Independent Evaluation Group (IEG) Implementation ...

1 Independent Evaluation Group (IEG) Implementation Completion report (ICR) ReviewKH - trade development Support Program (P109648)Page 1 of 20 report Number : ICRR00207431. Project DataProject IDProject Name P109648KH - trade development Support ProgramCountry Practice Area(Lead) Additional FinancingCambodiaTrade & CompetitivenessP147231,P147231L/C/TF Number(s)Closing Date (Original)Total Project Cost (USD)TF-9357331-Mar-201212,350, Approval DateClosing Date (Actual)07-Jan-200914-Aug-2016 IBRD/IDA (USD)Grants (USD)Original Commitment15,450, ,450, Commitment14,715, ,715, ,715, ,715, byReviewed byICR Review CoordinatorGroupAntonio M. OlleroJ. W. van Holst PellekaanChristopher David NelsonIEGFP (Unit 3)2. Project Objectives and to the Multi-Donor Trust Fund Grant Agreement (GA) (page 4), the project development objective (PDO) of the trade development Support Program (TDSP) of the Kingdom of Cambodia was: "to increase the Recipient s (the Royal Government of Cambodia s) capacity in formulating and implementing appropriate trade policies".

2 The statement of the PDO differed slightly from that used in the Project Appraisal Document (PAD) (page 4): "to increase the Royal Government of Cambodia s efficiency in formulating and implementing effective trade Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedIndependent Evaluation Group (IEG) Implementation Completion report (ICR) ReviewKH - trade development Support Program (P109648)Page 2 of 20policies".In the GA, "capacity" in formulating and implementing trade policies replaced "efficiency" in formulating and implementing trade policies. And "appropriate" trade policies replaced "effective" trade policies. Although the GA did not define what "appropriate" trade policies were, the Implementation Completion report (ICR) (page 13) interpreted "appropriate" trade policies these to mean: (a) policies identified in the Diagnostic trade Integration Study (DTIS) of 2007, namely on trade facilitation, sanitary and phyto-sanitary (SPS) standards, technical barriers to trade (TBT), trade information and transparency, capacity development , institutional coordination, and aid effectiveness; (b) policies representing Cambodia s international obligations to the World trade Organization (WTO); and, (c) "widely-accepted best practices".

3 The project objectives/key associated outcome targets revised during Implementation ? a split Evaluation be undertaken? project comprised four components (GA, page 4, and PAD, pages 5-6): trade Policy Formulation and Implementation (US$ million estimate at appraisal, US$ million estimate at the second restructuring of the project, US$ million estimate at the third restructuring, US$ million at the fourth restructuring; US$ million actual) aimed to assist the Government implement its commitments to the World trade Organization (WTO) in three areas: technical barriers to trade (TBT) and sanitary and phyto-sanitary (SPS) standards; the Action Plan on trade Facilitation; and, legal reforms arising from Cambodia's accession to the WTO in Monitoring (US$ million estimate at appraisal, US$ million estimate at the second restructuring, US$ million estimate at the third restructuring, US$ million at the fourth restructuring; US$ million actual) aimed to support the development of a transparent, consistent and sustainable performance monitoring system for various trade -related agencies to monitor progress in trade policy Implementation and to provide feedback on the quality of the business and Human Capacity Building (US$ million estimate at appraisal, US$ million estimate at the second restructuring, US$ million estimate at the third restructuring, US$ million at the fourth restructuring.)

4 US$ million actual) aimed to strengthen the institutional capacity and individual human capacity in Cambodia by equipping the Government s staff with appropriate skills and experience to develop and implement trade policy and by designing and providing for a Merit-Based Performance Incentive (MBPI) Support to the TDSP (US$ million estimate at appraisal, US$ million estimate at the second restructuring, US$ million estimate at the third restructuring, US$ million at the fourth Independent Evaluation Group (IEG) Implementation Completion report (ICR) ReviewKH - trade development Support Program (P109648)Page 3 of 20restructuring; US$ million actual) aimed to support the capacity of the Ministry of Commerce (MOC), through its Department for International Cooperation (DICO), to act as secretariat for the trade Sector-Wide Approach ( trade SWAp) and as program manager for the TDSP and to support other Government departments and agencies capacities in implementing the on Project Cost, Financing, Borrower Contribution, and DatesProject Cost: The project cost was estimated at appraisal at US$ million.

5 The revised project cost, following the provision of additional financing of US$ million, was US$ million. The actual disbursement was US$ millionFinancing: The project was financed through a recipient-executed trust fund, the Cambodia trade development Support Program Trust Fund (TF093573), under a parent Multi Donor Trust Fund (MDTF) (TF071046) funded by the Danish International development Agency (DANIDA), the European Union (EU), and the United Nations International development Organization (UNIDO). The MDTF also created three Bank-executed trust funds (BETFs) that financed activities related to the TDSP: (a) TDSP Implementation Supervision (BETF093561), in the amount of US$ million; (b) TDSP Facilitation and Advisory Service (BETF093560), US$ million; and, (c) IFC Advisory Service on Investment Policy (BETF017888), US$ Contribution: Counterpart funds included: (a) a US$250,000 contribution to the Merit-Based Performance Incentive (MBPI) scheme under the third component of the project, which was planned at appraisal but discontinued after the first restructuring; and (b) US$800,000 which was added later in the project to fund the business registration automation : The project was approved in January 7, 2009 and became effective in March 9, 2009.

6 The project was restructured four times: in December 29, 2010; March 29, 2012; January 31, 2014; and, March 31, 2015. The project closed in August 14, 2016, almost three and a half years after the original project closing date of March 31, : The first Level II restructuring of the project in December 2010: (a) removed the MBPI as a disbursement category following the agreement between the Bank and the Government to replace the provision of salary supplements to Government officials with a temporary system of Priority Operating Costs (POCs) for critical Government departments implementing the trade Sector Wide Approach ( trade SWAp); and (b) revised the expenditure categories, financial management arrangements, and a results indicator to reflect the second restructuring of March 2012: (a) discontinued the funding of the POCs at the request of the MDTF donors and reallocated the funding to other expenditure categories; (b) reduced the funding of the second and third components of the project and reallocated the funds to the first and fourth components of the project; (c) modified the Grant Agreement to align procurement under the project with the Bank s updated Procurement Guidelines and Consultant Guidelines.

7 And, (d) extended the project closing date from March 31, 2012 to January 31, 2014 to make up for delays encountered at the project preparation Independent Evaluation Group (IEG) Implementation Completion report (ICR) ReviewKH - trade development Support Program (P109648)Page 4 of 20stage and to take advantage of an extension in the life of the parent third restructuring of January 2014: (a) provided additional financing to the project of US$ million from the EU to scale up and expand the project activities while leaving the project components and the Results Framework unchanged; (b) distributed the additional financing to the first component of the project, US$ million; the second, US$ million; the third, US$ million; and the fourth, US$ million; and (c) extended the project closing date from January 31, 2014 to March 31, fourth restructuring of January 2015: (a) added a new outcome indicator; and, (b) extended the project closing date from March 31, 2015 to August 14, Relevance of Objectives & of ObjectivesThe project was relevant to economic conditions in Cambodia at project appraisal in 2008.

8 At that time, the economy had grown a remarkable 10 percent per year for about 10 years, and poverty had trended downward. With Cambodia joining the Association of Southeast Asian Nations (ASEAN) in 1999 and the World trade Organization (WTO) in 2004, international trade and investment had contributed significantly to the strong economic performance. Nonetheless, trade had yet to be fully mainstreamed in the national development strategy. In response, the Government introduced a trade Sector-Wide Approach ( trade SWAp) in 2008 to provide a common platform for trade policy making and Implementation among different Government agencies and to allow the coordination of trade -related technical assistance among Cambodia s development trade SWAp, as initially developed in 2008, was underpinned by three pillars: (a) legal and institutional cross-cutting reform for trade development ; (b) product and services export supply development ; and, (c) capacity development for trade SWAp management.

9 The TDSP, appraised also in 2008 and made effective in 2009, supported the first and third pillars of the trade project continues to be relevant to economic conditions in Cambodia at project closing in 2016. The trade SWAp remains the organizing framework for trade policy making and trade -related assistance coordination in Cambodia. In 2014, the Government articulated a new Cambodia trade Integration Strategy (CTIS) to serve as a roadmap for implementing the trade SWAp over the four-year period from 2014 to 2018. The CTIS updated the key reform areas of the trade SWAp, re-articulating its pillars in a results framework as consisting of: (a) increasing the competitiveness of Cambodian exporters in world markets through a strengthened export business environment; (b) expanding and diversifying Cambodia s exports through strengthening supply in current and new sectors, entering markets, and moving up global value chains (GVCs); and, (c) strengthening the capacity of the Government and Cambodian stakeholders to manage the trade agenda and trade challenges.

10 The CTIS also added transportation logistics as a new cross-cutting reform issue under the first pillar, and skills gap in the export sector under the third pillar. The TDSP, with its focus on the first and third pillars, remains aligned with the goals advanced by the trade SWAp and the Independent Evaluation Group (IEG) Implementation Completion report (ICR) ReviewKH - trade development Support Program (P109648)Page 5 of 20implementation roadmap outlined by the project was aligned at appraisal with the Bank Group s Country Assistance Strategy (CAS) for Cambodia The CAS supported six objectives organized around two pillars: (a) removing the governance constraints to attain the Cambodia Millennium development Goals (MDGs), and (b) supporting the strategy and investments to attain the Cambodia MDGs.