Lao People s Democratic Republic and Viet Nam: Greater Mekong Subregion: Sustainable Tourism Development Project

Transcription

1 Completion Report Project Number: Grant Number: 0117 Loan Number: 2457 May 2017 Lao People s Democratic Republic and Viet Nam: Greater Mekong Subregion: Sustainable Tourism Development Project This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS LAO PDR Currency Unit kip (KN) At Appraisal At Project Completion 15 September December 2014 KN1.00 = $ $ $1.00 = KN8,672 KN8,075 VIET NAM Currency Unit dong (D) At Appraisal At Project Completion 15 September December 2014 D1.00 = $ $ $1.00 = D16,590 D21,380 ABBREVIATIONS ADB Asian Development Bank DMF design and monitoring framework EIRR economic internal rate of return GAP gender action plan GMS Greater Mekong Subregion Lao PDR Lao People s Democratic Republic MCST Ministry of Culture, Sports and Tourism NCB national competitive bidding O&M operation and maintenance PCU project coordination unit PIU project implementation unit SOE statement of expenditure SDR special drawing right UNESCO United Nations Educational, Scientific and Cultural Organization WEIGHTS AND MEASURES km kilometer m meter m 2 square meter (i) (ii) NOTES In this report, "$" refers to US dollars unless otherwise stated. The Lao National Tourism Administration merged with the Ministry of Information and Culture in 2011, creating the Ministry of Information, Culture and Tourism.

3 Vice-President S. Groff, Operations 2 Director General J. Nugent, Southeast Asia Department (SERD) Directors Y. Negishi, Lao PDR Resident Mission, SERD E. Sidgwick, Viet Nam Resident Mission, SERD Team leader S. Schipani, Senior Portfolio Management Specialist, SERD Team members G. Nguyen, Senior Social Development Officer (Gender), SERD K. Thammalangsy, Project Analyst, 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.

4

5 CONTENTS Page BASIC DATA I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 5 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 6 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants, Contractors, and Suppliers 8 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 8 III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 9 C. Efficiency in Achieving Outcome and Outputs 10 D. Preliminary Assessment of Sustainability 11 E. Impact 12 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 14 C. Recommendations 15 APPENDIXES 1. Project Framework Appraisal and Actual Costs Disbursement Implementation Schedule Compliance with Grant and Loan Covenants Tourism Indicators at Baseline and at Completion Economic Reevaluation Financial Sustainability Assessment Gender Equality Results and Achievements Contribution to the ADB Results Framework 62 i

6

7 BASIC DATA (Grant No LAO) A. Grant Identification 1. Country 2. Grant Number 3. Project Title 4. Recipient 5. Executing Agency 6. Amount of Grant 7. Project Completion Report Number Number Lao PDR 0117-LAO (SF) Greater Mekong Subregion: Sustainable Tourism Development Project Lao People s Democratic Republic Ministry of Information, Culture and Tourism $10 million (Asian Development Fund) REG 1617 B. Grant 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. Closing Date In Loan Agreement Actual Number of Extensions 26 May June August August October November March March June February Disbursements a. Dates Initial Disbursement 27 September 2009 Effective Date 30 March 2009 Final Disbursement 18 February 2016 Original Closing Date 30 June 2014 Time Interval (months) 77 months Time Interval 63 months

8 ii b. Amount ($) Category Original Allocation Last Revised Allocation Amount Disbursed Undisbursed Balance a 3101 Consulting Services 1,667, ,136, ,136, A Works Part 1 2,863, ,406, ,406, B Works Part 2, 3 and 4 563, ,902, ,896, , Works Part 1 Emergency Rehabilitation 155, , , , Equipment 426, , , Training and Workshops 2,020, ,255, ,255, Recurrent Costs 534, , , , Unallocated 1,772, Total 10,000, ,000, ,890, , a Cancelled on 18 February C. Project Data 1. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Recipient Financed Asian Development Bank Financed Total Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual Output 1: Sustainable Tourism Development Output 2: Pro-Poor Tourism Development Output 3: Tourism Corridors Output 4: Human Resource Development Output 5: Project Implementation Support Subtotal Contingency Total Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Design and Construction Supervision Firm Q September 2009 Tourism Management Consultants (Individuals) Q Q May September 2010 Human Resource Development Firm Q Q Completion of Engineering Designs Q Q1 Q3 2010

9 iii Date of Civil Works Contract Awards Siphandone Wetland Natural Project Q August 2010 Vang Vieng Urban Improvements Q October 2010 North-South Corridor Q February March 2011 East West Corridor Q October 2010 Small-Scale Community Infrastructure (Output 2) Q Q Q Q Completion of Works Q Q Equipment and Supplies First Procurement Q July 2009 Last Procurement Q June Project Performance Report Ratings Implementation Period Development Objectives Ratings Implementation Progress From 30 March 2009 to 31 December 2009 Satisfactory Satisfactory From 1 January 2010 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 31 December 2011 On-track On-track From 1 January 2012 to 31 December 2012 On-track On-track From 1 January 2013 to 31 December 2013 On-track On-track From 1 January 2014 to 31 December 2014 On-track On-track From 1 January 2015 to 18 February 2016 On-track On-track D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person-Days Specialization of Members a Grant Fact-Finding 6 15 February, a,b,c,h Grant Appraisal 28 May 1 June, a,e,h Grant Inception July, b,f Grant Review 1 29 May 3 June, b,f Grant Review 2 26 November 3 December b,f Grant Review March, b,f Grant Review October, b,d,f Grant Midterm Review 1 14 March b,f,g Grant Review November b,f Grant Review September b,f,g Grant Review February b,g Grant Review August j,k a a = economist, b = social sector specialist, c = environment specialist, d =gender specialist, e = counsel, f = project officer, g = operations officer, h = young professional, j = portfolio management specialist, k = project analyst.

10 iv A. Loan Identification BASIC DATA (Loan No VIE) 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number 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. Closing Date In Loan Agreement Actual Number of Extensions 7. Terms of Loan Interest Rate Maturity (number of years) Grace Period (number of years) Socialist Republic of Viet Nam 2457-VIE (SF) Greater Mekong Subregion: Sustainable Tourism Development Project Socialist Republic of Viet Nam Ministry of Culture, Sports and Tourism SDR6.479 million ($10 million equivalent) REG June June July July October December March March June June % per annum during grace period 1.5% per annum thereafter Disbursements a. Dates Initial Disbursement 12 May 2009 Effective Date 30 March 2009 Final Disbursement 4 April 2014 Original Closing Date 30 June 2014 Time Interval (months) 59 Time Interval 63

11 v b. Amount ($) Category Original Allocation Last Revised Allocation Amount Disbursed Undisbursed Balance 01 Works 3,498, ,795, ,511, , Equipment and Vehicle 685, , , , Training and Workshops 1,438, ,132, ,027, , Consulting Services 1,724, ,355, ,244, , Environment & Social Mitigation 131, , , , Recurrent Cost 728, ,094, , , Interest 180, , , , Unallocated 1,612, , Imprest Account , , Total 10,000, ,000, ,100, , Note: Totals may not sum precisely due to rounding. c. Amount (SDR) Category Original Allocation Last Revised Allocation Amount Disbursed Undisbursed Balance a 01 Works 2,267, ,381, ,381, Equipment and Vehicle 444, , , Training and Workshops 932, , , Consulting Services 1,117, ,472, ,472, Environment & Social Mitigation 85, , , Recurrent Cost 472, , , Interest 117, , , Unallocated 1,045, , , Total 6,479, ,479, ,953, , a Cancelled on 15 June C. Project Data 1. Financing Plan ($million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed Asian Development Bank Financed Total

12 vi 2. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual Output 1: Sustainable Tourism Development Output 2: Pro-poor Tourism Development Output 3: Tourism Corridors Output 4: Human Resource Development Output 5: Project Implementation Support Subtotal Contingency Financing Charges Total Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Tourism Management and Design Firm Q August 2010 Construction Supervision Firms Q Q Q Q Human Resource Development Firm Q November 2011 Completion of Engineering Designs Q Q Q Date of Civil Works Contract Awards Phong Nga Khe Bang Q November May 2013 Bac Kan Tourism Information and Cultural Exchange Q February 2012 Center East West Corridor Q November 2012 Small-Scale Community Infrastructure (output 2) Q Q January March 2013 Completion of Works Q Q (various) Equipment and Supplies First Procurement Q June 2010 Last Procurement Q November Project Performance Report Ratings Implementation Period Development Objectives Ratings Implementation Progress From 30 March 2009 to 1 December 2009 Satisfactory Satisfactory From 1 January 2010 to 31 December 2010 Satisfactory Partly Satisfactory From 1 January 2011 to 31 December 2011 On-track Potential Problem From 1 January 2012 to 31 December 2012 On-track On-track From 1 January 2013 to 31 December 2013 On-track On-track From 1 January 2014 to 31 December 2014 On-track On-track From 1 January 2015 to 1 June 2015 On-track On-track

13 vii D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person-Days Specialization of Members a Fact-Finding February, a,b,c,h Appraisal 2 7 June, a,e,h Inception 28 September 1 October, b,f Review May, b,f Review November, b,f Review March, b,f Review May, B Review November, b,d,g Midterm Review March, b,d,g Review October, b,d Review July j,d,g Review December d,j,g Special Review 31 March 5 April d,k a a = economist, b = social sector specialist, c = environment specialist, d =social development officer (gender) specialist, e = counsel, f = project officer, g = operations officer, h = young professional, j = portfolio management specialist, k = project analyst.

14

15 I. PROJECT DESCRIPTION 1. The Greater Mekong Subregion (GMS) Sustainable Tourism Development Project was designed to benefit the poor in the Lao People s Democratic Republic (Lao PDR) and Viet Nam by promoting environmentally and socially sustainable tourism. 1 Its expected impact was the development of a sustainable, culturally and environmentally sound pro-poor tourism approach for the GMS, and the preservation of natural and cultural heritage. 2 The expected outcome was sustainable tourism development that creates livelihood opportunities for the poor. Project areas included provinces with good tourism potential and that had poverty rates of up to 38.6% The project had five outputs. Output 1 included four subprojects to protect natural and cultural heritage sites and improve environmental conditions in an urban tourism center. Output 2 was to promote pro-poor, community-based tourism development and link producers of agricultural products and handicrafts to tourism supply chains. Output 3 sought to transform the east west and north south GMS transport corridors into transnational tourism corridors. Output 4 was to create a pool of trainers and master trainers to improve (i) small-scale tourism and hospitality services, and (ii) public tourism planning and management. Output 5 supported consulting services, procurement, financial management, safeguards compliance, monitoring, and other project administration requirements. The project framework showing performance targets and the achievements at completion is in Appendix The rationale for undertaking the project was sound. It reflected the need to spread tourism s economic benefits in a more equitable way and reduce threats to heritage assets, as articulated in the GMS Tourism Sector Strategy ( ) and midterm review of the GMS Strategic Framework, The Asian Development Bank (ADB), the Lao PDR, and Viet Nam agreed that public intervention was necessary to unlock infrastructure and capacity constraints that were impeding tourism development in poor areas, better manage public tourism assets, and promote more balanced, pro-poor tourism growth. II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 4. Project design was relevant during appraisal and remains relevant to the development priorities of participating countries and ADB. Promoting sustainable tourism to create livelihood opportunities for the poor was consistent with ADB s GMS regional cooperation strategy and program and country strategies and programs for the Lao PDR and Viet Nam, which emphasized poverty reduction, sustainable economic growth, and regional cooperation and integration. 5 The project was aligned with the participating countries need to improve physical access to tourist 1 ADB Report and Recommendation of the President to the Board of Directors. Proposed Grant to the Lao People s Democratic Republic and Loan to the Socialist Republic of Viet Nam: Greater Mekong Subregion Sustainable Tourism Development Project. Manila. 2 The Greater Mekong Subregion includes Cambodia, the People s Republic of China (Guangxi Zhuang Autonomous Region and Yunnan Province), Lao People s Democratic Republic, Myanmar, Thailand and Viet Nam. 3 Bokeo, Champassak, Houaphanh, Luangnamtha, Oudomxay, Saravan, Savannakhet, Sayabouli and Vientiane Province (Lao PDR); and Bac Kan, Cao Bang, Quang Binh, Quang Tri and Thua Thien Hue (Viet Nam). Appraisal estimates stated 44% of beneficiaries in the Lao PDR and 30% of beneficiaries in Viet Nam were poor. 4 ADB Greater Mekong Subregion Tourism Sector Strategy Manila; ADB Midterm Review of the Greater Mekong Subregion Strategic Framework Manila. 5 ADB Greater Mekong Subregion: Regional Cooperation Strategy and Update Manila; ADB Country Strategy and Program: Lao People s Democratic Republic Manila; ADB Country Strategy and Program: Viet Nam Manila.

16 2 destinations, improve environmental management, and boost tourism service quality in underdeveloped areas, including those in the GMS economic corridors. Project design incorporated ADB recommendations to develop community-based tourism in areas where the poor live and expand supply chains to increase tourism s contribution to local economies ADB and the participating countries committed sufficient resources to formulate the project. Well-designed regional project preparatory technical assistance supported 55 personmonths of satisfactory consultant inputs, augmented by about 40 person-months of satisfactory government counterpart inputs. 7 ADB staff with expertise in regional economic development, tourism, social and environmental safeguards, and social development oversaw the feasibility analysis. Participatory consultations with men and women in all project areas included community meetings, in-depth socioeconomic surveys with 200 families, and 1,400 visitor surveys. More than 250 public and private tourism industry stakeholders joined eight workshops to review and validate the proposed project scope. Comprehensive stakeholder consultations contributed to design relevance and ensured that project initiatives had strong national ownership. 6. Outputs 1, 4, and 5 were largely implemented as envisaged. Lao PDR selected nine project provinces with many small and scattered infrastructure subprojects under outputs 2 and 3. This stretched the executing agency s capacity to adequately supervise civil works construction and build capacity for sustainable operation and maintenance (O&M). 8 Minor changes in scope to cancel redundant roadside parking areas and reposition the east west economic corridor visitor information center from Dong Ha City to the Lao Bao international border gate (and add immigration processing facilities) enhanced the relevance of output 3. 9 The design and monitoring framework (DMF) was generally well structured; however, some indicators overlapped or lacked quantitative targets. Duplicative gender mainstreaming targets and overlapping activities further complicated monitoring. B. Project Outputs 1. Output 1: Model Sustainable Tourism Development that Protects the Environment and Cultural Heritage 7. All performance targets for this output were substantially achieved. In addition to infrastructure development, the project supported (i) the preparation of tourism master plans; (ii) tourism management training; (iii) gender and ethnic development, including documentation of cultural practices; (iv) public awareness programs to promote sustainable tourism; (v) marketing and promotion; and (vi) private investment facilitation. 8. Biodiversity protection in Siphandone Wetland, Lao PDR. As envisaged during appraisal, the project upgraded the 3.6-kilometer (km) Nakasang access road to double bituminous surface treatment standard with 400 meters (m) of storm drains. After being damaged by severe flooding late in the construction phase, emergency repairs resurfaced 400 m of the road with concrete, which increased costs by $240,672 and delayed completion by 1 year. The project also financed construction of a tourist information center, the Nakasang community market with sanitation and parking, and the Nakasang river pier and adjacent river 6 ADB Evaluation Study: Tourism Sector in the Greater Mekong Subregion. Manila. 7 ADB Technical Assistance Report. Technical Assistance to the Greater Mekong Subregion: Preparing the Sustainable Tourism Development Project (TA 6279-REG). Manila. 8 Selection of output 2 and 3 subprojects followed a sector approach that was based on two demonstration models. 9 ADB approved the minor change on 27 March 2012.

