Technical Assistance Consultant’s Report

Project Number: 41444-01 December 2010

Regional: Preparing the Second Northern Greater Mekong Subregion Transport Network Improvement Project (Financed by the Japan Special Fund)

Prepared by Dainichi Consultant Inc, Japan In association with Denac Associates, Canada Lao Consulting Group, Lao PDR Hanoi Design and Consulting Joint Stock Company Viet Nam

For the Ministry of Public Works and Transport, Lao PDR and the Ministry of Transport, Viet Nam

This consultant’s report does not necessarily reflect the views of ADB or the Governments concerned, and ADB and the Governments cannot be held liable for its contents. All the views expressed herein may not be incorporated into the proposed project’s design.

COSO/80-177

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DAINICHI CONSULTANT INC, Japan In association with DENAC ASSOCIATES, CANADA

LAO CONSULTING GROUP, Lao PDR Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

PREPARING THE SECOND NORTHERN GMS TRANSPORT NETWORK IMPROVEMENT PROJECT ADB TA 6478 REG

Supplementary Appendix Volume 5

Traffic and Economics Report

July 2010

DAINICHI CONSULTANT INC, Japan in association DENAC ASSOCIATES, CANADA

LAO CONSULTING GROUP, Lao PDR

Hanoi Design and Consulting Joint Stock Company, Vietnam

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i Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

ii Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

TAABLE OF CONTENTS

Project Roads Map ...... i Rural Roads Map ...... ii Abbreviations ...... iii

PART ONE TRAFFIC STUDIES ...... 1 A. Traffic Analysis, Vietnam ...... 1 B. Traffic Analysis, Vietnam ...... 26 Annexe 1– Forms and Instructions Used for Origin–Destination Surveys ...... 52 PART TWO ECONOMIC BACKGRAUND ...... 61 1. The Potential for Economic Corridor Development ...... 61 A. Location and Characteristics of Project Corridors ...... 61 B. Socio-Economic Situation and Economic Potential of Project Area: Northern Corridor ...... 65 C. Socio-Economic Situation and Economic Potential of Project Area: Eastern Corridor ...... 66 PART THREE ECONOMIC ANALYSIS ...... 70 1. General Approach ...... 70 2. Economic Prospects ...... 70 3. Traffic Forecasts ...... 70 4. Vehicle Operating Costs ...... 71 5. The Economic Evaluation ...... 72 6. Results ...... 72 PART FOUR ROAD MAINTENANCE FINANCING ...... 74 1. General Approach ...... 74 A. Vietnam ...... 74 B. Lao PDR ...... 74

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ABBREVIATIONS

ADB – Asian Development Bank DOR – Department of Roads (Laos) DPWT – Provincial Department of Public Works and Transport (Lao PDR) EIA – Environmental Impact Assessment EIRR – Economic Internal Rate of Return GDP – Gross Domestic Product GIS – Geographical Information System HDM – Highway Development and Management program LRD – Local Roads Department NGO – Non - governmental Organization NPV – Net Present Value MPWT – Ministry of Public Works and Transport PDOT – Provincial Department of Transport PIR – Poverty Impact Ratio PMU – Project Management Unit PRC – Peoples Republic of China PRMMS – Provincial Road Maintenance Management System RAD – Road Administration Department (Laos) REA – Rapid Environmental Assessment RMS – Road Management System TA – Technical Assistance TEDI – Transport Engineering Design Institute TOR – Terms of Reference VOC – Vehicle Operating Costs

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PART ONE TRAFFIC STUDIES

A. Traffic Analysis, Vietnam

Available Records

1. The available traffic counts on the project roads were collected from Thanh Hoa province. They cover the years 2006 to 2008. Classified counts were undertaken at five sites on the project road (217), during three days at each site. 2. At the Thanh Hoa end there were over 700 vehicles/day in 2008, plus over 1800 motor cycles and 1200 bicycles. The numbers gradually lessen and by Canh Nang (Km 93.8) the flows have more than halved. There was strong growth along all these sections, however, averaging between 13% and 24% a year over three-year period.

Project Traffic Counts

3. During April 2009 the project conducted classified traffic counts at six locations. Four of these were at similar locations to those of the earlier counts (within 4 km), three of them along the same stretch of road. They can thus be used to indicate traffic growth between 2008 and 2009. In the fifth case, a site at Km 126 rather than Km 141 was selected. Finally a new site was chosen, at the Do Len junction where Road 217 departs from Road 1. This allowed a directional count to be made at the junction, to assist with junction design. 4. Small variations in traffic count location may affect the numbers of motorcycles significantly, as these are predominately used for short local trips which may or may not pass the station. In Vietnam most vehicles with four wheels or more are used for long journeys and a small shift in the traffic counting location normally has a very small effect on the count. 5. The counts were undertaken over two days (17 and 18 April 2009), 07:00 t0 19:00. At one site (Km 103.2) the count on 17 April was extended over 24 hours until 07:00 next morning. From this, factors were derived for each vehicle type to convert 12-hour counts into 24-hour counts, and these factors were applied at each survey point. The resulting estimates of the average 24-hour traffic level are summarised together with those of the earlier counts in FIGURE 1.1. FIGURE 1.2 compares 2009 with 2008 and shows the trends in annual traffic growth since 2006 (motorcycles excluded). 6. The counts indicate average annual vehicle traffic growth rates between 16% and 30% in recent years. The fastest growth has been on each side of Cam Thuy. This town is located on the Ho Chi Minh Highway which has been recently constructed and provides a direct road link to the north and south. It was completed in the Cam Thuy area in 2003. 7. In general, passenger traffic (cars and buses) has been growing consistently. Freight also shows growth at the western end of the road, where the O–D survey reveals that much of the traffic is bamboo from the mountain areas. This is increasingly used in paper manufacture. East of Canh Nang, however, the bamboo is a smaller proportion of the total traffic. Freight traffic here appears to have been static or declining between 2008 and 2009, no doubt affected by the world economic downturn.

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Figure 1.1

CLASSIFIED TRAFFIC COUNTS, 2006-09

V1. ROAD 217, JUNCTION WITH ROAD 1 (Km 0.0) Average of two days

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2009 2120 90 6 258 50 12 5 61 11 2613 482

V1. ROAD 217, EAST OF VINH LOC (Km 27.3) Average of three days*

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2006 1006 1289 72 17 38 72 49 37 15 42 2637 300 2007 1344 1442 127 30 67 72 65 52 20 21 3240 433 2008 1240 1824 203 71 164 157 58 26 59 3 3805 738 2009 (Km 25.5) 1840 70 2 259 56 12 1 71 1 2312 471 Average annual growth, % 11.0% 12.6% -0.9% -51.0% 89.6% -8.0% -37.4% -70.0% 67.9% -71.2% 16.2%

V2. ROAD 217, EAST OF CAM THUY (Km 59.7) Average of three days*

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2006 1265 1135 59 18 54 43 35 34 18 33 2694 261 2007 1254 1708 80 38 70 56 46 29 24 40 3345 343 2008 1305 1646 88 11 117 145 28 20 18 49 3427 427 2009 (Km 55.5) 2212 213 16 167 86 27 6 64 1 2792 579 Average annual growth, % 1.6% 20.4% 53.4% -3.9% 45.7% 26.0% -8.3% -43.9% 52.6% -68.8% 30.4%

V3. ROAD 217, EAST OF CANH NANG (Km 93.8) Average of three days*

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2006 965 705 52 13 16 34 16 21 6 19 1847 158 2007 492 782 28 18 31 22 21 20 10 17 1441 150 2008 612 931 66 22 70 58 28 28 19 6 1840 291 2009 (Km 91.2) 2647 96 1 81 86 26 0 25 2962 315 Average annual growth, % -20.4% 55.4% 22.7% -57.5% 71.7% 36.3% 17.6% -100.0% 60.9% -100.0% 25.9%

V4. ROAD 217, WEST OF CANH NANG (Km 107.0) Average of three days*

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2006 782 728 16 16 88 31 49 12 8 1730 220 2007 41 120 12 3 27 16 8 12 2 6 247 80 2008 44 107 13 3 28 15 10 11 2 8 241 82 2009 (Km 103.2) 2580 92 9 94 77 37 6 56 13 2964 371 Average annual growth, % -76.3% 52.5% 79.2% -17.5% 2.2% 35.4% -8.9% -20.6% 91.3% 19.0%

V5. ROAD 217, BAN BUN AREA (Km 141.0) Average of three days*

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2006 1320 1201 19 14 78 29 43 10 6 2720 199 2007 82 135 8 3 21 11 6 3 2 7 278 54 2008 77 137 10 3 19 14 8 12 2 7 289 68 2009 (Km 126) 1161 30 4 24 46 19 5 7 1296 135 Average annual growth, % -75.8% -1.1% 16.4% -34.1% -32.5% 16.6% -23.8% -20.6% 5.3% -12.1%

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Figure 1.2

RECENT TRAFFIC GROWTH IN VIETNAM

2009 Count Growth on 2008 Average Annual Growth since 2006

V1. Do Len ‐ Vinh Loc 471 minus 36% 16%

V2. Vunh Loc ‐ Cam Thuy 579 36% 30%

V3. Cam Thuy ‐ Canh Nang 315 8% 26%

V4. Canh Nang ‐ Road 15 Jct 371 ‐‐

V5. Road 15 Jct = Nameo 135 99% minus 12%*

Growth rates are approximate as the sites were slightly different in 2009 *The 2006 traffic count on Section V5 is regarded as atypical

Origin–Destination Surveys

8. Origin–destination surveys have been carried out at two of the traffic counting sites. These were intended clarify the types of traffic and the commodity flows on the survey days as well as provide information on the origins and destinations of the traffic. 9. The forms used for these origin-destination surveys were translated into Vietnamese. The English language versions are contained in ANNEXE 1, together with the instructions given to the enumerators. 10. The two sites selected for the surveys and the survey sample sizes are shown in FIGURE 1.3. The intention was to interview as many vehicles as possible between 07:00 and 19:00 over two full days at each site. The traffic police were asked to assist with stopping the traffic so that the questions could be asked of the drivers. The traffic police availability proved limited, however, and this limited the hours that the survey could cover and the number of vehicles that could be stopped. A 15% sample was obtained over one day at Km 55.5. The team at Km 103.2 was particularly successful and interviewed over half the vehicles that passed the site over the two days. At both sites the samples were uneven between vehicle types.

