PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB1961

Project Name / Northern Delta Transport Development Project
Region / EAST ASIA AND PACIFIC
Sector / Ports, waterways and shipping (65%); Roads and highways (25%); General Transportation (10%)
Project ID / P095129
Borrower(s) / SOCIALIST REPUBLIC OF VIETNAM
Implementing Agency / Ministry of Transport
Project Management Unit - Waterways
331 Nguyen Trai St, District 1
HCMC, Vietnam
Tel: 84 8 8365146 Fax: 84 8 8365149

Environment Category / [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / September 28, 2007
Estimated Date of Appraisal Authorization / January 21, 2008
Estimated Date of Board Approval / June 19, 2008

1.  Key development issues and rationale for Bank involvement

Vietnam’s transport and logistics system has supported impressive economic progress in recent years. The economy doubled in size during the 1990’s with per capita income reaching US $430; poverty dropped by half from 58 percent of the population in 1993 to 29 percent in 2002, and exports have averaged annual growth of over 17 percent since 1990.

The project region in northern Vietnam consists of 15 provinces: the 11 provinces of the Red River Delta and four provinces from the Northeastern Region (Quang Ninh, Bac Giang, Phu Tho and Tuyen Quang). These 15 provinces house a total population of 26 million, about 32 percent of Vietnam’s 82 million, on about 34,000 km2, about 10 percent of the country’s area. The Red River Delta is the most densely populated region (1,200 people per km2) with 80 percent of the population living in rural areas. About 36 percent of the Delta is agricultural land and 30 percent is covered by forests; forests in Quang Ninh and Tuyen Quang cover 42 percent and 62 percent of the provinces’ areas respectively.

The region contributed 23 percent to Vietnam’s GDP in 2003 up from 22 percent in 2000. According to the GSO, poverty rates in the Red River Delta dropped from 23 percent of the population in 2001 to 21 percent in 2004 compared to a drop in the national average from 37 percent to 29 percent over the same period. Poverty rates in the Delta (excluding Ha Noi with 5 percent poverty) vary from a low of 12 percent in Bac Ninh and Hai Phong to over 30 percent in Vinh Phuc, Thai Binh, Ha Nam and Ninh Binh.

Millions of small farmers, over 17,800 registered enterprises (29 percent of Vietnam’s total), thousands of small household businesses contribute to the vibrant economy of the region. The majority of the registered enterprises operate in mining, manufacturing, construction and trading. The region produces about 24 percent of Vietnam’s agricultural products on less than 14 percent of the country’s agricultural land. Twenty-five percent of the entire area of the region is under rice cultivation. The region also produces about 24 percent of Vietnam’s rice, 13 percent of it seafood and timber; and 25 percent of Vietnam’s industrial output including garments, footwear, mining, construction material, electrical goods, fertilizers and high tech products. Domestic and international (mainly Chinese) tourism in Ha Long Bay, a World Heritage site, plays an important role in that part of the regional economy.

Nearly 67 percent of the region’s total freight transport task (ton-km) is carried by inland waterway transport. Road transport carries most of the remaining traffic task (around 33 percent of ton-km), with a small amount of freight being carried by rail. In general, waterways carry the bulk goods that are predominant in this region such as rice, timber, cement, coal, building materials and fertilizer. Roads tend to carry shorter distance and higher value (and more time-sensitive) goods including manufactured goods produced in the industrial zones around Hanoi and perishable foodstuffs such as fruit and vegetables and seafood. Rail carries containers to China and bulk products to/from inland points not served by waterway.

There are many deficiencies in infrastructure that may inhibit sustainable growth, but particular areas of concern that are not being widely addressed by other donors include

·  low quality rural transport links from farms to freight aggregation points;

·  poor access from some peripheral areas on the provincial feeder roads from the aggregation points to the trunk roads and waterways;

·  lack of proper freight landing-stages at commune, district and provincial levels, which act as inter-modal transfer points between road transport and waterway transport: similarly there are numerous rudimentary and unsafe passenger ferry landing-stages;

·  poor facilities at larger river ports and gaps in the navigational aid systems on the connecting rivers;

·  river siltation, particularly at key estuaries, limiting vessel size and the penetration of seagoing vessels; and

·  transport and logistics regulatory systems which may not provide an enabling market environment for the development of the most efficient and effective logistics industry.

The 2004 PER for transport in Vietnam highlighted that inland waterways have been severely under invested in, receiving only 2 percent of total transport expenditures compared to 87 percent for roads. In the Northern Region, Canadian International Development Agency (CIDA) is the only donor that has financed waterway improvements. While the national road system and lower level roads providing access to communes have received significant attention from the Government of Vietnam (GoV) and donors, provincial roads are in much poorer condition, generally unpaved and constitute a weak link in the transport chain for those more remote from the main road corridors.