17 3 embankment protection. Det and Khone island trails (6 km) were improved to compacted laterite standard with viewpoints and interpretative signage explaining Siphandone s rich biodiversity and the importance of protecting it. At completion (2014), the improved facilities were being used by more than 7,000 residents and 200,000 tourists. 9. Vang Vieng town environmental improvement, Lao PDR. The project constructed 700 m of main storm drains with three mechanical gross pollutant traps and improved 2,984 m of urban roads with double bituminous surface treatment paving, side drains, and lighted footpaths. As a result, the southern part of town is more pedestrian friendly and storm water is channeled downstream through a natural wetland filter before discharging into the Nam Xong River. The project installed 22 septic tanks (capacity 110 cubic meters) to treat sewage in riverside areas with dense commercial activity. Environmental awareness activities and the garbage truck provided to Vang Vieng Urban Development Administration Authority helped to improve sanitation services for more than 12,000 residents and 400,000 tourists. 10. Phong Nha Khe Bang National Park, Viet Nam. The project contributed to the development of a nature circuit in the park by financing the following infrastructure: (i) 200 m flagstone footpath between Phong Nha and Tien Son caves; (ii) 800 m illuminated footpath inside Tien Son cave; (iii) Chay Lap boat landing; (iv) a wildlife viewpoint; (v) Phong Nha botanical garden footpaths, signage, herbarium, and parking area; and (vi) two tourist service centers with community markets, parking, and sanitation. Environmental management was improved by paving the 600 m landfill access road with concrete and providing the park management authority with a garbage truck, collection bins, 18 fuel efficient passenger boats, and three modern tour buses. These were benefiting 12,500 residents and 850,000 tourists at project completion. 11. Ethnic minorities cultural heritage development in Bac Kan, Viet Nam. After resolving a 2-year procurement delay, the project constructed the Bac Kan Cultural Exchange and Tourism Information Center near the entrance to Ba Bae Lake National Park. It includes a purpose-built building that offers tourist information and tour services, training facilities, meeting rooms, and a dormitory. Additional works were required to replace soft soils with appropriate foundation materials. This increased construction costs by about $200,000 and delayed the opening until July Tourism-related capacity building and investment promotion. Output 1 capacity building programs complemented the project s infrastructure investments. About 2,300 site managers received sustainable tourism management training. The executing agencies prepared tourism master plans for all project areas. Local heritage resources were documented during the master planning process and this information was used to help design information and education campaigns, guide training, and environmentally-friendly tourist excursions. Nearly 6,000 residents participated in sustainable tourism awareness seminars and benefitted from tourism-related business support services and destination marketing. Women s participation ranged from 40% (Lao PDR) to 63% (Viet Nam). The executing agencies collaborated with industry associations and chambers of commerce to organize familiarization visits to project areas for investors and tour operators. These helped Siphandone, Vang Vieng, Phong Nha Khe Bang, and other project areas mobilize significant private hospitality investment. For example, a Vietnamese tour operator invested more than $1.2 million to expand Phong Nha Khe Bang nature circuit s Chay Lap farm stay program See and

18 4 2. Output 2: Pro-Poor, Community-Based Supply Chain Tourism Projects Operational 13. All performance targets were substantially achieved. The project s capacity building and small-scale infrastructure investments enabled mostly rural poor communities to develop 32 community-based tours, 23 community-managed tourist attractions, and 23 supply chain products 78 subprojects against the target of 33 subprojects. These include communitymanaged waterfalls, caves, and hot springs; trekking, river excursions, homestay, and local markets; and various handicraft and food service enterprises. Although all the subprojects conformed to output 2 screening criteria, at completion about one-third of the communitymanaged tours were generating only modest benefits due to lower than expected demand. In comparison, the estimated success rate for community-based supply chain subprojects managed by entrepreneurial village-based production and marketing groups is at least 80%. 14. Gender and ethnic-sensitive training programs were delivered to 17,400 participants, of whom between 44% and 53% were women. These programs included collaboration with the United Nations Educational, Scientific and Cultural Organization (UNESCO) to organize three training programs for cultural heritage specialist guides. 11 The participating countries produced several community-based tourism and tourism value chain development manuals and organized a regional conference on the role of tourism for poverty reduction that was attended by about 60 senior officials, business leaders, and development partners. Provincial tourism departments conducted familiarization trips and investment seminars, helping to catalyze substantial additional private investment in project areas. The largest was for Nam Kat Yola Pa Nature Park, worth about $9 million Output 3: Greater Mekong Subregion Tourism Corridors Developed 15. Performance targets were partly achieved. As envisaged, this output piloted two transnational tourism corridor development models, focusing on the GMS north south and east west economic corridors. Completed infrastructure at 13 sites includes a new 600 square meter (m 2 ) tourism information center and immigration terminal at Viet Nam s Lao Bao international border gate, community-managed rest areas, viewpoints, and roadside markets. Strategies to encourage tourists to stay longer and spend more were prepared for each corridor. These guided gender and ethnic-sensitive enterprise training and public awareness programs to prevent HIV/AIDS and human trafficking. These were attended by 2,060 residents, of whom between 41% and 49% were women. Quality guidebooks, brochures, and maps were created to promote corridor attractions. Promotional materials were disseminated widely using the internet, trade shows, and tourist information centers. At completion, the most successful subprojects in terms of job creation and income generation were situated within the main corridor towns. Fewer than expected visitors at other corridor sites undermined financial sustainability. 4. Output 4: Human Resources in the Tourism Sector Developed 16. All performance targets were substantially achieved. As envisaged, in all project provinces the participating countries created a pool of (i) small-scale tourism and hospitality trainers, and (ii) public tourism planning and management trainers. Overall, Lao PDR trained 917 trainers (57% women) and Viet Nam trained 1,092 trainers (53% women), with more than 11 The training course was initially developed in 2006 with ADB financing under the GMS Mekong Tourism Development Project. See 12 See The site development plan was prepared with project assistance.

19 5 30% from areas that are predominately populated by ethnic groups. Courses were developed in coordination with other development partners based on comprehensive needs assessments and relevant Association of Southeast Asian Nations standards. Training was delivered by the Lao PDR s Tourism and Hospitality Training Center and Viet Nam s Asian Development Management Institute. The English, Lao, and Vietnamese training manuals (21 Lao courses and 13 Vietnamese courses) are used by provincial tourism departments in both countries and the National University of the Lao PDR. At project completion (2014), all were freely downloadable Output 5: Efficient Project Implementation Services Operational 17. Performance targets were substantially achieved. Two central project coordination units (PCUs) and 14 provincial project implementation units (PIUs) were established to provide implementation and administration support. The PCUs and PIUs managed infrastructure design, construction supervision, procurement, capacity building programs, financial management, safeguards compliance, gender mainstreaming, results monitoring, and other tasks. PCUs and PIUs exchanged knowledge and experiences with other GMS countries during regular subregional project steering committee meetings, GMS Tourism Working Group meetings, and the annual Mekong Tourism Forum. 14 C. Project Costs 18. The total project cost was about $22.7 million, $0.8 million (4%) more than the appraisal estimate. The actual cost for Lao PDR was about $11.1 million, 2% more than planned, and the actual cost for Viet Nam was $11.6 million, 6% more than planned. ADB financed 90% of the Lao PDR component and 78% of the Viet Nam component, with the balance financed by government contributions. Project implementation support costs exceeded the appraisal estimates by about $1.0 million (67%) in Lao PDR and $1.4 million (77%) in Viet Nam, mainly due to higher than expected recurrent costs and consultant inputs. Pro-poor tourism development costs were about 20% higher than planned because the project provided more support for small-scale community infrastructure than envisaged. Itemized appraisal and actual costs are presented in Appendix D. Disbursements 19. Payments for eligible expenditures were made through direct payment and statement of expenditure (SOE) procedure following ADB s Loan Disbursement Handbook (2007, as amended from time to time). Lao PDR established an imprest account at the Bank of Lao PDR and separate project subaccounts for the PCU and each PIU at Banque Pour Le Commerce Exterieur Lao. Viet Nam established its imprest account and separate project subaccounts for the PCU and each PIU at the Viet Nam Bank for Agriculture and Rural Development. 20. Disbursement schedules were realistic. Executing agencies were familiar with SOE procedure and the imprest account ceilings provided sufficient headroom to enable timely 13 See and 14 See 15 Approved ADB financing comprised a loan of SDR 6.47 million ($10 million equivalent) to Viet Nam and a $10 million grant to Lao PDR. Both the loan and grant were financed with ADB s Special Funds resources.

20 6 payment of numerous small expenditures. 16 Although Viet Nam s cumbersome procurement and budget approval processes delayed loan disbursements during , progress accelerated significantly in late 2012 following the executing agency s decision to devolve more decision making authority to the national project director. By December 2014 loan disbursements exceeded $9 million (Appendix 3). 21. Viet Nam effectively managed the imprest account and SOE dispensation. ADB s disbursement review of 1 April 2013 found that Lao PDR over-claimed payments from the imprest fund for emergency repairs to Nakasang access road and small-scale community works. As a result, SOE procedure was suspended on 8 May 2013 after more than 90% of grant proceeds were disbursed. E. Project Schedule 22. The project s envisaged and actual 5-year implementation schedule is in Appendix 4. Viet Nam was negatively affected by slower than expected consultant recruitment (para. 28). Infrastructure procurement was delayed in both countries because the subprojects were designed and advertised successively instead of simultaneously. Deficient geotechnical surveys delayed construction of the Bac Kan Cultural Exchange and Tourism Information Center, exacerbating the 2-year procurement gap (para.11). Although the project s actual physical completion date was consistent with the appraisal estimates, both countries required longer than expected to liquidate final year expenditures and close the project accounts. Viet Nam s loan account closing date was extended 12 months to 15 June 2015 and Lao PDR s grant account closing date was extended 20 months to 18 February F. Implementation Arrangements 23. Lao PDR s Ministry of Information, Culture and Tourism and Viet Nam s Ministry of Culture, Sports and Tourism (MCST) were the executing agencies. 17 The Lao PDR s implementing agencies comprised provincial departments of information, culture and tourism and the Vang Vieng Urban Development Administration Authority. Provincial departments of culture, sports, and tourism, under the supervision of Provincial People s Committees, were Viet Nam s implementing agencies. 18 As envisaged, a subregional steering committee, two national steering committees, and 14 provincial steering committees were formed, meeting periodically to provide implementation oversight and share information. The Lao PDR s PCU was based within the executing agency, while Viet Nam s PCU was housed in separate offices. Implementing agencies hosted the PIUs, actively facilitating community tourism group formation and local participation. Lao PDR appointed 52 full-time project counterparts and Viet Nam appointed 63 full- and part-time counterparts. Implementation arrangements are considered adequate, although some PIUs were impaired by staff attrition and insufficient capacity to manage many small-scale infrastructure subprojects. 16 The initial advance and ceiling of Lao PDR s imprest account was $0.5 million. The ceiling was increased to $1 million in October Viet Nam s initial advance and ceiling was $0.45 million. ADB approved SOE procedure to reimburse and liquidate eligible expenditures not exceeding $50, The Lao National Tourism Administration merged with the Ministry of Information and Culture to create the Ministry of Information, Culture and Tourism in Quang Binh province established a separate project-specific PIU directly under the Provincial People s Committee.

21 7 G. Conditions and Covenants 24. Covenants were relevant and compliance was generally satisfactory (Appendix 5). No covenants were modified, suspended, or waived. While Viet Nam complied with covenants to allocate 50% of tourist entry fees for site maintenance and Lao PDR partly complied, this covenant could have been better researched because the percentage may not accurately reflect actual site O&M costs in all cases. 19 One instance of partial compliance was the unavailability of counterpart funds for Nakasang access road emergency repairs. This was resolved by ADB s approval to finance 100% of the repairs with grant proceeds. Viet Nam was late to comply with covenants to establish a project website and prepare provincial gender action plans. Notwithstanding the delay, gender equity targets were achieved. The borrowers and executing agencies were generally compliant with monitoring and reporting requirements throughout the project implementation period. H. Consultant Recruitment and Procurement 25. Consultant recruitment followed the prevailing ADB guidelines on the use of consultants and government guidelines. There were no disagreements between the borrowers and ADB regarding consultant selection. As envisaged, Lao PDR engaged a firm to handle the detailed design and construction supervision for outputs 1 and 3 following the quality- and cost-based selection method. Individual consultants were engaged to help with pro-poor tourism initiatives, project management, and external monitoring. Lao PDR was unable to recruit a suitably qualified national heritage tourism specialist and an enterprise development specialist. These roles were taken on by the incumbent consultant team and counterparts, which allowed executing agency staff to gain significant hands-on experience. Viet Nam recruited a single firm following the quality- and cost-based selection method to assist with project management and prepare detailed engineering designs for larger infrastructure subprojects. Six firms were engaged for small-works design and construction supervision using the fixed budget selection method with lump-sum contracting arrangements. After the inception mission, ADB approved Lao PDR s request to implement output 4 training through the Ministry of Information, Culture and Tourism s Tourism and Hospitality Training Center, while Viet Nam engaged a firm for this purpose following the consultant s qualifications selection method. In total, the participating countries utilized 136 person-months international consultant inputs and 297 person-months national consultant inputs. The project administration manual estimated 130 person-months international inputs and 328 person-months national inputs. 26. Procurement followed the prevailing ADB procurement guidelines and government procedures acceptable to ADB. National competitive bidding (NCB) works contracts were awarded for (i) upgrading rural access roads, market improvements, roadside rest areas, tourist information centers, and border gate improvements; (ii) urban drainage and road improvements; and (iii) Phong Nha Khe Bang nature circuit infrastructure (para. 10). More than 30 works contracts costing less than $50,000 were awarded following shopping procedures. These supported community water supply and sanitation improvements, craft production facilities, community markets, viewpoints, and other small-scale facilities. While four equipment packages (project vehicles, shuttle buses, passenger boats, and garbage trucks) were awarded using NCB, most equipment and services cost less than $10,000 and were procured following shopping procedures. At appraisal, six NCB works contracts were envisaged, but during project implementation the executing agencies requested and received ADB approval to break the 19 See Appendix 5 and Appendix 6 for tourist entry fees and revenue estimates.

22 8 packages into 16 smaller NCB and shopping contracts. In retrospect, this increased transaction costs and may have discouraged bid submission from more qualified contractors. I. Performance of Consultants, Contractors, and Suppliers 27. Consultant, contractor, and supplier performance was generally satisfactory. Most consulting firms and individual consultants followed their terms of reference and worked closely with counterparts to facilitate skills transfer and knowledge sharing. Exceptions include design and supervision deficiencies for the following subprojects: Bac Kan Cultural Exchange and Tourism Information Center, Nakasang access road, Nam Eng cave access improvements, Bor Kung Nature Park, and a small bridge to Nam Dee village. Suboptimal works design and supervision undermined resilience to floods, increased costs, delayed completion, and reduced tourism functionality. Most contractors performed satisfactorily and completed larger works to an acceptable standard and on schedule; however, the quality of some small-scale works is deficient due to less than satisfactory contractor performance and inadequate supervision. 20 J. Performance of the Borrower and the Executing Agency 28. The performance of the borrowers and executing agencies is rated satisfactory. Institutional, legal, and reporting covenants were generally complied with. Both executing agencies appointed sufficient numbers of qualified counterparts to supervise and manage the project. Viet Nam s key issues were delayed consultant recruitment, delayed works procurement, and slow initial disbursement due to cumbersome internal approval procedures. Lao PDR s performance was adversely affected by overambitious work programs and the departure of several experienced PIU counterparts following the consolidation of the Lao National Tourism Administration and Ministry of Information and Culture. Both executing agencies submitted environmental monitoring reports late because the PIUs were unfamiliar with safeguards monitoring requirements. Measures taken by the executing agencies to address these weaknesses included (i) devolving financial management and procurement approval authority, (ii) organizing additional project management training, and (iii) allocating additional consultant resources to help the PIUs prepare environmental monitoring reports. K. Performance of the Asian Development Bank 29. ADB s performance is rated satisfactory. Together with the executing agencies and other concerned stakeholders, ADB conducted regular project review missions and in-depth midterm evaluations. ADB staff provided hands-on procurement, financial management, and other training as requested. All relevant ADB guidelines were disseminated in a satisfactory and timely manner. ADB was responsive to executing agency requests. Specialists worked closely with government counterparts and consultants to review and approve minor changes in scope, review and approve procurement documents, and perform other project administration tasks. ADB s close monitoring helped to ensure that gender issues were properly addressed and monitored. Apart from one instance of slower than expected imprest account replenishment in 2012, there were no substantial disbursement delays. Loan and grant administration were effectively delegated from ADB headquarters to the Thailand Resident Mission (2011), the Lao PDR Resident Mission (2014), and the Viet Nam Resident Mission (2014), with sufficient ADB staff continuity. 20 For example, Nam Eng cave formations suffered minor damage by the contractor and bathing pools at Bor Kung spring were poorly constructed.

