods o .. 94 9a

93 94 95 56 97 56 99Export price index (1995=100)Import price index (1995=100) * Exports * ImportsTerms of trade (1995=100)

BALANCE of PAYMENTS

(US$ millions) 1979 1989 1998 1999 Cuffent account balance to GDP (/)Exports of goods and services 81 978 1,117 0Imports of qoods and services 190 1,251 1,485Resource balance -109 -273 -368 -*

Net income 0 48 -122 I I'llNet current transfers 20 61 -10

Current account balance -89 -260 -346 -15

Financing items (net) 365 445Changes in net reserves -105 -98 -20

Memo:Reserves induding gold (US$ mittionsl 390 422Conversion rate (DEC, localIUS$) .. 224.0 3,744.4 3,807.8

EXTERNAL DEBT and RESOURCE FLOWS1979 1989 1998 1999

(US$ millions) Composition of 1998 debt (USS mill.)Total debt outstanding and disbursed 1,687 2,210

IBRD 0 0 0 0 F: 3 G :42 B:157IDA 0 0 157 180 C:67

Totaldebtservice 12 13 0:119IBRD 0 0 0 0IDA 0 0 1 1

Composition of net resource flowsOfficial grants 70 13 170Official creditors 0 55Private creditors 0 -3Foreign direct investment 0 0 121 120Portfolio equity 0 0 0 0 E: 1,822

World Bank programCommitments 0 0 31 80 A- IBRD E -BilateralDisbursements 0 0 19 27 8 -IDA D -Other multlateral F -PdvataPrincipal repayments 0 0 0 0 r.- IMF ( -Shmrt-rNetflows 0 0 19 1Interest payments 0 0 1 27Net transfers 0 0 18 26

Development Economics

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AdditionalAnnex 11

Environmental AssessmentEnvironmental Conditions of Cambodia

The Cambodian landscape features the floodplain of the Mekong River and the associated basin of theTonle Sap draining to the Mekong delta in the southeast, the Cardamon and Dangrek mountains to thesouthwest and northwest, and the plateaus bordering Laos and Vietnam in the northeast. A narrow coastalbelt lies beyond the Cardamon Mountains. Over 75 percent of the population lives in the Mekong basinand Tonle Sap plain, which encompass a large diversity of agroecological conditions. Farming systems(mostly rice-based), and environmental conditions, are thus very location specific. Cambodian soils tend tobe of low fertility, with low pH and deficiencies in nitrogen, phosphorus and micronutrients. Productivityis maintained in many areas by the deposition of silt by annual floods. In the highlands, farmers cultivatefields with rotational systems. The project will be active in the central provinces where the majority of thepeople live.

The climate is monsoonal, with the major wet season occurring from May to November. The onset,intensity and duration of the rains varies markedly from year to year. Some 80 percent of the rice crop israinfed, and the unreliability in the timing and quantity of water availability results in a high variations inrice output from year to year. Only 17 percent of the rice-growing areas are currently under any form ofwater management, and use of fertilizers and pest control technologies is as yet limited. Farmers arerapidly adopting agricultural machinery, including walking tractors, water pumps, and threshing machines.

Close to 2 million of Cambodia's 11.4 million people live in urban areas, and the numbers are growing.Lack of access to clean water and sanitation facilities contributes to Cambodia's high rate of infantmortality, much of it caused by preventable diarrheal diseases. During the 30 years of civil unrest littleinvestment was made in Cambodia's infrastructure. However, during the past five years much newinvestment has been made urban transport, water supply and other infrastructure, particularly in PhnomPenh, Sihanoukville and Siem Reap. Investments in water supply facilities have been made in someprovincial towns.

Estimates of Cambodia's forest cover range between 35 and 62 percent of total land area, includingevergreen lowland and mountain, semi-evergreen, deciduous and hydrophytic (flooded) forests.Deforestation is occurring at a alarming rates in Cambodia, due to poorly controlled commercial logging,clearing of land for agriculture, and cutting of timber for firewood. The forests provide habitat to a manylarge animals, including wild cats, primates, bears, elephants, wild cattle, pangolins and some 720 birdspecies. Loss habitat and uncontrolled hunting is decimating many of these animnal species. Deforestationis also contributing to flood disasters, and likely to changes in local rainfall patterns. Cambodia has 23protected areas, covering 18 percent of the country. Their boundaries are poorly demarcated, however, andencroachment and illegal hunting, timber cutting and other activities is widespread.

About 4 million people in six provinces, or 40 percent of Cambodians depend on the Tonle Sap lake and itsflood plain for their livelihood. The lake is one of the richest inland fisheries in the world, and providesabout 60 percent of the country's fish protein intake. The lake's area expands seasonally from about300,000 hectares in the dry season to about 1,300,000 hectares at full flood in the rainy season, with a

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change in water levels of up to 15 meters. The seasonally inundated area supports a hydrophytic forest,which is a critical habitat for spawning and nursery of many of the lake's abundant fish. Large areas of theflooded forest (up to 400,000 hectares from the 1960s to the 1990s) have been and continue to be clearedfor firewood and for agricultural plots. There is an increase in the use of chemical fertilizers and pesticidesin the Tonle Sap floodplain, posing risks of eutrophication of the lake and accumulation of toxic chemicalsin the fishery. Managing the environment of the Ton1e Sap region is complex because of the massiveannual fluxes in the hydrology, the dependence of the fishery on critical habitat in the flood forestinundation zone, the multiple uses land especially in the inundation zone, and number of jurisdictionsinvolved, stretching across six provinces, and involving nurnerous government agencies at all levels.

