Lao People's Democratic Republic : Urban Environment Improvement Investment Project

Project Name

Urban Environment Improvement Investment Project

Project Number

53203-001

Country / Economy

• Lao People's Democratic Republic

Project Status

Active

Project Type / Modality of Assistance

• Grant
• Loan

Source of Funding / Amount

Grant 0930-LAO: Urban Environment Improvement Investment Project

Source	Amount
Asian Development Fund	US$ 10.00 million

Loan 4425-LAO: Urban Environment Improvement Investment Program

Source	Amount
Concessional ordinary capital resources lending	US$ 35.00 million

Operational Priorities

• OP2: Accelerating progress in gender equality
• OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• OP4: Making cities more livable
• OP6: Strengthening governance and institutional capacity
• OP7: Fostering regional cooperation and integration

Sector / Subsector

• Water and other urban infrastructure and services / Other urban services - Urban policy, institutional and capacity development - Urban sanitation

Gender

Gender equity theme

Description

The proposed project will support sustainable, inclusive, and resilient urban development in Luang Prabang, a city in the Greater Mekong Subregion (GMS) north-south economic corridor affected by environmental degradation, climate change, disasters, and diminishing livability. Multisector project investments will (i) improve the quality and coverage of urban infrastructure and services, (ii) strengthen institutions and capacity to foster climate and disaster resilient development pathways, (iii) promote inclusive and gender-responsive urban planning, and (iv) enhance women's leadership and economic empowerment. The project is expected to benefit 104,500 residents and 1.3 million annual visitors by 2031.

Project Rationale and Linkage to Country/Regional Strategy

Economic growth in the Lao PDR averaged nearly 7.0% per year from 1990 to 2020, driven by capital intensive hydropower, mining, and transport investments that did not support significant formal job creation. Border closures and restricted movement of people and goods due to the coronavirus disease pandemic caused gross domestic product (GDP) to contract by 0.5% in 2020, exacerbating high external public debt and inflation. Other disasters reduce GDP by up to 2% per year. While GDP growth expanded by 2.3% in 2021 and 2.5% in 2022 after borders reopened and the Lao-Peoples Republic of China (PRC) railway started operations, precarious public debt continues to hold back public investment. The removal of travel and transport restrictions helped international tourist arrivals rebound from zero in 2021 to 1.3 million in 2022 and boosted domestic trips by 76% to 1.4 million over the same period. Tourism and other primarily urban-based services comprise 38.8% of GDP and are among the few sectors creating economic diversification opportunities and jobs that can absorb Lao PDR's surplus agricultural workforce. Sustainable urbanization is crucial to accelerate economic development and drive structural transformation.

Impact

Quality of life and sustainability of Luang Prabang city improved

Project Outcome

Description of Outcome

Urban development in Luang Prabang is sustainable, resilient, and inclusive

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Urban infrastructure improved

Enabling environment for inclusive and resilient urban and tourism services strengthened

Women's leadership and employment enhanced

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

Geographical Location

Nation-wide, Luang Prabang, Pakse, Savannakhet

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

B

Summary of Environmental and Social Aspects

Environmental Aspects

One initial environmental examination (IEE) and three environmental management plans (EMPs) were prepared for the project in accordance with ADB's Safeguard Policy Statement (2009) and government laws and regulations. The project is fully aligned with the current Luang Prabang Heritage Preservation and Development Master Plan. It is expected that project sites will experience short-term localized impacts during construction that are site-specific, reversible, and can be avoided, minimized, or properly mitigated with good construction practices and measures defined in the EMPs and corresponding environmental and health and safety management plans. The IEE and EMPs will be updated based on detailed engineering designs and approved by Ministry of Public Works and Transport (MPWT), cleared by ADB, and publicly disclosed before civil works contracts are awarded. Updated EMPs will be included in bidding documents. Works will commence only after domestic national environmental clearances have been secured and the site-specific environmental and health and safety management plans have been approved by MPWT.

Involuntary Resettlement

The project's resettlement and ethnic groups development plan (REGDP) was prepared based on broad and meaningful stakeholder consultations, following ADB's Safeguard Policy Statement (2009) and government laws and regulations. Impacts are confined to 15 affected households with 45 affected persons. All are vulnerable because of being low-income, ethnic, or landless households, or households headed women. The project costs include a social development program to ensure livelihood restoration for affected households and improved living standards. The REGDP will be updated based on consultations during implementation, detailed engineering designs, and the detailed measurement survey. The updated REGDP will be approved by MPWT, cleared by ADB, and disclosed before works contracts are awarded.

Indigenous Peoples

The safeguard category for indigenous people (IP) is B. The affected persons that will be impacted by the project do self-identify as a distinct social group and have a distinct language. They do not have a collective attachment to the area where they currently live and work, nor are their livelihoods traditional. A social development program for waste picker affected households (AH) will be developed to respond to the waste picker AHs high vulnerability, poor sanitation, low education level and children not attending school.

Stakeholder Communication, Participation, and Consultation

During Project Design

A project stakeholder communications strategy (SCS) was prepared following ADB's Access to Information Policy (2018) and the manual Strengthening Participation for Development Results: An ADB Guide to Participation. It incorporates project information disclosure requirements in the social and environmental safeguards documents and the gender action plan. The key objective is to provide the intended project beneficiaries, government, the private sector, and civil society with equal access to project information in a clear, timely, and appropriate manner, so that all stakeholders can meaningfully engage with project decision-makers.

During Project Implementation

Business Opportunities

Consulting Services

A consulting firm (the consultant) will be recruited to provide project management and implementation support

Procurement

Procurement activities include

(i) works and goods packages to deliver Output 1 subprojects, (ii) goods packages to support Output 2 urban master planning and integrated solid waste management capacity building, (iii) goods packages for vehicles and office equipment and software to facilitate project implementation; and (v) consulting services to support the EA and IA with Outputs 1, 2, and 3 implementation, project management, and external audits.

Contact

Responsible ADB Officer

Schipani, Steven M.

Responsible ADB Department

Sectors Group

Responsible ADB Division

Water and Urban Development Sector Office (SG-WUD)

Executing Agencies

Ministry of Public Works and Transport

Timetable

Concept Clearance

11 Nov 2020

Fact Finding

19 Jun 2023 to 23 Jun 2023

MRM

22 Aug 2023

Approval

07 Dec 2023

Last Review Mission

-

Last PDS Update

24 Jul 2024

Funding

Grant 0930-LAO

Loan 4425-LAO