23 9 III. EVALUATION OF PERFORMANCE A. Relevance 30. The project is rated relevant. Its intention to promote sustainable tourism development that creates livelihood opportunities for the poor was consistent with the participating countries national tourism strategies, the GMS Tourism Sector Strategy ( ), and ADB country strategies and programs. Project design was based on a careful sector assessment and incorporated lessons from previous ADB operations. 21 The participating countries efforts to strengthen public tourism management capacity and improve heritage protection complemented ADB and other development partner assistance to improve tourism vocational training, promote small and medium-sized enterprise development, and improve protected area management. The economic rationale for public intervention was reasonably robust and consistent with country experiences. 22 The modality (project) with a sector approach for outputs 2 and 3 is considered appropriate because there were clearly defined national and regional frameworks in place to guide public and private tourism investment. 31. Although several output 2 and 3 supply-side interventions aimed to build synergies with ADB and government transport sector investments by creating tourist rest areas and other attractions along improved transnational highways, some became less relevant as market demand shifted and transport times between corridor towns decreased. Minor changes in scope to address the situation were appropriate (para. 6). Meanwhile, surging demand for urban, culture- and nature-based tourism boosted the relevance of innovative demonstration models tested by the project, which were being scaled-up across the GMS at completion. Examples include public-private-community tourism development partnerships (paras. 12 and 14) and the $108 million ADB-financed GMS Tourism Infrastructure for Inclusive Growth Project. 23 B. Effectiveness in Achieving Outcome 32. Country-specific achievements and the project overall are rated effective. Reasonably reliable data to substantiate the rating are in Appendix 1 and Appendix 6. The project has substantially achieved the intended outcome of sustainable tourism development that creates livelihood opportunities for the poor and met the performance targets for more than 90% of its outputs. Overall, about 72,000 people in project areas benefitted directly and 288,000 benefitted indirectly from (i) jobs and economic opportunities created; (ii) improved transport services, a cleaner environment, and better recreation services; and (iii) increased local involvement in tourism planning and management. Ethnic groups comprised about 47% of project beneficiaries in Lao PDR and 85% of project beneficiaries in Viet Nam. 33. Aggregate tourist arrivals in the 14 project provinces rose from 3.5 million in 2009 to 5.6 million in 2014 (59%). By 2015, all project areas reported increases of 30% or more compared to the 2009 baseline. At completion, average daily tourist expenditure overall increased to $94 21 ADB Completion Report. Kingdom of Cambodia, Lao People s Democratic Republic, and Socialist Republic of Viet Nam: Greater Mekong Subregion: Mekong Tourism Development Project. Manila. 22 ADB Greater Mekong Subregion: Tourism Sector Assessment, Strategy, and Road Map. Manila. 23 ADB Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Kingdom of Cambodia for Greater Mekong Subregion: Tourism Infrastructure for Inclusive Growth Project. Manila; ADB Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Lao People s Democratic Republic for Greater Mekong Subregion: Tourism Infrastructure for Inclusive Growth Project. Manila; ADB Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Socialist Republic of Viet Nam for Greater Mekong Subregion: Tourism Infrastructure for Inclusive Growth Project. Manila.

24 10 (20.6%). International tourists average length of stay increased by about 1 day for Lao PDR and one-half day for Viet Nam. While this is slightly lower than the target, it is substantial given shorter-staying intra-gms source markets comprised about 60% of international tourists in Each country s contribution to the effective rating is summarized below. 34. Lao PDR. Infrastructure and tourism service improvements together with capacity building, investment promotion, and marketing activities contributed to a sharp increase in tourist arrivals, tourist spending, and employment. For example, in Siphandone arrivals rose from 90,000 in 2009 to 200,000 in 2014, while arrivals in Vang Vieng increased from 131,400 to 400,000 over the same period. Consequently, combined destination expenditure for these two sites reached $50 million in 2014, sustaining about 5,000 jobs. In addition, community-based tourism and tourism supply chain subprojects sustain 875 jobs and generate $1.1 million destination expenditure per year. GMS tourism corridor subprojects employ 377 people and generate $1.5 million in annual destination expenditure. Improved storm drains reduced the health and property risks associated with seasonal flooding for about 4,000 residents over a 20- ha area in Vang Vieng. Sanitation in the Nakasang market area and boat landing has improved compared to the baseline situation but inadequate solid waste and wastewater management remain a concern. 35. Viet Nam. Focused infrastructure, tourism capacity building, and investment promotion activities helped boost tourism growth, employment, and tourist spending, particularly in the Phong Nha Khe Bang nature circuit. Compared to the 2009 baseline, international tourist arrivals increased to 41,500 (812%) and domestic tourist arrivals increased to 808,500 (163%) by Conservative average length of stay and spending estimates indicate destination expenditure reached $26.7 million per year at completion (2014). In addition, Phong Nha Khe Bang generated about $4 million from park entry fees in There are 2,250 jobs linked to the nature circuit, including food, beverage, and accommodation service workers; retail vendors, tour guides, boat operators, and park managers. The project also helped about 30 young people to gain employment as freelance photographers through training and regulatory reform. Community-based tourism and tourism supply chain subprojects sustain 778 additional jobs and generate $3.2 million annual destination expenditure. 36. The Bac Kan Cultural Exchange and Tourism Information Center subproject is marginally effective, as the center generated only $46,000 and 11 direct jobs during its first full year of operation. Meanwhile, tourist arrivals in nearby Ba Bae Lake National Park increased from 50,000 at baseline (2009) to 141,900 at completion in 2014, partly due to the highly successful community-based tourism programs in Pac Ngoi and Bo Lu villages. Viet Nam s GMS east west economic corridor subproject contributes to more efficient visa processing and border fee collection at Lao Bao border gate but employs only 73 people. Apart from new economic opportunities for local entrepreneurs and tourism management agencies, tourists and residents at all project sites benefit from improved sanitation and transport services. C. Efficiency in Achieving Outcome and Outputs 37. The project is rated efficient. The estimated economic internal rate of return (EIRR) is 23.6% for the overall project, 24.7% for the Lao PDR component, and 22.0% for the Viet Nam component. Quantified benefits arise from increased net tourism expenditure and time savings due to shorter immigration and customs processing time at Lao Bao border gate. Economic benefits identified but not quantified are increased land values for property owners, health benefits from better environmental services, and willingness to pay for garbage collection and sanitation. Appendix 7 describes the economic reevaluation and supporting assumptions.

25 Separate EIRRs were calculated for the four sustainable tourism development subprojects (paras. 8 11), two representative pro-poor tourism subprojects, and three economic corridors subprojects. The reevaluation followed the methodology used at appraisal with updated actual costs and benefits. At completion, calculated EIRRs ranged from 29.3% to 17.6%, which compares favorably with a 12% opportunity cost of capital. Appraisal EIRRs ranged from 17.2% to 22.8%. The different EIRRs are mainly due to significantly higher than expected tourist arrivals and net tourism expenditure. The most efficient subprojects Siphandone wetlands and Phong Nha Khe Bang nature circuit combine larger infrastructure investments with targeted capacity building, marketing assistance, and investment promotion activities. Sensitivity tests show that all subprojects and the project overall remain economically viable under plausible alternate scenarios. 24 Although most subprojects and the project overall produced EIRRs greater than 12%, process efficiency was lowered by weak provincial implementation capacity and the delays caused by deficient consultant inputs. Very low variance between the appraised and actual costs suggest that the benefits were supplied at least cost. D. Preliminary Assessment of Sustainability 39. The project overall is rated likely sustainable as the participating countries show a strong commitment to promoting sustainable tourism development. Moreover, there is surging demand for nature- and culture-based tourism in all GMS countries. Larger project-financed infrastructure was in good condition (except for Nakasang access road) and was being used at completion. Technology, equipment, O&M plans, and related training were generally fit for purpose and appreciated by project beneficiaries. One exception is Vang Vieng s automated gross pollutant traps. These proved to be unsuitable because of high maintenance and security requirements. Tourist entry fees and other charges are sufficient to finance O&M costs for most subprojects, with provincial governments providing budgetary support where needed. The financial sustainability assessment is in Appendix The outlook for community-based tourism and tourism supply chain initiatives listed in Appendix 6 is positive. Many show very promising commercial viability and project beneficiaries have taken strong ownership. Dynamic tourism growth underpins continuing demand for the project s industry-relevant training programs and resource manuals. While some subprojects require government subsidy to meet O&M costs, and the repairs to Nakasang access road did not fully address its vulnerability to flooding, project executing agencies recognize that these pilots tested new approaches and offered valuable lessons regarding the risks associated with infrastructure-driven, supply side interventions and climate change. 41. Institutional and policy frameworks further support the likely sustainable rating. Tourism s role in promoting sustainable inclusive economic growth and environmental protection is enshrined in the United Nations Sustainable Development Goals 25 and the participating countries national tourism laws and strategies. 26 Follow-up actions that could enhance sustainability are (i) better implementation of infrastructure O&M plans, (ii) additional marketing 24 Alternate scenarios tested are (i) 10% increase in investment costs, (ii) 10% increase in O&M costs, (iii) 10% percent decrease in benefits, or (iv) 2-year implementation delay. 25 United Nations Transforming Our World: The 2030 Agenda for Sustainable Development. New York. Targets 8.9, 12b, and 14.7 deal specifically with tourism. 26 Ministry of Information, Culture and Tourism Lao People s Democratic Republic National Tourism Strategy Vientiane; Ministry of Culture, Sports and Tourism Viet Nam Strategy for Tourism Development to 2020, Vision to Hanoi.

26 12 support for community-based tourism and tourism supply chain initiatives, and (iii) continued tourism management training for community leaders and protected area managers. E. Impact 42. The project s development impact is rated satisfactory. Successful environmentally and culturally appropriate pro-poor tourism interventions are contributing to long-lasting positive development impacts. In 2016, GMS international tourism receipts totaled $66.8 billion, 21% higher than the DMF performance target, while GMS international tourist arrivals reached 57.8 million 11% higher than the DMF target. Conservative assumptions suggest tourism created about 6.4 million jobs in the GMS between 2007 and 2015, the majority of which are held by women. Increasing tourist arrivals and higher tourist spending helped eliminate poverty in some project areas and reduce it to 22% or less in others. These trends are consistent with a recent study showing each 1% increase in international tourist arrivals is associated with 0.12% less poor people in a destination Capacity building and training activities equipped more than 23,000 residents, tourism managers, and service providers with the knowledge and skills needed to benefit from tourism growth. At completion, tourism directly employed about 9,800 people in project areas and generated $87 million equivalent in annual destination spending. Women own and manage nearly all the production and marketing groups that were formed with project assistance. These have increased local participation in national tourism supply chains and, through group revolving funds, provide access to microcredit for at least 1,700 people. 44. The project directly improved tourism management and learning experiences for tourists at three UNESCO world heritage sites. It also provided platforms for public and private GMS tourism stakeholders to exchange experiences about sustainable tourism development and learn from the project s successes and shortcomings. This had a positive effect on public institutions, particularly the executing agencies tourism development departments, tourism training centers, and provincial departments responsible for tourism and heritage management. The participating countries heightened commitment to sustainable tourism is embodied in their endorsement of the updated GMS Tourism Sector Strategy ( ) and backing for the United Nations International Year of Sustainable Tourism for Development (2017) Environmental impacts. The safeguards categorization for the environment was B. Initial environmental examinations, environmental management plans, and environmental assessment and review frameworks were prepared and implemented following ADB and government safeguards policies. Environmental impacts were minor and largely confined to construction periods. Physical improvements to drainage, roads, and walkways in sensitive cave environments generated positive environmental benefits. Improved sanitation for 250 households directly benefitted about 1,500 residents and enabled families to develop tourist homestay services. Improved solid waste management also produced positive environmental benefits. Despite adequate environmental regulations and good efforts to raise environmental awareness through the project s Clean, Green, and Safe Vang Vieng campaign, at completion, the Nam Xong River continued to show worsening levels of sulfates, hydrogen sulfide, and biological oxygen demand due to lingering wastewater management issues. 27 Asia-Pacific Economic Cooperation Tourist Arrivals and Inclusive Growth. Singapore. 28 Mekong Tourism Coordinating Office Greater Mekong Subregion Tourism Sector Strategy Bangkok.

27 Resettlement impacts. The safeguards categorization for involuntary resettlement was B. Resettlement plans were prepared and implemented following ADB and government policies. Viet Nam s involuntary resettlement impacts were minor and limited to land acquisition (900 m 2 ) from a single family for construction of the Chay Lap boat landing. Lao PDR s involuntary resettlement impacts involved temporary minor economic disruption during the reconstruction of Nakasang market (120 vendors) and land acquisition (420 m 2 ) from three businesses for the construction of Nakasang pier. Cash compensation, land replacement, and other entitlements were provided as set out in the resettlement plan, under the supervision of provincial and district resettlement committees. All affected persons were satisfied with compensation and no complaints were received. 47. Gender impacts. The project was categorized effective gender mainstreaming. Its gender action plan (GAP) covered both countries. About 37,000 women directly benefitted from the project and 150,000 benefitted indirectly. 29 There were equal opportunities for men and women, particularly ethnic women in project areas, to access project resources and practical benefits. Female participation in training, enterprise support activities, and project management mostly exceeded the GAP targets. At completion, improved facilities were being used and managed by women to sell local produce, food and beverages, and locally-made handicrafts. Overall, women hold about 75% of tourism-related jobs in project areas. In some cases, strategic changes in gender relations enabled women to gain more control over household resources. Detailed gender equity results and achievements are in Appendix Project management teams effectively captured and disseminated gender-related knowledge through periodic GAP reviews, project websites, and international meetings. For example, Lao PDR organized a Gender, Tourism, and Microenterprise Development Forum. It enabled interactive discussions between entrepreneurs and policy makers from every province in Lao PDR. 30 Viet Nam organized the GMS Conference on Tourism s Role in Poverty Reduction, where policy makers exchanged lessons on good practices for increasing tourism s contribution to poverty reduction and women s empowerment. At completion, the three GAP targets were all fully achieved and 33 of 39 activities (85%) were fully implemented. The remaining six GAP activities (15%) were partly implemented. A summary of gender equity accomplishments is in Table A9.1. Overall, GAP implementation is rated highly successful. A. Overall Assessment IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 49. The project is rated successful based on the assessment of relevance, effectiveness, efficiency, and sustainability, with a satisfactory development impact. 31 Country ratings mirror the overall rating and are equally weighted in the overall assessment because the project costs were evenly distributed. While Lao PDR s attempt to implement more activities than envisaged was overambitious, the number and scope of successful interventions that were operating at completion is consistent with the design estimates. 29 Of all project beneficiaries, 50% were women in the Lao PDR and 54% were women in Viet Nam. 30 The forum was financed by TA 6143-REG: Promoting Gender Equality and Women s Empowerment. There were 231 participants (57% women). 31 ADB Guidelines for the Evaluation of Public Sector Operations. Manila.

28 14 B. Lessons 50. The main lesson is that ADB should focus its regional sovereign tourism sector assistance on larger investments with public-good elements. Emphasis should be on financing roads and other transport infrastructure, solid waste and wastewater management improvements, other utilities, and human resource development to boost service quality and better manage tourism assets. Operations should seek to generate synergies between multiple sectors and catalyze downstream private investment. Including too many small and scattered supply-driven subprojects can undermine efficiency and sustainability. The focus should be on doing things well in a few areas to maximize positive impacts. Also, ADB should recognize the risks that asynchronous country processes pose to the successful implementation of joint subregional activities. Other key lessons include: (i) (ii) (iii) (iv) (v) (vi) Project readiness. Project preparatory technical assistance should dedicate sufficient resources to assist executing agencies recruit project implementation consultants and prepare first-year bidding documents. ADB, government, or cofinancing resources should be sought to support the preparation of detailed engineering designs, before project approval where feasible. ADB and the participating countries have jointly prepared project readiness filters. These should be strictly applied and reviewed annually. Procurement packaging. Projects with multiple infrastructure packages should engage multiple design and supervision teams using the lowest number of consulting contracts possible. Similarly, works should be packaged into fewer, higher value contracts to minimize transaction costs and attract better qualified contractors. Private sector development. Detailed tourism demand analysis should guide the selection and design of infrastructure and capacity building programs. Early engagement with the private sector can enable community public private partnerships and other innovative business practices, which increase the efficiency and sustainability of public investments. Engineering solutions. Carefully consider life-cycle costing when selecting engineering solutions, e.g., more durable concrete roads and suitable drainage in areas with a shallow water table and/or prone to flooding. Operation and maintenance. Pay more attention to ensuring early adoption of realistic O&M plans that consider the project owners technical capacities and institutional arrangements to finance O&M. Gender equity. Targeted support for women-led enterprises is an important design feature that can boost female participation rates and women s income. Promoting women-led enterprises should complement efforts to support women s advancement to higher-level management and leadership positions. Project managers should be sensitized to gender issues and be provided with sufficient resources to implement gender action plans.