Impacts of the Project on the Environment

Among other goals, the project seeks to improve natural resources management by supporting developmentof policies, regulations and procedures for land classification, generation of information needed to classifyland (including procurement of aerial photos and satellite images), and production of land classificationmaps showing boundaries of land designated for particular uses and under the control of variousgovernment entities. Reaching a clear understanding of how various tracts of land will be managed in thefuture is a precondition for effective land-use planning and management of natural resources. This activityis also essential for effective implementation of the country's new forestry, fisheries, and water laws, whichare now being drafted to deal with specific categories of state property. In this way the project is expectedto directly contribute to improved environmental management in Cambodia.

Indirectly, by stimulating new investment in industries, agriculture, urban housing and offices, and, theproject has potential to affect the environment both positively and negatively. On the positive side, byimproving incentives to manage resources for long-term benefit, the project may encourage farmers toinvest in soil conservation, and firms and communities to manage forests and fisheries sustainably. Byformalizing rights to residential plots, the project encourages investment in activities and infrastructure thatimprove environmental conditions where people live and work, such as solid waste management, watersupply systems, and sanitation facilities. On the negative side, without proper management, newinvestment in industry and other facilities can harm the environment. To minimize or mitigate the potentialimpacts will require strengthening the environmental law and its sub-decrees, including that onenvironmental impact assessment. It will also necessitate the building of capacity of the ministry ofenvironment (MoE) to enable it to better enforce laws and regulations on environmental protection andnatural resources management.

New investrnent that occurs due to titling will occur outside the scope of the project, and no specificmeasures have been designed to deal with the potential impacts under project financing. Many multilateraland bilateral donors and NGOs are working with the government to improve its capacity for environmentaland natural resources management, including the European Union, the United Nations DevelopmentProgram/Global Environment Facility, the World Wild Fund for Nature, Wildlife Conservation Society,and Conservation International and others. The Asian Development Bank has provided technical assistanceand training to the MoE to strengthen its capacity to review and evaluate environmental impact assessmentreports. The United States Agency for Intemational Development is now supporting a project focused onstrengthening capacity of the MoE, which will start in September 2001 [date and specific activities to beverified]. Danish International Development Assistance (DANIDA) is helping six govemrnment agencies,including the MLMUPC, to integrate environmental concerns into its policies, strategies and operations. Itis also helping build capacity of the Council for Development of Cambodia, which is responsible forscreening all private and public projects that, according to sub-decree, require an environmental impactassessment. The World Bank is helping build capacity of the department of forestry and wildlife (ministry

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of agriculture, forestry and fisheries or MAFF) to better manage forests through a learning and innovationloan.

Environmental Management Plan

The project has been designed to promote sound environmental management and mitigate potentiallynegative affects arising directly from project activities.

Classification of land and delimitation of boundaries. Under its land management component, the projectwill support the classification of land and the delimitation of boundaries of land of different classifications.As making these decisions will not always be smooth, it is expected that the process will involve fullparticipation of all stakeholders, including relevant government agencies, central, provincial and localgovernment bodies, and families settled in the area.

Sequencing of systematic titling activities. The project will not provide titles in areas of potentialsignificance for environmental management until after decisions have been made with regard to its statusand boundaries agreed. Such areas include remaining forests, protected areas, the drainage area of TonleSap and the lake itself, the coastal zone, riverbanks and others.

Environmental input into land policy formulation. Wherever appropriate, the land policies andregulations being developed under the project will include environmental input. For example, the policy onthe delimitation and administration of public land must be based on a good analysis of the environmentalimplications of classifying the land in particular ways. Indeed a major principle for retaining land in thehands of the state is that it provides a public benefit in the form of improved environmental management.Other policy areas supported by the project that require environmental input include registering land in andaround conservation areas (forests, protected areas, fisheries, and water resources), registering communityand indigenous peoples' land rights, and allocating and developing land for the landless poor.

Creation of capacity for land management. The project will create capacity for improved environmentalmanagement in several ways. It will establish a university degree course in surveying, land management,and land administration. It will also help strengthen capacity of the General Department of LandManagement in the MLMUPC and of the provincial and district offices of land management. The projectwill also link to programs of other donors supporting land use planning.

Representation of environmental groups in project activities. The MoE is a member of the Council ofLand Policy that is responsible for formulating land policies and regulations. The three ministriesmanaging natural resources (MAFF, ministry of industry, mines and energy; and ministry of waterresources and meteorology) are also members. The NGO Forum, which includes representatives of NGOswith an interest in sustainable forest management, biodiversity conservation, protection of coastal waters,and other land use issues, will be consulted regularly throughout project implementation. Advice will alsobe sought from multilateral and bilateral donors working in the area of environmental management.

Environmental monitoring and evaluation. It is not expected that outcomes, such as evidence of improvedenvironmental management will be measurable during the project lifetime, as the delimitation process is notexpected to be completed until project year three or four. It is expected that the project's environmentalimpacts will ultimately be measurable through monitoring of environmental indicators planned byDANIDA (National Capacity Development Project) as input to the state of the environment report that willbe produced regularly, and through research and qualitative monitoring of assumptions and trends that theCambodian Development Research Institute (CDRI) is carrying out with support from DANIDA.

