Cambodia - Land Management and Administration Project

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 EQUIVALENT) TO THE KINGDOM OF CAMBODIA FOR A LAND MANAGEMENT AND ADMINISTRATION PROJECT January 29, 2002 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region  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 YEAR Government: January I - December 31 -- IDA: July 1 - June 30 ABBREVIATIONS AND ACRONYMS CDRI - Cambodian Development Resource Institute CLF - Council of Land Policy DANIDA - Danish International Development Assistance ERR - Economic Rate of Return IAPSO - Inter-agency Procurement Service Office ICB - International Competitive Bidding IDA - International Development Association (World Bank) IFI - International Financed Institutions LAMDP - Land Administr ation, Management and Distribution Program LIL - Leaming and Innovation Loan LMAP - Land Management and Administration Project MEF - Ministry of Economy and Finance MLMUPC - Ministry of Land Management, Urban Planning and Construction MOE - Ministry of Environment NCB - National Competitive Bidding NGO - Non-governmental Organization NLDSC - National Land Dispute Settlement Commnission NPV - Net Present Value OCSPR - Operational Core Services Network PMO - Project Management Office PMR - Project Management Report PPMO - Provincial Project Management Offices Vice President: Jemal-ud-din Kassum, EAPVP Country I)irector: Ian Porter, EACSM Sector Director: Mark D. Wilson, FASRD Task Team Leader/Task Manager: Wael Zakout, EASRD  CAMBODIA LAND MANAGEMENT AND ADMINISTRATION PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 7 C. Project Description Summary 1. Project components 8 2. Key policy and institutional reforrns supported by the project 9 3. Benefits and target population 10 4. Institutional and implementation arrangements 10 D. Project Rationale 1. Project alternatives considered and reasons for rejection 11 2. Major related projects financed by the Bank and other development agencies 11 3. Lessons leamed and reflected in the project design 12 4. Indications of borrower commitment and ownership 13 5. Value added of Bank support in this project 13 E. Summary Project Analysis 1. Economic 13 2. Financial 15 3. Technical 15 4. Institutional 16 5. Environmental 17 6. Social 19 7. Safeguard Policies 22  F. Sustainability and Risks 1. Sustainability 23 2. Critical risks 23 3. Possible controversial aspects 24 G. Main Conditions 1. Effectiveness Condition 24 2. Other 25 H. Readiness for Implementation 25 I. Compliance with Bank Policies 26 Annexes Annex 1: Project Design Summary 27 Annex 2: Detailed Project Description 32 Annex 3: Estimated Project Costs 47 Annex 4: Cost Benefit Analysis Summary 48 Annex 5: Financial Summary 53 Annex 6: Procurement and Disbursement Arrangements 54 Annex 7: Project Processing Schedule 69 Annex 8: Documents in the Project File 70 Annex 9: Statement of Loans and Credits 71 Annex 10: Country at a Glance 73 Annex I 1: Environmental Assessment 75 Annex 12: Social Aspects 79 Annex 13: Highlights of Cambodia New Land Law 89 Annex 14: Statement of the Royal Government on Land Policy 91 MAP(S) IBRD No. 31630  CAMBODIA Land Management and Administration Project Project Appraisal Document East Asia and Pacific Region EASRD Date: January 29, 2002 Team Leader: Wael Zakout Country Director: Ian C. Porter Sector Director: Mark D. Wilson Project ID: P070875 Sector(s): Bf - Institutional Development, VM - Natural Resources Management Lending 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$24.3 Proposed Terms (IDA): Standard Credit Financing Plan (US$m): Source Local Foreign Total BORROWER 2.60 0.00 2.60 IDA 15.70 8.60 24.30 GERMANY: BMZ 0.31 3.19 3.50 FINLAND: MINISTRY FOR FOREIGN AFFAIRS 0.31 3.19 3.50 Total: 18.92 14.98 33.90 Borrower: THE KINGDOM OF CAMBODIA Responsible agency: MINISTRY OF LAND MANAGEMENT, URBAN PLANNING AND CONSTRUCTION Address: Monivong Boulevard Contact Person: Mr. Sar Sovann, Project Director Tel: 855-023215659 & 855-023215660 Fax: 855 - 023 215 277 Email: Imap@camnet.com.kh; 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 5.20 Cumulative 1.00 3.00 7.60 13.30 19.10 24.30 Project implementation period: May 2002 - June 2007 Expected 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 stimulate economic development. The specific objectives of the project are to improve land tenure security and promote 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 and transparent land administration system. The proposed project is the first phase of the government's Land Administration, Management, and Distribution Program (LAMDP), which is expected to be implemented over 15 years. The objectives of the LAMDP program as stated in the Land Policy Statement of the Royal Government of Cambodia (May 2001) are to: (a) strengthen land tenure security and land markets, and prevent or resolve land disputes; (b) manage land and natural resources in an equitable, sustainable and efficient 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 in conflicts over land, increase in investment in urban areas, and growth in agricultural productivity. They include benchmarks of more efficient land markets, like an increase in formal land transactions. Output indicators include development and approval of land policies, issuance of about one million titles under the systematic and sporadic registration programs, increase in the number of disputes settled through dispute resolution mechanisms, increase in revenues raised through fees on land transactions, and detailed land use classification 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 foundations for sustainable development and poverty reduction". The proposed project will contribute to two of the three foundations identified in the CAS: (i) good govemance including an efficient and accountable public administration and a credible legal and judicial framework that safeguards basic human and property rights; and (ii) greater access for the poor to basic social services and economic opportunities. The proposed project will contribute to the first foundation by supporting the development of the legal framework for land administration and management and building the institutional capacity of the central and provincial governments to record and protect rights on land. The proposed project will contribute to the second foundation by assisting the government, in partnership with the NGOs and civil society, to develop a comprehensive land policy framework, aimed at enhancing an equitable access to land, and hence increase economic opportunities, especially to the poor and other marginal groups. The CAS highlighted the lack of access to land as a major contributing factor to rural poverty and income-earning potential. The proposed project will also complement the activities supported by the on-going IDA-supported North East Village Development Project and Biodiversity Project, and the proposed Forestry Project and the proposed Rural Infrastructure and Local Governance Project, in addressing land issues and in enhancing sustainable management of natural resources. -2 -  2. Main sector issues and Government strategy: Historical context. Cambodians have suffered through a tumultuous recent history, during which the rules governing rights to land have been in constant flux. During the precolonial era the sovereign owned all land, 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 the more densely populated rice growing areas into the system. The independent Cambodian government retained the French system, but made limited progress on formally registering property rights. The Khmer Rouge, which came to power in 1975, collectivized all land and destroyed all land records, including cadastral maps and titles. The regime, in addition to killing an estimated two million people, brought about one of the greatest population displacements in human history, forcing hundreds of thousands to move from cities and towns to the countryside and from one part of the country to the other. Many thousands also fled across borders. The right to own land was reestablished in 1989, allowing farmers to claim possession rights of plots up to five hectares after five years of continuously cultivating fields, and households to gain ownership title to residential plots up to 2,000 square meters. Concession rights were granted for plantation plots exceeding five hectares. Land left vacant for more than three years reverted to state ownership. Following the enactment of the 1992 land law, a program was initiated calling for applications for land tenure certificates to confirm occupancy and use rights. More than 4 million applications were submitted, but by mid-2001 only 15 percent of them had been processed due to limited capacity of government. Current situation and main sector issues Statistics on land, and mainly its ownership and use, are as yet not too accurate in Cambodia. Information available indicates that the country has an estimated 18.10 million ha of land mass (including rivers and lakes), of which 2.71 million ha are cultivated under subsistence (or peasant) fartning, and 1 million ha are taken up by towns, infrastructure and waterways (Table 1). It is reported that protected areas cover 3.27 million 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 areas accounted for another 0.10 million ha. Forest lands, not under any concession or protection, cover about 3.27 million ha. About 1.73 million ha seem to be scrub land, undergrowth, non-wooded land and similar unused 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) % share Cultivated areas 2.71 14.97 Towns, infrastructure etc. 1.00 5.52 Land mines contaminated areas 0.10 0.55 Scrub land, non-wooded land etc. 1.73 9.56 Forests not under concessions 3.25 17.96 Forest concessions 4.21 23.26 Protected areas/forests 3.27 18.07 Agricultural concessions 0.83 4.59 Fishing concession lots 1.00 5.52 Total 18.10 100.00 Source: Land Tenure in Cambodia - Data Update, Cambodia Development Resource Institute (CDRI); July 2001. -3 -  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 that during the 1960s there was an adequate system of land management, including confirmation of private property rights with land records including cadastral maps and land titles. The land management system is said 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 cadastral maps and titles, were also destroyed. The professionals in land laws and land management, registration and surveying were either re-deployed to the country side, left the country or were executed. The post-Pol Pot regime (1979-1989) organized collectives as a basis of claiming user rights to agricultural land: residential use rights were allocated on the basis of occupation while ownership of land still remained in the hands of the state. In 1989, the government re-introduced pnrvate property rights, with ownership rights issued for residential land with an upper ceiling of 2,000 sq. meters, possession rights for cultivated land less than 5 ha, and concession rights for plantation land greater than 5 ha. Now, the administration of property rights is spread widely across several governnent agencies. The Ministry of Land Management, Urban Planning and Construction (which was established in 1999) is the government agency with primary responsibility for land management, including policy and coordination of land registration and administration, land use planning, geodetic and cadastral surveying, mapping and property 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 Municipal offices of the MLMUPC. The Ministry of Agriculture, Forestry and Fisheries has responsibility for the management of forestry land and wetlands. The Ministry of Economy and Finance's State Property Department has responsibility for administration of state immovable properties. Due to the weak capacity of the courts (accentuated by ambiguities in the 1992 Land Law) to deal with land cases, a National Land Dispute 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 the demined land is the responsibility of provinces. Similarly, the allocation of forestry and fishing concessions seem 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 only about 25% of the land. The 1992 land law did not allow land ownership in rural areas; only possessory rights. Following the enactment of the 1992 Land Law, a program was initiated to call for applications for land tenure certificates to confirm occupancy and use rights. Apparently more than 4 million applications were submitted, but there has not been a capacity to process applications and only about 15% of the rural people have received land use certificates. As for public land, apparently the state does not know the amount, location and boundaries of the land that falls under it; obviously, much of it would not be surveyed, mapped or titled either. According to the 1992 Land Law, public land is reported to be of two categories. There is the 'state public land' and 'state private land' where the former cannot be sold or used to create any private land rights (and is therefore intended only for conservation) but the latter can be sold and is reported to be frequently sold by ministries and 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 forests and 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 the greatest contribution to poverty is lack of land tenure security (and the associated landlessness) and restricted access to common property resources. Symptoms of the problem are clear from the rising - 4 -  number of landless people due to forced or distressed sales and the high number of land disputes clogging the judicial and other institutions for resolving land conflicts. Recent studies have shown a significant and rising 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 an estimated 20% of some rural household incomes. There are suggestions that state agents such as the military and politically connected people have dispossessed people of their land, which is being facilitated by the lack of fornal recognition of rights on those lands. In the case of natural resources suitable for commercial use such as forest land (for logging) or wetlands (for fishing), there are reports that concessions for their use have often been offered to investors at very low prices. There is concern that the allocation of decontaminated land has been inequitable and ad hoc, and has been complicated by the lack of land titling services to formalize the rights of the recipients. Since 1998, Cambodia has enjoyed peace and stability for the first time in 30 years. Democracy is taking root, as demonstrated by the government's decision to hold the country's first commune elections in February 2002 and its acceptance of organized peaceful protests by citizens in Phnom Penh and other centers of government. The economy has also been growing steadily, at an average annual rate of about 5 percent per year. However, unclear rules governing rights to land threaten both political stability and economic development. Conflicts over land are growing, increasingly involving people or entities from outside the community seeking land for commercial purposes. The poor and less educated lose in the process 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 entities and 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 about where boundaries of land under the control of various state entities or private individuals lie. This in turn is the result of unclear policies and regulations about how land should be classified and lack of high quality maps that can allow boundaries to be precisely demarcated. This has led to competing claims for the same piece of land. In some cases the claims are between different government ministries. In others they are between farmers who have settled on the land and government agencies that allocate the land as concessions to commercial interests. In still other cases the disputes are between private individuals. A second reason is lack of government capacity to resolve disputes through either the courts or land dispute resolution commissions, which were established in 1999 to seffle land disputes out of court. This has led to a rising backlog of cases, with disputes routinely taking several years to resolve. Moreover, people involved with resolving disputes often do not fully understand the relevant laws or procedures involved and issue rulings that are inconsistent and legally incorrect. The problems are made worse because of the lack of transparency in the dispute resolution process. The problems with the dispute resolution mechanisms are undermining confidence of ordinary people in the formal system, who view it as favoring the rich and powerful. Conflicts over land cannot be reduced without better information on land use, clear policies and regulations, adequate capacity to resolve disputes and, ultimately, demarcation of boundaries generally accepted by all. Lack of clear title is also hindering economic growth in Cambodia by reducing incentives to invest. Farm productivity in the country is the lowest in all of Southeast Asia, with rice yields averaging 1.8 tons per hectare 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 the average family for only seven months a year. Low yields are due primarily to low investments in water control technologies, essential to take full advantage of high yielding rice varieties. Around 85 percent of rice cultivation is rainfed, and generally only one crop is produced each year. Low investment in - 5 -  agriculture is in part a result of lack of security over rights to land. Increasing agricultural productivity would have a significant impact on economic growth and poverty reduction in Cambodia; agriculture is the most important economic sector in the country, accounting for 40 percent of GDP and employing 70 percent of the labor force. Ambiguity about land rights is also inhibiting industrial and urban investment. Lack of secure land tenure is one of the main complaints of foreign investors in Cambodia (the others are high utility costs, inadequate infrastructure, 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. Entities that have been granted forest and fishing concessions do not feel sufficiently secure to manage them sustainably for the long-term benefit of the country. People are settling in coastal areas and other places that 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 amount of land under state control, coupled with taking more effective efforts to protect core areas. Better information on how and by whom land is currently being used, followed by clear demarcation of boundaries 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 land law and asked for donor support to issue land titles in 1995. In 1999, with improved decision making, the govermment moved quickly to address the land issues by: (i) establishing in late 1999 the Ministry of Land Management, Urban Planning and Construction; (ii) requesting during the CG meeting of 2000 donor support in addressing land issues; (iii) establishing in late 2000 a Council of Land Policy chaired by the minister of the MLMUPC, and comprising of senior officials from 17 ministries and institutions, including ministries of environment; agriculture, forestry and fisheries; rural development; interior; economics and finance; and defense; (iv) causing the Council of Ministers to approve in May 2001 a "Statement on Land Policy" outlining the direction of government policies in the land sector, the text of the" Statement on Land Policy" is included in Annex 14; and (v) having the national assembly and the senate pass a draft new land law which was signed into law on August 30, 2001. The government's strategy, expressed in its "Statement on Land Policy", articulates government policy on land management, administration and distribution. It calls for the creation of a state land inventory and classification system; increasing capacity to resolve disputes; registering all land in the nation (both public and private) over the long-term using both systematic and sporadic procedures; strengthening land tenure security 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. The government recognizes that implementing the strategy will be a long-term process requiring broad public consultation and consensus building. It will also require clarifying roles of various government agencies involved with land management, developing mechanisms for improving coordination among them. It will also involve the creation of accurate geodetic networks, maps and land information systems. -6 -  The government views the proposed project as an important instrument to support the implementation of these policies. However, in a weak governance system, actual implementation of these policies will rely heavily on the commitment and capacity of the government to implement these reform areas, yet to be seen during 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 the ministry and its provincial and district offices to administer land; assist with establishing systematic and sporadic titling programs under which over about one million titles will be issued; increase capacity to resolve disputes; and develop the information base government needs to improve land management. It will also strengthen processes of community participation and encourage development of the private sector to survey and demarcate land. Developing policies and regulations, building institutions and issuing titles for all parcels in the country will take much longer than the project's 5-year life-span. The project is thus conceived as the first phase of a long-term program lasting 15 years. Other donors are supporting the project. The German and Finnish governments have supported pilot projects in Kampong Thom, Sihanoukville, Kandal, Kampot, and Takeo provinces to test approaches and refine procedures. The lessons learned from these pilots form the basis of the proposed project. Both the German and Finnish governments will continue to support the project, assisting first with pre-implementation activities and then becoming full partners in implementing the project. The Asian Development Bank is supporting the overall objectives of the program by financing the review and drafting of subdecrees and other legal instruments needed to implement the land law, providing training in the land law, 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 is estimated that titling the whole country will involve the issuing of titles for some 6 to 7 million parcels of land. In a cost estimate for a National Land Titling Program prepared in 1999, it was estimated that a complete 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; 15 years may be a more realistic figure. Consequently, the proposed project would be the first five-year phase of a longer term program. In this phase the emphasis would be on capacity building and development of policy, legal and institutional aspects of land management and administration that would support a longer term program which goes beyond this project's timeframe. Charging fees for property titles rather than issuing them at no charge. There is considerable evidence that people in Cambodia want titles and are willing to pay for them. People already pay US$200 to US$300 and more (in infornal fees) for titles to land in urban areas. While the German and Finnish supported projects do not charge for the issued titles as these are pilot projects, it is important that there be some charge back for the titles in order for the beneficiaries to appreciate their value. Discussions with some urban people and poor farmers indicate that most are willing to pay around US$20 per title for urban land and around US$2.00 for agriculture land. Recovering costs from beneficiaries will also help ensure -7 -  the long-term financial viability of land titling and registration services. Cost recovery will be strengthened further through charging additional fees on registration of land transactions. Supporting NGOs to execute activities related to community participation, rather than relying on the government's adjudication teams. Evidence from other land titling programs in the region indicates that community participation activities are best handled by NGOs that specialize in this field. This frees government 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 trust them. To build confidence among villagers in the process of adjudication, it is important that people who offer 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 cost breakdown): 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, and other types of land use. -8 -  Indicative j Bank- % of Component Sector Costs % of financing Bank- (US$M) Total (US$M) financing 1. Development of land policy and Judicial Reform 2.80 8.3 1.80 7.4 regulatory framework 2. Institutional development Institutional 6.40 18.9 3.70 15.2 Development 3. Land titling program and Other Public Sector 20.40 60.2 16.70 68.7 development of a land registration Management system. 