fbpx 49310-002: Yunnan Lincang Border Economic Cooperation Zone Development Project | Asian Development Bank

China, People's Republic of: Yunnan Lincang Border Economic Cooperation Zone Development Project

Sovereign (Public) Project | 49310-002 Status: Active

The project will address cross-border trade capacity, border connectivity, and urban and social development issues in the Cangyuan Wa, Gengma Dai and Wa, and Zhenkang counties in Lincang Prefecture; and support Yunnan Province in enhancing regional cooperation and integration (RCI) under the Greater Mekong Subregion (GMS) program, focusing on economic corridor development. It is expected to enhance RCI in the Shan border province of Myanmar by providing benefits to Myanmar nationals who trade, work, and use social services in the project counties.

Project Details

Project Officer
McIntyre, Andrew J. East Asia Department Request for information
  • China, People's Republic of
  • Water and other urban infrastructure and services
Project Name Yunnan Lincang Border Economic Cooperation Zone Development Project
Project Number 49310-002
Country China, People's Republic of
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3759-PRC: Yunnan Lincang Border Economic Cooperation Zone Development Project
Ordinary capital resources US$ 250.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Education / Pre-primary and primary

Health / Health system development

Water and other urban infrastructure and services / Other urban services - Urban flood protection - Urban sanitation - Urban solid waste management

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The project will address cross-border trade capacity, border connectivity, and urban and social development issues in the Cangyuan Wa, Gengma Dai and Wa, and Zhenkang counties in Lincang Prefecture; and support Yunnan Province in enhancing regional cooperation and integration (RCI) under the Greater Mekong Subregion (GMS) program, focusing on economic corridor development. It is expected to enhance RCI in the Shan border province of Myanmar by providing benefits to Myanmar nationals who trade, work, and use social services in the project counties.
Project Rationale and Linkage to Country/Regional Strategy

Remote location and high poverty levels. Lincang Prefecture is situated in the remote southwest region of Yunnan Province on the border with Myanmar, and is characterized by significant urban and rural poverty. Per capita gross domestic product in the prefecture reached CNY21,967 in 2016 up 10.6% over 2015, however the annual disposable income of urban residents was CNY22,901 per capita, well below the People's Republic of China (PRC) average. The counties of Cangyuan Wa and Zhenkang are officially designated as national poverty counties, and are home to a large share of the prefecture's urban poor. Many Myanmar nationals live and work in these counties, which are located on the PRC -Myanmar border. Most are seasonal workers who increasingly secure manual jobs in factories established near the land ports and border cities of Lincang Prefecture. Many people from Myanmar use hospitals and schools in the three project counties in preference to the poor municipal services available in Myanmar. Most of the seasonal workers belong to ethnic minorities, which account for a significant proportion of the population in the three counties: 93.9% in Cangyuan Wa County (Wa is the major ethnic group), 52.2% in Gengma Dai and Wa County, and 31.5% in Zhenkang County.

Regional cooperation and integration potential. Lincang Prefecture''s location and 300 kilometer (km) border with Myanmar provide the potential for it to become an important trade gateway by which the PRC can reach key Indian Ocean ports, and thereby facilitate access to South Asia, the Middle East, and Europe. Lincang Prefecture complements other border regions of Yunnan by enabling the growing trade between the PRC and Myanmar, which reached $9.7 billion in 2015, up from $3.6 billion in 2010. Much of the trade originates at the local level, and is conducted largely by private sector small and medium-sized enterprises (SMEs). In May 2017, the ministries of commerce of the PRC and Myanmar signed a memorandum of understanding for the joint development of border economic cooperation zones. Lincang Prefecture''s comparative advantage is its location- along the shortest route from Kunming to Myanmar''s Kyaukpyu Port, on the Bay of Bengal. Yunnan''s economic and social development strategies have highlighted the potential for the border areas of Lincang Prefecture to become an important manufacturing and logistics hub along an economic corridor currently being developed through major investment projects such as the Kunming -Mandalay highway and the freight railway linking Kunming to Kyaukpyu.

