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 31 Dec 2021, physical progress is estimated at 56% compared to the elapsed implementation period of 57%.

G0599: as of 31 December 2021, physical progress is estimated at 40% against the time elapsed of 49% 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 (2): as of Oct 2021, a civil works contract have been awarded (Koh Tonsay Passenger pier improvement subproject).

LAO (2):

- Contract of TIIGP2-LAO-W01 was awarded on 30 Dec 2019, which includes improvement of one ferry port. Progress was 46.5%.

- Another port under Contract of TIIGP2-LAO-W02 was awarded on 26 Apr 2021. Progress was 4.5%.

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

LAO (15m3/day): Under contract of TIIGP2-LAO-W04 which was awarded on 19 Feb 2021. Tt includes 20m3/day septage sludge treatment facility. Overall progress of the subproject was 11%.

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

LAO (24.5ha):

- Contract of TIIGP2-LAO-W01 was awarded on 30 Dec 2019, which includes 0.5ha catchment area of flood protection and drainage improvement.

- Package TIIGP2-LAO-W03a includes 24ha and contract, and commencement of the procurement process to be confirmed in 2022.

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

LAO (4,100): Under contract of TIIGP2-LAO-W04 which was awarded on 19 Feb 2021. It will improve solid waste management services to 4,100 households and businesses (number of beneficiaries to be confirmed).

LAO: 39% women participants (127 out of 326) in all consultations held to date during detailed design preparation and updating of safeguards documents for all subprojects C1, C2, V1, V2, V3, V4 and V5.

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

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).

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 access road. Progress was 46.5%.

- Contract of TIIGP2-LAO-W02: Nam Ngum Reservoir Access Improvements was awarded on 26 Apr 2021, which includes 6.73km of access road. Progress was 4.5%.

- 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. Progress was 1.3%

- 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 11%.

The remaining roads are included package TIIGP2-LAO-W03a: Vang Vieng Urban Renewal. The timing of the procurement of this package will be decided in 2022. The DED was prepared, and endorsed by ADB. It has 0.67km of concrete road and 0.39km of DBST road totaling 1.05km of road improvement.

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

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

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: 44.8% (56 out of 125)

- Champasak Province: 34.97% (15 out of 43)

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

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

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

Total: 38.9% (90 out of 232)

Assessment committees to be restructured. Gender targets are being considered in the process.

LAO (64): ASEAN Green Hotel Standards have been adopted. Consultation and selection of the target hotels is ongoing.

2017 Baseline corrected from 29 to 21. The target may need to be reviewed at mid-term review as the 2017 baseline shows 21 hotels in target provinces certified as ASEAN green hotel standard.

LAO (113): ASEAN Home stay Standards have been adopted. Consultation and selection of the target homestay villages is ongoing.

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

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

LAO (3):

(i) Luang Prabang City, Luang Prabang Province, was certified in 2018, and is working towards renewal of its certification in 2022.

(ii) Pakse City, Champasak Province, is working towards certification in 2022.

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

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 (1): Internet-based tourism repository under development.

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

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 during in 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 (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 during 2021-2022.

CAM: Cumulative total of 317 participants

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

LAO (3,000): 3,870 participants (residents and tourism workers) participated in destination management training and awareness-raising activities.

CAM: Cumulative total of 317 participants

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

LAO (50%): Of 3,870 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 114 participants (F41/

36%) 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 planned for 2022.

Data available to date (September 2021): 44.6 % (422 out of 946) 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.

Data available to date: 45.4% (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.

The main stakeholders are: (i) urban and rural residents living in/near secondary towns in the GMS economic corridors, including ethnic groups and women; (ii) owners and operators of tourism-related enterprises, and; (iii) public agencies responsible for tourism, urban environmental management, and urban-rural transportation networks. A series of national and site-specific workshops including women, men, ethnic groups, youth and the elderly will be conducted in each country to gain the views of project stakeholders on project scope, implementation arrangements, community participation and grievance redress mechanisms, and other social, environmental and economic aspects of the project.

Representatives of nongovernment organizations, civil society, mass organizations, community-based organizations, and private sector associations will participate in workshops and focus group discussions to formulate the project's participation plan and stakeholder communication strategy. Household surveys and focus groups discussions with key stakeholders will establish baseline conditions and provide opportunities for stakeholders to provide inputs into the design of infrastructure and capacity building programs.

The project information was shared with civil society organizations active in tourism and urban development in CLMV, including several international nongovernment organizations, non-profit associations, tourism industry associations, and foundations that provide skills training for the urban and rural poor, and support women's and child protection.