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PROJECT INFORMATION DOCUMENT (PID)
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Report No.: AB642
VN-Mekong Transport Infrastructure Development Project
EAST ASIA AND PACIFIC
Roads and highways (40%);Ports, waterways and shipping
(40%);General transportation sector (20%)
P083588
SOCIALIST REPUBLIC OF VIETNAM
PMU1
308 Minh Khai St.
Hanoi, Vietnam
Tel: 84-4-8629101 Fax: 84-4-8628983/4
[email protected]
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
[X] S1 [ ] S2 [ ] S3 [ ] SF [ ] TBD (to be determined)
January 27, 2004
September 15, 2005
March 15, 2006
1. Key development issues and rationale for Bank involvement
1. Vietnam’s transport and logistics system has supported impressive economic progress in recent
years:
 the economy doubled in size during the 1990’s—7.5% real rate of annual growth;
 poverty dropped by half from 58% of the population in 1993 to 29% in 2002, though per capita
income of Vietnam’s 80 million people remains low around $430/annum;
 exports grew at 17% per year between 1990 and 2000; over 20% projected for 2003;
 exports as a share of GDP increased to 39% in 2002, though significantly lower than the shares of
the fast growing countries of the region; &
 the top 6 exports are: oil, garments, seafood, mining products, footwear, and rice.
2. The Mekong Delta region contains 12 of Vietnam’s 63 provinces and has an area of 40,000 km2,
about 12% of Vietnam’s area. Its population and labor force of around 17 million and 9 million
respectively account for about 22% of Vietnam’s totals. The region is inhabited by four ethnic
groups: the Viet (or Kinh) (about 90%); the Khmer (5%-6%), the Chinese (3%-4%) and a small
Cham minority of less than 1%. The region contributed 19% to Vietnam’s GDP in 2000 up from
17% in 1995. Poverty rates in the Mekong vary from a low of 15%-17% in the provinces
neighboring HCMC (Ben Tre, Long An and Tien Giang) to a high of the 32%-38% in the 3
southern provinces (Soc Trang, Tra Vinh and Ca Mau). The average for the Delta as a whole is
24% compared to a national average of 29%.
3. Millions of small farmers, thousands of private businesses, over 700 state-owned enterprises and
some cooperatives contribute to the vibrant economy of the region. The region produces about
45% of Vietnam’s agricultural products on only 31% of the country’s agricultural land. More
than half of the entire area of the region (2.1 million ha) is under rice cultivation. Known as the
country’s rice basket, it produces about half of Vietnam’s rice and 80% of rice exports. It also
produces about 40% of the country’s seafood yield and 50%-60% of its seafood exports.
4. National and provincial governments are encouraging economic diversification in order to
increase the value of production in an area traditionally dominated by rice:
 agricultural diversification: aquaculture industries, fruit and vegetables, etc;
 downstream diversification: local processing, canning and packing of produce, etc;
 quality enhancement: new central rice collection points well-equipped fishing ports and ISO
certified seafood packing plants, to reduce product loss and increase value;
 diversification into new manufacturing and service industries: for example, the delta is emerging
as a destination for eco-tourism;
 market diversification: increased international trade and new export markets.
5. The economy of the Mekong Delta is therefore both growing rapidly and diversifying its products
and its markets. These two factors pose great challenges to the transport logistics of the region
which this Project aims to address.
6. The most important part of the region’s freight transport infrastructure (which carries about 70%
of tonne-kms) is its inland waterway system. The region contains the nine tributaries of the
Mekong river and these have been connected and overlain with an extensive system of 10,000km
of dikes and canals from small feeders which serve the great majority of communes through a
comprehensive hierarchy of route standards to the major trunk barge routes joining the region to
its markets and ports in Ho Chi Minh City.
7. The road network in the Delta consists of about 1,700 km of national roads (76% paved), the
30,000 km of provincial and rural roads are generally unpaved and In poor condition. About 12%
of the communes do not have access to an all-weather road.
8. There are no railways serving the delta. There is some use of coastal shipping from river ports, in
particular in the regional centre of Can Tho, but river siltation currently limits vessel size and the
contribution of coastal shipping to the transport logistics of the region is modest.
9. A critical feature of the transport logistics is that the major direction of movement, for both
domestic and international markets, is to/from Ho Chi Minh City and its ports. Both waterways
and road systems funnel into a single main corridor which is experiencing some congestion.
10. Broadly, in logistics terms, the waterways carry the lower value bulk goods: rice, cement,
building materials, fertiliser etc. The roads carry higher value (and more time-sensitive) goods
including seafoods, other perishables and manufactured goods. However, there are some
important logistics bottlenecks:
 slow and sometimes expensive rural transport links from farms to freight aggregation points;
 poor access from some peripheral areas on the provincial feeder routes from aggregation points to
the trunk roads and waterways;
 growing congestion on the dominant trunk road, National Highway 1 and quality deficiencies on
other main roads, often caused by bridge loading constraints;



lack of major northern and southern canals providing high capacity barge routes to reduce
transport cost and relieve pinch-points on the central canal routes;
insufficient landing stages at commune, district and provincial levels, which act as interchange
points between road transport and waterway transport to the benefit of the logistics system as a
whole;
transport and logistics regulatory systems which may not provide an enabling market
environment for the development of the most efficient and effective logistics industry.
