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 (60%); Roads and highways (30%); 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 / [ ] A [ ] B [ ] C [ ] FI [X] TBD (to be determined)
Date PID Prepared / January 4, 2006
Estimated Date of Appraisal Authorization / July 16, 2007
Estimated Date of Board Approval / December 18, 2007

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% of the population in 1993 to 29% in 2002, and exports have averaged annual growth of over 17% 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% of Vietnam’s 82 million, on about 34,000 km2, about 10% of the country’s area. The Red River Delta is the most densely populated region (1,200 people per km2) with 80% of the population living in rural areas. About 36% of the Delta is agricultural land and 30% is covered by forests; forests in Quang Ninh and Tuyen Quang cover 42% and 62% of the provinces’ areas respectively.

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

Millions of small farmers, over 17,800 registered enterprises (29% 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% of Vietnam’s agricultural products on less than 14% of the country’s agricultural land. 25% of the entire area of the region is under rice cultivation. The region also produces about 24% of Vietnam’s rice, 13% of it seafood and timber; and 25% of Vietnam’s industrial output including garments, footwear, mining, construction material, electrical goods, fertilizer 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% of the region’s total freight transport task (ton-km) is carried by inland waterway transport, whose importance in Vietnam generally was recognized in the enactment of a new Law on Inland Waterway management in 2004 (No 23/QH11). Road transport carries most of the remaining traffic task (around 33% 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% of total transport expenditures compared to 87% for roads. In the Northern Region, 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 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. See Annex 1 for a brief description of the transport infrastructure.

Continued and balanced economic development and growth in this region requires increases in capacity and quality of all the main transport modes. This is reflected in the Government’s approval of a Comprehensive Transport Development Plan for the Northern Triangle Economic Zone (a major sub-set of the project region) in 2004. However, the potential benefits of such a Plan can be fully realized only if the transport and logistics markets work efficiently and competitively. Previous reports have observed regulatory constraints which may inhibit efficient market responses. These are being addressed in an ongoing Transport and Logistics Regulatory Review that will complement this project and an ongoing one in the Mekong Delta Region.

The project supports the three pillars of the 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.

·  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 four components supporting the three main waterway corridors in the region (see map in Annex 1). The proposed corridors are:

·  Quang Ninh to Viet Tri through Hai Phong, Ha Noi and Pha Lai

·  Quang Binh to Ninh Binh through Hai Phong

·  Ha Noi to the Eastern Sea through Lach Giang or Day river estuaries

(A) Investments in river ports and major landing stages (US$ 20-30 million) to raise the distribution efficiency of the transport network within the Northern Delta region, which would in turn improve the connectivity of the Delta to the international ports in the north and 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 socioeconomic criteria.

(B) Investments in access to river ports and main supply corridors (US$ 130-145 million) through improvements in inland waterways and roads. 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, may include some rural and district level landing stages at interchange points such as farmer's market centers and areas of warehousing and processing plants.

(C) Investments in small ferry boat stages throughout the Delta (US$ 15-20 million) to provide safer and wider access within the Northern Delta region. At present, there are over 1,000 of these small terminals and access to these ferries from the roads is often dangerous and many fatalities have occurred. This component will include the design and setting up of certain standards and models for the different size terminals and will improve 150-200 of these terminals.

(D) Institutional support To the Ministry of Transport, VIWA and provinces (US$ 5-10 million):

·  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 DoTs (including navigational schools) in planning multi-modal transportation infrastructure and logistics services taking full consideration of the potential role of the private sector.

In parallel with the Project, the World Bank proposes to carry out a transport study for the Northern Delta Region to identify the roles to be played by all transport modes (including rail). While the Project responds to clear priorities within the Northern Delta Region as identified by the government, the proposed study would entail developing a transport planning model that would project future transport movements to identify the broader modal and intermodal transport demand in the region. The World Bank has discussed the objectives of this study with the Government and JBIC. MoT supports the study; and the World Bank will seek grant financing, with JBIC support, to carry out the study.

4.  Safeguard policies that might apply

[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?]

Environmental impact of coal transport: Amongst other commodities, the inland waterway system is a major carrier of coal in this region. Although the Project will not alter the general level of coal transport it will be important to identify and mitigate any aspects which might be seen to be creating greater exposure to environmental problems associated with coal in this region.

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: