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Water Supply and Sanitation in Small Towns in the Central Region to be Improved by ADB Loan

HANOI, VIET NAM (24 May 2007) – Asian Development Bank (ADB) and the Government of Viet Nam signed today a loan of $53.2 million to help improve the quality of life of residents in small towns in the Central Region through water supply and sanitation infrastructure investments.

On behalf of ADB, Ayumi Konishi, ADB's Country Director in Viet Nam signed the loan agreement with Mr. Le Duc Thuy, Governor of the State Bank of Viet Nam at a ceremony held this afternoon.

The Central Region, the home of a large number of poor in Viet Nam, is in dire need for investments to catch up with the development of other regions. With the acceleration of growth in Hanoi and Ho Chi Minh City, in recent years, there have been steady investments in infrastructure in the northern and southern urban areas of Viet Nam. Without concerted efforts to develop smaller towns in the Central Region, the gaps in living standard will keep widening. The lack of infrastructure severely discourages needed external investments to develop the region and maintain competitiveness.

"In order to ensure balanced, inclusive development of Viet Nam, investment in the smaller towns in the Central Region is essential," says Konishi. "Inadequate cost recovery, operational inefficiencies, and lack of public support are also considered key challenges. Aside from the needed infrastructure investments, it is imperative to improve the delivery performance of water and sanitation utilities and increase people's awareness on the importance of good environmental hygiene and its impact on public health."

The Project will upgrade water supply and sanitation infrastructure, expand access to services, and improve the management of public utilities in 8 small and medium towns in the provinces of Binh Thuan, Dak Nong, Khanh Hoa, Ninh Thuan and Phu Yen. About 13,300 households will benefit from improved and expanded water supply services, 105,000 households from drainage and wastewater treatment works and protection from flood damage, and 30,700 households from improved solid waste management and good hygiene practices. The Project will also assist institutional reforms and efficiency improvements of water and sanitation utilities and sustained quality services. This will include, among others, corporatization of public utilities, tariff adjustments, cost recovery, and facilitation of an enabling business environment. A community environmental and sanitation awareness component will educate the public on the importance of good environmental hygiene as well as community support for the project.

The Provincial People's Committees of respective provinces will serve as executing agencies. The Project will be implemented over 5 years to December 2011. The loan will have a grace period of 8 years with the repayment period of 32 years.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 67 members - 48 from the region. In 2006, it approved loans and grants for projects totaling $8.5 billion, and technical assistance amounting to almost $242 million.

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