Regional: Second Greater Mekong Subregion Tourism Infrastructure for Inclusive Growth Project

Industry and trade / Small and medium enterprise development

Transport / Road transport (non-urban) - Urban roads and traffic management - Water transport (non-urban)

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

Cambodia and the Lao PDR actively promote tourism because it produces substantial national income, local employment, private investment and trade in services. Tourism directly contributes 12.4% to Cambodia's gross domestic product (GDP) and 4.6% to Lao PDR's GDP, generating 70% 78% of service exports and $1.1 billion annual investment. There are about 1.1 million tourism workers in the two countries. Most are women employed by small and medium-sized enterprises (SMEs). Tourist visa on arrival is permitted for 180 countries and 15-day tourist visa exemptions granted to ASEAN citizens. Government efforts to upgrade gateway airports, transnational railways and highways, and secondary roads to facilitate travel and tourism are supported by the Asian Development Bank (ADB) and other development partners. ASEAN and GMS policies to liberalize aviation services and ease cross-border vehicle movements complement physical infrastructure investments.

Even with these strengths and opportunities Cambodia and the Lao PDR rank low in the World Travel & Tourism Competitiveness Index, mainly because secondary destinations lack modern transport infrastructure and quality urban environmental services. Other underlying constraints are inadequate tourism planning, low service standards, and a weak business enabling environment. Consequently, in 2016 the two countries received only 8% of ASEAN's total tourist arrivals. In the same year Cambodia's international tourist arrival growth decelerated to 5%, about half the medium-term rate, and Lao PDR's arrivals fell 9.5% compared to 2015. Fewer visitors and lower spending because of poor sanitation and hygiene reduces economic benefits by about $90 million per year. Average expenditure per visitor in Cambodia ($641) and the Lao PDR ($171) is far below Asia and the Pacific's benchmark $1,500. Imbalances within the countries is also a problem. About half of international tourist arrivals and corresponding visitor expenditure, destination investment, and direct tourism employment accrue to just 3 cities: Phnom Penh, Siem Reap, and Vientiane Capital.

The GMS central and southern corridors are vulnerable to climate change, particularly increasingly severe weather events in Cambodia's coastal zone and flooding in Lao PDR's Mekong and Nam Xong River valleys. Climate vulnerability and risk are exacerbated by limited country capacity to integrate adaptation and mitigation solutions. Countering climate change requires finance and knowledge to retrofit and construct climate-resilient infrastructure and better prepare for natural disasters. Resource-efficiency certification programs, including the ASEAN green hotel standard, and public awareness campaigns to promote lower-carbon travel, emissions offsets, and environmentally-friendly tourism services are also needed.

To help address these constraints the project builds on the ongoing GMS Tourism Infrastructure for Inclusive Growth Project by strategically financing climate-resilient road, water transport, and urban infrastructure in areas with comparative tourism advantages. Priority investments include (i) road improvements to decongest urban areas and link secondary towns with nearby tourist attractions; (ii) coastal and river passenger ports to increase handling capacity and provide private operators with the facilities needed to expand water transport and recreation services; (iii) storm water drains and riverbank protection in flood-prone areas; and (iv) modern solid waste and septic management systems with expanded collection services, materials recovery, and hygienic disposal facilities

L3701-CAM: As of 20 March 2022, physical progress is estimated at 57.05% compared to the elapsed implementation period of 61.42% since approval.

G0599: As of 30 June 2022, physical progress is estimated at 50% against the time elapsed of 52% since effectiveness.

Output 1. Urban-rural access infrastructure and urban environmental services improved.

Output 2. Capacity to implement ASEAN tourism standards strengthened.

Output 3. Institutional capacity for tourism destination management and infrastructure O&M strengthened.

CAM (15m3/day): part of the Koh Tonsay passenger pier improvement subproject.

Kep Landfill subproject contract was signed on 7 May 2020. By 31 December 2021, progressat Kep Landfill is estimated at 96% of the updated total contract value after VO3 and the pending woks are limited to the supply and installation of the equipment parts included in the approved VO3.

LAO (15m3/day): TIIGP2-LAO-W04: Vang Vieng Landfill Improvements, which was awarded on 19 Feb 2021. Overall progress of the subproject was 36%. This package includes 20m3/day septage sludge treatment facility, and wastewater treatment under W02 and w03 (Kaeng Yui) will be included.

CAM (0.5ha): part of the Koh Tonsay passenger pier improvement subproject.

LAO (24.5ha):

- Contract of TIIGP2-LAO-W01: Nakasang and Don Det-Don Khone Access Improvement was awarded on 30 Dec 2019, which includes 0.5ha catchment area of flood protection and drainage improvement.

- Detailed design for package TIIGP2-LAO-W03a: Vang Vieng Urban Renewal was completed during the first half of 2020. This package includes 24 ha catchment area of flood protection and drainage improvement. Commencement of the procurement process to be confirmed in 2023.