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Compliance with World Bank Safeguard Policies

Environmental assessment (OP 4.01). The project is classified as category B because it is not expected tohave significant adverse environmental impacts. Other than rehabilitation/construction of project officebuildings, training facilities and institute building, the project will not support civil works, land conversion,resource extraction, industrial production or any activity that could potentially damage the environment.Technical designs and locations of civil works have not been finalized. Thus it is not possible to evaluatepossible effects at this time. All buildings will be designed and constructed in accordance with soundarchitectural and engineering practice and will make appropriate arrangements for dust and noise control,solid waste disposal, sanitary facilities and worker safety. Contracts for civil works will be screened forenvironmental impacts.

All policy and institutional development activities will solicit stakeholder input on environmentalimplications through public review procedures.

Natural habitats (OP 4.04). The project will support the delimitation of important natural habitats,including forests, protected areas, fisheries, and water resources. It will also support development ofcapacity to create land management plans. The project will also avoid titling in areas of potentialenvironmental significance until the boundaries of different categories of land are agreed.

Cultural property (OPN 11.03). Cambodia has sites of great cultural significance, not all of which arecurrently known. The project will not issue titles to lands that the government deems as high priority forfurther study. It is expected that under the project, the boundaries of these areas will be delimited and titlevested with the government.

Pest management (OP 4.09). This policy does not apply to the project. While farmers may increase theiruse of pesticides while intensifying cultivation, the increase is not expected to be significant. In should benoted that DANIDA has been supporting integrated pest management in Cambodia since 2000. The WorldBank under the Agricultural Productivity Improvement Project, and the Food and Agriculture Organizationare also training farmers in the use of integrated pest management practices.

Involuntary Resettlement (OD4.30). A Resettlement Policy Framework has been prepared for the Project.It provides the principles and procedures to be followed to compensate people who may be negativelyaffected by the Project so as to ensure that they will be assisted to improve, or at least restore their livingstandards, income and/or production capacity to pre-project levels. While no resettlement or landacquisition is anticipated under the land titling component, the Project has developed the policy frameworkto protect people who may be negatively impacted.

Indigenous Peoples (OD4.20). While the first project will not issue individual titles in areas inhabited byindigenous minorities, an Indigenous Minority Policy Framework has been prepared which will guide thepreparatory work for the second project in this long term program of land management and administration.

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AdditionalAnnex 12

Social AspectsSocial Assessment

A social assessment (SA) was undertaken as a prelude to project design. It began on March 1, 2001 andthe final analysis was presented at a stakeholder workshop on July 9, 2001 sponsored by the Ministry ofLand Management Urban Planning and Construction and Cambodia Research Development Institute . Asin the stakeholder workshop prior to the start of the SA, the July 9 workshop was attended by theGovemors and/or their representatives and the Directors of the land departments from the 24 Provinces.The SA findings were used by the Project Preparation Team in the design of the Project, especially in thearea of participation, infornation dissemination and education on land rights, in the area of land disputeresolutions and in the area of future policy studies and implementation guidelines.

SA Findings. Cambodia privatized lands in 1989 and it is widely believed that at that time there was a fairdistribution of both agricultural and residential lands. All those whose main occupation was agriculturereceived land according to household size. However, for want of adequate financial and human resources acomplete mapping and firm titling of land could not take place at that time. People therefore continued torely on local traditions and customs to govem land rights according to the productive use of land. In thelast decade, there have been significant socio-economic changes (e.g. refugee repatriation, the advent ofmarkets and urbanization, increased population growth) that have placed varied demands on land. As aresult, the composition of stakeholders in lands has emerged rather unevenly. Following the law of themarket, maximum demands have been placed on best-located lands: commercial lands, roadside lands,productive lands, urban lands, and the like. People who have not been able to adapt to such changes - forwhatever reason - have not benefited from this process, and in many cases have actually been adverselyaffected. These people include the most vulnerable segments of the population (e.g. the rural poor, womenheads of households). In this sense, there are at least five major problems that require attention: (1)inequality in land holdings, (2) landlessness, (3) insecure tenancy, (4) land conflicts, and (5) encroachmenton urban lands by squatters.

Land use patterns have changed dramatically, particularly in locales characterized by highcommercialization. The demand for land has also increased among the peasantry because of acceleratedland atomization and restrictions placed on their access to forest and fishing resources. Such shifts in landuse patterns have also been accompanied by a corresponding shift in people's perceptions of land rights. Adual system of ownership and control is now rapidly emerging as more and more land is acquired by peopleand institutions from outside the local community for purposes other than subsistence fanming. Land userights are recognized locally by people within the peasant community according to traditions and customs,while ownership rights are recognized by people from outside the community according to the formal lawand procedures laid-down by the state. This dualism is not harmonious because there is a frequentinterface between the two systems in which more powerful parties are able to take advantage of those whoare more vulnerable. In this sense, people routinely seek venues and employ procedures that promote theirown self-interests.

