Greater Mekong Subregion: Northern Economic Corridor Project in the Lao People’s Democratic Republic
The Greater Mekong Subregion (GMS): Northern Economic Corridor Project in the Lao People’s Democratic Republic (Lao PDR) was approved on 20 December 2002 with financing of $95.79 million equivalent. The project was funded by Special Funds resources of the Asian Development Bank (ADB) and bilateral loans from the governments of the People’s Republic of China (PRC) and Thailand on concessional terms.
The project aimed to accelerate subregional development and reduce poverty in the Lao PDR by strengthening regional infrastructure linkages between GMS countries. The project road links Chiang Rai in Thailand with Yunnan Province in the People’s Republic of China (PRC). Within the Lao PDR, it links two of its most remote and poorest provinces, Louangnamtha and Bokeo. It was expected to reduce poverty by increasing income and employment opportunities and improve access to markets, agricultural support, health, and education.
Overall, the project is rated less than successful. Although the project helped reduce transport costs and travel time, it was not economically viable for the Lao PDR. A substantial number of the benefits accrued were regional, whereas the maintenance costs were fully borne by the Lao PDR. Without an agreement on collection of tolls for transit vehicles, current spending on road maintenance by the Lao PDR is inadequate, putting in doubt the sustainability of the benefits in the long term.
Among the lessons from the evaluation includes having an effective project implementation entity to ensure uniform standards for the delivery of project outputs. For the ADB-funded section of the road, the Lao PDR government was able to track expenditures and verify if timelines and guidelines were followed. However, this was not the case for sections financed by the PRC and Thailand.