Background. Appendix 1 was prepared after discussions with the government during January 2018.

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1 Thirteenth Progress Report ADB Management s Action Plan to Implement the Board Decision on the Recommendations of the CRP Final Report: Rehabilitation of the Railway in Cambodia Project This report provides a summary of the progress in the remedial actions by the Asian Development Bank (ADB) Management in collaboration with the Government of Cambodia (the Government) to implement the ADB Board Decision on the Recommendations of the Review Panel (CRP) Final Report: Rehabilitation of the Railway in Cambodia Project since the issuance of the Final Report in January 2014, and their status as of 30 June Background On 31 January 2014, the ADB s Board of Directors agreed to bring the project into full compliance with its safeguard policies following a report by ADB s CRP. The CRP report highlighted numerous instances of insufficient compensation to affected households (AHs). It also found that ADB did not fully comply with its policies relating to consultation and communication with AHs. It determined there were deficiencies with some resettlement site facilities; an inadequate grievance redress mechanism; and delays in income restoration programs. To implement the Board s decision on the six recommendations of the CRP Final Report, ADB Management, in consultation with the Government, developed a set of remedial actions in April Implementation progress of the remedial actions have been reported on a quarterly basis. CRP conducted three annual monitoring missions and issued its first, second and third annual monitoring reports on 6 April 2015, 29 June 2016 and 4 December 2017, respectively. ADB discussed the first, second, and third reports findings with the Government and developed measures to address these findings. In the second annual monitoring report, CRP concluded that ADB is in compliance with Board-approved Recommendation 4 and is in partial compliance with the Board-approved Recommendations 1, 2, 3, 5 and 6. Implementation progress as of 30 June 2018 on actions related to the Report to bring the Project into full compliance are shown in the table below. In the third annual monitoring report, CRP concluded that ADB is in compliance with Boardapproved Recommendation 1 and remains in partial compliance with the Board-approved Recommendations 2, 3, 5 and 6. The ADB team discussed the findings and the recommendations of the third annual monitoring report with the Government in January The summary of the Management actions to bring the Project into full compliance is attached to this Report as Appendix The CRP s recommended actions to bring the Project into full compliance are of ongoing nature. CUFA s quarterly progress reports (third quarter 2017 to second quarter 2018) were uploaded in the Project s website. This report provides the progress achieved from May 2017 to 30 June SERD carried out three missions to oversee and ensure implementation of all actions. 2 Appendix 1 was prepared after discussions with the government during January 2018.

2 Implementation Progress on Actions Related to the Report to Bring the Project Into Full As of 30 June Recommendation 1. Establish a compensation deficit payment scheme (i) ADB to monitor that steps are taken by IRC to identify and offer appropriate and commensurate compensation and other benefits to AHs affected by the 30m 2 rule in the concerned railway section in Phnom Penh and Poipet and ensure that these are implemented in keeping with ADB safeguard policies; and (ii) with regard to compensation of income losses, the base of the transition allowances has to be increased. All compensation payments need to be adjusted for cumulative inflation for the period between resettlement and a date proximate to the date of payment compensation. The inflation adjustment rate applied for the Phonm Penh site needs to be corrected. The CRP Third Annual Monitoring Report found full compliance but offered some suggestions. Suggested recommendations are presented in Appendix 1. Recommendation 2: Improve facilities at resettlement sites. (i) resettlement sites at Sihanoukville, Battambang, and Poipet be connected to the local pipe water supply schemes and that the ADB seriously consider bearing the costs thereof or making significant contribution to such costs to enable the AHs to connect to the water supply; (i) In the Phnom Penh resettlement site, all AHs are connected to piped water supply. In Poipet, there are 65 handpumps, but only 37 are operational. Some AHs buy drinking water from a private company. The O&M committee is engaged in negotiations with the city authorities to obtain a reduction in the rate for connections to the city s pipe water system. In Battambang, water is supplied from a nearby pond, pumped into filtration tanks and to an overhead tank from

