ADB Loan to Build Future for Struggling City in Viet Nam

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will develop and upgrade key urban infrastructure and services in the city of Thanh Hoa in Viet Nam, where a lack of employment opportunities is forcing many people to move to large metropolises like Ha Noi and Ho Chi Minh City.

The US$72 million loan, approved by ADB’s Board of Directors, will finance a large portion of the $118 million Thanh Hoa City Comprehensive Socieconomic Development Project.

The project is part of a nationwide government plan to promote sustainable development in Viet Nam's mid-sized cities.

Thanh Hoa, in north central Viet Nam, has a population of 200,000 with major industrial and tourism potential. But infrastructure gaps and a shortage of skilled labor in areas targeted for development have held back investment.

To transform Thanh Hoa into a competitive and livable city, the project has adopted an integrated investment program to upgrade infrastructure, boost skills and human resources, build up the capacity of key service agencies, and enhance its tourism potential.

Under the work planned is road and bridge construction and rehabilitation, the replacement of damaged water pipes, improvements to sanitation facilities, and upgrades to a museum and other key tourism sites. Teacher training and other steps to address skills shortages will be carried out, while the Water Financing Partnership Facility (WFPF) grant will be used to reform and strengthen Thanh Hoa’s water supply and urban environment companies.

“This integrated approach will promote sustainable development and help achieve the objective of arresting the population drift toward major urban centres,” says Hubert Jenny, Senior Urban Development Specialist with ADB’s Southeast Asia Department.

ADB’s loan, from its concessional Asian Development Fund has a 32-year term, including an 8-year grace period with an interest rate of 1% a year, and a rate of 1.5% for the rest of the term.

ADB will also provide a $2 million grant through its WFPF to improve Than Hoa's water supply. The WFPF grant includes $1.2 million from the Multi-Donor Trust Fund and $800,000 from the Netherlands Trust Fund. The former includes contributions from Australia, Austria, Norway and Spain, and the latter is financed by the Government of the Netherlands.

The ADB loan and the WFPF grant cover 63% of the total project cost. The Government of Korea will provide a $32.7 million loan and the Government of Viet Nam $11.2 million.

The Thanh Hoa Provincial People’s Committee is the executing agency for the project which is due for completion around the end of June 2014.