Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 114017-VN

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM APPRAISAL DOCUMENT

ON A

PROPOSED IDA CREDIT IN THE AMOUNT OF SDR 111.5 MILLION

(US$153 MILLION EQUIVALENT)

TO THE

SOCIALIST REPUBLIC OF VIETNAM

FOR THE

NATIONAL TARGET PROGRAMS FOR NEW RURAL DEVELOPMENT AND SUSTAINABLE POVERTY REDUCTION SUPPORT PROGRAM (NTPSP)

PROGRAM-FOR-RESULTS

June 9, 2017

Agriculture and Social Development Global Practice Groups East Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30, 2017)

Currency Unit = Vietnam Dong (VND)

US$1 = 22,743 VND

SDR 1 = US$1.37102

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ACG Anti-Corruption Guidelines BER Bid Evaluation Reports CEMA

CPF

Committee for Ethnic Minority Affairs Country Partnership Framework

CPS Country Partnership Strategy DARD Department of Agriculture and Rural

Development DLI Disbursement-linked Indicator DOF Department of Finance DOLISA Department of Labor Invalids and

Social Affairs DPI Department for Planning and

Investment ECOP EM EMWG

Environmental Codes of Practice Ethnic Minority Ethnic Minority Working Group

EPP Environmental Protection Plan ESSA Environmental and Social Systems

Assessment FA Fiduciary Systems Assessment FM Financial Management FSA Fiduciary Systems Assessment GDP Gross Domestic Product GI / GIA Government Inspectorate /

Government Inspection Authorities GOV Government of Vietnam GSO General Statistics Office IA Internal Audit ICB International Competitive Bidding IDA International Development

Association

IEC Information, Education and Communication

INTOSAI International Organization of Supreme Audit Institutions

INTVP Bank’s Institutional Integrity Vice Presidency

ISM Implementation Support Mission IT Information Technology

IVA Independent Verification Agent M&E Monitoring and Evaluation MARD Ministry of Agriculture and Rural

Development MOF Ministry of Finance MOLISA Ministry of Labor Invalids and

Social Affairs MONRE Ministry of Natural Resources and

Environment MPI Ministry of Planning and Investment MTIP Medium-term Investment Plan NCB National Competitive Bidding NCO National Coordinating Office

NPV Net Present Value NRD New Rural Development NTP National Target Program PAP Program Action Plan PforR Program for Results PPA Public Procurement Agency PPC Provincial People’s Committee SA Social Assessment SAI Supreme Audit Institution SAV State Audit of Vietnam

SBV State Bank of Vietnam SEDP Social Economic Development Plan SOE State-Owned Enterprise SORT Systematic Operations Risk Rating

Tool SPR Sustainable Poverty Reduction SSS Single Source Selection TABMIS Treasury and Budget Management

Information System US$ United States Dollar VDPF Viet Nam Development Partnership

Forum VND Vietnamese Dong

i 

Regional Vice President: Victoria Kwakwa Global Practice Senior Directors: Juergen Voegele/Ede Jorge Ijjasz-Vasquez

Country Director: Ousmane Dione Practice Managers: Nathan M. Belete (GFA02)

Susan S. Shen (GSU02) Task Team Leaders: Carolina V. Figueroa Geron (GFA02)

Roxanne Hakim (GSU02) Son Thanh Vo (GFA02)

ii 

SOCIALIST REPUBLIC OF VIETNAM

National Target Programs for New Rural Development and Sustainable Poverty Reduction Support Program (NTPSP)

Table of Contents

I. STRATEGIC CONTEXT .................................................................................................... 1 A. Country Context ............................................................................................................................................... 1 B. Sector and Institutional Context ..................................................................................................................... 3 C. Relationship to the Country Partnership Strategy (CPS) and Rationale for Use of Program for Results

Financing ......................................................................................................................................................... 5 D. Rationale for choice of Lending Instrument. ..................................................................................................... 7 

II. PROGRAM DESCRIPTION ............................................................................................... 7 A. Government Program ....................................................................................................................................... 7 B. Government Program Expenditure Analysis .................................................................................................. 8 C. Areas for Overall Government Program Improvement ................................................................................ 10 D. Program Development Objective and Key Results ........................................................................................ 12 E. PforR Program Scope .................................................................................................................................... 12 F. Key Result Areas ............................................................................................................................................ 16 G. Disbursement Linked Indicators (DLIs) and Verification Protocols ........................................................... 18 H. Verification Protocols ................................................................................................................................... 19 I. Capacity Building and Institutional Strengthening, and Role of Donors .................................................... 20 

III. PROGRAM IMPLEMENTATION ................................................................................... 21 A. Institutional and Implementation Arrangements .......................................................................................... 21 B. Results Monitoring and Evaluation ............................................................................................................... 21 C. Disbursement Arrangements ......................................................................................................................... 22 

IV. ASSESSMENT SUMMARY ............................................................................................ 23 A. Technical (including program economic evaluation) ................................................................................... 23 B. Fiduciary ........................................................................................................................................................ 26 C. Environmental and Social Effects ................................................................................................................. 29 D. Integrated Risk Assessment ........................................................................................................................... 35 E. Program Action Plan ..................................................................................................................................... 37 

Annex 1: Detailed Program Description ....................................................................................... 38 

Annex 2: Results Framework........................................................................................................ 47 

Annex 3: Table 1: Disbursement-linked Indicators, Disbursement Arrangements and Verification Protocols ....................................................................................................................................... 50 

Annex 4: (Summary) Technical Assessment ................................................................................ 62 

Annex 5: (Summary) Fiduciary Systems Assessment .................................................................. 74 

Annex 6: (Summary) Environmental and Social Systems Assessment ........................................ 81 

Annex 7: Systematic Operations Risk Rating (SORT) ................................................................. 91 

Annex 8: Program Action Plan ..................................................................................................... 92 

Annex 9: Implementation Support Plan ........................................................................................ 93 

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PAD DATA SHEET

Vietnam

National Target Programs for New Rural Development and Sustainable Poverty Reduction Support Program (NTPSP)

PROGRAM APPRAISAL DOCUMENT

East Asia and Pacific Region

Agriculture and Social Development Global Practices

.

Basic Information

Date: June 9, 2017 Sectors: Agriculture and Social, Urban, Rural and Resilience

Country Director: Ousmane Dione Themes:

Rural Development; Social Development

Practice Managers/Senior Global Practice Directors:

Nathan Belete/Susan Shen/Juergen Voegele/ Ede Jorge Ijjasz-Vasquez

Program ID: P159737

Team Leader(s): Carolina Figueroa-Geron Roxanne Hakim Son Thanh Vo

Program Implementation Period: 4 years Start Date: November 2017

End Date: June 30, 2021

Expected Financing Effectiveness Date: November 2017

Expected Financing Closing Date: December 31, 2021 .

Program Financing Data

[ ] Loan [ ] Grant [ ] Other

[X] Credit

For Loans/Credits/Others (US$M):

Total Program Cost: US$1,833.1 M

Total Bank Financing:

US$153.00 M equivalent

Total Co-financing: 0

Financing Gap: 0

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Financing Source Amount

BORROWER/RECIPIENT US$1,680.1 M

IDA

US$153.0 M

Total US$1,833.1 M .

Borrower: Socialist Republic of Vietnam

Responsible Agency: Ministry of Agriculture and Rural Development (MARD) in collaboration with Committee for Ethnic Minority Affairs (CEMA)

Contact: Nguyen Minh Tien Title: Director General

Telephone No.: +84 438 434678 Email: ngmtien@gmail.com .

Expected Disbursements (in US$ Million equivalent)

Fiscal Year 2018 2019 2020 2021 2022

Annual 25.0 44 46.5 13 24.5

Cumulative 25.0 69 115.5 128.5 153 .

Program Development Objective(s)

To improve the delivery of, and access to, investments for increasing agricultural production and enhancing livelihood opportunities within the Program area

Compliance

Policy

Does the program depart from the CAS in content or in other significant respects?

Yes [ ] No [X]

Does the program require any waivers of Bank policies applicable to Program-for-Results operations?

Yes [ ] No [X]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [X]

Does the program meet the Regional criteria for readiness for implementation?

Yes [X] No [ ]

Overall Risk Rating: High

 

Effectiveness Condition: The Recipient, through MARD and CEMA, has duly adopted the Enhanced Operations Manual. (Financing Agreement: Article IV, Section 5.01)

v 

Legal Covenants

Name Recurrent Due Date Frequency

Obligation of the Recipient (a) to carry out the Program in accordance with the institutional and administrative arrangements for National Target Program for New Rural Development and the National Target Program for Sustainable Poverty Reduction Support Program-P135, specifically (i) through MARD and CEMA, to carry out the Program under the overall guidance and oversight of the Central Program Steering Committee, (ii) cause the respective National Coordinating Offices to be responsible for Program management coordination activities, and (iii) through each Participating Province, to be responsible for Program implementation within their respective jurisdiction; and (b) shall not amend or waive any of such arrangements if such amendment or waiver may materially and adversely affect the Program’s implementation or the achievement of the objectives unless the

Association agrees otherwise in writing.  (Financing Agreement:

Schedule 2, Section I.C.1).

X

Obligation of the Recipient (a) to undertake the actions set forth in the Program Action Plan; (b) carry out the Program in accordance with the Enhanced Operations Manual; (c) not amend, waive or abrogate any provisions of the PAP or the Enhanced Operations Manual unless the Association agrees otherwise in writing; (d) maintain policies and procedures adequate to enable it to monitor and evaluate, in a manner acceptable to the Association, the implementation of the PAP and the Enhanced Operations Manual. (Financing Agreement: Schedule 2, Section I.C.2).

X

Obligation of the Recipient, through the State Audit of Vietnam, to undertake or cause to be undertaken at least once annually, a verification process, for the fulfillment of the DLRs in accordance with terms of reference acceptable to the Association; and furnish to the Association, by no later than six (6) months after the end of the respective Year, corresponding verification reports, in form and

substance acceptable to the Association. (Financing Agreement: Schedule 2, Section III.A.2).

Six months after

the end of the year

Annually

Obligation of the Recipient to undertake or cause to be undertaken a survey, in accordance with terms of reference acceptable to the Association, for the purpose of measuring the baseline impact of the Program; and by no later than August 31, 2018, furnish to the Association a report, in form and substance acceptable to the Association, containing the corresponding results. (Financing Agreement: Schedule 2, Section III.A.3).

August 31, 2018

Obligation of the Recipient to The Recipient shall: (a) carry out jointly with the Association, by no later than June 1, 2019 (or such

March 1, 2019 (midterm report

submission)

vi 

other date the Association has confirmed in writing), a midterm review to assess the overall progress in implementation of the Program; (b) prepare and furnish to the Association, at least three (3) months prior to such review, a report, in scope and detail acceptable to the Association, needed to undertake the review, and (c) review, jointly with the Association, the verification reports and thereafter take all measures required to ensure the efficient completion of the Program and the achievement of the objectives thereof, based on the conclusions and recommendations of said

report and the Association’s views on the matter (Financing

Agreement: Schedule 2, Section III.

June 1, 2019

(midterm review mission)

Team Composition

Bank Staff

Name Title Specialization Unit

Carolina V. Figueroa-Geron Lead Rural Development Specialist Task Team Leader GFA02

Son Thanh Vo Senior Rural Development Specialist Co-Task Team Leader GFA02

Roxanne Hakim Senior Social Development Specialist Co-Task Team Leader GSU02

Harideep Singh Lead Operations Officer Adviser GFAGE

Imad Saleh Operation Advisor Adviser OPSPQ

Ingo Wiederhofer Lead Social Development Specialist Adviser GSU02

Sean Bradley Lead Social Development Specialist Peer Reviewer GSUGL

Parmesh Shah Lead Rural Development Specialist Peer Reviewer GFA06

Timothy D. Robertson Senior Agriculture Specialist Peer Reviewer GFA07

Andrea Liverani Program Leader Peer Reviewer MNC01

Hanif Anilmohamed Rahemtulla Senior Operations Officer Monitoring and Evaluation and MIS

EACPF

Aristeidis I. Panou Counsel Legal LEGES

Thu Ha Le Associate Counsel Legal LEGES

Chau-Ching Shen Senior Finance Officer Disbursement WFALN

Cung Van Pham Senior Financial Management Specialist Financial Management GGO20

John Nyaga Senior Financial Management Specialist Financial Management GGO20

Phuong Anh Nguyen Analyst Governance GGO14

Obert Pimhidzai Senior Economist Economics GPV02

Nghi Quy Nguyen Senior Social Development Specialist Social Development GSU02

Anjali Acharya Senior Environment Specialist Environment GEN02

Hoang Xuan Nguyen Senior Procurement Specialist Procurement GGO08

Hoa Thi Phuong Kieu Program Assistant Administration and Client Services

EACVF

Non-Bank Staff

Name Title City

vii 

David Webber Consultant – Adviser OPSPQ, WB, Washington DC

Douglas Forno Consultant – Institutions Specialist Cairns, Australia

Ly Thi Dieu Vu Consultant – Environment Safeguards Hanoi, Vietnam

Hoang Tung Consultant – Infrastructure Hanoi, Vietnam

Van Anh Nguyen Consultant – Livelihood Hanoi, Vietnam

Trang Thu Do Consultant – Social Development Hanoi, Vietnam

Hoang Xuan Thanh Consultant – Planning Hanoi, Vietnam

1 

VIETNAM

National Target Programs for New Rural Development and Sustainable Poverty Reduction Support Program (NTPSP)

I. STRATEGIC CONTEXT

A. Country Context

1. For the last decade, Vietnam has experienced relatively strong economic growth, with GDP growing at an annual average of around 6.3 percent leading to Vietnam’s graduation into a middle-income country. High growth has been accompanied by rapid urbanization, a rising middle class together with improved access to social and economic benefits and services. Nevertheless, about 67 percent of the population still live in rural areas where living standards are persistently lower. Average incomes in rural areas were about two thirds of average income in urban areas in 2014 for example. In the past, government investments in infrastructure and social services were instrumental in making growth inclusive, but Vietnam now faces shrinking financing options because of growing fiscal pressures and insufficient domestic private sector participation. Furthermore, the institutions of governance that were adequate to elevate the country to its lower-middle-income level status are now experiencing gaps that need attention, especially as pressures emerge from economic integration, urbanization, an aging population, pockets of extreme poverty and aspirations of a rising middle class.

2. Poverty rates have dropped remarkably over the past two decades. The overall poverty headcount based on the national poverty line computed by the GSO and World Bank (GSO-World Bank estimates) dropped from 58 percent in the early 1990s to an estimated rate of 14 percent by 2008. A revised series of poverty rates beginning in 2010 shows that poverty continued to decline, from 20.7 percent in 2010 to 13.5 percent in 2014. Poverty in rural areas declined from 27 percent in 2010 to 18.6 percent in 2014, but it is still nearly five times higher than in urban areas (3.8 percent). More than 90 percent of the poor and 84 percent of the bottom 40 percent reside in rural areas. Poverty is also concentrated in the Midland and Northern Mountain provinces which account for 36 percent of the poor.

3. Poverty is increasingly concentrated in mountainous ethnic minority communities. Vietnam has 54 recognized ethnic groups of which one group, the Kinh, are an overwhelming majority of the population (86 percent). The other 53 Ethnic Minorities (EMs) represent 14 percent of Vietnam’s population. Yet EMs accounted for 64 percent of the poor in 2014, with a poverty rate of 57.8 percent compared to 6.3 percent among the Kinh, who are the ethnic majority (GSO-WB estimates). The welfare of EMs has significantly improved over time, but the gap in the incidence of poverty between ethnic minorities and the rest of the population has actually widened. It is now 19 percentage points higher than in 1993, signaling that a disproportionate share of benefits of growth flowed to the ethnic majority. There is substantial variation among ethnic groups. Poverty rates range from 38 percent for groups in the Mekong Delta, to 93 percent for groups like the Hmong in the northern mountains (VN 2035). It is highest for the smallest six groups living in more isolated areas. The ethnic groups living in the mountains of the North and Central Provinces (Hmong, Muong, Dao etc.) tend to be more physically isolated, are less integrated linguistically and economically, have a poorer resource and asset base and are less organized internally. Apart from income and asset poverty, disparities between ethnic minorities and the Kinh ethnic majority are mirrored in other socio-economic indicators. About 26 percent of EM peoples do not have access to clean water and 72 percent lack sanitation. Without targeted interventions, disparities would widen further and ethnic minorities could constitute 80 percent of Vietnam’s poor by 2020 (World Bank 2016).

4. The concentration of poverty in Vietnam in rural areas, among ethnic minorities and midland and mountainous areas partly reflect low access to economic opportunities due to low economic integration. This is manifested in low migration rates among ethnic minorities and the high dependence on farm incomes. On-farm incomes constitute 60 percent of household income of the poor but only 26 percent of income for the non-poor and constitute 65 percent of ethnic minorities’ income

2 

compared to 24 percent of income of Kinh and Hoa households. Ethnic minorities derive a smaller share of income from non-agriculture enterprises, which contributed just 4 percent of their incomes on average in 2014, compared to 18 percent for the Kinh and Hoa. Despite the greater reliance of the poor on agriculture incomes, they still earn less from agriculture than most non-poor households. Average per capita income from agriculture of the bottom quintile is 25 percent less than the national average and 34 percent less that the third and fourth quintiles for example. The concentration of poverty in remote regions, rural areas and ethnic minorities is thus a reflection of not only poor local economic development that limits small enterprise creation and alternative employment opportunities in lagging areas, but also low agriculture productivity among the poor.

5. Ethnic minorities face additional linguistic and social barriers that limit their opportunities for engaging in the wider economy or fully benefiting from Government programs. Vietnam has a policy of assimilation of ethnic minorities which may have some benefits of national solidarity, but also results in these groups benefitting less from Government programs due to language barriers and social stigma which prevents them from fully participating in local governance decisions or being protected and knowledgeable of the law. EMs thus have low voice and representation. Even in communes where EMs are a majority, the bulk of commune officials, police and technical officers such as extension workers still come from the Kinh ethnic group. Ethnic groups in the highlands tend to be worse-off compared to those in the Mekong Delta like the Khmer who have recognized languages, are more literate, are physically and economically more integrated into the mainstream economy of their provinces, more urbanized and are recognized as part of a larger community that spreads across the national border, into Cambodia and China. Migration among ethnic minorities is low, with only 3.8 percent living outside their province of origin compared to 12.3 percent of the Kinh and Hoa. Those that move, tend to go to nearby provinces and within the same regions, meaning ethnic minorities tend to live and move around regions where opportunities are limited. Given the importance of networks and education in migration, a combination of language barriers, social stigma and poor educational attainment have limited the economic integration of ethnic minorities. There have also been issues around land titles and rights especially with ethnic minorities who are dependent on forest produce, that further threaten their livelihoods.

6. Vietnam has achieved impressive gains in many dimensions of gender equality, but the situation for ethnic minority women remains a development challenge. The EM women overall have lower literacy1 and less working knowledge of Vietnamese language. The burden of low access to water, health services and roads as well as poor child nutrition, falls disproportionately on them as they are primarily responsible for collecting water and taking care of family health. Their active participation in prioritization of social-economic infrastructure and livelihoods options is central to improving their well-being.

7. There are emerging concerns about the quality and sustainability of Vietnam’s growth model, especially in agriculture. Despite rapid improvements since the 1990s, labor productivity in agriculture has remained extremely low relative to comparator countries. An issue has been the policy to maintain the dominance of rice in the use of the best agricultural land and much of the country’s irrigation capacity. Low smallholder profitability, considerable underemployment among agricultural workers, uncertain food safety, low value addition, price-discounted commodities in international markets, and limited technological or institutional innovation are other concerns. Agricultural growth has also come at the expense of the environment, especially in the Mekong Delta which suffers from increasing soil salinity due to water quality issues, poor irrigation practices and excessive chemical use that is also impacting on food quality and the health of the population.

8. Environmental degradation coupled with vulnerability to the impact of extreme weather events and global climate change are major threats to the short, medium and long-term sustainability of the country’s development. In the Mekong Delta, environmental disasters have large

                                                            1 One study states that where 20 percent of Kinh women indicated that they had less than elementary school education, the number ranges between 41.9 percent and 75 percent among the EM women. (Briefing Note on the Situation of Ethnic Minority Women and Girls in Vietnam, CEMA, UN Women, 2015).

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impacts on the resource base that has led to the need for alternative livelihoods for both Kinh and ethnic minorities in the area. Meanwhile, the impacts of more regular extreme weather events, increasing soil and irrigation water salinity, loss of vegetative cover and erosion are particularly severe. Vietnam is exposed to 8-9 typhoons per year. Their coastal and deltas are vulnerable to flooding after typhoons as well as heavy monsoon. Areas with mountainous and hilly terrain, like the northern regions and cities, experience flashfloods and mudslides, especially during typhoons. High year-to-year variation in rainfall has resulted in some areas and regions to experience drought during dry seasons. This is especially true in 9 provinces in the Mekong region where drought has affected up to 17 percent of the population (1.3 million). Climate-related risks are expected to further increase due to climate change. The country is projected to be subjected to more heat stress as its mean temperature and the incidence of hot days are expected to further increase. Higher variability and risks in extreme precipitation as well as higher wind speeds are also projected, thereby increasing exposure and risk of typhoons and flooding in coastal and deltaic areas as well as flashfloods and mudslides in mountainous and hilly areas. Future sea level rise would also expose coastal areas to more storm surges. Nevertheless, these challenges, especially for rural areas, are well understood by the Government, as reflected in the recent Vietnam 2035 report jointly prepared with the World Bank Group.2 The government is committed to support not only initiatives towards climate resilient agriculture or environment-friendly agriculture and/or livelihoods but to also adapt rural infrastructure quality specifications to address climate variability issues.

B. Sector and Institutional Context

9. Government’s key strategy to address development challenges in the rural sector, and among ethnic minorities, has been through the sixteen (16) National Targeted Programs (NTPs) that were implemented over the period 2011-2015. These 16 NTPs were focused on specific sectors and were implemented through different ministries such as health, education, water, transport, agriculture and rural development. Coordination and efficiency has been a challenge as the sixteen NTPs could finance overlapping activities and were implemented in the same communes. Hence at the commune, district and provincial level, there were multiple and competing requirements and processes that led to inefficiencies in resource use and implementation, and poor monitoring. To address these issues, the government consolidated the 16 NTPs into two NTPs for the next implementation period to run from 2016-2020. This was achieved through a National Assembly Resolution No. 100 issued on November 12, 2015 created two overarching programs, the NTP for New Rural Development (NTP-NRD) implemented under the Ministry of Agriculture and Rural Development (MARD) and the Sustainable Poverty Reduction Program (NTP-SPR) implemented under the Ministry of Labor, Invalids and Social Affairs (MOLISA), with the Committee for Ethnic Minority Affairs (CEMA) managing the SPR-P135, as a project under the NTP-SPR.

10. The National Target Programs for New Rural Development and Sustainable Poverty Reduction (NTP-NRD and SPR) are central to Government’s strategy for raising rural incomes and productivity, while reducing the significant socio-economic disparities between rural and urban areas. In a further effort to build synergies between these two programs, a common Steering Committee has been established. This is aimed at ensuring that there is an over-arching common framework and guidelines for these programs which overlap both in activities and geographical areas.

11. The New Rural Development Program (NTP-NRD) is designed to upgrade services and infrastructure for rural communities across all 63 Provinces of Vietnam. It encompasses eleven (11) activity groups linked with nineteen (19) economic and social criteria relating to poverty, education, health, transport, water supply, irrigation, livelihoods, agricultural production, markets, culture, energy, environmental issues, communication and security. During the first phase of the NTP program (2011-2015), funding and implementation by many communes was directed primarily to achieve infrastructure targets set for communes, districts, and provinces covering roads, schools, health centers, and water

                                                            2 Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy. Overview Report. World Bank and the Ministry of Planning and

Investment of Vietnam. February 2016.

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supplies. Investments to raise incomes, productivity and value addition received less attention. Achievement of these predetermined 19 NTP economic and social criteria qualifies communes, districts and provinces for recognition as having attained “National Rural Development (NRD) status”, a largely symbolic recognition, but highly desirable as a political target for Provincial leaders and also to potentially attract additional funding from other government sources. There have been some gains during the first phase of the NTP-NRD particularly in terms of infrastructure and enhanced local level planning, especially where donor-supported projects were implemented. However, there has been little institutionalization of improved processes and approaches, and limited sustainability after completion of such projects. This has been compounded by inadequate budget provision for operation and maintenance (O&M), especially at the commune level.

12. The next phase of the NTP-NRD (2016-2020), has four ambitious objectives. These are: (a) 50 percent of communes to meet NRD standards (achieve 15 of the 19 preset criteria), and each province, and each city under Central Authority should have at least one district meeting NRD standards (i.e., meeting all 19 criteria); (b) Communes, on average, to meet 15 out of 19 NRD criteria, and no commune to achieve less than 5 criteria; (c) Basic production and quality of life requirements to be achieved for rural citizens in areas such as transportation, power supply and domestic water, schools, and health stations; and (d) income levels to increase by at least 1.8 times compared with 2015. The NRD is implemented through MARD with the budget being assigned directly to the provinces. Hence, investment choices and expenditure allocation decisions are made by the relevant departments at the provincial, district and commune level, with minimal input from the central office. The design of the program requires a significant share of contribution (about two-thirds of the program cost) by the provinces with a third being met by central funds. This has strained provincial budgets, which in the past has resulted in funds being diverted from other programs, and in some poorer provinces, in escalated debt levels with local contractors pre-financing infrastructure deliverables.

13. The Sustainable Poverty Reduction Program (NTP-SPR) supports infrastructure, livelihoods, basic services and capacity building for the country’s 94 poorest districts and 310 communes in coastal areas through five sub-programs. Program-135 (SPR-P135), is one of its five sub-programs, referred to as projects, which supports 2240 poorest communes and 33,7233 poorest villages in ethnic minority and mountainous areas. The persistence of poverty among ethnic minorities, whose rates barely changed between 2012 and 2014 (based on GSO-WB estimates), would suggest that the program had a limited impact. While there have been many policies and programs specifically designed to assist people living in remote and disadvantaged areas, there has been a lack of coherence in such policies and in implementation mechanisms. Planning and investment prioritization needs to be strengthened to take account of ethnic and cultural diversity, as well as indigenous circumstances and local needs of the people. Even when provided with assistance, the risks for these vulnerable groups of falling back into poverty are high, due to such factors as non-sustainability of livelihood activities, impacts of climate change, natural disasters and epidemics.

14. The next phase of the NTP-SPR (2016-2020) also has four ambitious objectives for its area of operation. These are: (a) lowering the poverty rate by an average of 1.5 percent per year; (b) improving the livelihoods and quality of life for the poor by increasing per capita income of poor households by 1.5 times from 2015 to 2020; (c) implementing poverty reduction mechanisms and policies in a consistent and effective manner to improve the living conditions and enhance access to basic social services for the poor; and (d) investing in the infrastructure of poor districts, communes and villages with special difficulties following NTP- NRD criteria. The NTP-SPR falls under the overall purview of MOLISA, with CEMA playing a strong role as it has relatively independent management of Program 135 (SPR-P135) which has

                                                            3 These are based on earlier documents. GoV has just issued a new set of criteria for SPR-P135 communes and villages to be effective on December 20, 2016 (Decision QD50/2016/QD-TTg, dated November 3, 2016 on Issuance of criteria for identifying extremely disadvantaged villages and communes in Ethnic Minority and Mountainous Areas 2016-2020. The new list of SPR-P135 communes is expected to be available at the end of March 2017.

 

5 

the highest budget of the five sub-programs referred to as projects4. Like the NRD, while the Central level has a function in program design and M&E, all investment decisions and expenditure allocations are made directly at the provincial level, with some devolution to the districts and communes.

15. There has been good donor coordination in supporting and contributing to the design, consultation and preparation of the two NTPs. Development partners worked closely with MARD, MOLISA and CEMA through the joint Ethnic Minority Poverty Working Group (EMWG) (donors and civil society) and Vietnam Development Partnership Forum (VDPF) to influence and initiate positive reforms and changes in these two NTPs. The donors that have been primarily supporting SPR-P135 include Irish Aid, UNDP, OXFAM, CARE, SDC, and EMWG (NGO representative unit that works with donors on ethnic minority policy). The NRD has primarily been supported by South Korea as it is modelled on the similar Korean rural development program. IFAD and FAO have also provided support to the production activities of NRD and will continue to engage in the current phase of the program.

16. The government has requested the World Bank’s assistance specifically to strengthen the efficiency and impact of both the NTP-NRD and SPR-P135 for the period 2016-2020. It would therefore build upon the lessons and experience acquired through interventions from a range of multilateral, bilateral and civil society partners, as above. The challenge is that while there are similarities between the NTP-NRD and NTP-SPR in that they both finance infrastructure, production and livelihood activities and some capacity building, there are significant differences in target groups, implementation mechanisms, reporting requirements and institutional responsibilities. The government has recognized the need for harmonization and coordination of the two programs particularly on the ground and has already taken preliminary initiatives by establishing a common Steering Committee and appealing for donor support to assist with harmonization of the two programs, especially at the local levels.

17. Over the last 15 years, the World Bank’s comparative advantage comes from its direct involvement in the lending operations and knowledge activities that contributed to the NTPs. This include Development Policy Lending Operations (DPOs) for the SPR-P135 second phase during 2006-2011 with complementary support from eight (8) development partners which came up with a matrix of policy reform areas of poverty targeting, participation and decentralization, fiduciary transparency and accountability, and monitoring and evaluation. At the same time, the Bank has been financing two community-driven development (CDD) investment operations in the two poorest regions of Vietnam in the Northwest (2010 – 2018) and the Central Highlands (2014 – 2019). The Bank’s contributions, through the EMWG and VDPF, to the two NTPs has been informed by lessons learned from these two CDD operations coupled with results from the previous DPOs.

C. Relationship to the Country Partnership Strategy (CPS) and Rationale for Use of Program for Results Financing

18. The objectives of the NTPs are well aligned with the World Bank’s twin goals. The two NTPs have poverty reduction of the poorest areas as a primary objective. This is a clearly stated objective in the NTP-SPR, especially with its focus on the poorest EM communes in the SPR-P135 program. The NRD has been given a new directive to focus on the poorest communes in this current phase of the program. The SPR-P135 focuses on improving infrastructure, livelihoods and capacity in the poorest mountainous ethnic minorities which constitute an overwhelming majority of the extreme poor, and the NRD focuses on making poorer communes meet the targets of infrastructure and livelihoods. The World Bank’s twin goals of reducing extreme poverty and increasing shared prosperity are well-aligned with the stated objectives and focus of these two programs.

19. Given the size of the NTPs, the activities would make a significant contribution to furthering some key Sustainable Development Goals of the UN. The programs aim to improve infrastructure,

                                                            4 The NTP-SPR consists of 5 projects, including: (i) Program 30A; (ii) P135; (iii) Production support, livelihood diversification and scaling up of poverty reduction models in non-P30A and non-P135 communes; (iv) Communications and information poverty reduction.

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services and livelihoods for the poorest groups and regions of the country. The activities supported by these national programs will contribute specifically to: (a) SGD1: No Poverty; (b) SDG2: Zero Hunger; (c) SDG8: Decent Work and Economic Growth; (d) SDG9: Infrastructure Development; and (e) SDG10: Reduced Inequalities.

20. The World Bank Group Country Partnership Framework for Vietnam (FY2017-2022) is fully aligned with the Government of Vietnam’s 2010-2020 Socio-Economic Development Plan (SEDP). The NTPs are viewed as a central vehicle to the implementation of the SEDP. The CPF identifies that there is inequality in access to basic services, especially for ethnic minority groups. It further highlights the significant economic and social gap for ethnic minority women as compared to majority women. This is consistent with the SCD where there was a strong recommendation to expand the inclusion of ethnic minorities. Over this CPF period, the WB will support Vietnam to solidify its development achievements and transition to a more sustainable growth model. One of the recognized shifts in focus for this CPF period is to support ‘Integrated, differentiated, and targeted approaches to support ethnic minority poverty reduction’. The NTPs directly deliver on this priority area of the CPF.

21. The NTPs support two objectives falling under the two focus areas of the CPF.  The CPF has three focus areas and 19 objectives. The focus areas are: (a) enabling inclusive growth and private sector participation; (b) investing in people and knowledge; and (c) ensuring environmental sustainability and resilience, with governance as a cross-cutting engagement area. Specifically, the NTPs support two objectives which fall in focus areas (a) and (b).

22. Focus Area 1: Enable Inclusive Growth and Private Sector Participation and Objective 7: Broaden economic participation of ethnic minorities and vulnerable groups: Whereas in the first phase of the NTPs, investment in infrastructure was the primary focus, for the period 2016-2020, and in accordance with PM Decision No. 1600/QD-TTg, more emphasis will be given to raising agricultural productivity and value addition, through on- and non-farm activities. In particular, there would be support for rural enterprise development and through the introduction of Value Chain Analyses to prioritized investments. The TA to the NTPs supported through the Australia-Bank Strategic Partnership (VN-ABP2) will also support value chain investments that have ethnic minority women and youth as primary beneficiaries. The operation will also cover and enable improved decentralized planning with the NTP investment decisions being integrated into a strengthened commune SEDP that is developed through consultation with beneficiary groups.

23. Focus Area 2: Invest in People and Knowledge and Objective 13: Strengthen capacity to address emerging challenges to gender equality: The SPR-P135 has introduced a component for capacity building of commune officials and ethnic minority leaders in this phase of the NTPs. The design of this PforR operation has placed a strong emphasis on capacity building. A capacity building needs assessment has been done to identify the areas which need to be strengthened to deliver the activities covered under this Operation. The program design has also emphasized maximum overlap with donor programs which support community-based organizations (CBOs) and NGOs who have ongoing capacity building programs in the targeted Program provinces. Specifically, there will be an emphasis on women in the area of consultation for SEDP planning and NTP investment decisions, as well as in the livelihood activities, as beneficiaries of value chain investments.

In addition, there will also be some overlap with Focus Area 3: Ensure Environmental Sustainability and Resilience: The Operation through the adoption of an enhanced operations manual would seek to instill a more streamlined and standardized approach to infrastructure development using technologies and specifications addressing climate risks, and through a focus on incorporating climate resilience in livelihood sub-projects to raise rural incomes, especially for the poorest and most vulnerable, through diversified investments in productivity and value addition from on- and non-farm activities. The environmental screening and management system will also ensure promotion of sustainable practices with regard to infrastructure and sustainable investment and livelihood choices.

24. Additionally, the proposed operation will cover the Cross-Cutting Themes of the CPF strategy of Strengthening Governance. In terms of Strengthening Governance, the operation would

7 

cover more transparent financial management through the tracking of expenditures using the government TABMIS system, and piloting the use of geo-tagging as part of the M&E system to enhance accountability.