11. Addressing these problems will both increase the capacity of the transport logistics system to
meet growing demand, improve the range of transport options to support economic
diversification, and reduce transport costs for all producers and consumers in the region.
However, for the potential benefits to be fully realized requires that transport and logistics
markets work efficiently and competitively. The road haulage industry, barge companies, freight
forwarders, port companies etc, all need to respond to the challenge. Previous reports have
observed regulatory constraints which may inhibit efficient market responses.
12. The proposed project is listed in Vietnam’s Country Assistance Strategy--CAS (Mekong Region
Infrastructure Development Project, FY 06) and supports the three broad objectives of Vietnam’s
Country Poverty Reduction and Growth Strategy and CAS: (i) high growth through a transition to
a market economy (ii) adoption of a modern public administration, legal and governance system,
and (iii) an equitable, socially inclusive and sustainable pattern of growth.
2. Proposed objective(s)
13. The overall goal of the proposed project is to support economic development in the Mekong
Delta and to reduce poverty in that area. To achieve this goal, the Project aims to improve supply
chain efficiency for the production, domestic and international trade of the region. It will relieve
bottlenecks on the main supply chain and better link the poor to that supply chain. Specific
Project objectives are:
 to reduce transport costs from points of production to points of export and markets through
improvements in the inland waterways and roads;
 to raise the efficiency of logistics services across modes.
3. Preliminary description
14. The Project will contain three components:
(A) Investments on main supply corridors ($130-150 million) to improve the standard and
connectivity of trunk road and canal networks (including major landing stages), concentrating on
links in (a) a northern corridor serving the provinces of Dong Thap, Tieng Giang and Long An; and
(b) a southern corridor which will benefit Ben Tre, Vinh Long, Ca Mau, Soc Trang and Bac Lieu.
Neither corridor provides good standard transport continuity at present and improvements will help
improve region-wide accessibility and relieve emerging congestion on the main central corridor;
(B) Investments to connect the poor to the supply corridors ($100-120 million) through feeder
waterways and roads at the commune and provincial levels to link poorer and more distant producer
communities to these corridors: this will include not only rural and provincial waterways and roads
but also rural and district level landing stages at interchange points such as farmer's market centers
and areas of warehousing, processing plants, etc.
(C) Institutional support To the Ministry of Transport (IDA $5-10 million):
 Support to the Vietnam Inland Waterways Administration for: (a) extension of the asset
management database to the remainder of the primary waterway network, including canals
upgraded in this Project; (b) planning of and budgeting for sustainable inland waterway
management and maintenance programs, including management of safety function.
 Support to MoT and PDoTs in planning multi-modal transportation infrastructure and logistics
services.
15. Because the access of producers to ports and markets is already better for provinces close to Ho
Chi Minh City, a larger proportion of funds will be used in the Provinces further away.
16. In parallel with the preparation of the Project the World Bank will give assistance to Ministry of
Transport in the design and oversight of an independent Transport and Logistics Regulatory
Review. This will assess and make recommendations for changes in national economic
regulations in all areas of road haulage, barging, ports, air freight, shipping and freight forwarding
(an application for PPIAF Grant funding for this work has been submitted by Ministry of
Transport). The intention of such changes will be to promote free markets, increased private
participation and competition in the freight and logistics supply industry.
17. Complex implementation structure: The implementation of project will involve two transport
administrations (roads and waterways) and two levels of Government (national and provincial).
At the project level, inter-modal working and steering groups have been established and thus far
progress and co-operation have been very good. However, the Bank will need to allow for a
significant level of coordinating supervision.
18. Lack of Sustainable Maintenance for Roads and Canals: Institutional support for road
maintenance planning is being currently addressed through other World Bank programs (Road
Network Improvement Project and Rural Transport Project). For the maintenance of the canals,
the project includes a subcomponent on supporting VIWA in building asset management systems
and on maintenance planning.
19. Inefficient Project Selection at the Commune & District Levels: Priorities and transport plans at
these levels are identified by the provincial governments following consultation with commune
and district governments. This requires significant capacity building at the local levels which is
being currently addressed through the World Bank’s Rural Transport Project.
4. Safeguard policies that might apply
[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project
and in what ways? What actions might be needed during project preparation to assess
safeguard issues and prepare to mitigate them?]
5. Tentative financing
Source:
BORROWER/RECIPIENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
Total
($m.)
20
200
220
6. Contact point
Contact: Simon David Ellis
Title: Transport. Spec.
Tel: 5777+273
Fax: 84-4-9346597
Email: [email protected]
Location: Hanoi, Vietnam (IBRD)