3 (ii) the O&M Committees be supported by funds, or where required, by direct O&M activities from the local commune and/or governors to enable major maintenance and repairs of the infrastructure to be carried out when necessary; (iii) the burning of garbage next to the Poipet Resettlement site and its school be terminated or abated 3 ; and which it is distributed to standposts in each house. Each family has been provided with a water purifier. The O&M Committee is negotiating with the provincial water authority to connect to the city s pipe water system. (ii) the O&M Committees in each resettlement site are formed and functioning properly. Two staff of CUFA 4 were assigned to support and enhance O&M across the 5 resettlement sites with focus on organization support and training for the O&M committees, improved solid waste management; fund raising for O&M from the AHs, and strengthening of relations between the O&M Committees and local government structures. It will facilitate dialogue between the local authorities to establish liaison/links between the O&M committees and local governments and contribute to sustainability of the infrastructure in the resettlement sites and community-based O&M mechanism. The progress suggests sustainable initiatives for better housing and infrastructure facilities at resettlement sites. The TA financed an O&M Workshop held in Mondulkiri from Oct 2016, participated by 48 O&M Committee Leaders and Members from 5 resettlement sites. The workshop cited the health hazards and its effect on the environment of burning of garbage and proper disposal of solid wastes. AHs and members of the community are continuously being encouraged to provide monthly contribution 3 3 Para. 25 of the Third Monitoring reported stated that the problem of air pollution from garbage burning beyond the resettlement site was reported by APs not to be an issue any more. 4 An NGO was hired under TA8810-CAM: Strengthening Resettlement and Income Restoration Implementation to help implement some of CRP's recommended actions to bring the Project into full compliance with particular attention to No. 2, 5 and 6.

4 Recommendation 3: Improve the functioning of the grievance redress mechanism (GRM), to be reflected in a timebound and veritable action plan (iv) a medical facility at the Poipet Resettlement site be considered to service the medical needs of the persons at the resettlement site. The CRP suggested that Management ensure that the GRM manual is adjusted to include a compulsory appeal proceeding where complaints are rejected by the original GRM committee; that complaints can be made regarding resettlement issues other than compensation; that AHs with the same grievance can submit their compliant as a group, and that the appeal proceedings be conducted as close to the AHs resettlement sites as possible or alternatively, that complainants be provided the travel costs at the very least for attending these appellate proceedings. The CRP also recommends that such appeal proceeding explain the reasons for complaint rejection to AHs. for O&M facilities and community development. (iii) There are quite a few government health centers in Poipet. The closest one is 6 km away from Poipet Resettlement site. CUFA will continue to provide assistance to the AHs to strengthen the established O&M mechanism, through workshops, training and counselling. Regular consultation and on-site training of community members are taking place. CUFA s support focused on giving assistance in operationalizing O&M committees, repairing damaged roads, keeping drains clean and clearing of rubbish. Conveyed the recommended action to the Government. The Government has undertaken the following activities to improve the functioning of the GRM: - GRM procedures, guidelines and training materials completed and distributed to AHs. - GRM Committees established consisting of Commune, District and Provincial levels. The AHs are represented at the Commune level. - Training to GRM members on GRM process conducted in all the 5 resettlement sites. -Overall 37 grievances have been successfully resolved suggesting the mechanism receives and facilitates resolution of affected persons concerns A participatory entry level informal GRM discussions will be carried out to build the capacity and awareness among the AHs and communes. 4

5 Recommendation 4: Develop an appropriate program to build capacity of IRC Recommendation 5: Establish a debt workout scheme to help highly indebted families repay their accumulated debts through a dedicated credit line and a debt workout facility. Recommendation implemented and brought into compliance. Ref. Report dated 20 June 2017 ADB needs to continue efforts to establish a functioning and robust debt workout scheme. No further steps are recommended by the CRP CUFA, engaged under the TA, continues to implement measures to address financial sustainability of indebted AHs thru training and by providing employment opportunities through the job placement programs. CUFA has collected data on income and debt levels, nature and sources of debts, income pattern and job skills of each resettled households. CUFA delivered 1,566 financial literacy training sessions to AHs and a free of charge call-in financial helpline 7 days a week. In October 2016, it piloted in Poipet and Phnom Penh a Vocational Placement Strategy Program (VPS) and conducted 2 employment expos in February The VPS is designed to assist the resettled households to increase their incomes and provide savings to clear their debts. Out of 68 identified AHs for job placement, 56 AHs have been employed while the other AHs were unable to accept the job offer due to several personal reasons, 10 are still looking for a company to interview with. CUFA will continue to provide VPS program in 2018, and its coverage will be adjusted based on the data of households financial status that will be monitored regularly. To ensure sustainability of the robust debt workout scheme CUFA continuously liaises with the potential employers, identifies required skills and will be focusing the VPS program to 5