Development needs. Lincang Prefecture''s poor infrastructure and the low competitiveness of its second- and third-tier cities are hindering the enhancement of cross-border trade, and the achievement of sustainable economic and social development. The existing customs and quarantine inspection facilities at Qingshuihe, the prefecture's main land port, are inadequate to handle the border crossing point's growing trade volume. Further, the current trading market area and warehouses are outdated and in poor condition, affecting the quality of logistical services provided to local traders and SMEs. A similar situation exists in the town supporting the land port. Qingshuihe''s urban road network is inadequate for current residential and commercial needs and the lack of road capacity makes urban areas difficult to access, causing economic losses and safety concerns for road users and pedestrians. Access to basic utilities is limited- 26% of households lack access to clean piped water and 29% are not connected to the sewerage system. Municipal solid waste (MSW) management capacity is limited, sorting facilities are lacking, and collection systems are basic, resulting in considerable environmental pollution and general nuisance. Qingshuihe is crossed by the Nanting River, which lacks flood alleviation infrastructure; some areas experience seasonal flooding, causing significant economic losses. Limited customs and logistical facilities in the city and its land port inhibit the activity of local enterprises and traders, slowing the flow of goods across the border. In addition, the prefecture's border counties of Cangyuan Wa, Gengma Dai and Wa, and Zhenkang have outdated social services (e.g., schools and hospitals), and are unable to serve growing populations of local urban rural residents, and of Myanmar migrants.

Lincang Border Economic Cooperation Zone. As a first step in addressing constraints to cross-border trade, as well as economic and social development in Lincang Prefecture, on

23 September 2013 the PRC''s State Council approved the establishment of a national-level border economic cooperation zone that aims to (i) eliminate bottlenecks created by inadequate infrastructure, (ii) promote cross-border trade and investment to improve living conditions of residents, (iii) promote sustainable regional economic and social development, and (iv) strengthen neighborly cooperation with Myanmar. The Lincang Border Economic Cooperation Zone (LBECZ) is comprised of several core industrial zones covering 3.47 square kilometers and located in the counties of Cangyuan Wa, Gengma Dai and Wa, and Zhenkang (including a tier 1 national port in Qingshuihe). To boost socioeconomic benefits, the LBECZ Management Committee has devised plans to develop 200 square kilometers of adjacent land in State Council-approved core industrial zones, which will provide complementary commercial and residential development areas; and additional industrial, logistics, and trading capacity. In light of the security situation in Myanmar, the LBECZ is instrumental in building cooperation dialogue with authorities in Myanmar (nationally and in Shan State) to enhance the development of the economic corridor beyond the PRC.

Strategic fit. The development of the LBECZ is supported by the national and provincial strategic frameworks for urban development and RCI. The PRC''s Thirteenth Five-Year Plan for National Economic and Social Development, 2016- 2020 and the National New-Type Urbanization Plan, 2014- 2020 both call for the development of small and medium-sized urban centers in key strategic border areas of the PRC, and establishment of border economic cooperation zones. Similar focus for the PRC is the development of border areas and the enhancement of cross-border cooperation to promote connectivity and strengthen economic partnerships in the spirit of open regionalism. Additionally, RCI constitutes an important means to increase integration with the regional and global economy, and is highlighted as a priority in the Thirteenth Five-Year Plan. In 2016, the State Council approved a list of key border areas and trade ports, and identified actions for their development, while the governments of the PRC and Myanmar began an ambitious cooperation program in 2014 intended to develop a _PRC -Myanmar corridor_ from Kunming to the sea port of Kyaukpyu, in which the LBECZ plays a key role. The corridor includes highway and railway links, as well as key urban and logistic centers. Many sections of the corridor in both countries are already under construction, with others in the planning and design stage.

Urban development and RCI are integral to Yunnan Province''s Thirteenth Five-Year Plan, which emphasizes (i) strengthening cooperation with the GMS countries, (ii) participating in major international economic corridors linking Yunnan and the GMS, and (iii) serving as the gateway for the PRC's southeast region. However, Yunnan Province is constrained by its low urbanization rate; despite rapid development in the Kunming area, many of the province's small and medium-sized cities suffer from inadequate urban infrastructure and limited connectivity. Through the GMS, Yunnan has been prioritizing the development of economic corridors, while highlighting the importance of cross-border cooperation as a way to enhance the benefits for neighboring countries, particularly Myanmar. Yunnan''s RCI action plan includes priority investments for development of the PRC -Myanmar corridor through Lincang Prefecture, which are intended for financing by various sources, including the PRC and Yunnan governments, multilateral development banks, and the private sector.

The project (i) supports Strategy 2030 of the Asian Development Bank (ADB) in making cities more livable, fostering RCI, and accelerating progress in gender equality; (ii) is in line with (a) ADB''s urban and water operational plans by promoting green, competitive, and inclusive cities; and (b) ADB''s operational plan for RCI by strengthening connectivity between economies; (iii) is consistent with ADB''s country partnership strategy for the PRC, 2016 -2020 in terms of facilitating inclusive urbanization and enhancing RCI; (iv) is included in the country operations business plan for the PRC, 2018 -2020, which references inclusive development of small cities; (v) is aligned with the latest strategic priorities of the GMS, and (vi) is in support of the achievement of several sustainable development goals of the United Nations related to health, education, sanitation, economic growth, and sustainable cities.

Continuity of development initiatives and lessons learned. The project is part of ADB''s continuous engagement to assist Yunnan in achieving green and sustainable urban development, and support the PRC in enhancing RCI. The project design incorporates lessons learned from previous ADB-financed urban development projects in Yunnan, as well as in small and medium-sized cities in the PRC. These lessons include enhanced implementation arrangements with integral capacity support from the Yunnan provincial authorities and improved design of project components in order to further support urban -rural integration. The project will also build on ADB''s experience from recent urban development and RCI projects in strategic border areas of the PRC on key issues such as construction and management of logistics and industrial parks and on the role of cross-border migrant workers.

Value addition of ADB assistance. By designing a multisector project that includes urban, social, and trading infrastructure, ADB has strengthened a holistic approach that enhances competitive, green, and inclusive development in the small and medium-sized urban centers of this border region. The project is thus aligned with the livable cities vision endorsed by both the PRC and ADB. Throughout the project implementation, ADB will provide recommendations to LBECZ regarding their master plan review process to introduce best practices in urban planning and development. Although the project is being implemented entirely in the PRC, ADB has ensured cross-border spillover effects by designing each component so that Myanmar nationals will also be beneficiaries. This is particularly the case for (i) trading markets and logistics parks, which will accommodate farmers and traders from Myanmar; and (ii) schools and hospitals, which will benefit large numbers of children and other family members from Myanmar. Output 4 of the project (on institutional capacity development) includes features that complement the infrastructure components, thereby enhancing their RCI impact. Some of these features, such as those focusing on SMEs and technical and vocational education and training, will be designed to enhance the capacity of entrepreneurs and workers from Myanmar. The project will also be effectively mainstreaming gender equality through its social infrastructure and services components. For instance, the hospitals will have specialized maternity and obstetrics and gynecology departments promoting safe motherhood and women's reproductive health, and the schools will have gender-inclusive design features and will be staffed by at least 60% women.

Impact Economic growth potential for LBECZ and border areas of Myanmar enhanced; benefits of regional cooperation and integration in LBECZ and border areas of Myanmar realized; and living conditions and public health of residents of LBECZ and border areas of Myanmar improved
Project Outcome
Description of Outcome Competitiveness of urban centers, logistics and industrial parks, and land ports in project counties and LBECZ enhanced
Progress Toward Outcome

The loan became effective on 11 July 2019. Three start-up consultants were mobilized in July 2019 and contract CS1: Project Management and Implementation Support will be signed by October 2019 and mobilized immediately. Contract award for civil works package RD-C04 was approved in September and construction is targeted to commence soon. Advance account expected to be established by end November 2019 and first disbursement by December 2019.

Pre-inception mission was fielded on 22-24 January and inception mission was fielded on 16-19 September 2019. The next review mission is tentatively scheduled on June 2020.

Implementation Progress
Description of Project Outputs

Cross-border trade infrastructure improved

Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved

Social infrastructure and services improved

Institutional capacity of involved agencies improved

Status of Implementation Progress (Outputs, Activities, and Issues)

1. Contract RD-C04 awarded in September 2019.

2. Several works packages are under preparation.

3. Design is ongoing.

4. Contract CS1: Project Management and Implementation Support awarded in Q4 2019. Other consulting services are for recruitment.

