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ADB, Viet Nam Sign Three Loans Totaling $115 Million for Rural Development, Infrastructure, and Poverty Reduction

HANOI, VIET NAM (20 December 2007) - The Asian Development Bank (ADB) and the State Bank of Viet Nam (SBV) today signed three loans totaling $115 million to help Viet Nam improve rural infrastructure in central provinces, develop an expressway, and further reduce poverty.

Governor Nguyen Van Giau of the State Bank of Viet Nam represented the Government while Mr. Ayumi Konishi, ADB Country Director for Viet Nam signed the loans on behalf of ADB.

The $90 million loan for the Integrated Rural Development Sector Project, which is also cofinanced by Agence Francaise de Developpement with a loan of $52 million and a grant of $1.3 million, will rehabilitate and upgrade vital infrastructure in the poor provinces in the central region to improve livelihood opportunities and the standard of living of the rural population in the area. The total cost of the project is $168.2 million and Ministry of Agriculture and Rural Development (MARD) is the executing agency of the project.

The project will target critical rural infrastructure that have deteriorated over the past decades due to war, natural disasters and budgetary constraints that have limited maintenance. They include rural roads, irrigation drainage and flood control systems, rural markets, domestic water supply schemes, and special coastal works such as sand dune stabilization, salinity intrusion prevention and mangrove rehabilitation. The project is expected to boost agricultural productivity and employment opportunities, as well as improve access to public services such as health and education. It will also reduce the exposure of the rural population to natural disasters. The project area comprises 13 provinces in the Central Region.

The second loan signed was for $15 million to support the Government’s poverty reduction program which is supported by a large number of development partners. The loan, which cofinances the World Bank-led and multi-donor supported Sixth Poverty Reduction Support Credit (PRSC6) is expected to help boost efficiency, accelerate economic growth and create jobs, as well as improve the quality of education, access of the poor to health services, promote a reformed social protection system and gender equality. The loan will also help secure land ownership and address the resettlement and compensation process and promote sustainable management of natural resources. The assistance will also help promote transparency and accountability in public financial management and modernize public administration. The State Bank of Viet Nam is the executing agency for this loan.

The third loan of $10 million will help develop an expressway that will ease traffic congestion in and around Ho Chi Minh City, the largest city in Viet Nam and the country’s economic hub. The Ho Chi Minh City-Long Thanh-Dau Giay Expressway Technical Assistance Project will support the government to complete pre-construction activities for the proposed expressway. Pre-construction requirements include detailed engineering designs; updated resettlement plans for people who might be affected by the development; and bidding documents for acquisition of civil works, goods and consulting services. The project will also strengthen the capacity of state-owned Vietnam Expressway Corp., which invests in expressway construction, management and operation and maintenance, so that it can operate as a commercially-oriented infrastructure provider. A follow on loan for the actual construction of the Ho Chi Minh City – Long Thanh- Du Giay Expressway, together with other financier(s) is being planned.

During 2007, ADB has approved 8 loans totaling $1,439 million and technical assistances grants amounting to $25 million for Viet Nam. These figures exclude regional technical assistance projects and private sector operations. At the Consultative Group Meeting on 6 and 7 December, ADB has indicated that its work program for 2008 includes loans and TAs totaling in the range of $1.3 to $1.6 billion.

"ADB has significantly increased its level of assistance to Viet Nam this year, as we have indicated during the last year’s consultative group meeting", said Mr. Konishi. "In order for us to keep providing strong support, a key would be the enhancement of Viet Nam’s absorptive capacity, starting with timely signing of approved loans like today."

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