Land markets are most active in areas situated along roads and near urban or market centers. In suchareas, the demand for formal land claims, i.e. titling deeds, is the highest in terms of facilitating transfers,clarifiing land boundaries, and avoiding disputes with would-be claimants. However, due to the high costsof land titles - mainly in the form of informal payments - many land transactions are routinely facilitated at

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the lower levels of administration through an exchange of application receipts or written contracts betweenbuyers and sellers, which are not necessarily tenable in law. In this sense, only people with adequatefinancial resources and/or political access are able and willing to obtain proper land certificates. In areascharacterized by subsistence farming systems away from roads and urban/market centers, people either relyon receipts or informal social institutions for validating use rights to certain areas of land, but here too thedemand for written documentation is increasing because people wish to ensure a smooth process ofsuccession and transfer of land to their off-spring.

A complex hierarchy of government officials and elected representatives govern land in a highly centralizedset up. An application for making certificates goes through at least 8-10 offices, spread across the village,commune, district, province and the national capital. Inquiries and measurements take enormous time, aprocess also lengthened for want of proper human and physical) resources. For one, most rural people,farmers and non-farmers alike, are not versed with this governance system. They would prefer to avoid thesystem in favor of local traditions and customs, and at best deal only with local institutions. Next, theduality of systems of land control not only coexist, actors within the government itself, particularly at thelower levels (e.g. village and commune chiefs) are party to perpetuating this dualism. Differentstakeholders understand land titles differently, to the extent that the guardians of the law themselves, thecourts and dispute settlement mechanisms, do not have a clear and consistent understanding of the law andrules. The defacto sanction extended to different practices of governance of land has ensured that theactual law is never really implemented.

The ambiguity in rules and multiplicity of practices in land transactions has also contributed to increasingcorruption, which is exacerbated by the unrealistic remuneration structure provided to government staff. Inmany areas, a proper certificate may cost up to US$300400, almost all in the form of informal paymentsto officials and representatives spread across different departments. Predictably, the poor rarely, if ever,obtain the right papers because they have neither the support of the law nor do they have the resources toby-pass the law. Women are especially vulnerable in this regard since they tend to have less access to andcontrol over resources which to advocate for their own rights.

The frequency and nature of land disputes is also increasing as more diverse interests compete for landresources. More land disputes now involve village people and people from outside the local peasantcommunity, including private companies and state institutions, and increasingly require more formalinstitutions for resolution. Any new land tilting effort will generate more demand for dispute resolution,involving both formal and informal governance mechanisms at all levels. Such an increase would, in alllikelihood, overwhelm a system that is already falling behind on its caseload. The most significantconstraints in terms of the capacity to handle an increased volume of cases are related to inadequatefinancial and human resources, including technical training in the law and procedures.

The key findings and recommendations from the SA are listed in a matrix in Attachment 1. The full socialassessment is available in project files.

Participation and Community Preparation in Systematic Registration

During Project Implementation. Based on the findings of the SA, observations from the field trip anddiscussions with non-governmental groups who are very supportive of the proposed project and eager toparticipate, the mission recommends that local NGOs be contracted to undertake the work prior tothe adjudication process. They will be responsible for field work prior to the commencement ofsystematic adjudication. Their activities will include information dissemination, targeting women foreducation on land laws and titling procedures, conducting village baseline profiles, entering field data into

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the registration database, analyzing registration records, producing consolidated village land files,providing post registration training in derivative registration and follow local land use planning support andfor evaluation and monitoring.

After loan effectiveness, local NGOs will be invited to send expression of interest and later submitproposals of how they plan to undertake the work in the provinces. The selected NGOs will be providedorientation and training by the Project including gender specific methods and tools for participation. Theywill consult and prepare communities prior to the adjudication work. Comrnunities which they think areready can be visited by the adjudication team. Communities which need more time for preparation can bevisited by the adjudication team at a later time. This partnership with NGOs will facilitate the work ofMLMUPC and help to solve the problem of lack of human resources in the provinces.

Following Completion of the Project. It has been mentioned in the SA and recognized in other landadministration and management projects that providing a title by itself does not necessarily lead toimmediate irnprovement in social welfare and economic livelihood for the households. For ruralhouseholds, in addition to security of tenure, people need support of extension services, credit, access tomarkets and other social services. The Project will link titled communities with non-govenmment groupsworking in the area for further support services which these groups provide. NGOs have informed themission that they prefer to work with people who have secured land tenure because these people will bemore willing to invest time and resources into their land.

Social Safeguards

Indigenous Minorities. The project area, comprising ten provinces and the municipality of Phnom Penh forthe first phase of the long-term program, has been proposed by the MLMUPC based on agreed criteria.These areas do not include provinces in the northeast where the indigenous minorities live. According tothe available information, there are small numbers of indigenous minorities in two of the ten projectprovinces-Kampong Thom and Sihanouk Ville. In Cambodia indigenous people are variously referred to'Khmer Loeu' (upper Khmer), 'highland peoples' or 'hill tribes.' These groups make up a large part of thepopulation in the northeast region; in the provinces Ratanakiri (62,000 or 66% of the total population,according to the 1995 census), Mondolkiri (23,000 or 71%), Stung Treng (5,000 or 6.6%) and Kratie(21,000 or 8.3%). Estimated figures set the total population of indigenous minorities to approximately120,000, or about one percent of the total population in Cambodia; they comprise of approximately thirteenmain language groups.

While this project will not undertake individual titling in areas inhabited by indigenous minorities, anIndigenous Minority Policy Framework has been prepared to guide the preparatory work for the follow-upproject in this long term program of land management and administration. Where opportumities anddemand emerge for comnunal titling, the Project will coordinate with the relevant government ministries toconsider selective requests.