29 15 C. Recommendations 1. Project Related 51. Future Monitoring. To inform policy decisions, it is important to assess the reasons why community-based tourism and tourism supply chain ventures succeed or fail over the mediumterm. As such, executing agencies should continue to monitor tourism and its corresponding economic, social, and environmental impacts at project sites. The number of tourist arrivals, tourist expenditure, source markets, and tourist satisfaction should be recorded in annual tourism statistics reports. Tourism employment and resident satisfaction with tourism should be tracked using periodic labor market surveys and social surveys. O&M practices, particularly fiscal management, must be closely monitored by agencies responsible for public works and the environment to ensure lasting benefits from improved transport infrastructure and environmental services. 52. Covenants. For similar projects, covenants that require tourist entry fees and tariffs be used to finance infrastructure O&M and environmental services should be maintained. ADB should monitor these issues through (i) regular dialogue with the participating countries, (ii) the follow-on GMS Tourism Infrastructure for Inclusive Growth Project subregional steering committee meetings, and (iii) GMS Tourism Working Group meetings. 53. Timing of the performance evaluation report. A project performance evaluation report could be prepared in 2018 or later. ADB s Independent Evaluation Department should consider preparing another GMS tourism sector assistance program evaluation in 2018, as ADB has financed several regional tourism projects and technical assistance programs since the previous evaluation in General 54. Future project design should pay more attention to selecting quantifiable DMF indicators and avoiding redundant indicators. Comprehensive baseline data should be collected for all DMF indicators as part of project preparation. As the participating countries both have devolution policies in place, more emphasis is required on assessing provincial procurement and financial management capacity. Similarly, annual work plan and budget approvals should be devolved to PCU and PIU management teams to avoid implementation delays. Given this was the second consecutive ADB-financed GMS tourism project that required an extension to the closing date, project implementation periods could be lengthened to 6 or 7 years. This would also allow sufficient time for projects to institutionalize O&M systems after physical works are completed.

30 16 Appendix 1 Design Summary Impact/ Goal A sustainable, culturally and environmentally sound, pro-poor tourism approach for the GMS developed Performance Indicators/ Targets By 2016 in the GMS: Receipts from international tourism increase from $23 billion to $55 billion 52 million international tourist arrivals PROJECT FRAMEWORK Achievements at Completion GMS international tourism receipts totaled $66.8 billion (2016). GMS international tourist arrivals totaled 57.8 million (2016). 16 Appendix 1 Preservation of natural and cultural heritage Outcome Sustainable tourism development that creates livelihood opportunities for the poor 1.2 million new jobs in the tourism sector created 50% of world heritage sites well preserved and 30% of tourism income from visitor site entry fees is reinvested in conservation and protection By 2013 in the project areas: 60,000 people benefit directly and 300,000 indirectly from tourism development, of which at least 30% are women and 37% are poor The number of international tourist arrivals at each project site increases by 30% compared to 2008 Tourist s average daily expenditure increases by 20% Average length of stay for international tourists increases by 1 day at each project site Tourism created about 6.7 million new jobs in the GMS between 2007 and No GMS world heritage sites (21) are included in UNESCO s List of World Heritage in Danger. The percentage of tourism income reinvested in conservation and protection varies by site based on need (2016). a Substantially achieved. 72,000 direct project beneficiaries and 288,000 indirect beneficiaries. More than 50% of beneficiaries are women. About 50% of beneficiaries in Lao PDR are women (about 95,000 women) and 54% in Viet Nam (90,000 women). Poverty rates in project areas range from 0 to 22%. b Achieved. Aggregate 59% increase to 5.6 million for the 14 project provinces, with arrivals in two of nine Lao PDR provinces increasing less than 30% against 2009 baseline (2014). By 2015 international tourist arrivals had increased by over 30% in all provinces. Achieved. Overall average daily expenditure increased 20.6% to $94. Lao PDR =14.6% increase to $73; Viet Nam = 25.6% increase to $114. Partly achieved. Average length of stay at project sites increased: Lao PDR = 0.9 day; Viet Nam = 0.5 day.

31 Appendix 1 17 Design Summary Outputs Performance Indicators/ Targets By 2013 for each site: Achievements at Completion Output 1: Model sustainable tourism development projects that protect the environment and cultural heritage developed in four sites: a) Siphandone Wetland, Lao PDR b) Vang Vieng urban improvements, Lao PDR c) Phong Nha Khe Bang National Park nature circuit, Viet Nam d) Bac Kan cultural exchange and tourism information center, Viet Nam Protection and access infrastructure (access roads, markets, viewpoints, walking trails, signage, information and visitor centers, parking, river piers, community lodges, and sanitary facilities) installed, operating, and maintained Site managers and operators trained on sustainable tourism practices Tourism master plans developed Manuals on nature-based, urban and ethnic minority tourism in the GMS developed Gender-sensitive public awareness programs implemented Achieved. Siphandone Wetland: 3.6 km paved access road and drainage (10 ha catchment), embankment protection, small river port, market with 50 stalls and sanitation, 6 km compressed gravel access road, tourist information center, viewpoints, signage and parking constructed and operating. Vang Vieng: 700 m storm drains, 2,984 m side drains and urban roads (20 ha catchment), 2,984m lighted sidewalks, 22 septic tanks (with 110 cubic meters capacity), 90 m 2 tourist information center and parking constructed and operating. Garbage truck and environmental awareness improved waste collection for 12,000 residents. Phong Nha Khe Bang: 600 m paved landfill access road, 1.0 km footpaths at Phong Nha and Tien Son caves, boat landing, viewpoints, botanical garden facilities, market, parking and sanitation constructed and operating. Improved waste collection for 12,500 residents. Bac Kan: Bac Kan Cultural Exchange and Tourism Information Center developed and operating near the entrance to Ba Be Lake National Park, linked to model community managed tourism in Pac Ngoi and Bo Lu ethnic villages. Achieved. 2,300 site managers and business operators received sustainable tourism management training. (Lao PDR = ~580 women [41% of Lao PDR s total], Viet Nam = ~460 women [53% of Viet Nam s total]). Achieved. Government-approved tourism master plans for Siphandone, Phong Nha Khe Bang, and Ba Be Lake National Park. Vang Vieng town plan prepared emphasizing sustainable tourism development. Achieved. Six manuals: ecotourism development, guide training, urban tourism management, and nature and culture interpretation. Published in English, Lao, and Vietnamese. GMS conference on tourism and poverty reduction organized by Viet Nam. Achieved. 5,900 residents joined public tourism awareness seminars (Lao PDR = ~700 women [40% of Lao PDR s total] and Viet Nam = ~2,600 women [63% of Viet Nam s total]). Appendix 1 17

32 18 Appendix 1 Design Summary Output 2: Pro-poor, community-based tourism and tourism supply-chain subprojects operational For each of 11 provinces: Performance Indicators/ Targets Manual on community-based tourism and tourism value chain development in the GMS produced At least one community-based tour circuit, one tourist site, and one supply-chain developed and operational Achievements at Completion Achieved. Three community-based tourism development/tourism value chain development manuals published in English, Lao and Vietnamese. Achieved. 32 community-based tours, 23 community-managed tour sites, and 23 community supply chains (78 subprojects) developed with project assistance against the target of 33 subprojects. 18 Appendix 1 Gender-sensitive training program on environment, culture, and tourism for tour operators and guides developed and implemented Achieved. Training programs implemented in each province (see numeric indicators below). Quality English, Lao, and Vietnamese training materials published. Ethnic minority and gender participation program implemented Achieved. Customized ethnic and gender participation plans prepared and implemented in 14 provinces. Guidebooks, brochures, and website produced Achieved. 10 guidebooks, 57 brochures, and seven maps produced (more than 200,000 copies disseminated). 11 websites created and/or upgraded. At least 2,000 people trained in each province (at least 30% women) Partly achieved. 17,433 people received skills and management training against the target of 22,000. There are about 2,900 women beneficiaries in Lao PDR (44% of Lao PDR s total) and about 5,700 women beneficiaries in Viet Nam (53% of Viet Nam s total). Output 3: GMS tourism corridors developed: a) North South Economic Corridor, Lao PDR b) East West Economic Corridor, Lao PDR, and Viet Nam Infrastructure (access roads, signage, information centers, viewing points) installed, operated, and maintained in five sites Achieved. North South Corridor, Lao PDR: Bokeo visitor information center (Houay Xay town), Houay Xay night market, Fort Carnot restoration, Nam Kan visitor center, Don Chai market, Nam Eng cave, Nam Pae viewpoint, Nam Ha visitor center, Luangnamtha night market, and Nam Dee waterfall. Achieved. East West Corridor, Lao PDR: Talad Yen night market, Phine rest station, and None Nyang community-based tourism site developed and operating. Achieved. East West Corridor, Viet Nam: Lao Bao border terminal and information center, Klu rest area and hot spring, and four signs advertising corridor tourist attractions developed and/or operating. Tourism corridor management plan with section on gender and ethnic groups produced Achieved. Strategies to encourage tourists to stay longer and spend more, site management plans, and thematic interpretation plans prepared for both corridors.

33 Appendix 1 19 Design Summary Output 4: Human resource capacity of public and private tourism stakeholders improved Output 5: Efficient project management services Performance Indicators/ Targets Guidebooks, brochures, and website produced Combined manual on developing GMS tourism corridors produced At least 2,000 people trained in each province (at least 30% women) At least 800 tourism officials trained to plan and manage sustainable tourism projects (40% women) At least 400 trainers and 180 master trainers are trained (40% women) PCUs and PIUs fully staffed and operate efficiently Provincial gender and ethnic participation plans implemented Monitoring and evaluation program established and annual report published Achievements at Completion Achieved. Two guidebooks, 11 brochures, and two maps produced (about 50,000 copies disseminated). Three websites created. Partly achieved. GMS conference on tourism s role in poverty reduction covered GMS tourism corridor development. Lao PDR and Viet Nam country manuals produced. Partly achieved. 2,060 people received tourism-related skills and management training (e.g., guiding, food and beverage services, and handicraft production) or participated in public awareness seminars to promote sustainable tourism and/or prevent human trafficking and other social problems (Lao PDR = ~650 women [41% of Lao PDR s total] and Viet Nam = 230 women [49% of Viet Nam s total]). Achieved. 1,845 officials trained (54% women). Achieved. 1,590 trainers trained (58% women). All trainers fulfill master trainer role. Ethnic groups comprise about 33% of trainers. Achieved. Two PCUs and 14 PIUs fully staffed (115 full- and part-time counterparts) and operated. Achieved. 14 gender and ethnic participation plans implemented. Achieved. Baseline report, quarterly reports, midterm review, annual reports and completion reports were prepared and published on project websites. ADB = Asian Development Bank; GMS = Greater Mekong Subregion; Lao PDR = Lao People s Democratic Republic; PCU = project coordination unit; PIU = project implementation unit; UNESCO = United Nations Educational, Scientific and Cultural Organization. a See b The project administration manual defines direct beneficiaries as men, women, youth and ethnic groups that benefit from the project, for example, by gaining employment and income from guiding, producing handicrafts, selling souvenirs, selling food, operating accommodation establishments, or working as boat or vehicle drivers. Direct beneficiaries are also those that receive skills and knowledge training because of the project. Indirect beneficiaries are defined as those who benefit from access to improved infrastructure built by the project, improved communication infrastructure induced by the project, new market opportunities to sell raw agricultural products that are processed into goods consumed by tourists, and an increase in extended family members access to health care and education because of higher household income gained from involvement in the tourism industry. Sources: GMS National Tourism Organizations; Mekong Tourism Coordinating Office; Ministry of Information, Culture and Tourism, Lao PDR; Ministry of Culture, Sports and Tourism, Viet Nam; Asian Development Bank. Appendix 1 19

34 20 Appendix 2 APPRAISAL AND ACTUAL COSTS (Grant 0117-LAO) ($ 000) Item Appraisal Estimate Actual A. Sustainable Tourism Development 1. Siphandone Wetland Project 1,910 1, Vang Vieng Urban Development 1,290 1,350 Subtotal (A) 3,200 3,323 B. Pro-poor Tourism Development 1. Bokeo Province Houaphanh Province Oudomxay Province Saravanh Province Vientiane Province Xayabouly Province Subtotal (B) 2,316 2,774 C. Tourism Corridors 1. North South Corridor East West Corridor Subtotal (C) 1,300 1,390 D. Human Resources Development 1. Training Master Hospitality Trainers Training Public Sector Tourism Officials Subtotal (D) E. Project Implementation 1. Consulting Services 1,142 2, Support to PCU/PIUs (recurrent costs) Capacity Building External Monitoring for Resettlement External Financial Auditing of PCU/PIUs External Monitoring and Evaluation Subtotal (E) 1,772 2,961 Total Base Cost 9,098 11,098 F. Contingency 1. Physical Contingency Price Contingency Subtotal (F) 1,772 0 Total (Lao PDR) 10,870 11,098 PCU = project coordination unit, PIU = project implementation unit. Source: Ministry of Information, Culture and Tourism, Lao PDR, and Asian Development Bank estimates.

35 Appendix 2 21 APPRAISAL AND ACTUAL COSTS (Loan 2457-VIE) ($ 000) Appraisal Estimate Actual A. Sustainable Tourism Development 1. Phong Nga Khe Bang 2,048 2, Bac Kan Interpretation/Cultural Centre 1,567 1,752 Subtotal (A) 3,615 3,874 B. Pro-poor Tourism Development 1. Bac Kan Province Cao Bang Province Quang Binh Province Quang Tri Province Thua Thien Hue Province Subtotal (B) 2,125 2,637 C. Tourism Corridors 1. East West Corridor 1,212 1,222 Subtotal (C) 1,212 1,222 D. Human Resources Development 1. Training Master Hospitality Trainers Training Public Sector Tourism Officials Subtotal (D) E. Project Implementation 1. Consulting Services 1,026 1, Support to PCU/PIUs 728 1, Capacity Building External Monitoring for Resettlement External Financial Auditing of PCU/PIUs External Monitoring and Evaluation 20 0 Subtotal (E) 1,855 3,285 Total Base Costs 9,317 11,515 F. Contingency 1. Physical Contingency Price Contingency Subtotal (F) 1,613 0 G. Financing Charges 1. Financing Charges Subtotal (G) Total (Viet Nam) 11,111 11,675 PCU = project coordination unit, PIU = project implementation unit. Source: Ministry of Culture, Sports and Tourism, Viet Nam, and Asian Development Bank estimates.

36 22 Appendix 3 DISBURSEMENT Table A3.1: Projected and Actual Cumulative Disbursement, Grant 0117-LAO ($ million) Year Projected Actual Total Source: Asian Development Bank. Table A3.2: Projected and Actual Cumulative Disbursement, Loan 2457-VIE ($ million) Year Projected Actual Total Source: Asian Development Bank..

37 Appendix 4 23 IMPLEMENTATION SCHEDULE: LAO PDR Quarter Output 1: Model Sustainable Tourism Development that Protects the Environment and Cultural Heritage Developed Design and implement community participation and awareness programs Planning and documentation, preparation of tourism master plans Infrastructure design Prepare detailed IEE, EIA, and EMPs Prepare and implement resettlement plans Design and implement gender/ethnic minority participation programs Capacity building for local communities Construction and supervision Institutional strengthening and capacity building for O&M Design and implement marketing program Monitoring and evaluation Produce best practice manuals on tourism development at GMS heritage sites Output 2: Pro-poor, Community-based, Supply-chain Tourism Projects Operational Institutional strengthening, capacity building, and awareness programs Design and implement community tour-product development programs Identify and develop tourism supply chains Design and construct small tourism-related infrastructure Prepare and implement gender and ethnic minority participation program Marketing and promotion plans and programs Develop community tourism networks and stakeholder associations Create, publish, and distribute GMS pro-poor tourism development manual Monitoring and evaluation Output 3: Greater Mekong Subregion Tourism Corridors Developed Design and implement community participation and awareness programs Planning and documentation, preparation of tourism master plans Infrastructure design Prepare detailed IEE, EIA and EMP's Prepare and implement resettlement plans

38 24 Appendix Quarter Design and implement gender/ethnic minority participation programs Capacity building for local communities Construction and supervision Design and implement marketing program Create, publish, and distribute GMS Economic corridors development manual Monitoring and evaluation Output 4: Human Resources in the Tourism Sector Developed Training needs assessment Review curriculum and training materials Recruit and train master trainers Refitting and improvement to cascade training intuition Training at cascade institution and sites Monitoring and evaluation Output 5: Effective Project Implementation Services Operational Mobilize PCU and PIU staff Identify, recruit, and mobilize consultants Procure equipment and vehicles Prepare detailed project implementation plan Establish data management and MIS system Review national tourism and gender action plans Prepare project performance monitoring system and training Establish accounting systems Prepare civil works bidding documents Monitoring and evaluation EMP = environmental management plan, GMS = Greater Mekong Subregion, IEE = initial environment examination, MIS = management information system, O&M = operations and maintenance, PCU = project coordination unit, PIU = project implementation unit. Planned Actual Source: Ministry of Information, Culture and Tourism, Lao PDR.

