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Raising Development Impact through Evaluation

Greater Mekong Subregion: Phnom Penh to Ho Chi Minh City Highway Project (1659-CAM[SF] and 1660-VIE[SF])

Evaluation Document | 31 December 2008

This report evaluates the performance of the Greater Mekong Subregion: Phnom Penh to Ho Chi Minh City Highway Project designed to rehabilitate the cross border road and reduce customs procedures-related bottlenecks.

Background

The Phnom Penh to Ho Chi Minh City Highway Project was the first road project developed as part of the Greater Mekong Subregion (GMS) initiative. Assisted by two separate loans to Cambodia and Viet Nam, the Project was designed to rehabilitate the cross border road and reduce custom procedures-related bottlenecks. It aimed to assist the two governments in responding to changed political and economic circumstances by promoting cross-border and sub-regional trade.

Summary of Findings

The Project was consistent with ADB's country strategies for Cambodia and Viet Nam and the respective governments' policies and development plans. It was also consistent with the GMS program's aim of enhancing regional connectivity and increasing competitiveness to strengthen cooperation between Cambodia and Viet Nam and economic links among GMS countries. The Project is "highly relevant" in terms of sector, country, and regional demands. Quality at entry of the Project has room for improvement owing to inadequate project preparatory activities.

The main achievements of the Project were improvement of transport efficiency and the construction of border facilities. It was "effective" in improving road transport efficiency at the national level. The quality of project outputs was satisfactory. Road transport movements within the two countries improved substantially. Project effectiveness in Cambodia was constrained by the absence of a bridge at Neak Loeung. The Project was "less effective" in meeting its targeted outcome of enhanced cross-border movements. Despite the road improvements and the reduction in bureaucratic and procedural constraints to cross-border trade, border traffic and trade have not grown as expected. Sub-regional traffic between Cambodia, southern Viet Nam, and Thailand is minimal. Unless the Cross-Border Transport Agreement (CBTA) is implemented at the Bavet-Moc Bai border crossing, full benefits from the regional road will not be achieved. Nevertheless, cross-border trade, using transshipment of cargo, has increased in recent years indicating potential for further growth.

The Project is "less efficient" owing to the low economic internal rate of return at post-evaluation compared to those at appraisal and at project completion. The Project is "less likely" to sustain the project benefits in Cambodia. But it is "likely" to sustain these benefits in Viet Nam. Funds allocated for road maintenance have generally been insufficient for the entire Cambodia road network. The risk of overloading and continued low allocations for routine maintenance has lowered the sustainability in Cambodia. Sustainability in the Viet Nam side benefited from increased allocations from the central budget and the ongoing efforts of the Government as well as the development partners. The latter's assistance has also enabled private sector participation in maintenance activities.

Overall, the Project is rated "successful." Its impact was found to be "moderate" in relation to cross-border movements, but it has been "significant" in terms of socioeconomic changes at the local levels. This underlines the conclusion that the Project has provided relatively more national benefits as compared to regional benefits. Apart from the protracted resettlement compensation issue in Cambodia resolved in May 2008, there are no other negative social and environmental issues.

ADB performance is "satisfactory" in both countries. The performance of the Borrower and Executing Agency is "partly satisfactory" for the Cambodia component and "satisfactory" in Viet Nam. There is room for improvement in both ADB and borrower performance in rectifying implementation issues especially those related to inadequate project preparation. Project completion was delayed by 3.5 years due to various factors, i.e., inadequate preparation in terms of physical road design, contractor problems, adverse weather conditions, and addition of new works. Including the additional works is seen as appropriate in light of apparent benefits, e.g., reduced congestion in the Ho Chi Minh City area. The Project witnessed substantial loan savings in both countries owing to lower bid costs for civil contracts. These financed additional works which could have benefited from adequate due diligence at project completion, i.e., to check whether the savings were used efficiently.

Several issues emanate from the Project:

  • the need for CBTA to be implemented at the Bavet-Moc Bai border crossing soon to enable regional benefits of the Project
  • the need for adequate funds to be made available for the road maintenance, i.e., Cambodia
  • the emergence of road safety as an endemic issue
  • the increased vulnerability to the spread of diseases such as HIV and Avian influenza caused by cross border movement of people

Lessons Identified

  • To achieve optimal benefits from cross-border or sub-regional road projects, the development and enforcement of a cross-border agreement, simplification of border formalities, and complementary investment in project area are crucial.
  • While loan savings could be helpful for the borrowing country, ADB should carry out appropriate due diligence at approval and at completion.
  • Resettlement of people should be carried out more carefully.

Recommendations

  • ADB should work closely with the GMS countries in ensuring that the CBTA is fully ratified and implemented as per the agreed timetable.
  • ADB needs to work with the governments to convert the transport corridors into economic corridors by undertaking parallel interventions to enable development of industries, agriculture, and production in general.
  • ADB should continue to engage the Ministry of Public Works and Transport of Cambodia and Ministry of Transport in Viet Nam in policy dialogue to ensure that appropriate budget is allocated for regular, periodic, and routine maintenance.