D. Rationale for choice of Lending Instrument.

25. The rationale for using the PforR instrument includes the fact that while the Government already has several NTP programs under implementation for several years, which are substantial (over US$7 billion annually over a five-year period) and wide ranging, it is an accepted observation that there have been serious deficiencies in the programs which have historically inhibited the achievement of the NTP objectives. In view of this, there lies a tremendous opportunity for the Bank to leverage its funding to support Vietnam’s NTPs by introducing elements of efficiency and effectiveness through technical improvements, improving government systems related to fiduciary, governance and safeguards aspects, strengthening monitoring and evaluation of the performance of NTPs, among others. The PforR instrument has been chosen due to its comparative advantage in incentivizing institutional change. Also, given the mixed evidence as to the impact of the programs (particularly for the NTP-SPR), the choice of PforR instrument is relevant to meet the need to increase the results orientation of the programs. An IPF instrument would not have been possible given the range of activities, the geographical coverage, and the substantial funding required, while a DPF would have been more policy-oriented and would not have allowed the nature of in-depth capacity building that a PforR does, including phasing of disbursements over a 4-year period linked to several critical achievements. The PforR instrument then maximizes the leverage of Bank financing to best help and support Vietnam’s main vehicle for rural development and poverty reduction efforts through the two NTPs.

26. These technical considerations offer an opportunity to leverage Bank financing through the PforR instrument to provide incentives to Government to achieve results and to support strengthening institutional capacities for NTP oversight at the national level and more effective implementation at the local levels. As such, a PforR instrument would provide support to the overall budget for the two NTPs, while strengthening program, implementation, management and oversight within existing Government procedures and systems.

II. PROGRAM DESCRIPTION

A. Government program

27. The government objectives for the two NTPs are as follows: (a) For NTP-NRD: “To introduce New Rural Development to enhance the spiritual and material life of people; to acquire relevant social and economic infrastructure, to achieve appropriate economic structure and production organizational arrangements, to link agriculture with the industry and service sectors; to link rural development with urbanization; to achieve democracy, equality, stability, rich cultural and national identify in rural society; to protect the ecological environment; and to maintain national defense and security, social order and safety.”; and (b) For NTP-SPR: “To achieve sustainable poverty reduction and to restrain the resurgence of poverty, in contribution to the achievement of economic growth, social security, improved living conditions and income generation for people, especially in poor areas; to facilitate the poor and poor households to access basic social services (health, education, housing, clean and hygienic water, and information), in contribution to the achievement of household poverty reduction targets in period 2016 - 2020 as set out in the National Assembly Resolution”.

28. The NTP-NRD consists of 11 main activities (components) implemented in 8,921 communes spanning across all 63 provinces of Vietnam. These activities cover various socio-economic, cultural, political and national security focus areas as follows: (a) new rural development master planning; (b) social-economic infrastructure development; (c) production development and rural economic structural transformation; (d) social security; (e) development of education in rural areas; (f) development of grassroots health facilities; (g) improving cultural life; (h) improving rural hygiene and environment; (i) improving quality and roles of political organizations; (j) robust national defense and security, social order

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and safety in rural areas; and (k) enhancing capacity for NRD implementation and M&E. Each of these umbrella activities has several sub-activities (summarized in Table 1).

29. The NTP-SPR consists of 5 sub-programs. These are: (a) Project 1, also called Program 30a, focused on 64 poor and 23 near-poor districts and coastal areas with specific sub-components in district infrastructure, coastal infrastructure, production development and labor export; (b) Project 2, also called P135, led by CEMA focused on 2,240 poorest EM communes and 33,273 villages; (c) Project 3, led by MARD on Production Development focused on Model Replication; (d) Project 4, also called Information and Communication for Sustainable Poverty Reduction, led by Ministry of Information and Communication; and (e) Project 5 on Capacity Building and M&E, led by MOLISA. The P135 sub-program of the NTP-SPR which is the focus in this proposed Operation consists of three main activities (components or subprojects), namely: (a) support for infrastructure investments; (b) support for production development and livelihood diversification; and (c) strengthening the capacity for community and grassroots-level officers.

30. The decision to consolidate the earlier 16 NTPs into two umbrella programs was premised on a strong need for coordination at the local levels where different programs overlapped. The two reconfigured NTPs continue to overlap: NRD is being implemented in all communes and SPR-P135 in selected communes. Hence, all SPR communes also implement NRD activities. In its previous phase, the NRD focused more on the better-off provinces that were closer to meeting the 19 criteria. However, in its current phase, the NTP-NRD focuses on cohorts of communes that have achieved less than 5 out of 19 NRD criteria. These are by default the poorest communes in Viet Nam and inevitably overlap with the SPR (and especially P135) communes. Both NTPs finance rural infrastructure as well as production and livelihood support, and the P135 has a special provision for capacity building. On the ground, implementation, operations and maintenance at the commune level would be handled by a single commune management board for both NTPs. This has been put in place through harmonized procedures for planning, investment decision making, procurement and monitoring. Thus the two NTPs are (i) supporting same planning process, (ii) overlapping in geographical areas, (iii) supporting of same types of activities, (iv) using the same institutional implementation arrangements, and (v) overlapping of their target groups.

B. Government Program Expenditure Analysis

31. The estimated funding envelope for the NTP over five years (2016–2020) is US$35.3 billion for NRD and US$0.91 billion for SPR-P135, totaling US$36.2 billion of which US$9.4 billion is expected to come from direct central and state budget allocations.

32. The requirement of state direct budget allocation for the NTPs had increased substantially, with the NTP-NRD 2016-20 allocation doubling the expenditure for the 2011-15 period. The significant change for both NTP-NRD and SPR-P135 (2016-20) is the specification of the minimum contribution from the State budget for these programs, which signals greater commitment of government resources. The government has developed a formula for determining counterpart financing for the NTP-NRD which provinces are required to reflect and adhere to the approved annual plans.

33. The State budget allocation formula for the NTPs is also transparent and pro-poor, which provides a clear guide of the overall financing envelope for the NTP 2011-2015 and increases direct state budget investments. The allocation formula factors in the gap that Communes within Provinces to meet the NRD criteria, the poverty rate and the share of ethnic minorities in the province, awarding a greater share of central government allocation to provinces with relatively more disadvantaged communes, and with a higher share of ethnic minorities. When added to the integrated financing from the NTP-SPR, the allocation mechanism channels more resources to poorer provinces than before. In this respect, the transfers are pro-poor. However, while provinces for which central transfers account for a greater share of the Provincial budget have minimal counterpart funding requirements (e.g. none, for provinces receiving at least 70 percent of the revenues in central budget transfers), the new allocation formula has resulted in an increase in the State budget contribution for the NTPs.

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Table 1: NTP-NRD and SPR-P135 Overall Program Costs and Financing

Source NRD (VND

billion)

SPR-P135 (VND

billion)

Total (VND

billion)

Total (US$ million)

% of Total

State direct budget 193,156.0 19,892.0 213,048.0 9,352.4 25.8 Central Government 63,156.0 19,226.0 82,382.0 3,616.4 10.0 Subnational budgets 130,000.0 666.0 130,666.0 5,736.0 15.8

Others financing sources* 611,659.0 760.0 612,419.0 26,884.1 74.2 Credit 362,167.0 0.0 362,167.0 15,898.5 43.9 Private sector 120,722.0 0.0 120,722.0 5,299.5 14.6 Community 80,482.0 80,482.0 3,533.0 9.7 Other programs 48,289.0 48,289.0 2,119.8 5.8

Total program Financing 804,815.0 20,652.0 825,467.0 36,236.5 100.0

Of which: capital expenditure 742,356.0 14,474.0 756,830.0 33,223.4 91.7 operational expenditure 62,459.0 5,418.0 67,877.0 2,979.7 8.2 discretionary 0.0 760.0 760.0 33.4 0.1

Notes: Estimates drawn from nominal allocations for direct state budget contribution and contribution shares from other sources in Decision 1600/QD-TTg for NTP-NRD 2016-20 and nominal allocations for NTP-SPR-P135 in Decision 1722/QD-TTg.

34. Despite a clear formula and defined 5 -year budget envelope, predictability of annual flow of funds is a challenge. The financing for the NTPs on a year-on-year basis is still subject to availability of resources in each fiscal year, resulting in an uneven yearly flow of resources that could undermine the achievement of results. This can be observed with the budget allocation for the NTP 2016-20 already. In the year 2016 for example, the central government only disbursed VND 3.3 trillion for the NTP-NRD 2016-20, equivalent to 5.1 percent of the 5-year allocation of the program. It is thus possible that a greater share of resources of the program could come in later years as was the case with the previous NTPs, or underperform against the original plans. If not addressed, challenges in the timely release of funds may lead to poor budget execution, putting the achievement of results at risk. Two main factors contribute to the large variance of budget and outturn. First, Vietnam currently faces tight fiscal constraints, putting the Government under high pressure to consolidate expenditures, resulting in an insufficient capital budget to fund the NTPs or delayed releases of funds. In 2016, central budget transfers were done towards middle of the year and at different times. Secondly, delays in fiscal transfers from the central budget to provincial are common, which further delays transfers from provinces to District and Commune levels, and subsequently delays in implementation of activities under NTPs.

35. Achievement of results in soft areas are also at risk in the absence of activity specific budget earmarks for the NRD. In the NTP-SPR-P135, there is a specific allocation for training and capacity building of government staff working on the NTP. The Decision 1600 concerning the NTP-NRD also states that the State budget will support all communes in the implementation of master planning, training and capacity building for local communities and New Rural Development officers. However, like other activities in the NTP-NRD, no predefined allocation was made for the capacity building and monitoring evaluation activity (component) of the program. Experience from the implementation of the NTP-NRD 2011-2015 shows that investments were heavily skewed towards infrastructure investments. With a similar set of infrastructure-focused criteria for the 2016-2020, expenditures most at risk pertain to training and capacity building and monitoring and evaluation. This could affect the quality of implementation of the Program. It is important to ensure that adequate resources are made available to for capacity building and training of officers training in-order to enhance the implementation of the NTPs. This issue was seen across all investment projects, not only projects in the NTPs. The Bank is providing support to the MOF to develop the medium-term budget framework that takes into account the full cycle of projects, including O&M cost.

36. Results in the previous NTPs were achieved with increased financing from the state budget, credit, and public contributions but with a bias towards investment in communes with the greatest

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likelihood of meeting the criteria for attaining New Rural Development status. Direct investments from the state budget constituted 31 percent of the NTP-NRD investments in communes that eventually attained New Rural Development status, compared to the national average of 12 percent. An internal report for MARD concluded that Provinces contributing more of the State budget to the NTP-NRD strategically diverted resources to communes with the highest possibility for satisfying the criteria for attaining New Rural Development status. This implies a systematic bias against the poorest communes that needed to meet many criteria to meet the NRD status. This adverse selection in targeting resources should be adequately addressed to achieve the overarching goals of increasing income and reducing poverty. The NTP 2016-2020, now sets a minimum of 5 criteria that each commune should target, which should re-align investments to poor communes. However, this may still get compromised as long as the primary focus for Provinces remains on getting a predetermined number of communes (50 percent of communes by 2020, with varying regional targets5) meeting the threshold of between 14 and 18 criteria to attain the new NRD status.

37. Despite the upfront commitment of resources by the government, it is evident that achievement of results will depend on mobilization of non-government sources at the local level. Unlike the SPR-P135, a significant share of resources for the NTP-NRD is planned to come from borrowing from banks at the local level along with community contributions. A large number of provinces and communes are deep into debt and arrears are an additional concern. Aside from bank credit, communes that attained NRD status during 2011-2015 tended to run into arrears amounting to 41 percent of construction costs, double the average rate of arrears for all communes within the program. The chase for attainment of NRD status could thus lead communes into a financially unsustainable investment path.

C. Areas for Overall Government Program Improvement

38. Two studies carried out to assess the efficiency and effectiveness of the implementation of the NTPs have identified common areas for program improvement. The NTP-NRD was reviewed through a joint World Bank- International Fund for Agricultural Development (IFAD) study. A second study focused on the design aspects of Phase 4 of SPR-P135 financed through the Programmatic AAA on Land and Social Development on Vietnam. The following issues were identified: (a) top-down pressure on achievement of NTP targets rather than focus on locally planned priorities and needs; (b) predominance of resources going to infrastructure compared with the allocation for productive on- and off-farm investments; (c) inadequate provision or planning for O&M; (d) limited capacity and disconnect between planning and incorporation of technical considerations in the formulation of investment plans and budgets; (e) multiple and often unfunded plans coupled with uncertainties in actual budget availability; (f) complex reporting requirements with emphasis on outputs rather than outcomes; and (g) lack of an effective M&E. Some of these lessons have already informed the design of the SPR-P135, such as: (a) inclusion of civil society and private sector as potential service providers to deliver livelihood training and capacity support; (b) inclusion of a new component on capacity building aimed at commune officials and ethnic minority communities and leaders; (c) expansion of livelihood investments to include off-farm activities; (d) reflection of successful donor approaches into the design of SPR-P135; and (e) using the Socio-Economic Development Plan (SEDP) as the basis for SPR-P135 investment decisions.  

39. Actions to enhance the impact of the next phase of the NTP-NRD and SPR (2016-2020) include strengthening coordination and implementation capacity while enhancing the quality and relevance of investments. Institutional mechanisms through which these programs are implemented at the local level need to be integrated into the overall planning for the province, district and commune levels. The primary focus on achievement of infrastructure targets during the first phase of the NTPs also deflected attention from issues of quality of those investments, their impact on livelihoods and the need for greater product intensification and value addition. Thus scaling up and improving the quality of

                                                            

5 Regional targets for the share of communes attaining New Rural Development Status by 2020 are Northern Mountainous region - 28%, River Delta Region – 80%, Northern Central Region – 59%, Southern Central Coastal Region – 60%, Central Highlands – 43%, Southeast Region – 80%, Mekong River Delta Region-51%

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infrastructure investments linked to rural livelihoods and production will be essential to deliver a more sustainable approach to rural livelihoods and a more diversified production options.

40. Improving access to, and quality of investments and services that support the transformation of agriculture will be critical for improving rural incomes, which is a key objective of both NTPs. Increasing agriculture productivity is necessary and will depend upon increased efficiency and innovation. Change is also needed in the structural patterns of production and supply-chain organization. These are highly fragmented, with limited collective action at farmer level and weak vertical linkages. This has contributed to unnecessary transaction costs, unrealized economies of scale in certain functions, and poor incentives to produce and maintain higher-quality produce and raw materials. Similarly, change is warranted in the “state management” model—that is, in the technical and regulatory services provided by the state, in public investments and expenditures in the sector, and in the policies applied to foster farmer and agribusiness investment. Implementation capacity will need to be strengthened. Historically, NTP programs have been more successful in meeting the infrastructure targets where operational procedures are better established and project staff have better competencies and technical capacity (e.g., engineers).

41. Remoteness, low local economic development and resulting limited livelihood options are a major development challenge in areas such as the Northern Mountains and Central Highlands, where ethnic minorities are concentrated. The small, household producers that dominate these areas are not well connected in terms of transport or value chains. Programs targeting disadvantaged groups face challenges in having effective consultation between communities and local government, and the somewhat standardized and top-down approach to program design that has characterized many past efforts. Where good models have been implemented (as with a number of donor and civil society projects), the impact of such programs have been short-lived and dependent on donor funding. The lessons and approaches as applied under the on-going Bank-funded operations to support the poorest provinces in Northern Mountains and Central Highlands (the Second Northern Mountains Poverty Reduction Project and the Central Highlands Poverty Reduction Project) are consolidating and scaling up the good practices on community-based poverty reduction and rural development through improvement of productive infrastructure and livelihoods support. These lessons have been considered in the design process of the NTPs and will continue to inform the development of the enhanced operations manual for the NTPs. Nevertheless, it requires stronger and systematic efforts for adequate scaling up and/or institutionalization to deliver transformational impacts.

42. The success of the NTPs in increasing rural livelihoods, also hinges on diversification of livelihood options beyond on-farm production, by investing in off farm and non-farm livelihood choices. Although household level agricultural production in Vietnam has received support, it is recognized that for the small producers in the highlands, transformational impact can be realized only when these households are integrated into the wider economy through improved infrastructures, services, secure land rights, and production value chains. However, there is also an acceptance that the limited land and forest resources, as well as the natural topography of the areas constrains the incremental benefit that can be gained from investment in agriculture alone. For a sustainable rural development, there is a clear need for investment in off-farm and non-farm production systems too, not just at the household level, but with a broader investment strategy that links households to the wider economy. Specifically, for the ethnic minority pockets of poverty, income-generating opportunities linked to medicinal plants, tourism, food processing, and handicrafts (weaving, woodwork and ceramics) have great potential. It is imperative that the NTPs recognize this potential and extend support to these activities.

43. Initiatives to reduce gender gap through NTP investments is required. Women, especially in ethnic minority communities, are more disadvantaged, despite the central role they play in sustaining rural livelihoods. Their responsibilities are largely limited to subsistence goods and sales that fulfil consumptive needs. Where livelihood activities begin to expand and EM households go into cash and commercial crops, it is largely the men that take over the marketing and management. Since it is often Kinh men that serve as the middle level intermediaries for buying the household level produce, ethnic minority women again face stronger barriers due to language and social discomfort with dealing with Kinh men – which is one reason for their limited participation in value chain development beyond the production of raw goods

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at the household level. Furthermore, the terms upon which small-scale women farmers are able to access new economic opportunities and tap into high value products are not well understood6. The value chain analysis which will become the basis of investment decisions will examine where men and women within the value chain of production to marketing play key roles, and how better opportunities and types of investments can be better designed to assist, especially women in general, as well as among ethnic minority women, who have cultural and linguistic difficulties dealing with Kinh middle men/women. D. Program Development Objective and Key Results

44. The Program Development Objective is to improve the delivery of, and access to, investments for increasing agricultural production and enhancing livelihood opportunities within the Program area.

45. The PDO is derived from the larger government program objective and addresses two very specific sub-objectives. First, it focuses on increasing investment in the agriculture sector and generating livelihood opportunities. In the case of NRD, it specifically embraces the following parts of the NRD overall objective: economic infrastructure and production organizational arrangements to link agriculture with industry; and in the case of SPR-P135, it specifically espouses the following parts of the SPR overall objective: achieving sustainable poverty reduction and income generation for ethnic minority communities. Second, drawing from the assessment of the program, it focuses on improving a range of program delivery aspects that have constrained the impact of the two NTPs in realizing higher agricultural productivity and access to sustainable livelihoods opportunities. These relate to governance, processes, planning, implementation, and M&E of the NTP-NRD and NTP-SPR-P135. Implicit in these objectives is the need to also improve the climate resilience and sustainability in the investments and livelihood opportunities to be enhanced by the NTPs.

46. The “delivery” attribute of the PDO relates to the planning, governance, implementation, and monitoring aspects of the program, and therefore reflects the process improvements that are sought to be achieved through the PforR operation. The “access” attribute of the PDO relates to the extent to which investments deliver concrete benefits to targeted households. The four Key Results Areas discussed in Section F therefore clearly focus on: (a) Improved Program Planning and Governance; (b)Improved Quality of Program Investments; (c) Increased Access to Program Investments; and (d) Improved Program Monitoring and Management. Annex 2 brings out the linkages between the PforR results areas, intermediate results, and their contribution to the PDO.

47. The PDO indicators are as follows: (a) Number of targeted participating provinces with an NTP-SEDP integrated planning process; (b) Share of Households with additional diversified income sources; and (c) Share of ethnic minorities and women satisfied with access to and quality of community assets

or services from increasing agricultural production and livelihoods.

E. PforR Program Scope

48. The PforR operation would be implemented in 18 targeted Program provinces covering both NRD and SPR-P135 communes, with the view to developing and consolidating the institutional reforms and new ways of doing business. These could then be subsequently “rolled-out” to other provinces under the NTP-NRD and NTP-SPR as experience is gained. The selection of targeted Program provinces was based on the following technical criteria: (a) poverty rate; (b) share of ethnic minorities in a province; (c) number of SPR-P135 communes; and (d) vulnerability and magnitude of losses and damages from environmental and natural, including climate-related risks and disasters. Additional criteria considered to identify the targeted Program provinces include: (a) presence of complementary World Bank and other donors providing technical assistance and related investments; (b) representation of the four prioritized regions for poverty reduction (i.e., Northern Mountains, Central Coastal, Central Highlands and Southwestern); and (c) capacity, commitment and interest of provinces to participate in the operation.

                                                            6 Towards Gender Equality in Viet Nam, Making Inclusive Growth Work for Women, UN Women 2016.

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Given the synergies, complementarities, and links existing between the two NTPs as discussed above, there is strong rationale to allow them to be subsumed under a single PforR operation.

49. The PforR operation will cover only those activities of the NTP-NRD and NTP-SPR-P135 that focus on improving rural livelihoods, capacity building, and planning and implementation capacity of the NTPs, with an added emphasis on coverage of ethnic minorities. Thus, the Program will cover four of the 11 components (main activities) of the NTP-NRD, and all three components of the NRD-SPR-P135. The four components of the NTP-NRD are those that focus on: (a) planning; (b) socio-economic infrastructure development; (c) investments to support production development, enhance livelihood opportunities, promote diversification and rural economic structure transformation; and (d) capacity building and monitoring and evaluation. These areas support the achievement of specific and measurable results associated with 8 of the 19 NTP-NRD criteria7 associated with investments designed to raise incomes and value added productivity through on and off-farm activities (i.e. NTP-NRD Criteria No: 1: Planning and Implementation; 2: Transport; 3: Irrigation; 7: Rural Infrastructure for trading and commerce; 10: Income; 11: Poor Households; 12: Rural Labor; and 13: Production Organization). These four NTP-NRD components are also aligned with the components of the SPR-P135. The PforR also aims to promote initiatives towards climate resilient infrastructure (including for rural roads), climate-smart agriculture cropping (for mitigation benefits especially for rice crop-related technologies), climate-resilient cropping options (as adaptive measures), and environment-friendly livelihood practices. The climate resilience and climate mitigation and adaptation measures are part of the livelihood subprojects under NRD subcomponent 3 and SPR-P135 subcomponent 2 below. One of the criteria for the inclusion of provinces is the degree of vulnerability – which builds into the program the need for climate resilience.

50. More specifically, there will be an emphasis in the operation to institutionalize the use of the value chain analysis as a tool for planning and investment in livelihood activities. The said analysis could be used to identify, more concretely the investment and public service gaps being faced, especially by women and EM women, from production to marketing. The operation will also support the strong emphasis of the 2 NTPs on improving participation in planning and decision making, especially for ethnic minorities, and more so for EM women. Communes often do not have adequate resources to have multiple village level meetings. Further, linguistic barriers for EMs, and the additional disadvantage of EM women who are often uncomfortable speaking out in front of commune officials, especially Kinh men. In some provinces, where donor programs have financed and supported more decentralized approaches, there is enhanced participation with villagers but the implementation is very varied across the country and often limited to the specific donor program rather than integrated into one harmonized commune planning process. Hence, the NTP program enhanced operations manuals put a strong emphasis on harmonizing NTP planning into the socio-economic development planning (SEDP) participatory planning with an emphasis on integration of the perspectives of women as well as ethnic minority men and women into the selection of investments

Table 2. Overview of the PforR Operation

Selected Activities from the Government Program Attribute NRD SPR-P135

PforR DO: align with parts of the Overall Government program DO

Supporting socio-economic infrastructure and production organizational arrangements to link agriculture with industry

Achieving sustainable poverty reduction and income generation for EM communities

PforR: Covers the following Components of the Overall Government program

1. New Rural Development Master Planning

Since the planning process is proposed to be harmonized, NRD Component 1 funding would be used for integrated planning of both NTPs

2. Socio-economic infrastructure investments in agriculture productivity enhancing and resilient infrastructure

1. Support for infrastructure investments in enhancing agriculture productivity and resilient infrastructure (commune and

                                                            7 Prime Minister Decision 1980/QD-TTg, dated 17 October, 2016, on the issuance of the national criteria set for new rural communes 2016-2020

14 

(commune and village roads, infield irrigation canals, markets and trade infrastructure, etc.).

village roads, infield irrigation canals, markets and trade infrastructure, etc.) in extremely disadvantaged communes, borderland communes, commune safety zones, and/or extremely disadvantaged villages.

3. Production development aligned with agricultural restructuring, rural economic structural transformation and income increasing for people through value chain integration, extension services, and training of rural workers, agriculture production reforms.

2. Support for production development and livelihood diversification and replication of povertry reduction models to extremely disadvantaged and vulnerable communes, borderland communes, communes in past revolutionary safety havens, and/or extremely disadvantaged villages.

11. Enhance capacity for New Rural Development implementation, program monitoring and evaluation, communication on New Rural Development

3. Strengthen capacity for community and grassroots-level officers in extremely disadvantaged and vulnerable communes, borderland communes, communes in past revolutionary safety havens; and/or extremely disadvantaged villages.

PforR Geographic scope

18 targeted Program Provinces: Cao Bằng, Hà Giang, Lào Cai, Bắc Kạn, Điện Biên, Lai Châu, Hà Tĩnh, Quảng Bình, Quảng Trị, Thừa Thiên Huế, Quảng Ngãi, Ninh Thuận, Bình Thuận, Bình Định, Kon Tum, Đắk Lắk, Sóc Trăng, Trà Vinh.

157 Districts 157 Districts

2236 Communes 1044 Communes Implementation period 2017-2021 2017-2021 IDA Share US$153 million equivalent out of the total PforR Program cost of US$1,833.1 million

51. The PforR operation will only cover those social-economic infrastructure investments (within components 2 and 1 of the NTP-NRD and NTP-SPR-P135 respectively) that are linked to sustainable and climate resilient rural livelihoods and production. These are most essential to deliver a more sustainable approach to rural livelihoods and more diversified and climate-resilient production options for on-farm and off-farm income generating opportunities. These are the main areas that support the PDO of the operation, consistent with the government’s goal of increasing income and reducing poverty and vulnerability in the 5- year period of the implementation of the Program. Typical investments would include small scale infrastructure for enhancing agricultural productivity and value added such as: village- level farm-to-market-roads, small bridges (fixed and suspension), foot paths and pathways, small-scale gravity, pump and drip irrigation, shallow wells, small water impounding, village-level, small-scale fish landings, village-level small jetties, postharvest facilities (drying floors, small storage sheds, market facilities), plant nurseries, seed production facilities, tree planting, composting/organic fertilizer production, livestock breeding and distribution facilities, milking facilities, small-scale commodity processing equipment for village –level processing, etc. For rural livelihood activities, this would cover on- and off-farm activities related to crop production, egg/chicken production, pig fattening, milk production, aquaculture, coffee, coconut and vegetable oil processing, rubber processing, broom and basket making, weaving, handicraft production, fruit and nut packaging and preservation, village level juice processing, product hauling and consolidation, marketing, and small scale processing of agricultural products. Annex 1 in Table1 provides a full list of specific activities within the boundaries of this operation (Decree 1600/QD-TTg for NTP-NRD and Decree 1722/QD-TTg for NTP-SPR). The financial management system has the capability of capturing separately the expenditure on each of these 11 activities.

52. The PforR operation will also cover capacity building activities of the two NTPs (within components 11 and 3 of the NTP-NRD and NTP-SPR-P135 respectively) given the need to operate in a more harmonized, decentralized and an increasingly participatory manner. The PforR operation will harness the activities in these components to build capacity in communities, government staff, private sub-project contractors, and other stakeholders in the targeted Program provinces with regard to: (a) implementation of an enhanced operations manual on infrastructure, livelihoods and planning; (b)

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harmonized monitoring and reporting and its implementation through focus on training and skill improvement of commune and district staff and the collection and analysis of gender-disaggregated data; (c) setting up mechanisms to draw on appropriate technical skills, especially as linked to training for livelihood options; and (d) cross learning and building on successful pilots from donor-financed programs.

53. The PforR operation will cover the planning and M&E activities of the two NTPs (within components 1 and 11 of the NTP-NRD and component 3 of NTP-SPR-P135) in order to strengthen their governance, improve efficiency and enhance the focus on credible measurement of results. Activities would include: (a) integration of NTPs’ infrastructure investment decisions in integrated SEDP plans (as against stand-alone decisions made independently for NRD and SPR); and (b) harmonized and enhanced procedures at the commune level in terms of technical standards and specifications, implementation and procurement procedures, O&M procedures, financing and reporting on targets and achievements.

54. The share of the overall Government program expenditure proposed to be covered by the PforR operation is expected at US$1,833.1 million. Table 3 shows the breakdown between the two NTPs and the shares of the various funding sources. The proposed IDA Credit of US$153 million would contribute about 8.3 percent of this total amount, through the contribution to the State budget allocation for the activities within the boundaries of the Program. The State government, will contribute to 28.1 percent of the financing from the NTPs, with the Central Government contributing 12.9 percent, including Bank financing and provincial sources another 15.2 percent. The central budget allocation for the NTPs are made by the MPI, MARD (for NRD), CEMA (SPR-P135) and MOLISA (SPR), the provincial Peoples Committees have discretion to make spending decisions and implement the activities within their jurisdiction.

Table 3: PforR Expenditure and Financing

Source NRD SPR-P135 Total Total

% of Total (VND billion)

(VND billion)

(VND billion) (US$ million)

State direct budget (including IDA allocation)

9,455.0 2,287.0 11,742.0 515.5 28.1

Central Government 3,091.0 2,287.0 5,378.0 236.1 12.9 Local Government 6,363.0 0.0 6,363.0 279.3 15.2

Others 29,927.0 90.4 30,017.4 1,317.7 71.9 Credit 17,720.0 0.0 17,720.0 777.9 42.4 Private sector 5,907.0 0.0 5,907.0 259.3 14.1 Community 3,938.0 0.0 3,938.0 172.9 9.4 Other programs 2,363.0 0.0 2,363.0 103.7 5.7

Total Program Financing 39,382.0 2,377.0 41,759.0 1,833.1 100.0 Of which: capital expenditure 37,686.0 1,664.0 39,350.0 1,727.4 94.2

operational expenditure 1,696.0 623.0 2,319.0 101.8 5.6 discretionary 0.0 90.4 90.4 4.0 0.2

Notes: Estimated based on the provincial allocations and plans for NTP-NRD 2016-20 and central budget allocation formula for NTP-SPR-P135. The provincial allocations are adjusted for the scope of activities in the program by applying the historical share (16 percent) of expenditures on activities within the scope of the Program based on TABMIS data for 2011-2015. Operational and capital expenditures are calculated using the ratios in Decision 1722/QD-TTg for SPR-P135 and the central budget allocation for NTP-NRD 2016-20, plus the permitted allocations for O&M (6 percent of the capital budget, assuming that bank credit, private sector and community contributions are part of the capital budget) and operating expenses for communes and provincial committees (up to 1 percent) in Decision 1600/QD-TTg.

55. Other sources, including credit, make up 72 percent of the budget and make about the majority of financing for the NTPs at the program level. Credit constitutes the largest share, being 42.4 percent of total expenditures. However, with no requirements for counterpart financing, the Central budget contribution is much larger in the poorest provinces (see Annex 4, Table 2), and the government have taken this into consideration in setting expected results to be achieved in the poorest targets given their low initial conditions. Overall, the contribution of credit financing is in line with revenue composition from the implementation of the NTPs in previous years.

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F. Key Result Areas

56. Through the focus on results, the World Bank’s financial and technical contribution would be to help catalyze the uptake of institutional changes and scale up innovations in “ways of doing business” (see Annex 1, Figure 1). This would build on interventions piloted under donor programs, some of which supported the earlier phase of the two NTPs, leading to improved implementation and resource efficiency, along with greater impact on poverty reduction, increased capacity at local levels and value-added productivity in agriculture and in rural livelihoods.

57. The focus of the investments and activities to be covered under this PforR fall into four (4) Result Areas of the PforR which address the key implementation and impact constraints of the first phase NTP-NRD and NTP-SPR-P135. The focus is on improving program processes, mechanisms and procedures on planning, implementation, monitoring and evaluation and governance of the overall NTP-NRD and SPR-P135 programs. An equally important focus is emphasis on sustainable and climate resilient agricultural production and livelihoods investments. The Result Areas discussed below are closely aligned with the proposed PDO which focuses both on “improved delivery” of the program and “increased access” to rural income enhancing investments. The four Results Areas are as follows (more details are in Table 4: Results Chain):

(a) Improved Program Planning and Governance (delivery attribute of the PDO). This would be supported through activities encompassing reforms of the NTP policy and implementation guidelines, enhanced oversight and accountability through the development of a much-needed Management Information System, and through institutional reforms at the provincial level that would integrate the planning processes of the two NTPs with Provincial, District and commune planning processes. A key outcome would be the re-orientation from central planning towards participatory decision-making and accountability at local levels and increased opportunities for synergies and leveraging resources.

(b) Improved Quality of Program Investments (delivery attribute of the PDO). This would be addressed through harmonization of NTP-NRD and SPR-P135 designs, specifications, and implementation arrangements/ approaches for climate-resilient small-scale infrastructure subprojects. A key outcome would be infrastructure projects meeting the technical standards and requirements needed to ensure sustainability and adequate support to productive activities. This would also streamline/simplify procedures and provide specific guidance to communes on ways in which they could ensure quality income generating activities, especially for women and ethnic minority women.

(c) Increased Access to Program Investments (access attribute of the PDO). Through the increased focus of communes and districts on productivity-raising activities, promoting the adoption of climate-resilient technologies, coupled with the introduction of value chain analyses to provide the technical underpinning for such investments, the Program would contribute to enhancing the impact of the NTPs in raising rural incomes and access to services, among women and men in the poorest (SPR-P135) areas of the country where ethnic minorities are concentrated. While socio-economic infrastructure will continue to receive support, there would be some re-balancing of investments from the infrastructure-dominated approach followed under the first phase of the NTPs to a deliberately increased focus on income and livelihood support to households, especially for women and ethnic minority women.

(d) Improved Program Monitoring and Management (delivery attribute of the PDO). Activities would address a major shortcoming in the effective management of the NTPs resulting from lack of any significant baseline and impact studies to guide policy and program direction and gauge access of the poor, women and ethnic minorities to the NTPs. This lack of credible data meant that the true magnitude of impact of the previous NTPs on poverty and welfare is largely unknown, an issue this operation seeks to address. Strengthening program monitoring will also ensure availability of information and data to monitor the results indicators of this operation and the government’s overall program.

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Table 4: Results Chain - Linkages between Activities, DLIs, Intermediate Results and Outcomes

 

RESULTS AREA 1. Improved Program Planning and Governance Revised NTP Policy and Guidelines for NRD and SPR-P135 Strengthen coordination between the NTP-NRD and SPR-P135 including the harmonization of planning and implementation procedures, including technical standards and reporting requirements of the two NTPs. Link multiple commune plans with provincial SEDP process. Establish the consultative and participatory planning processes that are to be followed in developing the NTP plan component for the provincial SEDP.

Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135

(DLI1)

 

Adoption of enhanced planning guidelines for NRD and SPR-

P135.