39 Appendix 4 25 IMPLEMENTATION SCHEDULE: VIET NAM Quarter Output 1: Model Sustainable Tourism Development that Protects the Environment and Cultural Heritage Developed Design and implement community participation and awareness programs Planning and documentation, preparation of tourism master plans Infrastructure design Prepare detailed IEE, EIA, and EMPs Prepare and implement resettlement plans Design and implement gender/ethnic minority participation programs Capacity building for local communities Construction and supervision Institutional strengthening and capacity building for O&M Design and implement marketing program Monitoring and evaluation Produce best practice manuals on tourism development at GMS heritage sites Output 2: Pro-poor, Community-based, Supply-chain Tourism Projects Operational Institutional strengthening, capacity building, and awareness programs Design and implement community tour-product development programs Identify and develop tourism supply chains Design and construct small tourism-related infrastructure Prepare and implement gender and ethnic minority participation program Marketing and promotion plans and programs Develop community tourism networks and stakeholder associations Create, publish, and distribute GMS pro-poor tourism development manual Monitoring and evaluation Output 3: Greater Mekong Subregion Tourism Corridors Developed Design and implement community participation and awareness programs Planning and documentation, preparation of tourism master plans Infrastructure design Prepare detailed IEE, EIA, and EMP's Prepare and implement resettlement plans Design and implement gender/ethnic minority participation programs

40 26 Appendix 4 Capacity building for local communities Quarter Construction and supervision Institutional strengthening and capacity building for O&M Design and implement marketing program Create, publish and distribute GMS Economic corridors development manual Monitoring and evaluation Output 4. Human Resources in the Tourism Sector Developed Training needs assessment Review curriculum and training materials Recruit and train master trainers Improvements to cascade training institution Training at cascade institution and sites Monitoring and evaluation Output 5: Effective Project Implementation Services Operational Mobilize PCU and PIU staff Identify, recruit, and mobilize consultants Procure equipment and vehicles Prepare detailed project implementation plan Establish data management and MIS system Review national tourism and gender action plans Prepare project performance monitoring system and training Establish accounting systems Prepare civil works bidding documents Monitoring and evaluation EMP = environmental management plan, GMS = Greater Mekong Subregion, IEE = initial environment examination, MIS = management information system, O&M = operations and maintenance, PCU = project coordination unit, PIU = project implementation unit. Planned Actual Source: Ministry of Culture, Sports and Tourism, Viet Nam.

41 Appendix 5 27 COMPLIANCE WITH GRANT AND LOAN COVENANTS Table A5.1 Status of Compliance with Grant Covenants, Lao People s Democratic Republic Covenant The Lao National Tourism Administration (LNTA) shall be the EA and shall be responsible for the overall management of the Project. A Subregional Project Steering Committee (SPSC) shall be established to oversee overall Project implementation at the subregional level. LNTA and the Ministry of Culture, Sports and Tourism of Viet Nam shall, respectively, appoint representatives to sit as members of SPSC. Representatives from the national tourism offices of other GMS countries will be invited as observers. The Mekong Tourism Coordination Office shall act as SPSC secretariat. A National Project Steering Committee (NPSC) shall be established to provide policy guidance, and oversee Project implementation at the national level. A Provincial Project Steering Committee (PPSC) shall be established in each participating Province within three months of the effective date. The PPSC shall provide policy guidance to the PIU and shall oversee Project implementation at the provincial level. The Recipient shall cause LNTA to ensure that community consultation takes place at every step of Project implementation. For this purpose, the PIUs shall work with each of the participating communities to establish a community tourism group. The Recipient shall provide counterpart funds for project implementation on time. LNTA shall cause the participating provinces to make timely submission to MOF of annual budgetary appropriation request in respect of the project and MOF shall promptly disburse the appropriated funds during each year of Project implementation. The Recipient and LNTA shall ensure that selection of subprojects under parts 2 and 3 of the Project shall be carried out in accordance with the selection criteria, which have been agreed between the Recipient and ADB. The Recipient shall ensure that priority for training to be provided under part 4 of the Project shall be given to public sector officials in the tourism sector from the Participating Provinces. The Recipient shall further ensure that the selection of master trainers, trainers, and public sector officials shall be carried out in accordance with the agreed selection criteria. Reference in Loan Agreement Schedule 4, para. 1 Schedule 4, para. 2 Schedule 4, para. 3 Schedule 4, para. 6 Schedule 4, para. 7 Schedule 4, para. 8 Schedule 4, para. 9 Schedule 4, para. 10 Status of Compliance Complied with. LNTA merged with the Ministry of Information and Culture to become the Ministry of Information, Culture and Tourism in Complied with. The SPSC was established and met periodically, with Mekong Tourism Coordination Office acting as secretariat. Complied with. The NPSC was established and provided effective guidance and oversight. Complied with. Nine provincial committees were established on time and provided effective guidance and oversight. Complied with. Community consultations led to the formation of community tourism group establishment, or strengthening, as envisaged. Partly complied with. The one instance of partial compliance was the unavailability of counterpart funds for Nakasang access road emergency repairs. Complied with. Complied with. 419 public officials were trained. In addition, 164 officials and private stakeholders became master trainers.

42 28 Appendix 5 Within 36 months of the effective date, the Recipient shall cause the local government of Vang Vieng to prepare and implement a mechanism to ensure that public assets such as roads, drainage and solid waste management can generate sufficient revenues. The Recipient shall further ensure that the revenues generated by the public asset will be used for O&M. Within 36 months of effective date, the Recipient shall cause the provincial tourism department of Champassak to increase the current entry fee to the Siphandone area to a level sufficient to cover the required O&M of the tourist site facilities. Such increase shall be at least 50% of the current entry fee. At least 50% of the revenues generated from the entry fee will be used for the O&M of the facilities at the tourism site. Within 12 months of effective date, the Recipient shall ensure that the local government of Vang Vieng shall issue district regulations on sanitation requiring: (a) connecting sullage drains and septic tanks to drains in high and medium density areas, and to drains or properly designed and constructed soakaways in low density areas; (b) septic tanks that meet prescribed standards in each household or business located in high and medium density areas; and (c) on-site wastewater treatment facilities in hotels, restaurants, hospitals, and industrial enterprises. The Recipient shall ensure that it shall not approve any subproject that involves significant involuntary resettlement according to ADB s Policy on Involuntary Resettlement (1995). The Recipient shall further ensure that all land and right-of-way required for the Project shall be made available in a timely manner and adequate compensation shall be paid to affected people prior to any works contract s award. Any involuntary resettlement shall be carried out in accordance with each of the resettlement frameworks prepared by and agreed between the Recipient and ADB, and ADB s Policy on Involuntary Resettlement (1995). The Recipient shall ensure that ensure that the Project will be implemented in accordance with the applicable laws and regulations of the Recipient and ADB s Policy on Indigenous Peoples (1998) and shall carry out the specific measures on Indigenous Peoples stipulated in the ethnic groups development framework (EGDF). The Recipient shall further ensure that Indigenous Peoples have equitable opportunities to participate in training, recruitment, income generation activities under the Project. The Recipient shall comply with its environmental laws and regulations and ADB s Environment Policy (2002). The design, construction, operation, and implementation of each subproject shall be carried out in accordance with the initial environmental examination, (IEE), environmental management plan (EMP), and environmental assessment and review framework (EARF). Any adverse environmental Schedule 4, para. 11 Schedule 4, para.12 Schedule 4, para.13 Schedule 4, para. 14 Schedule 4, para. 15 Schedule 4, para. 16 Complied with. Provincial Governor s Order 00942, dated 15 November 2006, established the revenue management mechanism for urban O&M. Partially complied with. Entry fees to Siphandone area waterfalls were increased by 122%. There is a private concession generating about $117,000 government revenue per year. The percentage allotted to O&M is unclear but facilities are well maintained. Complied with. Vang Vieng Urban Development and Administration Authority (UDAA) issued the regulations on 16 February Complied with. Complied with. Complied with.

43 Appendix 5 29 impacts arising from the construction, operation, and implementation of the subprojects will be minimized by implementing the environmental mitigation and management measures, and other recommendations specified in the EMPs. The Recipient shall ensure that the project is carried out in accordance with ADB s Policy on Gender and Development (1998) and the gender strategy contained in the gender action plan (GAP) for the Project. The Recipient shall further ensure, and shall cause LNTA and the Participating Provinces to ensure, that the GAP and the specific actions and targets contained therein, are included in the project and provincial rolling work plans. In particular, at least 40% of capacity development activities and 50% of scholarships for master trainers are reserved for qualified women. Further, at least 30% of the PCU and PIU staff shall be women. By midterm, each Participating Province shall develop a provincial gender plan for the tourism sector. The Recipient shall maintain, or cause to be maintained, separate Project accounts and have such accounts and financial statements audited annually, and furnish ADB audited accounts and financial statements not later than 6 months after the end of each related fiscal year. The Recipient shall ensure the Project Performance Monitoring System (PPMS) is implemented and integrated into the information management of LNTA and provincial tourism departments. Data will be disaggregated by sex, ethnicity, and income level where feasible. Annual PPMS reports shall be prepared by the PIUs and PCU and submitted to ADB. The Recipient shall comply with, and shall cause LNTA to comply with ADB s Anticorruption Policy (1998, as amended from time to time) and the policy relating to Enhancing ADB s Role in Combating Money Laundering and the Financing of Terrorism (2003). Within 6 months of the effective date, LNTA shall create a Project website to disclose information about the project, including procurement. Within 6 months of the effective date, LNTA shall prepare a public grievance redress mechanism, acceptable to ADB, and establish a task force at the PCUs to receive and resolve complaints/grievances or act upon reports from stakeholders on the misuse of funds and other irregularities, including grievances caused by resettlement and environmental issues. Source: Asian Development Bank. Schedule 4, para. 17 Article IV, Section 4.02 Schedule 4, para. 18 Schedule 4, para. 18 Schedule 4, para. 21 Schedule 4, para. 22 Complied with. See Appendix 9. Partly complied with. Submission of final year audited accounts was late. Complied with. Monitoring and reporting were satisfactory, with data disaggregated by sex and ethnicity. Information disaggregation by income level was not feasible. Complied with. Complied with. See established in May Complied with. Included in safeguards documents and posted in project website.

44 30 Appendix 5 Table A5.2 Status of Compliance with Loan Covenants, Viet Nam Covenant The Ministry of Culture, Sports and Tourism (MCST) shall be the executing agency and shall be responsible for the overall management of the Project. A Subregional Project Steering Committee (SPSC) shall be established to oversee overall Project implementation at the subregional level. MCST and the Lao National Tourism Administration shall, respectively, appoint representatives to sit as members of SPSC. Representatives from the national tourism offices of other GMS countries will be invited as observers. A National Project Steering Committee (NPSC) shall be established to provide policy guidance, and oversee Project implementation at the national level. A Provincial Project Steering Committee (PPSC) shall be established in each participating Province within three months of the effective date. The PPSC shall provide policy guidance to the PIU and shall oversee Project implementation at the provincial level. The Borrower shall cause MCST to ensure that community consultation takes place at every step of Project implementation. For this purpose, the PIUs shall work with each of the participating communities to establish a community tourism group. The Borrower shall provide counterpart funds for project implementation on time. MCST shall cause the participating provinces to make timely submission to MOF of annual budgetary appropriation request in respect of the project and MOF shall promptly disburse the appropriated funds during each year of Project implementation. The Borrower and MCST shall ensure that selection of subprojects under parts 2 and 3 of the Project shall be carried out in accordance with the selection criteria, which have been agreed between the Borrower and ADB. The Borrower shall ensure that priority for training to be provided under part 4 of the Project shall be given to public sector officials in the tourism sector from the Participating Provinces. The Borrower shall further ensure that the selection of master trainers, trainers, and public sector officials shall be carried out in accordance with the agreed selection criteria. Within 36 months after the Effective Date, the Borrower shall cause the Park Authorities of Phong Nha Khe Bang to increase the entry fee charge to tourists visiting the area. The Borrower shall further ensure that at least 50% of the funds collected from the entry fee will be retained and used solely for the Operation and Maintenance (O&M) of the facilities at the site. Reference in Loan Agreement Schedule 5, para. 1 Schedule 5, para. 2 Schedule 5, para. 3 Schedule 5, para. 6 Schedule 5, para. 7 Schedule 5, para. 8 Schedule 5, para. 9 Schedule 5, para. 10 Schedule 5, para. 11 Status of Compliance Complied with. Complied with. The SPSC was established and met periodically, with the Mekong Tourism Coordination Office acting as secretariat. Complied with. The NPSC was established and provided effective guidance and oversight. Complied with. Five provincial committees were established on time and provided effective guidance and oversight. Complied with. Community consultations led to the formation of community tourism group establishment, or strengthening, as envisaged. Complied with. Complied with. Complied with. A total of 774 public officials trained. In addition, 218 officials and private stakeholders became master trainers. Complied with. Park authorities increased entry fee from D50,000 per person to D70,000 per person (an increase of 40%), generating about $4 million annually at completion. The Phong Nha

45 Appendix 5 31 Within 3 months after the construction of the cultural heritage center in Bac Kan Province is completed, the Borrower shall cause the tourism provincial authorities in Bac Kan Province to impose entry fee charge to tourists visiting the center. The Borrower shall further ensure that at least 50% of the funds collected from the entry fee shall be retained and used solely for the O&M of the facilities at the site. The Borrower shall ensure that it shall not approve any subproject that involves significant involuntary resettlement according to ADB s Policy on Involuntary Resettlement (1995). The Borrower shall further ensure that all land and right-of-way required for the Project shall be made available in a timely manner and adequate compensation shall be paid to affected people prior to any works contract s award. Any involuntary resettlement shall be carried out in accordance with each of the resettlement frameworks prepared by and agreed between the Borrower and ADB, and ADB s Policy on Involuntary Resettlement (1995). The Borrower shall ensure that the Project shall be implemented in accordance with the applicable laws and regulations of the Borrower and ADB s Policy on Indigenous Peoples (1998) and shall carry out the specific measures on Indigenous Peoples stipulated in the Ethnic Minorities Development Framework (EMDF) that has been agreed between the Borrower and ADB. The Borrower shall further ensure that Indigenous Peoples have equitable opportunities to access scholarships and to participate in training, recruitment, income generation activities under the Project. The Borrower shall comply with its environmental laws and regulations and ADB s Environment Policy (2002). The design, construction, operation, and implementation of each subproject shall be carried out in accordance with the initial environmental examination, (IEE), environmental management plan (EMP), and environmental assessment and review framework (EARF). Any adverse environmental impacts arising from the construction, operation and implementation of the subprojects will be minimized by implementing the environmental mitigation and management measures, and other recommendations specified in EMPs. The Borrower shall ensure that the project is carried out in accordance with ADB s Policy on Gender and Development (1998) and the gender strategy contained in the gender action plan (GAP) for the Project. The Borrower shall further ensure, and shall cause MCST and the Participating Provinces to ensure, that the GAP and the specific actions and targets contained therein, are included in the project and provincial rolling work plans. In particular, at least 40% of capacity development activities and 50% of scholarships for Schedule 5, para.12 Schedule 5, para. 13 Schedule 5, para. 14 Schedule 5, para. 15 Schedule 5, para. 17 Khe Bang National Park Management Board retains the monies raised from entry fees, allotting sufficient budget for O&M of facilities. Complied with. Ba Bae Lake annual tourist entry fees totaled $43,000. The percentage retained for O&M exceeds 50%. The government provided a $4,700 subsidy to cover the balance of O&M costs in Complied with. Complied with. Complied with. Complied with, with delay. See Appendix 9.

46 32 Appendix 5 master trainers are reserved for women. Further, at least 30% of the PCU and PIUs staff shall be women. By midterm, each Participating Province shall develop a provincial gender plan for the tourism sector. The Borrower shall maintain, or cause to be maintained, separate Project accounts and have such accounts and financial statements audited annually, and furnish ADB audited accounts and financial statements not later than 6 months after the end of each related fiscal year. The Borrower shall ensure the Project Performance Monitoring System (PPMS) is implemented and integrated into the information management of MCST and provincial tourism departments. Data will be disaggregated by sex, ethnicity, and income level where feasible. Annual PPMS reports shall be prepared by the PIUs and PCU and submitted to ADB. The Borrower shall comply with, and shall cause MCST to comply with ADB s Anticorruption Policy (1998, as amended from time to time) and the policy relating to Enhancing ADB s Role in Combating Money Laundering and the Financing of Terrorism (2003). Within 6 months of the effective date, MCST shall create a Project website to disclose information about the project, including procurement. Within 6 months of the effective date, MCST shall prepare a public grievance redress mechanism, acceptable to ADB, and establish a task force at the PCUs to receive and resolve complaints/grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including grievances caused by resettlement and environmental issues. Source: Asian Development Bank. Article IV, Section 4.02 Schedule 5, para. 17 Schedule 5, para. 18 Schedule 5, para. 20 Schedule 5, para. 21 Complied with. Complied with. Monitoring and reporting were generally satisfactory, with data disaggregated by sex and ethnicity. Information disaggregation by income level was not feasible. Complied with. Complied with, with delay. The website was active until Complied with. Included in safeguards documents and posted in project website.