The project will construct flood protection and drainage for a total of 24.5 ha catchment.

CAM (1,600): Kep Landfill improvement subproject was awarded in May 2020.

LAO (4,100): Under contract of TIIGP2-LAO-W04: Vang Vieng Landfill Improvements, which was awarded on 19 Feb 2021. The project will support improving institutional capacity for enhanced solid waste management in Vang Vieng.

The targeted number of households and businesses for improved solid waste management services is 4,100 (number of beneficiaries to be confirmed).

CAM: As of March 2022, the cumulative total: 123 participants (Female 65 or 53%):

Koh Tonsay consultation meeting on 22-24 October 2019, total 82 participants (F= 37/45%)

Koh Tonsay consultation meeting on 28-29 May 2020, total 34 participants (F=21/62%)

Koh Tonsay consultation meeting on 24 November 2020 with 7 community representatives (F=7/100%)

LAO: 50.4% (119 out of 236) of people consulted to optimize inclusiveness, gender responsiveness, and employment opportunities during and after construction were women.

Additional consultations are planned, in which women participation will be encouraged to ensure the target of 50% will be maintained.

CAM (10.4km): as of Oct 2021, no civil works contract has been awarded (expected in Q1 2022 for the construction of Kep Coastal Road improvement - 12 KM).

as of March 2022, the final DRP for Kep Coastal Road subproject was submitted to ADB on 15 December 2021 for final review and appoval and the DRP was approved n 24 December 2021. The formal request for partial handover o the project site unaffected by IR impacts was submitted to ADB on 22 and approved on 24 December 2021.

LAO (62.6km):

- Contract of TIIGP2-LAO-W01: Nakasang and Don Det-Don Khone Access Improvements was awarded on 30 Dec 2019, which includes 15.3km of improvement of access road to tourist sites. Progress was 80%.

- Contract of TIIGP2-LAO-W02: Nam Ngum Reservoir Access Improvements was awarded on 26 Apr 2021, which includes 6.73km of concrete road. Progress was 11%. Progress was delayed and the catch up action plan was developed and closely monitored.

- Contract of TIIGP2-LAO-W03: Kaeng Yui Waterfall Access Improvements and Western Loop Rural Access Road and Bridge Improvements was signed on 23 Jul 2021, which includes 6.00 km of concrete road and 25.97 km of DBST road totaling 31.97km of access road improvement. Progress was 11%, delayed. The catch up action plan was developed and closely monitored.

- Contract of TIIGP2-LAO-W04: Vang Vieng Landfill Improvements was awarded on 19 Feb 2021, which includes 1.26km of access and internal road. Progress was 36%.

- The remaining roads are included package TIIGP2-LAO-W03a: Vang Vieng Urban Renewal, which includes 0.67 km of concrete road and 0.39 km of DBST road totaling 1.05 km of access road improvement. The DED was prepared, and endorsed by ADB. Commencement of the procurement will be confirmed in 2023.

A total 62.01 km road will be improved under these 5 Works packages.

CAM (2): as of Oct 2021, a civil works contract have been awarded (Koh Tonsay Passenger pier improvement subproject). Contractor completed the preliminary activities for the preparation of CEMP and UXO clearance of the area on 10 November 2021. EA cleared the CEMP. ADB approved the start of works on 14 November 2021. Contractor completed the detailed investigation survey and construction of the camp scheduled to start on 31 December 2021.

LAO (2):

- Contract of TIIGP2-LAO-W01: Nakasang and Don Det-Don Khone Access Improvement was awarded on 30 Dec 2019, which includes improvement of one ferry port. Overall progress of the subproject was 88%.

- Contract for Package TIIGP2-LAO-W02: Nam Ngum Reservoir Access Improvements was awarded on 26 April 2021, which includes passenger/ferry port improvement. Overall progress of the subproject was 11%.

A total of 2 passenger/ferry ports will be improved.

LAO: National and provincial tourism standard assessment committees (equivalent to the _certification bodies_ referred to in the PAM) have been set up for all seven standards, with this count of membership:

- National Level: 51% (48 out of 94)

- Champasak Province: 34% (14 out of 41)

- Vientiane Province: 33% (6 out of 18)

- Vang Vieng District: 30 % (9 out of 30)

- Luang Prabang Province: 25% (4 out of 16)

Total at provincial level: 31.4% (33 out of 105)

National Assessment Committees (equivalent to assessment frameworks and certification boards) being established for all seven ASEAN Tourism Standards.

CAM: two of 3 assessment committees have been established: (i) Clean City &Public Toilet Standards; and (ii) CBT and Homestay.

The Green hotel standard will be established.

