Helping Viet Nam to Design Missing Link of Vital Transport Corridor

HANOI, VIET NAM - The Government of Viet Nam and ADB today signed an agreement for a $6 million technical assistance loan to help design and plan the Noi Bai-Lao Cai segment of a transport corridor connecting Kunming in Yunnan Province, the People's Republic of China (PRC), to Haiphong port near Hanoi in Viet Nam.

The 400-km expressway from Kunming to the border with Viet Nam is due for completion in 2008. However, the existing highway on the Viet Nam side from the border at Lao Cai to Hanoi is narrow with several low capacity bridges, reducing its potential to meet the projected growth in traffic.

The Noi Bai to Hanoi and Haiphong section of the highway has been improved under assistance from other external donors. Only the 260 km section from Noi Bai, just to the north of Hanoi, to the border at Lao Cai needs to be upgraded to complete the transport corridor.

Nationally, the road link will connect the comparatively poor and isolated northwest region of Viet Nam with economic centers that have developed around Hanoi and the port of Haiphong. Meanwhile, at the regional level, it will link the rapidly-expanding economy of the PRC's Yunnan province with Hanoi and Haiphong, promoting the rapid expansion of cross-border trade and commerce.

The total project cost for the planned highway is estimated at around $620 million, of which ADB and others would provide around $430 million. Such a large scale infrastructure project involves substantial investment and study of the economic, social and environmental impacts. The technical assistance will provide the resources to undertake these studies and prepare the investment project.

"The future highway would reduce travel time between Hanoi and Lao Cai from at least eight hours at present to about three hours," says William Costin, Acting Country Director of ADB Viet Nam Resident Mission.

"The shorter travel time will promote economy activity in the surrounding provinces, generate jobs for the local population, and improve access to social services."

To ensure maximum utilization of the highway, the eventual road project will include the development of linkages to the existing road network. A road safety study will be carried out to identify accident prone areas and propose adequate road safety measures for the existing access roads.

Many ethnic minority groups live in the Yen Bai and Lao Cai provinces, mostly below the poverty line due to poor accessibility caused by poor road infrastructure. "There will be an immediate and significant economic and social benefit to communities in the project area as a result of improved road access" Mr. Costin added.

To meet the local community needs, ethnic minority development plans will be undertaken, while an HIV/AIDS component will be included in the project in order to ensure that these communities are not subject to increased risk of sexually transmitted infections and human trafficking because of the improved road infrastructure.

The total cost of the technical assistance is estimated at about $8 million, of which the Government will contribute $2 million. ADB's loan comes from its concessional Asian Development Fund, and carries a term of 32 years, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per annum subsequently.

The Ministry of Transport is the executing agency for the technical assistance, which is due for completion after two years around March 2008.

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