47 Appendix 6 33 TOURISM INDICATORS AT BASELINE AND AT COMPLETION Table A6.1: Key Tourism Indicators at Baseline and at Completion, Lao PDR Item Change (%) A. International Tourist Arrivals 1. Lao PDR 2,008,363 4,158, Bokeo Province 140, , a. Houayxay night market 36,000 b. Don Chai service center 2,400 c. Nam Yorn waterfall 3, Champasak Province 278, , a. Siphandone (Det and Khone), Khong District a 90, , b. Khong island museum Houaphanh Province 15,098 27, a. Saloeuy waterfall a 3,000 7, b. Viengthong hot spring a 3,000 6, Luangnamtha Province 244, , a. Luangnamtha night market a 71, , b. Nam Dee waterfall a 6,000 6,000 c. Name Eng (kao rao) cave 1,100 3, Oudomxay Province 107, , a. Phachao Singkham temple 6,000 b. Nam Kat waterfall 2,100 6, Saravan Province 28,142 78, a. Tad Lo waterfall 16,000 23, b. Tad Soung waterfall 3,000 7, Savannakhet Province 791,924 1,017, a. Talat Yen night market 72,000 b. Phine tourist service area 18, Xayabouli Province 23,061 96, a. Xayabouli night market 18,000 b. Houay Kang medicinal plant preserve 1, Vientiane Province 290, , a. Vang Vieng town a 131, , b. Kaeng Yui waterfall 32,000 B. Tourist Expenditure ($) International tourist expenditure (billion) Average international tourist expenditure per day Aggregate tourist expenditure at project sites 54,447,800 C. Average Length of Stay (days) International tourists Regional tourists entering with passport Regional tourists entering with a border pass = facilities were newly developed by the project or baseline data not available, Lao PDR = Lao People s Democratic Republic. a International and domestic tourists. Note: Regional tourists include arrivals from Cambodia, the People s Republic of China, Thailand, and Viet Nam. Source: Ministry of Information, Culture and Tourism, Lao PDR.

48 34 Appendix 6 Table A6.2: Key Tourism Indicators at Baseline and at Completion, Viet Nam Item Change (%) A. Tourist Arrivals 1. Viet Nam 3,747,431 7,874, Bac Kan Province i. International 3,804 9, ii. Domestic 87, , a. Ba Be National Park a 50, , b. Pac Ngoi and Bo Lu a 4,120 19, Cao Bang Province i. International 12,537 28, ii. Domestic 241, , a. Pac Rang Blacksmith Village a 300 1, b. Ban Gioc waterfall a 91, Quang Binh Province i. International 17,160 43, ii. Domestic 635,090 2,705, a. Phong Nha Khe Bang National Park i. International 4,548 41, ii. Domestic 306, , b. Tien Son cave 30,000 81, c. Chaylap homestay 221 5,500 b d. Dark Cave 14,204 e. Botanic garden 120 4, Quang Tri Province i. International 124, , ii. Domestic 495,000 1,410, a. Lao Bao border and market 185, ,226 c 49.1 b. Klu rest area and hot spring 200 2,335 a 1, Thua Thien Hue Province i. International and Domestic 1,430,000 2, a. Aluoi District a 2,000 13, b. A-Hua and Aka-Achi Hamlet 330 5,325 a 1,513.6 B. Tourist Expenditure ($) International tourist expenditure (billion) Average international tourist expenditure per day Aggregate tourist expenditure at project sites 33,634,300 C. Average Length of Stay (days) International tourists, Viet Nam All tourists, project sites ~0.1 = facilities were newly developed by the project or baseline data not available a International and domestic tourists. b 2016 Chaylap Farmstay bookings. c 2015 data for Lao Bao border. Source: Viet Nam National Administration of Tourism, Ministry of Culture, Sports and Tourism, Viet Nam, and Asian Development Bank Estimates.

49 Appendix 6 35 Item and Location Lao PDR Table A6.3: Select Tourism Products and Services at Completion Direct Employment Estimate Annual Tourism Revenue ($) A. Sustainable Tourism Development Nakasang pier, Champassak ,000 Det and Khone Islands (Siphandone), Champassak 1,500 18,000,000 Hang Khone dolphin watching, Champassak 50 4,600 Folk singing group (lam Siphandone), Champassak 35 15,000 Palm sugar marketing group, Khong, Champassak 57 9,500 Vang Vieng Town, Vientiane 3,500 32,000,000 Vang Vieng night market, Vientiane ,000 B. Pro-poor Tourism Development Nam Yorn waterfall, Bokeo 10 4,000 Wild tea and honey, Phoung Pha and Tor Lae, 20 4,700 Bokeo Bamboo paper, Nam Chang, Bokeo 20 2,000 Viengthong hot spring, Houaphanh 3 1,500 Saloey waterfall, Houaphanh 5 5,000 Silk and cotton textiles, Saloey, Houaphanh 84 24,000 Cotton textiles, Porn Saat, Houaphanh 9 17,000 Bamboo crafts, Faen, Oudomxay 10 3,000 Pottery and textiles, Yor, Oudomxay 40 18,000 Nam Kat waterfall, Oudomxay 30 20,000 Organic vegetables, Oudomxay 43 87,000 Tad Lo waterfall, Saravanh 300 1,500,000 Tad Soung waterfall, Saravanh 3 8,500 Katu textiles, Houay Houn, Savavanh 18 16,500 Khoun Lang cave, Vientiane 5 4,500 Kaeng Yui waterfall, Vientiane ,000 Bamboo crafts, Na Lao cluster, Vientiane 50 42,000 Embroidered textiles, Houay Xan, Vientiane 30 43,000 Houay Kang medicinal plant preserve, Xayabouli 5 4,500 Cotton textiles, Viengkeo, Xayabouli 50 12,000 Night market, Xayabouli ,000 C. Tourism Corridors Luangnamtha night market, Luangnamtha ,000 Nam Dee waterfall, Luangnamtha 30 11,000 Nam Eng (kao rao) cave, Luangnamtha 8 4,500 Silk and cotton textiles, Pieng Ngam, Luangnamtha 15 25,000 Houay Xay night market, Bokeo ,000 Cotton textiles and bamboo crafts, Don Chai service 50 17,000 area, Bokeo Talad yen night market, Savannakhet ,000

50 36 Appendix 6 Phine tourist service area, Savannakhet ,000 Lao rice spirits, None Nyang, Savannakhet ,000 Cotton textiles, Kaeng Lin, Savannakhet 32 22,000 Cotton textiles, Nong Kadeng, Savannakhet 43 62,000 Subtotal 6,796 54,447,800 Viet Nam A. Sustainable Tourism Development Phong Nha Khe Bang nature circuit, Quang Binh 2,250 26,700,000 Cultural exchange & tourism information center, Bac Kan 11 46,000 B. Pro-poor Tourism Development Aluoi tourist information center, Thua Thien Hueb ,000 Homestay, cultural performance and village tours, Aka-Achi and A-hua 33 11,700 Cotton textiles, Aka-Achi and A-hua ,200 Homestay, Pac Rang, Cao Bang 50 2,400 Iron crafts, Pac Rang cluster, Cao Bang ,000 Homestay, performance, cotton textiles, and boat trips Pac Ngoi, Bac Kan 180 1,500,000 Homestay, performance, cotton textiles, and boat trips Bo Lu, Bac Kan ,000 Farmstay, Chaylap, Quang Binh ,000 Organic vegetables, Chaylap, Quang Binh 50 18,000 Photography service group, Quang Binh 30 60,000 C. Tourism Corridors Lao Bao border gate, Quang Tri 50 3,645,000 Klu rest area, hot spring, cotton textiles and baskets 26 14,000 Subtotal 3,115 33,634,300 Total 9,884 88,082,100 Lao PDR = Lao People s Democratic Republic. a Including café operating under a concession agreement with the center. b Including visa fees. Source: Ministry of Information, Culture and Tourism, Lao PDR, and Ministry of Culture, Sports and Tourism, Viet Nam estimates.

51 Appendix 7 37 ECONOMIC REEVALUATION A. Introduction 1. The economic reevaluation was undertaken following the methodology and assumptions used at appraisal but applying actual project costs and benefits. Actual tourist arrivals were significantly higher and growing more quickly than the appraisal estimates for most subprojects, while the project costs increased only slightly. To remain conservative, the economic reevaluation uses the same or lower growth rates than forecast at appraisal for most output 1 subprojects and others in well-established tourist areas. For the pro-poor, community-based tourism subproject evaluated at appraisal and completion, the growth rate used is slightly higher than the initial estimate because arrival numbers are increasing from a very low base. Apart from the pro-poor, community-based tourism subprojects, all growth rates applied are lower than United Nations World Tourism Organization 2030 growth forecasts for Southeast Asia The methodology adopted in the economic reevaluation follows ADB s Guidelines for the Economic Analysis of Projects and other relevant ADB guidelines. 2 The analysis involved comparing the costs and benefits in with- and without-project scenarios over a period of 20 years ( ) with no salvage value thereafter, as assumed at appraisal. The economic viability of the subprojects and project overall were assessed by calculating the economic internal rate of return (EIRR) and net present value from a stream of incremental benefits and costs attributable to the investments. EIRRs were estimated and compared with the economic opportunity cost of capital, which was assumed to be 12%. Sensitivity indicators and switching values were also calculated. B. Economic Costs 3. The economic capital costs for civil works, human resource development, project implementation support, and incremental operations and maintenance (O&M) costs were derived from the financial costs. Capital costs included civil works, land acquisition, O&M equipment, training, administration, and monitoring. Land purchased for the project was idle and there were no alternate plans to use it for another activity. Therefore, the economic value of land acquired was assumed to be its actual purchase price. The cost of human resource development and project implementation support were shared between the subprojects. The percentage share was apportioned based on the respective subproject capital cost to the total capital cost for the specific country. Using the domestic price numeraire, but expressed in US dollars, the economic costs were derived from financial costs segregated into tradable and nontradable components. The financial costs for both countries were converted into economic costs using a shadow exchange rate factor (1.05) and a shadow wage rate factor for unskilled labor (0.71). For consistency, the shadow rates used in the economic reevaluation are the same as the appraisal estimates. 3 For non-tradable components, the shadow exchange rate factor was 1.0. All costs and benefits are expressed in constant March 2017 prices. 1 United Nations World Tourism Organization UNWTO Highlights. Madrid. 2 ADB Guidelines for the Economic Analysis of Projects. Manila; ADB Tourism for Pro-Poor and Sustainable Growth: Economic Analysis of Tourism Projects. Economics and Research Department Technical Note Series. No. 20. Manila. 3 ADB Report and Recommendation of the President to the Board of Directors. Proposed Grant to the Lao People s Democratic Republic and Loan to the Socialist Republic of Viet Nam: Greater Mekong Subregion Sustainable Tourism Development Project. Manila. See Supplementary Appendix K.

52 38 Appendix 7 C. Economic Benefits 4. The project s main economic benefit is increased tourist expenditure. Economic benefits were identified for each subproject and sensitivity analysis applied to test their robustness to changes in the assumptions. The sensitivity scenarios considered at appraisal were used for the reevaluation: (i) 10% increase in investment costs; (ii) 10% increase in O&M costs; (iii) 10% percent decrease in benefits; and (iv) 2-year project implementation delay. Incremental O&M costs have been added to capital costs to obtain the total economic cost of the subprojects for each year. 5. Tourism benefits. Tourism benefits arise from the project due to (i) increased numbers of tourists visiting the project areas, (ii) increased tourist length of stay in the project areas, and (iii) increased tourist spending. Improved infrastructure, tourist facilities and services, and better environmental conditions within and around the project sites induce an influx of international and domestic tourists and encourage them to spend more and stay longer. This generates additional tourist spending and creates direct and indirect jobs. The tourism benefits gained by the subprojects are increased net tourist expenditures. The net expenditure is estimated to be 60% of gross tourist expenditure for Lao PDR and 65% of gross tourist expenditure for Viet Nam. Net expenditure is the tourist s overall expenditure on tourism services less the costs of providing such services. Considering potential substitution effects, the analysis then assumes only 60% of the net tourist expenditure is the project-induced benefit. The current number of tourist arrivals, average length of stay, and spending in the subproject areas and projections under with- and without-project scenarios are estimated by subproject taking into account recent development trends, attractiveness of the subproject area, constraints on tourism development in the area, and the subproject s effects on removing or reducing these constraints. 6. Time savings. Time savings is the benefit attributed to shorter immigration and customs processing times at Lao Bao border gate for international tourists and Vietnamese travelers. Interviews with border officials suggest that project investments helped to reduce immigration and customs processing times by about 5 minutes per person. Time savings were valued based on 50% of international tourists gross daily expenditure, divided by the number of minutes in a 24 hour day, and then multiplied by the total number of minutes saved. 7. Benefits not quantified. Economic benefits identified but not quantified are increased land values for property owners, health benefits that arise from better environmental services, and willingness to pay for garbage collection fees and sanitation. D. Economic Reevaluation, Lao PDR 1. Biodiversity Protection in Siphandone Wetland 8. Improved access to Nakasang pier together with improved market facilities and better tourism services led to a significant increase in tourist arrivals and associated destination spending. The actual number of annual international tourist arrivals at completion (2014) was 132,000 compared to 69,000 projected at appraisal, while domestic tourist arrivals reached 68,000 compared to 36,000 projected at appraisal. At completion, international tourists average net daily spending in Siphandone was $38.40 and domestic tourists net spending was $23.50 per day. Net expenditure for international tourists was much higher at completion than what was assumed at appraisal because of higher service standards. This enabled the area to attract a mix of higher-spending independent travelers, group tours, and customized excursions, along with the existing, lower-spending backpacker market. Projections retain conservative estimates

53 Appendix 7 39 for the average length of stay because about half of international tourists are expected to be day-trippers from neighboring Thailand and Cambodia. The assumptions used for calculating tourism benefits are in Table A7.1. Table A7.1: Assumptions for Tourism Benefits Calculation, Siphandone Wetlands Completion Appraisal Estimate International Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Note: During project formulation, international tourists comprised mainly lower-spending backpackers. Source: Lao PDR Ministry of Information, Culture and Tourism and ADB staff estimates. 9. Results of the economic reevaluation. The base case EIRR calculated for Siphandone Wetlands is 29.3%, compared to 17.5% at appraisal. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 29.1% to 24.3%. The higher EIRR is mainly due to significantly higher numbers of tourist arrivals and higher spending by international tourists. 2. Vang Vieng Town Environmental Improvement 10. Urban improvements, better service quality, and marketing assistance helped attract significantly more and higher spending tourists. The major economic benefits of the subproject are tourism benefits. The actual number of annual international tourist arrivals at completion was about 200,000, compared to 99,400 projected at appraisal, with an estimated 200,000 additional domestic tourists. Moreover, international tourists average length of stay increased to 2 days and average net daily spending was about three times higher than at appraisal. Forward projections retain conservative assumptions for the average length of stay and spending at completion because Vang Vieng was successfully attracting higher-spending long- and mediumhaul visitors from diverse source markets. It is also a popular weekend destination for Vientiane residents. The underlying assumptions are in Table A7.2. Table A7.2: Assumptions for Tourism Benefits Calculation, Vang Vieng Completion Appraisal Estimate International Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Lao PDR Ministry of Information, Culture and Tourism and ADB staff estimates.

54 40 Appendix Results of the economic reevaluation. The base case EIRR calculated for Vang Vieng is 22.5%, compared to 18.4% at appraisal. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 22.4% to 20.8%. The higher EIRR is due to higher numbers of tourist arrivals and higher spending by international tourists. 3. Pro-poor, Community-based Supply Chain Tourism Project, Tad Lo and Tad Soung Cluster 12. The economic evaluation of this representative subproject covers the Tad Lo and Tad Soung waterfall cluster, Saravan province. 4 Economic benefits quantified are tourism benefits, partly gained by local communities that provide tourism services and sell crafts and food to the growing number of international tourists. Since no economic analysis was undertaken at appraisal, projected tourist arrivals for the with- and without-project scenarios were derived from the actual number of international tourist arrivals in the subproject area at completion. The number of international tourist arrivals totaled 30,000 in 2014, about 37% higher than the 2009 baseline. Domestic tourism is limited and not considered in the analysis. The without-project scenario assumes international tourists will increase by 3% per year, while the with-project scenario conservatively assumes a 5% annual increase. The average length of stay for both scenarios is assumed to be 1 day because about half of international tourists are Thai daytrippers. Daily spending is assumed to be the same as the national average because the two resorts at Tad Lo attract higher-spending international guests to the area and offer several highend excursions. The assumptions used for calculating tourism benefits are in Table A7.3. Table A7.3: Assumptions for Tourism Benefits Calculation, Pro-poor Subproject, Tad Lo and Tad Soung Waterfall Cluster, Saravan Completion International Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Lao PDR Ministry of Information, Culture and Tourism and ADB staff estimates. 13. Results of the economic reevaluation. The base case EIRR is 17.6%. Sensitivity tests show that the representative subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 17.3% to 16.2%. 4. North South Economic Corridor Tourism Development 14. At appraisal, the representative subproject sites that were covered in the economic analysis included the Nam Ha interpretation center, Nam Eng cave, Vat Mahaphot historic area, Bor Kung nature park, and Nam Phae scenic spot; all situated along the newly improved Route 3. 5 Total tourist arrivals were projected to reach 107,351 in This included 56,335 international transit tourists with no assumed destination spending. The remaining 48% comprised 45,552 international tourists and 5,505 domestic tourists that were expected to 4 The subproject was not evaluated at appraisal. Pro-poor, community-based supply chain tourism subprojects were selected and developed following a sector approach, based on the viable Aluoi, Viet Nam demonstration model. 5 ADB Project Completion Report: Greater Mekong Subregion-Northern Economic Corridor Project (Lao People s Democratic Republic (Loan 1989). Manila.