In order to anticipate the inclusion of the northeast area for the second project of the program, a reviewand drafting of implementation guidelines for the registration of communal and indigenous minoritiesland rights will be undertaken during this project. The Royal Govemment of Cambodia has enacted thenew Land Law on August 30 2001 that provides for the recognition of inalienable communal land rights of"ethnic minority communities" over residential areas and traditional cultivation lands within forests.Additional policy work and further elaboration of the legal framework will be required before thegovernment will be able to implement this section of the proposed new land law. The proposed review andimplementation guidelines for land titling for indigenous minorities will take as its basis the policy

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contained within the draft land law 2001 and lessons learned from on-going projects for indigenouscommunities in the northeast area.

Resettlement. The project's objective of establishing land titles and improving service deliveiy of landadministration functions would result in a significant reduction of disputes over land rights. The titleswould provide all people with secure tenure and protect them from being displaced. In the long term, thiswould have a positive social and economic impact.

A Resettlement Policy Framework has been prepared for the Project. It provides the principles andprocedures to be followed to compensate people who may be negatively affected by the Project so as toensure that they will be assisted to improve, or at least restore their living standards, income and/orproduction capacity to pre-project levels. While no resettlement or land acquisition is anticipated under theland titling components, the Project has developed the policy framework to protect people who may benegatively impacted from three possible sources. These are: (i) eviction from state land as defined underarticles 12 through 19 of the Land Law of individuals who occupied it prior to August 30, 2001, the dateof the enactment of the new land law, following titling of such land in the name of the state; (ii) evictionfrom state land titled in the name of the state of individuals who occupied it prior to August 30, 2001,because of the need to use such land for the carrying out of civil works under the Project; and (iii) extensionby the state of right of way (ROW) claims which adversely affects possession rights.

Informal Settlers. Agreement has been reached with the Ministry (MLMUPC) regarding the approach tobe used in the case of informnal settlers including squatters. The project (a) will issue titles where there isagreement by the government to provide the land to be registered to informal settlers, (b) will facilitate theprovision of services and titling where the municipality is working with development groups to provide landto informnal settlers through land sharing and/or relocation progamms based on the UNCHS principles(Attachment II to this Annex), and (c) will not issue titles where there is no agreement to allocate the landto informal settlers or through land sharing and/or relocation programs. The project has developedprocedures for screening and consultation to ensure that the above conditions are agreed before provision ofland registration and titling services.

Dispute Resolution and Legal Assistance to the Disadvantaged. The precise number of land disputes inCambodia is not known, but it is widely recognized that disputes about land are endemic. While the Bank'sOperational Directive 4.30 does not apply to impacts of adjudication on disputes between private parties,the proposed initiative to provide legal aid will assist the poor and disadvantaged in obtaining fairresolution of those disputes. The Project will have a component to strengthen the capacity ofadministrative institutions at all levels and civil society to work together to resolve land disputes. Inaddition, the Project will partner with the Cambodian Legal Aid group to provide legal assistance to thepoor in cases of disputes at the Land Dispute Resolution Commissions and the courts.

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ATTACHMENT I: PRINCIPAL FINDINGS FROM THE SOCIAL ASSESSMENT

Key Issues Recommendations RemarksI Land use pattem has changed Conduct detailed surveys and Administrative

dramatically due to surveillance; implement decentralization needed; fundssocio-economic changes in the development schemes required; personnel capacitieslast decade: this is in response to to be raised; this is also aincreasing demands on land from larger developmental issueoutside the local peasantry

2 Change in land use pattem is Encourage modemization: Synchronization of elementsfollowed by changing views on promote public education and of SEDP with the titlingland rights: those who cannot effective outreach program; special focus on theadapt to such changes are poor and vulnerable

I adversely affected3 There is extensive land transaction Have the new law on land to address Respect for each level of

and inheritance using informal these issues and create institutions administration inmeans: all not correct in law that speedily dispense such cases implementing the law

4 Land receipts and unauthenticated Strengthen enforcement Public education and trainingwritten contracts are used for land mechanisms; decentralize can helptransfers/divisions, and are even governancerecognized by courts and LDSC

5 People incorrectly believe receipts Encourage modernization: promote Public education can help;to be land certificates public education with effective this is a larger developmental

outreach issue6 Many application receipts are All new procedures should honor Administrative

out-dated and do not present the the present occupancy if there is no decentralization necessarycurrent reality conflict or contest

7 Today stakeholders include Promote integration of different Civil society can helpfarmers, migrants, soldiers, stakeholders; judiciously up-holdcompanies, govemment officials the law to protect the vulnerableand military among others: a veryheterogeneous group havingconflicting interests l

8 Many stakeholders possess lands Strengthen enforcement Cadastral maps andby means not valid in law (e.g. mechanisms; decentralize measurements necessarygrabbing, encroaching, squatting) govemance; create institutions that

speedily dispense such cases9 Many people hold unused lands Strengthen enforcement Promote good governance

mechanisms; decentralizegovernance

10 There is high demand and Develop land and infrastructure in Integrate elements of landspeculation for lands along roads, the hinterland; rely on market development in SEDP; morecommercial centers, and water mechanisms funds may be neededways

