Projects

Project Information

Borrower

Socialist Republic of Viet Nam

Project Description

The Project is designed to assist the Government in raising farmers' income by increasing tea and fruit production. This is to be done by providing a credit line for field development, nursery operations, and small- and medium-scale processing of these crops in 13 provinces (Thai Nguyen, Phu Tho, Yen Bai, Lam Dong, Tuyen Quang, and Ha Giang for tea; and Bac Giang, Thanh Hoa, Hoa Binh, Binh Dinh, Khanh Hoa, Tien Giang, and Ben Tre for fruits). To support this credit line, the Project will develop and provide the beneficiaries with a package of technology and market information to improve their agricultural practices and bargaining power. This is expected to reduce poverty by raising farm incomes of tea and fruit farmers. The Project affects the environment positively by providing ground protection where tea and fruit trees are established, particularly on the 7,500 hectares (ha) of deforested land.

Cost Estimates

The total project cost is estimated at $57.6 million equivalent, of which $17.2 million (30 percent) is the foreign exchange cost and $40.4 million equivalent (70 percent) is the local currency cost.

Loan Amount and Terms

The equivalent in various currencies of SDR 31,157,000 will be provided from the Asian Development Bank's (ADB) Special Funds resources. The loan will have a maturity of 32 years including a grace period of 8 years and an interest charge of 1 percent per annum during the grace period and 1.5 percent per annum thereafter. The balance of the project costs will be financed by participating financial institutions (PFIs), the beneficiaries, and the Government.

Period of Utilization

Until 30 June 2007

Executing Agencies

The Ministry of Agriculture and Rural Development (MARD) for the noncredit components and MOF for the credit component.

Procurement

Goods financed under the noncredit component and services for implementing the Project will be procured in accordance with ADB's Guidelines for Procurement. The portion of the loan earmarked for credit will follow procurement procedures applicable to ADB loans for developing financial institutions.

Consulting Services

A total of 23 person-months of international consulting services and 26 person-months of domestic consulting services will be engaged by the CPO in accordance with ADB's Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants.

Estimated Project Completion Date

31 December 2006

Project Benefits and Beneficiaries

The Project is expected to directly benefit 67,400 tea and fruit farmers, 300 private commercial nursery operators, 830 smallholder green tea processing units, and small- and medium-scale processing units for tea and fruit. The Project is expected to increase the productivity of tea and fruit lands, and increase the efficiency of tea and fruit processing units. At full maturity, the Project is expected to increase the yield of replanted tea from the current 3 tons of green leaf per ha to 12 tons per ha. The fruit areas are expected to have a peak yield of 8.5 tons per ha. In this way, the Project is expected to increase tea growers' incomes by $192 per ha per annum and fruit growers' income by $396 per ha per annum. The incremental production from the Project is estimated at 20,000 tons of tea valued at $25 million, and 325,000 tons of fruit valued at $100 million. The Project will generate a total of 71,600 person-years of employment during the development stage and 26,000 person-years of employment per annum during full maturity. In addition, the Project is expected to improve the environment as a result of canopy formation in the areas planted with tea and fruit, particularly on the 7,500 ha of deforested land.