4. Strengthening mechanisms for Institutional 1.70 5.0 1.00 4.1 dispute resolution Development 5. Land management Natural Resources 2.60 7.7 1.10 4.5 Management Total 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 received assistance to develop a comprehensive land policy framework. Further assistance would be provided during project implementation to support formulation of broad areas of land policy, and in coordination with the ADB-financed "the implementation of land law TA", the drafting of subdecrees and regulations needed to support implementation of the new land law. Specific areas of support would include formulation 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; and detennine and collect fees for land titling and the registration of land transfers. The project would also support 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 Council of Land Policy to undertake its tasks of overseeing the development of policies and regulations. It would also 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 and district levels, it would build capacity for surveying, adjudication and boundary demarcation and the creation and maintenance of a land registration system. Outside the ministry, the project would help build private sector expertise in surveying, land management and land administration through support for a university degree program. It would also train private surveyors and award them small contacts as part of the systematic adjudication work on a per parcel basis. The people trained under the program would form a cadre of professionals who would work directly in key areas of land administration and management for many years and would ultimately train others. Finally, the project would help strengthen mechanisms for dispute resolution from the village level to the central level. -9-  3. Benefits and target population: By securing land tenure rights, the project will help to promote social stability, contribute to poverty reduction and stimulate economic growth. By improving the land administration system, the project will stimulate the development of more efficient land markets, thereby facilitating the allocation of land to its highest and best use. By helping to develop capacity for land management, the project will contribute to improved environmental management. The entire population of Cambodia will benefit from these general improvements. About one million household in both rural and urban areas will also receive titles to land under the systematic and sporadic titling programs. The beneficiaries of land titles would enjoy the benefits associated with land titles, in the way of increased tenure security, access to credit and opportunities to increase investments and productivity (see Section E for details). Many of the expected beneficiaries are poor and vulnerable to being dislodged from the land where they live and farm. Providing them with secure titles 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 years 2002-2007. 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 project management office (PMO) will be established within MLMUPC to coordinate project activities. The PMO will be headed by a project director who will report to the Minister of the MLMUPC on matters of project implementation, and to the Land Policy Council through the Secretary General for policy guidance. The project director will convene the project technical committee comprised of the general directors of the various departments implementing the project. The PMO will be responsible for project planning and budgeting, coordination, monitoring, accounting, financial management and procurement. It will include five 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 technical personnel. Various departments of the MLMUPC will implement aspects of the project. For example, the Secretariat of the Land Policy Council will implement the policy development component, the General Department of Cadastral and Geography will be responsible for production of aerial photographs and orthophotos, the General Department of Land Management will implement the land management component, and the General Department of Construction will plan and supervise the construction of the building for the ministry and the renovation and construction of provincial and district offices. The PMO will be supported by technical assistance (to be financed by the governments of Germany and Finland). In addition to the TA team leaders who will advise the project director, there will be regional and local TA advisors supporting the various units in the PMO. There will also be several intemational and national TA personnel supporting the Ministry in implementing the project. Project oversight. The Land Policy Council will act as steering conmmittee for the Project. The Council will convene at least once every six months to review progress made and to assist in resolving any policy issue that arises and that may affect project implementation. Executing agency. Small provincial (or municipal) project management offices (PPMO) will be established in each of the ten provinces and one municipality (Phnom Penh) where systematic registration will be undertaken. The PPMOs will support the systematic and sporadic land adjudication teams. The director of the provincial or municipal departments of land management will also serve as the provincial or municipal project manager and report to the project director at the PMO on all project matters. The field managers 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 - 10 -  activities, (b) preparation and submission of periodic and technical reports as required to the project director, 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, a specific investment credit is the appropriate instrument to support the project. The focus of the project is on development of the policy and regulatory framework and building institutions (in addition to issuance of about 1 million titles), which often take a long time, beyond the timeframe of a learning and innovation loan or the first phase of an APL. Moreover, government's commitment to tackle the most difficult policy reform 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 land distribution component under the project. However, discussions with government officials and others revealed that there is not yet a national consensus on how such as program would work, nor adequate information on how land is currently being used and administered and therefore what land is available for distribution. The project includes support for policy development in this area, which will involve investigation of the potential for land distribution, consensus building on its scope and implementation arrangements, and preparation of the legislative instruments needed for implementation. The land management component will provide information about land use/status at the provincial level and provide infonnation 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 Supervision Sector 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 S Titling Thailand Land Titling I, II, III S S Indonesia Land Administration S S Project I Philippines Land S S Administration and Management Project Indonesia Land Administration Project II (under preparation) Rural Development North East Village S S Development Project Natural Resource Management Biodiversity and Protected Area S S Project Proposed Forestry Project  Other development agencies Draft a revised land law and Asian Development Bank and subdecrees, and provide legal training Oxfam (UK) supported Pilot a land titling program Land Management Project (German government through GTZ) Pilot a land titling program Cambodia Cadastral Project (Finnish government) Piloting cadastral mapping Cadastral Mapping of Phnom Penh (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 focused narrowly on titling before a national consensus on land policy has been reached rarely succeed in meeting their objectives. A better approach is to include land titling as part of a comprehensive policy and institutional framework for land management and administration. The proposed project takes a comprehensive approachi, supporting policy and regulatory reforms, consensus building and institutional development along with land titling. It carefully sequences activities so that systematic titling does not take place on lands with unclear status until after the status is agreed with all stakeholders and boundaries between private and state domains demarcated. Establishing the project on strong government commitment. A lesson of previous projects is that strong government 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 by formally titling and registering land. Other members of govemment, including leading members of the opposition, have similarly declared their commitment to formalizing rights to land. Demonstrating this commitment, the Council of Ministers has approve a Statement on Land Policy in May 2001, and the new land 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 efficient arrangements for adjudicating boundaries. The proposed project is based on the lessons learned from both the Finnish and German government's pilot projects in land titling in five provinces of Cambodia, including the need to thoroughly plan the systematic registration process, and the need to issue titles quickly following completion of adjudication to ensure that the agreements reached do not disintegrate. The two pilot projects will be merged with this project once IDA credit becomes effective, to provide the Technical Assistance needed to implement the project. Emphasizing stakeholder participation. Experience shows that active participation of all stakeholders during policy formulation, demarcation of boundaries between private and state domains, and systematic adjudication is critical to the success of the program. The proposed project contains measures for participation during each of these processes. During policy formulation, the project will support a public information campaign through radio, television, newspapers and other appropriate measures to inform citizens of the provisions of the new land law and will invite public comment on drafts of land policies as they are formulated. During the process of classifying land and demarcating boundaries, all stakeholders will 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 who are eligible for a land title will benefit from the Project. Promoting private sector participation. Projects elsewhere show that involving the private sector in surveying and other technical tasks can substantially speed up the process of titling. Using private contractors has several advantages. They can be hired to perform specific tasks, rather than as part of the civil service, and therefore can be used flexibly. They can also be offered performance incentives (such as payment 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 therefore help to create private sector capacity by training private individuals together with staff from the ministry so that all will have the same knowledge, and then use both private and ministry teams for systematic adjudication. The project will also promote development a private sector through its university degree program 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 land policy in its recently approved Interirn Poverty Reduction Strategy Paper. In September 1999, it created the Ministry of Land Management Urban Planning and Construction. In December 2000 it created an interministerial body, the Land Policy Council (as part of the Supreme Council of Reform), to manage the process of fornulating a new land policy. In May 2001, the Council of Ministers approved a Statement on Land Policy; the Statement, while concise and short, provides a clear direction to the government policy on land administration, management and distribution. The new land law was enacted in August 2001 (See annex 13). The Government has also developed draft forestry, fishery, and water laws to deal with specific categories of state land, to be implemented once the land law passes. The Prime Minister already approved US$3 million as counterpart for the project in the next five years. And finally, the government has expressed a desire to continue to refine its land policies and regulations, and to move forward with the difficult 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 considerable expertise in integrating the policy, institutional and technical aspects required to improve land tenure security. IDA has also developed a good working relationship with the government, which makes it possible to maintain the dialogue needed to resolve the difficult issues that inevitably will arise during implementation of the project. Finally, IDA has developed effective relationships with other donors in Cambodia 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 the donor'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 effectiveness o 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 of the 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 general macroeconomic environment and the development of relevant institutions will also influence investor behavior. If the macroeconomic situation is unstable or fonnal banking institutions fail to emerge in rural areas, then expected investment may not materialize. Methodology of economic analysis An economic analysis for such a land management and administration project would follow the conventional approach to economic evaluation of investments, which proceeds by estimating a future stream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and an economic rate of return (ERR). In urban areas, gross economic benefits can be measured through land price changes due to titling while holding other factors constant. In rural areas (where land markets are underdeveloped), the gross economic benefits can be measured by the incremental increase in production and the associated income from titling, less the value of the production inputs. Net economic benefits and returns 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 how farmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported by the 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, such as Thailand, do not offer a good guide because conditions in these countries are quite different from those in Carnbodia. For example, the land administration system in Thailand is much more developed than Cambodia's. Consequently, an estimation of project benefits would be based on questionable assumptions and therefore serve no purpose. Second, the focus of the project, which is the first phase of a long-termn program lasting 15 years, is on institutional development (one-half of project costs), which is a necessary foundation for a land admninistration system and whose benefits are not easily quantifiable. For these reasons, 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 during implementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia land projects. In rural areas, enumerators will collect baseline data for selected households before the project starts. 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), crops grown 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. In addition, in both rural and urban areas, information on groups that do not receive title will be collected to provide data for use as a control. As the proj ect is just the first phase of a long-term program, the findings from 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 charged only a fraction of the full cost of titling. A main concern is that the poorest landholders can not afford the registration fee. For example, in Thailand, landholders are charged less than US$5 per title, compared with an average cost of US$36 per title. In Indonesia, landholders are charged about US$2 per title compared with an average cost of about US$26 per title. The gap is covered by charging registration fees on subsequent 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 is US$38. A fee of US$2-5 per title will be charged to landholders in rural areas, and a fee of US$15-25 per title to landholders in urban area. Interviews during field visits and other anecdotal evidence indicates that these fees would be reasonable. Unofficial fees range generally between US$200 and US$500. This cost recovery arrangement for the project will have a positive impact on distribution of project benefits and will promote 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 a pre-implementation activity. The purpose of the study will be to develop a system that balances the need to attract people to register land for the first time and again when it is sold on the one hand and the need to recover 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 of the total project cost will be financed by the government. In the long term, the fiscal impact of the project is expected to be highly positive, as government revenues from fees and taxes from first-time titling and subsequent transactions of land rise. The NPV is US$15.4 million and the FRR is 22 percent. Annex 5 presents a detailed financial analysis. 3. Technical: The pilot projects financed by the German, Finnish and French governments tested several mapping and survey technologies similar to those used in other titling projects in the region. The technologies providing appropriate levels of accuracy at the minimum cost have been adopted. However, the pilots have differed from some of the other regional projects by producing digital mapping and computerized title products from the outset. This is a reflection of the advances being made in technologies, which have greatly simnlified and reduced the cost of these processes. The cadastre geographic information system (GIS) or digital mapping system uses simple PC technology that is cheap to maintain, with GIS software and a database program that are commonly available. The choice of technology was reviewed during project preparation by carefully assessing the experience of the pilot projects and a proposed technical approach was recommended as part of the project design. - 15 -  4. Institutional: Sustainability of the land administration system will depend, among several factors, on the ability of MLMUPC and their provincial and local offices to undertake institutional and human resources reform to adopt 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 project preparation. Reconumendations of this assessment were incorporated in the design of the project and a full component was devoted to long term institutional strengthening to MLMUPC and their provincial and local offices. 4.1 Executing agencies: The MLMUPC will execute the project. This is a new ministry, created in 1999, with no experience implementing Bank projects other than what was gained while executing activities for project preparation under Japanese PHRD grant support. The work load of the Ministry will expand by five folds (according to budget figures) during project implementation. The current structure and physical facilities are not adequate. Therefore, the project will provide the necessary support to construct an office building for the Ministry to move all their various departments in one building. The project will also provide support to the Ministry to review its current structure, staffing and human resource policies, and develop and implement a new structure and a human resources plan to enable the Ministry to adequately support its expanded mandate. The project will also support the Secretariat of the Council of Land Policy to enable it to develop land 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 project activities. The PMO will be headed by a project director and will report directly to the minister on administrative issues and to the Council of Land Policy for policy guidance. He or she will also convene a project technical committee comprised of the general directors of the various departments implementing the project. Small provincial (or municipal) project management offices (PPMO) will be established in each of the 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 will report 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, the PMO will be supported by technical assistance to manage the project. The team leader of TA will advise the project director and several international, local and regional advisors will be provided to support the various units of the PMO. 4.3 Procurement issues: The procurement system in Cambodia is based primarily on the Sub-Decree dated July 31, 1995 Governing Public Procurement. The Sub-Decree has a waiver, which mandates the application of International Financed Institutions (IFI) procurement rules and regulations for IFI-financed procurement. In general terms the system is consistent with the Bank's guidelines, with some exceptions. Some of the most notable and 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; the prerequisite requirement for the prior registration of foreign firms to be able to participate in NCB procurement; the use of the merit point system for pre-qualifying firms instead of pass/fail minimum criteria for pre and post qualifications; the obligatory requirement for a foreign contractor to enter into a joint 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 Office Memorandum 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 policies and procedures adopted and implemented by the central office involving purely locally funded projects since MILMUPC 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 MLMIUPC adhere to the principles 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 in procurement transactions. The project should not be affected because the country's Procurement Law and its internal rules and regulations contain a waiver for foreign funded projects. The MLMUPC ha's not had the experience in implementing projects funded by international financing institutions. This will be the first Bank financed project it will implement. The overall procurement risk 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 function to carry out effectively the implementation of procurement for the project. To mitigate these risks, a series of actions will be undertaken by the project. These actions are included in Annex 6. 4.4 Financial management issues: A financial management assessment of the implementing agency, MLMUPC, was carried out by a Bank financial 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 the budget managed by MLMUPC as project implementation begins; (c) significant amount of project activity at the provincial level; and (d) likelihood of politicization due land disputes. In order to minimize the above risks, technical assistance under the Project will be provided to establish a financial management function in 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 agreed include (a) approval by IDA of a Financial Management Manual establishing financial policies, procedures and 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 Project Management Reporting. The internal auditor will submit semi-annual reports to MLMUPC, the Land Policy Council and the World Bank. The financial management assessment and the arrangements agreed are given in Annex 6. 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for enviromnental assessment and EMP preparation (including consultation 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 environmental impacts. Other than rehabilitation/construction of project office buildings, 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 evaluate possible effects at this time. All buildings will be desigped and constructed in accordance with sound architectural and engineering practice and 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 and institutional development activities will solicit stakeholder input on environmental implications through public review procedures. The project will also support the development of procedures and undertaking the preparation of land classification maps in project provinces which define the boundaries between various categories of land use, such as urban, agriculture forest, and protected areas. The preparation of these maps will be done through a participatory process among local government officials, NGOs, and various national 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 potentially negative affects arising directly from project activities. To promote sound environmental management, the project includes support for land classification and delimitation of boundaries between the public and private domains, and creation of capacity for land management. To minimize negative irnpacts on the environment, titles will not be issued for land in potentially environmentally-sensitive areas until the lands have been classified and the boundaries between the state and private domains agreed. In addition, policies and regulations formulated under the project will include environmental input. Finally, the process of delimiting boundaries between public and private land, which will not always be smooth, will involve systematic consultations with the public, including environmental groups. The measures are adequate to promote 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 EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Environmental NGOs and bilateral donors (including DANIDA, UNDP/GEF, the European Union, and the NGO Forum) have helped in identifying the project's environmental impacts, specifying measures to address them and reviewing the EA and EMP. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? 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 delimiting the boundaries of land to be set aside for conservation purposes, and developing policies that reflect concems for improved environmental management. The key output indicators include number of areas delimited and their total size, and the number of policies developed with environmental input. It is not expected that outcomes, such as evidence of irnproved environmental management will be measurable during the project lifetime, as the delimitation process is not expected to be completed until project year three or four. It is expected that the project's environmental impacts will ultimately be measurable through monitoring of environmental indicators planned by DANIDA (National Capacity Development Project) as input to the state of the environment report that will be produced every few years, and through research and qualitative 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 social development outcomes. - 18-  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 who are eligible for a land title will benefit from the Project. Promoting private sector participation. Projects elsewhere show that involving the private sector in surveying and other technical tasks can substantially speed up the process of titling. Using private contractors has several advantages. They can be hired to perform specific tasks, rather than as part of the civil service, and therefore can be used flexibly. They can also be offered performance incentives (such as payment 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 therefore help to create private sector capacity by training private individuals together with staff from the ministry so that all will have the same knowledge, and then use both private and ministry teams for systematic adjudication. The project will also promote development a private sector through its university degree program 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 land policy in its recently approved Interim Poverty Reduction Strategy Paper. In September 1999, it created the Ministry of Land Management Urban Planning and Construction. In December 2000 it created an interministerial body, the Land Policy Council (as part of the Supreme Council of Reform), to manage the process of formulating a new land policy. In May 2001, the Council of Ministers approved a Statement on Land Policy; the Statement, while concise and short, provides a clear direction to the government policy on land administration, management and distribution. The new land law was enacted in August 2001 (See annex 13). The Government has also developed draft forestry, fishery, and water laws to deal with specific categories of state land, to be implemented once the land law passes. The Prime Minister already approved US$3 million as counterpart for the project in the next five years. And finally, the government has expressed a desire to continue to refine its land policies and regulations, and to move forward with the difficult process of classifying land and demarcating the boundaries between the state and private domains. 5. Value added of Bank support in this project: The World Bank has supported many land management and administration projects throughout the world, including in four countries within the East Asia and Pacific Region (Lao People's Democratic Republic, Philippines, Thailand and Indonesia). Through these projects, the Bank has developed considerable expertise in integrating the policy, institutional and technical aspects required to improve land tenure security. IDA has also developed a good working relationship with the government, which makes it possible to maintain the dialogue needed to resolve the difficult issues that inevitably will arise during implementation of the project. Finally, IDA has developed effective relationships with other donors in Cambodia working on both land issues and issues closely related to land, including governance, environment, poverty reduction, and resettlement. IDA involvement would also bring coherence to the donor's program supporting land issues in Cambodia. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): * Cost benefit NPV-US$ million; ERR = % (see Annex 4) O Cost effectiveness O 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 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 of the 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 general macroeconomic environment and the development of relevant institutions will also influence investor behavior. If the macroeconomic situation is unstable or formal banking institutions fail to emerge in rural areas, then expected investment may not materialize. Methodology of economic analysis An economic analysis for such a land management and administration project would follow the conventional approach to economic evaluation of investments, which proceeds by estimating a future stream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and an economic rate of return (ERR). In urban areas, gross economic benefits can be measured through land price changes due to titling while holding other factors constant. In rural areas (where land markets are underdeveloped), the gross economic benefits can be measured by the incremental increase in production and the associated income from titling, less the value of the production inputs. Net economic benefits and returns 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 how farmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported by the 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, such as Thailand, do not offer a good guide because conditions in these countries are quite different from those in Cambodia. For example, the land administration system in Thailand is much more developed than Cambodia's. Consequently, an estimation of project benefits would be based on questionable assumptions and therefore serve no purpose. Second, the focus of the 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 a necessary foundation for a land administration system and whose benefits are not easily quantifiable. For these reasons, 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 during implementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia land projects. In rural areas, enumerators will collect baseline data for selected households before the project starts. 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), crops grown 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. In addition, in both rural and urban areas, information on groups that do not receive title will be collected to provide data for use as a control. As the project is just the first phase of a long-term program, the findings from 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 charged only a fraction of the full cost of titling. A main concem is that the poorest landholders can not afford the registration fee. For example, in Thailand, landholders are charged less than US$5 per title, compared with an average cost of US$36 per title. In Indonesia, landholders are charged about US$2 per title compared with an average cost of about US$26 per title. The gap is covered by charging registration fees on subsequent 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 is US$38. A fee of US$2-5 per title will be charged to landholders in rural areas, and a fee of US$15-25 per title to landholders in urban area. Interviews during field visits and other anecdotal evidence indicates that these fees would be reasonable. Unofficial fees range generally between US$200 and US$500. This cost recovery arrangement for the project will have a positive impact on distribution of project benefits and will promote 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 a pre-implementation activity. The purpose of the study will be to develop a system that balances the need to attract people to register land for the first time and again when it is sold on the one hand and the need to recover 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 of the total project cost will be financed by the government. In the long term, the fiscal impact of the project is expected to be highly positive, as government revenues from fees and taxes from first-time titling and subsequent transactions of land rise. The NPV is US$15.4 million and the FRR is 22 percent. Annex 5 presents a detailed financial analysis. 3. Technical: The pilot projects financed by the German, Finnish and French governments tested several mapping and survey technologies similar to those used in other titling projects in the region. The technologies providing appropriate levels of accuracy at the minimum cost have been adopted. However, the pilots have differed from some of the other regional projects by producing digital mapping and computerized title products from the outset. This is a reflection of the advances being made in technologies, which have greatly simplified and reduced the cost of these processes. The cadastre geographic information system (GIS) or digital mapping system uses simple PC technology that is cheap to maintain, with GIS software and a database program that are commonly available. The choice of technology was reviewed during project preparation by carefully assessing the experience of the pilot projects and a proposed technical approach was recommended as part of the project design. - 15 -  4. Institutional: Sustainability of the land administration system will depend, among several factors, on the ability of MLMUPC and their provincial and local offices to undertake institutional and human resources reform to adopt 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 project preparation. Recommendations of this assessment were incorporated in the design of the project and a full component was devoted to long term institutional strengthening to MLMUPC and their provincial and local offices. 4.1 Executing agencies: The MLMUPC will execute the project. This is a new ministry, created in 1999, with no experience implementing Bank projects other than what was gained while executing activities for project preparation under Japanese PHRD grant support. The work load of the Ministry will expand by five folds (according to budget figures) during project implementation. The current structure and physical facilities are not adequate. Therefore, the project will provide the necessary support to construct an office building for the Ministry to move all their various departments in one building. The project will also provide support to the Ministry to review its current structure, staffing and human resource policies, and develop and implement a new structure and a human resources plan to enable the Ministry to adequately support its expanded mandate. The project will also support the Secretariat of the Council of Land Policy to enable it to develop land 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 project activities. The PMO will be headed by a project director and will report directly to the minister on administrative issues and to the Council of Land Policy for policy guidance. He or she will also convene a project technical committee comprised of the general directors of the various departments implementing the project. Small provincial (or municipal) project management offices (PPMO) will be established in each of the 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 will report 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, the PMO will be supported by technical assistance to manage the project. The team leader of TA will advise the project director and several intemational, local and regional advisors will be provided to support the various units of the PMO. 4.3 Procurement issues: The procurement system in Cambodia is based primarily on the Sub-Decree dated July 31, 1995 Goveming Public Procurement. The Sub-Decree has a waiver, which mandates the application of Intemational Financed Institutions (IFI) procurement rules and regulations for IFI-financed procurement. In general terms the system is consistent with the Bank's guidelines, with some exceptions. Some of the most notable and 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; the prerequisite requirement for the prior registration of foreign firms to be able to participate in NCB procurement; the use of the merit point system for pre-qualifying finms instead of pass/fail minimum criteria for pre and post qualifications; the obligatory requirement for a foreign contractor to enter into a joint venture with a local firm. Because of the waiver noted, the draft CPAR (Mar. 1997) recommends 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 Office Memorandum 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 policies and procedures adopted and implemented by the central office involving purely locally 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 the principles 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 in procurement transactions. The project should not be affected because the country's Procurement Law and its intemal rules and regulations contain a waiver for foreign funded projects. The MLMUPC ha's not had the experience in implementing projects funded by international financing institutions. This will be the first Bank financed project it will implement. The overall procurement risk assessment is high. The main risks concern the inadequate procurement staffing and knowledge, absence of fonnal and integrated procurement operating system, and lack of an intemal audit function to carry out effectively the implementation of procurement for the project. To mitigate these risks, a series of actions will be undertaken by the project. These actions are included in Annex 6. 4.4 Financial management issues: A financial management assessment of the implementing agency, MLMUPC, was carried out by a Bank financial 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 the budget managed by MLMUPC as project implementation begins; (c) significant amount of project activity at the provincial level; and (d) likelihood of politicization due land disputes. In order to minimize the above risks, technical assistance under the Project will be provided to establish a financial management function in 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 agreed include (a) approval by IDA of a Financial Management Manual establishing financial policies, procedures and 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 Project Management Reporting. The intemal auditor will submit semi-annual reports to MLMUPC, the Land Policy Council and the World Bank. The financial management assessment and the arrangements agreed are given in Annex 6. 5. Environmental: Environrmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation 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 environmental impacts. Other than rehabilitation/construction of project office buildings, 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 evaluate possible effects at this time. All buildings will be designed and constructed in accordance with sound architectural and engineering practice and 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 and institutional development activities will solicit stakeholder input on environmental implications through public review procedures. The project will also support the development of procedures and undertaking the preparation of land classification maps in project provinces which define the boundaries between various categories of land use, such as urban, agriculture forest, and protected areas. The preparation of these maps will be done through a participatory process among local government officials, NGOs, and various national 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 potentially negative affects arising directly from project activities. To promote sound environmental management, the project includes support for land classification and delimitation of boundaries between the public and private domains, and creation of capacity for land management. To minimize negative impacts on the environment, titles will not be issued for land in potentially environmentally-sensitive areas until the lands have been classified and the boundaries between the state and private domains agreed. In addition, policies and regulations formulated under the project will include environmental input. Finally, the process of delimiting boundaries between public and private land, which will not always be smooth, will involve systematic consultations with the public, including environmental groups. The measures are adequate to promote 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 EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Environmental NGOs and bilateral donors (including DANIDA, UNDP/GEF, the European Union, and the NGO Forum) have helped in identifying the project's environmental impacts, specifying measures to address them and reviewing the EA and EMP. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? 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 delimiting the boundaries of land to be set aside for conservation purposes, and developing policies that reflect concerns for improved environmental management. The key output indicators include number of areas delimited and their total size, and the number of policies developed with environmental input. It is not expected that outcomes, such as evidence of improved environmental management will be measurable during the project lifetime, as the delimitation process is not expected to be completed until project year three or four. It is expected that the project's environmental impacts will ultimately be measurable through monitoring of environmental indicators planned by DANIDA (National Capacity Development Project) as input to the state of the environment report that will be produced every few years, and through research and qualitative 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 social development outcomes. - 18 -  Social Assessment The Royal Government of Cambodia has embarked upon a reform agenda designed to promote sustainable economic and social development, poverty alleviation, and peace. The Land Policy Framework is one of the most significant initiatives and includes accelerated land titling, establishing a legal framework for governing property rights, and setting up territorial master plans and zoning rules. As a prelude to the titling program, a social assessment was conducted during project preparation. The main objectives of the social assessment were to (1) identify different stakeholders of land and the project, (2) examine the social and institutional capacity at the local level for governing land rights, (3) forecast possible negative impacts of the program, and (4) make relevant policy recommendations. The study was qualitative in nature and was conducted in five provinces, as well as one urban case study in Phnom Penh which focused on squatter settlements. Various qualitative methods were used, such as small group discussions and individual interviews with farmers, migrants, demobilized soldiers, women's groups, officials from the land management 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-long seminar in February 2001 that involved municipal officials and NGOs was organized to elicit information on land issues in the city. The findings and final analysis of the SA were presented at a stakeholder workshop 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 in areas 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 and entities 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 using formal dispute resolution mechanisms, which rely on presentation of formal documentation and require money and time. A major social development outcome of the project is to help one million families, mostly smallholders, 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 increasing encroachment on public land. Women, especially women-headed households, are vulnerable and lack knowledge of land rights and land titling procedures. The key findings and recommendations from the social assessment are listed in the matrix at the end of Annex 12, Attachment 1. The full social assessment is available in project files. The findings of the social assessment have been used in designing the project, especially in the areas of participation, information dissemination and education on land rights; land dispute resolutions; and future policy studies and implementation guidelines. Measures to Help the Disadvantaged Community Outreach by NGOs. During project implementation local NGOs will be contracted to facilitate community participation during systematic adjudication. They will be responsible for field work prior to the 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 registration records, producing consolidated village land files, explaining the benefits of and procedures for registering subsequent transfers and provide support for local land use planning and evaluation and monitoring. The project will provide the contracted NGOs with orientation and training, including on gender-specific methods and tools for participation. - 19 -  Legal Assistance for the Poor by NGOs. A major social development outcome of the project is to help one million families, mostly smallholders, to obtain formal titles to land, and thereby reduce their vulnerability from being dislodged. To assure that the poor and marginal groups fully benefit from the process, the project will provide legal aid to the poor and will contract NGOs to work in communities and involve all eligible households in the program. The ministry will also conduct a public information campaign to explain the new land law, regulations and procedures. Partnership with Development Groups. The Municipality of Phnom Penh and NGOs, with technical and financial assistance from UNCHS/UNDP and DFID (British Aid), have been actively engaged in the informal settlement program and in improving the lives of squatters households by providing security of tenure. The program is based on the UNCHS intemational 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. UNCHS has developed several innovative approaches for the program in Cambodia. Neither the World Bank nor the Ministry of Land has the comparative advantage in dealing with informal settlers and squatters. It is better for the Project to support the development groups currently working in this field. Informal Settlers. Agreement has been reached with the Ministry (MLMUPC) regarding the approach to be used in the case of informal settlers including squatters. The project (a) will issue land titles where there is agreement by the government to provide the land to be registered to informal settlers, (b) will facilitate the provision of services and titling where the municipality is working with development groups to provide land to informal settlers through land sharing and/or relocation programs based on the UNCHS principles, and (c) will not issue titles where there is no agreement to allocate the land to informal settlers or through land sharing and/or relocation programs. The Project has developed procedures for screening and consultation to ensure that the above conditions are agreed before provision of land registration and titling services. Resettlement 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 negatively affected by the Project so as to ensure that they will be assisted to improve, or at least restore their living standards, income and/or production capacity to pre-project levels. While no eviction, involuntary resettlement or land acquisition is anticipated under the project, a policy framework has been developed to protect people who may be negatively 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 law are 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 least two or three years before clear guidelines will be available for communal titling in indigenous areas. While this project will not undertake individual titling in areas inhabited by indigenous minorities, an Indigenous Minority Policy Framework has been prepared which will guide the preparatory work for the second project in this long term program of land management and administration. Where opportunities and demand emerge for communal titling, the Project will coordinate with the relevant government ministries and consider selective requests. - 20 -  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 indigenous minorities live'. According to the available information, there are small numbers of indigenous minorities in two of the ten proposed project provinces. In anticipation of including the northeast area in the second project of the program, several studies will be undertaken during the Project . The proposed reviews and implementation guidelines for land titling for indigenous minorities will take as its basis the policy contained within the draft land law 2001 and lessons learned from ongoing projects for indigenous communities in the northeast area. 1/ 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 the population in the northeast region; in the provinces Ratanakiri (62,000 or 66 percent of the total population, according to the 1995 census), Mondolkiri (23,000 or 71 percent), Stung Treng (5,000 or 6.6 percent) and Kratie (21,000 or 8.3 percent). Estimated figures set the total population of indigenous minorities to approximately 120,000, or about one percent of the total population in Cambodia; they comprise of approximately thirteen main language groups. 2/ The new land law (Annex 13) 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 the govemment will be able to implement this section of the new land law. 6.2 Participatory Approach: How are key stakeholders participating in the project? During project implementation. Local NGOs will be contracted to facilitate community participation during systematic adjudication. They will be responsible for field work prior to the commencement of systematic adjudication, conducting village baseline profiles, explaining the legal rights of the individuals and communities under the Cambodian laws, promoting the participating of women and other disadvantaged groups in land registration, producing consolidated village land files, explaining the benefits of and procedures for registering subsequent transfers and provide support for local land use planning and evaluation 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 immediate improvement in social welfare and economic livelihood for households. For rural households, people need the support of extension services, credit, access to markets and other social services, in addition to security of tenure if they are to improve their incomes and quality of life. The project will link titled communities with nongovernmental organizations working in the area that can provide further support services. NGOs have indicated that they prefer to work with people who have secure land tenure because such people are more 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 society organizations? NGOs, academic institutions, donors, indigenous rights' groups, and other civil society organizations were consulted during preparation of the social assessment. They are also involved in drafting and in consultations about the land law, and the subdecrees and regulations needed to implement it. They have influenced major aspects of the project design, for example the decision to include the Legal Assistance for the 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, as well as working with communities as detailed above. - 21 -  6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? As described above, NGOs will be contracted to work with communities during the process of systematic adjudication. Their involvement should ensure that no social or income groups are excluded from their rights to receive a title. The project is also supporting the provision of legal assistance to the poor, which should 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 titles collected by households. They also include qualitative measures that conflicts over land are falling and that land grabbing is diminishing. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? Policy Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 No Forestry (OP 4.36, GP 4.36) 0 Yes 0 No Pest Management (OP 4.09) J Yes * No Cultural Property (OPN 11.03) 0 Yes 0 No Indigenous Peoples (OD 4.20) * Yes 0 No Involuntary Resettlement (OP/BP 4.12) * Yes 0 No Safety of Dams (OP 4.37, BP 4.37) 0 Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * No Projects 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 safeguard policies. Contracts for civil works (which involve rehabilitation/construction of office space and related facilities) 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 will also avoid titling in areas of potential environmental significance until the boundaries of different categories of land are agreed. The project will not involve resettlement nor issuance of individuals land titles in areas inhabited by indigenous minorities. Institutional arrangements will be in place for project implementation where staff will be designated and trained to guide and monitor for environmental and social safeguards. -22 -  F. Sustainability and Risks 1. Sustainability: A number of actions will be taken to ensure project sustainability. First, to ensure that benefits of first-time titling are sustained through registration of subsequent transactions, the project will include public information campaigns to explain the importance of fonnal registration for maintaining land tenure security and gaining access to credit. NGOs working in villages during systematic adjudication will reinforce the message. Second, the project will support a study to develop appropriate tax and fee structure on registration of land transactions, taking into account the impact of the level of these taxes on people's decisions to formally register transactions. Third, the project will support the development of institutional and human resource capacity that will sustain titling and registration activities after the project is completed. In particular, the project's support for development of an efficient land registration system will help build capacity to manage title transfers on an ongoing basis once properties are registered in the land offices. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth columnn of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective All necessary sub-decrees identified in the S Continuous dialogue with the government on the new land law approved and enacted. land law and related sub-decrees. Technical assistance will be provided to the government to draft these sub-decrees. Judicial system is not strengthened S The judicial reform project, currently under preparation, will assist in strengthening the judicial system. Also, the ADB financed TA will include a substantial component to train judges on the new land law. Governance does not improve. H There are several projects supported by IDA and other donors with an aim to improve governance. 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 them to support the secure transaction law. Economy growth slows down. S External to the project. From Components to Outputs Secretariat of the Council of Land Policy M The project includes support to the secretariat to does 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 the institutional reforms. MLMUPC to keep abreast of developments in government. The project will be scaled back if commitment to reforms flags. Counterpart funds are not available. M Continued dialogue with the Ministry of - 23 -  Economy and Finance to explain the fiscal benefits of the project on government revenues. NGOs capacity is inadequate to M The project will provide training to NGOs on successfully mobilize communities to participatory tools, land issues and other topics participate in systematic adjudication. and support them throughout the adjudication process. Govermment lacks commitment to S The project includes support for strengthening ensuring disputes resolution mechanisms mechanisms of dispute resolution. IDA will function efficiently and fairly. maintain an active dialogue with government and development partners to remain abreast of changes in commitment. The project will be scaled back if commitment to a fair process of dispute resolution is inadequate. Government entities and other S The project is supporting a systematic public stakeholders are not able to reach consultation process to build broad consensus agreement on the process of land for decisions and will provide technical classification. assistance to the council of land policy to reach consensus among the various government agencies. Overall Risk Rating S Risk 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 in the public domain, tracts under the control of various government entities will often be difficult and may increase disputes in the short-run. The project will not title lands in areas where disputes are likely until agreements are reached on the status of the land. The project will support a systematic public consultation process to help build consensus for decisions and will ensure continuous discussions and consultations with NGOs and civil society. It is anticipated that some land now nominally under state control (about 80 percent of the total) will be released to the private domain. This will free government resources to better manage 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, to ensure proper accounting, monitoring and reporting of Project operations, resources and expenditures; * The adoption of the Project Implementation Manual by MILMUPC in from and substance satisfactory to IDA; and * Opening of the project account and deposit of US$100,000 of government counterpart fund. - 24 -  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 satisfactory to the Association, and by December 31, 2002, issue a ministerial instruction, satisfactory to the Association, 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 and comments, an annual work plan and budget, and implement it, taking into consideration the comments from the Bank; * Annual financial audit will be conducted by an independent auditor acceptable to the Bank and will follow the terms of reference in accordance to the appropriate auditing principles, as approved by the Bank, 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 reports on April 30, and October 30 of each year, commencing on October 30, 2002; (ii) a report on the project'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's performance; * 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. The reports will summarize progress in the project implementation for the reported period, physical achievements, and financial data for all sources of funds under the project, including those from the governments of Germany and Finland; * The establishment of the Provincial Management Offices in the remaining project provinces by December 31, 2002; and * MLMUPC will develop and complete the implementation of a restructuring plan of the Ministry by December 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 start of project implementation. [ 1. b) Not applicable. O 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. D 4. The following items are lacking and are discussed under loan conditions (Section G): - 25 -  1. Compliance with Bank Policies Vi 1. is prject cOmplic with all applicabic Bank policis Ei 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. Poncr Team Leader Sector Director Country Director -26-  Annex 1: Project Design Summary CAMBODIA: Land Management and Administration Project Key Perfornance Data Collection Strategy Hierarchy 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 build public administration. implement the 2001 land law. consensus to enact new land policies and associated Reduce in number and volume sub-decrees. of land disputes. Reduce cases of land grabbing. 2. Improved access of the poor Decrees in landlessness. to basic social services and economic 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 is urban and agriculture land strengthened. holders improved. Land grabbing falls. Govemance in the country is improved. Agriculture productivity rises. Access to (cheaper) credit The financial sector is increases. strengthened. Investment in the property Secure land transaction law is sector increases. enacted. 2. Land markets operate more Number of land transactions Socioeconomic impact study Economy continues to grow. efficiently. increases. Taxes and Fees collected from land 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 of formulated and regulatory administration of state land Land Policy has capacity to framework in place. policy approved by the CLP. oversee the formulation of policies and regulations. Tax and fees structure on land transactions policy approved by the CLP, regulatory framework signed, and the new tax and fees structure implemented by year 3 of the - 27 -  project. Land accessibility and development policy is approved by the CLP and regulatory framework is in place. Registration of and around natural resources policy is approved by the CLP. Registration of communal and indigenous peoples' land rights policy approved by the CLP and regulatory framework in place. Component 2. MLMUPC is Ministry building is complete Project progress reports, Council of Ministers supports undertaking its mandate and occupied by year 3 of the supervision, midterm and institutional reforms. effectively and efficiently. project. completion reports. Counterpart funds are Restructuring of the ministry available. is complete and a human resources development plan is developed and implemented by year 3 of the project. Surveying and land management education program is established in a national university. Licensed private surveyors are handling 10 percent of titling activities by year 3 of the project and 20 percent by year 5. Map shop is fully operational. Component 3. Titles are One million titles issued Progress reports, supervision NGOs can successfully issued 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 are by 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 through sporadic adjudication takes less than 2 months from start - 28 -  to finish. Land registration system Provincial and district land No informal fees are requested functioning well. offices are built. for registration. 75 percent of land transactions are registered. Registration of land transaction in Phnom Penh is completed in one day by year 4 of the project. Computerized land registration database system is operational in Phnom Penh Land Office and access to information in the registry is available online to government, financial institutions and individuals for a charge. Component 4. Disputes are Enactment of a sub-decree on MLMUPC reports. Government is committed to resolved quickly and to the the establishment of the ensuring fair process. satisfaction of the parties cadastral commissions. involved. Establishment of the Cadastral Commissions in the central MLMUPC office and in the project provinces. Increase in percentage of cases resolved by the cadastral commissions. Component 5. The Land classification policy is Progress reports, supervision Various government entities information basis for approved by the CLP and reports, mid-term report and are able to reach agreement on improved land management is guidelines to develop ICR. boundaries of land classified created. provincial land for different purposes. use/classification maps are developed and approved. Land use/classification maps are produced for the project provinces. - 29 -  Key Performnance Data Collection Strategy Hierarchy of Objectives Indicators Critical Assumptions Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) 1. Development of US$2.8 million Supervision reports every land policy and regulatory six months. framework (a) Development of the Midterm review. capacity of the Secretariat of the Council of Land Policy. (b) Formulation of key Implementation completion policies for land report. administration and management. (c) Development and drafting of legal instruments. 2. Institutional development US$6.4 million Systems of appropriately remunerating staff can be established. (a) Long-term institutional development of the MLMUPC. (b) Project management. (c) Development of land management and administration education program. (d) Development of a private surveying industry. 3. Implementation of a land US$20.4 million Provincial and district offices titling program and are able to build capacity to development of land survey and adjudicate land. registration systems NGOs can successfully mobilize communities. (a) Information dissemination and community participation (b) Systematic land titling (c) Sporadic land tilding (d) Development of land registration systems 4. Strengthening US$1.7 million Government is committed to mechanisms for dispute ensuring that the process is resolution fair. (a) Strengthening the national cadastral commission - 3 0 - -30 -  (b) Strengthening the provincial cadastral commissions (c) Legal assistance to the disadvantaged 5. Land management US$2.6 million (a) Clarification of procedures for defining different classes of land, such as forest land, protected area land, private land, public private land, and the like. (b) Procurement of aerial photographs and satellite images. (c) Preparation of land classification maps for each of the project provinces. - 31 -  Annex 2: Detailed Project Description CAMBODIA: 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 and distribution through: (a) development of the capacity of the Secretariat of the Council of Land Policy in policy 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 implementation of the new land law and other legal instruments needed to implement the project; and (d) dissemination of policies, 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 and formulation using a participatory process. The Secretariat is currently managed by a Secretary General who 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 the Secretariat will be enhanced by appointing a full time Senior Staff to assist the Secretary General in managing the Secretariat. Furthermore, a minimum of two qualified and experienced staff will be assigned to work in the Secretariat on a permanent basis and to get on-job and other training in policy analysis and development. These will be augmented by staff seconded from other Departments of MLMUPC and from the 5 core ministries (out of the 17 agencies) represented on the CLP. The expertise of the seconded staff would 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 by the German Government; (ii) 4 person - months of an intemational expert provided by the government of Finland 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) 12 person-months of short term international consultants and 24 person-months of local consultants funded by IDA to support the review and processing of the recommendations of policy studies and the preparation of a comprehensive land policy framework; (v) training and study tours to be funded by IDA; (vi) workshops to 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 Cambodian Government; and (x) an incentive payment equivalent to salary allowances for staff of CLP Secretariat that work full time on the project also, to be funded by Cambodian Government. B. Formulation of Key Policy Areas in Land Management, Administration and Distribution Based on Studies and Pilots The project will support the formulation of policies in key areas of land management, administration and distribution including: (i) delineation and administration of state property; (ii) land accessibility and development; (iii) registration of community and indigenous people's land rights; (iv) registration of land in - 32 -  and around natural resources; and (v) fees and charges for first time land titling, transaction taxes and other land registration taxes. The project will also support the building of consensus and dissemination of findings from the policy studies. Outline Terms of Reference of these studies is included in Attachnient I to this annex. C. Development and Drafting of Legal Instruments The project will finance the development (including studies, consultation and related processes as necessary) of the laws, sub-decrees and regulations needed to achieve the objectives of the project. Work will focus initially on the development of sub-decrees and regulations essential for the implementation of the new Land Law, with particular attention to the sub-decrees and regulations directly affecting the initiation and work of survey, titling and registration of land rights under the project. This work is proceeding in the pre-implementation phase using PHRD funds and funds of the bilateral partners under their ongoing projects. It is being closely coordinated with the ADB's technical assistance for implementation 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 are communicated to the public and throughout government. The ADB is taking primary responsibility for basic messages about the new Land Law, but there will need to be training and public education activities on the subsidiary legislation, especially in those areas where the systematic survey and titling will be initiated. 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. Project Component 2 - US$6.40 million Institutional Development This component will provide support to four main areas: (a) long term institutional development to MLMUPC; (b) project management to implement the project; (c) establishment of a land management and administration education program in an established university; and (d) development of the private surveying industry. A. Long Term Institutional Development to MLMUPC MLMUPC was established in 1998 by merging several departments from different ministries under the new ministry. The existing structure, staff numbers, skills and incentives are not adequate to support the newly expanded mandate of the ministry during project implementation. Further, the ministry offices are dispersed in several buildings around Phnom Penh which will make it very difficult to properly coordinate the 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, and provide financing for furniture, office equipment and vehicles. The project will support the establishment of a modem administrative and financial control system in the ministry. The project will also develop and implement a comprehensive training plan for ministry staff at all levels. Further, the project will support the training center and fund the establishment of a map shop to be located in the ministry to sell the maps and aerial photographs that will be produced under the project to public and private entities. The project will also finance maintenance costs of the equipment and buildings. - 33 -  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 the PMO with the necessary furniture, office equipment and vehicles. The project will also provide the PMO with the adequate technical assistance and training in project management, procurement and financial management, planning, budgeting and monitoring, and reporting. The project will establish a computerized accounting system, linked to provincial offices and capable of generating project monitoring reports. The project will also support travel cost and per diem of the PMO and other staff participating in project implementation. One round of social assessment was done during project preparation. A second round of social assessment will be done in year 3 of the project in areas awarded with titles to draw lessons about the impact of the project on the beneficiaries. The project will also support undertaking socio-economic and environmental impact assessment and studies, as needed to monitor the long term socio-economic and environmental 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 Royal Agriculture University in Phnom Penh. The support will cover curriculum development, a professor exchange 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 and capacity building. The project will train private surveyora-aiid award them small contracts as part of the systematic adjudication work on a per parcel basis (with equipment provided to them by the project). The project will also support the ministry to prepare a draft private surveying sub-decree to provide the legal basis for the private sector profession with a goal that all subdivision survey will be done by the private sector. 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 registration system to register land transactions, and will include: (a) information dissemination and community organization; (b) systematic land titling program; (c) sporadic land titling program; and (d) development of an 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 and newspapers) and posters about systematic, sporadic land titling program, and land transaction registration. The information dissemination also includes support information dissemination to villagers undergoing systematic adjudication. Prior to the commencement of the land titling activities in the village, the project will organize an infornation campaign, through focus groups discussions and workshops to explain the project objectives, rationale and benefits, and also explain the forms, the procedures and legal rights to each household. The information campaign will commence about one month before the surveying and - 34 -  adjudication starts. The project will hire and train local NGOs in the project provinces to undertake the village level information dissemination and community organization campaign including training and participation of mass organizations such as farmers associations. This sub-component will also include support for the collection of village land profiles to define village boundaries, 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 the socioeconomic impacts of the project. A standard form for gathering the data will be developed during the pre-implementation period. These data will be inputted in a computerized database for easy reference and use. B. Systematic Land Titling Program This sub-component will support the current initiatives of the MLMUPC in land titling (first-time land title registration) with further development and acceleration of the ongoing two pilot projects financed by the Finnish and German governments. The land titling program will cover ten provinces and Phnom Penh municipality (Attachment 11) and will cover both urban and rural areas. The sub-component will include the following activities: Geodetic network control and base mapping. The project will support the densification of the geodetic network to support the existing primary network and to provide suitable geodetic control for the systematic registration activities. The project will also support aerial photography and the production 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 of global positioning system (GPS) and other survey equipment; (ii) for systematic adjudication teams in 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 adjudication teams and involves: (i) refnement of the existing systematic registration procedures; (ii) field work including surveying and land adjudication in project areas; (iii) preparation of records and distribution of certificates to land holders; (iv) distribution of cadastral index maps and village land files to village leaders and commune councils to support their functions; (v) follow-up public information sessions on registration of transactions; and (vi) transfer of land records to the district and provincial offices. The project will issue an estimated one million titles. Attachment III to this annex includes the number of titles to be issued in each of the project provinces per year. This number will be refined later during the annual 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; travel allowances to adjudication teams; salaries and travel allowances of contractual staff, operational costs of adjudication teams; village profiling, information dissemination and community organization. The technical assistance (both international and national) for this sub-component will be financed by the Finnish government. - 35 -  C. Sporadic Land Titling Program The sub-component will support the issuance of titles (first-time issuance and registration of land titles) on demand in the project provinces. This support will include (i) review of the current procedures for issuance of 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 survey equipment and aerial photographs. The project will finance training, surveying equipment, and aerial photographs, and travel allowances to adjudication teams and salaries and travel allowances of contractual staff. The technical assistance (both international 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 staff who 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 land registration system that will ensure the security of titles and transactions records, full participation in registration of land transactions, and efficient service delivery. It will include the following: Review of land registration system and operational procedures. The project will support the review of the existing procedures of land registration and develop new procedures for land registration based on the new land law and the land registration sub-decree (see component 1). It will also include preparation of new instruction manual and provision of training for land office staff. Improved office facilities, equipment furniture and materials. Many provincial offices and most district offices lack the adequate space and facilities to cater for the systematic adjudication activities under 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 of necessary furniture and office equipment. New construction of these office buildings will only be supported on unoccupied public land. Funding for maintenance of the facilities and equipment will also be provided. Establishment of land registration database system. While the land records will be kept in paper form, it is important to develop a computerized database to keep basic information about land parcels. Access to the information should be available to other government agencies, banks and private citizens and firms on a fee basis. The database will include information about the parcel number, current and previous owner, area, location, zone, property value, date of registration, any mortgage or lien on the parcel, and the like. The project will support the design and insulation of the system. The system will be installed first in Phnom Penh and then expanded to other project provinces. The project will finance the new construction or renovation of the land office buildings, furniture and office equipment, and the design and installation of the land registration database system, office building and equipment maintenance. The technical assistance for this component will be financed by the Finish goverrnent. - 36 -  Project Component 4 - US$1.70 million Strengthening Mechanisms for Dispute Resolution The component will strengthen dispute resolution by MLMUPC as an element in provision of tenure security by the titling process. Disputes over land are endemic in Cambodia and reflect the pervasive tenure insecurity. Under the 1992 land law, rights to land depend largely upon short-term occupation. This was a reasonable strategy for re-establishing a property rights system after the legal chaos and large-scale population movements of past decades. Now LMAP will record and confirm those rights as ownership through systematic survey of holdings and adjudication of title. Disputes will arise because there are many fraudulent and overlapping claims. In the long run, the project will reduce the number of land disputes. But in the short term, systematic adjudication of land rights under the project will "flush out" many disputes: the prospect of a final settlement of rights will prompt the bringing forward of claims not previously articulated or not actively being pursued. The objective under this component is to increase the fairness of the titling process. This requires 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 those disputes and fairness for project beneficiaries will depend upon the quality of the dispute resolution processes, and this component seeks to strengthen these as a means of securing the benefits of the project to landholders. Efforts will focus on the Cadastral Commissions. The courts of Cambodia have very limited capacity and credibility, 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 and arbitrated 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 had a growing presence on the commissions. Under the new Land Law, the MLMUPC will take over and reconstitute these commissions as the Cadastral Comrnission. Unlike its predecessors, the Cadastral Commission 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 is operating. 