Establishment of Single NTP Steering Committee operating

at National, Provincial and District levels established

Number of participating

provinces with an NTP-SEDP integrated planning process

(DLI2)

Integrated and efficient SEDPs at the District and Provincial level incorporating the commune level, socio-economic infrastructure and productive/livelihoods investment plans and leveraging other investments

RESULTS AREA 2. Improved Quality of Program Investments Standardize Specifications and Procedures for Small Scale Infrastructure Enhance livelihood support implementation guidelines using value chain analysis Training of NRD and SPR-P135 implementing Officers

Issuance of an enhanced operations manual for socio-economic infrastructure for both the NTP-NRD and SPR-P135 Issuance of enhanced operations manual for standardized procedures and requirements for scaling up livelihood and enterprise support for both the NTP-NRD and SPR-P135 informed by value-chain analysis.

Number of officers at the provincial-, district-,

commune- and village-level trained in the use of the

enhanced operations manual (DLI 7)

Percentage of Infrastructure

Investment Sub-projects implemented in compliance

with the Enhanced Operations Manual (DLI3)

Percentage of livelihood support subprojects

implemented in compliance with the enhanced operations

manual (DLI 5) Increase in socio-economic infrastructure supported by O&M (separately for NRD and SRP-P135) Local level implementation and monitoring capacity strengthened

Enhanced quality of climate-resilient infrastructure investments Increased relevance of livelihood support activities which are adopting climate-resilient technologies

RESULT AREA 3. Increased Access to Program Investments Implementation of livelihoods and small-scale enterprise subprojects supporting on-off and non-farm productive activities to raise rural incomes informed by value chain analysis Implementation of small scale infrastructure subprojects supporting agriculture productivity (e.g., farm-to-market roads, small scale irrigation facilities, rural

Increased spending linked to value-chain based livelihood investments (separately for NRD and SRP-P135).

 

Percentage points increase in the share of households with additional diversified income sources (DLI 6)

Percentage points increase

in the share of ethnic minorities and women

satisfied with access and quality of community assets or services for increasing

agricultural production and livelihoods (DLI 4)

Activities/Actions OutputsIntermediate Outcomes

Outcomes

 

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markets and trade facilities, etc.) and value-adding

RESULTS AREA 4. Improved Program Monitoring and Management Development of M&E framework for NTP-NRD and SPR-P135 and

Roll-out of an MIS for NRD with a feedback mechanism.

Number of M&E frameworks developed for NRD and SPR-

P135 (DLI 8.1)

Number of participating provinces with an

operational NRD MIS web-based platform including semi-annual reports with

physical outputs and financial information from

the TABMIS (DLI 8.2)

Feedback received and addressed (separately for NRD and SPR-P135 Communes).

Number of publicly accessible websites publishing semi-annual

reports on physical progress and financial information on

NRD and SPR-P135 (DLI 8.3)

Improved monitoring and evaluation through regular and up-to-date reporting of gender-disaggregated data from province to national level

Rigorous measurement ofprogram Outcomes and Impact

Baseline and end line

tracking survey for NRD and SPR-P135

(DLI 9)

Measurement reporting of results and program impact of the NTP programs

G. Disbursement Linked Indicators (DLIs) and Verification Protocols

58. The following criteria were used in the identification of the DLIs: (a) close linkage with the key Result Areas agreed for the Program; (b) realism and verifiability of results within the time-frame of the Program; (c) scalability of DLIs, allowing for disbursement against achievement of graduated results; and (d) cost-efficiency for verification given that several indicators are process-linked indicators, and outcome indicators detailed data collection would be required only in the first year (to set the baseline) and for the last year of the program operation (to assess Program results). The DLIs are outlined below in Table 5, with details presented in Annex 3 (Tables 1, 2, and 3). Disbursements against DLIs are weighted in accordance with the complexity of work involved and their contribution to the NTPs to realize their development objectives.

59. Sequencing and complementarities have also been factored in the selection of the DLIs to support the achievement of the PDOs. DLI 1 supports the foundation of the reforms underpinning the Program and is rightly so, a prior agreed action. Two DLIs (DL1 4 and DLI6) focus on the direct achievement of the outcomes – of increasing access and satisfaction to agriculture productivity enhancing infrastructure and services and livelihood diversification. Another two DLIs pertain to the intermediate results necessary to achieve these outcomes, namely implementation quality of infrastructure projects (DL1 3) and livelihood support projects relevant to the communities (DL1 5), by implementing these activities in compliance with an enhanced operations manual that specify high technical standards8 for infrastructure investments and use of value chain analysis in selection of livelihood support activities. However, capacity building is critical for the adoption of the enhanced operations manual and improved implementation of the Program and monitoring of DLIs at the outcome level (DLI 4 and DLI 6) requires a credible baseline and end line data from household surveys. Both these areas have been weak points of the NTPs due to low recurrent budget allocation and use of subjective or self-reported outcome data by commune officials to monitor program results. Thus, a DLI on training of official (DLI 7) has been included to reinforce incentives for provision of financing for capacity building and DLIs on strengthening the M&E framework (DLI 8) and implementation of a baseline and end line survey (DLI 9) have been included to ensure availability of this information and enhance the results focus of the operation. The

                                                            

8 Includes climate-resiliency standards

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foundation of the Program, incorporating inputs from technical assistance from Donors and the World Bank, is in the issuance of the Decrees that harmonized the previous 16 NTPs into two, and the integration of the NTPs in the SEDP planning process using a bottom up approach. This forms the rationale for inclusion of the first two DLIs.

Table 5. Disbursement Linked Indicators (DLIs)

Disbursement linked Indicator (DLI)

DLI (US$ million equivalent)

IDA (in SDR million)

DLI scalability (Yes/No)

DLI#1 - Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135 20 14.58 No

DLI#2 – Number of Participating Provinces with an NTP-SEDP integrated planning process 15 10.94 Yes

DLI#3 – Percentage of Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

30 21.85 Yes

DLI# 4 – Percentage points increase in the share of ethnic minorities and women satisfied with access and quality of community assets or services for increasing agricultural production and livelihoods

10 7.30 Yes

DLI#5 – Percentage of Livelihood Support Sub-projects implemented in compliance with the Enhanced Operations Manual

30 21.85 Yes

DLI#6 – Percentage points increase in the share of households with additional diversified income sources 10 7.30 Yes

DLI#7 – Number of officers at the provincial-, district-, commune- and village-level trained in the use of the Enhanced Operations Manual

10 7.30 Yes

DLI#8.1 – Number of monitoring and evaluation frameworks developed for NRD and SPR-P135 5 3.64 Yes

DLI#8.2 – Number of Participating Provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

9 6.55 Yes

DLI#8.3 – Number of publicly accessible websites publishing semi-annual reports on physical progress and financial information on NRD and SPR-P135

5 3.64 Yes

DLI#9 - Baseline and end-line tracking survey for NRD and SPR-P135

9 6.55 Yes

TOTAL (US$ Million)

153 SDR 111.5

H. Verification Protocols

60. Achievement of the DLIs will be verified annually and verification results will be used as the basis for disbursement. The disbursement model proposes nine DLIs, linked either to actions, outputs, intermediate results or PDO indicators, emanating from the four Results Areas. There will be five annual disbursement periods, thereby enabling a phased approach for the roll-out of the innovations to be introduced across the targeted Program provinces. For scalable DLIs as shown above, payment will be made in proportion to the achieved results for each period after they have been verified. For non-scalable DLIs, the target must be achieved in full to trigger the corresponding payment. Verification protocols are briefly described below and detailed in Annex 3.

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(a) Data source/agency: MARD as the lead implementing agency for both the NTP-NRD and SPR (jointly implemented by MARD, MOLISA and CEMA), and through its NRD-national Coordination Office (MARD-NCO) will be the main data provider. Information on achievement of results for each DLI in each period should be collected by MARD-NCO before verification of results. CEMA would be responsible for submitting reports to MARD-NCO regarding their implementation results against DLIs. MARD-NCO will then aggregate information for results verification by the State Bank of Vietnam (SAV) and subsequent submission to the World Bank.

(b) Verification Entity: The SAV will be the verification entity for the DLI results associated with the Program’s Result Areas though it can select/appoint another agency to collect and verify the data under its overall supervision.

(c) Verification Procedures: The results reported by MARD-NCO as achieved under the Program would be verified through a paper audit and physical inspection that tests the accuracy and quality of results claimed. In accordance with good audit practice, physical verification will take place against a sampling framework and frequency. If the Bank finds that the disbursement request meets the terms of the Credit, the Bank will disburse the corresponding funds to the MOF.

(d) Scalable vs. Non-scalable DLIs: Definitions and description of DLI achievement are specified in Annex 3, and most would be scalable allowing for disbursement against achievement of graduated results over the course of the implementation of the Program.

I. Capacity Building and Institutional Strengthening, and Role of Donors

61. The need for capacity building in implementing the various reforms and changes in the way of doing business under the PforR operation will be substantial. Strengthening the planning process, the implementation arrangements, participation by communities, M&E capacity, and developing sub-project executing contractor awareness on quality and safeguards aspects are crucial to achieving the objective of the PforR operation and also for developing an efficient modality for scaling up to the entire government program. In the past, Government relied heavily on multilateral, bilateral and civil society support to provide technical assistance funding for the two NTPs. The second phase has clearly incorporated capacity building as a separate component in both NTPs (Component 11 in NTP-NRD and Component 3 in NTP-SPR-P135). In preparing the operation, the active donor community was closely consulted and involved to take an inventory of their successful (and less encouraging) approaches. Manuals, guidelines and experiences of the various donors have provided the basis on which the enhanced operations manual for the Program and policy guidelines under the Operation have been formulated.

62. On technical assistance, the Bank has secured financing from Australia under a WB-executed Trust Fund. One focus theme area will be ethnic minorities. The agreed activities that will be financed by this TF include support to training, designing and piloting value chain analysis focusing on ethnic minority women and youth as primary beneficiaries in terms of producers and management of the value chain. This activity will directly support and leverage the DLIs in the area of production support for SPR-P135 and NRD. The TF will also use the recent 2015 ethnic minority survey data to further analyze CEMA’s programs and policies, including SPR-P135, with the aim of tailoring the Program to the varied needs of the diverse ethnic groups. This further analysis of the 2015 data will also feed into the M&E and MIS systems of the NTPs that are supported through this Operation. It is expected that funds will be available by June 2017. The total amount for this ethnic minority theme is approximately US$2.4 million, of which about half would directly focus on NTP deliverables. There is also an ongoing coordination with Irish Aid who is supporting the SPR-P135 in 9 Provinces, 8 of which overlap with the NTP focus Provinces. The Irish Aid program supports the infrastructure activities of SPR-P135 and has a parallel program promoting NGOs in the 9 provinces to offer services and capacity building in SPR-P135 communes. Effort will be made to integrate and ensure that the NTP implementers avail of such services and capacity building programs offered by NGOs. There is also ongoing collaboration with OXFAM on the integration of NTP investment planning into a strong commune-level SEDP. The vision is that the commune SEDP will serve as a master plan to guide investment choices and priorities in other programs including the NTPs, donor programs and other Government programs.

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III. PROGRAM IMPLEMENTATION

A. Institutional and Implementation Arrangements

63. At the national level, overall responsibility for the NTP-NRD and SPR and for reporting on the progress of the programs to the National Assembly is that of the Ministry of Planning and Investment (MPI). Oversight of both the NTP-NRD and SPR would be through a Central Program Steering Committee (Central-PSC) chaired by the Deputy Prime Minister and with representatives from MPI, MOF, MOC the implementing Agencies (MARD, MOLISA and CEMA), as well as from other line ministries. The Central-PSC organization and functions are mirrored at Provincial, District and Commune level with program Steering Committees Steering Committees. At provincial, district and commune levels, the PSCs are chaired by the Chairman of the Peoples Committee.

64. The oversight Agencies (MPI and MOF) provide the guidance and resources for management, usage, payment and liquidation of NTPs’ budget for implementation of approved NTP subprojects. Specifically, MPI leads in developing mechanisms for management and implementation of the NTPs with emphasis given to decentralization and empowerment at local levels. MOF leads and coordinates with other ministries to review, develop and issue the financial management mechanism guidance for the NTPs throughout the 2016–2020 period. It determines the allocation of recurrent budget for the NTPs, coordinates with MPI in allocating medium term and annual investment budgets, and consolidates for approval the allocation scenarios of cost estimates for annual state budgets (investments and recurrent).

65. MARD has been designated as the Lead Implementing Agency for both the NTP-NRD and SPR and coordination with the other Implementing agencies MOLISA and CEMA. Directions as to how the NTP-NRD is to be implemented are detailed in Prime Minister Decision Approving the NTP-NRD No. 1600/ QD-TTg. The National Coordination Office (MARD-NCO) would provide the Secretariat functions for the Central-PSC and be responsible for executing the various directions and decisions of the Central-PSC. The MARD-NCO is hosted by MARD although the budget for the NTP-NRD is separate from that of MARD. The Program would not establish any Project Management Unit, but rather would depend upon the MARD-NCO which has functioned throughout the first phase of the NTP-NRD. The MARD-NCO would have responsibility for day-to-day implementation of the NTP-NRD at the national level, and through the Departments of Agriculture and Rural Development (DARD) at the Provincial, District and Commune levels where staff are designated with NTP-NRD responsibilities. Details of the NCO staffing and functions are provided in Annex 1.

66. MOLISA is responsible for leading and coordinating with other ministries, agencies, and Peoples Councils in implementing the NTP-SPR-P135. Directions as to how the NTP-SPR-P135 is to be implemented are detailed in Prime Minister Decision Approving the NTP-SPR No 1722/QD-TTg. In accordance with that Directive, MOLISA is responsible for implementing several sub projects, scaling-up the poverty reduction models a monitoring and reporting on poverty reduction. CEMA through its SPR-P135 Coordinating Office, is however responsible for managing and guiding the implementation of sub-project within the SPR-P135 communes. At the Provincial level, the SPR is managed by the Department of Livelihoods, Invalids and Social Affairs and at the District and Commune level by the Division of Labor and Social Affairs.

67. The implementation of the Program will be guided through the enhanced operations manual which among others, will include specific provisions regarding the application of the anti-corruption guidelines (ACGs) in the Program, and the obligation of all the implementing agencies to cooperate with Bank investigations. The said manual will be adopted by the MARD and the CEMA by no later than October 2017, as a condition of effectiveness.

B. Results Monitoring and Evaluation

68. Monitoring and evaluation of the Program indicators will be done using the Government’s own systems, which will be substantially strengthened under this Program. In July 2016, the Government issued Resolution No. 60/NQ-CP which includes directives towards strengthening monitoring and inspection by

22 

ministries and provinces of public investment projects to ensure that the intended objectives are achieved and the implementation is efficient - including tracking of physical progress and financial flows of funds through TABMIS on a regular basis. In this regard, a key objective of the PforR operation is to establish an M&E framework for the two NTPs, synchronously operationalizing an MIS for NRD with financial information from TABMIS in the targeted Program province.

69. The Program will cover the establishment of an M&E framework for the agriculture and sustainable livelihoods component of the two NTPs through the development of a defined set of outcome indicators, and institutional arrangements for periodic performance monitoring activities and assessments. The M&E framework will provide the platform for further development, implementation and rollout of the MIS for NRD. This will be further enhanced through adoption of financial reporting of expenditures using the Government’s TABMIS system to enhance accountability, transparency and learning that would integrate and institutionalize reporting requirements of various concerned implementing agencies.

70. A publicly accessible web-based platform would also be established which would provide up-to-date information on the progress of the two NTPs at the provisional level, implementation status, as well as the legal framework and corresponding public documents. The design will also provide a platform for piloting social accountability systems including use of mobile application for data collection extending to geo-tagging and establishing a feedback mechanism to inform the implementation status reporting of the NTPs.

71. For the evaluation of Program outcomes, a baseline survey and end-line survey will be conducted (TORs are currently in draft form and will be jointly reviewed and agreed to by the Government and the Bank) to measure project indicators related to productivity, sustainable livelihoods as well as intended and unintended outcomes and results of interventions in sampled localities. This will also include the systematic collection of gender-disaggregated data and data on ethnic minorities for tracking the impact of Program intervention over time. A qualified M&E institute/firm will undertake an end-of program assessment to determine program results and impacts. It is important that both the baseline and end line surveys will be funded and implemented in a timely manner.

C. Disbursement Arrangements

72. Program Financing Disbursement Arrangements. The PforR will cover the second phase of the two NTPs. Underpinning the choice of lending instrument has been Government’s policy that the loans should not be used to provide additional funding beyond the approved program budget envelopes of the implementing agencies, and the State Budget Law 01/2002, QH11 requiring that all loans should be spent for capital expenditures and not for recurrent expenditures. This was further clarified by the Office of Government (OOG), through Document 9596/VPCP-QHQT dated November 8, 2016 that the World Bank's lending instrument would be a PforR and that: (a) the credit should be merged and put into the State Budget to support the implementation of the two NTPs; and (b) such funding should be counted as part of the respective budgets approved by the National Assembly for the two NTPs. Accordingly, funds will pass from the central level (from the Ministry of Finance (MoF) via its treasury system) to the Provincial People’s Committees (PPC) in the 18 targeted Program provinces. The MOF, MPI and PPCs are responsible for allocating sufficient funding to all implementing entities in accordance with the relevant guidance to achieve the required DLI targets.

73. Payment for Prior Result. One of the nine agreed DLIs (DLI 1) has been identified for prior action. (Annex 3, Table 1). The amount associated with this DLI is SDR 14.58 million (US$20 million equivalent) or 13 percent of the PforR financing. This is well within the threshold of using 25 percent of the PforR proceeds against DLIs met by the Borrower between the date of the Program Concept Review (June 2016) and the signing date of the Legal Agreement (estimated to take place in August 2017). The DLI associated with the agreed prior result: (a) is within the scope of the Program covered by the PforR operation; (b) has been assessed as achieved based on the verification protocol used by the Bank which is in adherence with the provisions of Bank Policy and Directive on Program-for-Results Financing; and (c) has been agreed with the Borrower as a prior result financing.

23 

74. Advances. The Borrower has informed the Bank that advances would not be needed to finance the activities needed to achieve the results for some DLIs.

75. Program Reconciliation. If the Bank establishes, after the closing date, that the withdrawn financing under the PforR operation exceeds the total expenditures by the Borrower under the Program, exclusive of any such amounts financed by any other financier or by the Bank under any other loan, credit or grant, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such excess amount of the Withdrawn Financing. The Bank shall then cancel the refunded amount of the Withdrawn Financing.

76. Program Reports, Verification and Financial Statement Audit. MARD shall prepare NTP-NRD and SPR-P135 consolidated financial statements annually. The Reports will include consolidated financial statements that will cover all activities under the Program. It has been agreed with the Borrower that the State Audit of Vietnam (SAV) will be the agency responsible for overseeing the carrying out of the required annual audits as well as the verification exercise for the DLIs. The MOF would make the additional budgetary allocation to SAV if requested to sufficiently cover for the incremental costs. The SAV has also confirmed that they will provide sufficient staff resources for the audits and of the Program. Capacity building for audit of PforR (using Bank’s resources) will be provided to the core audit teams of the SAV before the first audit. The Terms of Reference of the audit shall be acceptable to the Bank. The Audited Financial Statements shall be submitted to the Bank within seven (7) months of the previous fiscal year end.

IV. ASSESSMENT SUMMARY

A. Technical (including Program economic evaluation)

77. Both NTP-NRD and SPR, are underpinned by both a strong commitment from national and provincial governments, and by a solid platform of laws, Prime Minister level decisions, as well as MPI and other circulars that define virtually every aspect of the two NTPs. The weaknesses lie mainly in the execution of the NTPs which during the first phase of the program were overly prescriptive and top-down, with the emphasis of the need to meet targets, rather than on responding to local priorities. For the second phase, ambitious targets have still been set for communes, districts and provinces to achieve “New Rural Development Status”. However, more flexibility and authority has been given for priorities to be established at local levels. Moreover, the focus on infrastructure in the first phase of the NTPs has been tempered by the focus area to be covered by the Program on investments designed to support groups of households, small enterprises and cooperatives to raise productivity through on-, and non-farm activities and market linkages. The technical basis for determining the types of such productive investments has also been strengthened with the introduction of Value Chain Analyses to determine opportunities and investment gaps at the provincial level for commodities and products.

78. Implementation capacity at the commune and district level is the weakest link in the NTP execution. Strengthening this will undoubtedly take time and considerable on-the-job training. Capacity building must therefore be a priority area under the PforR, considering that this is a high-risk factor in this Program. There is a strong need for the Government of Vietnam to commit to the timely release of adequate resources for capacity building. Under the two NTPs, the budget allocation for capacity building from the recurrent budget category accounts for barely 3–4 percent. This level is low in comparison to the demands for enhanced capacity building in the targeted Program provinces which are usually at the lower end of the capacity spectrum. Both NTPs have developed the capacity building frameworks to guide this activity during implementation. These frameworks have been well informed of the specific training needs identified through various consultations and training needs assessments. For NTP-NRD, these include: Planning, Support for Value Chain Analysis, Infrastructure O&M, environment and social systems, M&E /MIS, and Cooperative Development. While for SPR-P135, these are: Planning, Commune investment ownership (CIO), O&M, Planning, M&E, O&M of community infrastructure, Livelihood, Supervision of small-scale civil works, and Organizational strengthening. The SPR-P135 includes a specific sub-component for capacity building with financing for commune and ethnic minority leaders.

79. Small investments at the commune level are normally executed through the formation of Commune Implementing Agencies while larger investments (amounting to more than VND 3 billion or

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about US$131,700) are normally implemented through District Implementing Units (DIUs). The provincial level is mainly involved with planning coordinating and monitoring through the Provincial Office (PO) of the NTP which is normally established under DARD or DPI. Quality of construction is quite variable as might be expected, depending to varying degrees on the access to quality materials, workmanship, design and supervision.

80. The available resources for technical assistance and capacity building from other bilateral development partners are limited. Given the transition of Viet Nam to lower middle income category, most of the active development partners on rural development and poverty reduction in Viet Nam have refocused their priorities to other countries or issues. As such, the ODA landscape has changed significantly with sources of grants from bilateral donors for technical assistance has been limited for the NTPs to tap into. The Bank is working on a Bank-executed TF from Australia that will focus on supporting value chain analysis and a pilot for targeting ethnic minority youth and women. This Australia TF will also support analysis from the 2015 ethnic minority survey to better inform the NTP programs, especially SPR-P135, in terms of differentiated targeting needed for different ethnic groups. During implementation, the Government and the Bank should continue to explore opportunities for various grant windows to support the substantial capacity building requirements for the Program.

81. The substantial risks associated with need for intensive capacity building will be addressed through specific focus and resources to be given to on-the-job training and workshops, especially for commune and district officials charged with implementing subprojects under the Program. It will involve the following:

(a) Continued efforts on the part of the World Bank and MARD to solicit Technical Assistance and donor support for Program activities, especially regarding capacity building, baseline and impact evaluations and development of the MIS system.

(b) Good practices in delivering capacity building coupled with a mapping exercise looking into the capacity building frameworks for both NRD and SPR-P135 will guide the capacity building efforts in a more coordinated manner to avoid overlapping and increase synergy.

(c) MOF would annually provide recurrent budget for the targeted Program provinces for training, workshops, and studies in amounts at least equal to 15 percent of the capital budget for those targeted Program provinces under the NTP-NRD and SPR.

(d) MOF and MARD-NCO would annually agree on the level of recurrent budget to be provided for the contracting of trainers and for establishment and implementation of the MIS-M&E and MIS systems. This would be monitored under the appropriate DLIs.

(e) MARD-NCO would contract a local service provider to provide the “training for trainers” who in turn would support the provincial, district and commune level training under the NTPs, and

(f) Adoption of an enhanced operations manual which among others, will include specific provisions regarding the application of the anti-corruption guidelines (ACGs) in the Program, and the obligation of all the implementing agencies to cooperate with Bank investigations. The said manual will be adopted by the MARD and the CEMA by no later than October 2017, as a condition of effectiveness.

Economic justification of the Program

82. Rationale for public intervention: Targeted government interventions are necessary to close persistent welfare disparities between subgroups in Vietnam, especially between ethnic minorities and the ethnic majority and between the rural and urban population. Although household welfare improved across the board over the past two decades, lagging regions and population subgroups (ethnic minorities in particular), continue to lag behind and in some cases, by a widening margin. The gap in the incidence in poverty between ethnic minorities and the majority in 2014 was 19 percentage points higher than in 1993 for example. For this reason, poverty is becoming concentrated - among ethnic minorities

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and also becoming primarily a rural phenomenon. That means growth alone, without targeted interventions to lagging groups, is not adequate for reducing poverty and closing welfare gaps that exist in the country. If current trends continue, ethnic minorities would constitute 80 percent of the poor by 2020 for example. This justifies poverty targeted investments such as the two NTPs covered under this PforR Operation, to make targeted investments among the poorest and disadvantaged communities to improve their economic prospects and help close the gap to the rest of the population.

83. Impact of the government program: Among other objectives, the government program addresses two major constraints faced by the poor and most disadvantaged groups. These are chiefly the low profitability and productivity in agriculture and predominance of agriculture as a source of income among the poor because of their low integration to industry and services sectors. Despite the poor’s high dependence on agriculture income, it remains lower than agriculture income from non-poor households. Data from the VHLSS 2014 shows that on farm incomes constitute 65 percent of ethnic minorities’ income compared to 24 percent of income of Kin and Hoa households, and at 44 percent, the share of income from agriculture among the bottom 40 percent households is more than double than that of other households. Yet average household income from agriculture is still lower among poor households who are most dependent on it. Their income per person from agriculture is 25 percent lower than the average for example. The government program addresses these by building an asset base of rural communities and directly creating off-farm jobs. To build the asset base of communities, the government program will: (a) boost investment in essential infrastructure for enhancing productivity and attracting private sector investment; (b) improve skills and knowledge of beneficiaries; and (c) provide direct input support to households to increase production in agriculture and their participation up the value-chain. In implementing capital investments, inputs will be sourced directly from local communities and local labor will be utilized in public works programs thereby creating jobs in targeted communities. These will contribute to rising household incomes, but the magnitude of their impact is difficult to quantify given the role of other exogenous factors in determining household income and lack of prior rigorous evaluation of such targeted investments in Vietnam.

84. Impact of the government program covered by the Program: The impact of the government program will be enhanced through the PforR program which addresses challenges to low effectiveness of poverty targeted interventions because of: (a) low relevance of investments or subprojects based on a top-down one size fits all approach; and (b) low quality of subprojects due to poor implementation arising from the lack of budget on training and capacity building and absence of consistent technical specifications of different types of investment across programs. These are addressed in the Operation by strengthening implementation arrangements with the Operation disbursing against use of an enhanced operations manual which would include a value chain approach and considerations for ethnicity and gender and increased participation of communities in selection of subprojects. It will also promote the adoption of climate-resilient technologies and technical standards for infrastructure which will make such investments climate-resilient. Additional incentives on monitoring and measuring results at the commune and household level enhances the results focus of the NTP at a micro-level, thus increasing its likelihood to achieve impact on reducing poverty and raising incomes, especially among ethnic minorities. Even more important, the PforR program aligns incentives to achieve measurable results at the commune and household level.

85. Value added of the World Bank: The value added from the Bank’s participation in the program is mainly in increasing efficiency, effectiveness and the poverty and social impact of the program. The Bank engagement facilitates the integration of the NTP in the provincial SEDP planning process which increases efficiency by maximizing synergies and leveraging finances. The Bank is able to mobilize the expertise and leverage its resources to improve the technical design of the NTPs particularly with regards to improving the current operational guidelines for investments through: (a) standardization of specifications and procedures; (b) development of value-chain informed guidelines and procedures for livelihood and enterprise support subprojects; and (c) improving measurement of outcomes and impact of the Program. The first two are critical for improving the quality and relevance of investments made under the two NTPs. Furthermore, the Bank is able to bring together multiple agencies to facilitate use of the enhanced manuals across subprojects in both the NTP-NRD and SPR-P135. The last factor enhances the results orientation of the Program. 

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B. Fiduciary

86. Several weaknesses were identified in assessing the performance of the fiduciary systems under which the Program operates. These would be addressed through technical assistance to be provided and through the Program Action Plan. Assessment findings are summarized below and detailed in Annex 5.

Procurement

87. Procurement activities under the two NTPs shall be implemented in accordance with the currently applicable national procurement legislation. In general, the national procurement legislation includes: (i) Procurement Law No. 43/2013/QH13 dated 26 November 2013, and (ii) Decree No. 63/2014/ND-CP dated 26 June 2014 guiding implementation of the procurement law. Since recently by having realized that the majority of contracts for infrastructure at the commune and inter-commune levels are of small-value and simple nature that would need more flexible and practical arrangements for implementation, the Government of Vietnam has issued an additional Decree No.161/2016/ND-CP dated 2 December 2016, regulating the two NTPs in particular. The new Decree 161 has provided detailed guidance on the practical arrangements for investment planning, procurement and administration of contracts for Works estimated to cost below VND 5 billion per each, following the approach of community participation in procurement and contract management for implementation by procuring entities at the commune level. As the result of the enhanced procurement regulatory framework, applicable for both programs in the period 2016-2020, procurement for small works in communes (below 5 billion VND) will follow the specialized arrangements stipulated in Decree No. 161/2016/ND-CP, while other types of procurement for Goods, Non-consulting services and Consulting services as well as procurement for larger Works at district level will continue to follow Decree No. 63/2014/ND-CP guiding implementation of the procurement law 2013.

88. Procurement activities under the proposed Program have been implemented at (a) commune level for small value activities within a commune – by a communal procuring entity; and (b) district level for bigger value inter-commune activities – by a district implementing unit. No procurement activity is expected to be carried out at provincial and/or central (ministerial) levels, but coordinating agencies at both national and provincial levels, such as National Coordination Offices (NCOs) and Provincial Coordination Offices (PCOs), have been established respectively under both NTPs for coordination and monitoring purposes. The procurement planning will follow the bottom-up approach with data collected from communes through districts, then will be compiled and recorded at the provincial and national levels by the PCO and NCO under the respective NTPs). Procurement plans at commune and district levels will include small and very small size contracts in the following types:

(a) works for small scale infrastructure investment for enhancing agricultural productivity and value added such as: village- level farm-to-market-roads, small bridges (fixed and suspension), foot paths and pathways, small-scale gravity, pump and drip irrigation, shallow wells, small water impounding, village-level, small-scale fish landings, village-level small jetties, postharvest facilities (drying floors, small storage sheds, market facilities), plant nurseries, seed production facilities, tree planting, composting/organic fertilizer production, livestock breeding and distribution facilities, milking facilities, small-scale commodity processing equipment for village –level processing, etc.;

(b) goods and non-consulting services of small value for rural livelihood activities, e.g. to cover on-, off- and non-farm activities related to crop production, egg/chicken production, pig fattening, milk production, aquaculture, coffee, coconut and vegetable oil processing, rubber processing, broom and basket making, weaving, handicraft production, fruit and nut packaging and preservation, village level juice processing, product hauling and consolidation, marketing, small scale processing of agricultural products, etc.; and

(c) consulting services of small value for preparation of investment reports, detailed designs, and construction supervision under the Programs for both NRD and SPR-P135 NTPs.

89. There is no large contract included in the Program which are valued at or above Operational Procurement Review Committee (OPRC) thresholds for High-risk operations (i.e., US$50 million for works; US$30 million for goods, US$30 million for non-consulting services, and US$15 million for

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consulting services). Specific procurement methods in accordance with the national procurement legislation will be applicable to the Program, including open competitive bidding (OCB), limited competitive bidding (LCB), shopping, community participation, and direct contracting if justifiable to be necessary. Contracts for Works not exceeding 5 billion VND (equivalent to about US$220,000) will be implemented involving local community participation in procurement in accordance with Decree No.161/2016/ND-CP. The use of Direct Contracting should be limited to the minimum extent as possible.

90. Procurement complaints used to be handled in accordance with the procedures stated in Decree No. 63/2014/ND-CP. These procedures require that complaints are signed and stamped by a legitimate representative of the complaining bidder (anonymous complaints are not considered). For complaints related to contract award, the complainant has to deposit a fee which would be encashed if the complaint is not substantiated. Complaints are handled by procuring entities or project owners and appeals are reviewed by a competent agency – normally the Department of Planning & Investment (DPI) under the Provincial People’s Committee (PPC). This procedure seems to be rather rigid that would discourage submission of complaints. A practical recommendation for establishing a reporting system for complaint record and information sharing is included in the Program Action Plan (PAP).

91. In light of the national procurement regulation, the current debarment procedures are mandatory and applicable for the two NTPs. There is a risk that the non-application of Bank debarment and suspension lists may result in contract awards to debarred firms and/or individuals under the Program. In the effort towards preventing Fraud and Corruption practices, Vietnam’s mandatory debarment procedures should be complemented by the Bank’s lists of debarred and temporarily suspended firms and individuals. It is strongly recommended that the National Coordinating Offices (NCOs) for both NTPs to regularly share the Bank’s most updated lists of debarment and temporary suspension with the targeted Program provinces, and that their compliance is supervised and monitored during Program implementation. Application of both the Bank’s and the national debarment lists will ensure no firms or individuals in the local, national and the Bank’s debarment lists will be allowed to participate under the Program.

92. Specific areas identified in the procurement cycle that could, directly or indirectly, compromise the efficient achievement of Program are: (a) weak capacity in planning and budgeting at all province/district/commune levels and the use of inappropriate cost norms; (b) delays (sometimes substantial) in approval of annually allocated budgets and the corresponding procurement plans; (c) the low competition in the procurement processes and abuse of direct contracting; (d) weak capacity of procurement cadre at the commune level; (e) lack of public and/or independent oversight; (f) impractical mechanism for handling complaints; and (g) potential governance and corruption risks. In the context of the Program, actions are recommended in the Fiduciary Action Plan to address these shortcomings and mitigate the identified risks. The overall Procurement risk rating is High. Details of procurement risk analysis and proposed mitigation measures are provided in Annex 5.

93. The procurement risks as jointly identified in the fiduciary system assessment (details are in the section on Procurement Assessment) will be addressed by the following actions:

(a) The obligation for the Program to be carried out in accordance with the Bank’s Anti-Corruption Guidelines (Guidelines on Preventing and Combating Fraud and Corruption in P4R Financing updated July 10, 2015) is a legal covenant stipulated in the Financing Agreement for this PforR financing. This will trigger Government’s adoption of the Bank’s updated lists of debarred and temporarily suspended firms and individuals as complementary to the national debarment list, operationalizing which is compulsory and should be regularly coordinated and monitored by the Coordination Agencies at both national and provincial levels for both NTPs.

(b) Improved Planning: Early approval of the annual procurement plans for districts and communes within three (03) months after the approval of the annually allocated budgets by the PPC. The annual procurement plans in a targeted Program province should be approved as early as possible by the respective PPC, and shall not be later than the Second quarter of the year, to facilitate timely implementation by procuring entities at all levels in the province.

