ADB and Viet Nam Sign Loan to Help Rebuild Poor Areas in Viet Nam Severely Damaged by Typhoons

Manila, Philippines – ADB and the Government of Viet Nam have signed a US$51 million loan to help rehabilitate and improve infrastructure in parts of Viet Nam that were severely affected by typhoons and storms in 2005.

Signing on behalf of the Government, at the State Bank of Viet Nam, was the Governor of State Bank of Viet Nam, Le Duc Thuy. ADB’s Country Director for Viet Nam, Ayumi Konishi, signed on behalf of ADB. Other senior officials from concerned government agencies witnessed the signing.

Successive, intense tropical storms swept through the country in 2005, breaching sea dikes and causing extensive damage to rural infrastructure estimated at $365 million. Economic opportunities as well as access to markets, schools, services, and clean water have been significantly lost and there was an urgent need to restore them to minimize the serious effect on the welfare of people in the affected areas.

While the Government has already temporarily repaired some of the damaged structures using emergency funds, these need to be reinforced to increase their resistance to future disasters. There are also many other structures that remain to be repaired, reinforced ore replace.

“Without a concerted effort to accelerate the work, the Government would face a delay of 4-5 years in reconstruction, leaving the affected areas to be extremely vulnerable as succeeding storms compound the existing damage,” says Ayumi Konishi, Country Director for Viet Nam Resident Mission.

The project, covering 10 of the most affected provinces in the country – Ha Giang, Ha Tinh, Nam Dinh, Nghe An, Phu Tho, Phu Yen, Quang Binh, Quang Tri, Thanh Hoa, and Yen Bai is based on the damage and needs assessment made jointly by the Government and ADB in March-April 2006. The target provinces have poverty rates higher than the national average of 24.1%. Typhoon Xangsane in October 2006 narrowly missed the project area, causing extensive damage to houses, schools, health centers, and other facilities in Thua Thien Hue, Da Nang, and Quang Nam. Other agencies are helping the Government to repair these.

The project will help about 450,000 people to resume their normal lives by reinstating essential infrastructure, including roads, flood protection, irrigation systems, and social infrastructure such as schools and water supply.

It will also support increased disaster preparedness and mitigation by providing enhanced storm and flood protection, and helping the Government to mainstream prevention and preparedness activities into the development process.

The loan, which will cover 85% of the project’s estimated cost of $59.9 million, comes from savings in ongoing ADB projects in Viet Nam. It carries a 40-year term, including a grace period of 10 years. Interest is set at 1% per annum, with repayment of principal at 2% a year for the first 10 years after the grace period and 4% a year thereafter.

The Government will shoulder the balance of $8.9 million equivalent. The Ministry of Agriculture and Rural Development is the executing agency for the project, which is due for completion in June 2009.

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