The two credits signed today are the third Poverty Reduction Support Credit (PRSC 3) of US$100 million, and the Urban Upgrading project of US$222 million.

State Bank of Vietnam Governor Le Duc Thuy said in his remarks at the signing ceremony: "These two credits demonstrate once again the commitment of the World Bank and other donors in supporting Vietnam's economic growth and poverty reduction."

"In the months ahead, we will broaden and deepen our reform agenda. We intend to work closely with the World Bank and the donor community to monitor the process and its outcomes," added the Governor.

Donors join hands in support to economic reforms and efforts to help the poor and the disadvantaged

"Preparations for PRSC 3 have built on the strong donor commitment to support Vietnam's reform agenda. At the same time, nationwide implementation of the CPRGS has further galvanized interest for the reform program among many donors," said Klaus Rohland, Director of the World Bank in Vietnam.

"Co-financiers of the PRSC process have played an important role not only in providing grant financing as a complement to IDA loan funds, but also through their involvement in the policy dialogue with the Government," he added.

Co-financiers to the PRSC 3 include the Asian Development Bank, the Canadian International Development Agency, Denmark, the European Commission, the Japan Bank for International Cooperation, Netherlands, and the United Kingdom's Department for International Development.

The $100 million Third Poverty Reduction Support Credit (PRSC 3) from the International Development Association, the soft loan window of the World Bank, back reforms set out in the Government's Comprehensive Poverty Reduction and Growth Strategy.

Ms. Jane Rintoul, Acting Head of Office of DFID in Vietnam said, "DFID has been very happy to contribute to the PRSC process from the very beginning. The CPRGS reflects the commitment of the Government to inclusive economic and social development. The government of Vietnam has recorded significant successes in growth and poverty reduction but important structural issues and social challenges remain to be addressed. The PRSC provides resources to achieve further progress in these areas."

The newly approved credit strengthens the reform program to better allocate resources, create jobs, and promote economic growth through promoting greater internal and external competition, accelerating the divestiture of state-owned enterprises and banks, improving transparency and accountability in state-owned enterprises and in the banking sector, and establishing a sound regulatory framework for policy lending by the Government.

Ambassador Markus Cornaro of the European Commission, said, "PRSC III will continue to maintain the momentum for Vietnam's transition into a market economy. At the same time the credit supports measures that will ensure that growth targets also the poorest among the Vietnamese citizens and that it is socially inclusive. The foundations for building modern governance systems are also key reform areas carried forward by the PRSC process. The European Commission was pleased to confirm its intention to support this initiative with a grant contribution of €20 million, due to be finalized by October 2004".

Minister Mitsuru Kitano of the Japanese Embassy confirmed that the amount of Japan's co-financing is 2 billion yen or approximately $18.4 million. He said, "Through the process of formulating the policy package of PRSC3, Japan emphasized two issues, Public Expenditure Management and Improvement of Business Environment. The first one aimed at enhancing the quality of public expenditure. In the second one, we tried to reflect the work of Japan-Vietnam Joint Initiative to Improve Business Environment with a view to Strengthen Vietnam's Competitiveness. We strongly wish these important economic reforms will significantly go forward by the support of PRSC program."

Mr. Dean Frank, Head of Aid, CIDA said, “The credit supports completing the transfer of land-use rights to households, especially in upland and ethnic minority areas. The credit also provides for measures to strengthen management of the environment and water resources."

Ambassador Bjarne H. Sørensen of Denmark said, "Denmark has been a partner to all 3 PRSCs and we are happy to see that the direct poverty reduction has been more and more in focus. Furthermore PRSC 3 supports greater transparency and accountability for public funds, including simplifying administrative procedures and steps to reduce corruption."

Mr. Hans Peter Verhoeff, First Secretary (Economic and Commercial Affairs) of the Netherlands Embassy said, "With this credit, the Government will have the support to adopt improved standards for primary education, and increase the overall budget allocations for health and education, including covering the costs for healthcare for poor people.”

Helps Underway to Improve Life of Urban Poor in Vietnam

The US$222.5 million credit to finance the Urban Upgrading Project aims to help reduce poverty in four cities in Vietnam by improving the living and environmental conditions of the urban poor. A grant from the Japanese government of US$4.8 million was also signed to support capacity building under the project.