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(c) Increased Competition: Greater use of competitive bidding by discouraging the use of Direct Contracting. For works contracts below the threshold of VND 5 billion at the commune level, the use of local community participation in line with the newly effective Government Decree No. 161/2016/ND-CP on specific mechanism of planning and procurement for simple and small-value contracts. In contracting for infrastructure works under NRD and SPR-P135 that would exceed VND 5 billion per contract, competition must be used for mandatory selection of contractors in accordance with Decree No. 63/2014/ND-CP.

(d) Bid Evaluation: The enhanced operations manual shall clearly stipulate that for all kinds of competitive processes, all bids/quotations/proposals received, no matter higher or lower than pre-bid estimated costs, shall be evaluated to determine bid responsiveness; and no bid/quotation/proposal shall be rejected solely on the basis of minor and/or non-substantial deviations.

(e) Enhanced Procurement capacity: Regular capacity building and intensive training in terms of budget planning, procurement processing and contract administration for procurement practitioners in procuring entities at all sub-national levels (province/district/commune) with particular focus on commune level.

(f) Strengthened Oversight: Strengthening procurement oversight as part of the regular and intensive supervision by the Bank team and verification agencies, and engagement of independent supervision bodies with community participation. Enhancing the Bank’s monitoring of preparation of the verification protocol and the selection of (independent) verification agencies.

(g) Established Reporting system for Grievance redress and Information sharing: Establish in the enhanced Operation Manual a simple and practical mechanism for recording and sharing information of procurement-related complaints, as well as any allegation on Fraud and Corruption practices at a commune level; and reporting those records to upper levels (district and province) on a regular basis. The reporting system may be part of the M&E framework and the MIS through a public web portal.

94. Financial Management: Two high FM risks have been identified. The first relates to the budgeting and planning process as the State Budget may not be sufficiently allocated for the NTP-NRD Program implementation. To date, only 24 percent of the total requirement is to be financed by the State Budget. Demand for NRD has been committed for allocation by the Government. A substantial portion (76 percent) would have to be financed through credit, private sector and community contributions. The second risk relates to the high amount of arrears of the NRD capital expenditure of the four targeted Program provinces (Quảng Bình, Bình Thuận, Quảng Ngãi and Hà Giang) in the previous phase which amounted to VND 1,320 billion (about US$60 million). There is a high risk that a significant portion of the allocation for capital expenditure of the 2016-2020 for these provinces would be used for arrear payments, compromising the delivery of results.

95. To mitigate these high risks, it is recommended that: (a) For the NRD, the Government and the targeted Program provinces would commit to provide sufficient funds for the NRD for the 2016- 2020 which will be reflected in the Medium Term Public Investment Plan (MTPIP) of the targeted Program provinces; (b) monitor the implementation of the regulation on criteria and norms for central budget allocation to provinces to implement NTP-NRD; and (c) close monitoring of the settlement of provincial arrears as well as the outstanding balances of the four highly indebted provinces. This will also be monitored during the annual audits.

96. In addition, the following actions shall be taken:

(a) The timeliness of funds allocation shall be monitored closely by the Coordination Agencies (NCOs);

(b) The Coordination Agencies (NCOs) will work closely with the Finance Agencies to ensure that the budget allocation is entered in a timely and accurate manner.

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(c) Formal guidance and procedures on Financial Reporting including the responsibilities, frequency, format, contents and reconciliations shall be provided; and

(d) SAV will perform the annual audit of the Program and the audited financial statements will be submitted to the Bank within 7 months after the end of each fiscal year end.

97. Governance: Citizens can lodge fraud and corruption complaints to various offices according to the Laws on Complaints and Denunciations and Anti-Corruption. Two main channels exist: (a) the executive agencies including People’s Committee at the appropriate level; and (b) the GI and the Inspectorate agencies. In the consolidated NTP, complaints related to the subproject, which could include allegations of fraud or corruption, will most likely be submitted to the respective local governments (including the Provincial or District PC, the provincial departments (e.g. DARD, DOLISA) or other relevant technical agencies), or directly to the Inspectorates of MARD, MOLISA or CEMA. It appears that there is no unified system of collecting and reporting on how the authorities handle allegations of fraud and corruption.

98. The following are the areas of concerns based on the Bank’s assessment: (a) the multiple agencies dealing with complaints may create confusion and may result in complaints being passed around agencies or lost in the transfer process, making follow ups difficult; (b) the use of written log books in some provinces raises questions about the quality of the data collected.

99. Mitigating measures will include the following:

(a) Ensure that Program Participants (including national and sub-national officials, bidders, vendors, consultants, contractors, etc.) are obligated to cooperate with Bank Investigations. The Government would adopt the Bank’s Guidelines on Preventing and Combating Fraud and Corruption in the Program through an appropriate provision in the enhanced operations manual, including an obligation on all parties to cooperate with Bank investigations;

(b) On grievance mechanism and information sharing, the two NTPs shall set up and maintain a web portal linked to the M&E system for citizens to be able to leave feedback and complaints (on corruption/ procurement/program planning process, etc.). The information will be aggregated at the national level by MARD and the Bank will be informed of the number of fraud and corruption allegations, as well as how these were handled (investigated, mitigated and/or sanctioned);

(c) The Bank shall seek an agreement with the Government to share their debarment list and basic information including the name of the debarred entity, date and duration of debarment, and reason for debarment. These will be readily available to MARD, MOLISA and CEMA as well as the targeted Program provinces;

(d) The implementation of the Program will be guided through the enhanced operations manual which among others, will include specific provisions regarding the application of the anti-corruption guidelines (ACGs) in the Program, and the obligation of all the implementing agencies to cooperate with Bank investigations. The said manual will be adopted by the MARD and the CEMA by no later than October 2017, as a condition of effectiveness; and

(e) Bank supervision and independent annual audits shall be carried out during Program implementation to establish actual performance on enforcing the debarment lists.

C. Environmental and Social Effects

100. Given the scope of the Program, the types and modest scale of individual investments, the geographic focus, and previous central Government experience with Bank projects, the risk is expected to be moderate.

101. Climate change considerations are being given due consideration in the design of this Operation. The criteria for selection of provinces was expanded to include four provinces that had recently suffered from natural disasters and which are subject to climate change impacts. Addressing climate change is a key priority area for the Government. The design of the Operation accounts for climate co-benefits and addresses climate change from two perspectives. Firstly, the Program will attempt to ensure that all

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infrastructure is climate resilient. This will be done through appropriate procedures and incorporating climate resilience in the guidelines for infrastructure. Secondly, it is recognized that climate change and related disaster events have a long-term impact on people’s livelihoods. This Program has a strong focus on expanding and improving livelihood opportunities and choices. The guidelines for production related activities will include increased use of technology for climate adaptation and climate risk mitigation for on-farm and non-farm livelihood activities.

102. The analysis in the ESSA has examined how the system addresses and performs in relation to the core principles of the WB policies on environment and social. Overall, on the environment front, the NTP program and general provisions at the Provincial and local level show that Vietnam has the needed principles and risk mitigation policies in place. In the context of this PforR, the primary gap lies in enforcing the restriction on activities in protected areas. On the social side, the primary inconsistencies with WB principles are in the area of land, labor and financial donation and adequate consultation, especially with women and ethnic minority groups. While there is an overall weak capacity on both environment and social side, the gap is wider on the latter as the mandate is not the responsibility of any specific local office, resulting in the issues not being adequately monitored. Moreover, while the environment risks do have policies in place, the social policies, (more so for the NRD than the SPR), are often not consistent with WB principles. The issue of land, labor and financial donation which is a key feature of the NRD is a major gap. However, it must be noted that NRD, in principle discourages such donation in the poorer ethnic minority groups, although this is often ignored and has in the past resulted in these programs shying away from these poorer areas and prioritizing the better off communes. Another area that needs to be addressed is where people do not have land rights. For activities under the project boundary which will have verification, it is expected that such households will receive compensation for the investments they have made on the land.

103. The enhanced operations manual will be the official guidelines of procedures of the two NTPs which will be issued by the implementing agencies (MARD and CEMA). Hence, they are binding on the Program. The Government program does permit activities involving social and environment risks as identified in the ESSA. The procedures for screening will be integrated into the overall operations manual for both NTPs that will apply to the whole national program and not just the PforR area. Since the enhanced operations manual will be issued for all provinces, those which are not part of the Program will not be expected to be fully compliant with the provisions of the enhanced manual. The sections that are specific to the PforR activities, such as the environment and social guidelines will be verified only in activities within the Program boundary but it is expected that the local authorities will over time incorporate these as a better way of doing business. Hence, the activities under the PforR within the 18 provinces will be verified to ensure the use of the procedures as stated in the enhanced operations manual. It should be noted that a large part of the WB engagement in the PforR is to improve the way of doing business and that includes the environment and social procedures. Hence, incorporation of these procedures into the Government- issued operations manual for both NTPs is a major step. Through the PforR, there will be emphasis on demonstrating the benefit of these procedures in terms of activities under the PforR with the objective that local authorities will use the same systems for non-PforR activities under the NTP in those provinces. The Bank will review the enhanced operations manual and will need to ensure its technical rigor before the Government finalizes and clears it for formal adoption by October 2017.

104. The investments under the proposed Program are expected to bring about many positive environmental impacts and to improve living conditions in target areas resulting from improved access to improved infrastructure and environmental services, as well as connectivity. The benefited communities would have safer and better access to basic infrastructure, their living conditions would be improved. Participatory planning approaches, embedded in this Program’s design, would also help to empower communities. The Program will also cover important improvements to implement environmental aspects of the government program.

105. The anticipated adverse environmental effects of the investments provided under this Program are not expected to be significant considering: (a) the small scale and relative scatter of physical investments; (b) that the proposed works would take place in or very close to established villages; (c) the limited

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geographic footprint of planned works; and (d) that mitigation measures are known, including principally that proper care and oversight is undertaken during construction, production activities to improve livelihood, or cultivation.

106. The potential adverse effects are generally at moderate level, well known and understood by the implementing authorities. It is expected that these effects will be manageable with well-established mitigation measures introduced into this Program in the form of ECOP (Environmental Codes of Practice).

107. There are some protected areas in the country such as national parks, nature reserves, conservation areas, historical sites with communities living within. These areas are normally very important in terms of ecological balance and biodiversity, and are environmentally sensitive. Interventions, if any, into such areas may lead to potential significant adverse environmental impacts.

108. The preparation and implementation of commune-level investments has been and would continue be decentralized to district and commune levels. However, local level environmental management capacity is limited due to constrained resources availability. Therefore, while the impacts and risks are limited, environmental performance of small civil works have been dependent on the limited capacity and environmental awareness of project owner and implementers. Good environmental guidelines, community monitoring and participation would be needed to enhance environmental performance of small investments under the PforR.

109. Related to production support covered under the PforR, the related environmental impacts and food security would be managed by the existing management system and network set up by the Government at central, provincial, district and commune levels such as the Plant Protection, Agricultural Extension, Natural Resources and Environment, in coordination with mass organization such as Farmers Association, and support from external sources. While the production activities will have implications on the environment e.g. the expansion of agricultural areas (including potentially into natural habitats), increased water use through new or expanded irrigation, increased use of pesticides, health/nutrition impacts of displacement of subsistence crops with cash crops, exploitation of living natural resources, and pollution, the scale of the production activities is very small and often limited to household level activities. Moreover, the extension programs do involve community education and take into account issues like impacts of subsistence versus cash crop. Thus such activities would have in place appropriate educational programs and checks to ensure that negative impacts are addressed.

110. Number of sectoral guidelines with environmental aspects incorporated has been issued by rural sectoral management authorities such as MARD and MOLISA. However, program handbooks prepared during the previous phase of NTP and SPR have not incorporated adequately environmental guidelines thus the incorporation of environmental considerations into program implementation have been limited.

111. The enhanced operations manual to be issued by both NTPs will have detailed screening criteria to mitigate negative environmental impacts and promote positive environmental outcomes. These procedures will help screen out the negative investments listed above such as in protected areas or those supporting alcohol and tobacco. These activities are currently permitted in the NTPs. It is expected that these manuals will encourage a systems change in the NTPs to adopt better practices and thereby bring about a positive change in the NTP implementation system. For the purposes of the PforR Program, only activities that pass the screening will be included in the verification sample.

Environmental Recommendations

112. Recommendation 1: The enhanced operations manual developed for this phase of the NTPs will provide environmental guidelines outlining the required screening and management procedures to enable Program implementers at local level to mitigate against these risks. The implementation of the guidelines and procedures in the enhanced operations manual will be monitored through WB supervision and the validation protocols of this PforR. The enhanced operations manual will be issued by Government for both NTPs. Investments would be screened to exclude the following: (i) locations within protected areas such as national parks, nature reserve, biological conservation areas, cultural-historical sites etc. listed in MONRE Decision no. 1107/2015/BTNMT; (ii) Activities that support the production, processing,

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marketing of beverage, alcohol, drugs, tobacco; the works primarily serving the army and defense forces. Only activities that are eligible will be included in the verification sample of the PforR. A screening form for eligibility has been developed and attached to Annex 5 of the ESSA and will be filled in by the Program implementing agencies at the provincial level.

113. Recommendation 2: The enhanced operations manual for the Program will incorporate adequately the necessary environmental guidelines. For infrastructure, the procedures to be followed from planning to implementation should be described. For production support, the options/approach to be considered and/or implemented as part of investment process should be included.

114. Recommendation 3. Promote community participation into subproject planning, implementation, monitoring, supervision, maintenance to enhance sustainability of the works.

115. Recommendation 4. Training and technical assistance on the application of the Program environmental requirements and procedures (specified in the enhanced OM) should be provided to implementers. Adequate human resource should be allocated to monitor and report on the implementation of the measures to avoid, mitigate the potential environmental impacts and risks during Program implementation (e.g. screening for environmental eligibility, incorporation of ECOP into bidding/contractual documents, incorporation of pollution control in production support activities, etc.). The implementation of such avoidance, mitigation measures must be reflected in relevant sections of the Program Progress Report. An environmental consultant could be contracted at central level to provide the training, technical assistance and environmental monitoring in the Program. The central and provincial level implementing agencies should each designate at least one staff to oversee and be responsible for environmental aspect of the Program and both central level

Social

116. The Program would have significant positive impacts on socio-economic development, including its contribution to poverty reduction, income generation and accessibility to better productive related (commercial and productive) infrastructure. In terms of negative impacts/risks, the overall rating is moderate, taking into account a number of aspects such as land acquisition impact, cash/labor donation of beneficiaries, the consultation/participation process of local people (notably ethnic minority people in the Program area), and the Program’s institutional arrangements.

117. Since the Program will only cover productive/commercial (for NTP-NRD) and small basic (for SPR-P135) infrastructure, the magnitude of land acquisition impact is expected to be minor. Land acquisition, compensation payment and resettlement implementation are always the responsibility of the Government, particularly at the provincial and district levels. However, all land affected in a NRD investment is supposed to be donated by local people (no budget for compensation), while under SPR, compensation fund might be allocated for land acquisition activities. Although local authorities always classify land donation for NRD investment as voluntary, it is very easy to turn this into involuntary donation as affected households are subject to peer pressure from other community members. Land donation is frequently done on a verbal agreement basis with no written and signed documents. This requirement for contribution of land, coupled with the common practice requiring contribution of labor and finance from communities, is recognized as a risk, especially in the NRD program. This risk cuts across all communities, but is enhanced in the context of poorer ethnic minority communities.

118. The program execution (especially NRD) also involves and encourages contribution from local people in terms of cash/labor donation. Although the contribution of local people had been institutionalized with regard to its limits, in many cases, local authorities disregard the limit (especially in communes in the last miles of achieving all 19 criteria of NRD), causing additional burden of local people in NRD implementation. The two NTPs have different approaches to land, labor and financial contribution. While the NRD traditionally assumes that communities will donate land, labor and capital for the community projects, the SPR-P135 relies on this to a far lesser extent and has provision for payment of compensation. This difference is because the SPR-P135 is recognized as targeting the poorest ethnic minority groups. Even in the NRD, the principles discourage land, labor and financial donation from vulnerable and ethnic

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minority groups. This is why the NRD has in the past, tended to be implemented primarily in better off communes and districts.

119. In the context of the large presence of ethnic minorities impacted by the NTPs, Vietnam has a legal framework that guides Ethnic Minority affairs. Specifically, article 5 of the 2013 Constitution confirms: (a) the equality of all Ethnicities living in the territory of Vietnam; (b) prohibition against discriminated behaviors; (c) rights of Ethnic Minority people toward their languages, scripts, traditional culture and custom; and (d) comprehensive policies of Vietnam to enable the development of Ethnic Minority areas. On the participation of local communities (notably ethnic minority people), the assessment confirmed that these two programs have a strong focus on and directly target ethnic minority people on several counts. However, while these two programs strongly focus on the question of “what” (to finance) in EM regions, they are very thin on the question of “how” (to adapt procedures to these groups), especially how to make sure that all program activities are culturally appropriate. Participation of EMs in decision-making processes remains limited (UNDP, 2006; WB 2009, 2012; MDRI 2014). Experience in other governmental funded programs have consistently indicated that “top-down” decisions and “one size fits all” solutions are not appropriate for EMs and limit the impact of existing programs.

120. It is noted that people’s participation throughout the program cycle is relatively weak, although the related regulations are relatively well structured. This aspect becomes more important as this is implemented in the targeted Program provinces with substantial presence of ethnic minority (EM) communities.

121. NTP-NRD and NTP-SPR have different institutional arrangements in which social impacts/risks are not properly tracked, recorded and reported. No staff time is allocated in both NRD and SPR to oversee the programs’ social aspects. This compromises and weakens the program’s achievement in the area of social development agenda in general and in reflecting/capturing the social impacts in program reports in particular.

122. Engagement of Civil Society is a change that this Program design will influence. Since the NTPs are Government programs, there is limited appetite for inclusion of these institutions in the formal institutional structure of the programs in Vietnam. This is consistent across all Government programs in Vietnam. However, the design of the PforR has put a high premium with coordinating and leveraging donor programs in the Provinces. The selection of Provinces had the presence of complementary donor programs as one of the main criteria. These donor programs have high involvement of civil society. The main donor complementation is with IFAD, Irish Aid, OXFAM, and CARE. The Australia Bank-executed TF supported value chain activity will also engage civil society groups working in the selected districts and communes. It should also be noted that the refined design of SPR-P135 allows for use of civil society organizations to support the livelihood and capacity building sub-components of the program.

Social Recommendations

123. Recommendation 1: The enhanced operations manual developed for this phase of the NTPs will detail the social guidelines outlining the required screening and management procedures to enable Program implementers at local level to mitigate against these risks. The implementation of the guidelines and procedures in the enhanced manual will be monitored through WB supervision and the verification protocols for this PforR. The Government will issue the enhanced manual for both NTPs.

124. Recommendation 2: Social screening must be conducted prior to actual investment in sub-projects to maximize project benefits and minimize adverse impact to local communities especially on land acquisition. The screening process will be detailed in the enhanced operations manual. It needs to be closely followed and the results properly documented and included in the relevant section of the investment proposal.

125. Recommendation 3: Land acquisition must be minimized. However, if land acquisition is unavoidable, it is necessary to ensure that people affected by loss of land and assets will be compensated so that they are not worse off than before that loss. Investments that cause physical relocation should be restricted to only those limited cases that are necessary for the Program’s investment. The provision in

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2013 Land Law on using independent land appraiser must be followed and its implementation documented and monitored through the Programs’ M&E system in the targeted Program provinces.

126. Recommendation 4: Within the enhanced operations manual, there would be land acquisition procedures, with emphasis on following the Voluntary Land Donation guidelines. The Government will issue a “Voluntary Land Donation Guideline” for adoption by the targeted Program provinces that would provide for “Voluntary Donation” to be used for NTP small-scale community infrastructure where the impacts are minor and where there are no alternative options for the location of the infrastructure subprojects. Only activities which are eligible will be included in the verification sample of the PforR. Implementing agencies must ensure that the donation decision will be made based on the informed consent of affected households and of their own choice. Voluntary land donation guidelines are being developed at the Program level and will be adopted by the targeted Program provinces to guide the application of this practice in the Program activities. The guidelines will ensure that these contributions are not forced and where voluntary, are based on good consultation and monitoring. These guidelines will be included in the enhanced operations manual for the NTPs and monitored through WB supervision and the verification protocols for this operation.

127. Recommendation 5: Develop and implement the community/citizen engagement guidelines to enhance people’s participation and consultation processes, especially for Ethnic Minorities and other vulnerable groups such as female-headed households, disabled, etc. The guideline will first ensure that local people are fully informed about the Program benefits/risks, mitigation measures and the various arrangements (e.g. complaint registering, land donation etc.). Second, the guideline will also enable their meaningful participation and consultation in every step of the Program implementation (including planning, design and implementation, compensation, resettlement and rehabilitation measures in land acquisition) and their equal access to Program information/benefits. The guideline will be community-driven, transparent, gender sensitive and in appropriate language. Given that the Program will be implemented over a large geographic area with many different ethnic groups, specific guidance will be provided at the local level for each ethnic group. In addition, the guidelines shall fully operationalize existing Vietnamese Legislation with respect to Ethnic Minorities through a process of free, prior, and informed consultations

128. Recommendation 6: To the extent possible, efforts must be made to ensure that Program interventions are culturally appropriate. This is very important given the diversity of ethnic groups living in the Program areas. Where relevant, it is necessary to deliver a training to contractors working in the area having a high presence of EM peoples. The Program should encourage the following social development measures: (a) ensuring unskilled (and to the extent feasible, skilled) labor is sourced locally; (b) mobilization of community (especially women and other vulnerable groups such as female-headed households, disabled, etc.) in maintenance activities or community based supervision. The Women’s Union and other relevant grass root organizations (CBOs, NGOs, pagoda, church, etc.) should be incorporated into the institutional structure of implementation to assist in promoting gender-sensitive community mobilization, participation and grievance redress channels.

129. Recommendation 7: Arrange adequate staff time to ensure that social-related issues (land acquisition, land donation, gender mainstreaming, EM participation, and community complaints/feedback) will be properly tracked, monitored and reflected in the relevant Program report for documentation and tracking. In addition, a database on the Program’s beneficiaries, disaggregated by gender and ethnicity should be maintained and monitored.

130. Capacity. With regard to capacity to manage environmental and social impacts, it is the central and commune level agencies that matter. Overall, Vietnam has policies at the Provincial, District and commune level that are aimed at managing environment risk. However, the staff assigned to implement these guidelines and supervise their implementation are often poorly trained and may not see this as a priority task. With regard to social risk management, the risk is somewhat greater because unlike environment, the mandate for various aspects of social risk management (e.g. vulnerable groups, voluntary land donation etc.) is not with any one unit and is spread among different implementing bodies at the local level. To better manage the weak capacity, and to put in adequate checks, the enhanced operations manual

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will contain detailed procedures and guidelines for environmental screening and management. The capacity building program which is currently being reviewed and updated with a number of activities targeting to strengthen the capacity of implementing agencies in managing social and environmental risks should be implemented and monitored during implementation, and provided with adequate and timely budget.

131. Consultation and Disclosure. There have been two rounds of consultation carried out on the ESSA and the enhanced operations manual. The first ESSA consultation, which was conducted on February 17, 2017 was well-participated by representatives from the 18 targeted Program provinces including top leaders of the People’s Committee, Department of Agriculture and Rural Development (DARD), Department of Labor, Invalids and Social Affairs (DOLISA), Provincial Department of Ethnic Minorities, along with ministries including MOF, MOLISA, CEMA, and MARD. Among others, participants showed their greatest attention on the issue of land acquisition in NTPs activities and the application of ESSA recommendations with regards to land donation and people’s contribution. In general, participants hesitate to apply compensation to land affected by NTPs activities, given land donation practice has been widely applied in these two programs, especially under NTP NRD. The aim was to get consensus on the principles of the ESSA and to validate the proposed screening and monitoring procedures. The second round of consultation was done during appraisal (March 27-31, 2017), in two locations in the field and targeted the district and commune staff from participating provinces (in Đắk Lắk in the Central Highlands and in Trà Vinh in the South). The aim was to ground-truth the proposed screening and management procedures and systems that will be incorporated into the enhanced manual. The ESSA was disclosed on the World Bank’s external website on March 1, 2017. It was also disclosed on the NTP-NRD website on March 22, 2017 and on the CEM website on March 27, 2017.

132. Communities and individuals who believe that they are adversely affected as a result of the Operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance redress mechanism or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org

D. Integrated Risk Assessment

133. Overall risk for this Program is High and reflects both technical and fiduciary concerns. Risks involved in the Technical aspects and in the Disbursement-Linked Indicators are mainly due to the concern that adequate funding and attention may not be provided to capacity building which will constrain quality implementation of the two NTPs. This issue as earlier mentioned, was inadequately addressed under the first phase of the NTPs, where the emphasis on capital expenditures dominated budget allocation and focus at the expense of associated recurrent costs for capacity building and technical assistance. If not addressed, this issue will likely result to unsatisfactory implementation of the proposed Program. Fiduciary concerns relate particularly to risks that funds may be used for debt repayments and other uses, as well as in the need to improve procurement capacities and practices. Hence, the focus of the Program Action Plan has been made to address these issues.

134. Budget allocation and Public expenditure. Faced with the aftermath of the recent economic crunch, government is implementing more efforts in spending control and on spending consolidation. As such, strengthening the effectiveness and efficiency of public investment is among the most important tasks for the consolidation of capital spending. Measures to stabilize and rationalize recurrent expenditures have also been introduced. For capital investments there are now stricter provisions on spending of revenue collected over what was planned in the original budget.

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135. The National Assembly has issued its Resolution for national medium term public investment for the period of 2016 – 2020 (Resolution 26/2016/QH14). It sets the maximum capital investment from state budget is VND 2000 trillion (~ US$88 billion). Of which VND300 trillion (~US$13.1 billion) is set for ODA resources. It means that this will be the total ODA envelop that the Government could count on the next 5 years. US$13.1 billion threshold is for 2016 – 2020, it means that on average, annual ODA threshold will be US$2.6 billion/year. This is even less than the current portfolios from the six international development banks. Roughly, the annual disbursement projection of committed World Bank portfolio is in the range of US$1.2 – 1.4 billion. ADB has the share of around US$1 billion per year. Japan International Cooperation Agency (JICA) has relatively larger portfolio at around US$1.5 billion, let alone other three development banks of Agence Française de Développement (AFD), German KfW and Korea Eximbank whose share, though smaller, need to be accounted for. As such, there is a high risk that overall ODA allocation for Bank-funded projects will be reduced to be in line with the ODA ceiling. For new operation to be committed during this period (2016 – 2020) the risk is even higher for them to get a decent share of the announced ODA amount. The NA’s resolution pledged that priorities of resources are given the NTPs. MPI and MOF have expressed its strong commitment to ensure the targeted Program provinces will receive sufficient and punctual allocations of budget, but the risk remains to be further mitigated.

136. The NRD-NTP has a distinct risk related to over-planned and ambitious master plans, especially for the poorer communes. Due to the target-oriented nature of the NRD-NTP, rural commune spared nothing to achieve the criteria. This has driven several communes into indebtedness, when they proceeded with investments without confirmed sources of funding. Communes that have achieved less than 5 criteria face with substantial demands for investment and their master plans still have a long wish list of items to be invested. Those lists are much larger than the current state budget could possibly cover. For several poor communes, it could take several rounds of 5-year NRD NTPs to be able to complete their master plans to achieve the NRD criteria. Even when the Government emphasized that the NRD-NTP is a social program, alluding to the fact that all social agencies have a role to play, and not relying totally on the resources from the State Budget, the resources mobilized from private sector and other sources has been quite limited. Government has been implementing some measure to manage the risks of indebtedness by postponing budget allocation to communes that have outstanding arrears. At the same time, with the participatory integrated SEDP planning mechanism to be rolled out in the NTPs, resources could be managed and consolidated better for joint impacts. The latter measure, which will be covered under this Operation, could effectively help to address this risk from the receiving end.

137. Insufficient local capacity to coordinate, manage and implement the NTPs. The two NTPs are mega programs, covering wide range of agencies, line ministries and localities. They are also characterized with strong decentralization through a lean system of mixture of full-time and part-time management boards at the commune level, steering committees at districts and provincial levels, and national coordination offices at central level. The targeted Program provinces represent the poorest ones in Viet Nam. It also means that their implementation and monitoring capacity are lower compared to those in the better-off provinces. With stricter control on recurrent expenditure, resources for capacity building initiatives and activities will also be limited. At the same time, as Viet Nam has graduated from IDA status, several bilateral donors have diverted to other countries with higher priorities of technical assistances (TA), leading to a substantially lower level of available TA for the NTPs to tap into. Active development partners that could have some TA in a few of the targeted Program provinces include Irish Aid (in an active project in 9 provinces for SPR-P135 implementation), Australia (pipelined for a gender-focused project in two (2) provinces), and IFAD (a small TA to accompany its investment operation in a few selected provinces focusing on NRD). With the recent downsized landscape of available TA from bilateral donors, coupled with less domestic resources for capacity building, there is a high risk that responsible agencies/levels in the targeted Program provinces will face greater challenges in delivering the results to be committed under this Program. This risk will span across areas of coordination, management and implementation. Both NTPs have specific capacity building component/focus area on capacity building and these could help address the capacity building issues. However, the available resources are far from enough and will present a constant challenge during Program implementation.

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E. Program Action Plan

138. The Program Action Plan to address inadequacies and to mitigate identified risks are summarized below (Table 6). Annex 8 provides due dates for completion of these actions and also the completion indicators.

Table 6: Program Action Plan No. Program Action Plan Expected Result/ Impact

1 Develop an M&E framework for NTP-NRD and SPR- P135 and roll out an MIS for NRD with financial information from TABMIS

Strengthened monitoring and program oversight, enhanced transparency and feedback mechanism.

2 Set up and maintain a web portal for citizen to leave feedbacks and complaints (on corruption/ procurement/program planning process). The information will be aggregated at the national level by MARD and will inform the Bank of the number of fraud and corruption allegations, as well as how they are handled (investigated, mitigated and/or sanctioned)

Website to record feedbacks and complaints

3 Contract a Capacity Building Program (CBP) Officer in the NRD and SPR-P135 NCOs to oversee the implementation of the CBP to support national, provincial, district and commune level training under TORs acceptable to the Bank.

Targeted training/capacity building being implemented in the use of the Enhanced Planning, Infrastructure, Enterprise and Livelihood procedures as well as in regard to Fiduciary, ESSA, Safeguard and Governance requirements

4 Enhanced Operations Manual for Planning, Infrastructure and livelihoods approved and Instructions issued for the use of the targeted Program provinces, districts and communes (on aspects related to technical specifications, climate resilience, financial management, procurement, environmental and social systems, governance and M&E),

Enhanced procedures put into implementation for the NTP-NRD and SPR-P135, which would provide for regular updating in agreement with the Bank, e.g., of cost norms, specifications, criteria and procedures to ensure their practicability, realistic pricing of contracts and adequate provisions in planning and budget allocations.

5 The Bank’s most updated lists of debarred and temporarily suspended firms and individuals, as a complement to the national debarment list, adopted and regularly shared, coordinated and monitored by the two NCOs, at both the national and provincial levels for both NTPs.

Updated lists of debarment/suspension by the Bank and the Government of Vietnam regularly shared by 2 Program NCOs for use among the targeted Program provinces

6 In conjunction with the Enhanced Operations Manual, and in conformity with Vietnamese Legislation, issue community/citizen, gender-sensitive guidelines, in both a language and format understood and accessible to beneficiaries, taking account of language requirements, especially for ethnic minorities.

Transparent guidelines and procedures in place to enable meaningful participation and consultation in every step of the Program implementation, including planning, design and implementation, compensation, voluntary donation, resettlement and rehabilitation measures in land acquisition.

7 Issuance of a “Voluntary Land Donation Guideline” to be included in the enhanced operations manual for adoption by the targeted Program provinces which would provide for “Voluntary Donation” to be used for small-scale community infrastructure where the impacts are minor and where there are no alternative options for the location of infrastructure.

Assurance that the land donation decision is made based on the informed consent of those affected and of their own choice.

8 Conduct of baseline and end-line survey for the 2 NTPs Rigorous establishment of Program baseline and rational assessment of Program results and impacts.

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Annex 1: Detailed Program Description

Program Development Objective (PDO)

1. The Program Development Objective is to improve the delivery of, and access to, investments for increasing agricultural production and enhancing livelihood opportunities within the Program area.

This is embedded in the larger program objectives of the two NTPs which are “To introduce New Rural Development to enhance the spiritual and material life of people; to acquire relevant social and economic infrastructure, to achieve appropriate economic structure and production organizational arrangements, to link agriculture with the industry and service sectors; to link rural development with urbanization; to achieve democracy, equality, stability, rich cultural and national identify in rural society; to protect the ecological environment; and to maintain national defense and security, social order and safety.” and “To achieve sustainable poverty reduction and to restrain the resurgence of poverty, in contribution to the achievement of economic growth, social security, improved living conditions and income generation for people, especially in poor areas; to facilitate the poor and poor households to access basic social services (health, education, housing, clean and hygienic water, and information), in contribution to the achievement of household poverty reduction targets in period 2016 - 2020 as set out in the National Assembly Resolution.”). The focus of the Program is primarily directed to assisting Government to improve the governance, processes, planning, implementation, monitoring and evaluation components of the NTP- NRD and the Program 135 Component of the NTP-SPR (SPR-P135) programs which are related to achieving the abovementioned PDO. Through efficiency gains, and an increased focus on investments supporting rural incomes, the Program would address key issues that have constrained the impact of NTP NRD and SPR-P135 in realizing higher agricultural productivity and access to sustainable livelihoods

2. The PDO key results indicators are:

(a) Number of targeted participating provinces with an NTP-SEDP integrated planning process;

(b) Share of Households with additional diversified income sources; and (c) Share of ethnic minorities and women satisfied with access to and quality of community

assets or services from increasing agricultural production and livelihoods.

Program Background

3. The PforR would cover a portion of the government’s NTP-for New Rural Development and for Sustainable Poverty Reduction (NTP-NRD and SPR). The NTPs are Government’s primary mechanism for addressing development challenges in the rural sector and for facilitating the redistribution of growth to narrow the disparities between urban and rural areas; especially the disadvantaged areas that have high proportions of ethnic minorities.

4. The first phase of the NTP was implemented over the period 2011-2015. There were 16 NTPs with ambitious targets being set for achieving 19 economic and social criteria. Achievement of preset levels for each of the 19 NTP criteria qualifies communes, districts and provinces for recognition as having attained “National Rural Development (NRD) status”, a largely symbolic recognition, but an approach that has tended to prioritize those districts and communes with the best chance of achieving “NRD status”.