11 Military controls some key Rationalize and minimize military Relates to largerdisputed lands; also other or govemment control of 'private administrative reformsgovemment departments hold state lands''private state lands'

12 Landlessness and urban squatters Evolve a relocation and habitation Relates to largerare visibly large policy administrative reforms

13 Phnom Penh is expanding rapidly City needs zoning and expansion Some strong decisions are

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in an unplanned way plans necessary14 Women-headed households own * Promote right to obtain knowledge Requires larger awareness on

smaller land pieces than men do. and participation in titling and gender equityWomen-headed households are conflict resolutionalso more vulnerable to become * Create public awareness on genderlandless

15 Women have little knowledge of * Promote right to obtain knowledge Requires larger awareness onland laws and titling procedures and participation in titling and gender equity

conflict resolution* Create public awareness on gender

16 There are problems with land Accelerate agricultural Relates to largerwhere farmers practicing shifting development; make interim developmental issues;cultivation, mainly indigenous arrangement for transition for those affirmative actionpeople farmers

17 Absence of land/cadastral maps Give top priority for developing Funds required; capacities tomakes it difficult to properly maps, surveys and measurements; be raiseddefine land use and control promote inter-ministerial

coordination18 Land concessions are given out Rationalize lands under concession; Requires a comprehensive

without adequate consultation; re-examine some concessions agricultural policy; respectthey adversely affect the villagers' authority of local officials andlivelihood representatives

19 There is lack of clarity regarding Develop a comprehensive policy; Requires a comprehensivecontrol/use of water bodies create maps and surveys water & fishery policy; some

steps already taken20 Land administration procedures Judicious application of the law and Promote good governance

not adequately followed: there is proceduresadoption of short-cuts andunofficial dealings

21 Inability to tax unused lands Judicious application of the law and Promote good governanceresults in revenue losses procedures

22 Land titling process is Simplify procedures - may be Need to lay out newcomplicated, time-consuming, and through decentralization; make administrative procedures,expensive: people with resources affordability as one of the guiding training, capacity buildingcan obtain certificates, but the pooT principles; observe best practices;cannot afford them progressive taxation

23 Both, people and local officials Promote public education on landcomplain about the repeated laws and procedureschanges in procedures and formsof certificates

24 Capacity of titling institutions is Conduct training; provide Additional funding may belimited due to lacking of equipment and make provisions for necessaryhuman-power, training, materials funds through progressive taxation,and equipment, and fund inter-govemmental transfers

25 People/officials lack the knowledge Conduct training; provide Additional funding may beabout modern land governing equipment and make provisions for necessarysystems and methods funds; public education

26 In effect there are two parallel Promote public education on land This is a larger administrativepractices governing land rights: laws and procedures; also conduct reforms issueinformal and formal training for staff - all to minimize

unofficial practices, particularlythose not correct in law

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27 There are land conflicts between Settle disputes on priority Need to legitimize anddifferent stakeholders strengthen local conflict

settlement institutions28 Demand for formal conflict Make fuller use of local dispute Need to legitimize and

resolution outstrips the supply settlement systems: make it strengthen local conflictmandatory to first refer matters to settlement institutionslocal authorties

29 Social impact of this short-supply Make fuller use of local dispute Need to legitimize andis felt most by the poor settlement systems; instill strengthen local conflict

confidence among the poor settlement institutions30 Boundary disputes, Should be settled in the Need to legitimize and

inheritance/divorce village/commune strengthen local conflictsettlement institutions

31 Encroachment on public land Adjudication at village/commune Cadastral maps andlevel necessary; demarcation of measurements necessaryprivate and public lands prerequisite

32 Practice of coerced sales & land Judicious application of the law and Promote good governance;grabbing procedures pro-poor policies

33 Communal claims specially in Accelerate agricultural Affirmative action; partnershifting cultivation areas development; make interim with NGOs; reach out to

arrangement for transition for those non-Khmer speakingareas; communal titling populations

34 Repeated undermining of local Reverse the process: if necessary Need to legitimize andmechanisms of dispute settlement create new administrative fiats strengthen local conflict

Iinstitutions by the 'powerful' settlement institutions35 Some Land Dispute Settlement * Ensure neutrality of commission Relates to larger administrative

Commissions (LDSC) are not members reformneutral; also many people surveye * Layout clear procedures for disputedo not perceive them to be fair settlement

* Build capacities among LDSCmembers

36 Provincial courts and LDSC * Promote local dispute settlement Need to legitimize andbeyond the affordability of mechanisms as the first step of strengthen local conflictordinary folk conflict resolution settlement institutions

l Clarify the path for appeall Make affordability the guiding

principle to dispense justice

37 Courts & LDSC falling behind * Promote local dispute settlement Need to legitimize andcase loads mechanisms as the first step of strengthen local conflict

conflict resolution settlement institutions* Clarify the path of appeals

38 Courts & LDSC face problems of Conduct training; provide Funding may be necessaryinadequate financing, staffing & equipment and make provisions fortraining funds

39 The process and service of dispute * Make affordability the guiding Relates to larger administrativesettlement are rather complicated principle to dispense justice reformsand expensive, and women heads * Create public awareness on genderare not able to afford them

40 Dispute settlement systems have Rationalize the relationship between Relates to largerno 'teeth to implement their the judiciary and executive administrative reformsdecisions

41 Unofficial fees increase potential Strengthen enforcement Promote good governance

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abuse of the system mechanisms; decentralizegovernance

42 There are a number of unsettled Evolve a relocation and habitation Relates to largerpeople - returnees, displaced policy; use unused lands; invoke administrative reformspersons, migrants, demobilized part-self financed schemessoldiers

43 There is no accurate count of Conduct general and issue-specific May need funding;available lands and land use surveys; maintain same data base inter-departmental

across departments and ministries coordination

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ATTACHMENT II: INFORMAL SETTLEMENT PROGRAM

The mission had discussions with donors and NGOs implementing the Urban Poverty Reduction Project(funded by UNCHS/UNDP/UK DFID Project CMB/00/003). There was agreement that the Project willcoordinate closely with the development groups in the informal settlement program.