A review of OP2 DMF indicators in is progress in consultation with the LAO PDR ATS team The Cambodian ATS team has completed a review of all certified Green Hotels and Homestays to determine total, expired and current certifications to determine if OP 2 targets can be achieved before December 2024.

LAO: One national assessment framework established comprising:

- National and Provincial Assessment and Certification Committees (equivalent to certification boards) for all 7 ASEAN Tourism Standards

- ASEAN Tourism Standards (5 of them adapted to Lao national context) in English and Lao languages

- Assessment and certification manuals for all 7 standards

CAM: The commencement date for new Green Hotel certifications will be in Q2 2022. DMF targets for Green Hotel standard have been reviewed. Baseline by PCUs in Lao PDR and Cambodia with assistance from LAO TIIG2 International ASEAN Tourism Standards Specialist

LAO (64):

2017 Baseline corrected from 29 to 24.

Out of the 36 hotels that have been certified since 2008, 8 have active certification, the others are expired. An effort is being made in 2022 to re-certify the expired properties, along with certification of additional properties.

As the hotels partially or fully closed their operations during COVID-19 pandemic and recently resume their operations after the gov's announcement of full reopening of the country in May 2022. The target facilities being consulted and confirmed. The certification cycle is 2-year, the last round was in Jan 2022), and the next round will be in 2024.

CAM: The DMF targets have been reviewed by the Cambodian ATS team and new certifications will commence in Q2 2022.

LAO (113):

3 homestay villages certified in target provinces, with a combined number of 23 service providers in 2016:

- Ban Naduang (Kaeng Nyui waterfall site), Vang Vieng District, Vientiane Province (2016, renewed in 2018)

- Ban Hua Don Deng (Don Deng Island), Pa Thoumphone District, Chamapasak Province (2017, renewed in 2019)

- Ban Don Kho (Don Kho Island), Xanasomboun District, Champasak Province (2017, renewed in 2019)

2017: 25 service providers

2018/2019: 28 service providers

2020: 28 service providers

All three certifications are now expired. An effort is being made in 2022 to re-certify the expired villages, along with possible certification of additional villages.

Target may need to be reviewed at mid-term review.

CAM: Three cities have already achieved the Clean City Standard: Kep in 2018, Kampot in 2020 and Sihanoukville in January 2022. Two clean city certifications have expired (Kep and Kampot). Sihanoukville certification is current.

LAO (3):

(i) Luang Prabang City, Luang Prabang Province, was certified in 2018, and renewed its certification in 2022..

(ii) Pakse City, Champasak Provincewas certified in 2022.

(iii) Vang Vieng Town, Vientiane Province, is working towards certification in 2022.

An effort is being made in 2022-2024 to re-certify the expired units in these villages, along with certification of additional households in other villages. So far, additional 36 HH will be targeted.

LAO (30%): No capacity building activities related to tourism management and infrastructure O&M held to date. Site management plan and O&M plans are under preparation and will be finalized in 2022-2023.

CAM: Cumulative total of 317 participants

(F170/54%) in training and awareness raising activities.

LAO (50%): Of 4,270 residents and tourism workers who have participated in destination management training and awareness-raising activities, 48.5% were women (2,041 out of 4,270).

CAM: Cumulative total of 114 participants (F41/

36%) in training and awareness raising activities.

LAO (4): Five destination management plans completed (National, Luang Prabang, Southern Laos, Vang Vieng, and Vientiane Province).

CAM: 4 existing DMPs in Kep, SHV,

Kampot, and Koh Kong for the

period 2019 - 2023 have been

updated.

LAO (90): No capacity building activities related to tourism management and infrastructure O&M held to date. Site management plan and O&M plans are under preparation and will be finalized by end 2022.

CAM: This target requires revision as it is

too high and will be discussed with

ADB at the time of the mid-term review

LAO (3,870): To date, of the residents and tourism workers who have participated in destination management training and awareness-raising activities, 46.7% were women (1,807 out of 3,870)

CAM: Cumulative total of 317 participants

(F170/54%) in training and awareness raising activities.

LAO (300): List of SMEs supported during 2019-2020 is being compiled and list of targeted SMEs for remainder of project will be compiled through SME needs assessments is ongoing. SME development plan to be finalised by end 2022.

Data available to date 45.7% (384 out of 845) participants in SME development activities were women.

CAM: Cumulative total of 114 participants (F41/

36%) in training and awareness raising activities.

LAO (60%):

- List of SMEs supported during 2019-2020 is being compiled and list of targeted SMEs for remainder of project will be compiled through SME needs assessments planned for 2022.

CAM: Cumulative total of 114 participants (F41/

36%) in training and awareness raising activities.

LAO (1): Internet-based tourism repository developed and the project contimues to upload the information.

DMN website https://www.laos-dmn.com.

CAM: Project website has been established. Additional websites will be identified to disseminate tourist data and information (e.g. RUPP tourism website).