5. For the second phase of the program, to be implemented from 2106-2020, the 16 NTPs have been consolidated into two NTPs through a National Assembly Resolution -No. 100; which created two overarching programs; the NTP for New Rural Development (NTP-NRD) and the Sustainable Poverty Reduction Program (NTP-SPR). The specific scope and guidelines for each of programs have been further defined through Prime Minister Decision No 1600 (August 16, 2016) on New Rural Development and No.1722 (Sept 2, 2016) on Sustainable Poverty Reduction. The 19 socio-economic criteria of the first phase program have been retained and again ambitious targets have been set for Districts and Communes.

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The targets and activities to be undertaken under the two NTPs are provided in Tables 1 and 2 and summarized below:

6. NTP-NRD (2016-2020). The program has the following specific performance indicators: (a) 50% of communes and at least one district /province will achieve “NDR Status” with regional targets being 28% for the Northern Mountainous Region; 80% for the Red River Delta Region; 59% for the Northern Central Region; 60% for the Southern Central Coastal Region; 43% for the Central Highlands; 80% for the Southeast Region; and 51% for the Mekong River Delta Region; (b) an average of 15 criteria per commune would be achieved (with no commune achieving <5), and with regional targets being 13.8 for the Northern Mountainous Region; 18 for the Red River Delta Region; 16.5 for the Northern Central Region; 16.5 for the Southern Central Coastal Region; 15.2 for the Central Highlands; 17.5 for the Southeast Region; 16.6 for the Mekong River Delta Region); (c) provision of essential infrastructure (transport, power, clean water, school and commune health station infrastructure); and (d) improved quality of life, job creation and a 1.8 increase in incomes over 2015.

7. The program has overall projected costs of VND 804,815 billion, of which VND 63,155.6 billion come from central direct budget and VND 130,000 billion from local direct budget. There are 11 activities to be undertaken, each with their own targets: (a) New Rural Development Master Planning; (b) Socio-economic infrastructure development; (c) Production development; (d) Poverty reduction and social security; (e) Educational development in rural areas; (f) Health services; (g) Cultural life; (h) Rural hygiene and environment; (i) National Defense and Security; and (j) Monitoring and Evaluation. As the program is designed to be demand driven, no specific budgets have been set for the eleven program Activities. The proposed PforR operation would be more narrowly focused on the following four main activities: (a) New Rural Development Master Planning; (b) Socio-economic infrastructure development; (c) Production development; and (d) Monitoring and Evaluation.

8. There has been little institutionalization of improved processes and approaches, and limited sustainability after completion of projects during the first phase of the NTP for both NRD and SPR. This despite considerable donor support although there have been some gains, particularly in terms of infrastructure and enhanced local level planning. However, inadequate budget provision for Operation and Maintenance (O&M), especially at commune level has limited the sustainability of interventions. Reviews undertaken of both the NRD and SPR through technical assistance supported by the Bank and IFAD (in the case of NRD) and the Bank and Irish Aid (in the case of SPR-P135), have highlighted a number of areas requiring strengthening in the next phase of the program (see Annex 4).

PforR Design Considerations

9. The design of the PforR operation focuses on improving the efficiency of the implementation, while ensuring the emphasis is on improving the welfare and income for those living in the poorest as well as the most vulnerable and disadvantaged areas of the country; especially the poor ethnic minority areas. As illustrated in Figure 1, reforms and changes in the way of doing business are needed at all levels, National, Provincial, District and Commune, recognizing however that such changes will take substantial consensus building, detailed and implementable guidelines, and significant on-the-job training and follow-up. Adding to the complexity is that the PforR would cover two NTPs, with NRD being the responsibility of the Ministry of Agriculture and Rural Development (MARD), while the SPR is implemented by the Ministry of Livelihoods, Invalids and Social Affairs (MOLISA), and by the Committee for Ethnic Minority Affairs (CEMA), all of which have their own procedures and a weak track record of interagency coordination.

10. The design challenges are that while considerable complementarities exist between the two NTPs, there are differences in both target groups and implementation mechanisms. The NTP-NRD focuses on all 63 provinces of Vietnam, while the NTP-SPR is focused on the poorest communes and districts, and especially through Program-30A (P30A), on 94 poor Districts and 310 communes in coastal

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areas, and through Program-135 (SPR-P135) on 2240 poorest communes and 33729 poorest villages in ethnic minority and mountainous areas. Both the NTP-NRD and SPR finance various kinds of infrastructure, production, livelihood activities and some capacity building at the local levels. However, their implementation mechanisms and reporting requirements are different, resulting in inefficiencies in service delivery at the provincial, district and commune levels. Finally, both NTPs employ strong decentralization approach where the communes will assume the investment ownership. This poses some challenges given that the PforR’s focus aligns with the Government’s orientation of prioritizing poorer regions of the country. Local implementers and beneficiaries in these regions have been assessed to be in greater need of capacity building, technical assistance and greater support compared to other regions.

11. Efficiency requirements to be addressed under the PforR are as follows:

a) At the National level: Need for better Integration of planning and implementation between NRD and SPR-P135; need to revise NTP Policy and Guidance; need for more flexible criteria, need to strengthen planning and technical criteria as well as better linkage with strategic programs of MARD, CEMA, MOLISA and MPI (in coordinating the overall SEDP Planning); need to operationalize and institutionalize M&E; and need to strengthen capacity building at all levels in program implementation;

b) At the Provincial level: Need for better integration of NRD and SPR-P135 plans with the Provincial SEDP; need to strengthen and harmonize criteria for Investment prioritization, technical standards, and implementation processes; and

c) At the District and Commune level: Need to provide technical backstopping on use of the enhanced operations manual; need to enter agreements with communes on O&M; need to harmonize data collection and reporting requirements form communes, need for flexibility to plan according to local priorities; need enhanced implementing guidelines for Infrastructure, Enterprise and Livelihood implementation; and need for harmonized and improved procedures for participatory planning.

Scope and Boundaries of the Program

12. The boundaries of interventions to be covered (and verified) under the proposed PforR for the NTP-NRD and SPR, would be limited to those investments which support agriculture productivity related infrastructure, as well as other livelihood and enterprise subprojects encompassing on-, off- and non-farm activities. Within the NTP-SPR program, the PforR will only cover the SPR-P135 program implemented by CEMA which is focused on the very poorest provinces. This PforR will cover small scale infrastructure for enhancing agricultural productivity, climate resiliency, mitigate climate risks and value added. These would include: village- level farm-to-market-roads, small bridges (fixed and suspension), foot paths and pathways, small-scale gravity, pump and drip irrigation, shallow wells, small water impounding, village-level, small-scale fish landings, village-level small jetties, postharvest facilities (drying floors, small storage sheds, market facilities), plant nurseries, seed production facilities, tree planting, composting/organic fertilizer production, livestock breeding and distribution facilities, milking facilities, small-scale commodity processing equipment for village –level processing, etc. For rural livelihood activities, this would cover on-, and non-farm activities related to crop production, egg/chicken production, pig fattening, milk production, aquaculture, coffee, coconut and vegetable oil processing, rubber processing, broom and basket making, weaving, handicraft production, fruit and nut packaging and preservation, village level juice processing, product hauling and consolidation, marketing, small scale processing of agricultural products, etc.

                                                            9 These are based on earlier documents. GoV has just issued a new set of criteria for SPR-P135 communes and villages to be effective on December 20, 2016 (Decision QD50/2016/QD-TTg, dated November 3, 2016) on issuance of criteria for identifying extremely disadvantaged villages and communes in Ethnic Minority and Mountainous Areas 2016-2020). The new list of SPR-P135 communes is expected to be available at the end of March 2017.

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Table 1. Matrix of NTP Investments and Activities under the NTP PforR Operation

NTP - National Rural Development Sub-Project Boundary of investments and Activities (as per TABMIS) Project 1. New rural development master planning

Master planning of regional construction to meet the criteria set out in Prime Minister Decision No. 558/QD-TTg

Reviewing and making adjustments and/or supplementations to the production master plan within the master plan for new rural communes

Reviewing and making adjustments to the rural economic - social - environmental infrastructure development master plans within the new rural commune master plan

Project 2. Socio-economic infrastructure development.

Activity 01 - Improving the transport networks (including village roads, small and hanging bridges, foot paths, etc.) in the commune and/or village jurisdictions, with attention to improving climate resilience

Activity 02 -Improving the in-field agricultural irrigation networks Activity 06: Completing the construction of rural markets, rural trade

infrastructure (such as markets and postharvest facilities) in line with the master plans and demands of the population

Project 3: Production development aligned with agricultural restructuring, rural economic structural transformation and income increasing for people

Activity 01: Initiatives on agricultural restructuring by integration into value chains to improve value addition and sustainable development, as well as to adapt cropping patterns for better climate resilience

Activity 02: Strengthening agricultural extension services; accelerating the application of science and technologies, in particular advanced technologies in agricultural, forestry and fishery production

Activity 03: Strengthening agricultural extension services; accelerating the application of science and technologies, in particular advanced technologies in agricultural, forestry and fishery production, as well as climate-smart agricultural practices, which would promote climate adaptation and mitigation of climate risks

Activity 04: Continuing agricultural production reforms, by the implementation of Prime Minister Decision No. 2261/QD-TTg, dated December 15, 2014, on the approval of the NTP on supporting cooperative development in 2015-2020

Activity 05: Developing rural crafts including: preservation and development of craft villages in association with eco-tourism development; encouraging the development of one craft per village; supporting the development of brand names and geographical tagging, improvement of product design

Activity 06: Upgrading the quality of vocational training for rural workers:

Project 11. Enhanced capacity for New Rural Development implementation, program monitoring and evaluation, communication on New Rural Development

Activity 01: Training to build capacity and awareness for communities and local people, especially in disadvantaged areas for their full understanding of the substance, methodologies and methods in New Rural Development

Activity 02: Issuing a standardized manual for training and knowledge dissemination for New Rural Development officers at all government levels. Providing intensive training, advanced knowledge and skill building for New Rural Development workers at all government levels

Activity 03: Developing and effectively implementing the systematic and comprehensive monitoring and evaluation framework in response to the program management requirements on the basis of using information and communication technological platforms

Activity 04: Delivering communication on New Rural Development NTP- SPR/Program No. 135

Sub-Project Boundary of investments and Activities (as per TABMIS) Sub-project 1: Support for climate –resilient infrastructure investment in

Rural roads to support production, trading and residential activities New construction or upgrading of small scaled irrigation works

42 

extremely disadvantaged communes, borderland communes, communes safetyzones; and/or extremely disadvantaged villages Target Beneficiaries: extremely disadvantaged communes, borderland communes, communes in safety zones; and/or extremely disadvantaged villages in accordance with the decisions issued by the relevant authorities.

Other small scaled infrastructure works as proposed by the communities (related to improving ag productivity and improving livelihoods)

Maintenance of infrastructure works (related to improving ag productivity and improving livelihoods) in the local jurisdictions

Sub-project 2: Support for production development and livelihood diversification and replication of poverty reduction models to extremely vulnerable and disadvantaged communes, borderland communes, communes in past revolutionary safety havens, and/or extremely disadvantaged villages. Target beneficiaries: Workers from poor households, near poor households, or household recently escaped from poverty, with priorities given to poor households of ethnic minority groups, women from poor households; Household groups or communities in the local jurisdictions.

Production development and livelihood diversification (i.e. Training, transfers of techniques; seeds and breeds; production equipment, tools, materials; fertilizers; animal feeds, plant protection chemicals, veterinary drugs, etc.; support for the construction of animal husbandry farms or facilities, upgrading of aquaculture ponds)

Vocational and service development: workshops; machinery and equipment; production materials; vocational training and orientation education; access to markets and creation of jobs

Enterprises and cooperatives associating with the poor for production development, vocational development, product processing and distribution

Other livelihood diversification activities as proposed by the local communities, relevant to the norms, and aimed to improve climate resilience to changing land and water conditions, as well as in mitigating climate risks

Replication of poverty reduction models (with priorities given to replication of poverty reduction models linked with relevant livelihood of each region or residential groups)

Development and replication of public job creation models via investment in small scaled infrastructure works at village level to generate incomes for people; integrated agro-forestry production models to create jobs for people, linked with forest plantation and protection; natural disaster risk mitigation and climate change responsiveness models

Production lands, including, recovery of productive lands, creation of sloping fields, stone paved sloping fields

Sub-project 3: Strengthen capacity for community and grassroots-level officers in extremely vulnerable and disadvantaged communes, borderland communes, communes in past revolutionary safety havens; and/or extremely disadvantaged villages Target beneficiaries: Communities and grassroots-level officers in extremely disadvantaged communes, borderland communes, communes in past revolutionary safety havens; and/or extremely disadvantaged villages

Training for: Commune level: Communes' community oversight committees; village

workers; community representatives; heads of residential groups or teams; local mass organization workers; poverty reduction collaborators; village-level infrastructure maintenance teams; people of reputation in communities and among people; with priorities given to ethnic minority people and women in capacity building activities.

For grassroots-level officers: Capacity building emphasis on commune officers and villages in program implementation, commune-level and village-level extension workers and veterinarians; with priorities given to ethnic minority officers, female officers in capacity building activities.

13. The following were the technical criteria for selecting the Program provinces: (a) poverty rate, (b) share of ethnic minorities in a province, and (c) number of SPR-P135 communes. Additional criteria which Government considered in finalizing the said list included: (a) representation of the 4 prioritized regions for poverty reduction (i.e., Northern Mountains, Central Coastal, Central Highlands and Southwestern); (b) presence of complementary Bank and other donors providing technical assistance

43 

and related investments; and (c) capacity, commitment and interest of provinces to participate in the operation.

PforR Result Areas and DLI Linkages

14. Through the focus on results, the PforR operation would address those key institutional and procedural issues that constrained outcomes under the first phase program of both the NRD and the SPR. The World Bank’s financial and technical contribution would be to help catalyze the uptake of reforms and scale up innovations in “ways of doing business” that have been piloted under donor programs, some of which supported the earlier phase of the two NTPs, leading to improved implementation and resource efficiency, along with greater impact on poverty reduction, increased capacity at local levels and value -added productivity in agriculture and in rural livelihoods.

15. The proposed PforR operation will cover the achievement of specific and measurable results associated with 8 of the 19 NTP-NRD criteria associated with investments designed to raise incomes and value added productivity through on-, off-, and non-farm activities (i.e. NTP-NRD Criteria No: 1-Planning and Implementation, 2-Transport, 3-Irrigation, 7-Rural Infrastructure for trading and commerce, 10-Income, 11-Poor Households, 12 – Rural Labor and 13-Production Organization10. For the NTP-SPR, activities would be supported under SPR-P135 as those relate to support to community-based small-scale infrastructure and on-, off- and non-farm rural livelihoods for improving agricultural productivity and rural household incomes, as well as support to increased capacity for ethnic minority leaders and commune officials. The Program would also cover recurrent expenditures on technical assistance and capacity building in the areas of planning, subproject design, implementation and monitoring and evaluation.

16. The linkages between the activities to be implemented under the PforR operation and the expected results, are shown in the Results Framework (Annex 2), together with the Disbursement Linked Indicators against which the PforR performance will be assessed and the intermediate results.

Implementation Framework

17. The Implementation Processes for the NTPs are guided by a large number of Decisions and Circulars. Collectively these documents provide a comprehensive, at times overlapping, set of instructions and requirements for investment planning, implementation and accountability. But the plethora of such documents and their often-stylized format is a source of confusion and uncertainty impacting on implementation, especially at the commune level. Compounding this, is the considerable uncertainty that surrounds the levels of annual funding and the timing of budget releases. Key documents are as follows:

(a) The Resolution 100/2015/QH13 dated 12 November 2015 on approving proposal number 544 / BC-CP for investment policy for NTP-SPR and NTP-NRD 2016-2020;

(b) Prime Minister Decision No 1600 (August 16, 2016) on New Rural Development: This defines the overall Program Objectives, Targets, Activities, Budgetary requirements and Responsibilities for implementing the NTP-NRD; and

(c) Prime Minister Decision No.1722 (Sept 2, 2016) on Sustainable Poverty Reduction. This defines the overall Program Objectives, Targets, Activities, Budgetary requirements and Responsibilities for implementing the NTP-SPR.

18. Implementation Procedures for the NTP would be guided by an enhanced operations manual for Planning and Investment Prioritization, Infrastructure and Enterprise Support. These are being developed as part of the preparation of this Operation. Formal adoption of this enhanced operations manual for both the NTP-NRD and SPR would be a condition of effectiveness, and their implementation would be a legal covenant and part of the DLIs (DLI 3 and DLI 5). The enhanced operations manual will also include specific provisions regarding the application of the anti-corruption guidelines (ACGs) in the Program, and the obligation of all the implementing agencies to cooperate with Bank investigations.

                                                            10 Prime Minister Decision 1980/QD-TTg, dated 17 October, 2016 on the issuance of the national criteria set for new rural communes 2016-2020.

44 

19. Capacity Building would be essential to the success of the PforR operation in implementing the various reforms and changes in the way of doing business required to improve the efficiency of the NTP-NRD and SPR. Underestimation of the effort and resources that will be required is perhaps the largest risk in achievement of the results of the PforR operation. Specific actions are taken as part of the Program Action Plan to address capacity development needs (see Annex 8).

Institutional Arrangements and Program Management

20. Program Organization: The PforR would draw upon existing organizational and implementation arrangements as illustrated in Figure 2.

21. Program Oversight: A Central Program Steering Committee (Central-PSC) would provide the overall Oversight and Policy Guidance for both the NTP-NRD and SPR. This single Central Steering Committee was established though Resolution 100/2015 QH13 (November 12, 2015) which condensed the previous 16 NTPs into two (NRD and SPR). The Central-PSC is chaired by the Deputy Prime Minister with the permanent deputy chairperson being the Minister of MARD. The deputy chairperson is the Deputy Minister of MARD. Permanent members of the Central-PSC are the Ministers of MPI, MOF and MOC. Members are the Deputy Ministers of all line ministries. Key functions would be to provide oversight and policy guidance, serve as a forum for coordination between NTP programs and activities, issue guidelines and circulars as appropriate, adopt and periodically revise as necessary the Enhanced Operations Manual, and annually review and report to the Office Of Government on the progress of the NTP and the progress of the PforR Operation. The Central-PSC organization and functions are mirrored at Provincial, District and Commune level with program Steering Committees Steering Committees. At provincial, district and commune levels, the PSCs are chaired by the Chairman of the Peoples Committee.

22. Program Management. A Program Coordination Office would have primary responsibility for managing the execution of the NTP-NRD and SPR, although the day-to day management of the SPR-P135 within the NTP-SPR would be managed by CEMA. The program Coordination Office is administratively located in MARD (MARD-NCO). Principal functions are to: (a) develop programs and work plans; (b) preparation for meetings, conferences, workshops and reports as required by the Central –PSC; (c) develop plans to implement the program; coordination plan, supervise, monitor and guide the agencies, and local authorities; (d) prepare budget plans, allocate and monitor the disbursement of the state budget and other funds for NTP-NRD; (e) research and propose mechanisms, policies and mechanisms for inter-agency coordination; and (f) facilitate communication and international cooperation assistance. The Central-PCO is mirrored at Provincial, District and Commune levels. The MARD-NCO has four Divisions (Administration, Planning and General Affairs, Communications and International Cooperation, and Operation11) and some 28 full-duty officer and 17 concurrent officers drawn from other ministries. Provincial PCOs are administratively located in the various offices of the Provincial Peoples Committee, Provincial-program Steering Committee, or DARD. On average Provincial-PCOs have some 6-7 officers. District -PCOs have 2 officers on average while at the Commune Management Unit level, of the 8,935 communes nation-wide, about 30 percent have a full-time officer assigned to the NTP-NRD. About 75 percent of villages/hamlets have established Community Development/Supervision Boards.

23. Implementing Agencies. The responsible line ministries, through their provincial and district departments and sub-departments, would implement the NTPs for NRD and SPR. The Prime Minister Decisions approving the NTP and NRD for the period 2016-2020 contain the specific responsibilities for each line ministry and local authorities (summarized in Figures 1 and 2). The MARD had been assigned as the led implementing agency for the PforR operation with the responsibility for leading the collaboration with MOLISA and CEMA.

                                                            

11 As per Decision 905/QD-BNN-TCCB by MARD on organization and personnel

45 

Figure 1: NTP-NRD &SPR: Issues and Actions Needed

Districts - NRD is supported through Provincial and District Dept. of Agr. & Rural Dev. (DARD) -SPR is supported though Provincial & District Units providing the functions of MOLISA & CEMA

Province -People’s Council approve Plans -Allocation of budget to Districts & Communes influenced heavily by best options for Districts and Communes for achieving the 19 criteria “NRD Dev. Status”, rather than based on technical and socio -economic considerations.

Communes 

-Implement NRD, SPR Plans according to funding source requirements through budget allocations (often not provided in timely manner or in accordance with the budget).

-Need flexibility to plan according to needs -Need enhanced manuals for Infra.,Enterprise & Livelihood implementation -Need enhanced and harmonized procedures for participatory planning

-Implementation requirements vary by program -Participatory planning of variable quality especially integration of ethnic minority and women’s perspectives into selection of investments -Multiple reporting requirements

-Need to provide tech backstopping on use of enhanced Manuals

-Need to enter agreements with communes on O&M

-Need to harmonize data collection and reporting requirements from communes

-NRD &SPR implementation & reporting handled separately

-Tech. Approach and specifications vary between NRD &SPR

- Emphasis given to infrastructure over income generating investments

-Need better integration of NRD &SPR plans with the Provincial SEDP.

-Need to strengthen and harmonize criteria for i) Investment prioritization, ii) technical standards, and iii) implementation processes

-Separate NRD &SPR plans,

-NTP not well integrated with Provincial Plan (SEDP)

-Separate Reporting

-Separate Technical approach & specifications.

- Top-down pressures on achievement of 19 NTP targets rather than local needs;

-Weak accountability compounded by no effective M&E

-Considerable overlap between NRD & SPR but little integration of plans

- Different technical requirements

-Different data collection and reporting requirements

NTP-NRD

(NRD-Natl. Coord. Office hosted by

MARD)

- NRD covers all 63 Provinces in Vietnam,

713 Districts & 9043 rural communes.

-Need better Integration of planning & implementation between NRD and SPR/P135

- Need to revise NTP Policy & Guidance, more flexible criteria, strengthen planning & technical criteria, better linkage with strategic programs of MARD, CEMA & MOLISA. -Need to operationalize and Institutionalize M&E

-Need to strengthen capacity building at all levels in program implementation.

NTP-SPR (CEMA & MOLISA)

SPR covers 53 poor Provinces, 420 Districts, & 3815 communes. MOLISA focuses on 1515 communes in coastal areas and 67 poor Districts. CEMA’s focus is on 2300 -P135 poorest communes of minorities

Government

-MPI Chairs Steering Committees. for NRD & SPR -Reports NTP Progress to National Assembly

NTP ISSUES

2011 – 2015

KEY ACTIONS NEEDED

2016-2020

46 

Figure 2: NTP-NRD and SPR Oversight, Management and Implementation Framework

National-Program Coordination Office

Central Program Steering Committee

Provincial- Program Steering  

District-Program Steering Committee

Commune Program Steering Committee

Provincial Coordinating Offices

Commune Program Management Units

MARD, MOLISA, CEMA, MOC & other

line ministries

Departments of line Ministries

Sub-Departments of line Ministries

Oversight & Policy Guidance

NTP Program Management

Implementation Support

 

47 

Annex 2: Results Framework

Result Area PDO/Outcome Indicators

Intermediate Results Indicator DLI # Unit of Measurement

Baseline End line Target

Improved Program Planning and Governance

PDO Indicator 1-Number of participating provinces with an NTP-SEDP integrated planning process

2 Number of Provinces

0 18

IR Indicator 1: Issuance of Policy and Guidance Instruments for the NTP- NRD and SPR-P135 that include PforR agreed planning, technical and implementation improvements/reforms

- Number of Decisions issued

0 2

IR Indicator 2: Issuance of Policy and Guidance instruments for the NRD and SPR-P135

1 Number of Decisions issued

0 1

IR Indicator 3: Number of targeted Program provinces with plans prepared in a participatory manner (bottom-up) with community involvement with effective consultations of ethnic minorities and women.

- Number of targeted Program Provinces

0 18

Improved Quality of Program Investments

IR Indicator 4: Issuance of enhanced operations manual12 for socio-economic infrastructure for both the NTP-NRD and SPR-P135

- Number of operations manuals issued

0 1 with several Volumes

IR Indicator 5: Percentage of infrastructure investment sub-projects implemented in compliance with the enhanced operations manual

3 Percentage 0 90

IR Indicator 6: Percentage of socio-economic infrastructure supported by O&M (separately for NRD and SRP-P135)

- Percentage TBC TBC

IR Indicator 7: Issuance of standardized procedures and requirements for scaling up climate-resilient livelihood and enterprise support

- Number of operations manuals issued

0 1 with several volumes

                                                            

12 Includes climate resiliency standards and specifications

 

48 

Result Area PDO/Outcome Indicators

Intermediate Results Indicator DLI # Unit of Measurement

Baseline End line Target

established for both the NTP-NRD and SPR-P135 informed by value-chain analysis.

IR Indicator 8: Percentage of livelihood support subprojects implemented in compliance with the enhanced operations manual  

5 Percentage 0 90

Increased Access to Program Investments

PDO Indicator 2- Share of households with additional diversified income sources

6 Percentage TBA 20 percentage points increase over baseline figure

IR Indicator 9: Percentage of spending linked to value-chain based and climate-resilient livelihood investments (separately for NRD and SRP-P135)

- Percentage 0 30

PDO Indicator 3—share of ethnic minorities and women satisfied with access to, and quality of community assets or services for increasing agricultural production and livelihoods

4 Percentage TBA 20 percentage points increase over baseline figure

Improved Program Monitoring and Management

IR indicator 10: Number of officers at the provincial-, district-, commune and village-level trained in the use of the enhanced operations manual

7 Number of Trainees

0 50,000

IR Indicator 11: Number of monitoring reports submitted to the NTP steering committee with updated information on end of year implementation status and reporting of Program impacts at completion

Number of Reports

0 6

IR Indicator 12: Number of monitoring and evaluation (M&E) frameworks developed for NTP-NRD and SPR-P135

8.1 Number of Frameworks

0 2

IR Indicator 12: Number of participating 8.2 Number of 0 18

 

49 

Result Area PDO/Outcome Indicators

Intermediate Results Indicator DLI # Unit of Measurement

Baseline End line Target

provinces with an operational NRD-MIS web-based platform, including semi-annual reports with physical outputs and financial information from TABMIS.

targeted Program Provinces

IR Indicator 13: Number of publicly accessible websites publishing semi-annual reports on physical progress and financial information on NRD and SPR-P135

8.3 System Operational

0 2

IR Indicator 14: Baseline and end-line tracking survey for NRD and SPR-P135

9 Number of Surveys

0 2

 

 

 

 

 

 

 

50 

Annex 3: Table 1: Disbursement-linked Indicators, Disbursement Arrangements and Verification Protocols

DLI description Total DLI

Allocation (Million US$ equivalent)

As % of

Total Finan-

cing Amt

DLI Baseline

Timeline for DLI achievement

Year 1

Year 2

Year 3 Year 4 Year 5

DLI1: Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135.

16 NTPs collapsed into two NTPs. No specific guidelines.

Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135 

Allocated amount 20

(SDR 14.58 Million)

12.5% US$20 million equivalent

(SDR 14.58 million)

DLI 2: Number of Participating Provinces with an NTP-SEDP integrated planning process

0 9 Participating Provinces with

approved NRD and SPR-P135 plans integrated with

provincial SEDP plans

18 Participating Provinces with

approved NRD and SPR-P135 plans integrated with

provincial SEDP plans

Allocated amount 15

(SDR 10.94 Million)

10% US$7.5 million equivalent

(SDR 5.47 Million)

US$7.5 million equivalent

(SDR 5.47 Million)

DLI 3: Percentage of Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

0 (Absence of enhanced operations manual)

60 % of the Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

75% of the Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

90% of the Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

 

51 

DLI description Total DLI

Allocation (Million US$ equivalent)

As % of

Total Finan-

cing Amt

DLI Baseline

Timeline for DLI achievement

Year 1

Year 2

Year 3 Year 4 Year 5

Allocated amount 30

(SDR 21.85 Million)

20% US$12.5 million equivalent

(SDR 9.177 Million)

US$12.5 million equivalent)

(SDR 9.177 Million)

US$5 million equivalent

(SDR 3.496 Million)

DLI 4: Percentage points increase of ethnic minorities and women satisfied with access and quality of community assets or services for increasing agricultural production and livelihoods

To be Determined

from Baseline Survey

A 20 percentage points increase from baseline survey share of ethnic minorities and women satisfied with access and quality of community assets or services for increasing agricultural productivity

Allocated amount 10

(SDR 7.30 Million)

6.5% US$10 million equivalent

(SDR 7.30 Million)

DLI 5: Percentage of Livelihood Support Sub-projects implemented in compliance with the Enhanced Operations Manual

0 (Absence of enhanced operations manual)

60 % of Livelihood Support Subprojects implemented in compliance with the Enhanced Operations Manual

75 % of livelihood support subprojects implemented in compliance with the Enhanced Operations Manual

90 % of livelihood support subprojects implemented in compliance with the Enhanced Operations Manual

Allocated amount 30

(SDR 21.85 Million)

20% US$12.5 million equivalent

(SDR 9.177 Million)

US$12.5 million equivalent

(SDR 9.177 Million)

US$5 million equivalent

(SDR 3.496 million)

 

52 

DLI description Total DLI

Allocation (Million US$ equivalent)

As % of

Total Finan-

cing Amt

DLI Baseline

Timeline for DLI achievement

Year 1

Year 2

Year 3 Year 4 Year 5

DLI 6: Percentage points increase in the share of households with additional diversified income sources

To be Determined from Project

Baseline Survey

A 20 percentage points increase from baseline survey share of households with additional diversified income sources

Allocated amount 10

(SDR 7.30 million)

6.5% US$10 million equivalent

(SDR 7.30 million)

DLI 7: Number of officers at the provincial-, district-, commune- and village-level trained in the use of the Enhanced Operations Manual

0 20,000 officers at the provincial-,

district-, commune- and village-level

trained in the use of the Enhanced

Operations Manual

30,000 officers at the provincial-, district-,

commune- and village-level trained

in the use of the Enhanced Operations

Manual

Allocated amount 10

(SDR 7.30 million)

6.5% US$4 million equivalent

(SDR 2.92 million)

US$6 million equivalent

(SDR 4.38 Million)

DLI 8.1: Number of monitoring and evaluation frameworks developed for NRD and SPR-P135

No M&E Framework or MIS system in place for either NTP-NRD or SPR

2 M&E results frameworks for the NTPs (one for each of NRD and SPR-P135

Allocated amount 5

(SDR 3.64 Million)

3% US$5 million equivalent

(SDR 3.64 Million)

 

53 

DLI description Total DLI

Allocation (Million US$ equivalent)

As % of

Total Finan-

cing Amt

DLI Baseline

Timeline for DLI achievement

Year 1

Year 2

Year 3 Year 4 Year 5

DLI 8.2: Number of Participating Provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

No Institutional MIS for NTP-NTD

8 participating Provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

12 participating provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

18 participating provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

Allocated Amount 9 (SDR 6.55 Million)

6% US$3 million (SDR 2.18 Million)

US$3 million (SDR 2.18 Million)

US$3 million (SDR 2.19 Million)

DLI 8.3 Number of publicly accessible websites publishing semi-annual reports on physical progress and financial information on NRD and SPR-P135

No Public Disclosure Standards for NTP-NRD or SPR

Two (2) publicly accessible websites publishing semi-annual reports on physical progress and financial information on NRD and SPR-P135

Allocated Amount 5

(SDR 3.64 million)

3% US$5 million equivalent

(SDR 3.64 million)

DLI 9: Baseline and end-line tracking survey for NTP-NRD and SPR-P135

0 1 Baseline tracking survey for NRD and SPR-P135

1 End line tracking survey for NRD and SPR-P135

 

54 

DLI description Total DLI

Allocation (Million US$ equivalent)

As % of

Total Finan-

cing Amt

DLI Baseline

Timeline for DLI achievement

Year 1

Year 2

Year 3 Year 4 Year 5

Allocated amount 9

(SDR 6.55 Million)

6% US$4.5 million equivalent

(SDR 3.275 Million)

US$4.5 million equivalent

(SDR 3.275 Million)

Total Financing Allocated: 153 100% US$25million US$44million US$46.5 million US$13 million US$24.5 million

Total IDA Blend 153 equivalent

(SDR 111.5 million)

100%

US$25 million equivalent

(SDR 18.22 million)

US$44 million

equivalent

(SDR 32.199 million)

US$46.5 million

equivalent

(SDR 34.024 million)

US$13 million

equivalent

(SDR 9.182 million)

US$24.5 million

equivalent

(SDR 17.875 million)

 

 

 

55 

Annex 3: Table 2 - DLI Verification Protocols

Review Year or Period

DLI Definition/ Description of achievement Scalability of

Disbursements (Yes/No)

Protocol to evaluate achievement of the DLI and data/result verification

Data source/ agency

Verification Entity

Procedure

Year 1

DLI#1: Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135

This DLI will have been met upon issuance of Prime Minister Decisions for both NRD and SPR-P135 defining Objectives, Activities, Budgets and Responsibilities and inter alia addressing enhanced support for (a) livelihood development focusing especially on group activities,(b) use of value chain analyses to provide the technical basis for supporting agricultural productivity enhancement, (c) increased support for O&M and recurrent expenditures for capacity building, and (d) establishment of M&E framework and MIS system.

No Office of

Government

Verified already with issuance of the following:

Prime Minister Decision Ref. No.: 1600/QD-TTg Approval of the National Target Program on New Rural Development for Period 2016 - 2020, (August 16, 2016), and

Prime Minister Decision Ref. No 1722/QD-TTg Approval of the National Target Program on Sustainable Poverty Reduction for Period 2016 - 2020 (September 2, 2016)

Years 2-3

DLI#2: Number of Participating Provinces with an NTP-SEDP integrated planning process

This DLI will have been met when the NRD and SPR-P135 plans have been integrated in approved Provincial SEDP plans for each of the 18 targeted Program provinces.

Yes

MARD-NCO

SPR-P135 NCO

MARD-NCO through the State Audit of Vietnam

Verification that this DLI target has been achieved would be through an (a) official letter to the Bank from the MARD-NCO confirming and providing details of the targeted Program provinces where NTP-NRD and SPR-P135 plans have been integrated with Provincial SEDP processes. This would be followed by the random selection and review by the verification agent of at least 50 percent of Provincial SEDP plans from the targeted Program provinces by the independent verification agency to review, verify and confirm.

 

56 

Years 2-4

DLI#3: Percentage of Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

This DLI will have been met when the share of verified infrastructure investment sub-projects is implemented in compliance with enhanced operations manual for NRD and SPR-P135

Yes

MARD-NCO

SPR-P135-NCO

State Audit of Vietnam

Verification that the DLI target has been achieved would be through a letter to the Bank from the independent Verification Agency confirming that the specified share of infrastructure subprojects implemented in a representative and randomly selected sample of 300 communes are in compliance with the enhanced operations manual based on field visits by the VRA through which assessments of each reviewed subproject will be made against an agreed prior checklist of technical specifications and procedural requirements in the manual.