A 1999 Survey of Poor Settlements found that approximately 172,000 people in Phnom Penh live insquatter settlements. Today it may be over 200,000 people. The Municipality of Phnom Penh, withtechnical and financial assistance from UNCHSIUNDP and DFID (British Aid), has been actively engagedin the informal settlement program (spanning several years and formally based on intemationally endorsedprinciples UN (1998) Guiding Principles on Intemal Displacement; UN (1996) Report Of The UnitedNations Conference On Human Settlements (Habitat II), Istanbul, 3-14 June.) relocating squatters fromriver bank sites along the Bassac and Tonle Sap Rivers to developed, altemative sites in the peri-urbanareas. The program is based on the UNCHS principles for shelter-i.e., a) provide security of tenure; b)promote the right to adequate housing; c) provide equal access to land; d) promote equal access to credit;and e) promote access to basic services and guidelines. UNCHS has developed several approaches for theprogram. Among the various approaches are two which are briefly described below.

Land-sharing Approach. Informal settlers remain in the area where they have been living but their livingspace is reorganized so that they can share the land with new owners; new housing is built either asapartments or row houses. For example, land sharing of 111 families with a hospital in Phnom Penh willtake 2.5 percent of land area allowing the hospital to use 97.5 percent of the land.

Relocation Approach Informal settlers move to a new location where the area is prepared and basicinfrastructure installed; each family gets a residential plot including a small yard, a house and water supplyand sanitation facilities including septic tank. Below are the implementation steps for sub-projectsundertaken by a coalition of NGOs under the UNCHS program:

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Activities Responsible

(based on a 12 month period for Steps I to 7 per (Community and Partners)location)

1. Consultation and planning with community about Municipality, ACHRIUPDF, SUPF and URCthe program.

2. Community preparation including community SUPF and UPDFsurvey of land and housing opportunities (6

____ months).3. Provision of land. Municipality4. Community mapping, design and planning URC

assistance.5. Infrastructure installation using paid community Construction by contractor supervised by URC

labor (3 to 6 months)6. Housing construction with small loan to House foundation and posts by contractor; the

households rest by household supervised by URC; loanmanaged by UPDC

7. Households move into new homes and continue towork on the finishing touches.

8. Households develop livelihood activities. SUPF and UPDF9. Monitoring Municipality and UPDF10 Households get land title LMAP can facilitate the registration and

securing of titles* The responsible groups include non-government organizations who are currently working with squatters and theurban poor and who have collaborated with UNCHS. ACHR is Asian Coalition for Housing Rights; UPDF isUrban Poor Development Fund specializing in micro-credit; SUPF is Solidarity and the Urban Poor Federationspecializing in community organizing; and URC is Urban Resource Center specializing in architectural and urbanplanning services.

The estimated costs per family (excluding land) under the informal settlement program are approximately:

US$900 to US$1,200 per family for land-sharingUS$1,800 to US$2,200 per family for relocation.

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Additional Annex 13 Cambodia New Land LAW


The enactment of the new Land Law in August 2002, has greatly facilitate the implementation of LMAP; ithas provided a sound legal framework for the project.

The 1992 Land Law, enacted in the wake of the break-up of collective farming institutions and the fairlyrough and ready allocation of land to households and appropriation of land by government agencies in thewake of that change, vested all land in the Cambodian State and relied heavily on acquisitive prescriptionbased on 5 years possession to sort out use rights in a manner consistent with facts on the ground. Thiswas a useful provision at the time but is now contribution to the land grabbing that underlies the endemicland disputes in the country. The 1992 law is unclear as to the nature of the rights it allows to be createdthrough prescription, but has been interpreted to allow ownership of only urban, residential land.Elsewhere, use rights prevail. It encourages registration of transactions, but does not provide for systematicadjudication and registration of land, nor for a first registration process.

The draft of the new law extends ownership rights to all land. Ownership can have been acquired byprescription, or purchase, grant or donation from the state, or by inheritance or gift. New prescription isbarred. State land is included in one register with private land, and there is provision for communalownership of land. Systematic survey and adjudication of land is provided for, and provision is made fordelegation of land administration from the central to provincial/municipal level. It also provide a regime ofproperty rights, from ownership and leasehold to attachments and condominiums.

Achievement of the objectives of the project would have been difficult under the old law, and would haverequired an act of faith that it would subsequently be reformed along sound lines. The new law provides anadequate legal framework for implementation of the project. There are some issues which will requirecontinuing attention, such as the legal conclusiveness of registration of a title, which is not as clear as mnightbe desired in the draft new law, but these are manageable. The pending enactment of a Civil Code with itsprovisions on Immovable Property will override or repeal many of the substantive property provisions ofthe new law, and when that occurs, some consolidation of this law as the national land administration lawmay be necessary.

