Viet Nam, ADB Sign $1.38 Billion Water, Environment, Transport Package

News Release | 5 May 2011

HA NOI, VIET NAM - State Bank of Viet Nam Governor Nguyen Van Giau and Asian Development Bank (ADB) President Haruhiko Kuroda today signed a $1.38 billion financial assistance package to enhance Viet Nam's nationwide clean water access, conserve threatened forests, and ease urban gridlock. The total cost of the three projects is almost $4.5 billion.

Viet Nam Prime Minister Nguyen Tan Dung witnessed the signing.

"ADB's assistance will help ensure that more people in Viet Nam have access to clean water, more livable cities, and biologically diverse forests that will be preserved for future generations," said Mr. Kuroda.

In many of Viet Nam's largest cities, 30% to 40% of treated water is lost before it reaches the end user. Moreover, four in every ten families have no connection to a central water supply system.

A $1 billion financial support facility from ADB will help improve clean water access for 3 million families in Viet Nam's cities, including half a million poor households who will receive their own piped water connection for the first time. The assistance is part of a larger $2.8 billion investment program.

With Viet Nam's forests coming under increasing pressure from rapid economic development and climate change, habitat restoration is needed not only to protect the country's environmental treasures, but also to safeguard the livelihoods of indigenous communities.

A $30 million loan from ADB's concessional Asian Development Fund will enhance cross-border cooperation in protecting a contiguous stretch of biodiversity-rich forest in Viet Nam's Central Annamites, which spans the highlands of Quang Tri, Thua Thien-Hue and Quang Nam Provinces. This is part of a larger program that is also supporting the preservation of key forestlands in Cambodia and Lao People's Democratic Republic. The assistance package for Viet Nam includes approximately $8 million to improve clean water and sanitation services and upgrade market roads in the 34 largely ethnic minority communes in the project area.

"Sustainable economic development and environmental preservation are intertwined," said Mr. Kuroda. "In the long term, coupling conservation and livelihood improvements will help ensure that Viet Nam's forests and their biodiversity are managed well."

The third component of the assistance is a $350 million loan, which is the first tranche of an overall $636 million ADB package. This package is supporting a $1.6 billion project to construct a modern expressway to the south of congested Ho Chi Minh City.

With the city's population expected to swell by more than 50% by 2025, new roads are needed to complement other modes of transportation, including an ADB-supported metro rail system, to ensure the efficient transportation of goods and people. The 57-kilometer expressway between Ben Luc and Long Thanh will reduce traffic in the heart of Ho Chi Minh City by allowing vehicles traveling from east to west to bypass the city center. When the full expressway opens in 2017, it will reduce east-west travel time by 80% and cut the number of traffic accidents by 10%.