Completion Report

Project Number: 40198-023 Loan Number: 2451 June 2019

Viet Nam: Ho Chi Minh City–Long Thanh–Dau Giay

Expressway Construction Project

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – dong (D)

At Appraisal At Project Completion (27 August 2008) (31 December 2016)

D1.00 = $0.0000602 $0.0000439 $1.00 = D16,625.00 D22,758.00

ABBREVIATIONS

ADB – Asian Development Bank CPS – country partnership strategy DCC – district compensation committees EIA – environment impact assessment EIRR – economic internal rate of return EMP – environment management plan FIRR – financial internal rate of return HCMC – Ho Chi Minh City JBIC – Japan Bank for International Cooperation JICA – Japan International Cooperation Agency km – kilometer LAR – land acquisition and resettlement LIBOR – London interbank offered rate LURC - Land Use Rights Certificate O&M – operation and maintenance PCR – project completion review PPMS – project performance monitoring system PSC – project supervision consultants SEPMU – Southern Expressway project management unit SGIA – second generation imprest accounts TA – technical assistance VEC – Vietnam Expressway Corporation VEC-E – Vietnam Expressway Corporation Engineering JSC VOC – vehicle operation cost

NOTES

(i) The fiscal year (FY) of the Government of the Socialist Republic of Viet Nam ends on 31 December. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2019 ends on 31 December 2019.

(ii) In this report, "$" refers to United States dollars and "¥" refers to yen.

Vice-President Ahmed Saeed, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Director Hiroaki Yamaguchi, Transport and Communication Division, SERD Team leader Mohammad Nazrul Islam, Transport Specialist, SERD Team members Gemma T. Bade, Project Analyst, SERD Marie France B. Balawitan, Senior Operations Assistant, SERD

Sarah K. Bennett, Young Professional, SERD Maria Lorena C. Cleto, Safeguards Specialist (Resettlement), SERD Khoa D. Nguyen, Senior Project Officer (Transport), SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page BASIC DATA i I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 3 D. Disbursements 3 E. Project Schedule 4 F. Implementation Arrangements 5 G. Consultant Recruitment and Procurement 5 H. Gender Equity 7 I. Safeguards 7 J. Monitoring and Reporting 9

III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness 10 C. Efficiency 11 D. Sustainability 11 E. Development Impact 12 F. Performance of the Borrower and the Executing Agency 12 G. Performance of Cofinancier 12 H. Performance of the Asian Development Bank 13 I. Overall Assessment 13

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14 A. Issues and Lessons 14 B. Recommendations 15

APPENDIXES

1. Design and Monitoring Framework 16 2. Summary of Project Outputs 18 3. Project Cost at Appraisal and Actual 19 4. Project Cost by Financier 20 5. Disbursement of ADB Loan Proceeds 22 6. Contract Awards of ADB Loan Proceeds 23 7. Appraisal and Actual Implementation Schedules Compared 24 8. Chronology of Main Events 25 9. Organization Chart for Project Implementation 27 10. Project Contract Packages Financed by ADB 28 11. Land Acquisition and Resettlement 29 12. Status of Compliance With Loan Covenants 33 13. Economic Reevaluation 43 14. Financial Reevaluation 48 15. Socioeconomic Impacts of the Project 50 16. Contribution to ADB Results Framework 55

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BASIC DATA

A. Loan Identification 1. Country

2. Loan number and financing source 3. Project title 4. Borrower 5. Executing agency 6. Amount of loan 7. Financing modality

Viet Nam 2451, ordinary capital resources Ho Chi Minh City–Long Thanh–Dau Giay Expressway Construction Project Socialist Republic of Viet Nam Vietnam Expressway Corporation $410.2 million Project loan

B. Loan Data 1. Appraisal – Date started – Date completed 2. Loan negotiations – Date started – Date completed 3. Date of Board approval 4. Date of loan agreement 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions 6. Project completion date – Appraisal – Actual

7. Loan closing date – In loan agreement – Actual

– Number of extensions

8. Financial closing date – Actual

9. Terms of loan

– Interest rate – Commitment charges – Maturity (number of years) – Grace period (years) – Front-end fee

05 May 2008 19 May 2008 25 August 2008 27 August 2008 30 September 2008 20 March 2009 18 June 2009 26 June 2009 none 30 June 2014 31 December 2016 31 December 2014 31 December 2016 one 22 November 2018 London interbank offered rate (LIBOR)-based 0.15% 25 5 none

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10. Terms of Relending (if any)

– Interest rate – Commitment charges – Maturity (number of years) – Grace period (years) – Front-end fee

LIBOR-based, plus 0.2% loan management charge 0.15% 25 5 none

11. Disbursements

a. Dates Initial Disbursement

14 June 2010 Final Disbursement

13 August 2018 Time Interval

98 months

Effective Date 26 June 2009

Actual Closing Date 31 December 2016

Time Interval 90 months

b. Amount ($ million)

Category

Original Allocation

(1)

Increased during

Implementation (2)

Cancelled during

Implementation1 (3)

Last Revised Allocation2 (4=1+2–3)

Amount Disbursed

(5)

Undisbursed Balance3 (6 = 4–5)

1. Works 90.00 64.15 33.14 121.01 111.08 9.93

2. Land acquisition and resettlement compensation

186.10 (26.42) 112.57 47.11 44. 52 2.59

3. Consulting services

11.00 1.15 0.99 11.16 9.76 1.40

4. Project administration Costs

15.30 (4.77) 10.53 6.75 3.78

5. Interest charge

62.10 53.26 8.84 6.74 2.10

6. Unallocated 45.70 (34.11) 11.60

Total 410.20 0.00 211.56 198.64 178.84 19.81

1. The first loan partial cancellation of $100 million was made effective on 26 February 2013. The second loan partial cancellation of $20 million was made effective on 31 July 2014. The third loan partial cancellation of $92 million was made effective on 28 October 2016.

2. The last loan proceed reallocation was made effective on 28 October 2016. 3. The undisbursed amount was canceled at loan financial closure.

C. Project Data

1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign exchange cost 148.7 59.6

Local currency cost 783.7 803.1

Total 932.4 862.7

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation cost

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ADB financed 348.1 172.1

Japan International Corporation Agency 463.8 513.5

Vietnam Expressway Corporation 0.6 156.3

Total implementation cost 816.5 841.9

IDC and other financial charges

ADB financed 62.1 6.7

Japan International Corporation Agency 53.8 14.1

Vietnam Expressway Corporation

Total IDC and other financial charges 115.9 20.8

ADB = Asian Development Bank, IDC = interest during construction.

3. Cost breakdown by project component ($ million)

Item Appraisal Estimate Actual

A. Base cost

1. Civil works 444.5 604.9

2. Land acquisition cost 115.1 139.4

3. Compensation and resettlement 20.8 4.5

4. Unexploded ordnance clearance 0.5 0.4

5. Consulting services 19.2 29.6

6. Project administration costs 10.2 6.9

7. Taxes and duties 56.3

Subtotal (A) 616.9 841.9

B. Contingencies

1. Physical 53.7

2. Price 145.9

Subtotal (B) 199.5

C. Financial charges during Implementation 116.0 20.8

Total (A+B+C) 932.4 862.7

4. Project Schedule

Item Appraisal Estimate Actual

A. Detailed design

Consultant recruitment Q1 2008–Q2 2008 Q1 2008–Q2 2008

Detailed design Q3 2008–Q2 2009 Q3 2008–Q3 2009

B. Land acquisition and resettlement

Update of resettlement plan Q4 2008–Q3 2009 Q3 2009–Q4 2010

Implementation Q1 2009–Q1 2010 Q1 2009–Q4 2013

C. Civil works

Procurement Q4 2008–Q2 2010 Q4 2009–Q1 2014

Construction Q3 2009–Q2 2012 Q3 2009–Q4 2016

D. Supervision consultants

Recruitment Q4 2008–Q2 2009 Q2 2009–Q3 2015

Implementation Q3 2009–Q2 2013 Q3 2010–Q4 2016

Q = quarter.

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5. Project performance report ratings

Implementation Period

Ratings

Development Objectives Implementation Progress

From 26 Jun 2009 to 31 Dec 2009 Satisfactory Satisfactory

From 1 Jan 2010 to 31 Dec 2010 Satisfactory Satisfactory

Single Project Rating

From 1 Jan 2011 to 31 Mar 2011 On track

From 1 Apr 2011 to 31 Mar 2012 Potential problem

From 1 Apr 2012 to 31 Sep 2012 On track

From 1 Oct 2012 to 31 Dec 2012 Potential problem

From 1 Jan 2013 to 31 Dec 2013 Actual problem

From 1 Jan 2014 to 31 Dec 2014 On track

From 1 Jan 2015 to 31 Dec 2015 On track

From 1 Jan 2016 to 31 Dec 2016 On track

From 1 Jan 2017 to 30 Sep 2017 On track

From 1 Oct 2017 to 31 Dec 2017 Potential problem

D. Data on Asian Development Bank Missions

Name of Mission Date

No. of Persons

No. of Person-

Days

Specialization of Members

Fact finding 3–14 March 2008 7 72 t, s, c, b, g, i, i

Appraisal 5–19 May 2008 5 80 t, b, f, g, i

Inception 10–12 June 2009 3 9 t, o, g

Groundbreaking ceremonya 3 October 2009 1 1 d

Review 1 11–13 November 2009 4 12 t, r, o, g

Review 2 14–16 April 2010 3 9 t, t, p

Review 3 22–26 November 2010 4 13 t, r, g, i

Review 4 30 May–3 June 2011 4 20 t, r, g, g,

Review 5 10–17 November 2011 3 15 t, r, j

Review 6 7–14 June 2012 4 17 t, r, k, g

Review 7 25 October 2012 1 1 t

Review 8 28–31 January 2013 5 20 t, r, k, t, g

Review 9 10–21 February 2014 4 44 t, r, e, t

Review 10 7–18 July 2014 3 20 t, r, e

Review 11 5–7 March 2015 4 11 t, r, e, g

Review 12 18–22 January 2016 2 10 t, t

Review 13 25–29 June 2016 4 20 t, g, p, b

Review 14 10–14 October 2016 2 10 t, g

Review 15 21–25 July 2017 4 20 t, k, b, i

Completion review 20–28 February 2019 4 36 t, y, h, i a The mission was combined with other projects in the area. a = engineer, b = financial officer, c = economist, d = director, e = environment officer, f = counsel, g = program/project officer, h = project analyst, i = staff consultant, j = disbursement specialist, k = safeguard specialist, o = operation officer, p = procurement officer, r = resettlement officer, s = social specialist, t = transport specialist

I. PROJECT DESCRIPTION 1. At the request of the Government of the Socialist Republic of Viet Nam, the Asian Development Bank (ADB) approved a loan of $410.2 million on 30 September 2008 for the Ho Chi Minh City–Long Thanh–Dau Giay Expressway Construction Project.1 The expected project impacts were business-led, pro-poor, sustainable economic growth in Ho Chi Minh City (HCMC) and neighboring provinces. The project outcome would allow transport users in HCMC and Dong Nai Province to travel from District 9 of HCMC to Dau Giay with lower transport costs and less time on the project expressway. 2. At appraisal, the envisaged project comprised construction of approximately 51 kilometers (km) of four-lane, tolled expressway, starting at the Second Ring Road in HCMC District 9 and ending at National Highway 1 at Dau Giay, Dong Nai Province. The expressway would directly connect the center of HCMC to economic growth areas in the provinces and north of HCMC along National Highway 1. The investment cost of the project was estimated at $932.4 million equivalent, to be financed by a loan of $410.2 million from ADB, a loan of ¥50.972 billion (about $517.6 million equivalent) from the Government of Japan through the Japan Bank for International Cooperation (JBIC)—now the Japan International Cooperation Agency (JICA)—and a government fund of $4.6 million equivalent.

3. The project executing agency, Vietnam Expressway Corporation (VEC), had overall responsibility for implementing the project. The VEC delegated the responsibility of day-to-day project implementation to the Southern Expressway Project Management Unit (SEPMU). The peoples’ committees of HCMC and Dong Nai Province had established district compensation committees (DCCs) in all project related districts. Anticipated direct benefits of the project included (i) increased efficiency in moving goods and people in the area around HCMC, surrounding provinces, and along the Greater Mekong Subregion economic corridors; (ii) reduced transport costs in the same area; and (iii) reduced social and economic costs of traffic accidents. As transport costs are a key input to economic activities, the expected indirect benefits of the project were increased economic growth and a contribution to the government’s overall poverty reduction program.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation 4. Greater HCMC is the largest city in Viet Nam and the country’s economic hub. At appraisal, road networks within and around HCMC were becoming heavily congested, with decreasing travel speeds and increasing transport costs. HCMC urgently needed relief for city roads connecting its center and port area with central and northern Viet Nam. The government’s socio-economic development plan for 2006–2010 identified the need for a network of high-capacity and high-speed expressways to complement the network of national, provincial, and city roads.2 The government's Expressway Master Plan, developed with ADB-funded technical assistance (TA), identified a short-term program of priority expressway projects, including the project expressway, which was considered a key link to the interconnected expressway network and ring roads around

1 ADB. 2008. Report and Recommendation of the President to the Board of Directors on Proposed Loan to Socialist

Republic of Viet Nam: Ho Chi Minh City–Long Thanh–Dau Giay Expressway Construction Project. Manila. 2 Ministry of Planning and Investment. 2005. The Five-Year Socio-Economic Development Plan 2006–2010. Ha Noi.

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HCMC.3

5. To prepare the project, ADB implemented a TA loan in 2007 to design and formulate the project, considering highway network development, traffic demand, engineering aspects, and environment and social impacts.4 The project design included (i) cofinancing by ADB and JICA loans, (ii) a full environment assessment (category A), (iii) full resettlement plan (category A), and (iv) public–private partnership in project operation and maintenance (O&M). The design identified and addressed the project’s major risks, including delayed implementation caused by slow finalization of detailed designs and procurement of civil works contracts, and the VEC’s limited capacity and experience managing major construction projects. The TA included all activities required to begin construction and a component to address regulatory and institutional strengthening of the VEC. 6. During and after implementation, ADB found the project design relevant to the government’s objectives and policies and ADB’s country strategy (paras. 31–32). At completion, a total of 55 km of expressway was constructed (para. 7), which has significantly improved the connectivity and transport conditions in the project areas and the Greater Mekong Subregion. The project generated substantial socioeconomic impact during and after implementation (para. 39) and, at completion, effectively contributed to meeting the government’s objectives and ADB’s country strategy as envisaged (Appendix 1). B. Project Outputs 7. At appraisal, the project envisaged constructing an operating expressway of about 51 km. Upon completion, the project had constructed 55 km of four-lane expressway, including section 1, with 23.9 km passing through Ring Road 2 in HCMC District 9 and Nhon Trach and Long Thanh Districts of Dong Nai Province; and section 2, with 31.1 km passing through Long Thanh, Cam My, and Thong Nhat Districts of Dong Nai Province. The construction works also included a major new 1,700-meter bridge over the Dong Nai River at Long Thanh, 3 toll plazas, 2 service areas, 32 medium or small bridges, and a number of culverts, underpasses, and overpasses. The project expressway is equipped with an electronic toll collection and traffic information and monitoring system as well as substantial traffic safety facilities. During implementation, the project expressway had the following changes, which were all financed by the JICA loan: (i) inclusion of the first 4-km section of the project expressway in 2010 to better facilitate fast-growing traffic near HCMC and maximize the project benefits; (ii) construction of the interchange with Ring Road 2; and (iii) construction of an O&M center aside the expressway at Km6+150.5 A summary of the salient features of the expressway is in Appendix 2. 8. During implementation, the contractors carried out quality control in accordance with contractual requirements. The supervision consultants assessed and supervised the works to ensure that specifications were met and took immediate action for some cases of low-quality work.6 Upon completion total 446.3 hectares of land was acquired for the project. The EMP and

3 ADB. 2005. Technical Assistance to the Socialist Republic of Viet Nam for the Expressway Network Development

Plan. Manila (TA 4695-VIE). 4 ADB. 2007. Loan 2374-VIE: Ho Chi Minh–Long Thanh–Dau Giay Expressway Technical Assistance Project. Manila.

The loan of $10 million was approved on 28 November 2007, signed on 20 December 2007, effected on 5 September 2008, and closed on 30 June 2011.

5 At appraisal, the first 4 km was considered urban road that would be constructed by HCMC. 6 Subsidence was found at the section Km30+140 to Km30+320, caused by erosion by ground water. The VEC, the

PSC, and the contractor carried out additional work to reinforce the embankment.