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Figure 1.3 O–D Survey Sample Sizes A. East of Cam Thuy (Km 55.5)

PC LDV LGV MGV HGV VHGV MB LB Total 2009 count, 213 16 167 86 27 6 53 11 579 ADT O–D survey, 16 18 24 13 2 3 9 4 89 18 April Per cent 7.5% 23.0%* 15.1% 7.4% 50.0%17.0% 36.4% 15.4% sampled

B. West of Canh Nang (Km 103.2)

PC LDV LGV MGV HGV VHGV MB LB Total 2009 count, 92 9 94 77 37 6 41 15 371 ADT 2009 count, 184 18 188 154 74 12 82 30 742 2-day total O–D survey, 94 67 69 74 47 – 60 24 435 17/18 April Per cent 51.1% 66.0%* 48.1% 63.5% 0.0% 73.2% 80.0% 58.6% sampled *The traffic counting and O–D survey personnel appear to have taken differing views as to what is an LDV (pickup) and what is an LGV (light goods vehicle). Thus these totals are combined here. The O–D data shows the actual vehicle capacity, and after checking and some corrections the O–D data set is regarded as the more reliable of the two.

Vehicle types: PC = passenger car LDV = light delivery vehicle (pickup or van, includes all light four-wheel drive vehicles) LGV = light goods vehicle (4-ton capacity or similar; twin rear wheels) MGV = medium goods vehicle (2-axle trucks of 7–8 ton capacity) HGV = heavy goods vehicle (3 or 4 axle types of 10–15 ton capacity) VHGV = very heavy goods vehicle (truck-trailer combinations of five axles or more) MB = medium bus (small bus of about 30 seats or less) LB = large bus (45-seat or similar).

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Main Findings from the Origin–Destination Surveys

Passenger Traffic

11. The questions related to the origin and destination of the journey, the type capacity and occupancy of the vehicle, and, for light vehicles, the journey purpose. 12. For Vietnam, the average vehicle occupancies were found to be as follows:

Vehicle Type Average Occupancy (No. of Persons) Km 54.5 Km 103.2 PC (5 seats) 3.8 2.4 LDV (2–6 seats) 2.4 1.8 Medium Bus (16–34 18.4 14.0 seats, average 29) Large Bus (45 seats) 27.5 20.0

13. It seems that vehicle occupancies are higher in the more lowland areas. Passengers in PCs and LDVs were asked their journey purposes, and responded as follows:

Stated Purpose Per Cent of Respondents Km 54.5 Km 103.2 1. To/from work 0 0 2. Employer’s business 11% 4% 3. Personal business 21% 23% 4 Education 0 0 5. Medical 0 0 6. Visiting friends or 26% 42% relations (social) 7. Recreation/tourism 37% 32% 8. Commercial (shared 5% taxi)

14. It thus seems that only about 10% of trips or less are made for business purposes, though this rises to one-third if personal business is included. Another one- third of travellers are travelling for social reasons, and a similar number for recreational purposes (one of the survey days was a Saturday).

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15. The districts of origin and/or destination were given as follows

Location Per Cent of Light Vehicles Km 54.5 Km 103.2 Westbound Eastbound Westbound Eastbound Laos 4% Quan Son district 14% 92% Quan Hoa district 1% Muang Lat district 3% Ba Thuoc district 21% 47% Thach Thanh district 7% Cam Thuy district 43% 14% Thanh Hoa district 71% 52% Nga Son district 7% Hanoi 21% 1%

16. The sample size at Km 54,5 (after local traffic was excluded) was very low (14 vehicles). At Km 103.2 the sample size was 148 vehicles. Thus especially at Km 54.5, the results must be treated with caution. Even so, it is clear that the predominant eastern destination is Thanh Hoa district. This traffic takes Road 45 south from Vinh Loc, rather than continuing on the eastern section of Road 217. Only a small flow was identified for Nga Son district which would be routed via Do Len.

Freight Traffic

17. The questions related to the origin and destination of the journey, the type, capacity and load of the vehicle, and the commodity being carried. 18. The average vehicle loading was observed by the enumerators as follows:

Vehicle Type Observed load (Scale 0–5), number of vehicles of each type Km 54.5 Km 103.2 Observed load: 0 1 2 3 4 5 0 1 2 3 4 5 LGV 5 1 3 4 1 8 25 2 10 27 3 MGV 6 2 5 27 4 1 35 6 HGV 2 7 1 3 8 28 VHGV 2 1 0 = empty; 1 = ¼ full; 2 = ½ full; 3 = ¾ full; 4 = full; 5 = overloaded

19. It seems that in the lowland area overloading may be widespread, but in the mountainous area this is mainly confined to the HGV category. These may be on longer-distance journeys.