The next major legal task is the elaboration of sub-decrees under several provisions of the new law, andrules and regulations under those sub-decrees. Both the Bank and its partners and ADB will be providingtechnical assistance for new legislation should help ensure that this subsidiary legislation is wellthought-through. FinnMap (through funding from the Government of Finland) is providing an intemationallegal consultant to the Ministry for the development of the relatively technical sub-decrees and regulationsthat are central to the implementation of this project.

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Cambodia's New Land Law

LMAP's work will be greatly facilitated by the enactment two months ago of a new Land Law forCambodia. The new law is the result of a very effective legal TA provided by the AsianDevelopment Bank and a very valuable support by the NGOs. It provides both a framework forland administration and the fundamental property rights system for the country.

The law has been much needed. All rights of private property were abolished by the Pol Potregime in 1979. Even after the fall of that government, the 1992 Land Law (Decree 100) providedthat all land belonged to the State. No land rights from prior to 1979 were recognized. If certainconditions were met, a possessor in legitimate temporary possession for at least five years couldby registration convert that possession into ownership, but this applied only to urban land. Whilelegal recognition of possession is an appropriate principle for reconstitution a property systemwhere populations have been utterly displaced and land records destroyed, it has given rise toconflicts. Families, villages, government agencies and armed forces have been anxious to takepossession of land as a basis for claiming ownership, sometimes competitively.

The new land law says that only possession begun before its enactment can give rise toownership. Possession gives rise to ownership if it began more than five years before theenactment of the new Land Law. Possession begun less than five years before enactment will beallowed to mature to ownership so long as it is peaceful and uncontested.

The new law clearly allows full ownership of agricultural land and protects all ownership fromtaking without prior payments of just and prior compensation. Communal as well as individualproperty rights are recognized, for both religious foundations and indigenous groups. OnlyCambodians can own land, including enterprises registered in Cambodia in which more than 51%of shares are owned by natural persons of Cambodian nationality or by Cambodian legal entities,based on the percentages of share ownership shown in the Articles of Association.

State public property is land within certain constitutional categories (e.g., forests, reiterated in thislaw), plus lands that have "not been the subject of due and proper private appropriation or whichare not in the process of being privately appropriated through possession..." as wells as landsacquired by gift or when someone dies without an heir. State public property cannot be sold,whereas State private property can be sold. Provision is made for a new law that will govern theshifting of land from the category of State public property to the State private property category.

There are several provisions in the new law that are critical for LMAP. A Title VI on Cadastreprovides for a state guarantee of registered property rights. Provision is made both for systematictitling (compulsory, covering all the holdings in an area) sporadic titling (on demand, one parcelat a time), the cadastral index maps and the Land Register. The Ministry of Land Management,Urban Planning and Construction is given the necessary powers carry out the full range of LMAPactivities, including the power to mediate land disputes at field level and to decide disputes in itsCadastral Commission.

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Additional Annex 14 Statement of the Royal Government on Land PolicyCAMBODIA: Land Management and Administration Project

May, 2001

Statement of the Royal Government on Land Policy

The Royal Government of Cambodia is endeavoring to implement a coordinated set of laws, programs of work,and institutional arrangements regarding land which are directed toward enabling the achievement of national goalsof economic development, poverty reduction and good governance, as described in the SocioeconomicDevelopment Plan, Interim Poverty Reduction Strategy, and Governance Action Plan.

The obiectives of these initiatives reearding land are:

* To strengthen land tenure security and land markets, and prevent or resolve land disputes;

* To manage land and natural resources in an equitable, sustainable and efficient manner;

* To promote land distribution with equity.

To reach these objectives, government will endeavor to accomplish the following tasks:

In the area of land administration:

* Enactment of the Land Law, complementary laws, regulations and other related legislation;

* Operation of the Council for Land Policy to promote and monitor the implementation of land policy inconsistency with the direction of the Council of State Reform;

* Creation of a state land inventory and state land classification system;

* Implementation and operation of a nation-wide land registration system using both sporadic and systematicregistration procedures, including all property, both public and private;

* Resolution of land disputes through the local Administrative Commission, Provincial/Municipal LandDispute Settlement Commissions and the court organs;

In the area of land management:

* Development of land use plans for priority areas including tourism and investment zones, key urban areas andmajor road corridors;

* Co-ordination of land use planning with natural resource management of forests, fisheries, coasts, waterways,and mineral deposits in a harmonized legal framework;

* Decentralization of land management and planning authority to local and provincial authorities, after theestablishment of national land use guidelines and supervisory structures;

* Development of procedures for urban land management and re-settlement;

In the area of land distribution:

* Execution of a broadly consultative process and pilot projects to create a land distribution strategy for needygroups;

* Prevention of illegal land acquisition and land concentration.

For the three above areas, institutional strengthening and capacity building in land policy implementation adimprovement of public awareness of land legislation are priorities. .

In order to achieve these tasks it is envisioned that a long term Land Administration, Management and DistributionProgram (LAMDP) will be implemented, beginning with an initial phase to test approaches, achieve changes,clarify institutional roles and identify financial requirements. Important materials for the success of this programinclude the establishment of accurate geodesic networks, aerial photography and base mapping, and up-to-date landinfornation systems.

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