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Raising Incomes and Food Security for Viet Nam's Poor in the Red River Basin

MANILA, PHILIPPINES (13 November 2001) - The Asian Development Bank (ADB) today approved a US$70 million loan to Viet Nam to raise rural incomes and enhance food security by increasing agricultural productivity and reducing vulnerability to floods in the Red River Basin.

The Second Red River Basin Project will establish integrated water resource management in the basin and improve infrastructure for water service delivery in the poorer provinces. Subprojects will improve rural infrastructure, replant degraded forests, and generate employment.

The project will benefit 28 million people, a third of Viet Nam's population, in 25 provinces. Sixteen of the provinces are in the northern highlands, where the incidence of poverty, 59 percent, is substantially higher than the national average of 37 percent. The nine delta provinces have a 29 percent incidence of poverty.

The ADB assistance follows an earlier US$60 million loan for water resource management in the Red River delta. The second project follows a more holistic approach to basin-wide water resource management and is more narrowly focused on poverty reduction.

In response to needs identified by the intended project beneficiaries during preparatory surveys, the project includes a rural development component that targets poor farmers. Under this component, the project will provide agricultural support services, reforestation, and small-scale water-related infrastructure at community level. Subprojects will target communities in which at least a third of the people live below the poverty line, and will include investments that address the specific needs of women farmers.

The ADB loan will cover 45 percent of the project cost of US$156.2 million. ADB will administer a grant of US$10.6 million to be provided by the Government of the Netherlands. The Government of Viet Nam, project beneficiaries, and Agence Française de Développement will cover the remaining cost of the project.

The ADB loan, from the Bank's Special Funds resources, will have a term of 32 years, including a grace period of 8 years, with an interest charge of 1 percent per annum during the grace period and 1.5 percent thereafter. The project is expected to be completed by 2007.

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