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20. The commodity types were recorded as follows:

Commodity Type Observed commodities by type of vehicle Km 54.5 Km 103.2 Vehicle Type: LGV MGV HGV VHGV LGV MGV HGV VHGV 0. Empty 5 6 25 28 8 1. Rice or other grain 2 1 3 1 2. Fruit or vegetables 3. Other food or drink 3 2 4. Livestock 5. Logs or lumber; 2 1 1 7 31 bamboo 6. Construction material 1 2 1 1 10 13 2 7. Machinery, equipment 1 1 3 1 8. Fuel or chemicals 1 1 1 9. Mixed or unknown 5 1 24 20 4

21. There is no clear trend observable from the limited data collected at Km 54.5. In the more mountainous area at Km 103.2, the main traffic is bamboo, while there is also a lot of local construction material. This is shown more clearly later.

22. The districts of origin and/or destination , by commodity type, were given as follows

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 1. Empty Laos 2 Muang Lat district 1 1 Quan Son district 12 41 Ba Thuoc district 1 29 5 Cam Thuy district 4 5 Hanoi 2 Nghe An province 1 Lang Chanh district 1 Thuang Xuan district 1 Bim Son district 1 Vinh Loc district 2

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Thanh Hoa district 3 1 13 10 Thai Binh province 1 Ninh Binh province 1

23. Later tables show that there is a flow of stone and sand from Quan Son to Ba Thuoc. This explains much of the empty truck flow in the reverse direction.

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 2. Rice or Other Grains Quan Son district 2 2 Ba Thuoc district 2 2 Hanoi 1 Nga Son district 1 Yen Dinh district 1 Nam Dinh province 1

24. There is a small flow of rice from Ba Thuoc to Quan Son, and cassava is sent in the opposite direction.

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 3. Other Food or Drink Quan Son district 2 2 Thanh Hoa district 2 2

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 4. Logs or lumber; bamboo Quan Hoa district 1 4 Quan Son district 31 2 Ngoc Lac district 1 1

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Tho Xuan district 1 Ba Thuoc district 1 3 3 Cam Thuy district 1 Haiphong 1 2 Hai Duong province 2 Thach Thanh district 1 Bim Son district 1 Ha Trung district 2 Nga Son district 1 Thanh Hoa district 1 18 Hoang Hoa district 1 Nam Dinh province 1 Hung Yen province 2

25. Quan Son is a significant exporter of bamboo, and this goes to a multiplicity of destinations, about half of it to Thanh Hoa district and the rest dispersed around the north‐ east.

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 5. Construction Materials Muang Lat district 2 Quan Son district 1 12 5 Thuang Xuan district 1 Ba Thuoc district 6 12 Cam Thuy district 1 3 Bim Son district 2 Vinh Loc district 1 Yen Dinh district 1 Thanh Hoa district 2 5

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26. Quan Son exports stone and Ba Thuoc sends bricks in the reverse direction.

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 6. Machinery. Equipment Quan Son district 1 2 1 Ba Thuoc district 1 Cam Thuy district 1 Bim Son district 1 Thanh Hoa district 1 1 1

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 7. Fuel or chemicals Quan Son district 1 Cam Thuy district 1 Thanh Hoa district 1 1

Number of Trucks Km 54.5 Km 103.2 Origin Destination Origin Destination 8. Miscellaneous or Unknown Laos Son La province 1 Muang Lat district Quan Hoa district 1 Quan Son district 1 24 21 Ba Thuoc district 13 12 Cam Thuy district 1 3 Hanoi Nghe An province Lang Chanh district Thuang Xuan district Bim Son district 1

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Vinh Loc district 1 Thanh Hoa district 2 1 10 14 Quang Xuong district 1 Thai Binh province Ninh Binh province 1

27. The main supply corridor is to/from Thanh Hoa district via Roads 217 and 45. 28. As mentioned under passenger traffic, the sample size at Km 54,5 (after local traffic was excluded) was very low (14 vehicles). At Km 103.2 the sample size was 148 vehicles. Thus especially at Km 54.5, the results must be treated with caution. Even so, the figures suggest that although the freight traffic is more dispersed than the passenger traffic, the principal traffic route is also to and from Thanh Hoa district. At the two origin–destination sites, only a small flow of traffic was identified that travels through to the Vinh Loc–Do Len section of Road 217.

