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Agreement Signed for Grant to Develop Rural Infrastructure in Viet Nam's Deprived Central Region

HANOI, VIET NAM (25 March 2005) - ADB and the Government of Viet Nam today signed an agreement for a project preparatory technical assistance grant of US$800,000 to develop a rural infrastructure project to improve livelihoods in remote deprived areas of the country's Central Region. [ PDF ]

The grant is from ADB's Japan Special Fund, financed by the Government of Japan.

Signing on behalf of ADB at the ceremony, held this morning at the State Bank of Viet Nam, was Bradford Philips, Country Director, Viet Nam Resident Mission. Tran Minh Tuan, Deputy Governor of the State Bank of Viet Nam and Pham Hong Giang, Vice Minister of Agriculture and Rural Development signed on behalf of the Government. Also present at the signing ceremony was Mr. Yasukata Fukahori, First Secretary and Head of Economic Section, from the Japanese Embassy.

The TA will help the Government prepare a rural infrastructure project to help reduce rural poverty through improvements in rural infrastructure within six project provinces, namely Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri and Quang Nam in the Central Region.

Despite poverty incidence falling from 58% in 1993 to 29% in 2002, and improved social indicators, the urban-rural income gap has widened, leaving the poor, particularly in remote rural areas, worse off.

"The poor state of roads and infrastructure has resulted in isolation of poor villages and is a key cause of widening regional gaps in living standards and opportunities," says Michiko Katagami, an ADB Project Economist.

"Inadequate infrastructure in rural areas limits access to social services and results in stagnant agricultural development, few trading opportunities, and lack of information and technology. Investments in rural infrastructure will help improve living standards and develop economic opportunities for impoverished and disadvantaged communities."

Rural development therefore remains one of the Government's highest priorities. The TA will review the Government's sector plans, assess past infrastructure investments and analyze how such factors are reflected in the commitments and capacity of national and local government agencies to finance and implement rural infrastructure programs.

It will then prepare criteria for selection of practical subprojects and a medium-term development plan for each participating province, to be developed based on consultations with all relevant stakeholder groups.

The TA will also prepare a detailed prefeasibility study for the whole project and studies for three or four sample subprojects, as well as sector development project proposal.

"The project would integrate the proposed infrastructure investments with other planned economic and social development plans to maximize the synergies that will arise and ensure that there are tangible benefits to the targeted poor areas," adds Mr. Philips.

The total cost of the TA is about $1 million, of which about $200,000 equivalent will be met by the Government of Viet Nam. The Ministry of Agriculture and Rural Development is the overall executing agency for the TA, which is due to last about 11 months.

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