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 Policy Council, under one or more sub-decrees prepared by the Ministry with TA provided by the ADB's Land Legal Project and LMAP. The support provided by the project will build capacity and realize hopes for a more effective and impartial style of dispute settlement. The Commission and its secretariat will benefit from the project-supported expansion of office space. Vehicles and motorbikes will be provided. The project will fund provision for computers, office furnishings, and orthophoto maps; preparation of training - 37 -  materials and training in investigation of disputes; public education to make citizens aware of the new dispute settlement system; and incremental operating expenses, in particular those associated with investigations and costs of mediators and witnesses. Public education efforts would be carried out under a contract 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 to provide better access to effective dispute settlement is essential to achieve tenure security. The project will support MLMUPC at provincial and in some cases at district level as it takes over dispute settlement in the new Cadastral Commissions. Motorbikes will be provided, and travel allowances. The project will provide computers 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 contract with a national NGO or qualified local consultants for staff of MLMUPC, staff of other concemed ministries, and local leaders and educators. For some training activities, trainees from areas not yet reached by the project will be included. Costs of workshops and training programs will be covered, including costs of 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 to pressing their claims. The poor will be at a critical disadvantage if they cannot access legal assistance. The project will provide this assistance, seeking to level the playing field by funding an expansion of the activities of national legal NGOs currently providing such legal assistance to the poor. The RCG enjoys unusually good relations with the NGO community, and is supportive of donor funding of NGO activities in this area. The project will provide funds for the MLMUPC to contract with selected legal NGOs for investigation, counseling and representation services for the disadvantaged. Detailed discussion of this sub-component is included in Attachment IV to this Annex. Project Component 5 - US$2.60 million Land Management Currently, there are no maps showing the different classes of land tenure and land use arrangements. The project will support MLMUPC in preparing land use and classification maps in the project provinces. The project will support (i) clarification of procedures for definition of different classes of land, such as forest land, protected area land, private land, public private land, and others; (ii) procurement of aerial photographs and satellite images as needed; and (iii) 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, and the like. The project will finance aerial photography and satellite images, training, furniture and office equipment for the provincial land management offices, and operation cost for the compilation of land classification maps. Technical assistance for this component will be provided by the German government. - 38 -  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 state property by recommending options for approval by CLP in 5 areas: (a) clarifying the legal definitions of state immovable property; (b) integrating state property in a land-use planning process; (c) identifying state property spatially and administratively according to the new Land Law 2001 and others; (d) defining the authority of different levels and agencies of government to manage different state properties; (e) registering state immovable property and related concessions; (f) converting state public to state private immovable property; and (g) transferring state private immovable to private ownership. Methodolo v. The study will involve consultants working with inter-agency working groups and will be coordinated with similar forthcoming studies on land use planning, registration of natural resources rights and registration of economic concessions. The study will cover 2-3 provinces as pilot areas to improve the administration of state land. Expected Outputs. There will be 3 sets of outputs to be produced: (i) a proposal and recommendations for approval by the CLP, with a time-bound action plan (short term output); (ii) inputs for the preparation of any implementing regulations to the Immovable Property Law (short term output); (iii) draft guidelines and procedures 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 and October 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 the study 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 other people with potential to do farming) with little or no land, and to develop modalities for allocating land and enhancing 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 the new law. For example, through social concessions, land for social development can be provided. The law also provides a maximum limit of 10,000 ha for land to be used under economic concessions, thereby making it possible for larger concessions to give up land which could be allocated for farming by those that have little or no land. Methodology. . In the quest for improving access to and developing of land, the study will attempt to answer the following questions: (a) where are lands, suitable for allocation, located? (b) who should make social concession decisions; (c) what should be an appropriate decision-making process? (d) how should these decisions be made? (e) when should he decisions be made? (f) how should these decisions be enforced? The study will be followed by a pilot to test the granting of social concessions and productive use 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 granting land, particularly in de-mining regions; (ii) a reconnaissance survey of unused lands suitable for distribution and, where possible, marking them on a base map; (iii) draft policy recommendations for the -39 -  CLP; (iv) a draft Operations Manual with procedures on land allocation and development; and (v) an evaluation report on the pilot. Timing of the Study. Costs and Financin . The study and pilot would be done over 2 years starting from around 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 will be 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 the study will be a review of the land tenure arrangements in indigenous communities. This will be based mainly on the extensive work on land issues undertaken by Oxfam in 1999. The second part will review projects implemented by NGOs working in the northeast area with indigenous communities and with communal land rights with a view to drawing relevant lessons for LMAP. The third and main part of the study will be to develop methodologies and procedures to undertake titling and registration of community and indigenous peoples land rights and to prepare relevant implementing regulations. Specific objectives will be to identify options and make recommendations to CLP on: (i) interim measures to be used to protect indigenous peoples lands from expropriation or capture by private individuals; (ii) the policy implications of implementing the land law provisions for recognition of perpetual "ethnic minority community land rights"; (iii) incorporation of de jure recognition of "ethnic community" land rights into the draft national policy 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 review research initiatives and pilots to identify land tenure pattems and structure, map and protect land rights of indigenous communities and peoples. They will then design and pilot a sporadic or pseudo-sporadic approach to titling community land as well as indigenous peoples' lands under the LMAP. They will then propose a systematic registration program for community and indigenous peoples' land rights for implementation in the latter part of the LMAP. The study should recognize that any proposed approach for working with indigenous minorities should be based on the policy guidance which (a) ensures that indigenous people will benefit from development projects, and (b) potentially adverse effects on indigenous people caused by project activities will be avoided or mitigated. Included among the steps when working with indigenous minorities will be the following: * 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 titling community and indigenous peoples lands; (b) inputs into the preparation of relevant implementing regulations; 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 - 40 -  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 up project. 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 around April 2004. The total cost of the study is estimated at US$100,000, and would be funded from the IDA Credit. 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 natural resources, namely, forests, wet lands and fisheries. Another objective is to explore how information derived from registration of these natural resources can be used to facilitate the integration of local land use planning and decentralized natural resources management. The study will go closely with that on the administration of state lands (under this project) and with initiatives supported by the Ministry of Agriculture, Forestry and Fisheries aimed at promoting community-based management of forests and other natural resources. Methodolog. The study would involve taking stock of the patterns of rights, both individual and commnon as well as clear and overlapping, present in and around natural resources. It would also assess the extent of security of these rights and any related disputes as well as the desire, if any, of stakeholders to register the natural resources. It would review international experience in titling these rights and set out to develop procedures for titling the natural resources as well as the individual or community lands adjacent to these resources. 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 the CLP; (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 completed around June 2004. The total cost of the study is estimnated at US$100,000, and would be funded from the IDA 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 the charges on titling and transfer of land would be guided by the need to strike a balance between creating adequate incentives for land titling and registration on the one hand and meeting the needs for cost recovery on the other. The proposed review, particularly on the land taxes, would take into account related government policies including fiscal policy. Methodolo . The study would review current land tax structure and levels in Cambodia, how they are being assessed and administered and the willingness and ability to pay. There should also be a comparative analysis with countries at similar levels of development. The study should also examine at what levels of government the taxes and charges should be collected and spent, i.e. the revenue sharing arrangements between local and central government on one hand and between MLMUPC and the Ministry of Economy -41 -  and Finance on the other. Estimates should be made on how much revenue can be raised, under various assumptions and scenarios, and the adequacy to meet the costs of operation and maintenance of land administration. Expected Outputs. There will be 3 sets of outputs: (a) a proposal and recommendations for approval by the CLP on: (i) fees for first time systematic land titling; (ii) a new fee or reconfirmation of current fees for sporadic land titling; and (iii) a new rate for the transaction tax. Recommendations should take into account current and proposed taxes on land and buildings including property tax-type, and taxes on incomes and rent from immovable property. Timing the Study. Costs and Financing. The study would be undertaken during December 2001 to April 2002 as part of the pre-implementation activity with financing from the German Govenmuent. The total cost of the study is estimated at US$50,000. - 42 -  ATTACHMENT II: PROJECT PROVINCES Takeo Phnom Penh Prey Veng Kandal Kampong Speu Sihanoukville Kampong Thom Kampong Cham Kampot Siam Reap Battambang 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,OOC ph-oPnr% 2,00t 16, 42,OOC 60, 60,O00 18,OC 198,0C Kaidal 2,00O 16,00C 36,000 48,000 42,OOC 12, 156,OOC Sihanoukville 2,00t 10,OOC 12,00C 12,000 12,00( 48,00C Karopar 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 96,00C Prey Veng ( 12,OOC 12,00t 24,000 36,000 ( 84,00C Karrvorig Clrnm 12,00C 24, 0 0t 36,000 36,00 18, KaTf fS speu 12,00C 24,000 12,00O ( 48,00C Siem P__ap I_C__ 12, 24,OOC 12,00t 48,00C Batrbang 12,000 24,OOC 12,0I 48,000 Total 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 the project. 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 previous regime and the re-establishment of property rights through prescription. Competing prescriptive claims and disputes between government entities and between governnent entities and private entities. The courts have proven inadequate to the task, and the new Cadastral Commissions of NLMIUPC will take over from the - 43 -  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 disadvantaged involved in disputes more adequate legal advice and representation. This is especially true since the systematic adjudication of land rights under the project will "flush out" many disputes; the prospect of a final settlement of nights will prompt the bringing forward of claims not previously articulated or not actively being pursued. One of the objectives of the project is reduction of the number of land disputes, and this will be a long-term impact of the project. But in the short-term the number of disputes will grow. In the process of dispute resolution there will be winners and losers, and some displacement of land users will result. Legal assistance will provide support to disadvantaged who are involved in land dispute, such as the poor, 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 going on under its project. There are several dimensions to this effort. The ADB Land Law Project and LMAP's Component I will support public education on rights awareness and general understanding of the new Land Law and related legislation. Under Component 3, LMAP will support NGO activities to increase public understanding of the land survey and titling processes, as a preliminary to field operations. Under this component 4 of LMAP, NGOs will be supported in carrying out public education on the new cadastral commissions. All these activities would be carried out by NGOs specializing in community education who will have had training in the new Land Law, the titling process, and the reformed dispute settlement processes. There are other needs, however, which will need to be met by legal NGOs. National legal NGOs such as Legal Aid of Cambodia and Cambodia Defenders Project have been providing critical assistance to disadvantaged parties in land disputes before the commissions, but they lack the resources to assist with more than a subset of important cases in each province. Other NGOs such as Ad Hoc and Vigilance assist with investigation of land disputes as part of their human rights brief. There is legal expertise available to the concessionaires, government agencies and the wealthy, but the NGO community is providing essential support for the disadvantaged. This helps "level the playing field", and adequate presentation of the claims of 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 has an unusually positive attitude towards its NGO community, and supports donor funding of NGO activities in this area. Under LMAP's component 4, the Legal Assistance to the Disadvantaged sub-component, one or more contracts for legal services to the disadvantaged would awarded to legal NGOs. This legal assistance initiative is one of several in recent land titling projects funded by the Bank, including projects in Guatemala, Moldova and Peru. The contracts would allows the NGOs to assist disadvantaged disputants with investigations, with documentation of their claims, and with articulation of their claims before the cadastral 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 more NGOs without competition in the first year, but competed in subsequent years. Criteria for selection of the NGO will include experience in the land disputes area, legal competence, and effectiveness at provincial level. - 44 -  The contracts would provide for representation by the NGO on only one side of a dispute, and only on the disadvantaged side. The criteria for eligibility cannot be framed in terms of income or other individual wealth indicators, because most clients of these NGOs are groups, extended families or villages, rather than individuals. Those receiving assistance will be to some extent self-selected, but will be accepted for assistance only if 1) the claim seems legally viable; and 2) the claimant(s) are at a disadvantage in relation to the other disputant(s). It will be important to leave the NGOs some latitude to use their knowledge of local interests in making these determinations. Payment would be made in recognition of services provided. It is anticipated that the contracts will be awarded 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 unit will be specified in the contracts. Subsequent payments will be based upon reporting of provision of these services. It will be necessary to establish a baseline of assistance already being provided by the NGO(s) selected, and ensure that under the contracts they are providing an increment over and above that, Such statistics are available. Standards for reporting performance as a basis for incremental payments under the contract will be included. More general performance evaluation indicators will be specified, including number of household assisted and number of disputes resolved. The NGOs will undertake to maintain statistics that allow monitoring and evaluation, including statistics that distinguish disputes coming out of the systematic survey and titling process from other land disputes. ATTACHMENT V: Tentative Technical Assistance Input to be Finance by the Government of Germany (For components 1, 2, 4, and 5) Position Person month Person/Month International National/Region Teamleader 60 Assistant to TL 57 M&E/Moderator 60 Project review team 4 HRD advisor 7 13 Organizational advisor 4 8 Specialized advisors 20 Accountancy specialist 16 PR specialist 4 21 Legal advisor 1 1 32 Mediation advisor 5 15 Photogrammetric/RS Advisor 6 12 Land Policy Advisor 6 12 Land Management Advisor 16 38 Land Classification Advisor 10 24 GIS Advisor 5 14 - 45 -  ATTACHMENT VI: Tentative Technical Assistance Input to be Financed by the Government of Finland (For component 3) Position Person month Person/Month International National/Region Team Leader/Adjudication Advisor 60 Adjudication Advisor 60 Assistant Team Leader/Land Registration Advisor 52 Participation/Gender Advisor 4 Participation/Gender Advisor 60 Land Survey Advisor 21 Land Survey Advisor 28 Photogramuetric Advisor 9 Photogrammetric Advisor 21 Geodetic Advisor 4 Mass Media Advisor Mass Media Advisor 3 Information Technology Advisor 17 -46 -  Annex 3: Estimated Project Costs CAMBODIA: Land Management and Administration Project Local Foreign Total Project Cost By Component US $million US $million US $million Development of Land Policy and Regulatory Framework 1.37 1.43 2.80 Institutional Development 2.70 3.11 5.81 Land Titling Program and Development of a Land Registration 11.30 6.80 18.10 System Strengthening Mechanism for Dispute Resolution 0.65 1.01 1.66 Land Management 0.36 2.17 2.53 Total Baseline Cost 16.38 14.52 30.90 Physical Contingencies 0.18 0.12 0.30 Price 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 Total Project Cost By Category US $million US $million US $million Goods 0.94 3.98 4.92 Works 2.93 1.99 4.92 Consultant Services 0.38 7.98 8.36 Training, Workshops, Forum and Study Tours 1.48 0.20 1.68 Title Development Costs 11.19 0.00 11.19 Incremental Operating Cost 2.00 0.83 2.83 Total Project Costs 18.92 14.98 33.90 Total Financing Required 18.92 14.98 33.90 Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 33.9 (US$m). Therefore, the project cost sharing ratio is 71.68% of total project cost net of taxes. - 47 -  Annex 4: Cost Benefit Analysis Summary CAMBODIA: Land Management and Administration Project Summary of Benefits and Costs: Expected benefits: The main benefits of the project are: (a) Improved land tenure security through issuance of around 1 million titles, reducing the risks of land grabbing, encroachment, land disputes, and expropriation. Lack of tenure security has been identified by both the govermnent and donors as an overriding problem greatly contributing to poverty in Cambodia; (b) Increased investment, both domestic and international, due to an better access to credit and establishment 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 and improvements in the functioning of land markets in 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 of the 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 general macroeconomic environment and the development of relevant institutions will also influence investor behavior. If the macroeconomic situation is unstable or formal banking institutions fail to emerge in rural areas, then expected investment may not materialize. Methodology of economic analysis An economic analysis for such a land management and administration project would follow the conventional approach to economic evaluation of investments, which proceeds by estimating a future stream of costs and benefits and deriving net benefits to calculate a net present value (NPV) and an economic rate of return (ERR). In urban areas, gross economic benefits can be measured through land price change due to titling while holding other factors constant. In rural areas (where land markets are underdeveloped), the gross economic benefits can be measured by the incremental increase in production and associated income from titling, subtracting the value of the investment inputs. Net economic benefits and 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 how farmers or urban dwellers may respond to provision of titles is not available. Pilot projects supported by the 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, such as Thailand, do not offer a good guide because conditions in these countries are quite different than in Cambodia. For example, the land administration system in Thailand is much better developed than that in -48 -  Cambodia. The analysis would thus have to be based on questionable assumptions. Second, the focus of the 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 nor an ERR will be 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 during implementation to provide a basis for an ex-post evaluation, as for the Thailand and Indonesia land projects. In rural areas, enumerators will collect baseline data for selected households before the project starts. Data will include current investments in agriculture (fertilizer and pesticide use, tools and machinery, water control technologies, soil conservation measures), plot characteristics (such as, size, irrigation status, fertility and the like), and household characteristics (education, age structure), crops grown 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. In addition, in both rural area urban areas, information on groups that do not receive title will be collected to provide data for use as a control. As the project is just the first phase of a long-term program, the findings from 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 the project are attractive enough for the project participants. There are two key project participants: the landholders 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 through participating