Traffic Forecast, Traffic on Road 217

29. For traffic forecasting purposes, the road is divided into five sections. V1. Do Len – Vinh Loc (Km 0 – Km 28.1)

30. This traffic seems mainly local, connecting Vinh Loc with Road 1. Some traffic may continue on Road 45. There appears to be only a weak linkage between the sections of Road 217 west and east of Vinh Loc, as discussed above. They can almost be treated as separate roads. 31. Vinh Loc is a densely populated agricultural area (550 persons/km²) which reports an average GDP/capita of about US $500 in 2008. The district’s population is reported to be 87,000. Agricultural yields are understood to be rising rapidly and surpluses are obtained. 32. On this road section the underlying traffic growth in the last three years has been about 16% a year. This rapid rate excludes a peak in medium goods vehicle activity in 2007, which may have been linked to some temporary construction activity. The district is known for its stone deposits. 33. The counts for LDVs (light delivery vehicles or pickups) and LGVs (light goods vehicles, usually 4-ton trucks) appear confused. Taken together they show a healthy growth of 68% a year, similar to that of bus traffic. There seems to have been a move away from medium and heavy trucks in favour of the lighter types. The earlier rapid growth in the number of motor cycles has also diminished and this may be related to the recent rapid growth of bus transport. 34. FIGURE 1.4 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 6%–7% a year on average • The growth rate in Vinh Loc district continues to outperform the national average (the District reports 11% in 2008 compared with 6.2% nationally)

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• The traffic growth rate continues to outperform the Vinh Loc district growth rate, due to the increased motorisation of transport in the country and in the district. Private car and bus use will expand faster than motorcycle use.

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TRAFFIC FORECASTS, ROAD 217 IN VIETNAM Figure 1.4: Section V1, Do Len - Vinh Loc Year or Motorised, MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU Assumption ≥4 wheels

2009 920 70 130 129 56 12 1 65 6 1389 469 1058

Generated traffic 10%** 1012 77 143 72 7

Generated traffic 5%** 132 57

Generated traffic 2.5%** 12 1

Annual % Growth, 2010-12 5 12 10 10 10 10 10 10 10

Annual % Growth, 2012-15 4 10 10 8 8 8 8 10 10

Annual % Growth, 2015-20 3 15 12 8 8 8 8 12 12

Annual % Growth, 2020-25 2 12 10 8 8 8 8 10 10

Annual % Growth, 2025-33 1 10 8 8 8 8 8 8 8

2014 1267 131 230 204 89 19 2 115 11 2068 801 1696

2015 1318 144 253 221 96 21 2 127 12 2192 874 1830

2016 1357 166 284 238 103 22 2 142 13 2327 970 1990

2017 1398 190 318 257 112 24 2 159 15 2475 1077 2168

2018 1440 219 356 278 121 26 2 178 16 2636 1196 2364

2019 1483 252 399 300 130 28 2 199 18 2812 1329 2580

2020 1528 290 446 324 141 30 3 223 21 3005 1478 2820

2021 1558 324 491 350 152 33 3 246 23 3179 1621 3050

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Year or Motorised, MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU Assumption ≥4 wheels

2022 1589 363 540 378 164 35 3 270 25 3368 1779 3303

2023 1621 407 594 408 177 38 3 297 27 3574 1953 3578

2024 1654 456 654 441 191 41 3 327 30 3797 2143 3880

2025 1687 510 719 476 207 45 4 360 33 4040 2353 4209

2026 1704 561 777 514 223 48 4 388 36 4255 2552 4521

2027 1721 618 839 556 241 52 4 419 39 4488 2767 4858

2028 1738 679 906 600 260 56 5 453 42 4739 3001 5223

2029 1755 747 978 648 281 61 5 489 45 5010 3255 5618

2030 1773 822 1056 700 304 65 5 528 49 5303 3530 6045

2031 1790 904 1141 756 328 71 6 571 53 5619 3829 6508

2032 1808 995 1232 816 354 76 6 616 57 5962 4153 7009

2033 1826 1094 1331 882 383 82 7 665 61 6332 4505 7552

*2009 traffic count for motor cycles divided by two, on assumption that the average length of journey is 50% of the length of the section **Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

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35. A boost in the growth rates after 2015 is allowed for, as VRA proposes other road improvements in the Ha Trung area to follow the improvement of Road 217, bringing more traffic to the area and improving its connection with Nga Son district. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities. This effect is assumed to be greater for passenger transport than for freight. 36. Taken together, these assumptions lead to the forecast as shown in the table. Underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed.

V2. Vinh Loc– Cam Thuy (Km 29.5 – Km 56.4)

37. The traffic on this section predominantly has Thanh Hoa as its eastern origin or destination. In the westbound direction nearly half the traffic starts or ends its journey in Cam Thuy district, with about a third continuing on Road 217 and some 20% (as found in the origin-destination survey) to or from Hanoi using the HCM Highway. 38. Cam Thuy is an agricultural district with 112,000 people and an average population density of 263 persons/km². Its industry is mainly at household level. Its income per capita, reported by the District as being about $385 in 2008, is 23% below that of Vinh Loc and its economic growth rate is slightly lower. Yet its traffic has grown by an average of 30% a year in the last three years. This growth has been accounted for by strong growth in car, pickup and light goods, and bus transport. As in Section V1, there seems to have been a shift from the heavier trucks to the lighter type. 39. The very rapid growth is no doubt linked to the completion of the HCM Highway in 2003. This a completely new road of high standard with links to the north and south of the country. Cam Thuy reports that its industrial production rose by 27% in 2008. 40. FIGURE 1.5 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 6%–7% a year on average • The growth rate in Cam Thuy district continues to outperform the national average (10% in 2008 compared with 6.2% nationally) • The traffic growth rate continues to outperform the Cam Thuy district growth rate, due to the increased motorisation of transport in the country and in the district. Private car and bus use will expand faster than motorcycle use. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities. This effect is assumed to be greater for passenger transport than for freight. 41. Taken together, these assumptions lead to the forecast as shown in the table. As for Section V1, Underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed.