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SEMPs were implemented and adverse environmental impacts were minimized. HIV awareness and prevention of human trafficking program was implemented in the five project districts and community monitoring was in place. Women representatives were included in all district compensation committees and two district committees were headed by women. Capacity building trainings on resettlement and livelihood were conducted for women and women-headed households in all districts. 9. At appraisal, it was anticipated that private sector will be involved in the project O&M and an O&M concession will be selected using competitive bidding procedures.7 Upon completion, the expressway is now being operated by a joint stock company: the VEC-E, a public–private company established by the VEC (para. 37). 8 A project performance management system became operational with baseline data in 2012. A summary of project achievements per output is in Appendix 1. C. Project Costs and Financing 10. At appraisal, the total project cost was estimated at $943.4 million equivalent. At project completion, the total project cost was $862.7 million equivalent, about 7.5% lower than estimated. In comparison with cost estimates at appraisal, the actual costs decreased by (i) $97.7 million for the financial charges due to lower interest rates applied and loan cancellations, (ii) $16.3 million for compensation and resettlement mainly due to over estimation at appraisal, and (iii) $10.2 million for recurrent costs, which were removed from the project cost. Meanwhile, the actual costs increased by (i) $160.4 million for civil works, mainly for the additional 4 km of the expressway and the interchange, and (ii) $24.3 million for land acquisition, mainly for the added 4 km of expressway, and (iii) $10.4 million for consulting services due to the prolonged implementation period (Appendix 3). 11. At appraisal, the project financing comprised an ADB loan of $410.2 million for 44.0% of total project cost, a JICA loan of $517.6 equivalent (¥50.972 billion) for 55.5% of project cost, and a government fund of $4.6 million equivalent for 0.5% of project cost. 9 Due to partial cancellations of the ADB loan proceeds of $231.4 million (para. 13), an increase in the JICA loan for the additional 4 km expressway section (para. 7), and an increase in the government counterpart fund for the land acquisition and resettlement (LAR) for the added 4 km expressway section (para. 27), the project financing at completion was revised to be $178.8 million (20.7% of total project cost) from ADB, $527.6 million equivalent (61.2% of project cost) from JICA, and $156.3 million equivalent (18.1% of project cost) from government funds (Appendix 4).

D. Disbursements 12. The ADB loan was approved on 30 September 2008, signed on 20 March 2009, and became effective on 26 June 2009. The central government on-lent the ADB loan to the VEC with terms acceptable to ADB.10 The borrower disbursed the ADB loan proceeds in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). The VEC

7 The appraisal document didn’t clearly indicate how much the private sector would be involved in the project O&M. 8 VEC-E is a subsidiary company of VEC, established in 2012 for operating expressways in southern Viet Nam. 9 It was arranged at appraisal that JICA would finance the costs for civil works of the HCMC–Long Thanh section

(Km4+000–Km23+900), related supervision consulting services for that section, and an electronic toll collection and traffic information and monitoring system for the entire project. The government fund was for unexploded ordnance clearance and taxes and duties. ADB would finance the rest of the project costs.

10 The on-lending terms are the general terms for the ADB loan, plus a 0.2% loan administration fee collected by the central government.

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established and administered a loan advance (imprest) account under ADB’s imprest account procedures, which limited the VEC to providing funds for (i) project administration costs, (ii) some consulting services, and (iii) replenishment of second generation imprest accounts (SGIAs). The related districts established and operated five SGIAs to pay LAR plan implementation expenses, using the statement of expenditure procedure to reimburse eligible expenditures and liquidate advances to the SGIA accounts. 13. Under retroactive financing, the VEC disbursed the first loan proceed on 14 June 2010 to replenish the incremental project administration cost. Due to initial implementation delay (para. 14), initial loan disbursement proceeded slowly, reaching $14.9 million in 2012, with a disbursement ratio of only 3.6%. As the project progressed, loan disbursement increased and reached its peak in 2014 ($41.7 million). Due to overall project implementation delays (para. 15) and liquidation of the loan proceeds used for the LAR activities (para. 1.46), the loan closing date was extended by two years.11 During implementation, the ADB loan had three partial cancellations in response to actual needs for project financing, including $100.0 million effective 26 February 2013, $20.0 million effective 31 July 2014, and $91.6 million effective 28 October 2016.12 The VEC reallocated the loan proceeds several times, mainly to the civil works category. Along with project completion, the loan was closed at the extended loan closing date of 31 December 2016. To handle pending eligible withdrawal applications and liquidate advance funds, the loan financial account was kept open for a winding-up period which was extended three times until 31 July 2018, mainly caused by slow refunding of the unused balance of the advance funds for the LAR. Upon financial closure of the loan account on 22 November 2018, total ADB loan proceeds of $178.8 million were disbursed, about 43.6% of the original loan amount. The undisbursed loan amount of $19.8 million was canceled on the same day. The actual disbursements of the ADB loan proceeds did not align with original projection due to implementation delays (Appendix 5). E. Project Schedule 14. At appraisal, the envisaged project implementation would be from December 2008 to June 2014, with construction works beginning by June 2009 and substantially completed and ready for opening by June 2013. However, the project implementation experienced initial delays because of delays in recruiting the project supervision consultants (PSC). After the completion of the detailed design, the civil work began with the groundbreaking ceremony on 3 October 2009, a huge event in the country. In November 2009, the ADB project mission found the overall progress of the project was only 3%, about 4 months behind schedule. In May 2011, the ADB mission found the overall progress was only 18%, mainly caused by (i) initial delays in subcontractor and supplier arrangements, (ii) early start of the rainy season and a high amount of rain, (iii) remaining LAR and obstructions on already-acquired right-of-way, and (iv) weak financial capacities of the contractors. With joint efforts from the executing agency, the PSC, and the ADB missions, the project progress started to catch up. In the middle of 2012, the overall civil works progress reached 61%, including 33% for ADB-financed sections and 42%–87% for the JICA-financed sections.

11 ADB (Southeast Asia Department). 2013. Fax to VEC: Loan 2451-VIE: Ho Chi Minh City–Long Thanh–Dau Giay

Expressway Construction Project–Extension of Loan Closing Date. 20 September. 12 In February 2013, $100 million was canceled under the land acquisition and resettlement category. In July 2014, the

cancellation included (i) $10.14 million from the work category, (ii) $2.57 million from the LAR compensation category, and (iii) $0.99 million from the consulting services category, and (iv) $6.30 million from the unallocated category. In October 2016, the cancellation included (i) 23.00 million from the work category, (ii) $10 million from LAR compensation category, and (iii) $53.26 million from the interest charge category, and (iv) 5.29 million from unallocated category.

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Due to slow progress, the project was rated actual problem in 2013.13 15. The ADB mission in February 2014 found that the original JICA-financed section had been completed and had preliminarily opened to traffic.14 The remaining work included construction of additional toll booths and civil works for the newly added 4-km expressway section. Meanwhile, the ADB-financed sections were still under construction and scheduled to be completed by December 2015. The contractor issues caused delays: the contractor for package 5 was terminated due to bankruptcy (para. 21), so the VEC needed to undertake new procurement for the remaining work (package 5A); the contractor for package 6 was substantially delayed and could not meet the extended completion target of March 2014, mainly because of slow mobilization, additional work, and financial capability. The VEC and the ADB missions supervised project progress closely and provided a variety of support to the contractors. The ADB-financed sections were substantially completed in February 2015. The remaining works included fully completing the service areas, slope protection, drainage, fence, local roads, and electricity transformations. To facilitate project implementation, ADB extended the loan closing date by 2 years. The entire project expressway opened to traffic on 8 February 2015. The actual implementation schedule compared with the schedule at appraisal is in Appendix 7, and a chronology of the main events is in Appendix 8.

F. Implementation Arrangements 16. As arranged at appraisal, the executing agency for the project was the VEC, holding overall responsibility for the project management and formal correspondence with the line ministries, provincial authorities, and ADB. The VEC established a Southern Expressway Project Management Unit (SEPMU)—composed of board directors, several functioning departments, and two field offices—to implement the project. The VEC and SEPMU, with assistance from the PSC, implemented all aspects of the project including project preparation and design, procurement and contract management, financial management and audits, construction supervision and quality control, safeguard measures, and loan covenant compliance. The VEC adopted the financial information and management system developed under the ADB TA, with improvement during trial operation. These implementation arrangements were generally adequate for delivering the project outputs and achieving the intended project outcome. The project was one of the first ADB-financed projects managed by the VEC. The VEC and SEPMU staff gained substantial experience and improved their capacity to implement and manage such projects, especially in procurement, financial management, and compliance with ADB’s safeguards policy. 17. As regulated by the national government, the local authorities implemented the LAR for the project. The people’s committees of HCMC and Dong Nai Province established district compensation committees (DCC) in all districts through which the project expressway passes. The DCCs acted as implementing agencies for the LAR plans, and were responsible for paying all compensation and allowances. An updated organization chart for project implementation is in Appendix 9.

G. Consultant Recruitment and Procurement 18. Due to overall implementation delays and scope changes, the original projections for contract awards were no longer applicable. As arranged at appraisal, two PSCs were recruited

13 According to ADB’s performance validation system, the project was rated actual problem for Q1–Q4 2013. 14 The expressway section of Km4+000–Km23+900 opened to traffic in January 2014.

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separately for the JICA-financed and the ADB-financed expressway sections. The PSC for the ADB-financed section was engaged using quality- and cost-based selection procedures in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time).15 The contract was awarded on 7 May 2010. The PSC assisted the VEC and SEPMU with project management, construction supervision, contract administration, environment monitoring, LAR implementation, social development and gender, HIV awareness and prevention of human trafficking, and toll rate study. Environmental training, traffic survey, and a road safety audit were not implemented because of actual needs and were removed from the terms of reference. During implementation, the PSC experienced some staffing problems because many experts were replaced due to delayed mobilization. Because of overall project implementation delays, the PSC’s service period was extended until 31 December 2016. Upon completion, a total of 219.6 person-months for international experts and 1,571.4 person-month for national experts were provided to the project.

19. To ensure project quality, the VEC recruited a third-party quality assurance consultant using the consultants’ qualifications selection procedure and awarded the contract to a national consulting firm on 27 August 2015. The major tasks were to test and confirm that the works under the project were constructed in accordance with the project specifications and quality control measures for both the contractors and the PSC. A financial auditor was recruited using the consultants’ qualifications selection procedure and the contract was awarded to a national firm on 4 October 2012 on a lump sum basis. The financial auditor audited the project financial statements for 2009–2017 and submitted the required auditing reports to ADB.16

20. Overall, the performance of the consultants is rated satisfactory.

21. The project implemented procurement for the civil works packages separately for the JICA-financed and the ADB-financed sections. As arranged at appraisal, a total of seven civil works packages were procured, including two packages under ADB financing (package 5 and 6) and five packages under JICA financing (package 1a and 1b, and 2–4). For the ADB-financed packages, the procurement activities started during the ADB TA, using the international competitive bidding procedure in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time).17 The bidding documents were issued in the fourth quarter of 2009 and the contracts were awarded on 15 October 2010 for package 5 and on 8 September 2010 for package 6. During implementation, the contractor for package 5 experienced bankruptcy, which caused substantial delays in implementation. The VEC and the ADB missions made some efforts to resolve this issue, including arranging substantial meetings and providing financial and legal support. As agreed by ADB, the VEC terminated the contract on 22 December 2011. The VEC procured a new contract (package 5A) and awarded it on 29 November 2013 to complete the remaining work.18 All of the civil works contractors had problems with mobilization, staffing and financial capability (para. 44), which were the main reasons for the implementation delays. With joint efforts, the civil works for the ADB-financed sections were substantially completed within the extended completion date. During implementation, three more civil works packages were added—all financed by JICA loans—including two packages (package 7 and 8) for the added expressway

15 The supervision consultant for the JICA-financed sections was recruited in accordance with the Guidelines for

Employment of Consultants under Japanese ODA Loan, dated October 1999. 16 The financial auditing report for 2018 is scheduled to be submitted to ADB before 30 June 2019. 17 The civil works packages for the JICA-financed sections were procured in accordance with Guidelines for

Procurement under Japanese ODA Loan, dated October 1999. 18 The re-procurement took about 2 years, which was mainly due to (i) prepare revised bidding documents, and (ii)

dispute between ADB and VEC on the evaluation of bids. (Ref. ADB BTOR on 13 February 2011).

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sections (Km0–Km4+000) and one package for constructing the interchange with Ring Road No. 2 at Km4+000 (package 9).

22. Overall, the performance of the civil works contractors is rated satisfactory, except for package 5.19 Appendix 10 summarizes the contracted and actual costs for ADB-financed project packages. H. Gender Equity 23. At appraisal, the project was classified as some gender elements (SGM). The resettlement impact on women was assessed as significant. Poor women and women who headed households in the project area were at more risk than men economically (through loss of productive assets due to land acquisition) and socially (through risks posed by HIV, road safety, and possible human trafficking). To address this issue, the resettlement plan included a livelihood program targeted at women in the project districts. The VEC prepared a project-specific gender strategy—described in the summary of the poverty reduction and social strategy—that included capacity-building training and consultation workshops with those affected to increase their understanding of resettlement issues (compensation, entitlements, and grievance procedures) and to develop skills for appropriate livelihood activities. 24. During implementation, the bidding documents made provisions for the contractors to encourage employment of the poor, particularly women, and not to differentiate wages between men and women, particularly for work of equal value. The VEC, SEPMU, the PSC, and the contractors paid adequate attention to the gender issue. A social and gender specialist was engaged under the PSC to monitor gender strategy implementation. Women representatives were included in all DCCs and two district committees were headed by women (District 9 in HCMC and Thong Nhat district in Dong Nai Province). Capacity building trainings on resettlement and livelihood were conducted for women and women-headed households in all districts in close cooperation with women unions in various organizations; 62 females attended the vocational training courses (59.6% of the total trainees) and 23 females attended the small trade model. The ADB PCR mission noticed that the project expressway operation uses a large number of female staff, mainly toll collectors. The fast-growing public transport in the project area has helped women to travel further and therefore participate more in socioeconomic activities. Empowerment of women in the project areas has improved. I. Safeguards 25. Environmental safeguards. At appraisal, the project was classified environment category A in accordance with ADB’s Safeguard Policy Statement (2002). The environment impact assessment (EIA) was prepared by the government and updated by the ADB TA. A summary of the EIA report was circulated to the ADB Board of Directors and made publicly available through the ADB website on 19 May 2009. The EIA concluded that the project area did not include any sensitive areas such as national parks, protected areas, or special use forests within or near the project alignment. Endangered, threatened, or rare species of flora and fauna were not found in the project area. Predicted environmental impacts during construction included air pollution, mainly due to dust emission, noise and vibration, water pollution due to fuel spills and improper waste disposal, soil erosion and siltation of water courses due to earthworks and extraction of borrow materials, and temporary obstructions of river flow. Impacts during operation were expected to be limited to air and noise pollution due to vehicular emissions, and potential

19 Among the JICA-financed contract packages, the contractor for package 8 was rated unsatisfactory.

8

water pollution due to accidents involving transportation of chemicals and other hazardous materials. Land use within the project area was dominated by tree plantations (mainly rubber) and paddy fields. Accordingly, the VEC prepared an environment management plan (EMP). 26. During implementation, SEPMU took overall responsibility for executing and supervising EMP implementation. For each civil works contract, the contractors prepared site-specified EMPs (SEMPs), which the VEC and ADB approved before construction. The VEC established a grievance redress mechanism. The PSCs conducted regular site inspections along the expressway alignment, off-site borrow, spoils, and disposal areas, as well as construction camps and plants. ADB missions were also involved in supervising environment impacts. The VEC took quick action if any noncompliance was found, conducted several workshops on compliance with environment safeguards, and collected environment data semiannually, which it compared with 2005 baselines.20 No critical complaints about the environment and safety were received during implementation. The monitoring and analysis results concluded that (i) the contractors had generally implemented the environment measures; and (ii) the VEC, with assistance from the PSC, properly implemented the EMP and complied with ADB’s environment safeguard policy. The VEC submitted environmental monitoring reports to ADB regularly and 24 environmental monitoring reports are disclosed on the ADB website.21 27. Involuntary resettlement. The involuntary resettlement for the project was category A. The VEC, together with the local officials of HCMC and Dong Nai Province, prepared a full resettlement plan, which was updated based on detailed design. The resettlement plan also included livelihood and income restoration activities for severely affected and vulnerable affected households. At appraisal, the resettlement budget was estimated at $170 million to be fully

financed by the ADB loan.22 The VEC and SEPMU carried out consultations and meetings with affected households and local officials during the resettlement planning process. DCCs were established in all related districts to implement the resettlement plan. The VEC was responsible for monitoring the resettlement plan implementation, recruitment of the monitoring agency, and implementing the income restoring program. To facilitate the resettlement plan implementation, the related districts established and operated SGIAs to pay resettlement expenses.

28. During implementation, the VEC, assisted by the PSC, carefully supervised the resettlement plan implementation. The advance funds were transferred to the SGIAs for the five related districts. An external monitoring agency was engaged in 2010 to carry out periodical monitoring and prepare quarterly monitoring reports. The VEC prepared a resettlement plan in 2010 for the added 4-km section, and HCMC totally financed its implementation. The compensation was paid by the VEC in 2009 and 2010 to affected households located along the original expressway sections (51 km), and by HCMC in 2012 for the added section.23 By the end of 2013, handover of land to the contractors for all expressway sections was completed. An income restoration program was implemented. Upon completion, a total of 446.3 hectares of land

20 Noncompliance issues included discharge of cement-laden water to surrounding area, workers not wearing full

protection equipment in high altitude construction sites, improper storage of fuel tanks, improper dumping of dredged materials, and improper garbage management.