55 Appendix 7 41 generate destination spending and stay 0.5 days on average to visit one or more project sites. At completion, only Nam Eng cave, Don Chai service area, Luangnamtha night market, Huay Xay night market, and other small attractions developed by the project were regularly receiving tourists and generating tourist spending. Actual tourist arrival numbers for these sites reached 251,400 in Improved facilities, better tourism services, and Lao PDR s Tea Caravan Trail marketing program contributed to the increase. 6 Following the appraisal estimates, it is assumed that 48% of the total tourist arrivals generate destination spending and the percentages of international and domestic tourists are the same. Daily international tourist spending is assumed to be 75% of the national average. Other assumptions used for calculating tourism benefits are in Table A7.4 Table A7.4: Assumptions for Tourism Benefits Calculation, North South Economic Corridor, Luangnamtha and Bokeo Completion Appraisal Estimate International Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Lao PDR Ministry of Information, Culture and Tourism and ADB staff estimates 15. Results of the economic reevaluation. The base case EIRR is 23.3% compared to 18.4% at appraisal. Sensitivity tests show that the representative subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 23.1% to 20.1%. 5. East West Economic Corridor Tourism Development, Savannakhet 16. This economic corridor segment was not covered in the economic evaluation at appraisal. Subproject sites include Talat Yen night market and Phine tourist service area in Savannakhet province. Since no economic analysis was undertaken at appraisal, projected tourist arrivals for the with- and without-project scenarios were derived from the actual number of tourist arrivals in the subproject areas at completion. The number of tourist arrivals in 2014 totaled 90,000, against a baseline of zero, as both sites were newly developed by the project as part of Lao PDR s efforts to promote the Savannakhet Historic Trail. 7 Of the total, 59,400 were international tourists and 30,600 were domestic tourists. The with- and without-project scenarios conservatively assume that international and domestic tourists will increase by 1% per year. The average length of stay for the with-project scenario is 0.5 days, the same as in the withoutproject scenario. The assumptions used for calculating tourism benefits are in Table A See 7 See

56 42 Appendix 7 Table A7.5: Assumptions for Tourism Benefits Calculation, East West Economic Corridor, Savannakhet Completion International Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Lao PDR Ministry of Information, Culture and Tourism and ADB staff estimates. 17. Results of the economic reevaluation. The base case EIRR is 27.5%. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 27.2% to 23.7%. 6. Country Economic Reevaluation, Lao People s Democratic Republic 18. The combined analysis for all Lao PDR subprojects shows that the country component is economically viable and robust under the adverse scenarios tested, with a base case EIRR of 24.7% (Table A7.6). Table A7.6: Economic Reevaluation, Lao People s Democratic Republic Scenario EIRR (%) ENPV SI SV Base case ,226 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,474 EIRR = economic internal rate of return, ENPV =economic net present value, O&M = operation and maintenance, SI = sensitivity indicator, SV = switching value. Source: Asian Development Bank estimates. E. Economic Reevaluation, Viet Nam 1. Phong Nga Khe Bang National Park 19. The new Phong Nha Khe Bang nature circuit, improved environmental conditions at the park s tourist service center, and better tourism services along with professional marketing contributed to a sharp rise in tourist arrivals and destination spending. Annual international tourist arrivals reached 41,500 at completion (2014), 812% higher than the 2009 baseline, while domestic tourists numbered 808,000 or 325% higher than the 2009 baseline. At project completion, actual average daily spending for international and domestic tourists was much higher than the appraisal estimates; however, forward projections assume very conservative estimates for average length of stay and tourist growth rates in with- and without-project scenarios. The assumptions used are in Table A7.7

57 Appendix 7 43 Table A7.7: Assumptions for Tourism Benefits Calculation, Phong Nga Khe Bang Completion Appraisal Estimate International Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Viet Nam Ministry of Culture, Sports and Tourism and ADB staff estimates. 20. Results of the economic reevaluation. The base case EIRR is 28.4%, compared to 22.8% at appraisal. The high EIRR is due to the large number of tourist arrivals and significantly higher tourist spending. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 28.0% to 19.1%. 2. Ethnic Minorities Cultural Heritage Development 21. The project constructed Bac Kan cultural exchange and tourism information center, which promotes tourism in nearby Ba Bae Lake national park, offering visitor information and tour services, training facilities, meeting rooms, and a dormitory. The subproject was not evaluated at appraisal; therefore, tourist arrivals and spending were projected based on data collected at project completion. In 2014, there were 28,380 international tourist arrivals and 113,520 domestic tourist arrivals. The analysis assumes international and domestic tourists stay an average of 0.75 days in the with- and without-project scenarios, but growth rates for international tourists will be higher due to the center s marketing and promotion efforts. Average daily spending for international tourists is assumed to be 75% of the national average. The assumptions used for calculating tourism benefits are in Table A7.8 Table A7.8: Assumptions for Tourism Benefits Calculation, Ethnic Minorities Cultural Heritage Development Completion International Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Viet Nam Ministry of Culture, Sports and Tourism and ADB staff estimates.

58 44 Appendix Results of the economic reevaluation. The base case EIRR is 18.8%. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 18.6% to 17.2%. 3. Pro-poor, Community-based Supply Chain Tourism Project, Aluoi Cluster 23. The representative subproject constructed a new tourist information center and assisted two ethnic communities to develop community-based tour programs and establish markets for textile handicrafts. At completion, there were 27 tour operators using the well-managed tourist information center. Services included tour bookings, logistics, and retail craft sales. Appraisal estimates projected 2015 international tourist arrivals would reach 14,400 and domestic tourists would number 43,300, with 2% 4% staying for 1 3 nights and the remainder staying 1 day or less. At completion, the total number of international tourists reached only 2,990, with 10,010 domestic tourists. The main reason for lower than expected arrivals is the delay in upgrading national road 49 (linking Aluoi district to Hue city) under a separate government-financed project. At subproject completion in December 2014, the road was still under construction. 24. To calculate the tourism benefits at completion, it was assumed that all tourists will spend an average of 1 day at the subproject site, as it is located 60 km (two hours driving) from Hue City. Since international tourists primarily join organized tours, average spending is higher than the appraisal estimate and consistent with the national average, while domestic tourists are assumed to spend $27.50 per day. Given that the number of annual tourist arrivals in Aluoi district increased from 2,000 to 13,000 during the project (550%), the reevaluation reasonably assumes modestly higher forward growth rates in the with-project scenario. Other assumptions used are presented in Table A7.9. Table A7.9: Assumptions for Tourism Benefits Calculation, Pro-poor Subproject, Aluoi Cluster, Thua Thien Hue Completion Appraisal Estimate International Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Domestic Tourists Without Project With Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Source: Viet Nam Ministry of Culture, Sports and Tourism and ADB staff estimates. 25. Results of the economic reevaluation. The base case EIRR is 18.1% compared to 17.2% at appraisal. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 17.9% to 16.8%. EIRRs are higher than at appraisal due to the higher tourist spending and higher assumed tourist growth rate. 4. East West Economic Corridor Tourism Development, Quang Tri 26. This subproject was not evaluated at appraisal. It involved the construction of a new immigration and customs terminal, international tourist information center, and retail space at

59 Appendix 7 45 Lao Bao border gate. Nine tour companies and a duty-free shop use the facility to provide tourism transport, excursions, and retail services. At completion, the facility was processing 110,490 international tourists and 165,736 domestic travelers per year. Management reports that the average processing time to enter/exit Viet Nam fell from 20 minutes in 2009 to about 12 minutes in Economic benefits quantified are time savings and tourism benefits. 27. The analysis conservatively assumes time-savings is 5 minutes per person. Given the high volume of domestic traders that use the border, tourism benefits are assumed to be generated from international tourists only. Since no evaluation was conducted at appraisal, it is conservatively assumed that international tourists spend $45.60 per day and stay a bit longer to shop or visit nearby historic and cultural attractions. Assumptions used to calculate tourism benefits and time savings benefits are in Table A7.10. Table A7.10: Assumptions for Tourism Benefits Calculation, East West Economic Corridor, Quang Tri Completion International Tourists Without Project With Project Tourist growth rate (%/year) Length of stay (days) Gross daily spending ($/day) Net daily spending ($/day) Time savings (minutes) Net time value ($/minute) Source: Viet Nam Ministry of Culture, Sports and Tourism and ADB staff estimates. 28. Results of the economic reevaluation. Results of the economic reevaluation. The base case EIRR is 21.0%. Sensitivity tests show that the subproject remains economically viable under all alternate scenarios, with EIRRs ranging from 20.8%%to 16.0%. 5. Country Economic Reevaluation, Viet Nam 29. The combined analysis for all Viet Nam subprojects shows that the country component is economically viable and robust under adverse scenarios tested, with a base case EIRR of 22.0% (Table A7.11). Table A7.11: Economic Reevaluation, Viet Nam Scenario EIRR (%) ENPV SI SV Base case ,705 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,868 EIRR = economic internal rate of return, ENPV =economic net present value, O&M = operation and maintenance, SI = sensitivity indicator, SV = switching value. Source: Asian Development Bank estimates. 8 ADB Special Review Mission, 19 April 2016.

60 46 Appendix 7 F. Economic Evaluation, Overall Project 30. The economic evaluation of the project as a whole shows that it is economically viable. The base case EIRR for the whole project is calculated at 23.7%. The project is efficient under all sensitivity scenarios, with EIRRs ranging from 23.5% to 20.2% (Table A7.12). Economic indicators for individual subprojects are summarized in Table A7.12. Table A7.12: Economic Evaluation for the Overall Project Scenario EIRR (%) ENPV SI SV Base case ,930 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,342 EIRR = economic internal rate of return, ENPV =economic net present value, O&M = operation and maintenance, SI = sensitivity indicator, SV = switching value. Source: Asian Development Bank estimates. Table A7.13: Summary Indicators, Appraisal and Completion Appraisal Completion EIRR (%) EIRR (%) NPV ($ 000) SI SV Subproject and Scenario A. Siphandone Wetland Base case ,656 10% increase in investment cost , % increase in O&M cost , % decrease in benefits year project implementation delay ,786 B. Vang Vieng Town Environmental Improvement Base case ,504 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,176 C. Pro-poor, Community-based Supply Chain Tourism Project, Tad Lo and Tad Soung Base case % increase in investment cost % increase in O&M cost % decrease in benefits year project implementation delay D. North South Economic Corridor Base case ,658 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,309 E. East West Economic Corridor, Savannakhet Base case % increase in investment cost % increase in O&M cost % decrease in benefits year project implementation delay

61 Appendix 7 47 F. Phong Nga Khe Bang National Park Base case ,604 10% increase in investment cost , % increase in O&M cost , % decrease in benefits , year project implementation delay ,448 G. Ethnic Minorities Cultural Heritage Development Base case ,315 10% increase in investment cost , % increase in O&M cost , % decrease in benefits year project implementation delay ,225 H. Pro-poor, Community-based Supply Chain Tourism Project, Aluoi Base case % increase in investment cost % increase in O&M cost % decrease in benefits year project implementation delay I. East West Economic Corridor Tourism Development, Quang Tri Base case ,198 10% increase in investment cost , % increase in O&M cost , % decrease in benefits year project implementation delay = data not available, EIRR = economic internal rate of return, ENPV =economic net present value, O&M = operation and maintenance, SI = sensitivity indicator, SV = switching value. Source: Asian Development Bank estimates.

62 48 Appendix 8 FINANCIAL SUSTAINABILITY ASSESSMENT A. Introduction 1. The financial sustainability assessment examines if output 1 3 subprojects can generate sufficient inflows from tourist entrance fees or other user charges to pay for operation and maintenance (O&M) costs incurred by the subproject owners. Subproject owners are provincial and district tourism offices, community tourism groups, national park management authorities, urban management authorities, and Lao Bao Special Trade-Economic Zone management board. 2. All subprojects were identified as non-revenue generating at appraisal, thus financial internal rates of return were not calculated. 1 The analysis conducted during appraisal correctly assumed that loan and grant proceeds would be passed on as grants to the participating provinces, and capital cost recovery was not required. Appraisal estimates concluded that all subprojects would generate sufficient income to fund O&M and obtain modest surpluses. B. Methodology and Assumptions 3. Following the methodology and assumptions used at appraisal, with updated tourist arrivals and projections, cash flow analysis and site management arrangements were considered to determine the financial sustainability of each subproject. Operating revenues calculated for each subproject were derived from tourist entrance fees, parking and concession fees, and other fees. 4. The estimated O&M costs at appraisal remained valid and were used at completion, with minor adjustments. Costs were updated to reflect 2017 prices using an annual inflation rate of 5%. Moreover, the annual civil works O&M costs are assumed to be 1% of the actual works costs per year, while annual equipment O&M costs are assumed to be 5% of the actual equipment costs per year. At appraisal, the percentages assumed for civil works O&M varied from 1% 2%, and for equipment O&M 5% 7%. 5. Appraisal estimates correctly assumed that some subproject management entities would share revenues with the provincial and/or central government in the form of royalties for the privilege of running the sites. In addition, some subprojects would contribute to community development funds and/or village revolving funds. The financial sustainability reassessment conservatively assumes royalty and community development fund payments, as appraised, and that all subprojects will pay these two charges. Assumed royalty fees are 15% 45% of gross revenue, while contributions to community development funds are 8% of gross revenue. For Lao PDR subprojects, an additional 5% of gross revenue is set aside for the provincial tourism promotion fund. A standard 10% value added tax is deducted from gross revenues, except for the representative pro-poor tourism subprojects and Viet Nam s East West Economic Corridor subproject. Royalty fees, contributions to community development funds, and the tourism promotion fund are first deducted from gross revenues to arrive at the net operating inflows. After determining net operating inflows, O&M costs are deducted to arrive at net operating cash flow. Provisions for an annual reserve were also assumed to fund replacement equipment. 2 1 ADB Financial Management and Analysis of Projects. Manila; and ADB Financial Due Diligence, A Methodology Note. Manila. 2 Operations and administration/fit-out equipment comprises waste bins, signage, office furniture and equipment, and specialized vehicles.