in the project: (a) to improve the security of land ownership or possession, and (b) to improve the access to credit from formal financial institutions by using the land titles as collateral. As a result of an improved land tenure security and better access to formal credit, the landholders will increase investments in their land and hence increase productivity and income. If landholders were to be charged the full cost of land titling (as in the case of sporadic adjudication), the decision by a landholder to participate in the project 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 cost of the services, the landholders do so with the expectation that the financial return from acquiring the title will exceed the cost of the title. In most cases, land titling projects include systematic adjudication to title all parcels in a given area quickly. To ensure the high voluntary participation of landholders, the charge to landholders of land titling has been kept at a level significantly lower than the cost of producing a title. The affordability of the poorest landholders is one of major criterion of setting an appropriate registration fee. For example, in the case of Thailand, landholders are charged less than US$5 per title, compare to the average cost of US$36 per title. In the case of Indonesia, landholders are charged about US$2 per title while the average cost is around US$26. The difference between the actually cost of titling and the fee charged to landholders is the subsidy from the government. Often government recovers the subsidy by charging registration fees on subsequent 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 be introduced in Cainbodia. Current estimates show that the actual cost to produce a title is around US$38 Based on the estimated project cost and the total numbers of title will be issued under the project, the average cost - 49 -  of per title is about US$29.3. However, this average cost does not include the government's future management 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 to ensure each title still valid and (ii) the discount rate is 10%. Based on these two assumptions, the actual total 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 will be charged to landholders in urban area. Discussions with farmers and government officials and other anecdotal evidence indicates that the fee arrangement would be reasonable. This is far less than the unofficial 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 transfer tax, unused land tax, and the like) will be undertaken as a pre-implementation activity. The objective of the study is to find a balance between the need to encourage people to register subsequent transactions on one hand 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 system will 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 for speculative purposes. The financial costs to the government are the direct project cost and the government's future management fees 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 the total project cost will be financed by the government. In the long run, it is expected that the fiscal impact of the proposed project will be highly positive as shown by the NPV of around US$15.4 million (at a discount 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 the project, and the affordability of the poorest has been taken into account. Therefore, the cost recovery arrangement of the project will have a positive impact on distribution of project benefits and will promote the 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: -50 -  Rural agricultural US$2, rural residential US$5 Urban 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 parameters with significant potential to affect the success of the project and are also of the highest concern to both the government and landholders. Therefore, there is a need to conduct a sensitivity analysis to test the financial robustness 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 remain financial 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$13.5 million; FRR will be 19.9%. - 51 -  Annex 5 Table 1 Calculation of Financial Rate of Return (US$'000) Year Cost Benefits Subsequent Transaction Transfer Tax Registration Fee Registration fee (4% of land value 1 5450 987 61 311 2 7200 1833 175 888 3 7200 2679 342 1732 4 7300 3525 561 2842 5 6230 4371 832 4218 6 1000 832 4218 7 1000 832 4218 8 1000 832 4218 9 1000 832 4218 10 1000 832 4218 11 1000 832 4218 12 1000 832 4218 13 1000 832 4218 14 1000 832 4218 15 1000 832 4218 16 1000 832 4218 17 1000 832 4218 18 1000 832 4218 19 1000 832 4218 20 1000 832 4218 21 1000 832 4218 22 1000 832 4218 23 1000 832 4218 24 1000 832 4218 25 1000 832 4218 26 1000 832 4218 27 1000 832 4218 28 1000 832 4218 29 1000 832 4218 30 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 - 52 -  Annex 5: Financial Summary CAMBODIA: Land Management and Administration Project Years Ending IMPLEMENTATION PERIOD Year I Year 2 | Year 3 Year 4 Year 5 | Year 6 | Year 7 Total Financing Required Project Costs Investment Costs 3.9 5.8 6.0 5.9 6.4 3.1 0.0 Recurrent 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 Financing IBRD/IDA 2.5 4.0 4.7 4.8 5.5 2.8 0.0 Govemment 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 0.0 Provincial 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 0.0 User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 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 - 53 -  Annex 6: Procurement and Disbursement Arrangements CAMBODIA. Land Management and Administration Project Procurement Introduction The procurement of civil works and goods will follow the "Guidelines for Procurement under IBRD Loans and IDA Credits" dated January 1995 and revised in January and August 1996, September 1997, 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 revised in September 1997 and January 1999, and on Standard Request for Proposal dated July 1997 and revised in April 1998 and July 1999. The procurement methods to be used for the Project are indicated in 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. The PMO procurement staff, with the support of an international Procurement Advisor, will be responsible for the implementation of the agreed procurement plan for the Land Management and Administration Project (LMAP). The concerned departments within the MLMUPC are expected to provide technical support for their respective areas of specialization. Advertisement. A General Procurement Notice will be published in the Development Business announcing works, goods and consultants services to be procured and inviting eligible contractors, suppliers and consultants to express interest to contracting opportunities, and to request any complementary information from MLMUPC. In addition, specific procurement notices will be published 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 the Office Memorandum from the Manager of the World Bank Procurement Unit of the Operational Core Services Network (OCSPR) dated August 11, 1998. The assessment involved a review of the procurement policies and procedures adopted and implemented by the central office involving purely locally 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 the principles 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 the country, there are certain government rules, regulations and practices which are inconsistent with the Bank procurement Guidelines and thus such exceptions are required to be incorporated in the Side Letter to the Development Credit Agreement. Some specific areas that deviate from the Bank 's guidelines are (a) negotiation with the lowest bidder to reduce the price when all bids exceed the cost estimates; (b) the prerequisite requirement for the prior registration of foreign fimns to be eligible to participate 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 of arithmetical errors in their bids; (e) the obligatory requirement for a foreign contractors for entering - 54 -  into a joint venture with a local firms; (f) the use of merit point system for pre-qualifying firms instead of 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 negotiation with the first ranked firm fail, is silent. --- For procurement of items financed in whole or part under ICB, MLMUPC agree to follow the Bank's Guidelines and Standard Bidding Documents since its Implementing Rules and Regulations Governing Public Procurement (IRRPP) contain a waiver for foreign funded projects. The MLMUPC has not had the experience in implementing projects funded by international financing institutions. This will be the first Bank financed project it will implement. The overall procurement risk 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 function to 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 of implementation, and to provide and/or identify training opportunities for MLMUPC staff (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 documentation and filing (by May 2002); and * Setting up an internal audit function and arrangement within the MLMUPC to (a) provide checks and balances and (b) ensure that procurement transactions are all in order, and that the deliveries of 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, and construction/renovation of provincial and district offices of the ministry, and provisions of aerial photography and satellite images. The Procurement Operations Manual to be developed will include sample procurement documents in accordance with the World Bank Standard Bidding Documents. (a) International Competitive Bidding (ICB) ICB procedures will be used for contracts for the construction of new ministry building, training center, and the provisions of aerial photography and satellite imaging. The Bank's Standard Bidding Documents (Procurement of Works for Smaller Contracts) 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, when comparing bids from eligible domestic Contractor with those from foreign firms.. - 55 -  (b) National Competitive Bidding (NCB). Works involved small valued contracts dispersed geographically, and spread over time which can only be suitably package on a limited scale of provincial basis. It is unlikely that the size of the works would attract much interest outside of established construction companies in Cambodia. Contracts for the construction/ renovation of provincial and district offices of the ministry up to less than the equivalent of US$300,000 will be procured using NCB procedures acceptable to the Bank. The estimated total value for this procedure is about US$ 2.22 million. (c) Civil Works Shopping. Very Small works for renovation of offices up to a maximum US$20,000 per contract will be procured using simplified procurement procedures for works similar to shopping by seeking quotations from at least three contractors. The estimated value for this procedure is about US$.36 million. Procurement of Goods (US$ 4.92 million) Goods to be procured under the Project will include vehicles, motorbikes, mapping and geodetic equipment, computers and other office equipment, and furniture. (a) International Competitive Bidding (ICB). ICB procedures will be used for contracts for the procurement 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 be eligible for a domestic preference of 15 percent over foreign bid price or custom duties, whichever is lower. (b) Procurement through LAPSO. Procurement of utility vehicles and motorcycles may be done through the Inter-agency Procurement Service Office (LAPSO) of the United Nations. There is a wide range of specifications of vehicles available to choose from at standard advertised prices. The estimated total value for this procurement is about US$ 1.10 million. Procurement of vehicles and motorcycles will 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$100,000 per contract will be procured using NCB procedures acceptable to Bank. The estimated total value for this procurement is about US$ 1.44 million. (d) Shopping. Shopping will be used for computers and office equipment, and furniture costing less than the equivalent of US$50,000 per contract, and which will be procured over time. These contracts will be awarded after solicitation and evaluation of written price quotations from at least three suppliers in accordance with articles 3.5 and 3.6 of the guidelines. The estimated total value for this procurement is about US$0.84 million. (e) Direct Contracting (DC). GIS software, reference books and journals of proprietary nature and obtainable only from one sources, may with the Bank's prior agreement, be procured following direct contracting procedures acceptable to the Bank up to a maximum aggregate amount of US$0.15 million. - 56 -  Consultant Services (US$1.35 milion) About US$ 8.36 million would be allotted to consultants services and technical assistance. The majority of the contracts, estimated at US$ 7.01 million, will be financed by the governments of Germany and Finland, according to their own procurement guidelines. These would include technical assistance on the different components. Consultant services, mostly surveys and information dissemination, 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 of Consultants by World Bank Borrowers" published in January 1997 and revised September 1997, and January 1999. The Bank's latest Standard Requests for Proposals (dated July 1997, revised April 1998 and July 1999) will be used for the selection of consultants. Any contract above US$200,000 must be advertised in the Development Business requesting an Expression of Interest prior to developing a shortlist. (a) Quality and Cost Based Selection (QCBS). Selection of firms for some of the policy studies and NGOs for community participation in the second year will follow Quality and Cost Selection. The value 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 and institutional surveys will be undertaken through Selection Under Fixed Budget. These assignments are simple, and scope of services can be precisely defined with a fixed budget. The value of the contracts awarded 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 to carry out the extemal audit of the Project. The value of the contracts awarded through LCS should not exceed US$0.05 million. (c) Single Source Selection (SSS). Because of their involvement and knowledge of local issues, community needs, and participatory approaches, NGOs may be engaged to conduct information dissemination on the basis of single source selection. The value of the contract(s) awarded through SSS should not exceed US$ 0.30 million. (d) Selection Based on Consultants' Qualifications (SBCQ). The selection of NGOs estimated to cost less than $ 50,000 per contract, whenever competition is possible, may be procured by using SBCQ in accordance with paragraph 3.7 of the Guidelines. The value of the contracts awarded through SBCQ is about US$ 0.20. (e) Individual Consultants. The Project would need individual advisors and consultants to carry out some 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 whose experience and qualifications are the paramount requirements to the assignment. The selection of individual consultants would be in accordance with Section V of the Guidelines. The aggregate cost of the 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 - 57 -  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 training activities and workshops is estimated at about US$1.70 million. These would be procured according to normal commercial procedures acceptable to the Bank. Title Development Cost (US$ 11.19 million) About US$ 12.19 million would be allocated to cover the costs related to activities in land titling, land recording, infornation management and include transport cost and training allowances to adjudication teams and PPMO staff, salaries and transport cost of contractual staff, materials used in adjudication and 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 guidelines acceptable to the Bank. These guidelines will be included in the procurement manual. Government staff on 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 to managing the project, including: a. Operating costs incurred by MLMUPC to manage the project. This includes, operating and maintenance of vehicles, equipment and office buildings, transport costs and training allowances for project 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 will be paid entirely by the Government counterpart contribution. - 58 -  Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procurement Method Expenditure 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 8.36 Consultant Services (0.00) (0.00) (1.35) (0.00) (1.35) 4. Miscellaneous 0.00 0.00 1.68 0.00 1.68 Training, Workshops, and (0.00) (0.00) (1.68) (0.00) (1.68) Study Tours 5. 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 2.83 Costs (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 of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. - 59 -  Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) Selection Method Consultant Services Expenditure Category QCBS QBS SFB LCS CQ Other N.B.F. Total Cost A. 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 Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Credit. - 60 -  Prior review thresholds (Table B) Table B indicates the thresholds for prior review. The Bank will conduct prior review of procurement documents and actions in accordance with procedures set forth in paragraph 2 of Appendix I to the Procurement 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 procured through Direct Contracting; all consulting contracts costing more than or equal to US$100,000 for firms and US$50,000 for individuals; and all single source selection contracts for frms. The total amount of contracts/procurements subject to prior review is US$9.08 million, or 37 percent of the value of the Credit. - 61 -  Table B: Thresholds for Procurement Methods and Prior Review' Contract Value Contracts Subject to Threshold Procurement Prior Review Expenditure Category (US$ thousands) Method (US$ millions) 1. Works >300,000 ICB 2.34 <300,000 NCB 1.5 2. Goods >100,000 ICB 1.39 IAPSO 1.44 <100,000 NCB 1.5 <50,000 NS 0.50 DC 0.15 3. Services a. Firms >100,000 All methods 0.5 SSS 0.1 b. Individual >50,000 CQ 0.16 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous Total value of contracts subject to prior review: US$9.08 million (38 percent of the Credit) Overall Procurement Risk Assessment High Frequency of procurement supervision missions proposed: One every 4 months (includes special procurement 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 Procurement Documentation" and contact the Regional Procurement Adviser for guidance. - 62 -  Disbursement Allocation of credit proceeds (Table C) Introduction IDA is proposing to finance a Land Administration, Management, and Distribution Program (LAMDP) in Cambodia. The proposed Project will cover the first five years of a 15-year program. The objective of the project is to improve land tenure security and promote an efficient land market. The Project will be implemented by the Ministry of Land Management, Urban Planning and Construction (MLMUPC). A Project Management Office will be established in MLMUPC to coordinate project activities. A financial management capacity assessment of the Project was carried out in accordance with the Bank's Financial Management Assessment Guidelines. The assessment included visit to the MLMNPC and discussions with concerned staff of Ministry of Economy and Finance (MEF). The main findings of the assessment and the proposed financial management arrangements are described below. Financial Management Assessment of MLMUPC Organization and staffing. MLMUPC is a recently created ministry by amalgamating several government agencies 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 Director of the Department reports to the Head of the General Department of Administration. The Director is supported by two deputies and 28 supporting accounting and administrative staff. Responsibilities. The Department is responsible for preparing the annual budget by incorporating central ministerial budgets and provincial budgets. The approved budget for year 2001 amounts to about Riel 5000 million (US$ 1.25 million) split between the center (R3000 million) and provinces (R2000 million). The budget execution and monitoring is split between the center and the provinces. A Financial Controller of the Ministry of Economy and Finance (MEF) is responsible for approval of expenditures incurred by the MLMUPC. All payments are made directly to the suppliers by the MEF (Treasury). MLMUPC is given an imprest account advance (limited to an eighth of about 30% of non-salary expenditures ) for day to day small 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 the Provincial Treasuries of MEF. There are no accounting records maintained at the ministry in a traditional sense. MLMUPC maintains copies of all expense vouchers processed, advice of MEF approving payment and based on these prepares a spread sheet analysis of approved budget, cumulative expenses to date and the budget balance. Any budget transfers between expense categories have to be approved by MEF. The budget management at the provincial level is reported to be similar. Each provincial department of MLMUPC 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 project preparation. Two other grants: Finland and Germany, are managed by the donors. The transactions on the PHRD 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 costs funded by the national budget. The staff understand the procedures well and the spread sheet analysis of - 63 -  budget actual expenditure provides adequate information for control of budget expenditures. As the accounting and cash flow management is centralized at the MEF, there is no need for the MLMUPC finance staff to maintain accounts, prepare cash forecasts or manage bank accounts. There is also no analysis of expenditures beyond that is necessary for budget line item management. A considerable amount of technical assistance and training will be required to prepare the MLMUPC finance staff to handle the project related financial management. The planning, budgeting and reporting requirements under the Project will be more complex than the current requirements of MLMUPC. The volume of financial transactions under IDA financed project alone will be more than five times the budget managed by the ministry at present. In addition, the fnance department will be expected to manage the provincial accounting and fnancial control. Therefore, the financial management arrangements described below are designed to build capacity in the longer-term while providing assurance that adequate safeguards are in place at the start of the Project. Financial Management Arrangements. Organization and staffing. The financial management function for the Project will be located within the proposed Project Management Office (PMO). The PMO will ensure that a Project Financial Management Officer (PFO) and adequate and competent staff are appointed to carry out the project fnancial and accounting functions. During the first two years of Project implementation, a Financial Advisor (funded by TA) will be appointed to train and guide the project financial staff. Given disbursement activities at the provincial level, an accountant/cashier will be appointed at each of the provincial project management offices. The accountant/cashier will report to the PFO. The following actions were completed before Credit negotiation: a) Appoint a Project Financial Officer who will be the Head of the finance section of the Project Management Office; and b) Appoint an advisor to the Project Finance Officer under the GTZ technical assistance program. Project Financial Management ManuaL As part of the project preparation, a Financial Management Consultant assisted the Project Team in designing a Financial Management Manual for the Project. The draft Manual covers project management, procurement, financial management, monitoring and evaluation aspects 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 of MLMUPC. The mission discussed the draft Manual with MLMUPC finance staff and advised that much detailed work in designing the financial management system and training staff still remains to be done. The action plan agreed during pre-appraisal to appoint staff, design and install the accounting system and train staff is still not accomplished. Revising of the draft Manual and setting up the accounting system are priority activities that 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 for financing 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 Costs will 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 - 64 -  facilitate withdrawal of cash at the provinces to meet the payment of costs incurred at the provinces as and when they fall due. The Government will establish a Project Bank Account for funding the Government counterpart funds. The Government counterpart fund will have an initial deposit of $100,000. Of this, a float of $5,000 is to be made available to each province to enable it to pre-finance travel per diems and other small 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 the PMO. Disbursements for field travel per diems and other operating costs will be authorized by the head of each PPMO. Each provincial project office will employ an accountant/cashier who will be responsible for withdrawing funds and disbursing and maintaining accounting records. If payment is made out of the counterpart funds, the accountant/cashier will submit reimbursement requests to the PMO with supporting documentation 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 fully documented payment requests. The accountant/cashier will be authorized to withdraw such transfers and disburse funds as authorized by PMO. The provincial accountant/cashier will maintain records of all withdrawals and disbursements made and will submit a statement of expenditures to PFO with supporting documentation. The details procedures to be followed for accounting and reporting at the provincial and central 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 a computerized accounting system to record and report financial transactions at the central and provincial level. All accounting will be centralized at the PMO. Provision should be made to incorporate project related expenditures financed by Finland and GTZ. The accounting system will feature a chart of accounts that would facilitate reporting to IDA, the other donors and the Government as well as providing the management information needs of the PMO. A simple system, based on spread sheet analysis, will be established to monitor payments at the provincial level. Establishment of all systems and training of staff will be completed by March 2002. Planning, Budgeting and Reporting. The PMO will be responsible for preparing annual plans and budgets and establishing project management reporting. As the project is implemented through several Departments of the MLMUPC and the provinces, the plans and budgets should be prepared in such detail to 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 Financial Management Manual. The project management reporting (PMR) will include financial and project monitoring reports acceptable to IDA. PMO will also be responsible for preparing annual project financial statements, PMRs and any other monitoring reports that IDA would reasonably request. Risk Assessment. The project financial management risks are rated high due to (a) inexperience of the implementing agency in managing foreign funded projects; (b) more than five fold increase in budget managed 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 project as high risk. Measures to minimize risks will be taken through technical assistance and training funded by Finland and GTZ and establishment of an independent intemal audit function. Parallel Financing of Technical Assistance. Technical assistance (TA) including financial and procurement management advisors will be provided by the governments of Germany and Finland. The procurement, disbursement and accounting for TA will be done in accordance with procedures applicable - 65 -  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 quarterly and annual statements of disbursements will be provided to PMO for incorporating these in the PMRs. In addition, 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 will establish an intemal audit function to carry out audit of provincial activities. The organization, staffng and responsibilities of the internal audit function will be described in the Project Financial Management Manual. The intemal auditor will submit semi-annual reports to MLMUPC, the Land Policy Council and the World Bank. The annual project financial statements will be audited by an independent auditor acceptable to IDA on terms of reference acceptable to IDA. The auditor shall be required to express an opinion on (a) project financial 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 be reviewed and revised during appraisal * 1. Appoint Project Financial Management Officer MLMUPC December 1, 2001 2. Appoint Financial Advisor MLMUPC December 1, 2001 3. Revise draft Project Financial Management PMO January 31, 2002 Manual 4. Appoint accounting staff PMO/Provinces PMO February 1, 2002 5. Design and install computerized project accounting PMO arch 31, 2002 system 6. Central and provincial staff training PMO February - May 2002 7. Appoint Internal Auditor PMO July 1, 2002 - 66 -  Table C: Allocation of Credit Proceeds Expenditure Category Amount in US9million Financing Percentage 1. Works 4.10 90% 2. Goods 4.20 100% CIF, 85% local 3. Consultant services 1.35 100% 4. Training, workshops, forum and 1.50 100% study tours 5. 