21 Some reports were prepared by package. ADB. Viet Nam: Ho Chi Minh City–Long Thanh–Dau Giay Expressway Construction Project. https://www.adb.org/projects/40198-023/main#project-documents.

22 It was the first time in Viet Nam that the compensation and assistance was funded by an ADB loan, which was mainly for beginning to implement the resettlement plan as early as possible.

23 After the RP prepared in 2008, the grant of the 69th Decree in 2009 advanced the policy in such a situation for career change and employment support. Therefore, the affected households with compensation plans approved after 1 October 2009 got much higher assistances.

9

was acquired, with a total of 2,043 households affected, of which 2,032 (99.5%) households received compensation payment. A total of 2,043 households handed over land (100%) and 303 households were allocated plots in the resettlement site, while 171 households self-relocated. The external monitoring agency carried out a midterm review in June 2011 to assess post-resettlement living standards of all affected households and concluded that the living conditions of most affected households had stabilized or improved. The executing agency prepared the final resettlement completion report in January 2015.24 The final monitoring and evaluation report on the resettlement plan implementation and life rehabilitation was prepared in March 2017.25 A total of 13 social safeguard monitoring reports prepared by the external monitor were disclosed on the ADB website.26 The details of the resettlement plan implementation are in Appendix 11. 29. Indigenous peoples. At appraisal, the project impact to indigenous people was assessed as “limited” in accordance with ADB’s Safeguard Policy Statement. The overwhelming majority of the population within the project area is from the main ethnic group, the Kinh. Of the 800 affected households, only 11 were ethnic minority households. The 11 households were spread around the project districts and were integrated into the mainstream Kinh society in terms of language, education, housing, clothing, and daily livelihood activities and did not maintain any distinct livelihood pattern. There would be no differential impact on the 11 ethnic households. A specific measure was included in the resettlement plan to ensure that the 11 households were not marginalized in the resettlement. During implementation, the VEC and SEPMU paid special attention to vulnerable households. Meanwhile, the construction activities did not adversely affect the socioeconomic condition or disrupt the life or culture of these ethnic households. Instead, the improved transport conditions are expected to augment their access to socioeconomic facilities. J. Monitoring and Reporting 30. The borrower and the executing agency complied with most loan covenants for the project, which enabled the VEC to carry out the project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and social practices. During implementation, the VEC provided adequate oversight, coordination, and financial support to the project implementation. SEPMU was fully operational with adequate staff and resources. The VEC procured civil works contracts and engaged consultants in accordance with ADB guidelines and procedures. Measures for environmental and social aspects were incorporated in the contracts and implemented accordingly. After completion, VEC-E undertook the O&M of the project expressway with regular financial allocations. The VEC submitted audited project financial statements to ADB on time.27 The project progress and monitoring reports were prepared as required and submitted to ADB on a timely basis. Project performance monitoring was carried out at baseline and at completion. The required borrower’s project completion report was prepared and submitted to ADB on time. Appendix 12 contains the status of compliance with loan covenants.

24 VEC. 2015. HLD Expressway Construction Project: Resettlement Completion Report. SEPMU HLD. 25 March 2017. Final Social Safeguards Monitoring Report: Ho Chi Minh City–Long Thanh–Dau Giay Expressway

Construction Project. Prepared by the Investment and Environment Protection Consultancy EPC Company. 26 ADB. Viet Nam: Ho Chi Minh City–Long Thanh–Dau Giay Expressway Construction Project. https://www.adb.org/projects/40198-023/main#project-documents. 27 The last audit project financial statement (2018) is still under preparation and will be submitted to ADB as required,

which will include final financial data for the project.

10

III. EVALUATION OF PERFORMANCE A. Relevance 31. At both appraisal and completion, the project was rated relevant, as it was an integral part of government strategy for economic growth and poverty reduction. The project supported government development plans at appraisal—and their later updates—on developing a network of high-capacity, high-speed expressways to support fast socioeconomic development. The government's Expressway Master Plan included the project expressway in the short-term program of priority expressway projects. 28 The project was also in line with ADB’s country partnership strategy (CPS) priorities for Viet Nam (CPS, 2007–2010). At completion, the project remained aligned with the CPS, 2016–2020 in (i) promoting job creation and competitiveness, (ii) increasing the inclusiveness of infrastructure and service delivery, and (iii) improving environmental sustainability and climate change response. The project was highly consistent with ADB’s strategy for the road sector in Viet Nam. ADB’s cumulative lending, grant, and TA commitments to Viet Nam up to the end of 2017 reached $15.8 billion, with 34.96% going to the transport sector. 32. The project was one of the first expressway projects in the country with an ADB cofinanced loan managed by the VEC, which gained substantial experience in transport network development and financing, as well as business-led, pro-poor, and sustainable economic development. In 2004, the Ministry of Transport established the VEC to raise funds and construct and manage expressways nationwide. The VEC’s capacity strengthened significantly during project implementation. To properly design and formulate the project, a project preparation TA supported due diligence activities in the project design and preconstruction activities. The engineering design minimized social and environmental impacts. Advance actions ensured that construction could begin without unnecessary delay. During implementation, the VEC amended the project scope to reflect actual needs of socioeconomic development in the project areas. Overall, the project is closely relevant to the government’s development objectives and plans, as well as ADB’s CPS and lending policy. B. Effectiveness 33. The project is rated effective in achieving its outcome and outputs. The project achieved most of its performance targets and indicators for outcomes and outputs. At completion, the project constructed and opened a good quality expressway of 55 km with 4 lanes, which is operated by a joint stock company.29 The project expressway is in an important section of the transport corridor connecting HCMC and Dau Giay and part of the Southern Focal Economic Area, an important industrial developing area in southern Viet Nam. According to VEC traffic counts, the actual traffic in 2018 increased by 13.1% for the HCMC–Long Thanh section and 14.6% for the Long Thanh–Dau Giay section. Travel time on the project expressway dropped at least 50% from 90 minutes to 45 minutes. The vehicle operation cost (VOC) fell by 30% on average. Meanwhile, the traffic congestion on the parallel highway has also been substantially alleviated. Hence, the operation of the project expressway has supported HCMC port exports and

sustainable economic development in the project areas (para. 39). 34. Project implementation complied with the environment safeguards specified in the loan

28 In April 2007, assisted by ADB, which was approved by the Prime Minister in 2008 as “Vietnam Expressway Network

Developing and Planning until 2020 and the view for post 2020” (Decision No. 1734/QD-TTg). 29 International roughness indices for the project expressway ranged between IRI 1.67–1.94.

11

covenants. The monitoring and analysis results for the environment impacts concluded that the contractors had generally implemented the environment measures, and the VEC, with assistance from the PSC, properly implemented the EMP and complied with the ADB’s environment safeguard policy. The ADB PCR mission noticed that (i) the borrow pits were redeveloped and replanted and (ii) a substantial amount of staff in the expressway operation were female, mainly toll collectors. The fast-growing public transport in the project area has helped women to travel further distances and participate in more socioeconomic activities. C. Efficiency 35. The project is efficient in achieving its outcomes and outputs. The ADB PCR mission reevaluated the economic internal rate of return (EIRR) of the project using similar methodology at appraisal and the updated data. The economic benefits were recalculated by comparing the “with-project” and “without-project” cases, including reductions in VOC and savings in passenger travel time costs. The EIRR was higher at completion—18.4% compared to 15.0% at appraisal—mainly because of lower capital cost and higher traffic level.30 Because the recalculated EIRR is above the ADB recommended discount rate of 12% at appraisal, the project is considered to be continuously economic viable. Sensitivity analysis results indicated that the project was economically viable for all scenarios. If a 20% maintenance cost increase were combined with a 20% benefit reduction, the EIRR would still be 15.6% for the whole project (Appendix 13). 36. During implementation, the project experienced initial delays, despite the preconstruction activities. Subsequently, the termination of a poorly performing contractor and procurement of a new contractor to complete the balance of work further delayed project implementation. With joint efforts by the VEC, ADB missions, and the PSC, the contractors improved their performance and mobilized additional resources. To facilitate project implementation, ADB approved an extension of the loan closing date by two years, enabling the VEC to fully complete the works and achieve intended project objectives. These implementation delays reduced project efficiency. D. Sustainability 37. The project is rated likely sustainable. The entire project expressway opened to traffic on 8 February 2015. Currently, the expressway is operated by a joint stock company: the VEC-E, a public–private company established by the VEC in 2012 with 51% share from the VEC and 49% share from two private companies. Currently, approximately 340 staff are working for the expressway. The toll plazas operate 24 hours a day. The VEC-E is equipped with vehicles and facilities for emergency rescue, regular patrolling, and routine maintenance. The project expressway has an electronic toll collection and traffic information and monitoring system. To control overloaded trucks, the expressway has installed weighing equipment at all entries. According to VEC-E data, the expressway traffic increased sharply in 2017 and 2018. The actual budget for O&M increased from D52,471 million in 2015 to D68,487 million in 2018. The VEC established the current toll rate for five vehicle types with approval from government agencies.31 38. During the ADB PCR mission, the financial internal rate of return (FIRR) of the project was reevaluated at 5.6% before tax and 4.9% after tax, based on actual capital costs, prevailing O&M cost, and existing revenue. The recalculated FIRR was higher than the weighted average cost of capital of 1.13% at appraisal. Therefore, the project is still considered financially viable.

30 The EIRRs were 19.0% for the HCMC–Long Thanh section and 16.0% for the Long Thanh–Dau Giay section. The

higher EIRR for the HCMC–Long Thanh section was mainly caused by higher traffic level. 31 The current toll rate is D40,000–D380,000 per journey, depending on vehicle type and travel distance.

12

Additionally, the FIRR was subject to sensitivity tests. Combining a 20% increase in O&M costs and a 20% decrease in revenue, FIRR was at 3.8% before tax and 3.2% after tax (Appendix 14).

E. Development Impact

39. The project’s development impact is rated satisfactory. At appraisal, a project impact

assessment focused on poverty, gender, LAR, indigenous people, health and labor. Accordingly, a design and monitoring framework and a project performance monitoring and evaluation program were designed as part of the project appraisal document. During implementation, the PSC carried out a baseline survey in 2012 and a completion survey in 2017. A comparison of the indicators before and after the project found that (i) the monthly average income per capita increased by 9% per year for HCMC and 17% per year for Dong Nai Province; (ii) the GDP per capita in 2017 reached $6,119 for HCMC, an increase of 8.5%, and $4,545 for Dong Nai Province, an increase of 9%; (iii) the poverty rates fell from 0.3% to 0.01% for HCMC and from 3.7% to 1.2% for Dong Nai Province; (iv) the export value at HCMC port increased about 700 times in 2010–2014; (v) the number of businesses increased by 50% for HCMC and 23% for Dong Nai Province; (vi) the traffic in the project areas sharply increased, including on the project expressway; and (vii) the traffic accidents in the project areas and on the expressway, however, were still significant (Appendix 15). F. Performance of the Borrower and the Executing Agency 40. The overall performance of the borrower and the executing agency is rated satisfactory. The borrower of the ADB loan was the Socialist Republic of Viet Nam and the executing agency was the VEC. The related government agencies, mainly the Ministry of Finance (MOF) and the Ministry of Transport, actively participated in (i) coordinating and supervising project implementation and (ii) coordinating among ADB, JICA, and the related government line agencies. The VEC made adequate institutional arrangements for project implementation. SEPMU was fully staffed with the expertise required for the project and the VEC delegated adequate technical and administrative authority to SEPMU for expeditious and field-level decisions. The VEC and local governments provided counterpart funding ($156.3 million equivalent) for the project. Project implementation complied with most of the loan and project covenants. The VEC, assisted by the consultants, implemented all aspects of project management. During implementation, the VEC adopted the financial management system developed with ADB assistance and established a

project-specific webpage to disclose project information to the public.32 The project was one of the first expressway projects with an ADB cofinanced loan managed by the VEC, and during project implementation, the VEC substantially increased its capacity to design and implement large and complex expressway projects. Upon completion, the project expressway O&M was well arranged. However, project implementation experienced substantial delays and a prolonged period to liquidate the loan advance. G. Performance of Cofinancier 41. The project was cofinanced by ADB and JICA (JBIC at appraisal). ADB and JICA signed a cofinancing agreement on 19 September 2008. As agreed, the JICA loan of ¥50.972 billion would finance part of the project cost in several phases, including for civil works of the HCMC–Long Thanh section, related consulting services, toll collection, and the traffic monitoring system

32 The VEC webpage discloses the loan proceeds used by contracts and is updated every two weeks. Vietnam

Expressway Corporation. http://www.expressway.com.vn/.

13

for the entire project. The agreement for the first JICA loan of ¥16.643 billion was signed on 31 March 2008, the second loan of ¥25.034 billion on 15 June 2011, and third loan of ¥18.459 billion on 18 March 2014.33 As requested by the government, the first section of the expressway—fully financed by JICA loans—was added to the project scope in 2010. By the end of 2018, the total JICA loan of ¥50.235 billion was disbursed to the project. During implementation, JICA conducted several fact-finding and appraisal missions, including visiting the project sites. The executing agency acknowledged that the JICA missions provided valuable advice and acted promptly on issues relating to approvals, disbursement, project monitoring, and loan administration. The JICA officers were particularly supportive of the project and committed to the interests of the borrower. Overall, JICA played a proactive role and its performance can be evaluated highly satisfactory. H. Performance of the Asian Development Bank 42. ADB’s overall performance was satisfactory. ADB headquarters undertook project administration. ADB was closely involved in identifying and resolving issues during implementation through regular review missions and tripartite project review meetings between the borrower, the executing agency, and ADB. During implementation, ADB fielded 17 project review missions, including the inception mission in June 2009 and the completion review mission in February 2019. The ADB missions analyzed implementation issues and provided substantial inputs in preparing action plans to expedite project implementation. The ADB project team and experts provided regular training and handholding support to the VEC and SEPMU staff, the consultants, and the contractors on project management and safeguard policy compliance, thus building their capacity. Document approval during processing and implementation was timely, and all claims for payment were promptly processed. ADB extended the loan closing date by two years to facilitate project implementation and also made substantial efforts to expedite project implementation. The role of ADB missions in providing timely advice and technical supports was well recognized by the government. I. Overall Assessment

43. Overall the project is rated successful. The project was relevant to both the government’s development objectives and ADB’s CPS. The project was designed appropriately and implemented with some changes in scope to meet actual needs. The project was rated effective in achieving its outcomes. The project’s outputs and outcomes demonstrate that it was an effective intervention for business-led, pro-poor, and sustainable economic growth in the project areas, as well as enhancing the VEC’s capacity in expressway development and management. The project was rated efficient in achieving its outcomes and outputs. The recalculated EIRR was robust and indicated that the project would be continuously economically viable. The recalculated FIRR also confirmed that the project was financially viable. At completion, the project expressway had substantially improved connectivity, supported fast socioeconomic development, and brought and will bring significant socioeconomic benefits in the project areas. The project was rated likely sustainable, considering the institutional and financial arrangements for expressway O&M, fast growth in traffic, and its socioeconomic impacts.

33 JICA loans include VNXV-1 signed on 31 March 2008, VN10-P7 signed on 15 June 2011, and VN13-P5 signed on

18 March 2014.

14

Overall Ratings Criteria Rating

Relevance Relevant

Effectiveness Effective

Efficiency Efficient

Sustainability Likely Sustainable

Overall Assessment Successful

Development impact Satisfactory

Borrower and executing agency Satisfactory

Cofinancier Highly Satisfactory

Performance of the Asian Development Bank Satisfactory

Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons 44. Performance of contractors and implementation delays. One of the primary reasons for the implementation delays was the limited experience and capacity of small local contractors, who were considered as subcontractors. This inevitably affected the project performance. The contract for package 5 was terminated and a new contract was procured for the balance of work, causing further implementation delays. The project was one of the first ADB-financed expressways for the VEC. Thus, VEC experienced a learning period for ADB’s procurement process and loan administration policy. After implementing this project, VEC’s capacity to implement future ADB-financed projects is expected to improve. 45. Disbursement review process. The government review process for disbursement documents of ADB-financed contracts was different from other co-financiers, which affected contractor’s cash flow, and caused implementation delays. Under ADB-financed contracts, the VEC submits disbursement documents to the Vietnam Development Bank (VDB) for verification, then VDB forwards them to the MOF, and the MOF submits them to ADB’s Viet Nam Resident Mission. Under other co-financed contracts, the VEC submits disbursement documents to the MOF, and the MOF submits them to respective co-financiers office, and forwards their copy to the State Treasury. If the State Treasury finds any issues, the VEC will address them in the following claim. The government obliges review of disbursement documents by VDB prior to the MOF for ADB-financed contracts. In future projects, it is recommended to apply one harmonized disbursement documents review process for all donor financed contracts to avoid any delays in contracts implementation. 46. Liquidation of ADB loan advance. To facilitate LAR activities, the related districts established five SGIAs and the VEC transferred a large amount of advance loan proceeds to them. The VEC and ADB’s due diligence overestimated LAR costs and the district government could not provide eligible supporting documents for some expenses (mainly for procurement for utility shifting), so the related districts had to liquidate some advance funds, around $18 million, according to an ADB letter in October 2016. The liquidation took a long time because of a long verification process which checked whether the relocation of public utilities was eligible for ADB financing. As a result, the winding-up period was extended three times, thus postponing the closing of the loan financial account to November 2018 (around two years after the loan closed). It is suggested that ADB and the executing agency ensure accurate cost estimates for LAR and carefully arrange and monitor how SGIAs are established and used.