63 Table A8.1: Consolidated Projected Cash Flow, 2026 ($) Vang Vieng Pro-Poor Lao PDR North- South Economic Corridor East-West Economic Corridor Lao PDR Phong Nha Khe Bang Pro-Poor Viet Nam East-West Corridor Viet Nam Siphandone Bac Kan 1. Tourist Arrivals International 169, ,152 40, ,027 66,933 52,632 45,437 11, ,532 Domestic 87, , ,020 34,481 1,025, ,971 31, , Operating Cash Flows Receipts Tourist entrance fees/user fees/visa fees 381, , ,784 34,782 19,881 4,312, , ,259 78,766 Parking fees 16,508 37,720 4,764 58,337 5,229 Brochure sales and tour booking services ,048 Direct tour package sales 29,616 Gross Receipts 398, , ,071 93,119 25,110 4,312, , ,026 80,814 VAT 39,815 73,110-4,656 2, ,271 37,941 Royalty to government 59, ,655 18,911 13,968 3,767 1,940,410 56,911 31,854 12,122 Community development fund 31,822 58,488 10,086 7,449 2, ,962 30,353 16,978 6,465 Tourism promotion fund 19,907 36,555 6,304 4,656 1, Net operating inflows 246, ,292 90,770 62,390 15,567 1,595, , ,194 62, Payments for Operations Civil works maintenance 17,400 18,986 3,938 9,168 3,924 17,316 11,268 1,668 7,524 O&M equipment maintenance 1,188 8, ,684 1, ,820 Employee payments 31,898 35,702 15,777 16,260 16,331 71,306 10,015 10,015 4,584 Vehicle and boat operations 1, , Administrative costs 31,763 31,763 31,763 31,763 31,763 31,790 7,383 7,383 31,763 Marketing and promotion 25,461 26,609 3,749 25,271 3,224 66,503 66,503 57,557 45,097 Human resource development 5,787 5, ,627 1,031 11,559 11,559 1,781 1,395 Monitoring and evaluation 3,137 3, , ,137 3,137 2,266 1, Total payments 118, ,949 57,199 88,934 57, , ,473 80,790 94, Net operating cash flows 128, ,343 33,571 (26,544) (42,056) 1,367, ,729 72,404 (32,731) 7. Reserve Fund, O&M Equipment Replacement Operations equipment 6,144 40, ,456 27, ,400 Administration and fit-out equipment 8,400 78,192 1,628 1,440 5,280 4,800 32,160 2,400 20,400 Sub-total 14, ,637 1,628 1,440 8,736 32,352 32,160 2,400 34, Net cash flows 113, ,706 31,943 (27,984) (50,792) 1,334, ,569 70,004 (67,531) O&M = operation and maintenance, VAT = value added tax. Source: Executing agency and Asian Development Bank estimates. Appendix 8 49

64 50 Appendix 8 The annual reserve funds for operations equipment are deducted from the net operating cash flows to arrive at the net cash flow for each year. Table A8.1 shows the consolidated projected cash flow position of all subprojects in C. Financial Sustainability Assessment Results 6. The financial sustainability assessment at completion estimates that six of the nine subprojects will generate sufficient income to fund O&M each year during Not surprisingly, subprojects with the strongest financial positions are output 1 model sustainable tourism development subprojects due to the high numbers of tourist arrivals, well-defined tourist entry fee systems, and regulations that establish tariffs for urban services. 7. All economic corridors subprojects were evaluated as not financially sustainable without substantial government subsidies for O&M. This is because the facilities are mainly night markets and tourist information centers, which do not charge entrance fees. While night market vendors and retail shop operators are charged daily or monthly space rental fees, these are kept low to promote inclusive economic opportunities. For tourist visa fees collected at Lao Bao immigration checkpoint, 70% is credited to the national Treasury and 30% is retained by the Lao Bao Special Trade-Economic Zone Management Board Ministry of Finance, Socialist Republic of Viet Nam. Circular No. 157/2015/TT-BTC (2015) on collection, payment, management of fees for issuance of passports, visas, documents related to entry, exit, transit, and residence in Viet Nam. Hanoi.

65 Appendix 9 51 GENDER EQUALITY RESULTS AND ACHIEVEMENTS A. Gender Issues and Gender Action Plan Features 1. The expected impact of the Greater Mekong Subregion (GMS) Sustainable Tourism Development Project was the development of a sustainable, culturally and environmentally sound pro-poor tourism approach for the GMS that would contribute to the conservation of natural and cultural heritage. The project sought to increase tourism s contribution to poverty reduction by expanding the traditional community-based tourism approach to include tourismrelated value chain development, boost tourism development along the GMS economic corridors, and improve public and private tourism management skills. The project included nine provinces in Lao PDR and five provinces in Viet Nam. 2. The expected outcome sustainable tourism development that creates livelihood opportunities for the poor was substantially achieved, with about 72,000 people directly benefitting from the project and 288,000 benefitting indirectly. Of this total, the project s executing agencies estimate that women comprise 37,300 direct beneficiaries and about 150,000 indirect beneficiaries. 1 Expected outputs were also substantially achieved. These include: (i) model sustainable tourism development that protects the environment and cultural heritage; (ii) propoor, community-based tourism and tourism supply-chain subprojects operational; (iii) GMS tourism corridors developed; (iv) human resource capacity of public and private tourism stakeholders improved; and (v) efficient project management services. 3. At project appraisal, women in project areas had limited access to the skills training, facilities, and business services needed to access jobs in tourism-related service and production enterprises. Although women comprised over 50% of tourism workers, they were underrepresented in decision-making and few held high-level management positions, especially in the remote and underdeveloped provinces targeted by the project. 4. The project aimed to address these issues. It was categorized effective gender mainstreaming and its gender action plan (GAP) covered the Lao PDR and Viet Nam. The GAP was regularly reviewed in consultation with men and women project beneficiaries, communitybased organizations, government officials and other development partners. It reflected national policies and international commitments to promote gender equality, increase women s role as strategic decision makers, and avoid the negative social impacts that can arise from poorly managed tourism. 5. Key features of the GAP included: (i) mechanisms to promote women s participation in decision-making and increase their access to tourism-related economic opportunities; (ii) gender equality training for communities, government officials, and other stakeholders; (iii) awareness programs for communities and government officials to reduce the risk of HIV/AIDS, human trafficking, and other social risks known to be associated with tourism; and (iv) preparation of 14 provincial gender action plans specific to the tourism sector. The GAP required the involvement of women in project monitoring and evaluation and made gender-disaggregated data collection and reporting compulsory. Women were to comprise at least 40% of training participants and receive 50% of master-trainer scholarships. 1 The percentage of women beneficiaries was 50% for Lao PDR and 53% for Viet Nam. The number of women in Lao PDR who directly benefitted from the project was about 19,000 and in Viet Nam about 18,000. The number of women in Lao PDR who indirectly benefitted was about 77,000 and in Viet Nam about 73,000.

66 52 Appendix 9 B. Overall Assessment of Gender-Related Results and Achievements 6. GAP implementation is considered highly successful. All 3 numerical targets were achieved. Out of 39 activities, 33 (85%) were completed and six (15%) were partially completed. A summary of the accomplishments against GAP targets is in Table A In the Lao PDR, about 6,600 people (44% women) joined formal and informal pro-poor, community-based tourism skills training and 1,600 (41% women) participated in training to boost tourism development in economic corridors. Gender awareness seminars included government officials, business leaders, community leaders, and other key stakeholders. Gender- and ethnicsensitive information and education materials were produced in the Lao and Vietnamese languages to support the seminars. Women comprised 68% of the 498 master trainers that were trained in small-scale hospitality management and/or sustainable tourism planning and 52% of the 21 tertiary master trainer scholarship recipients. Men or women from provinces that are predominately populated by ethnic groups received over one-third of master trainer scholarships. The project provided training for male and female tour guides in collaboration with the United Nations Educational, Scientific and Cultural Organization (UNESCO) and used materials developed by World Vision to implement child-safe tourism campaigns. At project completion (2014), women comprised about 15% 50% of tour guides that were active in project areas. 8. The Lao PDR s gender-balanced project management team based in the Ministry of Information, Culture and Tourism facilitated and monitored women s involvement in project activities, including collection and reporting sex-disaggregated data each quarter. As envisaged, gender action plans were prepared and implemented in nine provinces under the supervision of counterpart gender focal points established in the central project coordination unit and provincial project implementation units. 9. In Viet Nam, training and seminars to support pro-poor, community-based tourism reached about 23,000 people (53% women). There were 572 (65% women) participants in the project s gender-sensitive tourism awareness and anti-trafficking seminars. These seminars targeted men and women living in the east west economic corridor. As envisaged, the project conducted gender-sensitive training and workshops to boost environmental awareness for about 2,500 tour operator employees and guides (59% women). There were 838 tourism officials trained in tourism planning and management (48% women) and 354 (64% women) officials trained as master trainers. All training programs, including scholarships for master-trainers, were fully financed by the project. 10. Viet Nam s gender-balanced project management team seconded from the Ministry of Culture, Sports and Tourism effectively monitored GAP implementation. Sex-disaggregated data was regularly included in quarterly progress reports. Counterpart gender focal points were established in the central project coordination unit and provincial project implementation units to support preparation and implementation of gender action plans for five provinces. C. Gender Equality Results 11. Participation in and access to project resources and practical benefits. There were equal opportunities for men and women, particularly ethnic women, to access project resources and practical benefits. Female participation rates in training activities and tourism enterprise activities generally exceeded GAP targets. Community infrastructure such as small access roads, walking paths, segregated toilets, bridges, water supply, drainage, wastewater treatment,

67 Appendix 9 53 septic tanks, public lighting, small markets, food kiosks, and tourist information centers provide much-needed safe public access and commercial opportunities for women. The facilities are suitable for their intended purposes and have helped predominately women-led micro and small enterprises expand and prosper. Although women s participation in civil works construction was less than 20% in Lao PDR and only slightly higher in Viet Nam, women in both countries benefitted from selling food to contractors. At project completion, nearly 100% of newly constructed markets and other retail facilities were being used by women to sell local produce, food, and beverages, and locally made handicrafts. 12. Strategic changes in gender relations. Women s participation in tourism planning and management workshops was over 40%. This enabled women to take a prominent role in the day-to-day management of community-based tourism and tourism supply chain ventures. In some cases, there were strategic changes in gender relations at the household level, as women s access to income has enabled them to gain more control over household resources. In one case, a female Lao vendor said that her status in the household had risen markedly because she was earning a higher income, which paid for critical household expenses. This increased the respect she received from her husband and daughters-in-law. Another older woman said that not having to ask her sons for money gave her new-found freedom. Notwithstanding, women generally remain less visible on village/commune development committees the main community-level governance bodies despite their increasing household incomes and influence. 13. Contribution of gender equality results to the project outcome and effectiveness. Gender equality results were integral to the successful project outcome of increased tourist arrivals and spending, which creates good jobs for women in project areas. Women that were previously poor now operate micro and small enterprises or are employed as wage-earners in hotels, guesthouses, and other small to medium-sized tourism enterprises. They are now typically earning from $5 to $50 per day in net income and can meet a range of family expenses. Additionally, increased numbers of tourists and increased tourist spending have created spillover opportunities for other women that are not directly involved in tourism, for example, by creating higher demand and new markets for agricultural products. While most economic benefits mainly accrue to households involved in tourism, better community infrastructure and more revenue for communal village funds has helped expand public services and access to micro-credit. 14. Knowledge dissemination. Project management teams in Lao PDR and Viet Nam effectively captured and disseminated gender-related knowledge and lessons generated by the project through periodic GAP reviews, project websites, and international meetings. For example, Lao PDR organized the Gender, Tourism and Microenterprise Development Forum to exchange lessons on (i) gender analysis using sex-disaggregated data, (ii) promoting gender equality in tourism and other sectors, and (iii) measures to foster greater gender equality such as quotas and booster groups for women. Successful entrepreneurs shared lessons and recommendations on marketing, product design, and sourcing local materials. The forum enabled interactive discussion and exchange of ideas among female and male microentrepreneurs from every province in Lao PDR. The 231 participants (57% women) included small and medium-sized enterprise owners, policy makers, and development partners. 2 Similarly, Viet Nam organized the GMS Conference on Tourism s Role in Poverty Reduction, 2 ADB financed the forum through Technical Assistance 6143-REG (ADB Promoting Gender Development and Women s Equality. Manila.

68 54 Appendix 9 where 60 policy makers exchanged lessons on good practice approaches for increasing tourism s contribution to poverty reduction and women s empowerment. 15. Sustainability. Factors that indicate positive changes and will be sustained beyond project completion are: (i) policies in Lao PDR and Viet Nam strongly support tourism growth in project areas as well as women-led enterprise development; (ii) visitor arrivals and spending is increasing in all project areas, which creates demand for goods and services that generate jobs and income for women; (iii) skills training and business support services provided by the project were relevant and effective; and (iv) small infrastructure was purpose-built to match the needs of community beneficiaries. Most infrastructure was being well-maintained at project completion. Moreover, women s leading role in the day-to-day management of community-based tourism and tourism supply chain ventures is increasing their status as productive household members/leaders and is likely to gradually boost their involvement in community decisionmaking. 16. Key lessons related to GAP implementation are as follows: (i) (ii) (iii) (iv) women and ethnic groups can be enabled to successfully operate and manage tourism enterprises with small investments; targeted support for development of enterprises that are traditionally led by women may boost women s participation rates and incomes; however this should not detract from efforts to support women s advancement to higher-level management and leadership positions; project managers should be sensitized to gender issues early in the project cycle and allocated sufficient human and financial resources to implement the GAP; and engaging expertise to provide business support services such as networking, trade shows, and familiarization tours for traders and media, can be an effective way of boosting micro-entrepreneurs confidence to access new markets. 17. Solutions to overcome challenges encountered: (i) (ii) (iii) the project organized training and meetings in local languages to facilitate the involvement of ethnic minority women; project management teams and ADB flexibly reported combined qualitative and quantitative information in an attempt to report progress towards difficult-to-monitor GAP targets/actions and reconcile anomalies between the GAP targets and design and monitoring framework targets; and appointment and empowerment of gender focal points, although delayed in some provinces, was a key factor behind successful GAP implementation. 18. Recommendations: (i) (ii) (iii) (iv) hospitality and enterprise training, and business support services should be designed to respond to both market demand and learners needs; provide support for women-only activities and booster groups to increase women s participation and confidence; practical gender mainstreaming and women s leadership training that is directly related to GAP implementation should start early and continue throughout the project cycle; GAP targets should be realistic and aligned with the project s design and monitoring framework;

69 Appendix 9 55 (v) (vi) GAP implementation arrangements and responsibilities should be clearly identified and include terms-of-reference for gender focal points in project documents; and consider including the most important GAP targets as project covenants. D. Success Stories Case 1: Training Boosts Women s Employment and Income, Quang Binh, Viet Nam Le Thi Hue is 30 years old and was formerly a farmer. She graduated from the project s 2-week photography training, earning a certificate and permission from local authorities to work as a freelance photographer at Paradise Cave in Phong Nha Khe Bang National Park. She earns about D400,000 per day during the 5-month high season and D70,000 D80,000 per day during the low season. After deducting permit fees (D10,000,000 per year) she earns about D2.5 million per month (about $110), which is a good income for a rural area. She is happy with the training and the employment opportunity she gained from the project. Case 2: English Training Helps Shopkeeper Increase Her Income, Quang Binh, Viet Nam Tran Thi Thuy is 52 years old. She sells clothes and souvenirs at her shop in Phong Nha Tourism Center. She reports that after attending the project s 1 month English language training course she earns about $50 more each month from increased sales to foreigners. She mentioned this extra income is used to pay school fees for her children. She was satisfied with the training and requested more courses. She mentioned that conducting the course during evening hours in the low season was convenient and facilitated good participation by local vendors. Case 3: Tourism Management Training for Home-stay Owners, Bac Kan, Viet Nam Gia Thi Phuong Que is 26 years old. She lives in Pac Ngoi village and has managed her family s expanding home-stay business since 2012 when she graduated from tourism college in Hanoi. Ms. Que attended the project s training courses on tour guiding, gender and tourism for youth, tinh traditional musical instrument playing, and then singing classes. She comments all courses were very practical and helped her feel more confident to explain musical instruments, and sometimes sing, for guests. Ms. Que and her peers would like to learn more English so they can better communicate with foreign tourists. They also wish to learn other tourism skills such as massage and cooking to provide more and better services.

70 56 Appendix 9 Case 4: Weaver Increases her Income and Status, Vieng Neua Village, Lao PDR Som Chit, a farmer and weaver in Vieng Neua village, Luangnamtha province, has built a reputation as an expert weaver. Apart from weaving, she was also trained in handbag design, which boosted her confidence. She intends to find new markets and expand her business, which currently earns her about $700 per year. In addition to the extra income from weaving, Som Chit has gained status and respect from her fellow villagers, and her daughters are proud of her ability to support them. Case 5: Luangnamtha Night Market, Luangnamtha, Lao PDR There are 60 vendors in Luangnamtha night market (97% women). All vendors are equally entitled to low-cost kiosks. Approximately 12% are from female-headed households. Most women sell vegetables, food, and drinks. There are seven women vendors selling handicrafts, textiles, and clothes, who earn $10 50 per night. Another woman earns between $50 70 per night from selling crepes. Three Akha ethnic women sell specialized ethnic handicrafts and jewelry, earning $7 15 net per night. Each of the Akha women supports 8 11 people in their households. Noi, a 15-year-old female vendor from a female-headed household, attends school during the day and works at the night market in the evening. Her single mother prepares the food to sell. Noi said that without the income from the night market she and her siblings would be unable to attend school. Women said the project had significantly improved their lives and that the extra income enabled them to pay for daily living expenses including food, electricity, and school fees. Case 6: Pottery Enterprise Changing Gender Division of Labor, Yor village, Lao PDR The skills and knowledge to produce pots have been passed down from father to son through generations of ethnic Tai Lu farmers. The project helped transform pot production into a fulltime successful enterprise. The project also facilitated the participation of seven women in the pottery production process through a sequence of gender-sensitive training activities. Benefits from project training, equipment, infrastructure, and marketing assistance have increased family incomes by 30% and improved women s status in their families and the community. Group members (14) mentioned pot making is easy compared to farming and suitable for women and men. The deputy director of the pottery group is a woman. Source: Ministry of Information, Culture and Tourism, Lao PDR; Ministry of Culture, Sports and Tourism, Viet Nam; and Asian Development Bank.