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: physical progress is estimated at 33% compared to the elapsed implementation period of 39% since loan effectiveness.

G0599: as of December 2020, physical progress is estimated at 35% against the time elapsed of 35% 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.

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

LAO: National Assessment Committees (equivalent to certification boards) established for all seven ASEAN Tourism Standards.

LAO: National Assessment Committees members appointed to date: 72, 19 (26%) women.

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

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.

- 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)

LAO (3):

(i) Luang Prabang City, Luang Prabang Province, was certified in 2018, and is working towards renewal of its certification in 2021.

(ii) Pakse City, Champasak Province, is working towards certification in 2021.

(iii) Vang Vieng Town, Vientiane Province, is working towards certification in 2021.

LAO: 47.7% women participants (172 out of 363) in all consultations held to date during detailed design preparation and updating of safeguards documents for all subprojects.

CAM (2): as of Dec 2019, no civil work contracts have been awarded.

LAO (2): Contract of TIIGP2-LAO-W01 was awarded in Dec 2019, which includes improvement of one ferry port.

Another port is under TIIGP2-LAO-W02 package, of which bid was submitted on 30 Oct 2020 and contract is expected in Q1 2021.

CAM (15m3/day): as of Dec 2019, no civil work contracts have been awarded.

LAO (15m3/day): under TIIGP2-LAO-W04 package, of which bid was submitted on 27 Oct 2020 and contract is expected in Q1 2021.

CAM (1,600): as of Dec 2019, no civil work contracts have been awarded.

LAO (4,100): TIIGP2-LAO-W04, of which bid was submitted on 27 Oct 2020. Contract of this package is expected in Q1 2021. It will improve solid waste management services to 4,100 households and businesses.

CAM (10.4km): as of Dec 2019, no civil work contracts have been awarded.

LAO (62.6km): Contract of TIIGP2-LAO-W01 was awarded in Dec 2019, which includes 15.3km of access road. Progress was 36%.

The remaining roads are included in 4 work packages, of which bids for package TIIGP2-LAO-W02, TIIGP2-LAO-W04 and TIIGP2-LAO-W03 were submitted, with contract awards are expected in Q1 2021. Package TIIGP2-LAO-W03a is scheduled to be awarded in Q3 of 2021.

CAM (0.5ha): as of Dec 2019, no civil work contracts have been awarded.

LAO (24.5ha): Package TIIGP2-LAO-W01 awarded in Dec 2019 includes 0.5ha.

Package TIIGP2-LAO-W03a includes 24ha and contract

signing is targeted for Q2 2021.

LAO (90): data on tourism site managers is being collected.

LAO (30%): data on tourism site managers is being collected.

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

LAO (3,000): 3,761 participants (residents and tourism workers) participated in destination management training and awareness-raising activities.

LAO (50%): 46.7% of 3,761 participants are women.

LAO (300): 222 entrepreneurs have received SME support from the project i.e. Support DMN-endorsed SME development activities.

LAO (60%): 43.2% of the entrepreneurs who have received SME support from the project were women.

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

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.