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Figure 1.5: Section V2, Vinh Loc - Cam Thuy Motorised, Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU ≥4 wheels

2009 1106 213 87 80 86 27 6 53 11 1669 563 871 Generated traffic 10%** 1217 234 96 58 12 Generated traffic 5%** 82 88 Generated traffic 2.5%** 28 6 Annual % Growth, 2010-12 4 20 15 12 12 10 10 15 15 Annual % Growth, 2012-15 3 15 12 10 10 8 8 12 12 Annual % Growth, 2015-20 2 12 10 8 8 8 8 10 10 Annual % Growth, 2020-25 1 10 8 8 8 8 8 8 8 Annual % Growth, 2025-33 1 8 7 6 8 8 8 7 7 2014 1452 535 183 139 149 43 10 111 23 2645 1193 2211 2015 1495 616 204 153 164 46 10 125 26 2839 1344 2435 2016 1525 690 225 165 177 50 11 137 28 3009 1483 2640 2017 1556 772 247 178 191 54 12 151 31 3193 1637 2864 2018 1587 865 272 192 207 58 13 166 34 3395 1808 3110 2019 1619 969 299 208 223 63 14 182 38 3615 1996 3380 2020 1651 1085329 224 241 68 15 201 42 3856 2205 3677 2021 1659 1194356 242 260 74 16 217 45 4063 2403 3956 2022 1668 1313384 262 281 80 18 234 49 4287 2620 4259

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Motorised, Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU ≥4 wheels 2023 1676 1444415 282 304 86 19 253 52 4531 2855 4588 2024 1684 1589448 305 328 93 21 273 57 4797 3113 4946 2025 1693 1748 484 329 354 100 22 295 61 5086 3394 5336 2026 1710 1887 518 349 382 108 24 315 65 5360 3650 5700 2027 1727 2038 554 370 413 117 26 337 70 5653 3926 6092 2028 1744 2202 593 392 446 126 28 361 75 5967 4223 6512 2029 1761 2378 634 416 482 136 30 386 80 6304 4543 6964 2030 1779 2568 679 441 520 147 33 413 86 6666 4887 7450 2031 1797 2773 726 467 562 159 35 442 92 7054 5257 7971 2032 1815 2995 777 495 607 172 38 473 98 7471 5656 8532 2033 1833 3235 831 525 655 185 41 506 105 7918 6085 9135

*2009 traffic count for motor cycles divided by two, on assumption that the average length of journey is 50% of the length of the section **Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

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V3. Cam Thuy – Canh Nang (Km 29.5 – Km 96.0) V4. Canh Nang – QL 15 (Km 96.0 – Km 104.7)

42. Canh Nang is the main town of Ba Thuoc district, which has a population of 67,000 and a relatively low population density of 87 persons/km². To the east of the town the predominant traffic movement is to or from Thanh Hoa. To the west over 90% of the identified traffic uses Road 217 to or from Quan Son district, with the small remainder divided between Laos (via Road 217) and other Vietnamese districts (via Road 15). 43. Ba Thuoc is an agricultural district with a low level of industrial production. Its income per capita is in 2008 is reported by the District to be US $327, some 15% less than that of Cam Thuy, but its economic growth rate is slightly higher. Outmigration of the population is said by the District administration to be one of the problems being faced. This may be adding to the income growth of the area – and the traffic demand – due to remittances and family visits. Whatever the reason, its traffic has grown by an average of 20–25% a year in the last three years, mostly private car and bus traffic. As in Section V1, there seems to have been a shift from the heavier trucks to the lighter type. 44. FIGURES 1.6 and 1.7 show the forecast growth of traffic on these sections. These are based on the following assumptions: • Continuing national economic growth of 6%–7% a year on average • The growth rate in Ba Thuoc district continues to outperform the national average (12% in 2008 compared with 6.2% nationally) • The traffic growth rate continues to outperform the Ba Thuoc district growth rate, due to the increased motorisation of transport in the country and continued outmigration from the district, partly associated with the increased mobility. Private car and bus use will expand faster than motorcycle use. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities. This effect is assumed to be greater for passenger transport than for freight. 45. Taken together, these assumptions lead to the forecast as shown in the tables. As for Sections V1 and V2, underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed.