15

B. Recommendations 47. Future monitoring. ADB has thus far provided four loans to expressway development in the country, which is significant. An in-depth analysis might be undertaken to assess and document the project design, formulation, and implementation, as well as its socioeconomic impacts. The experiences and lessons learned can be disseminated to on-going and future projects in the country, as well as to other similar developing countries. 48. Further action or follow-up. Upon completion of the project, the connectivity and mobility in the project areas had been substantially improved (para. 33), which has brought huge socioeconomic benefits to local people (para. 39). The project carried out socioeconomic surveys in 2016–2017 (with data in 2014 and 2016). Generally, the benefits of such expressways expand rapidly after 2–3 years of operation. A follow-up survey is needed to assess the impacts and recommend government interventions, which may maximize and accelerate the socioeconomic benefits, especially to the poor. 49. Timing of the project performance evaluation report. The project performance evaluation report may be prepared in 2020 when the project expressway has been fully operating for 3 years. By then, the traffic development, expressway maintenance and physical condition, benefits attained, and socioeconomic impacts can be better assessed.

50. Pending land acquisition and resettlement issues. The VEC and SEPMU need to closely monitor and follow up on pending resettlement issues (Appendix 11). SEPMU needs to follow up with pending complaints and court cases, after which land requirement adjustment will be recommended to no longer acquire land from said household.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance

Targets/Indicators Project Achievements

Impact Business-led, pro-poor, and sustainable economic growth in HCMC and neighboring provinces

• Average per capita income in HCMC and Dong Nai Province increases by 8% per year from project completion

• Value of exports from HCMC port

increased by at least 10% per annum from project completion

• Exceeded the target In the period of 2010–2014, the average per capita income increased by an average of 9% per year in HCMC and 17% per year in Dong Nai Province

• Exceeded the target The value of exports from HCMC port increased by an average of 35.2% per annum in the period of 2010–2014.

Outcome Transport users in HCMC and Dong Nai Province can travel from HCMC District 9 to Dau Giay with lower transport costs on the HLD expressway

• Road user costs for a car are reduced from D4,200/km without the Project to D2,400/km with the Project in 2013

• Travel time from HCMC district 9

to Dau Giay reduced from 100 minutes to 40 minutes on completion of the expressway

• In 2013, traffic volume from

HCMC District 9 to Long Thanh reaches 33,000 passenger car units per day in 2013 and from Long Thanh to Dau Giay 23,000 per day

• Substantially Achieved The vehicle operation cost (VOC) on the project expressway reduced by at least 30% in comparing with that on the existing national highways.

• Substantially Achieved The traveling time from HCMC to Dau Giay reduced from 90 minutes on the national highway to 45 minutes on the project expressway.

• Achieved In 2017 (the first fully operation year), the traffic on the project expressway reached AADT 34,561 vehicles for the HCMC–Long Thanh section and 9,303 vehicles for the Long Thanh–Dau Giay section. The weighted average was about 7.7% higher than the target.

Outputs 1. HLD expressway is

operating, connecting HCMC District 9 with Dau Giay (about 51 km) as a four-lane, high-speed, limited-access, tolled highway.

• Road capacity of 80,000 passenger car units per day is provided on the full length of the expressway in 2013

• About 62 hectares (ha) of land in HCMC and 245 ha in Dong Nai acquired at replacement cost by the end of 2009

• The environmental management plan is implemented and adverse environmental impacts are minimized by mitigation measures

• The HIV awareness and prevention of human trafficking program is implemented in the five project districts and community monitoring in place by

• Achieved A four lane expressway was constructed and fully opening to traffic in February 2015.

• Achieved Upon completion total 446.3 hectares of land was acquired for the project.

• Achieved. The EMP and SEMPs were implemented and adverse environmental impacts were minimized.

• Achieved HIV awareness and prevention of human trafficking program was implemented in the five project districts and community monitoring

Appendix 1 17

Design Summary Performance

Targets/Indicators Project Achievements

2. O&M concession

procurement complete and concession operating

3. Project management system operating

the end of 2013 • Women representatives are

included in the five district compensation committees by the end of 2009; capacity building training on resettlement and livelihood are conducted for women and households headed by women in five districts by the end of 2009.

• Concession for O&M effective

and operating within 2 years of completion of the expressway

• Project performance

management system reports generated.

was in place. • Achieved

Women representatives were included in all district compensation committees and two district committees were headed by women. Capacity building trainings on resettlement and livelihood were conducted for women and women-headed households in all districts.

• Partially achieved The expressway is operated by a joint stock company: the VEC-E, a public–private company established by the VEC in 2012 with 51% share from the VEC and 49% share from two private companies.

• Achieved The PSC carried out a baseline survey in 2012 and a project completion survey in 2017 on the indicators designed. A final PPMS report was prepared and submitted to ADB in March 2017.

Activities with Milestones Actual Activities Actual Inputs

2.1 O&M concession documentation completed

Target: end of 2012 2.2 Procurement of O&M concession Target: begin at start of 2014 and

complete by end of 2014 2.3 O&M concession awarded Target: end of 2014 3.1 Recruit project supervision

consultant Target: completed by mid-2009 3.2 Commission project performance

management system and undertake base-line surveys for project indicators

Target: end of March 2009 3.3 Prepare project progress reports Target: from end of 2008 and to

mid-2014 3.4 Prepare project completion report Target: end of 2013

2.1 O&M concession documentation was prepared in 2012.

2.2 A joint stock company – VEC-E was established by VEC in 2010.

2.3 VEC-E was engaged in 2012 to operate and maintain the project expressway.

3.1 The contract for the project supervision consultant was awarded on 7 May 2010

3.2 A PPMS was designed and the PSC undertake a base-line survey in 2012 and a project completion survey in 2017.

3.3 Project progress reports were prepared and submitted to ADB timely.

3.4 The executing agency’s project completion report was prepared and submitted to ADB in April 2017.

Total project cost $862.7 million Financed by ADB $178.8 million JICA $527.6 million VEC/HCMC $156.3 million

ADB = Asian Development Bank, AADT = annual average daily traffic, HCMC = Ho Chi Minh City, HIV = human immunodeficiency virus, HLD = Ho Chi Minh City–Long Thanh–Dau Giay, JICA = Japan International Cooperation Agency, O&M = operation and maintenance, PSC = project supervision consultant, PPMS = project performance monitoring system, VEC = Vietnam Expressway Corporation. Source: The Asian Development Bank’s project completion review mission.

18 Appendix 2

SUMMARY OF PROJECT OUTPUTS

Actual Length (km)

Carriageway width

(meter)

Bridge Over/under pass (no.)

Culvert (no.)

Service Area (no.)

Toll Plaza (no.) (no.)

total (km)

Whole Project Expressway 54.982 27.5 32 19.094 20 117 2 3

Section 1 with 23.9 km, passing the Ring Road 2 in District 9 of HCMC and Nhon Trach and Long Thanh Districts of Dong Nai Province (JICA-financed)

23.900 27.5 19 18.090 2 47 1 2

Section 2 with 31.1 km, passing through Long Thanh, Cam My and Thong Nhat Districts of Dong Nai Province (ADB-financed)

31.082 27.5 13 1.004 18 70 1 1

Source: Southern Expressway Project Management Unit.

19 Appendix 3

PROJECT COST AT APPRAISAL AND ACTUAL ($ million)

Appraisal Estimate Actual

Item Foreign Exchange

Local Currency

Total Cost

Foreign

Exchange Local

Currency Total Cost

A. Investment Costs

1. Civil works 9.0 435.5 444.5 12.2 592.6 604.9

2. Land acquisition cost 6.6 108.5 115.1 8.0 131.5 139.4

3. Compensation and resettlement 1.0 19.7 20.8 0.2 4.2 4.5

4. Unexploded ordnance clearance 0.0 0.5 0.5 0.4 0.4

5. Consulting services 11.9 7.3 19.2 18.4 11.2 29.6

6. Project administration costs 0.0 6.6 6.6 6.9 6.9

7. Taxes and duties 56.3 56.3

Subtotal (A) 28.5 578.1 606.7 38.8 803.2 841.9

B. Recurrent Costs 0.0 10.2 10.2

Total Base Costs 28.5 588.4 616.9 38.8 803.2 841.9

C. Contingencies

1. Physical 2.6 51.1 53.7

2. Price 1.6 144.3 145.9

Subtotal (C) 4.2 195.4 199.5

D. Financial Charges during Implementation

1. Interest during construction 114.3 114.3 16.7 16.7

2. Commitment charges 1.6 1.6 4.1 4.1

3. Front-end fees

Subtotal (D) 116.0 116.0 20.8 20.8

Total (A+B+C+D) 148.7 783.7 932.4 59.6 803.2 862.7

Source: Asian Development Bank’s loan financial information system, JICA’s financial data, and Vietnam Expressway Corporation.

20 Appendix 4

PROJECT COST BY FINANCIER Table A4.1: Project Cost at Appraisal by Financier

($ million)

ADB JBIC VEC Total Cost item Amount

% of Cost Category

Amount % of Cost Category

Amount % of Cost Category

A. Investment Costs

1. Civil works 133.5 22.9 450.6 77.1 0.0 0.0 584.1

i. Long Thanh–Dau Giay section 133.5 100.0 0.0 0.0 0.0 0.0 133.5

ii. HCMC–Long Thanh section and TCTIM 0.0 0.0 450.6 100.0 0.0 0.0 450.6

2. Land acquisition cost 157.6 100.0 0.0 0.0 0.0 0.0 157.6

3. Compensation and resettlement 28.5 100.0 0.0 0.0 0.0 0.0 28.5

4. Unexploded ordnance clearance 0.0 0.0 0.0 0.0 0.6 100.0 0.6

5. Consulting services 10.6 44.5 13.2 55.5 0.0 0.0 23.8

6. Taxes and duties 2.6 39.4 0.0 0.0 4.0 60.6 6.6

Subtotal (A) 332.8 41.5 463.8 57.9 4.6 0.6 801.2

B. Recurrent Costs 15.3 100.0 0.0 0.0 0.0 0.0 15.3

Total Base Costs 348.1 42.6 463.8 56.8 4.6 0.6 816.5

C. Financial Charges during Implementation

1. Interest during construction 61.5 53.8 52.8 46.2 0.0 0.0 114.3

2. Commitment charges 0.6 37.5 1.0 62.5 0.0 0.0 1.6

3. Front-end fees

Subtotal (C) 62.1 53.6 53.8 46.4 0.0 0.0 115.9

Total (A+B+C) 410.2 44.0 517.6 55.5 4.6 0.5 932.4

ADB = Asian Development Bank, JBIC = Japan Bank for International Cooperation, VEC = Vietnam Expressway Corporation Source: Project appraisal document (Report and Recommendation of the President).

21 Appendix 4

Table A4.1: Project Cost at Completion by Financier ($ million)

ADB JICA VEC/HCMC Total Cost item Amount

% of Cost Category

Amount % of Cost Category

Amount % of Cost Category

A. Investment Costs

1. Civil works

i. Long Thanh–Dau Giay section 111.1 100.0% 111.1

ii. HCMC–Long Thanh section and TCTIM 493.8 100.0% 493.8

2. Land acquisition cost 44.5 31.9% 94.9 68.1% 139.4

3. Compensation and resettlement 4.5 100.0% 4.5

4. Unexploded ordnance clearance 0.4 100.0% 0.4

5. Consulting services 9.8 33.0% 19.7 66.7% 0.1 0.3% 29.6

6. Project administration costs 6.7 97.4% 0.2 2.6% 6.9

7. Taxes and duties 56.3 100.0% 56.3

Subtotal (A) 172.1 20.4% 513.5 61.0% 156.3 18.6% 841.9

B. Recurrent Costs

Total Base Costs 172.1 20.4% 513.5 61.0% 156.3 18.6% 841.9

C. Financial Charges during Implementation

1. Interest during construction 3.8 22.6% 12.9 77.4% 16.7

2. Commitment charges 3.0 71.5% 1.2 28.5% 4.1

3. Front-end fees

Subtotal (C) 6.7 32.4% 14.1 67.6% 20.8

Total (A+B+C) 178.8 527.6 156.3 862.7

% of Total Cost 20.7% 61.2% 18.1% ADB = Asian Development Bank, JICA = Japan International Cooperation Agency, VEC = Vietnam Expressway Corporation, HCMC = Ho Chi Minh City Source: Project appraisal document (Report and Recommendation of the President).

22 Appendix 5

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A5: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million)

year

Annual Disbursement Cumulative Disbursement

Amount % of Total

Amount % of Total

($million) ($million)

2009 41.12 23.0% 41.12 23%

2010 12.65 7.1% 53.76 30%

2011 9.52 5.3% 63.28 35%

2012 13.66 7.6% 76.94 43%

2013 21.45 12.0% 98.40 55%

2014 41.47 23.2% 139.86 78%

2015 25.86 14.5% 165.72 93%

2016 8.58 4.8% 174.31 97%

2017 4.35 2.4% 178.66 100%

2018 0.18 0.1% 178.84 100%

Total 178.84 100%

ADB = Asian Development Bank. Source: ADB loan financial information system.

Figure A5: Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million)

ADB = Asian Development Bank. Source: ADB loan financial information system.

Appendix 6 23

CONTRACT AWARDS OF ADB LOAN PROCEEDS

Table A6: Annual and Cumulative Contract Awards of ADB Loan Proceeds

year

Annual Award Cumulative Award

Amount % of Total

Amount % of Total

($million) ($million)

2009 5.80 3.4% 5.80 3%

2010 73.03 42.4% 78.83 46%

2011 4.38 2.5% 83.21 48%

2012 0.0%

83.21 48%

2013 50.01 29.0% 133.22 77%

2014 33.82 19.6% 167.04 97%

2015 4.36 2.5% 171.40 99%

2016 0.0%

171.40 99%

2017 0.90 0.5% 172.30 100%

2018 0.0%

172.30 100%

Total 172.30 100%

ADB = Asian Development Bank. Source: ADB loan financial information system.

Figure A6: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

ADB = Asian Development Bank. Source: ADB loan financial information system.

24 Appendix 7

APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES COMPARED

Source: Southern Expressway Project Management Unit; Asian Development Bank project completion review mission.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

At appraisal At actual Minor works

Update of resettlement plan

Implementation

Implementation

A. Loan Procession

B. Detailed Design

Loan signing and effective

Detailed design

Recruitment

Procurement

Construction

C. Land Acquisition and Resettlement

D. Civil Works

E. Supervision Consultants

2016

Loan procession to ADB approval

Consultant recuitment

Item2008 2010 2011 2012 2013 20152009 2014

Appendix 8 25

CHRONOLOGY OF MAIN EVENTS

Date Main Event

2008

3–14 March ADB project fact-finding mission

31 March Agreement signed for the first JIBC loan of ¥16,634 million

5–19 May ADB project appraisal mission

25–27 August 2008 ADB loan negotiation

19 September Co-financing agreement signed between ADB and JIBC

30 September ADB approval of the loan L2451

2009

2 March Contract signed with the construction supervision consultants for the JICA financed section

20 March ADB loan signing

10–12 June ADB project inception mission

26 June ADB loan effectiveness

5 August Contract signed with the civil works contractor for Package 1a

3 October Project groundbreaking ceremony

11–13 November ADB project review mission

2010

13 January Contract signed with the civil works contractor for Package 1b

11 February Contract signed with the civil works contractor for Package 2

24 February Contract signed with the civil works contractor for Package 3

14–16 April ADB project review mission

7 May Contract signed with the supervision consultants for the ADB financed section

14 June First disbursement of the ADB loan

8 September Contract signed with the civil works contractor for Package 5

4 October Contract signed with the financial auditor

15 October Contract signed with the civil works contractor for Package 6

22–26 November ADB project review mission

2011

30 May–3 June ADB project review mission

10–17 November ADB project review mission

22 December Termination of the contract for Package 5

2012

7–14 June ADB project review mission

25 October ADB project review mission

7 December Contract signed with the civil works contractor for Package 7

7 December Contract signed with the civil works contractor for Package 8

31 December Completion of civil works contract for Package 1a

2013

17 January Contract signed with the civil works contractor for Package 9

28–31 January ADB project review mission

26 February First ADB loan partial cancellation ($100 million)

18 March Contract signed with the contractor for Package 4

26 Appendix 8

Date Main Event

20 September ADB approval of extension of loan closing date by two years to 31 December 2016

30 September Completion of civil works contract for Package 1b

29 November Contract signed with the civil works contractor for Package 5A

31 December Completion of civil works contract for Package 3

2014

10–21 February ADB project review mission

23 April ADB approval of extension of time for completion for Package 6

30 April Completion of civil works contract for Package 2

7–18 July ADB project review mission

17 September Second ADB loan partial cancellation ($20 million)

31 December Original loan closing date for L2451

2015

10 January Completion of civil works contract for Package 7

10 January Completion of civil works contract for Package 9

8 February Entire project expressway opened to traffic

5–7 March ADB project review mission

27 August Contract signed with the consultants for the Third Party Quality Assurance Consulting Services

2016

18–22 January ADB project review mission

28 April Completion of civil works contract for Package 5A

25–29 June ADB project review mission

30 June Completion of civil works contract for Package 6

31 August Completion of civil works contract for Package 8

10–14 October ADB project review mission

28 October Third ADB loan partial cancellation ($91,555,733)

31 December Actual loan closing date for L2451

31 December Completion of the contract with the supervision consultants for the ADB financed section

2017

5 May ADB approval of extension of winding-up period from 30 April 2017 to 31 December 2017

18 May Completion of contract for Package 4

30 June Completion of the contract for the supervision consultants for the JICA financed section

21–25 July ADB project review mission

2018

11 June ADB approval of third extension of winding-up period until 31 July 2008

13 August Final disbursement of the ADB loan of L2451

22 November Financial closure of the ADB loan of L2451

2019

20–28 February 2019 ADB project completion review mission

ADB = Asian Development Bank, JBIC = Japan Bank for International Cooperation, JICA = Japan International Cooperation Agency Source: ADB project completion review mission.