Year 5

DLI#4: Percentage points increase in the share of ethnic minorities and women satisfied with access and quality of community assets or services for increasing agricultural production and livelihoods

This DLI will have been met when the specified percentage points increase from baseline survey value of the share of ethnic minorities and women in communes in targeted Program provinces are satisfied with access and quality of community assets or services for increasing agricultural productivity

Yes

MARD-NCO

SPR-P135-NCO

Independent survey firm

Verification that this DLI target has been achieved would be through a final report and accompanying data from the baseline and end-line surveys implemented in line with TORs agreed with the Bank submitted by the MARD–NCO, providing indicators of access and satisfaction with quality of community assets or services for increasing agricultural productivity.

Years 2-4

DLI#5: Percentage of Livelihood Support Sub-projects implemented in compliance with the Enhanced Operations Manual

This DLI will have been met when the share of implemented livelihood support subprojects is in compliance with the enhanced operations manual.

Yes

MARD-NCO

SPR-P135-NCO

State Audit of Vietnam

Verification that a DLI target has been achieved would be through a letter to the Bank from the VRA confirming that the specified share of livelihood support subprojects implemented in a representative and randomly selected sample of 300 communes are in compliance with the enhanced operations manual based on field visits by the independent Verification Agency through which assessments of each reviewed subproject will be made against an agreed prior checklist of technical specifications and procedural requirements in the enhanced operations manual.

 

57 

Year 5

DLI#6: Percentage points increase in the share of households with additional diversified income sources

This DLI will have been met when the specified percentage points increase from baseline survey value of the share of households with diversified income sources

Yes

MARD-NCO and SPR-

P135-NCO

Independent survey firm

Verification that a DLI target has been achieved would be through final report and accompanying data from both the baseline and the end line survey implemented under TORs agreed with the Bank submitted by the MARD –NCO, providing indicators of share of households with diversified income sources

Years 2-3

DLI#7: Number of officers at the provincial-, district-, commune- and village-level trained in the use of the Enhanced Operations Manual

This DLI will be fully met when the specified number of officers at the province-, district-, commune-, and village-level are trained in the use of the enhanced operations manual

Yes

MARD-NCO

SPR-P135-NCO

State Audit of Vietnam

Verification that this DLI target has been achieved would be through submission of a training registry of participants listing names, district and commune of trainees, training course attended and date of completion and with verification of participation of a random selection of 10 percent of the listed trainees based on face-to-face interviews by the independent verification agent.

Years 1-4

DLI#8 (8.1 – 8.3):

(8.1) Number of monitoring and evaluation frameworks developed for NRD and SPR-P135

(8.2) Number of participating provinces with an operational NRD MIS web-based platform including semi-annual physical outputs with financial information from the TABMIS

(8.3) Number of publicly accessible websites publishing semi-annual reports on physical progress and financial information on NRD and SPR-P135

This DLI will have been fully met when an MIS for NRD is operational and capturing information on outputs and outcomes with financial information from TABMIS with subproject information published online via a public disclosure portal, and when it is in use by all of the targeted Program provinces.

Yes

MARD-NCO

SPR-P135-NCO

NRD- State Audit of Vietnam

Verification that (a) DLI 8.1 has been achieved would be through a letter to the Bank from the MARD-NCO with the attached issuances of 2 decisions establishing the M&E frameworks for NRD and SPR-P135; (b) DLI 8.2 has been achieved would be through a letter to the Bank from MARD-NCO with the independent Verification Agency report that the MIS system has been rolled-out in the targeted Program provinces and is capable of capturing information on outputs and outcomes (this may be through a hybrid approach, from harmonized paper-based forms for communes, to electronic forms from districts to provinces and state levels); protocols are in place for the targeted Program provinces and districts where the system is operational requiring targeted Program provinces and districts to submit the specified data in a timely manner; the system is capable of producing semi-annual performance reports with separate financial information submitted from TABMIS; (c) DLI 8.3 has been

 

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achieved through a letter to the Bank from MARD-NCO with the independent Verification Results Agency report confirming the launch of 2 web-based public disclosure portals with annual physical outputs and financial information published at provincial level on both NRD and SPR-P135.

Years 2 and 5

DLI#9: Baseline and end-line tracking survey for NRD and SPR-P135

This DLI will have been met when the baseline and end line survey datasets and final reports are completed, in line with agreed TORs

Yes

MARD-NCO and SPR-P135-NCO

Independent survey firm

Verification that a DLI target has been achieved would be through the submission of the final report and accompanying data from both the baseline and the end-line survey under TORs agreed with the Bank submitted by the MARD–NCO.

 

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Annex 3: Table 3 - Bank Disbursement Table

# DLI Bank financing

allocated to the DLI (in US$

million equivalent)

Deadline for DLI

Achievement

Minimum DLI value to be achieved to

trigger disbursements

of Bank Financing

Maximum DLI value(s)

expected to be achieved for

Bank disbursements

purposes

Determination of Financing Amount to be disbursed against achieved and verified DLI value(s)

1 Issuance of the Policy and Guidance Instruments for the NRD and SPR-P135

20 (SDR 14.58

Million)

August 31, 2017

2 2 SDR 14.58 million (US$20 million equivalent) when both policies are issued (SDR 14.58 million)

2 Number of Participating Provinces with an NTP-SEDP integrated planning process 15

(SDR 10.94 Million)

December 31, 2018

6 Provinces 9 Provinces

SDR 3.28 million (US$4.5 million equivalent) for meeting minimum target of 6 provinces and SDR 0.73 million (US$1 million equivalent) for each additional province achieving the target up to 9 provinces in year 2 (SDR 5.47 Million)

December 31 2019

15 Provinces 18 Provinces

SDR 3.28 million (US$4.5 million equivalent) for meeting minimum target of 15 Provinces and SDR 0.73 million (US$1 million equivalent) for each additional province achieving the target up to18 provinces in year 3 (SDR 5.47 million)

3 Percentage of Infrastructure Investment Sub-projects implemented in compliance with the Enhanced Operations Manual

30

(SDR 21.85 Million)

December 31, 2018

Year 2 - 50% Year 2 - 60%

SDR 6.977 million (US$9.5 million equivalent) for meeting 50% compliance rate and SDR 220,000 (US$300,000 equivalent) per additional percentage point increase up-to 60% compliance rate

SDR 9.177 million

December 31, 2019

Year 3 – 65% Year 3 – 75%

SDR 6.977 million (US$9.5 million equivalent) for meeting 65% compliance rate and SDR 220,000 (US$300,000 equivalent) per additional percentage point increase up-to 75% compliance rate

SDR 9.177 million

December 31, 2020

Year 4 – 80% Year 4 – 90%

SDR 2.10 million (US$3 million equivalent) for meeting 80% compliance rate and SDR 139,600 (US$200,000 equivalent) per additional percentage point increase up-to 90% compliance rate SDR 3.496 million

4 Percentage points increase in the share of ethnic minorities and women satisfied with access and quality of community assets or services

10

(SDR 7.30 million) December 31

2021

10 Percentage Point

Increase

20 Percentage Point

Increase

SDR 5.11 million (US$7 million equivalent) for minimum target of 10 percentage points from baseline survey value plus SDR 219,000 (US$300,000 equivalent) for each percentage point above 10 percentage points up to the maximum value of 20 percentage points increase.

 

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for increasing agricultural production and livelihoods

SDR 7.3million

5 Percentage of Livelihood Support Sub-projects implemented in compliance with the Enhanced Operations Manual 30

(SDR 21.85 Million)

December 31, 2018

Year 2 - 50% Year 2 - 60%

SDR 6.977 million (US$9.5 million equivalent) for meeting 50% compliance rate and SDR 220,000 (US$300,000 equivalent) per additional percentage point increase up-to 60% compliance rate SDR 9.177 million

December 31, 2019

Year 3 – 65% Year 3 – 75%

SDR 6.977 million (US$9.5 million equivalent) for meeting 65% compliance rate and SDR 220,000 (US$300,000 equivalent) per additional percentage point increase up-to 75% compliance rate SDR 9.177 million

December 31, 2020

Year 4 – 80% Year 4 – 90%

SDR 2.10 million (US$ 3 million equivalent) for meeting 80% compliance rate and SDR 139,600 (US$200,000 equivalent) per additional percentage point increase up to 90% compliance rate SDR 3.496 million

6 Percentage points increase in the share of households with additional diversified income sources

10 (SDR 7.30 Million)

December 31 2021

10 Percentage Point

Increase

20 Percentage Point Increase

SDR 3.65 million (US$5 million equivalent) for minimum target of 10 percentage points from baseline survey value plus SDR 365,000 (US$500,000 equivalent) for each percentage point above 10 percentage points up to the maximum value of 20 percentage points increase.

SDR 7.30 million

7 Number of officers at the provincial-, district-, commune- and village-level trained in the use of the Enhanced Operations Manual

10

(SDR 7.3 Million)

December 31 2019

20,000 50,000

SDR 2.92 million (US$4 million equivalent) for minimum target of 20,000 people trained and SDR 146(US$200 equivalent) per additional person trained between Years 2 to 3 up to a maximum of 50,000 people trained

(SDR7.30 million

8.1 Number of monitoring and evaluation frameworks developed for NRD and SPR-P135

5

(SDR 3.64 million)

December 31 2017

1 2

SDR1.82 million (US$2.5 million equivalent) for each of the two (2) M&E frameworks developed

SDR3.64 million

8.2 Number of Participating Provinces with an operational NRD-MIS web-based platform including semi-annual reports with physical outputs and financial information from the TABMIS

9 (SDR 6.55 million)

December 31 2020

8 18

SDR 3.64 million (US$5 million equivalent) for meeting the minimum target of 8 Provinces and SDR 291,000 (US$400,000 equivalent) for each additional province achieving the result between Years 2 to 4 up to a maximum of 18 targeted Program provinces.

SDR 6.55 million

8.3 Number of publicly accessible websites publishing semi-annual reports on physical progress

5 (SDR 3.64 million)

December 31 2019

1 2 SDR 1.82 million (US$2.5 million equivalent) for each of the two (2) operational public disclosure portals SDR 3.64 million

 

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and financial information on NRD and SPR-P135

9 Baseline and end-line tracking survey for NRD and SPR-P135

9 (SDR 6.55 million)

August 31 2018 (baseline) December 31

2021 (end line)

1 2 surveys SDR 3.275 million (US$4.5 million equivalent) for each of the two (2) surveys completed SDR 6.55 million

Total financing allocated 153

(SDR 111.5 Million IDA)

 

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Annex 4: (Summary) Technical Assessment

Strategic Relevance of the Program

1. Poverty in Vietnam’s rural areas declined from 27 percent in 2010 to 18.6 percent in 2014 (WB-GSO estimates), but it is nearly five times higher than in urban areas (3.8 percent). More than 90 percent of the poor reside in rural areas and the Midland and Northern Mountain provinces account for 36 percent of the poor. Poverty is also increasingly becoming an ethnic minorities’ issue. As of 2014, more than half of ethnic minorities lived in poverty. Minorities make up 14 percent of the population yet they constitute 60 percent of the poor. Their welfare has significantly improved over time but the gap in the incidence of poverty between ethnic minorities and the rest has actually widened. It is now 19 percentage points higher than in 1993, signaling that a disproportionate share of benefits of growth flowed to the ethnic majority. Without targeted interventions, these gaps are expected to increase, to the point where ethnic minorities could constitute 80 percent of the poor by 2020 (World Bank 2016).

2. Vietnam is also confronting a need for agricultural transformation. Sector competitiveness is declining in the face growing domestic competition-from cities, industry, and services-for labor, land, and water. Future growth must depend upon increased efficiency and innovation. Change is also needed in the structural patterns of production and supply-chain organization. These are highly fragmented, with limited collective action at farmer level and weak vertical linkages. This problem has contributed to unnecessary transaction costs, unrealized economies of scale in certain functions, and poor incentives to produce and maintain higher-quality produce and raw materials. Similarly, change is warranted in the “state management” model—that is, in the technical and regulatory services provided by the state, in public investments and expenditures in the sector, and in the policies applied to foster farmer and agribusiness investment.

3. Government’s key strategy to address development challenges in the rural sector has been through 16 National Targeted Programs (NTPs) that were implemented over the period 2011-2015. These 16 NTPs have now been consolidated into two NTPs for the next implementation period to run from 2016-2020. This was done through a National Assembly Resolution -No. 100; which created two overarching programs; the NTP for New Rural Development (NTP-NRD) and the Sustainable Poverty Reduction Program (NTP-SPR). The PforR, in covering these two programs is a high priority both for Government and for the Bank’s Country Partnership Strategy with Vietnam.

Technical Assessment Background

4. The Technical Assessment underpinning the design of the PforR builds specifically on two Bank-Donor-assisted Technical Assistance studies. Those assessments reviewed implementation issues in the first phase of the NTPs (2000-2015), as well as feedback and experience from all key donors who have supported various aspects of the first phase program. Collectively, the assessment highlighted the point that despite the considerable budget support for the first phase program and the substantial donor support, mostly focused at the commune level, there has been little institutionalization of improved processes and approaches, and limited sustainability after completion of projects. Overall the assessment findings and consensus of donors point to the priority in the second phase (2016-2-2020) to be focused primarily on strengthening the efficiency of implementation, governance and accountability as highlighted by the long list of short-comings identified through the assessments, i.e.,

(a) The principle of bottom-up Commune-level planning was compromised from the very beginning by the “target” nature of the criteria, and the top-down pressures and incentives to achieve them, regardless of actual commune needs;

(b) The emphasis on achievement of the targets/criteria may have provided incentives to Provinces to make allocations more readily available to Communes with the greatest probability of success (in reaching all of the NRD 19 Criteria) rather than the greatest need for actual support in each commune;

 

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(c) The emphasis on new infrastructure development to meet targets led to exacerbation of a characteristic problem of public finance in Vietnam, i.e., inadequate provisions for recurrent costs, including operations and maintenance – raising important questions about the sustainability of NRD investments financed;

(d) Many of the key institutional actors at various levels were unprepared for their roles in the NTP, and received insufficient capacity building efforts or incentives to support the program.

(e) Planning work at sub-national levels tend to be seen as the sole responsibility of the planning sections and units rather than the work of all officials. This has minimized inputs from technical units who play important roles in setting up more realistic targets. The potential and important role of Districts, supported by Province-level public entities, in improving the effective planning and implementation of NTP was seriously neglected;

(f) The impact and effectiveness of all Commune-level investments was weakened by the lack of an integrated approach to planning, and even resulting to multiple plans, reports, etc.

(g) Planning and budgeting are not well aligned and often policy objectives are not sufficiently costed and prioritized, resulting to unfunded multiple plans;

(h) The link between planning and budgeting, both for recurrent and capital investments, and ensuring that sectoral plans are in line with relevant policies, is missing.

(i) The lack of predictability in NTP transfers impedes planning, budgeting, and delivery of NTP targets. The level of resource allocation is not closely aligned with the targets and objectives, due to their ambitious nature.

(j) Complex, input-based guidance on NTP implementation has reduced flexibility and increased burden of reporting.

(k) Provisions for supporting economic diversification through income generation livelihood opportunities were not given focus; and

(l) There is little use of M&E functions to inform and correct policy and guide implementation since there was no systematic monitoring of the development performance and financial management of the key institutional actors in planning and implementing NTP, nor was there any comprehensive assessment of development impact in rural areas i.e., the lack of a structured baseline by which to track implementation progress and emerging results and impacts of the program.

Results Chain and Linkage with DLIs

5. The strategic focus of the Program is directed primarily to assist Government in improving the governance, processes, planning, implementation, monitoring and evaluation of the NTP- NRD and SPR-P135 (very poor area) programs. This responds to the above assessment, which highlights the first- phase inefficiencies in planning, and implementation along with deficiencies in support for rural poverty/income support activities. Accordingly, the PDO for the Program was designed “to improve the planning, delivery, and access of agricultural productivity investments and rural livelihoods.

6. The choice of Result Areas and DLIs, therefore, also reflects a focuses both on strengthening implementation efficiency and contributing to investments designed to raise rural incomes through support for sustainable livelihoods and small-scale investments and enterprises designed to raise agricultural, livestock and fishery production. There is also a close alignment between the activities, outcomes and the Disbursement Linked Indicators (DLIs) through which achievement of these Result Areas would be verified. The four Results Areas are as follows (more details are in Annex 2 – Results Framework):

(a) Improved Program Planning and Governance. This would be supported through activities encompassing reforms of the NTP policy and implementation guidelines, enhanced oversight

 

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and accountability through the development of a much needed Management Information System, and through institutional reforms at the provincial level that would integrate the planning processes of the two NTPs with Provincial, District and commune planning processes. A key outcome would be the re-orientation from central planning towards participatory decision-making and accountability at local levels and increased opportunities for synergies and leveraging resources.

(b) Improved Quality of Program Investments. This would be addressed through harmonization of NTP-NRD and SPR-P135 designs, specifications, and implementation arrangements/ approaches for small-scale infrastructure subprojects. A key outcome would be climate-resilient infrastructure subprojects meeting the technical standards and requirements needed to ensure sustainability and adequate support to productive activities. This would also streamline/simplify procedures and provide specific guidance to communes on ways in which they could ensure quality income-generating activities which would promote adoption of climate-resilient technologies and would mitigate climate risks.

(c) Increased Access to Program Investments. Through the increased focus of communes and districts on productivity-raising activities, coupled with the introduction of value chain analyses to provide the technical underpinning for such investments, the Program would contribute to enhancing the impact of the NTPs in raising rural incomes and access to services, including in the poorest (SPR-P135) areas of the country where ethnic minorities are concentrated. While socio-economic infrastructure will continue to receive support, there would be some re-balancing of investments from the infrastructure-dominated approach followed under the first phase of the NTPs to a deliberately increased focus on income and livelihoods support to households.

(d) Improved Program Monitoring and Management. Activities would address a major short-coming in the effective management of the NTPs resulting from lack of any significant baseline and impact studies to guide policy and program direction and gauge access of the poor, women and ethnic minorities to the NTPs.

Evaluation of Technical Risks and Proposed Actions

The main technical risks in the NTP-NRD and SPR -P135 programs revolve around: (a) the lack of lack of clear guidelines on technical approaches, prioritization criteria, designs and specifications, and on implementation and O&M procedures; and (b) the need for substantial capacity building. Compounding these risks are that different approaches and procedures have been followed for each of the two NTPs under the first phase of the NTPs.

7. Technical Requirements for the PforR would be specifically addressed through the formulation and use of an enhanced operations manual for the Program which will include guidelines for Planning and Investment Prioritization, Infrastructure, and Enterprise and Livelihood Support. The drafts of this enhanced operations manual is being prepared as part of the PforR preparation and their adoption and issuance of instruction on their use is targeted for October 2017. While modification of the enhanced operations manual would be required as experience is gained in their implementation, it would be a requirement that such modifications would be subject to bank approval. The enhanced operations manual has been based on the guidelines and experiences of the Bank and various donors who have previously provided support to Vietnams rural development efforts. The enhanced operations manual is also based on the extensive Laws and Circulars that have been issued. The key features addressed in the enhanced operations manual will provide a sound technical basis for the Program operation, are as summarized below:

(a) NTP-Planning. This provides a common planning process that is integrated with the Socio-Economic Development Planning processes of the province. It allows communes to develop their investment plans according to the resources available under the NTP-NRD and SPR or other sources of funding. The enhanced operations manual provides guidelines for a seven-step planning process at commune level involving: (a) Preparation (April-May) involving

 

65 

training for the commune/village planning core teams; (b) Information collection (May-June) involving a problem-solving approach of identifying Issues, Reasons, Solutions and Activities; (c) Synthesis and Drafting (June), involving reviewing the feasibility and verifying the resources; (d) Commune planning meeting (June) with participation of commune cadres and village representatives; (e) Submission and Discussion (June-November) of the draft commune plan to commune People’s Council (and commune Party Committee) and subsequent integration with the district plan; (f) Feedback and Update (November-December) involving feedback to the communities on the draft commune plan along with updates; (g) Approval (December) by People’s Council and reporting to the district and commune enabling implementation to commence. Additionally, the enhanced operations manual provides criteria and guidelines for: (a) comprehensive capacity building framework to be established and implemented in each province; (b) a strong element of participatory planning at the commune level that especially takes account of the needs of the very poor, but with procedures for linking with top-down priorities and programs to achieve a balanced participatory-strategic approach; (c) a process for transparent budget allocation from provincial to district to commune and village levels; (d) guidance on ‘how to make investment prioritization (e.g. basing on such criteria as suitability, cost-effectiveness, market potential, number of beneficiaries etc.); (e) incorporation of climate change risk factors in the planning process; and (f) identification of activities that can be implemented through reasonable mobilization of community resources, especially in the forms of labor and local materials

(b) NTP Enterprise and Livelihood. The enhanced operations manual provides criteria and guidelines to facilitate and promote communes to use NTP and other resources to support on-, off- and non-farm productive investments and marketing, both small and medium scale, especially through small collaborative or group production enterprises. The enhanced operations manual provides guidelines on both Approval and M&E Processes for sub projects as well as Technical Guideline for the selection, design, implementation and O&M of sub projects. The approval and M&E processes include, Five Year Planning for Production Sub-Project Design involving selection criteria for producer groups, fund allocation for each village, fund contribution, implementation mechanisms, monitoring and evaluation, role and responsibility of commune, village, groups, and households, and validation and evaluation processes, subproject approval processes, criteria and checklists for approval, release of funds, and Monitoring and Evaluation of technical aspects as well as reporting and acquittal forms and procedures. Technical Guidelines encompass village and/or group resource mapping and analysis methods (Identification and Prioritization of Product Segment/Enterprise/Livelihood cluster), commune, village, group/enterprise Business Planning/project design methods, climate adaptation and climate mitigation approaches, validation and evaluation of Business Plans, group/enterprise, cooperative formation and capacity building guidance (including such as legal basis for groups/clusters/ enterprises/cooperatives to access support under the NTPs), financial modalities (what should be for small and medium business, how to combine different sources (from the people, local banks, women credit program, from NTPs support and fund and so on). livelihood modalities: farm and off-farm, services modalities, criteria/checklist for a “good” production models for start-up or expansion activities, market linkages modalities: concept, approach, Value Chain Analysis and Product/crop selection and link to Value Chain Analyses for the province. Criteria/checklist for a “good” production models following market approach for start-up or expansion activities, cooperation modalities: within villages, inter-village, linkages outside village and commune, outside communes, Learning and sharing modalities: field workshop, cross-visit, traditional festivals.

(c) NTP Infrastructure. The enhanced operations manual provides standardized criteria and guidelines for the selection, design, implementation and O&M of infrastructure supported under the NTP, with particular reference to small scale infrastructure supporting agri-productivity investments contributing to raising rural incomes and access to services. For each type of infrastructure, the manual would provide the prevailing laws, regulations and requirements, with the focus being on infrastructure to be implemented at the district, commune

 

66 

or village level. The enhanced manual also takes account of different geographical and landscape conditions e.g., in the large Northern mountainous and Mekong delta regions where engineering requirements result to high unit prices and issues with sustainability. Selection criteria have been strengthened to help prioritize infrastructure that in the past, have been somewhat mechanically applied/constructed resulting in duplicate or redundant facilities. The enhanced Manual also provides for enhanced management, maintenance and repair of infrastructure, as well as technical standards for climate-resilient infrastructure.

(d) Climate resiliency standards and specifications for both infrastructure and livelihood investments. Climate risk assessments have shown that Vietnam, in general, and the NTP areas, in particular, are vulnerable to extreme weather events and climate change. It is visited by about 8-9 typhoons in a year. More specifically, the coastal and deltaic areas are vulnerable to flooding, the mountainous and hilly areas are vulnerable to flash floods and mud slides, while certain provinces in the Mekong area are regularly subjected to drought. It is projected that the incidence of extreme precipitation, temperature, wind speed and sea level rise will further rise in the future

8. Capacity Building will be an essential requirement for the Program. The need for capacity building in implementing the various reforms and changes in the way of doing business under the Program will be substantial, especially given that inadequate attention was given to this by Government during the first phase of the NTPs (2011-2015), where the focus was primarily on capital expenditures for infrastructure. In the past, Government has relied heavily on support from multilateral, bilateral and civil society support to provide technical assistance funding for the two NTPs. In designing the Program, close collaboration has been maintained with donors active in Vietnam with a view to ensuring an alignment of the Key Result Areas with the strategies and approaches being followed by the donor community. Manuals, guidelines and experiences of the various donors have provided the basis on which the enhanced operations manual and policy guidelines under the Program have been formulated.

9. On technical assistance, the Bank has secured financing from Australia under a WB-executed Trust Fund. One focus theme area will be on ethnic minorities. The agreed activities that will be financed by this TF include support to training, designing and piloting value chain analysis focusing on ethnic minority women and youth as primary beneficiaries in terms of producers and management of the value chain. This activity will directly support and leverage the DLIs in the area of production support for SPR-P135 and NRD. The TF will also use the recent 2015 ethnic minority survey data to further analyze CEMA’s programs and policies, including SPR-P135, with the aim of tailoring the Program to the varied needs of the diverse ethnic groups. This further analysis of the 2015 data will also feed into the M&E and MIS systems of the NTPs that are supported through this Operation. It is expected that funds will be available by June 2017. The total amount for this ethnic minority theme is approximately US$2.4 million, of which about half would directly focus on NTP deliverables. There is also an ongoing coordination with Irish Aid who is supporting the SPR-P135 in 9 Provinces, 8 of which overlap with the NTP focus Provinces. The Irish Aid program supports the infrastructure activities of SPR-P135 and has a parallel program promoting NGOs in the 9 provinces to offer services and capacity building in SPR-P135 communes. Effort will be made to integrate and ensure that the NTP implementers avail of such services and capacity building programs offered by NGOs. There is also ongoing collaboration with OXFAM on the integration of NTP investment planning into a strong commune-level SEDP. The vision is that the commune SEDP will serve as a master plan to guide investment choices and priorities in other programs including the NTPs, donor programs and other Government programs.

Program Expenditure Analysis

10. The estimated funding envelope for the NTP over five years (2016 – 2020) is US$35.3 billion for NRD and US$0.9 billion for SPR-P135, totaling US$36.2 billion of which US$9.4 billion is expected to come from direct state budget allocation. Expenditures under the NTP NRD and SPR-P135 within the boundaries for this Program amount to about US$1.8 billion. The proposed IDA Credit of US$153 million equivalent would contribute about 8.3 percent of this amount. As shown in Table 1

 

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below, the proposed NTP funding would be sourced from the Central Government (12.9 percent), provincial sources (15.2 percent) and other sources including credit (42.4 percent). The central budget allocation for the NTPs to the provinces are determined by the MARD (for NRD), CEMA (SPR-P135) and MOLISA (SPR), which is reviewed and decided by the MPI. The provincial Peoples Committees have discretion to make spending decisions and implement the activities within their jurisdiction. For NTP NRD, Provinces and Communes can mobilize funding from different sources including borrowing from credit institutions, contributions from the private sector and the citizens.

11. The NTP 2016-20 overall have a recurrent budget of about 9 percent, which in absolute amounts is higher than the previous program from 2011-2015. The central budget allocation for the NTP-NRD for example is 25 percent higher than the expenditure allocation for 2011-15. The Decision 1600/QD-TTg also requires Provinces to set aside recurrent budget for O&M for the infrastructure sub-projects which is set at 6 percent of the total infrastructure investment capital budget in each commune. The same requirement is for NTP-SPR-P135 as Decision 1722/QD-TTg spelled out the state (central and subnational) budget allocation for O&M of the infrastructure sub-project at VND 912 billion which is almost 6 percent of the VND 15,936 billion for sub-project 1 of NTP-SPR-P135 which focuses on infrastructure investment. This is in addition to the operational budgets for the other two components in NTP-SPR-P135 (on livelihood investments and capacity building), that raise the operational budget for the NTP-SPR-P135 to about 26 percent of its program allocation, a norm that applies equally at the national level and boundaries of this PforR operation. However, financing from other sources like bank credit for the NTP-NRD for example, will mainly be used for the capital budget, thus reducing the overall share of recurrent expenditures in the program. At most, the planned spending of recurrent expenditure for activities under this operation would constitute 6 percent of the program if the targeted Program provinces allocate the full permitted amount for O&M in the NTP-NRD.

Table 1: NTP-NRD and SPR-P135 program Costs and Financing

Source NRD SPR-P135 Total Total % of

Total (VND billion) (VND billion) (VND billion) (US$ million) Panel A: Overall NTP-NRD & P135 Budget

State direct budget 193,156.0 19,892.0 213,048.0 9,352.4 25.8 Central Government 63,156.0 19,226.0 82,382.0 3,616.4 10.0 Subnational budgets 130,000.0 666.0 130,666.0 5,736.0 15.8

Others financing sources* 611,659.0 760.0 612,419.0 26,884.1 74.2 Credit 362,167.0 0.0 362,167.0 15,898.5 43.9 Private sector 120,722.0 0.0 120,722.0 5,299.5 14.6 Community 80,482.0 80,482.0 3,533.0 9.7 Other programs 48,289.0 48,289.0 2,119.8 5.8

Total Program Financing 804,815.0 20,652.0 825,467.0 36,236.5 100.0 Of which: capital expenditure 742,356.0 14,474.0 756,830.0 33,223.4 91.7 operational expenditure 62,459.0 5,418.0 67,877.0 2,979.7 8.2 discretionary 0.0 760.0 760.0 33.4 0.1

Panel B: PforR Program Expenditures* State direct budget 9,455.0 2,287.0 11,742.0 515.5 28.1

Central Government 3,091.0 2,287.0 5,378.0 236.1 12.9 Local Government 6,363.0 0.0 6,363.0 279.3 15.2

Others 29,927.0 90.4 30,017.4 1,317.7 71.9 Credit 17,720.0 0.0 17,720.0 777.9 42.4 Private sector 5,907.0 0.0 5,907.0 259.3 14.1 Community 3,938.0 0.0 3,938.0 172.9 9.4 Other programs 2,363.0 0.0 2,363.0 103.7 5.7

Total Program Financing 39,382.0 2,377.0 41,759.0 1,833.1 100.0 Of which: capital expenditure 37,686.0 1,664.0 39,350.0 1,727.4 94.2

operational expenditure 1,696.0 623.0 2,319.0 101.8 5.6 discretionary 0.0 90.4 90.4 4.0 0.2

Notes: Estimated based on the provincial allocations and plans for NTP-NRD 2016-20 and central budget allocation formula for NTP-SPR-P135. The provincial allocations are adjusted for the scope of activities in the program by applying the historical share (16 percent) of expenditures on activities within the scope of the Program based on TABMIS data for 2011-2015. Operational and capital expenditures are calculated using the ratios in Decision 1722/QD-TTg for SPR-P135 and the central budget allocation for NTP-NRD 2016-20, plus the

 

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permitted allocations for O&M (6 percent of the capital budget, assuming that bank credit, private sector and community contributions are part of the capital budget) and operating expenses for communes and provincial committees (up to 1 percent) in Decision 1600/QD-TTg.

12. The planned financing sources for the NTP as a whole are aligned to actual contribution of financial sources for the NTP 2011-2015, especially with respect to the government’s contribution and financing from credit. Based on the Decision 800/QD-TTg, about 30 percent of financing for the NTP-NRD (24 percent from direct state budget allocation and 6 percent from integrated investments from the NTP-SPR) is expected to come from the State. This is relatively similar to the share of the actual contribution from the government with 20 percent coming from the integrated investments and 12 percent from direct state budget investment. It is expected that credit, contribution from the private sector and the community will respectively contribute to 45 percent, 15 percent and 10 percent of financing for the NTP-NRD. Decision 551/QD-TTg concerning SPR-P135 for 2012-15 did not have a predefined share of contribution from various sources, but indicated contributions from the direct central budget allocation, sub-national budgets and contributions from the private sector, donors and the public. For the SPR--P135 2016-20, the central budget allocation will comprise 90 percent of the NTP SPR-P135 and 10 percent from subnational budgets, but within the Program boundary, it will make up 94 percent of the allocated budget.

 

Figure 1: Comparison of budget composition for NTP-NRD 2011-15 and NTP-NRD 2016-20

13. There has been a large variation in revenue compositions across provinces for NTP 2011-15, with poorer provinces relying more on integrated investments than on direct budget allocation for the NTP-NRD for example. In the targeted Program provinces, this operation in particular, the direct state budget contribution of 15 percent was greater than the national average, but ranged from as low as 1 percent in Đắk Lắk to 37.6 percent in Trà Vinh. Integrated investments contributed a lot more (37 percent) instead, especially among the poorest provinces relying more on central budget transfers to fund their provincial budgets. In Điện Biên for example, integrated investments contributed 86 percent of the NTP-NRD investments during 2011-15 (see Figure 2 below). Thus, there was no consistent commitment of direct state budget to the NTPs during 2011-15.

0

10

20

30

40

50

60

70

80

90

100

Planned NTP-NRD2011-2015

Actual NTP-NRD 2011-2015

Actual NRD statusachievement

communes 2011-2015 *

Planned NTP-NRD2016-2020

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Intergrated investment Direct state budget investment Bank credit

Corporate investment Public contribution Others

 

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Figure 2. Comparison of Revenue Sources for NTP NRD 2011-2015 and Central Government Transfers to Provincial Budgets

14. The lower than planned contribution from the State budget for NTPs for 2011-2015 was partly a result of low central government direct investment allocation during the first three years of the program. The central budget allocation for direct investments in the NTPs only increased substantially during 2014 -2015 with an annual investment of VND 5,000 billion from government bonds, which was double the total central budget allocation compared to the first 3 years of the NTPs. This increase came after the Prime Minister issued the Decision 195/QD-TTg which stipulated allocation of government bond funds to the NTP-NRD, giving priority to disadvantaged communes. This was a recognition of the need for the government to commit resources in order to achieve results for the NTPs. Analysis of execution rates at the activity level is not feasible at this stage given that not a-priori allocation was made at the activity level that can be used to establish a benchmark against actual spending at activity level. Figure 3: Comparison state budget allocation (nominal) NTP-NRD 2011-15 and NTP-NRD 2016-20

15. The significant change for both NTP-NRD and SPR-P135 (2016-20) is the specification of the minimum contribution from the State budget for these programs, which signals greater commitment of government resources. The Central budget allocation for each Province has been defined, amounting to VND 3.09 trillion for the NTP-NRD and VND 2.28 trillion for NTP SPR-P135 in the geographical boundaries of this operation. The government has developed a formula for

0

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40

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60

70

80

90

100

0

10

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60

70

80

90

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Sh

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tran

sfe

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vin

cial

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Inve

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Share of State contribution (%) Share of intergrated investment (%)

Share of bank credit (%) Share of Central transfers in provincial budget (%)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

VN

D b

illio

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2011-15 2016-20

 

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determining provincial matching fund for the NTP-NRD, which provinces are required to reflect and adhere to the approved annual plans. As such, the state direct budget allocation for the NTPs had increased substantially, with the NTP-NRD 2016-20 allocation doubling the expenditure for the 2011-15 period (see Figure 3). However, with investments, being community driven, the expenditure by activity will vary from one province to another in accordance to their needs. In the past, only a small share of funds went towards livelihood support activities.

