The Asian Development Bank says it is not achieving its poverty reduction targets in Cambodia despite having invested $675 million here in the past 10 years.

"The pace of poverty reduction has been disappointing, with an estimated 35-40 percent [of the population] being below the poverty line," says a 10 year review produced by the ADB's Cambodia resident mission director Urooj Malik.

"Per capita income is around $280 per annum, one of the lowest in the [Southeast Asia] region. Poverty remains pervasive in the rural areas where nearly 85 percent of the population live. Urban drift is increasing, leading to a growing incidence of urban poverty.

"Despite significant effort, access to basic health and education services is comparatively limited, especially for the rural poor. Food security and significant incidence of HIV/AIDS provide further development challenges," the report says.

The review is also critical of the Cambodian Government, stating that despite significant progress in the past decade, the reform program remained uneven, and revenue [tax] collection remained a significant challenge.

The Royal Government was concerned about balancing three objectives of its Triangle Strategy: 1. build peace, stability and security; 2. integrate Cambodia into regional and global economies; 3. promote balanced economic and social development.

The ADB's primary strategic objective is to reduce poverty and improve the living conditions and quality of life of people living in Southeast Asia.

Its long-term goal for Cambodia is to halve the proportion of people living in poverty to 20 percent by 2015.

The report expresses concern about weaknesses in domestic production growth: "Despite encouraging GDP growth over recent years (5.5 percent in 2002), there is a heavy reliance on agricultural output which constitutes around 40 percent of GDP. Economic diversification has been primarily led by growth in urban-based garment industries and a fledgling tourism sector."

For the Government to achieve its aims of sustainable economic growth and political and social stability, the key challenges to be addressed included:

ï Increasing rural incomes through greater agricultural and natural resource production.

ï Strengthen market linkages and supply chains.

ï Improve fiscal management through tax and customs reforms.

ï Develop legal and regulatory frameworks to ensure effective public sector management and promote private sector development.

ï Reform measures to meet conditions of recent ASEAN and WTO entry.

Cambodia remained heavily dependent on financial and technical resources. The next five-year Country Strategy Program, to be completed this year, would sharpen the focus on poverty reduction and management and conservation work in the Tonle Sap Great Lake area, an ecosystem essential to the survival of many globally significant freshwater species.

Commenting on the report Mr Malik said: "While the poverty reduction indicators are weak, we have to recognise that the country's needs are huge and that poverty is a long-term phenomenon. A key issue during the early days after the resumption of external aid in the early 1990s was the restoration of urban centre infrastructure and development growth poles. The cities needed adequate infrastructure to attract business and tourism, but public investment is shy of the rural hinterland as peace and security was absent till 1998.

"The big challenge is effective investment in rural areas to halt the urban drift and raise living standards. We have invested significantly in energy and primary networks and rural roading [about 35 percent of ADB's total lending portfolio of $775m since 1992] to link the urban centres and villages and we are now focusing more broadly on rural development. If the agreed objectives of poverty reduction were not pursued the consequences would not be good for Cambodia as 90 percent of the population live in rural areas and 80 percent of them are dependent on agriculture."

Mr Malik said helping the Government to devise poverty reduction strategies for Cambodia has been one of the most interesting challenges he has experienced in 19 years with the ADB. "The Cambodian people are receptive to ideas and change, eager to learn and work alongside their development partners. The country has strong leadership which is committed to fundamental reform."