6 Recommendation 6: Implement the expanded income restoration program (EIRP) in a sustained and sustainable manner. ADB needs to ensure that an adequate EIRP, which includes vocational skills training and employment/business support be implemented in addition to ongoing support to self-help groups. For this purpose, the EIRP needs to be extended for an adequate length of time, at least until there is robust evidence that AHs on resettlement sites have achieved real income levels (which are income levels adjusted for inflation) which AHs had prior to resettlement. Since little or no training has been provided to AHs over the past 2 years, it now becomes necessary that such training and ongoing support be provided for a sufficient length of time. maximize efficiency of job placement among AHs. Of the 16 AHs that were identified in need for immediate debt relief, 14 AHs have cleared their debts, 1 AH did not join the debt relief program and 1 AH sold the house and moved out. CUFA continues to implement the EIRP Exit Strategy and conducts regular training and monitoring visits. In December 2016, CUFA conducted scoping exercises in Phnom Penh and Poipet to establish a community social enterprise. It included community consultation to gain commitment, conduct skills audit, research into possible business ideas with consideration to the market, competition, local consumers, and available products. One group in Phnom Penh and in Poipet was organized and piloted the production and selling of rugs and dishwashing soap. In Oct 2017, SETC approved the holding of Entrepreneurship Skills Internship Program to be participated by 13 entrepreneur groups consisting of 78 AHs from the 5 resettlement sites. The Program started on 9 Oct 2017 and was completed on 1 Dec Hands on training on product making, marketing and bookkeeping were demonstrated by 8 successful microenterprises such as mushroom growing, dishwashing liquid, rug making, drinking water, duck raising and balut selling, suggesting sustainable efforts being pursued towards improvement of livelihoods of affected persons. CUFA will continue to work with the community to execute a business plan and to create 6

7 viable community enterprises. Rapid needs assessment for income generation opportunity including market study will be conducted for the resettlement sites other than Phnom Penh and Poipet to recommend potential additional income generating opportunities and markets for the remote areas to factor in sustainability. 7

8 Appendix 1 SUMMARY OF THE MANAGEMENT ACTION PLAN TOGETHER WITH THE CRP s MAIN CONCLUSIONS AND FEEDBACK TO MANAGEMENT ON ACTIONS TO BRING THE PROJECT INTO FULL COMPLIANCE CRP Third Annual Monitoring Report to the Board of Directors CRP Recommendation No. 1: Establish a compensation deficit payment scheme No. 2: Improve Facilities at Resettlement Sites FEEDBACK TO MANAGEMENT ON ACTIONS TO BRING THE PROJECT INTO FULL COMPLIANCE Fully complied with The CRP finds this recommendation in full compliance but recommends that Management raises the need with Government for a final effort regarding information dissemination to reach the three categories of AHs to inform them of their entitlements as well as their opportunity to submit complaints, if needed, through the GRM regarding the allocated compensation. (i) The 404 AHs who could either not be contacted, did not sign the contract, or did not collect their additional compensation for property losses and transition allowances; (ii) The 82 AHs in the Phnom Penh Section who could not be located regarding their entitlements under the CPI adjustment; and (iii) The 14 potentially eligible AHs in Phnom Penh and Poipet who could not be contacted in the implementation of 30m 2 rule. In addition, ADB should monitor the issuing of land titles to AHs in resettlement sites, which while in Battambang needs to be expedited in the other resettlement sites as well. For ADB to bring the Project into compliance, the CRP suggests that Management takes the following actions. (i) extend the contract with CUFA regarding support for the O&M program across the five resettlement 1 Actions Taken/to be Taken ADB expressed its appreciation to the Government s efforts and hard work to bring this recommendation into full compliance; and conveyed CRP s suggestion for a final effort on information dissemination. The Government expressed its view that more than sufficient outreach actions to inform the AHs have been taken and no further actions would be intended. The Government firmly expressed its position that there are no barriers for the AHs who were provided with land plots under the Project and who have fulfilled the condition of residing on the plot for 5 years to acquire the land title. There is no role for either the RGC or the ADB to interfere or expedite with the legal process. ADB discussed CRP s suggestions with the Government. The Government firmly expressed its view that it has fully complied with the recommendation.