Table 2: Matching fund requirements for the NTP-NRD and SPR

Central fiscal transfers as a share of provincial budget

Matching fund requirement in NRD communes

Matching fund requirement in SPR-P135 communes

More than 70% 1: 0 1: 0 50 – 70 % 1: 1 1: 0.1 Less than 50 % 1: 1.5 1: 0.15

16. The State budget allocation formula for the NTPs is also transparent and pro-poor, which provides a clear guide of the overall financing envelope for the NTP 2011-2015 and increases direct state budget investments. The allocation formula factors in the gap Communes within Provinces have to meet the NRD criteria, the poverty rate and the share of ethnic minorities in the province, awarding a greater share of central government allocation to provinces with relatively more disadvantaged communes, and with a higher share of ethnic minorities. While provinces for which central transfers account for a greater share of the Provincial budget have minimal counterpart funding requirements (e.g. none, for provinces receiving at least 70 percent of the revenues in central budget transfers (see Table 2)), the new allocation formula resulted in an increase in the State budget contribution for the NTPs (see Figure 3). When added to the integrated financing from the NTP-SPR, the allocation mechanism channels more resources to poorer provinces than before. In this respect, the transfers are pro-poor. Since all the targeted Program provinces receive greater than 50 percent of transfers from the central government, the Central Budget would finance majority of the program expenditures.

17. Despite that both NTPs already have the budget ceilings for 5-year period based on the predefined formula, predictability of annual flow of funds is a challenge. The financing for the NTPs on a year-on-year basis is still subject to availability of resources in each fiscal year, resulting in an uneven yearly flow of resources that could undermine the achievement of results. This could be observed with the budget allocation for the NTP 2016-20 already. In the year 2016 for example, the central government only disbursed VND 3.3 trillion for the NTP-NRD 2016-20, equivalent to 5.1 percent of the 5-year allocation of the program. It is thus possible that a greater share of resources of the program could come in later years as was the case with the previous NTPs, which undermines the credibility and sustainability of the budget.

18. If not addressed, challenges in the timely release of funds may lead to poor budget execution, putting the achievement of results at risk. Two main factors contribute to the large variance of budget and outturn. First, Vietnam currently faces tight fiscal constraints, putting the Government under high pressure to consolidate expenditures, resulting in an insufficient capital budget to fund the NTPs or delayed releases of funds. In 2016, central budget transfers were done towards middle of the year and at different times. Secondly, delays in fiscal transfers from the central budget to provincial are common, which further delays transfers from provinces to District and Commune levels, and subsequently delays in implementation of activities under NTPs.

19. Achievement of results in soft areas are also at risk in the absence of activity specific budget earmarks for the NRD. In the NTP-SPR-P135, there is a specific allocation for training and capacity building of government staff working on the NTP. The Decision 1600 concerning the NTP-NRD also states that the State budget will support all communes in the implementation of master planning, training and capacity building for local communities and New Rural Development officers. However, like other activities in the NTP-NRD, no predefined allocation is made for the capacity building and monitoring evaluation activity (component) of the program. Experience from the

 

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implementation of the NTP-NRD 2011-2015 shows that investments were heavily skewed towards infrastructure investments. With a similar set of infrastructure-focused criteria for the 2016-2020, expenditures most at risk pertain to training and capacity building and monitoring and evaluation. This could affect the quality of implementation of the Program. It is important to ensure that adequate resources are made available for capacity building and training of officers-in-order to enhance the implementation of the NTPs.

20. Results in the previous NTPs were achieved with increased financing from the state budget, credit, and public contributions but with a bias towards investment in communes with the greatest likelihood of meeting the criteria for attaining New Rural Development status. Direct investments from the state budget constituted 31 percent of the NTP-NRD investments in communes that eventually attained New Rural Development status, compared to the national average of 12 percent (see Figure 1 on budget composition). An internal report for MARD concluded that Provinces contributing more of the State budget to the NTP-NRD strategically diverted resources to communes with the highest possibility for satisfying the criteria for attaining New Rural Development status. This implies a systematic bias against the poorest communes which needed to meet many criteria to meet the NRD status. This adverse selection in targeting resources should be adequately addressed to achieve the overarching goals of increasing income and reducing poverty. The NTP 2016-2020, now sets a minimum of 5 criteria that each commune should target, which should re-align investments to poor communes. However, that may not be adequate as long as the primary focus for Provinces remains on getting a predetermined number of communes (50 percent of communes by 2020, with varying regional targets13) meeting the threshold of between 13.8 and 18 criteria to attain the new NRD status. This operation, can further align incentives by focusing on the achievement of results based on increasing access to infrastructure, services and programs clearly linked to the higher level objectives of the NTPs at the household level among disadvantaged communities, rather than financing results on meeting the NRD status.

21. Despite the upfront commitment of resources by the government, it is evident that achievement of results will depend on mobilization of non-government sources at the local level. Unlike the SPR-P135, a significant share of resources for the NTP-NRD is planned to come from borrowings from banks at the local level along with community contributions, which combined, will constitute 42.4 percent of expenditures within the geographical boundary of the PforR operation. Only 6 of the 18 targeted Program provinces in the Operation had financed the NTP-NRD with at least 40 percent from borrowing during 2011-2015 and bank credit made up more than 70 percent of NRD investments for four of them. Reflecting potential constraints, Provinces where Central government fiscal transfers made up 70 percent borrowed the least. Among the 7 targeted Program provinces meeting this criteria, bank credit contributed less than 10 percent of investments in four provinces (Cao Bằng, Điện Biên, Hà Giang and Lào Cai) and 14 percent in Trà Vinh but was higher in Bắc Kạn (34 percent) and Sóc Trăng (40 percent). For the NTPs 2016-2020, counterpart financing is discretionary for provinces receiving more than 70 percent in fiscal transfers, so only Bắc Kạn and Sóc Trăng have included bank credit in their budget envelope, which has been taken into consideration in estimating the size of this Program. On the other hand, at least 5 of the 18 targeted Program provinces may borrow twice the amount previously borrowed for the NTP – NRD, 2016-20, putting communes deeper into debt. Arrears are an additional concern. Aside from bank credit, communes that attained NRD status during 2011-2015 tended to run into arrears, with arrears in such communes amounting to 41 percent of construction costs, thus double the average rate of arrears for all communes within the program. The chase for attainment of NRD status could thus lead communes into a financially unsustainable investment path. The Government has realized this risk and stipulates in its Resolution that new budget for NTP NRD will not be used to pay off outstanding debts by the provinces.

                                                            

13 Regional targets for the share of communes attaining New Rural Development Status by 2020 are Northern Mountainous region - 28%, River Delta Region – 80%, Northern Central Region – 59%, Southern Central Coastal Region – 60%, Central Highlands – 43%, Southeast Region – 80%, Mekong River Delta Region-51%

 

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22. The risks to the specific results to be pursued under this operation are lower than those for the NTP program as a whole within the geographical boundaries of the operation. Rather than focus on the attainment of NRD status, the results to be pursued by this operation focuses on improving outcomes that can contribute to increasing incomes at the household level particularly among ethnic minorities, backed by appropriate DLIs. Communes with a large share of ethnic minorities will primary be funded using the state budget, and with much smaller counterpart financing, as shown in Table 2. The pressure to borrow is likely to be lower in these communes. Another result area of the operation is strengthening capacity building and monitoring and evaluation – the type of activities also financed by the state budget. The inclusion of DLIs with targets for training, M&E frameworks and implementation of surveys will help align incentives for the state budget to be availed for such activities. The activities most at risk from lack of counterpart financing pertain to infrastructure investments and livelihood support. However, this operation primarily focuses on enhancing the impact of these investments improving the quality of implementation and relevance of programs to, as opposed to quantitative targets of number of investments that should be made. Nonetheless, the sustainability of any infrastructure investments made under the operation would still be at risk from excessive debt or arrears if these lead to reduced O&M allocations in later years.

23. A good framework for reporting government expenditure under the program exist but the accuracy of reporting can still be improved. The Treasury accounting and budgeting management information system of Vietnam (TABMIS) records the expenditure of all public investment projects funded by the state budget including those of the two NTP programs. TABMIS is operational in 63 provinces and more than 700 districts. While projects or spending is done by the various divisions of the people’s committees at each level of government, the drawdown of funds is recorded in real time by the treasury in TABMIS. The chart of accounts in TABMIS will have a main code for each of the NTP and sub-code for each activity of the NTP. Thus there will be 11 sub-codes corresponding to 11 activities of the NRD in TABMIS and similarly three sub-codes corresponding to the 3 activities of the SPR-P135. The NTP budgets are also recorded by functions (e.g., agriculture, transport, construction), chapter (e.g., MARD, CEMA), and by economic category (e.g., recurrent, capital). This makes it possible to track spending on activities within the boundaries of the PforR Program. Nevertheless, the budget execution in TABMIS might not reflect the overall spending of the NTP, given that errors can be made at entry and that spending out of other resources outside the state budget will not be captured in TABMIS. However, reports submitted to the NCO suggests that provinces record such information at a reasonable level of disaggregation, but the reporting format was previously not standardized and compliance was weak. For the NTPs 2016-20, such financial reporting will be standardized as part of an improved monitoring and evaluation system.

Monitoring and Evaluation 

24. Monitoring and evaluation of the NTP-NRD and SPR indicators will be carried out using the Government’s own systems which will be substantially strengthened as part of the PforR operation. In July 2016, the Government issued Resolution No. 60/NQ-CP which includes directives towards strengthening monitoring and inspection by ministries and provinces of public investment projects to ensure intended objectives are achieved and the implementation is efficient - including tracking of physical progress and financial flows of funds through TABMIS on a regular basis.

25. The PforR operation will cover the establishment of an M&E framework for the agriculture and sustainable livelihoods component of NTP through the development of a defined set of outcomes indicators, and institutional arrangements for carrying out periodic performance monitoring activities and assessments. The M&E framework will provide the basis for further development, implementation and rollout of the MIS for NRD capable of enhancing management oversight, governance and the tracking of subproject implementation for the PforR activities, consistent with approved NTP-NRD and SPR-P135 indicators. This will be further enhanced through the adoption of financial reporting of expenditures using the government TABMIS system, with the wider objective to enhance accountability, transparency and learning that would integrate and institutionalize reporting requirements of various concerned implementing agencies. The goal under the PforR operation would

 

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be to have the M&E framework for NTP established for the program, alongside the adoption and use of the MIS with financial reporting from TABMIS in the targeted Program provinces by the fourth year of the operation.

26. A publicly accessible web-based platform would also be established to provide up-to-date information on the NTP progress, operational procedures, implementation status, and financial reports from TABMIS, alongside specifics as to the legal framework and corresponding public documents. The design will also provide a platform for piloting social accountability systems alongside establishing a grievance redress system to inform the implementation of the NTPs.

27. For the evaluation of Program outcomes, a baseline survey will be conducted through agreed TORs (currently in draft form) to measure Program indicators related to productivity, sustainable livelihoods as well as intended and unintended outcomes and results of interventions in sampled localities. This will also include the systematic collection of gender-disaggregated data and data on ethnic minorities for tracking the impact of Program intervention over time. The MARD will also commission a qualified M&E institute/firm to undertake an end-of program assessment to determine Program results and impacts. An important issue will be to ensure continued commitment of support that both the baseline and end line surveys would be funded in a timely manner.

Economic Justification of the Program

28. The Program addresses economic challenges to closing welfare disparities in Vietnam. Household welfare has improved across the board over the past two decades, but initially lagging regions and population subgroups, ethnic minorities in particular, continue to lag behind and in some cases, by a widening margin. The gap in the incidence in poverty between ethnic minorities and the majority in 2014 was 19 percentage points higher than in 1993 for example. For this reason, poverty is becoming concentrated - among ethnic minorities and also becoming a primarily a rural phenomenon. That means growth alone, without targeted interventions to lagging groups, is not adequate for reducing poverty and closing welfare gaps that exist in the country. This justifies poverty-targeted investments such as the NTP which is being focused on under this Program.

29. Within this context, the Program addresses two critical challenges faced by the poor and near poor. One is their low level of livelihoods diversification and that despite their high dependence on agriculture income, it remains lower than agriculture income from non-poor households. Data from the VHLSS 2014 shows that on farm incomes constitute 65 percent of ethnic minorities’ income compared to 24 percent of income of Kinh and Hoa households, and at 44 percent, the share of income from agriculture among the bottom 40 percent households is more than double that of other households. Yet average household income from agriculture is still lower among poor households who are most dependent on it. This project’s focus on agriculture productivity enhancing investments and livelihood projects to move household economic activity up the value chain, would increase both agriculture incomes and the diversification of livelihoods of poor households. The other challenge addressed by this project is low effectiveness of poverty targeted interventions because of (i) low relevance of investments or subprojects based on a top-down one size fits all approach and (ii) low quality of subprojects due to poor implementation and lack of spending on training and capacity building. These are addressed in the Program by strengthening implementation arrangements with the Program disbursing against use of enhanced, harmonized, value chain based, ethnicity and gender informed livelihood subprojects and increasing participation of communities in selection of subprojects. Additional incentives on monitoring and measuring results at the commune and household level enhances the results focus of the NTP at a micro-level, thus increasing its likelihood to achieve impact on reducing poverty and raising incomes, especially among ethnic minorities. Beyond supporting poverty-targeted interventions to eliminate the remaining pockets of poverty, the Program is thus justified on the basis that it changes incentives towards or facilitates investments most relevant for increasing incomes for poor households and aligns incentives to achieve measurable results at the commune and household level.

 

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Annex 5: (Summary) Fiduciary Systems Assessment

Purpose of Fiduciary Systems Assessment

1. The Program fiduciary systems should provide reasonable assurance that the financing proceeds will be used for intended purposes, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability. The Assessment of Program fiduciary systems integrates findings in three areas:

(a) The procurement systems were assessed to determine the degree to which the planning, bidding, evaluation, contract award and contract administration arrangements and practices provide a reasonable assurance that the Program will achieve intended results through its procurement processes and procedures;

(b) The financial management systems were assessed to determine the degree to which the relevant planning, budgeting, accounting, internal controls, funds flow, financial reporting and auditing arrangements provide a reasonable assurance on the appropriate use of Program funds and safeguarding of its assets; and

(c) The Program was also assessed in how its governance systems handle the risks of fraud and corruption, including the use of complaint mechanisms, and how such risks are managed and mitigated in light of the government’s commitments under the Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing (Anti-Corruption Guidelines or ACGs).

2. The Fiduciary Systems Assessment (FA) has been prepared based on interviews and analysis at the national level - National Coordinating Office (NCO) for New Rural Development Targeted Program (NRD NTP) under the Ministry of Agriculture and Development (MARD), the Ministry of Finance (MOF) and the Ministry of Planning and Investment (MPI) and at the sub-national level (province/district/commune levels) based on field visits to two targeted Program provinces (Quảng Ngãi and Hà Giang).

Procurement

3. Procurement activities under the two NTPs have been implementing in accordance with the currently applicable national procurement legislation. In general, the national procurement legislation includes: (i) Procurement Law No. 43/2013/QH13 dated 26 November 2013, and (ii) Decree No. 63/2014/ND-CP dated 26 June 2014 guiding implementation of the procurement law. Since recently by having realized that the majority of contracts for infrastructure at the commune and inter-commune levels are of small-value and simple nature that would need more flexible and practical arrangements for implementation, the Government of Vietnam has issued an additional Decree No.161/2016/ND-CP dated 2 December 2016, regulating the two NTPs in particular. The new Decree 161 has provided detailed guidance on the practical arrangements for investment planning, procurement and administration of contracts for Works estimated to cost below VND 5 billion per each, following the approach of community participation in procurement and contract management for implementation by procuring entities at the commune level. As the result of the enhanced procurement regulatory framework, applicable for both the Programs in the period 2016-2020, procurement for small works in communes (below 5 billion VND) will follow the specialized arrangements stipulated in Decree No. 161/2016/ND-CP, while other types of procurement for Goods, Non-consulting services and Consulting services as well as procurement for larger Works at district level will continue to follow Decree No. 63/2014/ND-CP guiding implementation of the procurement law 2013.

4. Procurement arrangements under the proposed Program have been implemented at (a) commune level for small value activities within a commune – by a communal procuring entity; and (b) district level for bigger value inter-commune activities – by a district implementing unit. No procurement activity is expected to be carried out at provincial and/or central (ministerial) levels, but coordinating agencies at both national and provincial levels, such as National Coordination Offices (NCOs) and Provincial Coordination Offices (PCOs), have been established respectively under both NTPs for coordination and monitoring purposes. The procurement planning will follow the bottom-up approach

 

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with data collected from communes through districts, then will be compiled and recorded at the provincial and national levels by the PCO and NCO under the respective NTPs). Procurement plans at commune and district levels will include small and very small size contracts in the following types:

(a) works for small scale infrastructure investment for enhancing agricultural productivity and value added such as: village- level farm-to-market-roads, small bridges (fixed and suspension), foot paths and pathways, small-scale gravity, pump and drip irrigation, shallow wells, small water impounding, village-level, small-scale fish landings, village-level small jetties, postharvest facilities (drying floors, small storage sheds, market facilities), plant nurseries, seed production facilities, tree planting, composting/organic fertilizer production, livestock breeding and distribution facilities, milking facilities, small-scale commodity processing equipment for village –level processing, etc.;

(b) goods and non-consulting services of small value for rural livelihood activities, e.g. to cover on-, off- and non-farm activities related to crop production, egg/chicken production, pig fattening, milk production, aquaculture, coffee, coconut and vegetable oil processing, rubber processing, broom and basket making, weaving, handicraft production, fruit and nut packaging and preservation, village level juice processing, product hauling and consolidation, marketing, small scale processing of agricultural products, etc.; and

(c) consulting services of small value for preparation of investment reports, detailed designs, and construction supervision under the NRD and SPR NTPs.

5. There is no large contract included in the Program which are valued at or above Operational Procurement Review Committee (OPRC) thresholds for high-risk operations (such as US$50 million for works; US$30 million for goods, US$30 million for non-consulting services, and US$15 million for consulting services). Specific procurement methods in accordance with the national procurement legislation will be applicable to the Program, including open competitive bidding (OCB), limited competitive bidding (LCB), shopping, community participation, and direct contracting if justifiable to be necessary. Contracts for Works not exceeding 5 billion VND (equivalent to about US$220,000) will be implemented involving local community participation in procurement in accordance with Decree No.161/2016/ND-CP. The use of Direct Contracting should be limited to the minimum extent as possible.

6. Procurement complaints used to be handled in accordance with the procedures stated in Decree No. 63/2014/ND-CP. These procedures require that complaints are signed and stamped by a legitimate representative of the complaining bidder (anonymous complaints are not considered). For complaints related to contract award, the complainant has to deposit a fee which would be encashed if the complaint is not substantiated. Complaints are handled by procuring entities or project owners and appeals are reviewed by a competent agency – normally the Department of Planning and Investment (DPI) under the Provincial People’s Committee (PPC). This procedure seems to be rather rigid that would discourage submission of complaints. A practical recommendation for establishing a reporting system for complaint record and information sharing is included in the Program Action Plan (PAP).

7. In lights of the national procurement regulation, the current debarment procedures are mandatorily applicable for the two NTPs as well. Prohibition from participation in future tenders is governed by the Law on Procurement which provides a defined set of “prohibited acts” which can lead to debarment. For procurement, initial sanctioning decisions will be made by the tendering authority. The national list of debarment is prepared by the Public Procurement Agency (PPA) under MPI through collecting data submitted by the provincial Department of Planning and Investment (DPI) under the respective Provincial Peoples’ Committee (PPC), in order to be centrally compiled and updated by the MPI on an annual basis. There is a risk that the non-application of Bank debarment and suspension lists may result in contract awards to debarred firms and/or individuals under the Program. In the effort towards preventing Fraud and Corruption practices, Vietnam’s mandatory debarment procedures should be complemented by the Bank’s lists of debarred and temporarily suspended firms and individuals. It is strongly recommended that the National Coordinating Offices (NCOs) for both NTPs to regularly share the Bank’s most updated lists of debarment and temporary suspension with the targeted Program provinces, and that their compliance is supervised and monitored during Program implementation.

 

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Application of both the Bank’s and the national debarment lists will ensure no firms or individuals in the local, national and the Bank’s debarment lists will be allowed to participate under the Program.

8. Specific areas identified in the procurement cycle that could, directly or indirectly, compromise the efficient achievement of Program are: (a) weak capacity in planning and budgeting at all province/district/commune levels and the use of inappropriate cost norms; (b) delays (sometimes substantial) in approval of annually allocated budgets and the corresponding procurement plans; (c) the low competition in the procurement processes and abuse of direct contracting; (d) weak capacity of procurement cadre at the commune level; (e) lack of public and/or independent oversight; (f) impractical mechanism for handling complaints; and (g) potential governance and corruption risks. In the context of the Program, actions are recommended in the Fiduciary Action Plan to address these shortcomings and mitigate the identified risks. The overall Procurement risk rating is High, and the residual Risk may become Substantial after the recommended mitigation measures have been implemented during the course of this operation. Details of procurement risk analysis and proposed mitigation measures are provided in the next paragraphs below.

9. Having incorporated the assessment of procurement performance on sampling basis in the two visited provinces (Quảng Ngãi and Hà Giang) as well as taken lessons learnt from the past experience in similar projects within sectors and country, the team has found the following specific procurement-related issues that could, directly or indirectly, compromise the achievement of Programs’ Development Objectives in terms of timeliness, quality, economy and efficiency:

(a) Procurement Planning: Weak capacity in planning and budgeting at all province/district/commune levels as well as Delays in approval (sometimes substantial) of annually allocated budgets and procurement plans, would delay the procurement process and contract execution. As a consequence, this would negatively affect the achievement of the results;

(b) Procurement Procedures: Excessive use of Direct Contracting would cause low competition in the procurement processes that subsequently lead to decrease in economy and efficiency from the expected results;

(c) Rigid Evaluation of Bids: Unjustified rejection of bid(s) due to minor qualification deviations and/or technical non-compliances, or due to the offered price being higher than unrealistic cost estimates, which may lead to the exclusion of a competitive bid and may therefore adversely impact the economy and efficiency of the Program’s procurement;

(d) Capacity of communal procuring entities: Limited number of qualified procurement personnel being available within procuring entities at the commune level;

(e) Limited independent Oversight: Lack of public and independent oversight (by citizens, watchdog organizations, NGOs, external auditors, etc.) for verification of timeliness, quality, economy and efficiency of the actual investment on infrastructure at commune level;

(f) Integrity: there are inherent risks of potential governance and corruption issues, but there is not an existing mechanism for sharing information on fraud and corruption allegations, as well as sharing the Bank and national debarment lists of firms and individuals.

(g) Procurement complaint handling: Impractical mechanism for handling procurement-related complaints that in fact discourages submission of complaints;

10. The procurement risks as jointly identified in the fiduciary system assessment (see details in section on Procurement Assessment) will be addressed by the following actions:

(a) Adoption of the Bank’s Anti-Corruption Guidelines (Guidelines on Preventing and Combating Fraud and Corruption in P4R Financing updated July 10, 2015) shall be a legal covenant to be stipulated in the Financing Agreement for this PforR financing. This will trigger Government’s adoption of the Bank’s updated lists of debarred and temporarily suspended firms and individuals as complementary to the national debarment list, operationalizing which is

 

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compulsory and should be regularly coordinated and monitored by the Coordination Agencies at both national and provincial levels for both NTPs.

(b) Improved Planning: Early approval of the annual procurement plans for districts and communes within three (03) months after the approval of the annually allocated budgets by PPC. The annual procurement plans in a targeted Program province should be approved as early as possible by the respective PPC, and shall not be later than the Second quarter of the year, to facilitate timely implementation by procuring entities at all levels in the province.

(c) Increased Competition: Greater use of competitive bidding by discouraging the use of Direct Contracting. For works contracts below the threshold of VND 5 billion at the commune level, the use of local community participation in line with the newly effective Government Decree No. 161/2016/ND-CP on specific mechanism of planning and procurement for simple and small-value contracts. In contracting for infrastructure works under NRD and SPR-P135 that would exceed VND 5 billion per contract, competition must be used for mandatory selection of contractors in accordance with Decree No. 63/2014/ND-CP. This action would be clearly guided in the enhanced operations manual for this PforR operation.

(d) Bid Evaluation: The enhanced operations manual shall clearly stipulate that for all kinds of competitive processes, all bids/quotations/proposals received, no matter higher or lower than pre-bid estimated costs, shall be evaluated to determine bid responsiveness; and no bid/quotation/proposal shall be rejected solely on the basis of minor and/or non-substantial deviations. This action would be included in the enhanced Operation Manual.

(e) Enhanced Procurement capacity: Regular capacity building and intensive training in terms of budget planning, procurement processing and contract administration for procurement practitioners in procuring entities at all sub-national levels (province/district/commune) with particular focus on commune level.

(f) Strengthened Oversight: Strengthening procurement oversight as part of the regular and intensive supervision by the Bank team and verification agencies, and engagement of independent supervision bodies with community participation. Enhancing the Bank’s monitoring of preparation of the verification protocol and the selection of (independent) verification agencies.

(g) Established Reporting system for Grievance redress and Information sharing: Establish in the enhanced Operation Manual a simple and practical mechanism for recording and sharing information of procurement-related complaints, as well as any allegation on Fraud and Corruption practices at a commune level; and reporting those records to upper levels (district and province) on a regular basis. The reporting system may be part of the M&E framework and the MIS through a public web portal.

Financial Management

11. In particular, two high FM risks have been identified. The first relates to the budgeting and planning process as budget may not be sufficiently allocated for the NRD program implementation. To date, only 24 percent of the demand for NRD has been committed for allocation by the Government. A substantial portion (76 percent) would have to be financed through credit, private sector and community contribution which is not very certain. The second risk is related to the high amount of arrears of the NRD capital expenditure of the four targeted Program provinces (Quảng Bình, Bình Thuận, Quảng Ngãi and Hà Giang) in the previous phase which amounted to VND 1,320 billion (about US$60 million). There is a high risk that significant portion of the allocation for capital expenditure of the 2016- 2020 for these provinces would be used for arrear payments, thus no results can be delivered.

12. In order to mitigate this risk, the following are recommended:

 

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(a) For the NRD, the Government and the targeted Program provinces would commit to provide sufficient funds for the NRD for the 2016- 2020 which will be reflected in the Medium Term Public Investment Plan (MTPIP) of the Provinces; and

(b) Close monitoring on (i) resettlement of the arrears, and (ii) outstanding balances shall be carried out regularly (semi-annual) of the four highly indebted provinces. This will be monitored during the annual audits.

Governance

13. According to the Law on Complaints and Denunciations and the Anti-Corruption Law, citizens can provide fraud and corruption complaints to various offices, but they can be summarized into two main channels: (i) the executive agencies including People’s Committee at the appropriate level; and (ii) the GI and the Inspectorate agencies. In the consolidated NTP, complaints related to sub-project, which could include allegations of fraud or corruption, will most likely be submitted to the respective local governments (including the Provincial or District PC, the provincial departments (e.g. DARD, DOLISA) or other relevant technical agencies), or directly to the Inspectorates of MARD, MOLISA or CEMA.

14. The Bank has assessed the degree to which the Program Systems handle the risk of fraud and corruption, and found three areas of concerns and proposed mitigations measures.

(a) The multiple agencies dealing with complaints will create confusion to citizen and may result in complaints being passed around agencies or lost in the transfer process, making it difficult for citizens to follow up with their complaints. The use of written log books in some provinces raises questions about the quality of the data collected. To mitigate these risks, the NTP NCO shall set up and maintain a web portal linked to the M&E system for citizen to leave feedbacks and complaints (on corruption/ procurement/program planning process). The information will be aggregated at the national level by MARD and will inform the Bank of the number of fraud and corruption allegations, as well as how they are handled (investigated, mitigated and/or sanctioned).

(b) There is a risk that inadequate staffing of inspection agencies will constrain the ability of the Program to collect, manage and investigate allegations, especially when the scope of the NTP-NRD is widely spread in different areas. It is recommended that the adequacy of staffing is reviewed at Program mid-term, alongside a review of reports on complaints handling, to assess whether additional capacity support or other interventions are required.

(c) There is also a risk that the non-application of Bank’s guidelines on preventing and combating fraud and corruption. In view of this, it has been agreed that the Program’s enhanced operations manual will include, among others, specific provisions regarding the application of the anti-corruption guidelines (ACGs) in the Program, and the obligation of all the implementing agencies to cooperate with Bank investigations. The said manual will be adopted by the MARD and the CEMA by no later than October 2017, as a condition of effectiveness.

Summary

15. In assessing the performance of the fiduciary systems under which the Program operates, the Bank identified a number of weaknesses which, once addressed, either prior to effectiveness or during implementation, will result in Program fiduciary systems that provide reasonable assurance that the Program expenditures will be used appropriately to achieve their intended purpose. The fiduciary system assessment identifies risks and proposed mitigation measures. Prior to the mitigation measures being taken, the Program risk is assessed as “High”. The residual risk after all mitigations measures are implemented may be reduced to substantial. The results of the assessment and recommendations are reflected, among others, in the Program Action Plan.

 

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Integrated Fiduciary Risk Mitigations and Fiduciary Action Plan.

Action Fiduciary

area Legal

Covenant

Program Action Plan

Enhanced Operations

Manual Early approval of the annual procurement plans for districts and communes within three (03) months after the approval of the annually allocated budgets by PPC. The annual procurement plans in a targeted Program province should be approved as early as possible by the respective PPC, and shall not be later than the Second quarter of the year, to facilitate timely implementation by procuring entities at all levels in the province. (to address procurement risk #1)

FM and Procurement

*

Greater use of competitive bidding by discouraging the use of Direct Contracting. For works contracts below the threshold of VND 5 billion at the commune level, the use of local community participation in line with the newly effective Government Decree No. 161/2016/ND-CP on specific mechanism of planning and procurement for simple and small-value contracts. In contracting for infrastructure works under NRD and SPR-P135 that would exceed VND 5 billion per contract, competition must be used for mandatory selection of contractors in accordance with Decree No. 63/2014/ND-CP. (to address procurement risks #2 and 5)

Procurement *

Operation Manual provides clear guidance on bid evaluation that all bids/quotations/proposals received, no matter higher or lower than pre-bid estimated costs, shall be evaluated to determine bid responsiveness; and no bid/quotation/proposal shall be rejected solely on the basis of minor and/or non-substantial deviations (to address procurement risk #3)

Procurement *

Regular capacity building and intensive training in terms of budget planning, procurement processing and contract administration for procurement practitioners in procuring entities at all sub-national levels (province/district/commune) with particular focus on commune level (to address procurement risk #4)

Procurement *

Strengthening oversight by regular and intensive supervision by the Bank team and verification agencies, and engagement of independent supervision bodies with community participation; and Enhancing the Bank’s monitoring of preparation of the verification protocol and the selection of (independent) verification agencies (to address procurement risk #5).

Financial Management, Procurement

and Governance

*

The Central Government and the Participating Provinces commit to provide sufficient funds for the NRD for 2016- 2020 which will be reflected in the MTPIP of the Provinces

Financial Management

*

The timeliness of funds allocation shall be monitored closely by the Coordination Agencies (NCOs).

Financial Management

*

The Coordination Agencies (NCOs) will work closely with the State Treasury to ensure that the budget allocation is entered timely

Financial Management

*

Close monitoring of the NCO on (i) resettlement of the arrears, (ii) outstanding balances shall be carried out regularly (semi-annually) of the 4 highly indebted provinces (Quảng Bình, Bình Thuận, Quảng Ngãi and Hà Giang)

Financial Management

*

 

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Formal guidance and procedures on Financial Reporting including the responsibilities, frequency, format, contents, level of details and reconciliations shall be provided

Financial Management

*

The Coordination Agencies will prepare the consolidated Financial Statements of the Programs based on the information generated from TABMIS

Financial Management

*

SAV will perform the annual audit of the Programs and the audited financial statements will be submitted to the Bank within 7 months of the fiscal year end

Financial Management

*

Government agrees to apply the Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing to the Program

Governance and

Procurement * *

The central government and participating provinces shall be obliged to cooperate with the World Bank investigations

Governance and

Procurement * *

The NTP NCO shall set up and maintain a web portal linked to the M&E system for citizen to leave feedbacks and complaints (on corruption/ procurement/program planning process). The information will be aggregated at the national level by MARD and will inform the Bank of the number of fraud and corruption allegations, as well as how they are handled (investigated, mitigated and/or sanctioned). (to jointly address procurement risk #7).

Governance and

Procurement *

The NCOs of NRD and SPR-P135 are responsible for (1) regularly checking and sharing the Bank’s lists of debarred and temporarily suspended firms and individuals (updated regularly on the Bank website) within the (18) targeted Program provinces on a monthly basis; and (2) the Bank shall carry out supervision and audit during implementation to establish actual performance on enforcing the debarment lists. (to jointly address procurement risk #6).

Governance and

Procurement * *

The Government shall ensure that the adequacy as well as capacity of inspectorate staff to handle of fraud and corruption cases in a transparent and timely manner.

*

 

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Annex 6: (Summary) Environmental and Social Systems Assessment

Purpose of the ESSA

1. The purpose of this ESSA is to:

Assess the likely environmental and social risks associated with the program;

Document the environmental and social management procedures, standards and institutional responsibilities that will apply to the Program;

Evaluate the institutional capacity to manage the likely environmental and social effects in accordance with Vietnam’s own requirements under the proposed Program;

Assess the consistency of the borrower’s systems with core principles and attributes defined in the Program-for-Results (PforR) Guidance Note on Environmental and Social Assessment; and

Recommend specific actions for improving counterpart capacity during implementation to ensure consistency with World Bank principles.

2. Key findings of this assessment will be used to improve environmental and social management outcomes of the Program through specific actions under the overall Program Action Plan (PAP), as well as through technical assistance and capacity building activities to be implemented under the Program. The action plan will be discussed and agreed with the Government of Vietnam (GoV) and will be incorporated as relevant into legally binding agreements under the conditions of the new financing.

3. In preparing the assessment, the assessment teams have reviewed available document of the National Target Programs (NTP) for New Rural Development and the NTP for Sustainable Poverty Reduction, associated projects and programs and have met with all related Government Ministries and representatives from some of the targeted Program provinces.