Appendix 9 27

ORGANIZATION CHART FOR PROJECT IMPLEMENTATION

ADB = Asian Development Bank, EA = executing agency, ITS = intelligence transport system, JICA = Japan International Cooperation Agency Source: Southern Expressway Project Management Unit.

Viet Nam Central Government

Vietnam Expressway Corporation (EA)

Southern Expressway Project Management Unit

ADB

Planning, Land Acquisition & Social Department

ITS Developers Land Acquisition and Resettlement Civil Works Contractors Equipment Suppliers

Technical, Inspectional and Environmental Department

Accounting Department

Quality Assurance Consultant

Board of Director

Administration Department

Field Office Field Office

Local governments Project Supervision Consultant

JICA

28 Appendix 10

PROJECT CONTRACT PACKAGES FINANCED BY ADB

Package No.

Description/Nature of Works Contractor/ Consultant/Supplier Procurement

Method Contract

Date

Contract Cost ($)

Contract Amount

Actual Amount (ADB financing)

0001 Replenishment of IA (incremental cost) Other 10/05/2010 751,430 751,430

0002 Construction supervision service CDM Smith Inc. QCBS 07/05/2010 9,527,065 9,527,065

0003 Replenishment of 21F (land acquisition) Others 28/12/2009 5,795,503 5,795,503

0004 Civil works of Pkg 6 (km37+800 - km55+000) Hanshin Engineering & Contr Co. Ltd. ICB 08/09/2010 47,204,754 47,204,753

0005 Civil works of Pkg 6 (km37+800 - km55+000) Hanshin Engineering & Contr Co. Ltd. ICB 08/09/2010 15,183,989 15,183,989

0006 Constructing services for project audit JV Auditing and Informatic Service Co. Ltd. CQS 04/10/2010 132,557 132,556

0007 Civil works of Pkg 5 (km23+900 - km37+800) Pumyang - Sungjee JV (terminated on 22 Dec.2011)

ICB 15/10/2010 34,251 34,250

0008 Replenishment for WA003IF (land acquisition) Others 14/07/2011 2,275,446 2,275,446

0009 Replenishment for WA006IF (project administration)

Others 14/07/2011 726,539 726,538

0010 Replenishment for WA007IF (project administration)

Others 17/07/2011 114,499 114,498

0011 Replenishment of imprest fund Others 29/07/2011 1,267,326 1,267,325

0012 Replenishment for WA008IF (land acquisition) Others 31/07/2013 1,356,189 1,356,189

0013 Civil works Pkg 5A (km23+900 - km37+800) Posco Engineering and Construction ICB 29/11/2013 48,653,236 48,653,235

0014 Liquidation of Land acquisition and resettlement (District 9)

Others 16/04/2014 12,284,291 12,284,291

0015 Liquidation of Land acquisition and resettlement (CAM My district)

Others 16/04/2014 3,260,147 3,260,147

0016 Liquidation of Land acquisition and resettlement (Nhon Trach)

Others 16/04/2014 707,932 707,932

0017 Liquidation of Land acquisition and resettlement (Long Thanh)

Others 16/04/2014 15,559,611 15,559,611

0018 Liquidation of Land acquisition and resettlement (Thong Nhat)

Others 16/04/2014 2,011,329 2,011,329

0019 Liquidation for WA010IF Others 25/08/2015 1,190,992 1,190,991

0020 Third party quality assurance consulting services

VNC Construction Joint Stock Company CQS 27/08/2015 103,552 103,552

0021 Reimbursement for WA013IF Others 07/12/2015 3,060,737 3,060,737

0022 Reimbursement for WA021IF Others 03/07/2017 902,319 902,319

Total 172,103,694 172,103,696

CQS = consultant’s qualifications selection, ICB =international competitive bidding, QCBS = quality and cost-based selection Source: Asian Development Bank’s financial system.

Appendix 11 29

LAND ACQUISITION AND RESETTLEMENT 1. The involuntary resettlement for the project was category A. The Vietnam Expressway Corporation (VEC), together with the local officials of Ho Chi Minh City (HCMC) and Dong Nai Province, prepared a full resettlement plan (RP) based on the socioeconomic and inventory of losses surveys, which was updated based on detailed design. The initial resettlement plan for the whole section was prepared in May 2008. Following completion of detailed measurement survey (DMS), updated RPs were prepared between 2009 and 2010 for each affected district (except for the first 4 km). A draft RP for the first 4 km section, in HCMC (Districts 2 and 9), was submitted to ADB in November 2010. The draft RP was based on preliminary design, preliminary inventory of losses, socioeconomic surveys and results of consultation meetings. ADB required the updated RP to be based on DMS data. Payment started in December 2012 in both districts without preparation of an updated RP. Since payments were already made without preparation of an updated RP, due diligence reports (DDRs) were prepared instead of updated RPs to review compliance with project resettlement policy (one DDR for District 2 and two DDRs for District 9). DDRs include a corrective action plan. 2. For District 9, non-compliance was found for the following items:

• Compensation rates for structures were not updated at the time of payment; • Households who built houses on agriculture land were not compensated for structures; • Not all vulnerable were provided with assistance;

3. Following meetings with District 9 in October 2013, it was found that some recommendations cannot be endorsed by District 9 as they are not in compliance with Decision 35/2010 QD-UBND on resettlement of HCMC People’s Committee (PC). Only HCMC PC can endorse such recommendations and instruct District 9 to implement these recommendations. During the ADB review mission in June-July 2014, a meeting was held between ADB and Vice Chairman of HCMC PC. During this meeting HCMC agreed to comply with ADB policy and the agreed RP and to instruct District 9 on actions to take to comply with agreed RP. HCMC PC sent detailed instructions to District 9 in October 2014. A meeting was held with the resettlement committee of District 9 on 19 November 2014. During this meeting, the list of vulnerable HH and HH who need to receive additional compensation for their structure was finalized. The budget to implement these corrective actions was approximately D2 billion (equivalent to 95,000 USD). In its letter dated 24 February to VEC, ADB indicated that they have no objection to use loan funds in the imprest account to cover this additional payment. All additional payments have been completed. 4. Aside from compensation for affected land and non-land assets, the RP also included livelihood and income restoration activities for severely affected and vulnerable affected households. At draft RP stage, the resettlement budget was estimated at $170.0 million, including $115.1 million for compensation for land, and $18.1 million for compensation for non-land assets,

allowances and resettlement site development, which would be fully financed by the ADB loan.1

Consultations and meetings with affected households and local officials were carried out during the resettlement planning process. 5. In Dong Nai Province the Centers for Land Fund Development (CLFD) at provincial district

1 It was the first time in Viet Nam that the compensation and assistance was funded by ADB loan, which was mainly

for commencing the RP implementation as early as possible.

30 Appendix 11

levels were in charge of the implementation of resettlement activities. CLFDs at the provincial level are under DONRE while at the district level they are under the District PCs. At the district level, CLFDs are in charge of the preparation of compensation plans and the implementation of all resettlement activities. They replaced the former District Compensation Committee (DCC) and therefore were the main stakeholder for the implementation of resettlement activities for the project. In HCMC, Resettlement Committees for District 2 and District 9 were still in charge of DMS, compensation and implementation of resettlement activities.

6. VEC was responsible for internal monitoring through the SEPMU of RP implementation, recruitment of the external monitoring agency, and implementing the income restoration program. For facilitating the RP implementation, SGIAs were established and operated for payment of expenses arising from the RP implementation. 7. Apart from resettlement for the added section (first 4 km), implementation of the RP started after its review and concurrence by ADB. VEC with the assistance of the PSC carefully supervised the RP implementation. The advance funds were transferred to the SGIAs for the five related districts. An external monitory agency was engaged in 2010 to carry out periodical monitoring of the RP implementation and prepare quarterly monitoring reports. For the added section (first 4 km), the RP was prepared in 2010, implementation of which was totally financed by HCMC. The compensation to affected households took place in 2009 and 2010 for the households located along the original expressway sections (51 km) and in 2012 for the added section. By the end of 2013, handover of land to the contractors for all expressway sections was completed. An income restoration program was implemented by focusing on vocational trainings, agricultural models, and industrial/business extension model for severely affected and vulnerable households. Upon completion, a total of 446.3 hectares of land was acquired with a total of 2,043 households affected, among which 2,032 households received compensation payment (amounting to 99.5%).2 2,043 households handed-over land (amounting to 100%) and 303 households were allocated plots in the resettlement site, while 171 households self-relocated. Among the affected households, 1,044 households were severely affected (losing 10% or more of their productive assets) and 150 households were identified as vulnerable households and received additional assistance in line with project resettlement policy. Complaints have been resolved using the grievance redress procedures, mostly at the district level. There are two pending complaints, one of which is waiting for the court’s decision. These and proposed follow-up actions are summarized

in Appendix 16. The external monitoring agency carried out a mid-term review in June 2011 to

assess post-resettlement living standards of all affected households, which concluded that the living conditions of most affected household had stabilized or improved. The final resettlement completion report was prepared by the executing agency in January 2015.3 The monitoring and evaluation report on the RP implementation and life rehabilitation was prepared by the external monitor in March 2017.4 A total of 13 social safeguard monitoring reports prepared by the external monitor were disclosed on the ADB website. 5 Internal monitoring was carried out by VEC,

2 Some HHs still didn’t receive compensation for the following reasons: i) local agencies need to verify and identify

exact owners; ii) there are some disputes on land; iii) some HHs cannot provide LURC because they gave their LURC as guarantee to a bank to get a loan; and iv) some owners cannot be reached or are unknown. Regarding unknown owners, the implementing agencies have posted up information of the acquired land and the compensation, assistance at each concerned commune/ward and on Dong Nai Newspaper (for the Long Thanh district). When compensation couldn’t be done; the compensation amount was kept in an account in a bank; AHs will receive interests on this amount

3 VEC. January 2015, HLD Expressway Construction Project – Resettlement Completion Report. SEPMU HLD. 4 March 2017. Final Social Safeguards Monitoring Report - Ho Chi Minh City–Long Thanh–Dau Giay Expressway

Construction Project. Prepared by the Investment and Environment Protection Consultancy EPC Company. 5 https://www.adb.org/projects/40198-023/main#project-documents.

Appendix 11 31

supported by PSC, and reported in the quarterly project progress reports.

8. VEC through SEPMU needs to closely monitor and follow up on pending resettlement issues (unpaid affected households due to not having located the landowners, or LURC (i.e. Land Use Rights Certificate) having been used as guarantees to receive bank loans; and two complaints). These affected households once identified, and LURCs are retrieved from the banks, should receive full compensation as per project resettlement policy. Furthermore, SEPMU needs to follow up with the pending complaints/court cases, such as for the one household in the control center, after which land requirement adjustment will be recommended to no longer acquire land from said household.

Table 11.1: Outstanding Grievances/AHs Not Yet Compensated

No Location/ HH Name

Address/ID Date of

complaint

Content of complaint or reasons for HH not yet

compensated Status of complaint

I. HCMC

1 Trinh Ngoc Hai

Control Center

2012 Access to the control center needs land acquisition of Mr. Hai. Mr. Hai refused compensation and complained that DMS was not conducted properly.

Mr. Hai lodged a complaint at the court; waiting for decision from the court (court decision still pending at the time of this report). SEPMU HLD is planning land adjustment for the Control Center and will suggest to HCMC People's Committee not to acquire land for this household; After a court decision, SEPMU will suggest to HCMC People's Committee not to acquire land for this household

II. Nhon Trach district: No pending grievance

III. Long Thanh District

1 Phung Thi Nhan

VA4341089 2011 The HH is asking for higher compensation rate for land Compensation claimed: 21,136,252 VND

Compensation not yet received the HH has sold his land and didn’t provide LURC. (This AH received the compensation in May 2010. And then she sold the remaining land which was not included expressway area and she moved to a new location. The local government had additional compensation due to the difference in price (about 21.136.252 VND) and informed her in order to receive the additional compensation in 2011. However, this AH has not yet

32 Appendix 11

received this additional compensation up to now).

2 Le Duc Cua

VA 7326225 LURC deposit in a bank as guarantee for a loan. Compensation: 64,836,000 VND

Compensation not yet received. Follow up with bank.

3 Luu Phuoc Sang

KG0017796 LURC deposit in a bank as guarantee for a loan. Compensation: 541,500,000 VND

Compensation not yet received. Follow up with bank.

4 Absent Owner 1

VA 8762774 Owner has not been found Compensation: 1,219,000 VND

Compensation not yet received

5 Absent Owner 2

VA 8762775 Owner has not been found Compensation: 154,730,000 VND

Compensation not yet received

IV. Cam My district

1 Le Van Nhat

Hamlet 6, Song Nhan Commune

2011

The HH rented land from the State, and when acquired the land, People Committee of Dong Nai Province approved to support 30,000 VND/m2 for land compensation. However, the HH has not accepted and required compensation to this whole rent land area.

HH still refuse compensation (384,428,000 VND). Not yet solved; (The specialist of ADB missions have reviewed the Project compensation policy for this AH as well as directly interviewed this AH from 2011 to 2014. They confirmed that the applied policy to meet the Safeguard Policy Statement of ADB and Policy framework. Thus, the action is not proposed for this AH).

2 Tran Dung Kiet

Not yet received compensation (15,898,000 VND) because the HH is living abroad

Continue to try to contact HH

V. Thong Nhat district: No pending grievance

Appendix 12 33

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference in

Loan Agreement

Status of Compliance

Particular Covenants

(a) The Borrower shall cause VEC to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and expressway practices.

(b) In the carrying out of the Project and operation of the Project Facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement and the schedule to the Project Agreement.

LA, Article IV, Sec. 4.01

Partially complied with. VEC and the SEPMU encountered implementation delays and several changes. Complied with. The project implementation and operation performed all obligations set forth in loan agreement.

The Borrower shall make available to VEC, promptly as needed and on terms and conditions acceptable to ADB, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

LA, Article IV, Sec. 4.02

Complied with. The Borrower provided all necessary support to VEC.

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project Facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

LA, Article IV, Sec. 4.03

Complied with. The related government agencies, mainly the Ministry of Finance and the Ministry of Transport, actively participated in the coordination and supervision of the project implementation, as well as well coordinated among ADB, JICA, and related government line agencies.

The Borrower shall take all action which shall be necessary on its part to enable VEC to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations.

LA, Article IV, Sec. 4.04

Complied with. The Borrower took all necessary action to perform its obligations under the loan agreement.

(a) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan.

(b) No rights or obligations under the Subsidiary Loan Agreement shall be assigned, amended, abrogated or waived without the prior concurrence of ADB.

LA, Article IV, Sec. 4.05

Complied with. The ADB loan was relent to VEC at acceptable terms and conditions to ADB. Complied with.

Project Executing Agency

VEC shall be the Project Executing Agency and shall be responsible for awarding all consulting services and Works contracts. VEC shall have overall responsibility for project implementation and formal correspondence with the line ministries, provincial authorities, and ADB. VEC shall delegate responsibility for day-to-day project implementation to the SEPMU, headed by a Director.

LA, Schedule 5, Para. 1

Complied with. VEC had overall responsibility for the project management and formal correspondence with the line ministries, provincial authorities, and ADB. VEC established the SEPMU for implementing the project on day-to-day basis.

34 Appendix 12

Covenant Reference in

Loan Agreement

Status of Compliance

Implementation Agencies

The DCCs shall be the implementing agencies for Component C (Resettlement of Affected Persons) and shall be responsible for payment of all compensation and allowances. Each DCC shall comprise of about seven members, representing provincial (or city) and district government departments, members of the civil society (such as Farmers’ Association, Women’s Union), and APs, and be headed by the Vice-Chairman of the relevant District People’s Committee.

LA, Schedule 5, Para. 2

Complied with. The People’s Committees of HCMC and Dong Nai Province established DCCs in all districts which the project expressway passes. The DCCs acted as the implementing agencies for the LAR plans, and responsible for payment of all compensation and allowances.

VEC, through SEPMU, shall have overall responsibility for implementation of all other components of the Project.

LA, Schedule 5, Para. 3

Complied with.

Financing

In the event where the funds made available to the Borrower under the loan agreements between JBIC and the Borrower are insufficient at any time to finance the items to be funded by JBIC (as detailed in Schedule 1 to this Loan Agreement), the Borrower undertakes to fund the shortfall from its own resources under arrangements satisfactory to ADB.

LA, Schedule 5, Para. 4

Complied with. VEC and the local governments provided all counterpart funds for the project as needed.

Resettlement

The Borrower shall ensure that the RP is fully implemented to the satisfaction of ADB.

LA, Schedule 5, Para. 5

Complied with. The RP was fully implemented to the satisfaction of ADB

The Borrower shall ensure that (a) VEC recruits an EMA before commencement of any land acquisition activities; (b) land acquisition and relocation activities do not commence until an updated RP has been prepared for the relevant section of the Project and the updated RP has been reviewed and approved by ADB; (c) the updated RP is prepared in compliance with ADB’s Involuntary Resettlement Policy (1995) and the Borrower’s laws, regulations, and procedures and be applied to all resettlement activities under the Project, regardless of the source of funding, being agreed by the Borrower that, in case of any discrepancy between the Borrower’s laws and regulations, and ADB's Involuntary Resettlement Policy, the ADB policy requirements shall apply.

LA, Schedule 5, Para. 6

Complied with. An external monitory agency was engaged in 2010 to carry out periodical monitoring of the RP implementation and prepare quarterly monitoring reports. For the added section (first 4 km), the RP was prepared in 2010.

The Borrower shall ensure that (i) APs are compensated at replacement cost and assisted before they are displaced from their houses, land, and assets and (ii) that no APs are displaced until suitable alternative land within the same or a neighboring commune has been allocated to them or compensation has been paid that is sufficient to purchase suitable alternative land within the same or a neighboring commune.

LA, Schedule 5, Para. 7

Complied with. The RP monitoring reports concluded that the living conditions of most affected household had stabilized or improved.

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The Borrower shall provide ADB with quarterly status reports on the land acquisition and resettlement process as part of the progress reports required under Section 6.05 of the Loan Regulations, and shall provide a report immediately following completion of an RP’s implementation.

LA, Schedule 5, Para. 8

Partially Complied with. The external monitoring agency carried out a mid-term review in June 2011 to assess post-resettlement living standards of all affected households. The final resettlement completion report was prepared by the executing agency in January 2015. The monitoring and evaluation report on the RP implementation and life rehabilitation of affected households was prepared by the external monitor in March 2017. Submission of updated resettlement completion report was delayed until December 2018, this didn’t have significant negative impacts to the project performance.

If, at any time after an RP has been approved, significant realignment of any part of the Project is required, the Borrower shall revise and update that RP to take into account the realignment. The updated RP shall be updated in accordance with ADB's Involuntary Resettlement Policy and submitted to ADB for approval prior to commencement of any land acquisition activities for the realigned part of the Project. Significant realignment occurs when the previously approved alignment is moved entirely outside the construction corridor of the previous design over a distance greater than 100 meters or the impact of the realignment increases the number of APs by more than ten percent (10%).

LA, Schedule 5, Para. 9

Complied with. For the added section (first 4 km), the RP was prepared in 2010. The cost for LAR was totally financed by HCMC.

The Borrower shall ensure that VEC contracts an EMA for independent monitoring and evaluation of resettlement activities and that the EMA’s monitoring reports be uploaded onto VEC’s website. The Borrower shall ensure that VEC submits copies of the EMA’s monitoring reports to ADB every quarter until resettlement and income restoration programs are complete.

LA, Schedule 5, Para. 10

Complied with. Total 13 social safeguard monitoring reports were disclosed on the ADB website.

The Borrower shall ensure that liquidation of any amount paid from any SGIA for land or other assets requires the submission of: (i) a valid validation certificate issued by an external values acceptable to both the Borrower and ADB; (ii) the results of the detailed measurement survey (DMS) for the AP receiving the payment, signed as agreed by the AP, setting out the assets to be acquired; (iii) that receipt of payment is acknowledged by the AP, and (iv) certification by the EMA that the AP has received the full payment.

LA, Schedule 5, Para. 11

Complied with. After loan closed, the loan financial account was kept open with a winding-up period for the pending eligible withdraws applications and liquidation of the advance funds, which was extended several times until 31 July 2018 mainly caused by slow liquidation of the unused balance of the advanced fund for the LAR.

The Borrower shall ensure that that Works contractors are not issued a notice of possession

LA, Schedule 5,

Complied with.

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for a geographic area until (a) compensation payment and relocation to new sites has been satisfactorily completed for that area in accordance with the approved RP, (b) agreed rehabilitation assistance is in place, and (c) the area is free of all encumbrances.

Para. 12 No serious complain was received and the disputes were solved by the grievance procedures. The RP monitoring reports concluded that the living conditions of most affected household had stabilized or improved.

Environment

The Borrower shall ensure that its laws and regulations governing environmental impact assessments, as well as ADB's Environment Policy (2002) are followed, it being agreed that if there is any discrepancy between the Borrower’s laws and regulations, and ADB's Environment Policy, the ADB policy requirements shall apply. The Borrower shall ensure that the EMP is fully implemented to the satisfaction of ADB.

LA, Schedule 5, Para. 13

Complied with. The ADB’s environment policy was complied with.

The Borrower shall ensure that (a) specific provisions are included for the implementation of the EMP and its monitoring in Works contracts, and in consulting services contracts, together with budget allowances for these provisions; (b) the provisions of the EIA and EMP, and any updates, are fully implemented for all activities under the Project, regardless of the source of funds for a particular activity. The Borrower shall ensure that the EMP, as updated during detailed design and approved by ADB, is included in the bidding documents as a basis for the contractors to prepare SEMPs.

LA, Schedule 5, Para. 14

Complied with. Provision was included in the bidding documents for implementation of the EMP. Site-specified EMPs for each civil works contracts were prepared by the contractors, which were approved before construction. Grievance redress mechanism was established.

The Borrower shall cause VEC to ensure that additional environmental studies will be undertaken and corresponding approval from MONRE and ADB shall be obtained should there be changes in the Project design that would cause significant environmental impacts that are not included in the scope of the current EIA and that such changes shall be screened for environmental significance and environmental category determination.

LA, Schedule 5, Para. 15

Complied with. No significant changes of the project design.

If, at any time, significant realignment of any part of the Project is required, and this change may have an adverse environmental impact as agreed between the Borrower and ADB, an additional environmental assessment shall be completed and a process similar to that used for an EIA, and acceptable to ADB, shall be undertaken. Significant realignment occurs when the previously approved alignment is moved entirely outside the construction corridor of the previous design over a distance greater than 100 meters or the impact of the realignment increases the number of APs by more than ten percent (10%).

LA, Schedule 5, Para. 16

Complied with. There was no significant realignment of the project expressway.

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The Borrower shall cause (i) the contractors engaged under the Works contracts to comply strictly with all environmental impact mitigation requirements set out in the contract documents, and (ii) the consultants engaged for construction supervision to monitor closely the compliance by the contractors with the environmental impact mitigation requirements. The Borrower shall ensure that VEC submits to ADB semi-annual reports on implementation of the EMP as stated in the EIA.

LA, Schedule 5, Para. 17

Complied with. Site-specified EMPs for each civil works contract were prepared by the contractors, which were approved before construction. Grievance redress mechanism was established. The PSCs conducted regular site inspections to the site activities along the expressway alignment, off-site borrow, spoils, and disposal areas, as well as construction camps and plants. ADB missions also well involved in the supervisions of environment impacts. Quick actions were taken if any non-compliance were found. Several workshops on compliance of environment safeguards were conducted. Regular environmental monitoring reports were prepared and submitted to ADB. Total 24 environmental monitoring reports are disclosed on the ADB website

The Borrower shall ensure that VEC conducts an unexploded ordnance survey and clearance, and that completion of such clearance is certified to ADB by the Borrower, prior to commencement of Works.

LA, Schedule 5, Para. 18

Complied with. VEC engaged external agency to conduct unexploded ordnance survey and clearance.

Indigenous Peoples and Ethnic Minorities, Gender and Other Social Issues

The Borrower shall ensure that, to the extent any ethnic minorities are likely to be significantly affected by the Project, the measures set forth in the ethnic minorities specific sections in the RP are carried out in accordance with such actions, Borrower’s laws and regulations, and ADB’s Policy on Indigenous Peoples (1998), it being agreed that, if there is any discrepancy between Borrower’s laws and regulations and ADB's Policy on Indigenous Peoples, the ADB policy requirements shall apply.

LA, Schedule 5, Para. 19

Complied with. Specific measure was included in the RP to ensure that the 11 households would not get marginalized in the process of resettlement. During implementation, special attentions were paid to the vulnerable households, including consultation participation, disaggregated monitoring, timely compensation, capacity trainings, and related assistance. Meanwhile, the construction activities did not have any adverse consequences on their socioeconomic condition nor lead to any disruption in the life or culture of these ethnic households. Instead, the improved transport condition was expected to augment access to socioeconomic facilities for these people.

The Borrower shall ensure that the provisions set forth in the project-specific gender strategy and the HIV/AIDS Awareness and Prevention of Human Trafficking Program are implemented. In particular, the Borrower shall ensure that, in any instance where land is acquired for AP, VEC ensures joint registration of land or land use rights in the names of both the husband and wife and where compensation is paid, payment is made

LA, Schedule 5, Para. 20

Complied with. During implementation, provisions were made in the bidding documents for the contractors to encourage employment of the poor particularly women, and not differentiate wages between men and women particularly for work of equal value and ensure that all civil works would comply with all applicable labor laws, not employ

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into a joint account opened in the names of both the husband and wife (where applicable).

child labor for construction and maintenance activities. VEC, the SEPMU, the consultants and the contractors paid adequate attention to the gender issue. A social and gender specialist was engaged under the PSC to monitor the implementation of gender strategy and ensure the gender issues were well addressed.

The Borrower shall ensure that all Works contracts under the Project incorporate provisions and budget to the effect that contractors comply with all applicable labor laws and related international treaty obligations and carry out the project-specific gender strategy and the HIV/AIDS Awareness and Prevention of Human Trafficking Program in the campsites and corridors of influence. The Borrower shall further ensure that all Works contracts include provisions to: (a) prohibit employment of child labor; (b) prohibit differential wages or benefits to men and women for work of equal value; (c) require the provision of basic water and sanitation facilities for men and women in the construction camps as well as separate bathing and toilet facilities for men and women; (d) provide day care service for the children of female construction workers; and (e) provide safe working conditions for male and female workers.

LA, Schedule 5, Para. 21

Complied with. Provisions were made in the bidding documents and all works contracts to comply with all applicable labor laws, not employ child labor for construction and maintenance activities.

Governance

The Borrower shall ensure that a Project specific web page shall be established on VEC’s website and information shall be publicly disclosed on this web page on how Loan proceeds are being used, including for each contract (a) the list of participating bidders, (b) name of the winning bidder, (c) basic details on bidding procedures adopted, (d) amount of the contract awarded, (d) list of Goods and/or services purchased, and (e) intended and actual utilization of Loan proceeds under each contract and that the web page shall be updated within two weeks after each award of contract.

LA, Schedule 5, Para. 22

Complied with. VEC adopted the financial management system developed with ADB’s assistance and established a project specific webpage to disclose the project information to public.

Auditing and Accounting

The Borrower shall cause VEC to (i) maintain separate accounts for the Project; (ii) maintain a separate Project account ledger to record VAT payments to Project consultants and contractors and recovery of these amounts from the relevant tax authority within MOF (the VAT Account), it being agreed that funds from the VAT Account shall only be applied to Works procured under International Competitive Bidding; (iii) have all

LA, Schedule 5, Para. 23

Complied with. VEC maintained separate financial account for the project. Audited financial statements of the project were submitted to ADB timely as required. The audit report for 2010 and 2011 were qualified by the independent auditors and the qualified matters were cleared in the succeeding APFS. A loan

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Status of Compliance

Project accounts (including the VAT account) and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iv) furnish to ADB, promptly after their preparation but in any event not later than six (6) months after the close of the Fiscal Year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto, all in the English language. The audit opinion shall include (i) a detailed description on the source of funds and expenditures made, (ii) an assessment of the adequacy of accounting and internal control systems with respect to project expenditures and other financial transactions, and to ensure safe-custody of Project-financed assets, (iii) an assessment as to whether the Borrower, VEC and the DDCs have maintained adequate documentation for all financial transactions, (iv) a separate opinion on the use of the statement of expenditures and imprest account and SGIA procedures, and (v) confirmation of compliance with the financial covenants in this Loan Agreement. The audit opinion shall further include confirmation that (i) the VAT Account has only been used for the payment of VAT amounts for Project-related expenses, and (ii) the accounting records and documentation of the VAT Account are complete. The Borrower shall cause VEC to furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

advance (imprest) account was established at Vietnam Industrial and Commercial Bank, and administrated by VEC under ADB’s imprest account procedures, which limited VEC providing funds for (i) payments for project administration costs, (ii) payments for some consulting services, and (iii) replenishment of second generation imprest accounts (SGIAs). Five SGIAs were established and operated for payment of expenses arising from implementation of the resettlement plan. The statement of expenditure (SOE) procedure was used to reimburse eligible expenditures and liquidate advances to the advance and SGIA accounts to facilitate the project implementation.

The Borrower shall ensure that (a) VEC authorizes all withdrawals from the SGIAs, and (b) that all SGIA’s are audited as part of the regular annual audits of Project accounts. The Borrower shall ensure that that ADB staff will have the right to conduct spot or random checks of expenditures covered by the SGIAs.

LA, Schedule 5, Para. 24

Complied with. The SGIAs were managed by the local governments, which were audited as part of the project financial auditing reports.

Financial Matters

The Borrower shall ensure that VEC (a) achieves beginning from Financial Year 2020 (i) a DSCR of at least 1.2 times, and (ii) a debt: equity ratio of not greater than 90:10; (b) submits to ADB a reasonable forecast of the projected financial statements to achieve those financial ratios and sets up toll rate structure and levels in agreement with ADB on the earlier of (i) 1 June 2012, or (ii)

LA, Schedule 5, Para. 25

Partial complied with. The current toll rate by 5 vehicle types was established by VEC with approval by related government agencies. The current toll rate is VND40,000–VND160,000 per vehicle-km by different vehicle types. But, the VEC didn’t submit to ADB a reasonable forecast of the projected financial

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the opening of the first section of the HLD Expressway to users. The Borrower shall cause VEC to carry out periodic reviews of the toll structure and toll levels as may be required to adjust for inflation or unanticipated costs or at ADB’s request, it being agreed that any changes to the toll rates must be submitted to ADB for approval before they may be implemented. For the purpose of this paragraph, the following definitions shall have the meanings prescribed hereunder: (i) DSCR shall be (a) an indicator of VEC's cash flow margin, enabling it to service debt from internal sources; and (b) a ratio that measures the extent to which forecast cash flows are able to cover forecast debt service requirements; and (ii) debt: equity ratio means the ratio that measures the relationship between all borrowed funds and shareholders’ invested capital.

statements to achieve the required financial ratios.

The Borrower shall ensure that, on or before 31 December 2009, VEC has established an internal financial information and management system which enables VEC to produce a financially sustainable Expressway investment plan utilizing monitoring and planning, cost recovery tariff levels, traffic forecast planning, and preparing projected financial statements and debt management strategies.

LA, Schedule 5, Para. 26

Complied with. VEC adopted the financial information and management system for the financial management of the project, which was developed under the ADB TA and improved during trial operation. VEC was highly satisfactory with the financial management system.

Anticorruption

The Borrower shall comply with, and shall cause VEC to comply with ADB’s Anticorruption Policy (1998, as amended to date) and the Policy relating to Enhancing ADB’s Role in Combating Money Laundering and the Financing of Terrorism (2003). The Borrower (i) acknowledges ADB’s right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; (ii) agrees to cooperate fully with, and to cause VEC to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation; and (iii) agrees to refrain, and cause VEC to refrain, from engaging in money laundering activities or financing of terrorism and shall allow, and cause VEC to allow, ADB to investigate any violation or potential violation of these undertakings.

LA, Schedule 5, Para. 27

Complied with. VEC and the SEPMU complied with ADB’s Anticorruption Policy (1998, as amended to date) and the Policy relating to Enhancing ADB’s Role in Combating Money Laundering and the Financing of Terrorism (2003).

Without limiting the generality of the preceding paragraph, the Borrower shall (i) ensure that VEC conducts periodic inspections on the contractors’

LA, Schedule 5, Para. 28

Complied with. VEC and the SEPMU conducted periodic inspections on the contractors’ activities

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activities related to fund withdrawals and settlements; and (ii) ensure and cause VEC to ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of VEC, and all contractors, suppliers, consultants and other service providers as they relate to the Project.

related to fund withdrawals and settlements to ensure contracts financed by ADB in connection with the project include provisions specifying the right of ADB to audit and examine the records and accounts of VEC, and all contractors, suppliers, consultants and other service providers as they relate to the project.

In addition to these requirements, to deter corruption and increase transparency, the Borrower shall cause VEC to create and maintain a webpage to disclose information about procurements related to the Project, such webpage to include, for each contract, information on, among others, the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded, and the list of Goods/services, including consulting services, procured. The Borrower shall further ensure that stakeholders, which include civil society and non-governmental organizations are provided detailed information on procurement on public notice boards in each respective province of the Borrower.

LA, Schedule 5, Para. 29

Complied with. VEC created and maintained a webpage to disclose information about procurements related to the project.

Operation and Maintenance

The Borrower shall cause VEC to ensure that the Expressway includes permanent truck weigh station facilities to be used to prevent overloaded trucks from using the Expressway.

LA, Schedule 5, Para. 30

Partially complied with. Weighing facilities were installed along the expressway and monitoring is place. However, measures have not been taken to the overloaded trucks.

The Borrower shall ensure that, by completion of the Works, VEC shall submit documentation for an Operations and Maintenance (O&M) concession for the entire Expressway including a time-bound implementation schedule in form and substance satisfactory to ADB.

LA, Schedule 5, Para. 31

Partial complied with. Unlike expected at appraisal and suggested by ADB missions, VEC established a joint venture company (VEC-E) in 2012 to operate and maintain the expressway. Currently, there is no plan for concession of the full expressway operation to a private sector concessionaire.

Project Performance Monitoring and Evaluation

The Borrower shall ensure that VEC establishes a systematic Project performance monitoring and analysis system for use throughout the Project period.

LA, Schedule 5, Para. 32

Complied with. A PPMS was established and monitoring was carried out accordingly, including a baseline survey in 2012 and following-up survey in 2017.

The Borrower shall ensure that VEC establishes Project indicators (baseline data) in the Project Area for the Expressway, including: (i) traffic volumes and journey times; (ii) goods moved, by value and category, and number of passengers; (iii) average road roughness; (iv) annual expenditures on maintenance in HCMC and Dong Nai Province for the national, city and provincial

LA, Schedule 5, Para. 33

Being Complied with. The PPMS included all indicators required. The baseline data were collected in 2012 and the data in 2016 were collected in the second survey. Changes of the indicators were compared between those two surveys.

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level road networks; and (v) social and economic impact indicators. The data shall be collected within one (1) year of the Effective Date. A second survey shall be conducted upon Project completion and a third survey five (5) years after Project completion to establish Project impact. The design of the baseline and impact surveys shall include appropriate control areas and an assessment of all Project interventions, including resettlement and other safeguard interventions that affect the livelihood of Project beneficiaries.

The PCR Mission requested VEC to update ADB about the status of the second survey, and third survey of project performance and evaluation indicators, which were required to be conducted upon project completion, and five years after the project completion, respectively.

The Borrower shall ensure that VEC: (i) collects and consolidates all Project progress reports, site reports, technical and financial reports and submit them to ADB; and (ii) prepares monthly and quarterly progress reports, a midterm Project evaluation report and an overall Project completion report. Quarterly reports shall include updated implementation, financial and procurement-related information, as well as reports submitted by the EMA for resettlement activities. Monthly and quarterly reports shall be submitted to ADB within 15 days of the end of each month or quarter, as applicable.

LA, Schedule 5, Para. 34

Complied with. The project progress and monitoring reports were prepared as required and submitted to ADB on a timely basis. Project performance monitories of the project were carried out at baseline and after project completion. The required borrower’s project completion report was prepared and submitted to ADB timely.

ADB = Asian Development Bank, DCC = district compensation committees. EMA = external monitoring agency, HCMC = Ho Chi Minh City, LAR = land acquisition and resettlement, RP = resettlement plan,

PPMS = project performance monitoring system, SEPMU = Southern Expressway Project Management Unit, VEC = Vietnam Expressway Corporation.

Source: ADB project completion review mission.

Appendix 13 43

ECONOMIC REEVALUATION

A. Introduction

1. The Asian Development Bank (ADB) project completion review (PCR) mission conducted an economic reevaluation of the project using similar methodology as that at appraisal with updated data. In the “without-project” case, it was assumed that the original state of the highway network in the project area was retained. In the “with-project” case, a new expressway was constructed and opened to traffic so that vehicles could drive at higher speeds and at shorter distances with lower operating costs and reduced travel time. A traffic analysis compared the actual traffic counts on the project expressway with those projected at appraisal. Economic benefits were recalculated by comparing the “with-project” and “without-project” cases. Consequently, the economic internal rate of return (EIRR) for the project was calculated and its sensitivities were tested.

B. The Project Expressway

2. Upon completion, a total of 55 km of the project expressway with four-lanes was constructed, including section 1 with 23.9 km passing the Ring Road 2 in District 9 of HCMC, Nhon Trach and Long Thanh Districts of Dong Nai Province, and section 2 with 31.1 km passing through Long Thanh, Cam My and Thong Nhat Districts of Dong Nai Province. The construction works also included a major new 1,700-meter bridge over the Dong Nai River at Long Thanh. Three toll plazas were constructed at the locations of the intersection with the Second Ring Road, the intersection with National Highway 51 at the southern end of Long Thanh town, and at Dau Giay. The project expressway is equipped with an Electronic Toll Collection and Traffic Information and Monitoring System, as well as substantial traffic safety facilities. The expressway section of Ring Road 2 to Long Thanh was opened to traffic in January 2014. The entire project expressway was opened to traffic in February 2015. 3. The project expressway is an important transport corridor connecting HCMC and Dau Giay, which is a fast industrial developing area in southern Viet Nam, named Southern Focal Economic Area. Before the project, the traffic between HCMC to Vung Tau area (a famous tour attraction and port area) took mainly the National Highway 1 and National Highway 51 (NH-51), which is longer, in poor condition, and heavily congested. National Highway 1 is the main highway corridor in the country, which connects HCMC and Hanoi. Upon opening, a large amount of the traffic on the existing highways have diverted to the project expressway. On the new expressway, the vehicles now may drive at much faster speeds and with shorter distances. C. Traffic Analysis

4. At appraisal, a traffic survey was conducted at the locations of HCMC, Long Thanh, and Dau Giay to collect existing traffic counts and willingness-to-pay if using the project expressway. Traffic analysis was carried out to forecast future traffic demand based on socioeconomic development trends in the project areas and potential traffic diversions to the expressway. It was assumed that the traffic on the project expressway would grow at 8.1%–8.5% annually in 2013–2020, and then slow down to 6.4%–6.6% annually in 2021–2025. The annual average daily traffic volume on the HCMC–Long Thanh section in AADT would reach 17,201 vehicles in 2013 and 30,401 vehicles in 2020. The traffic volume on the Long Thanh–Dau Giay section would reach 11,477 vehicles in 2013 and 19,848 vehicles in 2020. 5. During the ADB PCR mission in February 2019, the actual traffic counts on the project expressway in 2017 and 2018 were provided by the expressway operator. It was found that the

44 Appendix 13

actual traffic on the HCMC-Long Thanh section was much higher than that estimated at appraisal with 34,561 vehicles in 2017 and 39,088 vehicles in 2018. Meanwhile, the traffic on the Long Thanh–Dau Giay section was lower than expected with 9,303 vehicles in 2017 and 10,659 vehicles in 2018.

Table 13.1: Actual Traffic on the Project Expressway (vehicle, AADT)

Year Section Car Mini-bus

Large bus

Small Truck

Medium Truck

Large Truck

Total

2017 HCMC–Long Thanh 10,336 11,977 5,480 2,297 1,532 2,940 34,561

Long Thanh–Dau Giay 2,539 2,942 1,514 1,062 726 520 9,303

2018 HCMC–Long Thanh 11,749 13,614 5,844 2,684 1,686 3,509 39,088

Long Thanh–Dau Giay 2,952 3,420 1,713 1,176 784 614 10,659

Growth Rate

HCMC–Long Thanh 13.7% 13.7% 6.6% 16.9% 10.1% 19.4% 13.1%

Long Thanh–Dau Giay 16.3% 16.3% 13.1% 10.7% 8.0% 18.1% 14.6% AADT = annual average daily traffic Source: Vietnam Expressway Corporation

6. The traffic growth rates in 2018 were much higher than expected, approximately 13.1% for the HCMC-Long Thanh section and 14.6% for the Long Thanh–Dau Giay section. The high traffic volume on the HCMC-Long Thanh section was mainly due to fast socioeconomic development in that area, especially in industrial and tourism development. The lower traffic for the Long Thanh–Dau Giay section was mainly due to the whole expressway construction along the HCMC–Hanoi corridor being in an early stage, which was not able to well facilitate and induce the through traffic on the project expressway. Accordingly, the traffic growth rates at appraisal were adjusted by considering actual traffic, the fast socioeconomic development and the expressway network development in the project areas.

Table 13.2: Adjusted Traffic Growth Rates (% per year)

Year Section Car Mini-bus

Large bus

Small Truck

Medium Truck

Large Truck

2019–2020 HCMC–Long Thanh 5.5% 3.7% 2.3% 4.7% 4.3% 4.0%

Long Thanh–Dau Giay 9.4% 7.1% 6.2% 8.7% 8.5% 8.3%

2021–2025 HCMC–Long Thanh 4.7% 3.9% 3.7% 4.8% 4.7% 4.6%

Long Thanh–Dau Giay 8.9% 8.1% 7.9% 9.0% 8.9% 8.9%

2026–2030 HCMC–Long Thanh 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Long Thanh–Dau Giay 5.8% 5.2% 5.2% 5.8% 5.8% 5.8%

2030– HCMC–Long Thanh 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Long Thanh–Dau Giay 3.0% 2.0% 3.0% 3.0% 3.0% 3.0%

Source: Asian Development Bank project completion review mission.

D. Project Cost

7. The project costs comprised investment capital cost, and operation and maintenance (O&M) costs. The actual annual investment costs for the project were used in the economic reevaluation. Comparing with the cost estimation at appraisal, the actual project cost was about 7.5% lower and the project implementation period extended from original 5 years to 11 years (2008–2018). The actual O&M costs in 2015–2018 for the expressway were provided by the expressway operator (VEC-E), which is a joint venture expressway operation company. It was

Appendix 13 45

assumed that such O&M cost would increase by 3% per year in consideration of the traffic growth and the expressway condition deterioration. The periodic maintenance cost, mainly for pavement overlay, was assumed to have occurred every 5 years at 5% of the capital costs.

Table 13.3: Actual O&M Cost for the Project Expressway (million)

in VND in USD Annual

Increase

2015 46,237 2.13

2016 55,008 2.51 18%

2017 58,869 2.63 5%

2018 60,350 2.70 3%

Source: VEC-E.

8. The financial annual capital costs and the annual O&M costs were converted into economic costs using the average conversion factor of 0.73 adopted from the project appraisal document. E. Project Benefits 9. As estimated at appraisal, the main sources of economic benefits were the reductions in vehicle operating cost (VOC) and passenger travel time costs due to better road condition, shorter distance, and less travel time. The unit VOC was adopted from a recent ADB study report.1 It was estimated that the savings of the VOC per km was at least 30% compared with that on the existing parallel highways.

Table 13.4: Unit Vehicle Operation Cost ($ per vehicle-km)

Car Mini-bus

Large bus

Small Truck

Medium Truck

Large Truck

On expressway 0.13 0.22 0.29 0.19 0.29 0.40

Local highway 0.17 0.29 0.38 0.25 0.37 0.52

Saving 0.04 0.07 0.09 0.06 0.09 0.12 Source: Asian Development Bank project completion review mission.

10. In the economic reevaluation, average speeds of passenger vehicle by types were assumed to be 80 km–90 km per hour for the “with-project” scenario and 50–60 km per hour for the “without-project” scenario (on the existing national highways). Passengers’ travel time cost savings were recalculated by different types of passenger vehicles. The passenger time cost was derived from the gross domestic product per capita of HCMC and Dong Nai Province in 2017. Other factors taken into account in the calculation of the passenger travel time cost savings included average vehicle loads, percentage of work-related trips, time costs by different road users, and potential increases in time cost. It was assumed that the induced traffic was 20% of the total traffic. Half of the benefits were included for the induced traffic. The reevaluation of the benefits indicates that the VOC savings initially took around 73.1% of the total benefits in 2017 (first fully operation year), but the share of the passenger time cost benefits increased sharply along with fast economic development and income increase, to 36.5% in 2030.

1 ADB. June 2018. Technical Assistance Consultant’s Final Report. Loan No. 3248-VIE (SF): Ho Chi Minh City Third

Ring Road Technical Assistance Project.

46 Appendix 13

F. Economic Internal Rate of Return and Sensitivity Analysis 11. Based on the assumptions and parameters above, the EIRR was calculated for a period of 28 years (2008–2035), including 11 years for project implementation and 21 years for operation (with some overlaps of construction and operation periods). 50% of the capital cost was considered as the residual value of the expressway, which was added to the last calculation year. The EIRR was recalculated at 18.4% for the whole project expressway, respectively 19.1% for the HCMC–Long Thanh section and 16.0% for the Long Thanh–Dau Giay section. The higher EIRR for the HCMC–Long Thanh section was mainly caused by a higher traffic level. In comparing the EIRR at appraisal (15% for the whole project), the higher EIRR at completion was mainly due to a lower capital cost and higher traffic level. The recalculated EIRRs are above the ADB recommended discount rate of 12% at appraisal. The project is therefore considered to be continuously economically viable. The details of the economic reevaluation are in Table 13.6.

12. The EIRR was subjected to sensitivity analysis to test different scenarios of O&M costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for all tested scenarios. If a 20% maintenance cost increase would be combined with a 20% benefit reduction, the EIRR would be still 15.6% for the whole project. The sensitivity analysis confirmed that the project has robust economic viability. The sensitivity analysis also showed that the EIRR was more sensitive to changes in economic benefits. For this reason, the expressway operator needs to keep the project expressway in good condition and facilitate the fast-growing traffic, especially the through traffic. The local government should pay attention to the socioeconomic development of the project area, foster local transport services, and increase incomes for the expressway users. The results of the sensitivity analysis are in the following table.

Table 13.5: Sensitivity of the EIRR

Tests EIRR (%)

ENPV@12% ($ million) Case O&M Cost Benefits

Base Case 18.4% 1,008.31

Changes (+/-) 10% 18.3% 1,000.10 20% 18.3% 991.90 100% 17.9% 926.20 10% 19.6% 1,242.10 20% 20.7% 1,475.90 -10% 17.1% 774.50 -20% 15.7% 540.70 10% -10% 17.0% 766.30

20% -20% 15.6% 524.30

Switching Point 1290% 12.0%

-44% 12.0%

EIRR = economic internal rate of return, ENPV = economic net present value, O&M = operation and maintenance Source: Asian Development Bank project completion review mission.

Appendix 13 47

Table 13.6: Economic Reevaluation for the Project Expressway ($ million)

Costs Benefits Net

Benefit Net Present

Value year Capital O&M Cost

Total VOC Time Cost

Total

2008 0.16 0.16 -0.2 -0.6

2009 37.03 37.03 -37.0 -115.0

2010 34.04 34.04 -34.0 -94.4

2011 66.83 66.83 -66.8 -165.5

2012 127.76 127.76 -127.8 -282.4

2013 146.91 146.91 -146.9 -290.0

2014 113.94 113.94 -113.9 -200.8

2015 56.01 1.56 57.57 48.3 12.7 61.0 3.4 5.4

2016 22.29 1.83 24.13 69.0 25.4 94.4 70.3 98.8

2017 19.81 1.92 21.73 98.6 36.3 134.9 113.2 141.9

2018 5.52 1.97 7.49 111.7 41.0 152.6 145.1 162.5

2019 2.03 2.03 116.7 43.0 159.6 157.6 157.6

2020 24.4 2.09 26.52 121.9 47.8 169.7 143.2 127.8

2021 7.1 1.97 9.06 127.9 53.2 181.1 172.0 137.1

2022 2.03 2.03 134.2 59.2 193.4 191.4 136.2

2023 2.09 2.09 140.8 65.9 206.8 204.7 130.1

2024 2.15 2.15 147.9 73.4 221.3 219.1 124.3

2025 24.4 2.22 26.64 155.3 81.8 237.0 210.4 106.6

2026 7.1 1.97 9.06 159.4 86.5 245.9 236.9 107.1

2027 2.03 2.03 163.7 91.6 255.2 253.2 102.3

2028 2.09 2.09 168.1 96.9 265.0 262.9 94.8

2029 2.15 2.15 172.7 102.6 275.3 273.1 87.9

2030 24.4 2.22 26.64 177.4 108.6 286.1 259.4 74.6

2031 7.1 2.28 9.37 179.9 113.5 293.4 284.0 72.9

2032 1.97 1.97 182.4 118.6 300.9 298.9 68.5

2033 2.03 2.03 184.9 123.9 308.7 306.7 62.8

2034 2.09 2.09 187.4 129.4 316.9 314.8 57.5

2035 -290.7 2.15 -288.58 190.0 135.2 325.3 613.9 100.1 Economic Net Present Value (ENPV): 1,008.3 Economic Internal Rate of Return (EIRR): 18.4% Discount Rate: 12%

Source: Asian Development Bank project completion review mission.

48 Appendix 14

FINANCIAL REEVALUATION 1. The financial internal rate of return (FIRR) of the project was recalculated based on actual capital costs, actual operation and maintenance (O&M) costs, and actual toll revenues of the expressway operation. The major assumptions used in the FIRR recalculation are as follows:

(i) The capital costs included all capital expenditures related to the civil works, land acquisition and resettlement activities, and consulting services, but excluded the financial charges for the loans.

(ii) Actual O&M costs of the operator in 2015–2018 were used as the basic cost. The O&M costs were kept at constant prices, and a 3% increase per year was added to account for traffic increases and expressway deterioration.

(iii) Actual toll revenues in 2014–2018 were used as the basis. It was assumed that the toll revenue level would increase along with the increase in traffic each year during the evaluation period.

(iv) 1%–5% of the toll revenue was added as the non-toll revenue which would be generated by extra services of the expressway operation and started from 2020, including mainly the revenues from the service areas, advertisement space leasing, and spare facility leasing.

(v) The corporative tax rate of 10% was applied to the total revenue. 2. Based on the above assumptions and estimations, the FIRR was recalculated at 5.6% before tax and 4.9% after tax. The recalculated FIRR is higher than the weighted average cost of capital of 1.13% at appraisal. Therefore, the project is still considered financially viable. Table A14.2 presents the cash flows of the FIRR recalculations. Additionally, the FIRR was subject to sensitivity tests. Combining a 20% increase in O&M costs and a 20% decrease in revenue, the FIRR was at 3.8% before tax and 3.2% after tax. The test results indicated that the FIRR was very sensitive to the revenue changes (Table A14.1). Therefore, the Vietnam Expressway Corporation and the highway operators (VEC-E) should improve their management and service of toll collection and explore more revenue sources to ensure sufficient revenue.

Table A14.1: Sensitivity Tests

Scenarios

FIRR before tax

FIRR after tax

Base Case 5.6% 4.9%

Sensitivity Tests

1 O&M cost 10% higher 5.5% 4.8%

2 O&M cost 20% higher 5.4% 4.7%

3 Revenue 10% higher 6.3% 5.5%

4 Revenue 20% higher 6.9% 6.2%

5 Revenue 10% lower 4.8% 4.1%

6 Revenue 20% lower 4.0% 3.4%

7 O&M cost 10% higher &revenue 10% lower 4.7% 4.0%

8 O&M cost 20% higher &revenue 20% lower 3.8% 3.2% FIRR = financial internal rate of return, O&M = operation and maintenance. Source: Asian Development Bank project completion review mission.

Appendix 14 49

Table 14.2: Financial Reevaluation for the Project Expressway ($ million)

Costs Revenue

Profit Tax Net

Profit year Capital O&M Cost

Total Toll Other Total

2008 0.22 - 0.22 -0.22 -0.22

2009 50.27 - 50.27 - - - -50.27 -50.27

2010 45.24 - 45.24 - - - -45.24 -45.24

2011 89.91 - 89.91 - - - -89.91 -89.91

2012 171.95 - 171.95 - - - -171.95 -171.95

2013 198.90 - 198.90 - - - -198.90 -198.90

2014 153.69 153.69 8.99 8.99 -144.70 - -144.70

2015 73.38 2.13 75.52 25.80 25.80 -49.71 - -49.71

2016 25.75 2.51 28.26 35.70 35.70 7.44 3.57 3.87

2017 26.19 2.63 28.82 43.13 43.13 14.31 4.31 10.00

2018 6.43 2.70 9.12 48.01 48.01 38.89 4.80 34.08

2019 - 2.78 2.78 52.81 52.81 50.03 5.28 44.75

2020 33.43 2.86 36.29 58.09 0.58 58.67 22.38 5.81 16.57

2021 9.70 2.70 12.40 62.16 0.62 62.78 50.38 6.22 44.16

2022 - 2.78 2.78 66.51 0.67 67.17 64.40 6.65 57.74

2023 - 2.86 2.86 71.16 0.71 71.88 69.01 7.12 61.90

2024 - 2.95 2.95 76.15 0.76 76.91 73.96 7.61 66.35

2025 33.43 3.04 36.47 81.48 1.63 83.11 46.64 8.15 38.49

2026 9.70 2.70 12.40 85.55 1.71 87.26 74.86 8.56 66.30

2027 - 2.78 2.78 89.83 1.80 91.62 88.85 8.98 79.86

2028 - 2.86 2.86 94.32 1.89 96.21 93.34 9.43 83.91

2029 - 2.95 2.95 99.04 1.98 101.02 98.07 9.90 88.16

2030 33.43 3.04 36.47 103.99 5.20 109.19 72.72 10.40 62.32

2031 9.70 3.13 12.83 107.11 5.36 112.46 99.63 10.71 88.92

2032 - 2.70 2.70 110.32 5.52 115.84 113.14 11.03 102.11

2033 - 2.78 2.78 113.63 5.68 119.31 116.53 11.36 105.17

2034 - 2.86 2.86 117.04 5.85 122.89 120.03 11.70 108.32

2035 -387.53 2.95 -384.58 120.55 6.03 126.58 511.16 12.05 499.10

(before tax) (after tax) Net Present Value (NPV): 815.59 666.23 Internal Rate of Return (IRR): : 5.6% 4.9% Weighted Average Cost of Capital (WACC): 1.13% 1.13%

Source: Asian Development Bank project completion review mission.

50 Appendix 15

SOCIOECONOMIC IMPACTS OF THE PROJECT 1. At appraisal, an impact assessment of the project was carried out, which focused on poverty, gender, land acquisition and resettlement, indigenous people, health and labor. Accordingly, a design and monitoring framework and a project performance monitoring and evaluation program was designed as part of the project appraisal document. During implementation, the project supervision consultants (PSC) developed the project performance monitoring system (PPMS) with a set of indicators for monitoring and evaluating the project impacts. The PSC carried out a baseline survey in 2012 and a project completion survey in 2017 on the indicators designed. A final PPMS report was prepared and submitted to ADB in March 2017.1 During the ADB project completion review mission in February 2019, more recent data was collected. Below are the key findings of the socioeconomic impacts of the project. A. Economic Development and Poverty Reduction 2. The project expressway falls in an important section of the transport corridor connecting HCMC and Dau Giay, which is an important industrial developing area in southern Viet Nam, named the Southern Focal Economic Area. Along with improvement of the transport condition, the economic development presented booming status, which has led to a fast income increase for the local residents. In comparing with that in 2010, the monthly income in 2014 had increased by an average of 9% per year for HCMC and 17% per year for Dong Nai Province.

Table 15.1: Monthly Average Income per Capita (‘000 VND)

2010 2014 annual %

Vietnam 1,387.1 2,640.0 17%

HCMC 2,581.6 3,652.7 9%

Dong Nai Province 1,631.6 3,100.5 17%

HCMC = Ho Chi Minh City Source: PPMS report, 2017

3. During the ADB PCR mission, it was confirmed that the economic development continuously kept a fast development trend in the project areas. The average gross domestic product (GDP) growth rates in 2015–2017 was 8.1% per year for HCMC and 8.5% per year for Dong Nai Province, and the GDP per capita in 2017 reached $6,119 for HCMC and $4,545 for Don Nai Province.

Table 15.2: GDP per Capita ($ per person)

2015 2016 2017

HCMC 5,217 5,640 6,119

Growth rate (%) 7.8% 8.1% 8.5%

Dong Nai 3,850 4,170 4,545

Growth rate (%) 8.1% 8.3% 9.0% HCMC = Ho Chi Minh City Source: Provincial Statistical Office.

1 SDM Smith. March 2017. Project Performance Monitoring & Evaluation Report - Viet Nam: Ho Chi Minh City–Long

Thanh–Dau Giay Expressway Construction Project.

Appendix 15 51

4. Meanwhile, the poverty rates had substantially reduced. According to the PPMS report, the poverty rates in 2010–2014 reduced from 0.3% to 0.01% for HCMC and from 3.7% to 1.2% for Dong Nai Province.

Table 15.3: Poverty Rate by Location (%)

2010 2014

Vietnam 14.2 8.4

HCMC 0.3 0.01

Dong Nai Province 3.7 1.2

HCMC = Ho Chi Minh City Source: PPMS report, 2017.

B. Traffic Development and Exports 5. The fast socioeconomic development has led to a boom in transport demand and traffic growth. The survey showed that the traffic level at the survey locations presented fast increasing trends, especially for trucks and cars.

Table 15.4: Traffic Development in the Project Areas (average daily traffic)

No. Vehicle category at different

locations

Annual average traffic data/day*night

2005 2007 2009 2016

1 All truck types

NH51 at Long Thanh 5,863 5,888 9,389 9,029 NH1A Km 1829+800 6,795 6,331 8,450 7,157

2 All bus types

NH51 at Long Thanh 3,042 4,210 6,520 2,974 NH1A Km 1829+800 4,846 4,858 5,216 1,708

3 Cars

NH51 at Long Thanh 4,154 4,481 5,416 6,698 NH1A Km 1829+800 2,485 2,577 4,333 3,850

4 Total quantity of all car types

NH51 at Long Thanh 13,059 14,579 21,326 18,700 NH1A Km 1829+800 14,126 13,766 17,999 12,715

5 2~3 wheeled motorbikes

NH51 at Long Thanh 22,999 25,629 25,818 N/A

NH1A Km 1829+800 21,222 18,650 4,344 5,996

Source: PPMS report, 2017.

6. Before the project, the traffic between HCMC to Vung Tau area, a famous tour attraction and port area, took mainly the National Highway 1 and National Highway 51 (NH-51), which was longer, in poor condition, and heavily congested. National Highway 1 is the main highway corridor in the country, which connects HCMC and Hanoi, which was heavily congested. Upon opening, a large amount of the traffic on the existing highways have diverted to the project expressway. On the new expressway, the vehicles now may drive at much faster speeds and with shorter distances. According to the actual traffic counts provided by the expressway operator, the traffic on the project expressway in 2018 increased by 13.1% for the HCMC–Long Thanh section and

52 Appendix 15

14.6% for the Long Thanh–Dau Ciay section. Meanwhile, the traffic on National Highway 1 and NH-51 has also been significantly alleviated.

Table 15.5: Traffic Development on the Project Expressway (vehicles per year)

Year Sections Type 1 Type 2 Type 3 Type 4 Type 5 Total

2017

HCMC-NH51 2,606,720 638,214 264,426 182,538 347,154 4,039,052

NH51-DG 1,384,725 376,887 269,692 195,558 137,597 2,364,459

DG-NH51 615,829 175,624 118,110 69,539 52,063 1,031,165

NH51-HCMC 5,537,583 1,362,083 573,891 376,536 725,791 8,575,884

Year Sections Type 1 Type 2 Type 3 Type 4 Type 5 Total

2018

HCMC-NH51 4,617,268 1,063,040 479,744 311,703 636,755 7,108,510

NH51-DG 1,173,141 315,507 217,348 160,837 123,834 1,990,667

DG-NH51 1,152,682 309,566 212,059 125,494 100,208 1,900,009

NH51-HCMC 4,640,412 1,070,155 499,996 303,844 644,143 7,158,550

HCMC = Ho Chi Minh City, DG = Dau Giay Source: VEC-E.

7. The improvement of the transport condition has also well facilitated the exports at the HCMC ports.

Table 15.6: Value of Goods for Exportation from HCMC Ports ($ million)

2010 2014

Rice 1,215 2,786

Aquaculture products 366,958 764,809

Milk and products of milk 84,322 135,192

Garments and textiles 1,863 5,200,082

Footwear 506,431 2,306,809

Crude oil 4,970 9,254

Source: The PPMS report, 2017.

C. Business Development and Working Opportunities 8. The implementation and operation of the project has provided a large amount of working opportunities for the local people. During project implementation, a large amount of unskilled laborers were used in the construction activities, which included substantial local laborers. Currently, the project expressway is operated by VEC-E. Around 340 VEC-E staff are now working on the management, operation and maintenance of the project expressway. Among which, about 150 staff are local, including a substantial amount of female toll collectors and around 90 staff who lost land due to the project. Currently, the project expressway has installed two service areas along the project expressway. The service areas have just started operation with a limited service including fuel stations and toilets. As a general practice, the service areas will provide more services as traffic increases, such as, restaurants, shops, and garages, hotels, etc., which will provide more working opportunities for the local people. 9. Traffic development on the project expressway and in the project areas has stimulated business development. According to the PPMS report, the number of registered businesses in

Appendix 15 53

the project areas increased by 50% for HCMC in the period of 2009–2014, and 23% for Dong Nai Province in the period of 2009–2013.

Table 15.7: Number of Registered Business in the Project Areas

(number business)

2009 2013 2014

HCMC 79,916 119,918

Dong Nai Province 7,082 8727

HCMC = Ho Chi Minh City Source: PPMS report, 2017.

D. Gender, Child Labor, and HIV/AIDS Infections 10. It was assessed that the project’s resettlement impact on women could be significant. Poor women and women who head households in the project area were at more risk economically (loss of productive assets due to land acquisition) and socially (risks posed by HIV, road safety, and possible human trafficking) than males. A project-specific gender strategy was prepared and was described in the summary of poverty reduction and social strategy. During implementation, provisions were made in the bidding documents for the contractors to encourage employment of the poor, particularly women, and not differentiate wages between men and women particularly for work of equal value and ensure that all civil works would comply with all applicable labor laws, not employ child labor for construction and maintenance activities. Women representatives were included in all district compensation committees and two district committees were headed by women (District 9 in HCMC and Thong Nhat district in Dong Nai province). Capacity building trainings on resettlement and livelihood were conducted for women and women-headed households in all districts in close cooperation with women unions in various organizations. 62 females attended the vocational training courses (taking 59.6% of the total trainees) and 23 females attended the small trade model. During construction, the direct employment generated by the project was substantial for female workers. The ADB PCR mission noticed that many of the project expressway operation uses a large number of female staff (about 65%), mainly toll collectors. The fast-growing public transport in the project area has assisted and promoted women travelling a further distance and participating more socioeconomic activities. Women empowerment in the project areas has improved. 11. The PPMS program also collected information on the HIV Infections and AIDS cases in the project areas.

Table 15.8: Number of New HIV Infections and New AIDS Cases (number)

2011 2015

No. of New

HIV infections No. of New AIDS cases

No. of New HIV infections

No. of New AIDS cases

Vietnam 14,113 6,429 10,195 6,130

HCMC 1,943 1,470 2,457 332

Dong Nai Province1 250 123 332 98

Dong Nai Province2 463 216 224 64 1 Vietnam Administration of HIV/AIDS Control, Ministry of Health 2 Provincial AIDS Centers, Dong Nai Province HCMC = Ho Chi Minh City Source: PPMS report, 2017.

54 Appendix 15

E. Traffic Safety Management 12. However, traffic accidents in the project areas are still significant. The PPMS program collected and provided the official records of the traffic accidents.

Table 15.9: Number of Traffic Accidents (number accidents)

2010 2015

Accidents Fatalities Accidents Fatalities

Vietnam 21,380 11,400 29,796 8,727

HCMC 1,048 864 3,712 703

Dong Nai Province 988 332 444 343

HCMC = Ho Chi Minh City Source: PPMS report, 2017.

13. The project expressway has installed substantial safety facilities. The traffic monitoring system with CCTV and emergency response is fully operational. However, traffic accidents on the project expressway are still significant. Since opening in 2015, a total of 111 accidents were recorded, which included 13 fatalities and 159 person injured. The safety management of the project expressway needs to be enforced by fully using the safety facility, taking quick actions on emergency requests, coordinating with local traffic police, enforcing vehicle axle-load control, and carrying out trainings and campaigns to drivers and local residents, especially children.

Table 15.10: Number of Traffic Accidents on the Project Expressway (number)

No of

Accidents Person Killed

Person Injured

2015 21 2 40

2016 21 3 24

2017 42 3 64

2018 27 5 31

Total 111 13 159

Source: VEC-E

55 Appendix 16

CONTRIBUTION TO ADB RESULTS FRAMEWORK

No. Level 2 Result Framework

Indicator Target

Revised Target

Aggregate Output

Methods/Comments

Transport

1 Use of roads built or upgraded (average daily vehicle-kilometers in the first full year of operation

962,645 vehicle-kilometers in 2017

1,117,871 vehicle-km in 2017

Actual traffic in 2017 (first full operation year) was provided by the project operator, that is AADT 34,561 vehicles for HCMC–Long Thanh section and 9,303 vehicles for the Long Thanh–Dau Giay section.

2 Roads built or upgraded - Expressways and national highways (kilometers)

51 kilometers of expressway

55 km of expressway was constructed

Upon completion, total 55 km of the expressway with four-lanes was constructed, including section 1 with 23.9 km passing the Ring Road 2 in District 9 of HCMC and Nhon Trach and Long Thanh districts of Dong Nai Province, and section 2 with 31.1 km passing through Long Thanh, Cam My and Thong Nhat districts of Dong Nai Province.

AADT = annual average daily traffic, HCMC = Ho Chi Minh City Source: Asian Development Bank project completion review mission.