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, 2005 Unallocated 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 contracts below U$100,000 equivalent; goods contracts below $50,000 equivalent; consulting firm contracts below US$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 the National Bank of Cambodia, on terms and conditions satisfactory to IDA including appropriate protection against set off, seizure and attachments. The Special Account will have an Authorized Allocation of US$2,000,000 with the initial deposit being restricted to US$1,000,000 until amounts withdrawn from the Credit 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 to project provinces. The account will receive funds from the Special Account and be opened in the Phnom Penh branch of a commercial bank with a retail banking network which covers substantially all project provinces, and on terms and conditions satisfactory to IDA. Details of the maximum advance to the Second Generation Special Account and other procedures for the operation of the Second Generation Special Account will be laid out in the Financial Management Manual. - 67 -  Retroactive Financing The project will provide retroactive financing to a maximum of US$400,000 starting from January 1, 2002 against eligible expenditures procured according to the agreed procurement arrangements. Retroactive fmancing will enable the government to undertake pre-implementation activities necessary to ensure smooth start up of the project once the Credit becomes effective. Pre-implementation activities include the setting up of the PMO office including some refumishing of the office facilities, the procurement of some office equipment and furniture, the development of the administration, financial and management systems in the PMO; 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. - 68 -  Annex 7: Project Processing Schedule CAMBODIA: Land Management and Administration Project Project Schedule Planned Actual Time taken to prepare the project (months) 7 7 First Bank mission (identification) 07/01/2000 07/01/2001 Appraisal mission departure 10/03/2001 10/19/2001 Negotiations 12/05/2001 12/11/2001 Planned 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 Speciality Wael Zakout (EASRD) Task Team Leader Frank Byamugisha (EASRD) Economist Mary Judd (EASES) Anthropologist John Bruce (LEGEN) Land Lawyer Hassane Cisse (LEGEA) Country Lawyer Guo Li (EASRD) Economist Wijaya Wickrema (EAPCO) Financial Management Specialist Mimi Ladipo (LOAG3) Financial Management/Disbursement Specialist Glenn Morgan (EASES) Environmental Specialist Dominic Aumentado (EACPF) Procurement Officer Wendy Ayres (AFTT2) Environmental Specialist/Consultant Oithip Mongkolsawat Procurement Officer Brenda Phillips (EASRD) Program Assistant Cecilia Tan Team Assistant Evelyn Bautista Laguidao Program Assistant - 69 -  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 - 70 -  Annex 9: Statement of Loans and Credits CAMBODIA Land Management and Administration Project 07-Nov-2001 Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd P071445 2002 Demobizatonand ReirnteogrbnPronPec 0.00 18.40 0.00 0.00 18.76 0.00 0.00 P073394 2001 Flood Emegency Rhiab8italon Projec 0.00 35.00 0.00 0.00 32.91 -1.27 0.00 P058O 4 2000 SAC - CAMBODiA 0.00 30.00 0.00 0.00 14.02 20.04 0.00 P05f971 2000 KH-EDUCATION QUALITY IMPROVEMENT 0.00 5.00 0.00 0.00 2.65 0.49 0.00 P060003 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 0.00 P052006 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 4.47 P004033 1997 AGRI.PRODUCTIMP. 000 27.00 0.00 0.00 16.84 18.18 9.15 P004034 1997 KH-DISEASE CONTROL & HEAL 0.00 30.40 0.00 0.00 6.76 9.91 0.00 P034755 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 - 71-  CAMBODIA STATEMENT OF IFC's Held and Disbursed Portfolio MAY-2001 In Millions US Dollars Committed Disbursed IFC 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 Partic 2000 SEF ACLEDA Bank 1.00 0.00 0.00 0.00 Total Pending Commitment: 1.00 0.00 0.00 0.00 - 72 -  Annex 10: Country at a Glance CAMBODIA: Land Management and Administration Project East POVERTY and SOCIAL Asia & Low- Cambodia Pacific Income Development diamond 1 999 Population, mid-year (millions) 11.8 1,837 2,417 Life expectancy GNP per capita (Atlas method, USS) 260 1,000 410 GNP (Atlas method, US$ billions) 3.1 1,833 988 Average annual growth, 1993-99 Population t%) 2.6 1.2 1.9 Labor force (%) 2.6 1.3 2.3 GNP i Gross per primary Moat recent estimate (latest year available, 1993499) capita enrollment Poverty (% of Dopulation below national poverty tine) 36 yrban population (% of total population) 16 34 31 Life expectancv at birth (years) 54 69 60 Infant mortailtv (per 1.000 live births) 102 35 77 Child malnutrition (X of children under 5) 22 43 Access to safe water Access to Improved water source (I% of population) 13 64 64 Illiteracy (% ofpopulation age 15+) 61 15 39 - Cambodia Gross primary enrollment (%ofschool-age population) 113 119 96 Male 123 121 102 Low-income group Female 104 121 86 KEY ECONOMiC RATIOS and LONG-TERM TRENDS 1979 1989 1998 1999 Economic ratios GDP (USS billions) 1.1 2.8 3.0 Gross domestic investment/GDP 11.0 12.0 18.4 Trade Exports of goods and services/GDP 5.6 35.9 37.2 Gross domestic savings/GDP 3.4 1.7 6.4 Gross national savings/GDP 5.0 6.8 Current account balance/GDP -8.3 -9.2 -11.5 Domestic v Interest Pavments/GDP 1.0 0.2 Savings Total debtGDP 156.9 78.6 Total debt service/exports 14.6 1.3 Present value of deWbGDP 62.2 Present value of debt/exports 176.1 Indebtedness 1979-89 1989-99 1998 1999 1999-03 (average annual growth) GDP 4.9 1.8 5.0 - Cambodie GNP per capita 1.7 -2.3 2.2 -- Low-income group Exports of goods and services STRUCTURE of the ECONOMY 1979 1989 1998 1999 Growth of investment and GDP (%) (% of GDP) Agriculture 52.3 41.9 39.6 Industry 15.4 17.4 18.8 Manufacturing 7.5 12.8 13.1 Services 32.3 40.7 41.6 2 Private consumption 88.9 92.7 87.3 94 55 96 97 9s 99 General government consumption 7.7 5.6 6.3 -GD C GDP Imports of goods and services 13.2 46.2 49.1 1979-89 1989-99 1998 1999 (average annual growth) Agriculture 2.3 2.5 1.5 Industrv 9.4 8.6 11.4 Manufacturinq 8.3 16.4 9.0 Services 6.3 -1.3 5.8 Private consumption General aovernment consumption Gross domestic investment Imports of aoods and services Gross 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 will be Incomplete. - 73 -  Cambodia PRICES and GOVERNMENT FINANCE 1979 1989 1998 1999 Inflation (%) DomesUc prices' (% change) 150 Consumer prices 12.6 5.0 100 Implicit GDP deflator 19.0 13.1 3.8 Government finance 0o_-_ _ (% of GDP, includes current grants) o Current revenue 7.6 9.0 11.5 94 95 56 97 9S 9 Current budget balance 4-0.1 -0.3 1.8 - GDP deflator CPI Overall 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 30 Logs and sawn timber 8 88 36 1c-* Manufactures 392 536 _,0 0 Total imports (cif) .. 176 1,139 1,334 0J Food . 0 Fuel and energy __ Capital goods o .. 94 9a 93 94 95 56 97 56 99 Export price index (1995=100) Import price index (1995=100) * Exports * Imports Terms 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 0 Imports of qoods and services 190 1,251 1,485 Resource balance -109 -273 -368 -* Net income 0 48 -122 I I'll Net current transfers 20 61 -10 Current account balance -89 -260 -346 -15 Financing items (net) 365 445 Changes in net reserves -105 -98 -20 Memo: Reserves induding gold (US$ mittionsl 390 422 Conversion rate (DEC, localIUS$) .. 224.0 3,744.4 3,807.8 EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 (US$ 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:157 IDA 0 0 157 180 C:67 Totaldebtservice 12 13 0:119 IBRD 0 0 0 0 IDA 0 0 1 1 Composition of net resource flows Official grants 70 13 170 Official creditors 0 55 Private creditors 0 -3 Foreign direct investment 0 0 121 120 Portfolio equity 0 0 0 0 E: 1,822 World Bank program Commitments 0 0 31 80 A- IBRD E - Bilateral Disbursements 0 0 19 27 8 - IDA D - Other multlateral F - Pdvata Principal repayments 0 0 0 0 r.- IMF ( -Shmrt-r Netflows 0 0 19 1 Interest payments 0 0 1 27 Net transfers 0 0 18 26 Development Economics - 74 -  Additional Annex 11 Environmental Assessment Environmental Conditions of Cambodia The Cambodian landscape features the floodplain of the Mekong River and the associated basin of the Tonle Sap draining to the Mekong delta in the southeast, the Cardamon and Dangrek mountains to the southwest and northwest, and the plateaus bordering Laos and Vietnam in the northeast. A narrow coastal belt lies beyond the Cardamon Mountains. Over 75 percent of the population lives in the Mekong basin and 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 to be of low fertility, with low pH and deficiencies in nitrogen, phosphorus and micronutrients. Productivity is maintained in many areas by the deposition of silt by annual floods. In the highlands, farmers cultivate fields with rotational systems. The project will be active in the central provinces where the majority of the people 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 is rainfed, and the unreliability in the timing and quantity of water availability results in a high variations in rice output from year to year. Only 17 percent of the rice-growing areas are currently under any form of water management, and use of fertilizers and pest control technologies is as yet limited. Farmers are rapidly 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 infant mortality, much of it caused by preventable diarrheal diseases. During the 30 years of civil unrest little investment was made in Cambodia's infrastructure. However, during the past five years much new investment has been made urban transport, water supply and other infrastructure, particularly in Phnom Penh, Sihanoukville and Siem Reap. Investments in water supply facilities have been made in some provincial towns. Estimates of Cambodia's forest cover range between 35 and 62 percent of total land area, including evergreen 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 many large animals, including wild cats, primates, bears, elephants, wild cattle, pangolins and some 720 bird species. Loss habitat and uncontrolled hunting is decimating many of these animnal species. Deforestation is also contributing to flood disasters, and likely to changes in local rainfall patterns. Cambodia has 23 protected areas, covering 18 percent of the country. Their boundaries are poorly demarcated, however, and encroachment 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 its flood plain for their livelihood. The lake is one of the richest inland fisheries in the world, and provides about 60 percent of the country's fish protein intake. The lake's area expands seasonally from about 300,000 hectares in the dry season to about 1,300,000 hectares at full flood in the rainy season, with a - 75 -  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 the flooded forest (up to 400,000 hectares from the 1960s to the 1990s) have been and continue to be cleared for firewood and for agricultural plots. There is an increase in the use of chemical fertilizers and pesticides in the Tonle Sap floodplain, posing risks of eutrophication of the lake and accumulation of toxic chemicals in the fishery. Managing the environment of the Ton1e Sap region is complex because of the massive annual fluxes in the hydrology, the dependence of the fishery on critical habitat in the flood forest inundation zone, the multiple uses land especially in the inundation zone, and number of jurisdictions involved, 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 development of policies, regulations and procedures for land classification, generation of information needed to classify land (including procurement of aerial photos and satellite images), and production of land classification maps showing boundaries of land designated for particular uses and under the control of various government entities. Reaching a clear understanding of how various tracts of land will be managed in the future is a precondition for effective land-use planning and management of natural resources. This activity is also essential for effective implementation of the country's new forestry, fisheries, and water laws, which are now being drafted to deal with specific categories of state property. In this way the project is expected to directly contribute to improved environmental management in Cambodia. Indirectly, by stimulating new investment in industries, agriculture, urban housing and offices, and, the project has potential to affect the environment both positively and negatively. On the positive side, by improving incentives to manage resources for long-term benefit, the project may encourage farmers to invest in soil conservation, and firms and communities to manage forests and fisheries sustainably. By formalizing rights to residential plots, the project encourages investment in activities and infrastructure that improve environmental conditions where people live and work, such as solid waste management, water supply systems, and sanitation facilities. On the negative side, without proper management, new investment in industry and other facilities can harm the environment. To minimize or mitigate the potential impacts will require strengthening the environmental law and its sub-decrees, including that on environmental impact assessment. It will also necessitate the building of capacity of the ministry of environment (MoE) to enable it to better enforce laws and regulations on environmental protection and natural resources management. New investrnent that occurs due to titling will occur outside the scope of the project, and no specific measures have been designed to deal with the potential impacts under project financing. Many multilateral and bilateral donors and NGOs are working with the government to improve its capacity for environmental and natural resources management, including the European Union, the United Nations Development Program/Global Environment Facility, the World Wild Fund for Nature, Wildlife Conservation Society, and Conservation International and others. The Asian Development Bank has provided technical assistance and training to the MoE to strengthen its capacity to review and evaluate environmental impact assessment reports. The United States Agency for Intemational Development is now supporting a project focused on strengthening capacity of the MoE, which will start in September 2001 [date and specific activities to be verified]. Danish International Development Assistance (DANIDA) is helping six govemrnment agencies, including the MLMUPC, to integrate environmental concerns into its policies, strategies and operations. It is also helping build capacity of the Council for Development of Cambodia, which is responsible for screening all private and public projects that, according to sub-decree, require an environmental impact assessment. The World Bank is helping build capacity of the department of forestry and wildlife (ministry - 76 -  of agriculture, forestry and fisheries or MAFF) to better manage forests through a learning and innovation loan. Environmental Management Plan The project has been designed to promote sound environmental management and mitigate potentially negative affects arising directly from project activities. Classification of land and delimitation of boundaries. Under its land management component, the project will 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 full participation of all stakeholders, including relevant government agencies, central, provincial and local government bodies, and families settled in the area. Sequencing of systematic titling activities. The project will not provide titles in areas of potential significance for environmental management until after decisions have been made with regard to its status and boundaries agreed. Such areas include remaining forests, protected areas, the drainage area of Tonle Sap and the lake itself, the coastal zone, riverbanks and others. Environmental input into land policy formulation. Wherever appropriate, the land policies and regulations being developed under the project will include environmental input. For example, the policy on the delimitation and administration of public land must be based on a good analysis of the environmental implications of classifying the land in particular ways. Indeed a major principle for retaining land in the hands 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 and around conservation areas (forests, protected areas, fisheries, and water resources), registering community and 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 environmental management 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 Land Management in the MLMUPC and of the provincial and district offices of land management. The project will 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 of Land Policy that is responsible for formulating land policies and regulations. The three ministries managing natural resources (MAFF, ministry of industry, mines and energy; and ministry of water resources and meteorology) are also members. The NGO Forum, which includes representatives of NGOs with 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 also be 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 improved environmental management will be measurable during the project lifetime, as the delimitation process is not expected to be completed until project year three or four. It is expected that the project's environmental impacts will ultimately be measurable through monitoring of environmental indicators planned by DANIDA (National Capacity Development Project) as input to the state of the environment report that will be produced regularly, and through research and qualitative monitoring of assumptions and trends that the Cambodian Development Research Institute (CDRI) is carrying out with support from DANIDA. - 77 -  Compliance with World Bank Safeguard Policies Environmental assessment (OP 4.01). The project is classified as category B because it is not expected to have significant adverse environmental impacts. Other than rehabilitation/construction of project office buildings, 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 evaluate possible effects at this time. All buildings will be designed and constructed in accordance with sound architectural 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 for environmental impacts. All policy and institutional development activities will solicit stakeholder input on environmental implications 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 of capacity to create land management plans. The project will also avoid titling in areas of potential environmental 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 are currently known. The project will not issue titles to lands that the government deems as high priority for further study. It is expected that under the project, the boundaries of these areas will be delimited and title vested with the government. Pest management (OP 4.09). This policy does not apply to the project. While farmers may increase their use of pesticides while intensifying cultivation, the increase is not expected to be significant. In should be noted that DANIDA has been supporting integrated pest management in Cambodia since 2000. The World Bank under the Agricultural Productivity Improvement Project, and the Food and Agriculture Organization are 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 negatively affected by the Project so as to ensure that they will be assisted to improve, or at least restore their living standards, income and/or production capacity to pre-project levels. While no resettlement or land acquisition is anticipated under the land titling component, the Project has developed the policy framework to protect people who may be negatively impacted. Indigenous Peoples (OD4.20). While the first project will not issue individual titles in areas inhabited by indigenous minorities, an Indigenous Minority Policy Framework has been prepared which will guide the preparatory work for the second project in this long term program of land management and administration. - 78 -  Additional Annex 12 Social Aspects Social Assessment A social assessment (SA) was undertaken as a prelude to project design. It began on March 1, 2001 and the final analysis was presented at a stakeholder workshop on July 9, 2001 sponsored by the Ministry of Land Management Urban Planning and Construction and Cambodia Research Development Institute . As in the stakeholder workshop prior to the start of the SA, the July 9 workshop was attended by the Govemors 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 the area of participation, infornation dissemination and education on land rights, in the area of land dispute resolutions 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 fair distribution of both agricultural and residential lands. All those whose main occupation was agriculture received land according to household size. However, for want of adequate financial and human resources a complete mapping and firm titling of land could not take place at that time. People therefore continued to rely on local traditions and customs to govem land rights according to the productive use of land. In the last decade, there have been significant socio-economic changes (e.g. refugee repatriation, the advent of markets and urbanization, increased population growth) that have placed varied demands on land. As a result, the composition of stakeholders in lands has emerged rather unevenly. Following the law of the market, 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 - for whatever reason - have not benefited from this process, and in many cases have actually been adversely affected. These people include the most vulnerable segments of the population (e.g. the rural poor, women heads 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) encroachment on urban lands by squatters. Land use patterns have changed dramatically, particularly in locales characterized by high commercialization. The demand for land has also increased among the peasantry because of accelerated land atomization and restrictions placed on their access to forest and fishing resources. Such shifts in land use patterns have also been accompanied by a corresponding shift in people's perceptions of land rights. A dual system of ownership and control is now rapidly emerging as more and more land is acquired by people and institutions from outside the local community for purposes other than subsistence fanming. Land use rights 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 law and procedures laid-down by the state. This dualism is not harmonious because there is a frequent interface between the two systems in which more powerful parties are able to take advantage of those who are more vulnerable. In this sense, people routinely seek venues and employ procedures