4. The analysis in the ESSA has examined how the system addresses and performs in relation to the core principles of the WB policies on environment and social. Overall, on the environment front, the NTP program and general provisions at the Provincial and local level show that Vietnam has the needed principles and risk mitigation policies in place. In the context of this PforR, the primary gap lies in enforcing the restriction on activities in protected areas. On the social side, the primary inconsistencies with WB principles are in the area of land, labor and financial donation and adequate consultation, especially with women and ethnic minority groups. While there is an overall weak capacity on both environment and social side, the gap is wider on the latter as the mandate is not the responsibility of any specific local office, resulting in the issues not being adequately monitored. Moreover, while the environment risks do have policies in place, the social policies, (more so for the NRD than the SPR), are often not consistent with WB principles. The issue of land, labor and financial donation which is a key feature of the NRD is a major gap. However, it must be noted that NRD, in principle discourages such donation in the poorer ethnic minority groups, although this is often ignored and has in the past resulted in these programs shying away from these poorer areas and prioritizing the better off communes. Another area that needs to be addressed is where people do not have land rights. For activities under the project boundary which will have verification, it is expected that such households will have compensation for the investments they have made on the land.

5. The enhanced operations manual will be the official manual of the two NTPs which will be issued by the implementing agencies (MARD and CEMA). Hence they are binding on the Program. The Government program does permit activities involving social and environment risks as identified in the ESSA. The procedures for screening will be integrated into the overall operations manual for both NTPs that will apply to the whole national program and not just the PforR area. Since the enhanced operations manual will be issued for all provinces, those which are not part of the Program will not be expected to be fully compliant with the provisions of the enhanced manual. The sections that are specific to the PforR activities, such as the environment and social guidelines will be verified only in activities within the Program boundary but it is expected that the local authorities will over time incorporate these as a better way of doing business Hence, the activities under the PforR within the 18

 

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provinces will be verified to ensure the use of the procedures as stated in the enhanced operations manual. It should be noted that a large part of the WB engagement in the PforR is to influence a change in the way of doing business and that includes the environment and social procedures. Hence incorporation of these procedures into the Government- issued operations manual for both NTPs is a major step. Through the PforR, there will be emphasis on demonstrating the benefit of these procedures in terms of activities under the PforR with the objective that local authorities will use the same systems for non-PforR activities under the NTP in those provinces. The Bank will review the enhanced operations manual and will need to ensure its technical rigor before Government finalize and clear it for formal adoption by October 2017.

National Program for New Rural Development (NTP-NRD)

6. The New Rural Development Program (NTP-NRD) is designed to upgrade services and infrastructure for rural communities across all 63 Provinces of Vietnam. It encompasses 19 economic and social criteria that target poverty, education, health, transport, water supply, irrigation livelihoods, agricultural production, markets, culture, energy, environmental issues, communication and security. During the first phase of the NTP program (2011-2015), funding and implementation by many communes was directed primarily to achievement of infrastructure targets set for communes, districts and provinces; largely by way of roads, schools, health centers, and water supplies. Investments to raise incomes, productivity and value addition received less attention.

The National Targeted Program for Sustainable Poverty Reduction (NTP-SPR)

7. The Sustainable Poverty Reduction Program (NTP-SPR) supports infrastructure, livelihoods, basic services and capacity building for the country’s 94 poorest districts and 310 communes in coastal areas. Through Program-135 (SPR-P135), it supports 2240 poorest communes and 337214 poorest villages in ethnic minority and mountainous areas.

PforR (the Program)

8. The PforR covers the 2016-2020 phase of NTP-NRD and NTP-SPR. The Program Development Objective is to improve the delivery of and access to investments for increasing agricultural production and enhancing livelihood opportunities within the Program area. The focus of the PforR is therefore primarily directed to assisting Government to improve the governance, processes, planning, implementation, monitoring and evaluation of the NTP- NRD and SPR-P135 programs.

9. The PforR operation will pursue the achievement of specific and measurable results associated with 8 of the 19 NTP-NRD criteria associated with investments designed to raise incomes and value added productivity through on-farm and off-farm activities (i.e. NTP-NRD Criteria No: 1-Planning and Implementation, 2-Transport, 3-Irrigation, 7-Rural Infrastructure for trading and commerce, 10-Income, 11-Poor Households, 12 – Rural Labor and 13-Production Organization). For the NTP-SPR, activities supported under SPR-P135 as those that support community-based small-scale infrastructure and rural livelihoods for improving agricultural production and rural household incomes, and increased capacity for ethnic minority leaders and commune officials. The Program would also cover recurrent expenditures on technical assistance and capacity building in the areas of planning, subproject design, implementation and monitoring and evaluation. The interventions covered through this PforR would be limited to those investments in NRD and SPR-P135 which support agriculture productivity related infrastructure, as well as other livelihood and enterprise subprojects encompassing on-, off- and non-farm activities.

                                                            

14 These are based on earlier documents. GoV has just issued a new set of criteria for P135 communes and villages to be effective on December 20, 2016 (Decision QD50/2016/QD-TTg, on November 3, 2016). New list of P135 communes is expected to be available at the end of March 2017.

 

 

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10. The PforR would be implemented in 18 targeted Program provinces15, with the view to developing and consolidating institutional reforms and new ways of doing business that could subsequently be “rolled-out” to other provinces under the NTP-NRD and SPR as experience is gained.

Institutional Arrangements and Capacity

11. The institutional arrangements are described below:

The program oversight is by the Central Program Steering Committee (Central-PSC) chaired by the Deputy Prime Minister and with representatives from MPI, MOF, MOC the implementing Agencies (MARD, MOLISA and CEMA), as well as from other line ministries. The Central-PSC organization and functions are mirrored at Provincial, District and Commune level with program Steering Committees. At provincial, district and commune levels, the PSCs are chaired by the Chairman of the Peoples Committee.

MARD has been designated as the lead Implementing Agency for both the NTP-NRD and NTP-SPR and coordination with the other Implementing agencies including MOLISA and CEMA. The National Coordination Office (MARD-NCO) provide the Secretariat functions for the Central-PSC and be responsible for executing the various directions and decisions of the Central-PSC. The PforR would depend upon the MARD-NCO which has functioned throughout the first phase of the NTP-NRD. The MARD-NCO would have responsibility for day-to-day implementation of the NTP-NRD at the national level, and through the Departments of Agriculture and Rural Development (DARD) at the Provincial, District and Commune levels where staff are designated with NTP-NRD responsibilities.

MOLISA is responsible for leading and coordinating with other ministries, agencies, and Peoples Councils in implementing the NTP-SPR. MOLISA is responsible for implementing several sub projects, scaling-up the poverty reduction models a monitoring and reporting on poverty reduction. CEMA through its SPR-P135 Coordinating Office, is however responsible for managing and guiding the implementation of sub-project within the SPR-P135 communes. At the Provincial level, the SPR is managed by the Department of Labor, War Invalids and Social Affairs and at the District and Commune level by the Division of Labor and Social Affairs.

With regard to capacity to manage environment and social impacts it is the central and commune level agencies that matter. Overall, Vietnam has policies at the Provincial, District and commune level that are aimed at managing environment risk. However, the staff assigned to implement these guidelines and supervise their implementation are often poorly trained and may not see this as a priority task.

With regard to social risk management, the risk is somewhat greater because unlike environment, the mandate for various aspects of social risk management (e.g. vulnerable groups, voluntary land donation etc.) is not with any one unit and spread amongst different implementing bodies at the local level.

To better manage the weak capacity, and put in adequate checks, the Program’s Enhanced Operation Manual will contain detailed procedures and guidelines for environmental screening and management. There will also be budget in the capacity building program to train staff responsible for environment and social management.

Environmental and Social Effects of the Program

Environmental Benefits and Risks

12. The investments under the proposed Program are expected to bring about many positive environmental impacts and to improve living conditions in target areas as a result of access to improved

                                                            

15 Cao Bằng, Hà Giang, Lào Cai, Bắc Kạn, Điện Biên, Lai Châu, Ha Tĩnh, Quảng Bình, Quảng Trị, Thừa Thiên-Huế, Ninh Thuận, Quảng Ngãi, Bình Thuận, Bình Đinh, Đắk Lắk, Kon Tum, Trà Vinh and Sóc Trăng.

 

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infrastructures and environmental services, as well as connectivity. The benefited communities would have safer and better access to basic infrastructure, their living conditions would be improved. Participatory planning approaches, embedded in this Program’s design, would also help to empower communities. The Program will also cover important improvements to implement environmental aspects of the government program.

13. Typical investments would include small scale infrastructure such as: village- level farm-to-market-roads, small bridges (fixed and suspension), foot paths and pathways, small-scale gravity, pump and drip irrigation, shallow wells, small water impounding, village-level, small-scale fish landings, village-level small jetties, postharvest facilities (drying floors, small storage sheds, market facilities), plant nurseries, seed production facilities, tree planting, composting/organic fertilizer production, livestock breeding and distribution facilities, milking facilities, small-scale commodity processing equipment for village –level processing, etc. For rural livelihood activities, this would cover on-, off- and non-farm activities related to crop production, egg/chicken production, pig fattening, milk production, aquaculture, coffee, coconut and vegetable oil processing, rubber processing, broom and basket making, weaving, handicraft production, fruit and nut packaging and preservation, village level juice processing, product hauling and consolidation, marketing, and small scale processing of agricultural products, etc.

14. The anticipated adverse environmental effects of the investments provided under this Program are not expected to be significant considering that: (a) the small scale and relative scatter of physical investments; (b) that the proposed works would take place in or very close to established villages; (c) the limited geographic footprint of planned works; and (d) that mitigation measures are known, including principally that proper care and oversight is undertaken during construction, production activities to improve livelihood, or cultivation.

15. Potential adverse environmental effects of Program activities include: (a) construction related impacts such as dust, noise, generation of solid waste/construction waste or small quantity of dredged materials , loss of vegetation cover , increased erosion risks at walls/slopes created, social disturbance due to construction activities and transportation of materials and wastes, and safety risks to the public and workers; and (b) pollution risks related to usage and disposal of agrochemicals (pesticide and fertilizer) and packaging materials; c) generation of waste, wastewater and by-products during the operation and post-harvest related to production support (cultivation, animal raising, crops, etc.). The potential adverse effects are generally at moderate level, well known and understood by the implementing authorities. It is expected that these effects will be manageable with well-established mitigation measures introduced into this Program in the form of ECOP (Environmental Codes of Practices). For production support activities, the potential impacts and risks would be manageable by the measures being applied in agricultural practices in the country since early 1990s such as IPM, VietGAP (Vietnamese Good Agricultural Practices) or “three reductions, three increases” movement facilitated by existing agricultural institutions and associations.

16. There are a number of protected areas in the country such as national parks, nature reserves, conservation areas, historical sites with communities living within. These areas are normally very important in terms of ecological balance and biodiversity, and are environmentally sensitive. Interventions, if any, in to such areas may lead to potential significant adverse environmental impacts. The Government has policies and guidelines to protect these areas, although these are not always adhered to. The environmental guidelines in the enhanced operations manual for the Program will restrict work in protected areas and as a result, no significant impacts to these critical natural habitats or cultural resource assets are expected. The geographic footprint, scale, and volume of facilities constructed under the Program will be small and therefore any adverse impacts are expected to be limited, localized and mitigatable. These potential adverse impacts would be mitigated further or minimized by the known mitigation measures.

17. The Government program permits activities related to the production, processing, marketing of beverage, alcohol, drugs, tobacco; the works primarily serving the army and defense forces. These activities will be screened as per the environmental procedures in the enhanced operations manual.

 

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18. The Law on Environmental Protection was revised in 2014. Environmental management is also supported by related laws such as the Labor Law, The Workplace Health and Safety Law, the Aquaculture and Fishery Law, the Plant Protection and Quarantine Law, the Animal Health Care Law etc. Decree 18/2015/ND-CP and Circular 27/2014/TT-BTNMT (guiding the implementation of the Environmental Law) requires Environmental Impact Assessment (EIA) or Environmental Protection Plans (EPP) be prepared for investment projects. While it is not likely that any of the NTP activities will be required to prepare full EIAs as physical investments will be mostly community-based, EPP would be required. The physical investments will be mostly small scale, community-based with limited potential impacts and risks. However, a common problem is the ineffective implementation of EPP requirements due to lack of awareness, institutional capacity and resources.

19. The preparation and implementation of commune-level investments has been and would continue be decentralized to district and commune levels. However, local level environmental management capacity is limited due to constrained resources availability. Therefore, while the impacts and risks are limited, environmental performance of small civil works have been dependent on the limited capacity and environmental awareness of project owner and implementers. Good environmental guidelines, community monitoring and participation would be needed to enhance environmental performance of small investments under the PforR.

20. Related to production support under the PforR, the related environmental impacts and food security would be managed by the existing management system and network set up by the Government at central, provincial, district and commune levels such as the Plant Protection, Agricultural Extension, Natural Resources and Environment, in coordination with mass organization such as Farmers Association, and support from external sources. While the production activities will have implications on the environment e.g. the expansion of agricultural areas (including potentially into natural habitats), increased water use through new or expanded irrigation, increased use of pesticides, health/nutrition impacts of displacement of subsistence crops with cash crops, exploitation of living natural resources, and pollution, the scale of the production activities is very small and often limited to household level activities. Moreover, the extension programs do involve community education and take into account issues like impacts of subsistence versus cash crop. Thus such activities would have in place appropriate educational programs and checks to ensure that negative impacts are addressed.

21. Number of sectoral guidelines with environmental aspects incorporated has been issued by rural sectoral management authorities such as MARD and MOLISA. However, program handbooks prepared during the previous phase of NTP and SPR have not incorporated adequately environmental guidelines thus the incorporation of environmental considerations into program implementation have been limited.

22. The enhanced operational manual issued by both NTPs will have detailed screening criteria to mitigate negative environmental impacts and promote positive environmental outcomes. These procedures will help screen out the negative investments listed above such as in protected areas or those supporting alcohol and tobacco. These activities are currently permitted in the NTPs. It is expected that this enhanced operations manual will encourage a systems change in the NTPs to adopt better practices and thereby bring about a positive change in the NTP implementation system. For the purposes of the PforR Program, only activities that pass the screening will be included in the verification sample.

Environmental Recommendations

23. Recommendation 1: The enhanced operations manual developed for this phase of the NTPs will detail environmental guidelines outlining the required screening and management procedures to enable program implementers at local level to mitigate against these risks. The implementation of the guidelines and procedures in the enhanced operations manual will be monitored through WB supervision and the validation protocol of the PforR. The enhanced manual will be issued by Government for both NTPs. Investments would be screened to exclude the following: (i) locations within protected areas such as national parks, nature reserve, biological conservation areas, cultural-historical sites etc. listed in MONRE Decision no. 1107/2015/BTNMT; (ii) Activities that support the production, processing, marketing of beverage, alcohol, drugs, tobacco; the works primarily serving the

 

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army and defense forces. Only activities that are eligible will be included in the verification sample of the PforR. A screening form for eligibility has been developed and attached to Annex 5 of the ESSA and will be filled in by the program implementing agencies at the provincial level.

24. Recommendation 2: The enhanced operations manual incorporate adequately the necessary environmental guidelines. For infrastructure, the procedures to be followed from planning to implementation should be described. For production support, the options/approach to be considered and/or implemented as part of investment process should be included.

25. Recommendation 3. Promote community participation into subproject planning, implementation, monitoring, supervision, maintenance to enhance sustainability of the works.

26. Recommendation 4. Training and technical assistance on the application of Program environmental requirements and procedures (specified in OM) should be provided to program implementers. Adequate human resource should be allocated to monitor and report on the implementation of the measures to avoid, mitigate the potential environmental impacts and risks during Program implementation (e.g. screening for environmental eligibility, incorporation of ECOP into bidding/contractual documents, incorporation of pollution control in production support activities, etc.). The implementation of such avoidance, mitigation measures must be reflected in relevant sections of the Program Progress Report. An environmental consultant should be contracted at central level to provide the training, technical assistance and environmental monitoring in the Program. The central and provincial level implementing agencies should each designate at least one staff to oversee and be responsible for environmental aspect of the Program and both central level

Social Benefits and Risks

27. The Program would have significant positive impacts on the socio-economic development in the Program areas, including its contribution to poverty reduction, income generation and accessibility to better productive related (commercial and productive) infrastructure. In terms of negative impacts/risks, the overall rating is moderate, taking into account a number of aspects such as land acquisition impact, cash/labor donation of beneficiaries, the consultation/participation process of local people (notably ethnic minority people in the Program area), and the program’s institutional arrangements.

28. First, since the Program will only cover productive/commercial (for NTP-NRD) and small basic (for SPR-P135) infrastructure, the magnitude of land acquisition impact is expected to be minor. The percent of the acquired area is rarely more than 10 percent of the household’s total land holdings. However, the arrangement for land acquisition/compensation is different in NRD and SPR. By default, all land affected in a NRD investment is supposed to be donated by local people (no budget for compensation), while under SPR, compensation fund might be allocated for land acquisition activities. Although local authorities always classify land donation for NRD investment as voluntary, it is very easy to turn into involuntary donation as affected households are subject to peer pressure from other community members.

29. Second, the Program execution (especially NRD) also involves and encourages contribution from local people in terms of cash/labor donation. Although the contribution of local people has been institutionalized with regard to its limits, in a number of governmental regulations, in many cases, local authorities disregard the limit too much (especially in communes in the last miles of achieving all 19 criteria of NRD), causing additional burden of local people in NRD implementation. The two NTPs have different approaches to land, labor and financial contribution. While the NRD traditionally assumes that communities much donate land, labor and capital for the community projects, the SPR relies on this to a far lesser extent and has provision for payment of compensation. This difference is because the SPR is recognized as targeting the poorest ethnic minority groups. Even in the NRD, the principles discourage land, labor and financial donation from vulnerable and ethnic minority groups. This is why the NRD has in the past, tended to be implemented primarily in better off communes and districts.

 

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30. Third, there are differences in the country and Program systems and those supported by WB OP 4.12. One area that needs to be addressed is where people do not have land rights. For activities under the Program boundary which will have verification, it is expected that such households will have compensation for the investments they have made on the land.

31. Fourth, it is noted that the enforcement of provisions related to people’s participation throughout the program cycle is relatively weak, although the related regulations are relatively well structured. This aspect becomes more important as the program will be implemented in the targeted provinces with substantial presence of ethnic minority (EM) communities. There are a number of factors hindering the citizen’s effective participation which mainly include (i) limited fluency in Vietnamese among EMs, and insufficient bilingual support; (ii) insufficient information provided for planning and budgeting processes; (iii) limited capacity for sound participatory planning and budgeting, and lack of cultural sensitiveness among local government; and (iv) lack of technical knowledge with regard to supervision and monitoring of infrastructure work of the local people.

32. Finally, NTP-NRD and NTP-SPR have different institutional arrangements in which social impacts/risks are not properly tracked, recorded and reported. Land donation is frequently done on a verbal agreement basis with no written and signed documents. No staff time is allocated in both NRD and SPR to oversee the programs’ social aspects. This compromises and weakens the program’s achievement in the area of social development agenda in general and in reflecting/capturing the social impacts in program reports in particular.

Social Management System

33. First, on the resettlement side, the land acquisition, compensation payment and resettlement implementation are always the responsibility of the Government, particularly at the provincial and district levels. The activities are conducted in accordance with the Government’s regulations (e.g., planning, disclosing, approving or paying compensation). In this program, in current practice, land is acquired through a donation process, with the commune people’s committee playing an important role in communication, consultation and facilitation to mobilize land donation from affected households. This requirement for contribution of land, coupled with the common practice requiring contribution of labor and finance from communities, is recognized as a risk, especially in the NRD program. This risk cuts across all communities, but is enhanced in the context of poorer ethnic minority communities. In the cases where compensation funds are available (e.g. some investments under SPR-P135), CPC and DPC will play a key role in developing/approving compensation plans and making payments to affected households.

34. Second, in the context of the large presence of ethnic minorities impacted by the NTPs, Vietnam has a legal framework that guides Ethnic Minority affairs. At the constitutional level, article 5 of the 2013 Constitution confirms: (a) the equality of all Ethnicities living in the territory of Vietnam; (b) prohibition against discriminated behaviors; (c) rights of Ethnic Minority people toward their languages, scripts, traditional culture and custom; and (d) comprehensive policies of Vietnam to enable the development of Ethnic Minority areas. The principles when promulgating Ethnic Minority policies are: (a) equality and solidarity among all Ethnic Minorities; and (b) mutual support for progress. At lower level, decree No. 05/2011/ND-CP dated January 14, 2011 on Ethnic Minority affairs is the highest legal document. The Prime Minister has also approved the project “Cultural Preservation and Development of Ethnic Minorities in Vietnam toward 2020” with an estimated budget of 1.512 billion VND;16 and the Ethnic Minority strategy up to 202017.

35. Third, on the legal requirements for public consultation/disclosure, Vietnam has relatively good legal framework on access to information and disclosure. These rights of citizen have been reflected in the 2013 Constitution as well as in specialized Laws and its associated guiding decrees. The program, especially NTP-SPR has some specific provisions that allow program activities to be tailored in

                                                            16 For more detail, refer to decision No. 1270/QD-TTg dated on July 27 2011. 17 For more detail, refer to decision No. 449/QD-TTg date on March 12, 2013

 

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accordance with geographical and cultural characteristics of benefited communities. The attention to vulnerable groups, especially women, is also emphasized in the Program design.

36. Fourth, on the participation of local communities (notably ethnic minority people), the assessment confirmed that these two programs have a strong focus on and directly target ethnic minority people on several counts. However, while these two programs strongly focus on the question of “what” (to finance) in EM regions, they are very thin on the question of “how” (to adapt procedures to these groups), especially how to make sure that all program activities are culturally appropriate. Participation of EMs in decision-making processes remains limited (UNDP, 2006; WB 2009, 2012; MDRI 2014). Experience in other governmental funded programs have consistently indicated that “top-down” decisions and “one size fits all” solutions are not appropriate for EMs and limit the impact of existing programs.

37. The enhanced operations manual issued by both NTPs will have detailed screening criteria to mitigate negative social impacts and promote positive outcomes. These procedures will include the Guidelines on Voluntary Land Donation as well as the procedures for consultation, grievance channels and specific guidelines regarding engaging with ethnic minority groups. Currently, the NTP programs permit practices such as land donation and weak consultation that can have negative social outcomes. It is expected that the improved provisions in this enhanced operations manual will encourage the NTPs to adopt better practices and thereby bring about a positive change in the NTP implementation system. For the purposes of the PforR Program, only activities that pass the screening will be included in the verification sample.

38. Engagement of Civil Society is a change that this Program design will influence. Since the NTPs are Government programs, there is a limited appetite for inclusion of these institutions in the formal institutional structure of the programs in Vietnam. This is consistent across all Government programs in Vietnam. However, the design of the PforR has put a high premium with coordinating and leveraging donor programs in the Provinces. The selection of Provinces had the presence of complimentary donor programs as one of the main criteria. These donor programs have high involvement of civil society. The main donor overlap is with IFAD, Irish Aid, OXFAM, and CARE. The Australia Bank-executed TF supported value chain activity will also engage civil society groups working in the selected districts and communes. Also note that the refined design of SPR-P135 allows for use of civil society organizations to support the livelihood and capacity building sub components of the program.

Social Recommendations

39. Recommendation 1: The enhanced operations manual developed for this phase of the NTPs will detail the social guidelines outlining the required screening and management procedures to enable program implementers at local level to mitigate against these risks. The implementation of the guidelines and procedures in the enhanced manual will be monitored through WB supervision and the verification protocols for this PforR. The enhanced manual will be issued by Government for both NTPs.

40. Recommendation 2: Social screening must be conducted prior to actual investment in sub-projects to maximize project benefits and minimize adverse impact to local communities especially on land acquisition. The screening process will be detailed in the enhanced operations manual. It needs to be closely followed and the results properly documented and included in the relevant section of the investment proposal.

41. Recommendation 3: Land acquisition must be minimized. However, if land acquisition is unavoidable, it is necessary to ensure that people affected by loss of land and assets will be compensated so that they are no worse off than before that loss. Investments that cause physical relocation should be restricted to only those limited cases that are necessary for the Program’s investment. The provision in 2013 Land Law on using independent land appraiser must be followed and its implementation documented and monitored through the Programs’ M&E system in the targeted Program provinces.

 

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42. Recommendation 4: Within the enhanced operations manual, there would be land acquisition procedures, with emphasis on following the Voluntary Land Donation guidelines. The Government will issue a “Voluntary Land Donation Guideline” for adoption by the targeted Program provinces that would provide for “Voluntary Donation” to be used for NTP small-scale community infrastructure where the impacts are minor and where there are no alternative options for the location of the infrastructure subprojects. Only activities which are eligible will be included in the verification sample of the PforR. Implementing agencies must ensure that the donation decision will be made based on the informed consent of affected households and of their own choice. Voluntary land donation guidelines are being developed at the Program level and will be adopted by the targeted Program provinces to guide the application of this practice in the Program activities. The guidelines will ensure that these contributions are not forced and where voluntary, are based on good consultation and monitoring. These guidelines will be included in the enhanced operations manual for the NTPs and monitored through WB supervision and the verification protocols for this operation.

43. Recommendation 5: Develop and implement the community/citizen engagement guidelines to enhance people’s participation and consultation processes, especially for Ethnic Minorities and other vulnerable groups such as female-headed households, disabled, etc. The guideline will first ensure that local people are fully informed about the Program benefits/risks, mitigation measures and the various arrangements (e.g. complaint registering, land donation etc.). Second, the guideline will also enable their meaningful participation and consultation in every step of the Program implementation (including planning, design and implementation, compensation, resettlement and rehabilitation measures in land acquisition) and their equal access to Program information/benefits. The guideline will be community-driven, transparent, gender sensitive and in appropriate language. Given that the Program will be implemented over a large geographic area with many different ethnic groups, specific guidance will be provided at the local level for each ethnic group. In addition, the guidelines shall fully operationalize existing Vietnamese Legislation with respect to Ethnic Minorities through a process of free, prior, and informed consultations

44. Recommendation 6: To the extent possible, efforts must be made to ensure that Program interventions are culturally appropriate. This is very important given the diversity of ethnic groups living in the Program areas. Where relevant, it is necessary to deliver a training to contractors working in the area having a high presence of EM peoples. The Program should encourage the following social development measures: (a) ensuring unskilled (and to the extent feasible, skilled) labor is sourced locally; (b) mobilization of community (especially women and other vulnerable groups such as female-headed households, disabled, etc.) in maintenance activities or community based supervision. The Women’s Union and other relevant grass root organizations (CBOs, NGOs, pagoda, church, etc.) should be incorporated into the institutional structure of implementation to assist in promoting gender-sensitive community mobilization, participation and grievance redress channels.

45. Recommendation 7: Arrange adequate staff time to ensure that social-related issues (land acquisition, land donation, gender mainstreaming, EM participation, and community complaints/feedback) will be properly tracked, monitored and reflected in the relevant Program report for documentation and tracking. In addition, a database on the Program’s beneficiaries, disaggregated by gender and ethnicity should be maintained and monitored.

Program Action Plans

46. The following are the social actions identified for the Program Action Plan:

(a) The Government will issue a “Voluntary Land Donation Guideline” for adoption by the targeted Program provinces that would provide for “Voluntary Donation” to be used for NTP small-scale community infrastructure where the impacts are minor and where there are no alternative options for the location of the infrastructure subprojects; and

(b) In conjunction with the enhanced operations manual, and in conformity with Vietnamese Legislation, community/citizen, gender-sensitive guidelines will be issued, both in a language and format understood and accessible to beneficiaries, taking account of language requirements, especially for ethnic minorities.

 

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Consultation and Disclosure

47. There have been two rounds of consultation carried out on the ESSA and the enhanced operations manual. The first ESSA consultation, which was conducted on February 17, 2017 was well-participated by representatives from the 18 targeted Program provinces including top leaders of the People’s Committee, Department of Agriculture and Rural Development (DARD), Department of Labor, Invalids and Social Affairs (DOLISA), Provincial Department of Ethnic Minorities, along with ministries including MOF, MOLISA, CEMA, and MARD. Among others, participants showed their greatest attention on the issue of land acquisition in NTPs activities and the application of ESSA recommendations with regard to land donation and people’s contribution. In general, participants hesitate to apply compensation to land affected by NTPs activities, given land donation practice has been widely applied in these two programs, especially under NTP NRD. The aim was to get consensus on the principles of the ESSA and to validate the proposed screening and monitoring procedures. The second round of consultation was done during appraisal (March 27-31, 2017), in two locations in the field and targeted the district and commune staff from participating provinces (in Đắk Lắk in the Central Highlands and in Trà Vinh in the South). The aim was to ground-truth the proposed screening and management procedures and systems that will be incorporated into the enhanced manual. The ESSA was disclosed on the World Bank’s external website on March 1, 2017. It was also disclosed on the NTP-NRD website on March 22, 2017 and on the CEM website on March 27, 2017.

Environmental and Social Risk Ratings

48. Given the scope of the Program, its types and scale of investment, geographic focus, and previous experience with World Bank projects of the central Government, the risk rating is moderate from the environmental and social perspectives.

 

 

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Annex 7: Systematic Operations Risk Rating (SORT)

Stage: Board

Systematic Operations Risk-Rating Tool (SORT)

Risk Category Rating (H, S, M, L)

Political and Governance Moderate

Macroeconomic Substantial

Sector Strategies and Policies Substantial

Technical Design of Project or Program High

Institutional Capacity for Implementation and Sustainability High

Fiduciary High

Environment and Social Moderate

Stakeholders High

Other

OVERALL High

 

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Annex 8: Program Action Plan

No. Program Action Plan Completion Measurement Due Date Responsible Entity 1 Develop an M&E framework for NTP-NRD and SPR-P135 and roll out an MIS for NRD

with financial information from TABMIS.

M&E Framework Submitted for NRD and SPR-P135 Operational MIS for NRD with physical and financial reporting updated quarterly

October 2017

2nd quarter

2018

MARD and CEMA

2 Set up and maintain a web portal for citizen to leave feedbacks and complaints (on corruption/ procurement/program planning process). The information will be aggregated at the national level by MARD and will inform the Bank of the number of fraud and corruption allegations, as well as how they are handled (investigated, mitigated and/or sanctioned)

Website to record feedbacks and complaints

December

2017

MARD and CEMA

3 Contract a Capacity Building Program (CBP) Officer in the NRD and SPR-P135 NCOs to oversee the implementation of the CBP to support national, provincial, district and commune level training under TORs acceptable to the Bank

CBP Officer on board for the 2 Program NCOs

December

2017

MARD and CEMA

4 Enhanced Operations Manual for Planning, Infrastructure and livelihoods approved and Instructions issued for the use of the targeted Program provinces, districts and communes (on aspects related to technical specifications, financial management, procurement, environmental and social systems, governance and M&E).

Updated operations manual issued for the use of the targeted Program provinces

October

2017

MARD and CEMA

5 The Bank’s most updated lists of debarred and temporarily suspended firms and individuals, as a complement to the national debarment list, adopted and regularly shared, coordinated and monitored by the two NCOs, at both the national and provincial levels for both NTPs.

Updated lists of debarment/suspension by the Bank and GoV regularly shared by 2 Program NCOs for use among the targeted Program provinces

Regularly

MARD and CEMA

6 In conjunction with the enhanced operations manual, and in conformity with Vietnamese Legislation, issue community/citizen, gender-sensitive guidelines, in both a language and format understood and accessible to beneficiaries, taking account of language requirements, especially for ethnic minorities.

Transparent guidelines issued and adopted

Continuing October

2017

MARD and CEMA

7 Issuance of a “Voluntary Land Donation Guideline” to be included in the enhanced operations manual for adoption by the targeted Program provinces which would provide for “Voluntary Donation” to be used for small-scale community infrastructure where the impacts are minor and where there are no alternative options for the location of infrastructure.

Issuance of Guidelines October 2017

MARD and CEMA

8 Conduct of baseline and end-line survey for the 2 NTPs Preparation of Baseline Survey and End-line Survey

August 2018

(baseline) August

2021 (End-line)

MARD and CEMA

MARD

 

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Annex 9: Implementation Support Plan

1. The implementation support plan (ISP) is based on the implementation support guidelines for Program-for-Results operations, adapted to the design and risk profile of the Program. The Borrower is responsible for the Program’s overall implementation, including its technical aspects. The basic mandate of Bank implementation support under the Program are the following:

(a) Review implementation progress and achievement of Program results and DLIs; (b) Provide support for resolving emerging Program implementation issues; (c) Provide technical capacity building support to the Government for implementation of the

Program Action Plan, the achievement of DLIs and other results, and for institutional development and capacity building;

(d) Monitor systems performance to ensure their continuing adequacy through monitoring reports, audit reports, and field visits; and

(e) Program Monitor changes in risks to the Program and compliance with legal agreements and, as needed, the Program Action Plan.

2. The ISP focuses on actions that the Bank will perform and on associated needs in terms of skills and resources. Successful support and monitoring of Program implementation will require a task team including a diverse skills mix. The approach is to mobilize the Bank’s global expertise at the outset to help with operationalizing design improvements while relying on a core group of experts normally based in the country to conduct permanent dialogue with the borrower. Given that the bulk of actions in the Program Action Plan are expected to be implemented within 24 months of effectiveness, this approach entails higher upfront costs during the first two years of implementation.

Bank team assistance

Table 1: Main focus of Implementation Support

Time Focus Skills Needed Resource Estimate

Partner Role

Years 1-2 (First 24 Months)

Provision of dedicated TA related to the implementation of the PAP actions and monitoring of DLIs will be needed in the following fields: Development Planning, Livelihoods, Value Chain Development, Small scale infra; governance, GRM and Participation, Fiduciary, Environmental and Social management system; Poverty Economics

Skills mix needed: Agriculture/Value Chains, Rural Development, Planning/Institutions, Livelihood, Engineering/Rural Infrastructure, Institutional Capacity Building, Procurement and Financial Management, M&E/MIS Poverty/Ethnic Minorities, Governance, Environmental and Social Systems.

US$250,000 per year

No definite development partner yet

Years 3-5 (Next 25-

60 months

Provision of dedicated TA related to supervision of actions above and implementation of targeting interventions

In addition to the skills mix above: M&E and MIS Development and Operationalization, Livelihood, Institutional Capacity Building

US$180,000

per year

 

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Table 2: Task Team Skills Mix Requirements for Implementation Support

Skills Needed Number of

Staff Weeks Number of

Trips Comments

Task Team Management 10 6

Overall team coordination and monitoring of implementation and compliance with legal agreements, including Program Action Plan and DLIs

Rural Development and Institutions and Value Chain Development

8 6 TA related to institutional capacity building and value chain development

Development Planning 8 6 TA related to decentralized planning

Engineering 8 6 TA related to small scale infrastructure development

Livelihoods and Cooperatives 8 6 TA related to development of livelihoods and groups

Poverty Economics 6 6 Economic analysis and purposive targeting of poor households, women and EMs

M&E and MIS 8 6 TA related to M&E framework and MIS development and operationalization

Procurement, FM and Governance

8 6 TA related to fiduciary support and monitoring

Environment and Social Management

8 6 TA related to improving capacities for environment and social management aspects

Legal 1 0 Support on matters related to legal covenants