9 Appendix 1 CRP Recommendation No. 3: Improve the functioning of the grievance redress mechanism, to be reflected in a time-bound and verifiable action plan FEEDBACK TO MANAGEMENT ON ACTIONS TO BRING THE PROJECT INTO FULL COMPLIANCE sites until to establish effective and sustainable O&M program; (ii) continue the effort strengthen the local O&M committees and establish linkages between these and local government entities within an agreed medium-term planning and budgeting framework to strengthen the mutual obligations of the two parties and bring greater predictability; (iii) focus on improving service delivery comprising solid waste disposal and drinking water supply; and (iv) SETC to include site visits to resettlement sites and meetings with AHs in its future monitoring missions. For ADB to bring the Project into compliance, the CRP suggests that: (i) Management take steps to assess and where needed remedy the GRM structure and process, and to ensure that AHs are informed when this has been achieved, so that they have access to GRM which can credibly address the complaints they might submit. (ii) SETC to include site visits to resettlement sites and meetings with AHs in its future monitoring missions. Actions Taken/to be Taken The Government s position is that no further action is required for the implementation of this Recommendation The Government advised that any TA support provided by the ADB will need to be conducted in compliance with the national laws and regulations, The Government requests that ADB and its consultants follow the normal protocol in fielding any mission. ADB discussed CRP s suggestions with the Government. The Government expressed its view that there is no basis for this finding by the CRP monitoring mission. The Government expressed its firm position that it has fully complied with the all remedial actions in respect of this recommendation and no further actions will be undertaken under this Project. The Government requests that ADB and its consultants follow the normal protocol in fielding any mission. No. 4: Develop an appropriate program to build capacity of IRC Fully complied with The CRP Report found full compliance. No further recommended action. 2

10 Appendix 1 CRP Recommendation No. 5: Establish a debt workout scheme to help highly indebted families to repay their accumulated debts through a dedicated credit line and a debt workout facility. No. 6: Implement the Expanded Income Restoration Program (EIRP) in a sustained and sustainable manner. FEEDBACK TO MANAGEMENT ON ACTIONS TO BRING THE PROJECT INTO FULL COMPLIANCE ADB needs to continue the CUFA effort to assist the debt reduction among highly indebted AHs within the framework of the overall EIRP strategy, and with a focus that includes the AHs who became heavily indebted because compensation for their property in the railway line was inadequate to finance construction of replacement houses, and they had to borrow money to construct new houses in the resettlement sites. CUFA should provide special support to AHs affected by the 30m2 rule who now resettle to the sites of Phnom Penh and Poipet to avoid excessive indebtedness of these AHs. Moreover, progress on this issue should be documented. The contract of CUFA should be extended to fully implement this program. ADB needs to ensure that the EIRP with its current menu of activities and possibility of new ones if needed, is continued until monitoring data clearly document that the overall objective of ADB s resettlement policy restoration of income and living standards has been achieved. An EIRP program needs to be implemented on the Battambang resettlement site and preferably also for the Pursat site. The TA with CUFA should be extended as needed to achieve this. As noted above, with regard to recommendations 2 and 3, SETC needs to include visits to resettlement sites and meetings with AHs in its future monitoring missions and to also assess progress towards achievement of restoration of incomes and living standards for the AHs. Actions Taken/to be Taken The Government maintains that debt workout is not a compliance issue and is not involved in implementing any remedial action. Support through CUFA is in place. The need of extension will be assessed based on CUFA data to be collected on a regular basis. CUFA will need to comply with the national laws and regulations in carrying out any further activities. ADB discussed CRP s recommendation with the Government. The Government s position is that the restoration of income and living standards have been achieved, and this has been amply established by the independent assessment of CUFA. The Recommendation is therefore complied with and it does not support any further action under this Project. Support through CUFA is in place. The need of extension will be assessed based on CUFA data to be collected on a regular basis. CUFA will need to comply with the national laws and regulations in carrying out any further activities. 3

11 Appendix 1 CRP Recommendation FEEDBACK TO MANAGEMENT ON ACTIONS TO BRING THE PROJECT INTO FULL COMPLIANCE Actions Taken/to be Taken The Government requests that ADB and its consultants follow the normal protocol in fielding any mission. 4

Recommendation 1: Establish a compensation deficit payment scheme.

Recommendation 1: Establish a compensation deficit payment scheme. Eleventh Quarterly Progress Report ADB Management s Action Plan to Implement the Board Decision on the Recommendations of the CRP Final Report: Rehabilitation of the Railway in Cambodia Project This report