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Figure 1.6: Section V3, Cam Thuy - Canh Nang Motorise Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total d, ≥4 PCU wheels 2009 1324 96 40 41 86 26 0 10 15 1638 314 655 Generated traffic 10%** 1456 106 44 11 17 Generated traffic 5%** 42 88 Generated traffic 2.5%** 27 Annual % Growth, 2010-12 4 20 15 12 12 10 10 15 15 Annual % Growth, 2012-15 3 15 12 10 10 8 8 12 12 Annual % Growth, 2015-20 2 12 10 8 8 8 8 10 10 Annual % Growth, 2020-25 1 10 8 7 8 8 8 8 8 Annual % Growth, 2025-33 1 8 7 6 7 7 7 7 7 2014 1737 241 84 71 149 41 2 21 31 2379 641 1530 2015 1789 278 94 78 164 45 2 24 35 2509 720 1661 2016 1825 311 103 84 177 48 3 26 39 2617 791 1777 2017 1862 348 114 91 191 52 3 28 43 2732 870 1904 2018 1899 390 125 99 207 56 3 31 47 2857 958 2043 2019 1937 437 138 106 223 61 3 34 52 2991 1054 2194 2020 1976 489 151 115 241 66 3 38 57 3136 1160 2360 2021 1986 538 164 123 260 71 4 41 61 3247 1262 2511 2022 1996 592 177 132 281 77 4 44 66 3368 1372 2676 2023 2006 651 191 141 304 83 4 48 72 3498 1492 2854

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Motorise Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total d, ≥4 PCU wheels 2024 2016 716 206 151 328 89 5 51 77 3639 1623 3048 2025 2026 788 222 161 354 96 5 56 83 3792 1766 3257 2026 2046 851 238 171 379 103 5 60 89 3942 1896 3454 2027 2066 919 255 181 405 110 6 64 96 4102 2035 3664 2028 2087 992 273 192 434 118 6 68 102 4272 2185 3888 2029 2108 1072 292 203 464 126 7 73 109 4454 2346 4129 2030 2129 1157 312 216 497 135 7 78 117 4648 2519 4387 2031 2150 1250 334 229 531 145 8 83 125 4855 2705 4663 2032 2172 1350 357 242 569 155 8 89 134 5076 2904 4959 2033 2193 1458 382 257 608 166 9 96 143 5312 3119 5275

*2009 traffic count for motor cycles divided by two, on assumption that the average length of journey is 50% of the length of the section **Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

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Figure 1.7: Section V4, Canh Nang - Km 107.2 Motorised, Year or Assumption MC PC LDV LGV MGV HGV VHGV MB LB Total PCU ≥4 wheels

2009 1290 92 45 49 77 37 6 41 15 1652 362 730 Generated traffic 10%** 1419 101 50 45 17 Generated traffic 5%** 50 79 Generated traffic 2.5%** 38 6 Annual % Growth, 2010-12 4 20 15 12 12 10 10 15 15 Annual % Growth, 2012-15 3 15 12 10 10 8 8 12 12 Annual % Growth, 2015-20 2 12 10 8 8 8 8 10 10 Annual % Growth, 2020-25 1 10 8 7 8 8 8 8 8 Annual % Growth, 2025-33 1 8 7 6 7 7 7 7 7 2014 1693 231 94 85 134 59 2 86 31 2416 723 1720 2015 266 106 93 147 64 2 96 35 2554 810 1873 2016 1779 298 116 101 159 69 3 106 39 2669 890 2011 2017 1815 334 128 109 171 74 3 117 43 2793 978 2161 2018 1851 374 141 118 185 80 3 128 47 2926 1075 2325 2019 1888 418 155 127 200 87 3 141 52 3071 1183 2504 2020 1926 469 170 137 216 93 3 155 57 3227 1301 2700 2021 1945 516 184 147 233 101 4 168 61 3358 1413 2882 2022 1964 567 199 157 252 109 4 181 66 3499 1535 3080

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Motorised VHG Year or Assumption MC* PC LDV LGV MGV HGV MB LB Total , ≥4 PCU V wheels 2023 1984 624 215 168 272 118 4 196 72 3652 1668 3293 2024 2004 686 232 180 294 127 5 211 77 3816 1812 3524 2025 2024 755 250 193 317 137 5 228 83 3993 1969 3774 2026 2044 815 268 204 339 147 5 244 89 4156 2112 4005 2027 2065 880 287 216 363 157 6 261 96 4331 2266 4253 2028 2085 951 307 229 388 168 6 279 102 4517 2431 4518 2029 2106 1027 328 243 416 180 7 299 109 4715 2609 4801 2030 2127 1109 351 258 445 193 7 320 117 4926 2799 5105 2031 2148 1198 376 273 476 206 8 342 125 5152 3004 5430 2032 2170 1294 402 290 509 220 8 366 134 5393 3223 5778 2033 2192 1397 430 307 545 236 9 392 143 5650 3459 6150

**Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

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V4. QL 15 – Nameo (Km 104.7 – Km 194.9)