The project supports the three pillars of the Country Assistance Strategy (CAS). Institutional reforms and management systems would result in modern institutions supporting the transition to a market economy. The proposed nature and geographic region of the project which includes low income provinces would support inclusive development both directly by linking poor areas to the main supply chains and indirectly by catalyzing growth through more efficient transport systems. The CAS also indicates a commitment to focusing on increased infrastructure demands in order to sustain and promote rapid export-led economic growth.

2.  Proposed objective(s)

The development objective of the project is to support sustainable economic growth and inclusive development in the Northern Delta Region by increasing the efficiency of transport infrastructure in the Delta Region in an integrated and safe manner. The project will improve supply chain efficiency for production, distribution and trade and will also provide better and safer access for the poor to the main supply corridors. Specific project objectives are:

·  to reduce transport costs/tariffs and improve service quality from points of production to local markets or points of export through improvements in the inland waterway and connecting road systems;

·  to raise the efficiency of logistics services across modes;

·  to assist in building the management tools and capacity of the Vietnam Inland Waterways Administration and Provincial Departments of Transport in the effective exercise of their responsibilities under the 2004 Law on Inland Waterways; and

·  to develop/strengthen existing frameworks for private sector participation in the provision of infrastructure and services associated with provincial ports, landing stages and logistical centers.

3.  Preliminary description

The Project has three main components:

Component (A): Multi-modal Corridor Investments: Investments in three main waterway corridors: (1) Quang Ninh to Viet Tri, (2) Quang Ninh to Ninh Binh, (3) Hanoi to Day-Lach Giang to increase the efficiency of multimodal transport and supply chains. The estimated cost of this component is US$ 175-190 million. It will include the following subcomponents:

(A.1) Investments in inland waterways and roads (US$ 155-160 million) to improve the main supply corridors and their access routes. While the bulk of the road investment is expected to be in provincial and lower level roads, this will not preclude investments in small sections of national roads if this is to enhance connectivity. Among the important waterway access routes for consideration under the project are those linking Tuyen Quang, Da Phuc and Bac Giang to the Quang Ninh – Viet Tri corridor This component also includes navigational aids.

(A.2) Investments in river ports and landing stages on the three waterway corridors (US$ 20-30 million) to raise the distribution efficiency of the transport network within the project region which would in turn improve the connectivity of the region to the sea ports in the north as well as to central and southern Vietnam. This component will cover 10-15 ports on the Red and Thai Binh river systems distributed among the provinces of the region. The selection of the ports to be included in the project will be based on both efficiency and socio-economic considerations. This sub component will include investments in both infrastructure and management systems. Investment in management support systems will be addressed under the institutional support component below. This component may include some rural and district level landing stages at interchange points such as farmers’ market centers and areas of warehousing and processing plants.

Component (B): Investments in small ferry boat stages (US$ 5.0 million) to provide safer and wider access within the region. At present, there are over 1,000 small ferry boat stages for river-crossing passenger boats. Access to these ferries from the roads is often dangerous and many accidents resulting in fatalities have occurred. This component includes developing standards for the design and operation of the different size ferry boat stages and will lead to the physical improvement of 15-30 of these stages. The development of a framework of standards for the design and operation of the different sizes of ferry boat stages will be part of the institutional support component for this project.

Component (C): Institutional support to MoT, VIWA and provinces (US$ 5.0 million). This component is expected to include:

·  Support to the Vietnam Inland Waterways Administration and Provinces in implementation of Law 23/2004/QH 11 for: (a) extension of the asset management database to this region, (b) planning of and budgeting for sustainable inland waterway management and maintenance programs, and (c) management of safety function.

·  Support to MoT and Provincial Departments of Transportation (PDoTs) (including navigational schools) in planning multi-modal transportation infrastructure and logistics services taking full consideration of the potential role of the private sector.

·  Support to VIWA and provincial governments in developing and strengthening existing frameworks for private sector participation in the provision of infrastructure and services associated with provincial ports, landing stages and logistics centers.

4.  Safeguard policies that might apply

The Initial Safeguards Review meeting concluded that the following safeguards policies are triggered:

·  Environmental Assessment (OP4.01);

·  Involuntary Resettlement (OP4.12);

Whether the following safeguards policies will apply is still to be decided:

·  Natural Habitats (OP4.04)

·  Physical Cultural Resources (OP4.11)

·  Indigenous Peoples (OP4.10)

The other safeguards policies that will not apply to the Project are: Pest Management (OP4.09), Forests (OP4.36), Safety of Dams (OP4.37) and Disputed Areas (OP7.60). The safeguards policy Projects on International Waterways (OP7.50) is triggered. However, the Project falls under the exceptions to notification requirement set forth in paragraph 7 of OP7.50.

The safeguards team endorsed the proposed assignment of Category A due to the potentially large volume of dredging and the potential work at the river estuary.

5.  Tentative financing

Source: / ($m.)
BORROWER/RECIPIENT / 50
INTERNATIONAL DEVELOPMENT ASSOCIATION / 150
Total / 200

6.  Contact point

Mr. Baher El-Hifnawi

Senior Transport Economist

Tel: (202) 458-1589

Fax: (202) 522-3573

Email: