Improving infrastructure and economic connectivity in northern and central provinces

The infrastructure system and economic connectivity in Nothern Vietnam have been improved but still cannot meet the demand for development

The first loan worth $150 million aims to improve economic connectivity and raise living standards in four of Vietnam’s northeastern provinces by enhancing basic infrastructure and services. The assistance is expected to help over 212,000 people and be completed by the first quarter of 2023. The total cost of the project is $190.3 million, including Vietnam’s counterpart fund of $40.3 million.

According to the assessment of ADB, the four provinces of Bac Kan, Cao Bang, Ha Giang, and Lang Son have significant potential to become trade hubs due to their strategic location at the nexus of the People’s Republic of China, Hanoi, Haiphong Port, and the ADB-supported Greater Mekong Subregion North-South Economic Corridor. However, these potentials are yet to be fully realised.

The project to construct basic infrastructure for inclusive growth in the northeastern provinces will help unlock the binding constraints through the development of basic infrastructure across key sectors, including trade, transport, health, and agriculture.

The project will improve road connectivity among the provinces by upgrading about 121 kilometres of provincial and 144km of district roads, provide rural water supply, benefiting 42,300 people and improving the agricultural value chain infrastructure in Lang Son province through farm-to-market connectivity and support to local businesses.

The second loan worth $149 million aims to help improve basic infrastructure services and promote inclusive and sustainable economic growth that will benefit over one million people in four provinces in the north central coastal region of Vietnam.

ADB’s assistance for the project on constructing basic infrastructure for inclusive growth in the north central provinces includes a regular loan of $52 million and a concessional loan worth $97 million. Both loans will be financed from ordinary capital resources where most of ADB’s lending come from. The total cost of the project is $203.52 million, with Vietnam contributing $54.52 million.

Economic development in the provinces of Ha Tinh, Nghe An, Quang Binh, and Quang Tri has been constrained by the fragmented coverage of basic infrastructure, with the 2015 poverty rate reaching 13 per cent compared to the 7 per cent national average. Moreover, the provinces are extremely vulnerabile to weather-related disasters and are predicted to have the country’s highest increase in annual mean temperature at 1.7 per cent and annual rainfall shooting up by 20 per cent.

To address these issues, the project will improve connectivity among the provinces by upgrading and constructing about 214km of climate-resilient provincial and district roads which will benefit more than 900,000 beneficiaries. It will boost business development through the construction and upgrading of rural water supply, flood protection, irrigation, and port services.

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