that promote their own self-interests. Land markets are most active in areas situated along roads and near urban or market centers. In such areas, 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 costs of land titles - mainly in the form of informal payments - many land transactions are routinely facilitated at - 79 -  the lower levels of administration through an exchange of application receipts or written contracts between buyers and sellers, which are not necessarily tenable in law. In this sense, only people with adequate financial resources and/or political access are able and willing to obtain proper land certificates. In areas characterized by subsistence farming systems away from roads and urban/market centers, people either rely on receipts or informal social institutions for validating use rights to certain areas of land, but here too the demand for written documentation is increasing because people wish to ensure a smooth process of succession and transfer of land to their off-spring. A complex hierarchy of government officials and elected representatives govern land in a highly centralized set 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, a process 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 the system in favor of local traditions and customs, and at best deal only with local institutions. Next, the duality of systems of land control not only coexist, actors within the government itself, particularly at the lower levels (e.g. village and commune chiefs) are party to perpetuating this dualism. Different stakeholders understand land titles differently, to the extent that the guardians of the law themselves, the courts and dispute settlement mechanisms, do not have a clear and consistent understanding of the law and rules. The defacto sanction extended to different practices of governance of land has ensured that the actual law is never really implemented. The ambiguity in rules and multiplicity of practices in land transactions has also contributed to increasing corruption, which is exacerbated by the unrealistic remuneration structure provided to government staff. In many areas, a proper certificate may cost up to US$300400, almost all in the form of informal payments to 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 to by-pass the law. Women are especially vulnerable in this regard since they tend to have less access to and control 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 land resources. More land disputes now involve village people and people from outside the local peasant community, including private companies and state institutions, and increasingly require more formal institutions 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 all likelihood, overwhelm a system that is already falling behind on its caseload. The most significant constraints in terms of the capacity to handle an increased volume of cases are related to inadequate financial 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 social assessment 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 and discussions with non-governmental groups who are very supportive of the proposed project and eager to participate, the mission recommends that local NGOs be contracted to undertake the work prior to the adjudication process. They will be responsible for field work prior to the commencement of systematic adjudication. Their activities will include information dissemination, targeting women for education on land laws and titling procedures, conducting village baseline profiles, entering field data into - 80 -  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 and for evaluation and monitoring. After loan effectiveness, local NGOs will be invited to send expression of interest and later submit proposals of how they plan to undertake the work in the provinces. The selected NGOs will be provided orientation and training by the Project including gender specific methods and tools for participation. They will consult and prepare communities prior to the adjudication work. Comrnunities which they think are ready can be visited by the adjudication team. Communities which need more time for preparation can be visited by the adjudication team at a later time. This partnership with NGOs will facilitate the work of MLMUPC 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 land administration and management projects that providing a title by itself does not necessarily lead to immediate irnprovement in social welfare and economic livelihood for the households. For rural households, in addition to security of tenure, people need support of extension services, credit, access to markets and other social services. The Project will link titled communities with non-govenmment groups working in the area for further support services which these groups provide. NGOs have informed the mission that they prefer to work with people who have secured land tenure because these people will be more 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 for the 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 to the available information, there are small numbers of indigenous minorities in two of the ten project provinces-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 the population 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 approximately 120,000, or about one percent of the total population in Cambodia; they comprise of approximately thirteen main language groups. While this project will not undertake individual titling in areas inhabited by indigenous minorities, an Indigenous Minority Policy Framework has been prepared to guide the preparatory work for the follow-up project in this long term program of land management and administration. Where opportumities and demand emerge for comnunal titling, the Project will coordinate with the relevant government ministries to consider selective requests. In order to anticipate the inclusion of the northeast area for the second project of the program, a review and drafting of implementation guidelines for the registration of communal and indigenous minorities land rights will be undertaken during this project. The Royal Govemment of Cambodia has enacted the new 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 the government will be able to implement this section of the proposed new land law. The proposed review and implementation guidelines for land titling for indigenous minorities will take as its basis the policy - 81 -  contained within the draft land law 2001 and lessons learned from on-going projects for indigenous communities in the northeast area. Resettlement. The project's objective of establishing land titles and improving service deliveiy of land administration functions would result in a significant reduction of disputes over land rights. The titles would provide all people with secure tenure and protect them from being displaced. In the long term, this would have a positive social and economic impact. 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 negatively affected by the Project so as to ensure that they will be assisted to improve, or at least restore their living standards, income and/or production capacity to pre-project levels. While no resettlement or land acquisition is anticipated under the land titling components, the Project has developed the policy framework to protect people who may be negatively impacted from three possible sources. These are: (i) eviction from state land as defined under articles 12 through 19 of the Land Law of individuals who occupied it prior to August 30, 2001, the date of the enactment of the new land law, following titling of such land in the name of the state; (ii) eviction from 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) extension by 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 to be used in the case of informnal settlers including squatters. The project (a) will issue titles where there is agreement by the government to provide the land to be registered to informal settlers, (b) will facilitate the provision of services and titling where the municipality is working with development groups to provide land to 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 land to informal settlers or through land sharing and/or relocation programs. The project has developed procedures for screening and consultation to ensure that the above conditions are agreed before provision of land registration and titling services. Dispute Resolution and Legal Assistance to the Disadvantaged. The precise number of land disputes in Cambodia is not known, but it is widely recognized that disputes about land are endemic. While the Bank's Operational 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 fair resolution of those disputes. The Project will have a component to strengthen the capacity of administrative institutions at all levels and civil society to work together to resolve land disputes. In addition, the Project will partner with the Cambodian Legal Aid group to provide legal assistance to the poor in cases of disputes at the Land Dispute Resolution Commissions and the courts. -82 -  ATTACHMENT I: PRINCIPAL FINDINGS FROM THE SOCIAL ASSESSMENT Key Issues Recommendations Remarks I Land use pattem has changed Conduct detailed surveys and Administrative dramatically due to surveillance; implement decentralization needed; funds socio-economic changes in the development schemes required; personnel capacities last decade: this is in response to to be raised; this is also a increasing demands on land from larger developmental issue outside the local peasantry 2 Change in land use pattem is Encourage modemization: Synchronization of elements followed by changing views on promote public education and of SEDP with the titling land rights: those who cannot effective outreach program; special focus on the adapt to such changes are poor and vulnerable I adversely affected 3 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 in means: all not correct in law that speedily dispense such cases implementing the law 4 Land receipts and unauthenticated Strengthen enforcement Public education and training written contracts are used for land mechanisms; decentralize can help transfers/divisions, and are even governance recognized 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 issue 6 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 necessary current reality conflict or contest 7 Today stakeholders include Promote integration of different Civil society can help farmers, migrants, soldiers, stakeholders; judiciously up-hold companies, govemment officials the law to protect the vulnerable and military among others: a very heterogeneous group having conflicting interests l 8 Many stakeholders possess lands Strengthen enforcement Cadastral maps and by means not valid in law (e.g. mechanisms; decentralize measurements necessary grabbing, encroaching, squatting) govemance; create institutions that speedily dispense such cases 9 Many people hold unused lands Strengthen enforcement Promote good governance mechanisms; decentralize governance 10 There is high demand and Develop land and infrastructure in Integrate elements of land speculation for lands along roads, the hinterland; rely on market development in SEDP; more commercial centers, and water mechanisms funds may be needed ways 11 Military controls some key Rationalize and minimize military Relates to larger disputed lands; also other or govemment control of 'private administrative reforms govemment departments hold state lands' 'private state lands' 12 Landlessness and urban squatters Evolve a relocation and habitation Relates to larger are visibly large policy administrative reforms 13 Phnom Penh is expanding rapidly City needs zoning and expansion Some strong decisions are - 83 -  in an unplanned way plans necessary 14 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 equity Women-headed households are conflict resolution also more vulnerable to become * Create public awareness on gender landless 15 Women have little knowledge of * Promote right to obtain knowledge Requires larger awareness on land 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 larger where farmers practicing shifting development; make interim developmental issues; cultivation, mainly indigenous arrangement for transition for those affirmative action people farmers 17 Absence of land/cadastral maps Give top priority for developing Funds required; capacities to makes it difficult to properly maps, surveys and measurements; be raised define land use and control promote inter-ministerial coordination 18 Land concessions are given out Rationalize lands under concession; Requires a comprehensive without adequate consultation; re-examine some concessions agricultural policy; respect they adversely affect the villagers' authority of local officials and livelihood representatives 19 There is lack of clarity regarding Develop a comprehensive policy; Requires a comprehensive control/use of water bodies create maps and surveys water & fishery policy; some steps already taken 20 Land administration procedures Judicious application of the law and Promote good governance not adequately followed: there is procedures adoption of short-cuts and unofficial dealings 21 Inability to tax unused lands Judicious application of the law and Promote good governance results in revenue losses procedures 22 Land titling process is Simplify procedures - may be Need to lay out new complicated, time-consuming, and through decentralization; make administrative procedures, expensive: people with resources affordability as one of the guiding training, capacity building can obtain certificates, but the pooT principles; observe best practices; cannot afford them progressive taxation 23 Both, people and local officials Promote public education on land complain about the repeated laws and procedures changes in procedures and forms of certificates 24 Capacity of titling institutions is Conduct training; provide Additional funding may be limited due to lacking of equipment and make provisions for necessary human-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 be about modern land governing equipment and make provisions for necessary systems and methods funds; public education 26 In effect there are two parallel Promote public education on land This is a larger administrative practices governing land rights: laws and procedures; also conduct reforms issue informal and formal training for staff - all to minimize unofficial practices, particularly those not correct in law -84 -  27 There are land conflicts between Settle disputes on priority Need to legitimize and different stakeholders strengthen local conflict settlement institutions 28 Demand for formal conflict Make fuller use of local dispute Need to legitimize and resolution outstrips the supply settlement systems: make it strengthen local conflict mandatory to first refer matters to settlement institutions local authorties 29 Social impact of this short-supply Make fuller use of local dispute Need to legitimize and is felt most by the poor settlement systems; instill strengthen local conflict confidence among the poor settlement institutions 30 Boundary disputes, Should be settled in the Need to legitimize and inheritance/divorce village/commune strengthen local conflict settlement institutions 31 Encroachment on public land Adjudication at village/commune Cadastral maps and level necessary; demarcation of measurements necessary private 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; partner shifting cultivation areas development; make interim with NGOs; reach out to arrangement for transition for those non-Khmer speaking areas; communal titling populations 34 Repeated undermining of local Reverse the process: if necessary Need to legitimize and mechanisms of dispute settlement create new administrative fiats strengthen local conflict Iinstitutions by the 'powerful' settlement institutions 35 Some Land Dispute Settlement * Ensure neutrality of commission Relates to larger administrative Commissions (LDSC) are not members reform neutral; also many people surveye * Layout clear procedures for dispute do not perceive them to be fair settlement * Build capacities among LDSC members 36 Provincial courts and LDSC * Promote local dispute settlement Need to legitimize and beyond the affordability of mechanisms as the first step of strengthen local conflict ordinary folk conflict resolution settlement institutions l Clarify the path for appeal l Make affordability the guiding principle to dispense justice 37 Courts & LDSC falling behind * Promote local dispute settlement Need to legitimize and case 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 necessary inadequate financing, staffing & equipment and make provisions for training funds 39 The process and service of dispute * Make affordability the guiding Relates to larger administrative settlement are rather complicated principle to dispense justice reforms and expensive, and women heads * Create public awareness on gender are not able to afford them 40 Dispute settlement systems have Rationalize the relationship between Relates to larger no 'teeth to implement their the judiciary and executive administrative reforms decisions 41 Unofficial fees increase potential Strengthen enforcement Promote good governance - 85 -  abuse of the system mechanisms; decentralize governance 42 There are a number of unsettled Evolve a relocation and habitation Relates to larger people - returnees, displaced policy; use unused lands; invoke administrative reforms persons, migrants, demobilized part-self financed schemes soldiers 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 - 86 -  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 will coordinate 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 in squatter settlements. Today it may be over 200,000 people. The Municipality of Phnom Penh, with technical and financial assistance from UNCHSIUNDP and DFID (British Aid), has been actively engaged in the informal settlement program (spanning several years and formally based on intemationally endorsed principles UN (1998) Guiding Principles on Intemal Displacement; UN (1996) Report Of The United Nations Conference On Human Settlements (Habitat II), Istanbul, 3-14 June.) relocating squatters from river bank sites along the Bassac and Tonle Sap Rivers to developed, altemative sites in the peri-urban areas. 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 the program. 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 living space is reorganized so that they can share the land with new owners; new housing is built either as apartments or row houses. For example, land sharing of 111 families with a hospital in Phnom Penh will take 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 basic infrastructure installed; each family gets a residential plot including a small yard, a house and water supply and sanitation facilities including septic tank. Below are the implementation steps for sub-projects undertaken by a coalition of NGOs under the UNCHS program: - 87 -  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 URC the program. 2. Community preparation including community SUPF and UPDF survey of land and housing opportunities (6 ____ months). 3. Provision of land. Municipality 4. 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; loan managed by UPDC 7. Households move into new homes and continue to work on the finishing touches. 8. Households develop livelihood activities. SUPF and UPDF 9. Monitoring Municipality and UPDF 10 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 the urban poor and who have collaborated with UNCHS. ACHR is Asian Coalition for Housing Rights; UPDF is Urban Poor Development Fund specializing in micro-credit; SUPF is Solidarity and the Urban Poor Federation specializing in community organizing; and URC is Urban Resource Center specializing in architectural and urban planning 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-sharing US$1,800 to US$2,200 per family for relocation. -88 -  Additional Annex 13 Cambodia New Land LAW CAMBODIA: Land Management and Administration Project The enactment of the new Land Law in August 2002, has greatly facilitate the implementation of LMAP; it has 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 fairly rough and ready allocation of land to households and appropriation of land by government agencies in the wake of that change, vested all land in the Cambodian State and relied heavily on acquisitive prescription based on 5 years possession to sort out use rights in a manner consistent with facts on the ground. This was a useful provision at the time but is now contribution to the land grabbing that underlies the endemic land disputes in the country. The 1992 law is unclear as to the nature of the rights it allows to be created through 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 systematic adjudication 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 by prescription, or purchase, grant or donation from the state, or by inheritance or gift. New prescription is barred. State land is included in one register with private land, and there is provision for communal ownership of land. Systematic survey and adjudication of land is provided for, and provision is made for delegation of land administration from the central to provincial/municipal level. It also provide a regime of property 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 have required an act of faith that it would subsequently be reformed along sound lines. The new law provides an adequate legal framework for implementation of the project. There are some issues which will require continuing attention, such as the legal conclusiveness of registration of a title, which is not as clear as mnight be desired in the draft new law, but these are manageable. The pending enactment of a Civil Code with its provisions on Immovable Property will override or repeal many of the substantive property provisions of the new law, and when that occurs, some consolidation of this law as the national land administration law may be necessary. The next major legal task is the elaboration of sub-decrees under several provisions of the new law, and rules and regulations under those sub-decrees. Both the Bank and its partners and ADB will be providing technical assistance for new legislation should help ensure that this subsidiary legislation is well thought-through. FinnMap (through funding from the Government of Finland) is providing an intemational legal consultant to the Ministry for the development of the relatively technical sub-decrees and regulations that are central to the implementation of this project. - 89 -  Cambodia's New Land Law LMAP's work will be greatly facilitated by the enactment two months ago of a new Land Law for Cambodia. The new law is the result of a very effective legal TA provided by the Asian Development Bank and a very valuable support by the NGOs. It provides both a framework for land 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 Pot regime in 1979. Even after the fall of that government, the 1992 Land Law (Decree 100) provided that all land belonged to the State. No land rights from prior to 1979 were recognized. If certain conditions were met, a possessor in legitimate temporary possession for at least five years could by registration convert that possession into ownership, but this applied only to urban land. While legal recognition of possession is an appropriate principle for reconstitution a property system where populations have been utterly displaced and land records destroyed, it has given rise to conflicts. Families, villages, government agencies and armed forces have been anxious to take possession 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 to ownership. Possession gives rise to ownership if it began more than five years before the enactment of the new Land Law. Possession begun less than five years before enactment will be allowed 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 from taking without prior payments of just and prior compensation. Communal as well as individual property rights are recognized, for both religious foundations and indigenous groups. Only Cambodians 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 this law), plus lands that have "not been the subject of due and proper private appropriation or which are not in the process of being privately appropriated through possession..." as wells as lands acquired 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 the shifting 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 Cadastre provides for a state guarantee of registered property rights. Provision is made both for systematic titling (compulsory, covering all the holdings in an area) sporadic titling (on demand, one parcel at 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 LMAP activities, including the power to mediate land disputes at field level and to decide disputes in its Cadastral Commission. - 90 -  Additional Annex 14 Statement of the Royal Government on Land Policy CAMBODIA: 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 goals of economic development, poverty reduction and good governance, as described in the Socioeconomic Development 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 in consistency 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 systematic registration procedures, including all property, both public and private; * Resolution of land disputes through the local Administrative Commission, Provincial/Municipal Land Dispute 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 and major 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 the establishment 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 needy groups; * Prevention of illegal land acquisition and land concentration. For the three above areas, institutional strengthening and capacity building in land policy implementation ad improvement 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 Distribution Program (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 program include the establishment of accurate geodesic networks, aerial photography and base mapping, and up-to-date land infornation systems. - 91 -   MAP SECTION  I  IBRD 31630 I OA1 I 104