One of the largest urban poverty alleviation projects ever signed by the World Bank, this project will ensure that numerous low-income communities in Can Tho, Hai Phong, Ho Chi Minh City and Nam Dinh will have better living conditions by providing clean water, improved sanitation and sewerage systems, stable electricity and sufficient public lighting services. The project will also help reduce flooding in these areas and hence reduce environmental pollution and waterborne diseases. An innovative project component will provide access to microcredit loans to the poor to enable them to improve their houses. Project beneficiaries will also be issued with land-use certificates thereby improving their security of tenure.

“Nearly a million poor households in urban areas will benefit directly from this project, and over one million more will enjoy the extended infrastructure network and environmental improvements,” said Klaus Rohland, Director of the World Bank in Vietnam. “Through upgrading alleys and bridges, renovating markets and public toilet facilities, and improving electricity and water supply networks, the project is expected to enhance the quality of life and productivity of the urban poor. In addition, it will save millions of dollars every year through reduced water leakage and electricity loss, and reduced damage due to flooding.”

The Project is based on the principle that active participation by communities throughout preparation, design and implementation is a pre-requisite to successfully address the needs of the urban poor. By jointly preparing Community Upgrading Plans, poor households participated actively in selecting investments, giving opinions on technical standards and designs, determining their contribution to capital costs, and taking responsibility for the operations and maintenance of infrastructure and services. The design of infrastructure improvements therefore takes into account communities’ and local administrations’ priorities and their ability to pay, and applies functional standards to ensure that as many people as possible benefit. The Project also adopts an area-based approach, ensuring that all residents living in the project areas, irrespective of their registration status, stand to benefit.

Relocation and resettlement will be minimized in order to maintain the social fabric of the communities. In cases where resettlement is unavoidable, the Project has adopted a Resettlement Policy Framework to ensure that affected households are given alternative housing options and are appropriately compensated.

As part of its overall poverty alleviation strategy, the central Government is providing the credit funds mostly as grants to the four cities. The government intends to scale up this approach to urban poverty alleviation by preparing a National Urban Upgrading Program, which will apply the principles of this project to other cities across Vietnam.

Japan representative said: "As Vietnam continues to grow and urbanize, the need for upgrading and improving infrastructure and services, particularly for the poor, will continue to grow. The government intends to scale up this approach to urban poverty alleviation by preparing a National Urban Upgrading Program, which will apply the principles of this project to other cities across Vietnam. We hope that this project, and the National Program which it spearheads, will significantly enhance the quality of life and productivity of urban populations throughout Vietnam."

For more information about the Vietnam Urban Upgrading Project, please visit our web site at www.worldbank.org.vn.

Basic facts

Project Name: Urban Upgrading Project
Total cost: US$417.5 million
Local contribution: US$148.5 (Government) and US$4.15 (local community)
Donor contribution: US$222.5 million (World Bank), US$37.5 million (possibly from French) and US$ 4.8 million (grant from Japan)
Duration: 2004-2012
Responsible agency: Hai Phong, Ho Chi Minh and Can Tho City Government, Nam Dinh Province and Ministry of Construction
Contact in HCMC: Mr. Nguyen Hoang Nhan, Director, PMU, 25 Pham Ngoc Thach street, District 3, Ho Chi Minh city, Vietnam
Telephone: (84-8) 8246498 Fax: (84-8) 8246499
E-mail: bqlda-ncdt@hcm.vnn.vn
Contact in Nam Dinh: Mr. Bui Van Que, Director, PMU
10 Tran Dang Ninh, Nam Dinh City, Vietnam
Telephone: (84-350) 864451 Fax: (84-350) 864451
E-mail: duanwb_tpnd@hn.vnn.vn
Contact in Can Tho: Mr. Phung Kim Chau, Director, PMU
51 Phan Chu Trinh street, Can Tho City, Vietnam
Telephone: (84-71) 823917 Fax: (84-71) 823918
E-mail: pmucantho@hcm.vnn.vn
Contact in Haiphong: Mr. Pham Vu Cau, Director, PMU
2G Tran Quang Khai street, Hong Bang district Hai Phong, Vietnam
Telephone: (84-31) 810811 Fax: (84-31) 810812
E-mail: haiphongppu@hn.vnn.vn
Contact in MOC: Do Tu Lan, Director, PMU of National Urban Upgrading Program
Telephone: (84-4) 9740318
 

For more information about World Bank in Vietnam please visit the World Bank’s Web site at http://www.worldbank.org.vn