Geographical Location Lincang
Safeguard Categories
Environment A
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects The categorization was based on the project having numerous multisector components and potential accumulative impacts to the project area. An environmental impact assessment (EIA), including an environmental management plan (EMP) was finalized in compliance with the Asian Development Bank's (ADB) Safeguard Policy Statement and disclosed on ADB's website on 25 May 2018. The EIA incorporates findings of the domestic feasibility studies, domestic EIAs, climate risk and vulnerability assessment, and technical reports conducted. The domestic EIAs were approved by the local environmental protection bureau in March 2018. The EMP complies with the People's Republic of China's environmental laws and ADB's Safeguard Policy Statement. An external monitoring entity will be recruited by the project management office to perform evaluation and assessment of the implementation and compliance with the EMP during all stages of the project. During project preparation, two rounds of meaningful consultations have been conducted with all relevant stakeholders and the findings have been incorporated in the project design. Any potential environmental disputes will be handled in accordance with the grievance redress mechanism established for the project. The potential impacts during construction include excavation, movement of soil, and treatment of sediments associated with river rehabilitation works, causing air, soil, and water pollution. Earthworks are required for construction of river embankments; roads, bridges, and culverts; and water and wastewater installations with temporary impacts on soil, surface water, air, and community and occupational safety. During operations, mitigation measures identified in the EMP require environmental compliance for air pollution, water treatment, municipal solid waste, and hospital and industrial wastes. An assessment to determine the significance of project impacts and risks on biodiversity and natural resources has been conducted; and adequate measures to mitigate potential impacts and risks have been included in the EMP.
Involuntary Resettlement There are 145 households (766 persons) who will be affected by the acquisition of collective farmland (1,038.37 mu) in the Mengding subproject. There are 28 households (110 persons) who belong to the Wa and Yi ethnic groups. The impacts are found to be insignificant since loss of land per household is less than 5% of their total landholdings and households have other sources of income. For the Cangyuan subproject, the impacts are found to be marginal where four households (20 persons) will lose about 7.65 mu of cultivated land while one household (4 persons) will be affected by house demolition. These five households are from the Wa and Dai ethnic group. Impacts are also found to be marginal for the Zhenkang subproject where an estimated 38.24 mu of collective land will be affecting nine households (41 persons) from the De'ang ethnic group. An estimated 125 mu unallocated state-owned rubber forest land in Mengding and a 39.53 mu state-owned construction land owned by a real estate company in Cangyuan will be required. For Zhenkang, where 85.26 mu of state-owned construction land was acquired in the past, due diligence indicated that there are no outstanding issue. There are three resettlement plans that have been prepared in consultation with the affected people and various stakeholders to address land acquisition and resettlement issues. Key information in the resettlement plans have been disclosed to the affected persons.
Indigenous Peoples The ethnic population makes up of 42.8% of project beneficiaries. Among ethnic minority beneficiaries, Dai, De'ang, Wa, and Yi minorities comprise 83.57% of the total. Ethnic people will benefit from improved municipal infrastructure and social services, and additional business and job opportunities. With the exception of one household (4 persons) whose house will be totally affected and will be required to relocate, none of the 41 ethnic minority households (171 people) will be marginally affected by acquisition of their farmland. An ethnic minority development plan has been prepared and endorsed by the project management office.
Stakeholder Communication, Participation, and Consultation
During Project Design Meaningful consultations have been conducted with all relevant stakeholders and the findings have been incorporated in the project design.
During Project Implementation This includes policy dialogue with the executing agency, information gathering and sharing with civil society organizations, and participation of neighborhood and village committees and the Women's Federation in project activities during the GAP and EMDP implementation.
Business Opportunities
Consulting Services Consulting services will be undertaken in accordance with the ADB' Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Procurement Procurement to be financed by the loan will follow the ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Responsible ADB Officer McIntyre, Andrew J.
Responsible ADB Department East Asia Department
Responsible ADB Division Urban and Social Sectors Division, EARD
Executing Agencies
Lincang Municipal Government
[email protected]
No. 350, Shiji Road, Fengxiang
Sub-district, Linxiang District,
Lincang City, Yunnan Province
Yunnan Provincial Finance Department Division of International Cooperation
[email protected]
Wuhuashan, Kunming Yunnan,
Peoples Republic of China
Concept Clearance 22 Sep 2017
Fact Finding 18 Apr 2018 to 27 Apr 2018
MRM 18 Sep 2018
Approval 10 Dec 2018
Last Review Mission -
Last PDS Update 25 Mar 2020

Loan 3759-PRC

Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2018 15 Apr 2019 11 Jul 2019 31 Dec 2024 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 402.80 Cumulative Contract Awards
ADB 250.00 10 Dec 2018 16.56 0.00 7%
Counterpart 152.80 Cumulative Disbursements
Cofinancing 0.00 10 Dec 2018 1.63 0.00 1%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

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Tender Title Type Status Posting Date Deadline
project management and implementation support Firm - Consulting Closed 18 Apr 2019 17 May 2019
Environmental Specialist Individual - Consulting Closed 21 Dec 2018 03 Jan 2019
Contract Management and Procurement Specialist Individual - Consulting Closed 21 Dec 2018 03 Jan 2019
Social and Resettlement Specialist Individual - Consulting Closed 21 Dec 2018 03 Jan 2019

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)