46. This long section of road traverses the full length of Quan Son district, which has a reported population of about 36,000. It is mountainous but densely populated (384 persons/km² in 2008). Nearly 60% of the district’s population are said to live along the road. It is a food deficit area but the cultivated area is increasing (reportedly by 12% in 2008). Agricultural production is said by the District to have increased by 18% in tonnage terms in 2008. It is mainly forest area, however, and a rich source of bamboo. 47. Although no origin–destination surveys have been carried out on this section, those at Nameo (Lao side) and Km 103.2 are very close and give a good indication of traffic patterns. The predominant movements, for both passengers and freight, are to Ba Thuoc and Thanh Hoa districts. The heaviest trucks have more diversified traffic patterns. 48. Quan Son being an agricultural and forest district has a low level of industrial production. Its reported income per capita at US $303 for 2008 is about 7% less than that of Ba Thuoc, and 40% of the people still live below the poverty line (down from 54% in 1997). Its economic growth rate in 2008 is reported to have been 9.1%. 49. As with Ba Thuoc, outmigration of the population may be adding to the income growth of the area and the traffic demand. A comparison with the 2006 traffic figures does not reveal this, however. That may have been an exceptional year or there may be some confusion in the figures. Traffic in 2008 was 25% higher than 2007 and then almost doubled in the year to 2009, giving an average 60% annual growth over the two-year period1. Car, medium truck and bus traffic appear to have grown the most. 50. FIGURE 1.8 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 6%–7% a year on average • The growth rate in Quan Son district continues to outperform the national average (9% in 2008 compared with 6.2% nationally) • The traffic growth rate continues to outperform the Quan Son district growth rate, due to the increased motorisation of transport in the country and associated outmigration from the district. Private car and bus use will expand faster than motorcycle use. Medium truck growth will remain strong due to continuing strong growth in the demand for bamboo for industrial purposes. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities. This effect is assumed to be greater for passenger transport than for freight. 51. Taken together, these assumptions lead to the forecast as shown in the table. As elsewhere, underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed.

1 The 2009 count appears to have been in a more urban location, as evidenced by the number of motor cycles, but the traffic of vehicles with four wheels or more is predominantly long‐distance and would not be much influenced by this. Vehicle ownership in the outlying districts is very low.

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Figure 1.8: Section: V5, Km 107.2 – Nameo

Motorised, Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU ≥4 wheels 2009 387 30 4 24 46 19 21 10 7 548 161 547 Generated traffic 10%** 426 33 4 11 8 Generated traffic 5%** 24 47 Generated traffic 2.5%** 19 22 Annual % Growth, 2010-12 6 15 15 10 10 10 10 12 12 Annual % Growth, 2012-15 5 12 12 8 8 8 8 10 10 Annual % Growth, 2015-20 4 10 10 8 8 8 8 8 8 Annual % Growth, 2020-25 3 8 8 7 8 8 8 8 8 Annual % Growth, 2025-33 2 8 8 6 7 7 7 7 7 2014 559 63 8 38 73 30 2 19 13 805 246 730 2015 587 71 9 41 79 33 2 21 14 857 270 788 2016 610 78 10 44 85 35 3 22 16 903 293 846 2017 635 85 11 48 92 38 3 24 17 953 318 908 2018 660 94 13 52 99 41 3 26 18 1006 345 975 2019 687 103 14 56 107 44 3 28 20 1062 375 1047 2020 714 114 15 60 116 48 3 30 21 1121 407 1125 2021 736 123 16 65 125 52 4 33 23 1175 439 1203 2022 758 132 18 69 135 56 4 35 25 1231 474 1286 2023 780 143 19 74 146 60 4 38 27 1291 511 1376

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Motorised, Year or Assumption MC* PC LDV LGV MGV HGV VHGV MB LB Total PCU ≥4 wheels

2024 804 154 21 79 157 65 5 41 29 1355 551 1473 2025 828 167 22 85 170 70 5 44 31 1422 595 1577 2026 844 180 24 90 182 75 5 48 33 1482 637 1674 2027 861 195 26 95 194 81 6 51 36 1544 683 1779 2028 879 210 28 101 208 86 6 54 38 1611 732 1890 2029 896 227 30 107 223 92 7 58 41 1681 785 2009 2030 914 245 33 113 238 99 7 62 44 1755 841 2136 2031 932 265 35 120 255 106 8 67 47 1834 902 2272 2032 951 286 38 127 273 113 8 71 50 1917 967 2417 2033 970 309 41 135 292 121 9 76 53 2006 1036 2572

*2009 traffic count for motor cycles divided by three, on assumption that the average length of journey is 33% of the length of the section **Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

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B. Traffic Analysis, Laos

Available Records

52. The available traffic counts on the project roads were collected from MPWT. They cover the years 2006 to 2008, and are shown in FIGURE 2.1 (parts A–C). Few details are available as to the extent and reliability of the counts. The most serious unexplained fluctuation is on Road 6B for 2008. 53. If this is assumed to be an error, the main findings are the very low initial level of traffic which has shown substantial growth on Roads 6 and 6A in the years up to 2008. The average annual traffic growth on the project roads during the 2001–2008 period was as follows: • Road 6, Viangxai–Xamtai Junctiion: 22% (from 4 vehicles/day in 2001 to 16 in 2008); • Road 6, Xamtai Junction–Nam Soi border: 8% (from 4 vehicles/day in 2001 to seven in 2008); • Road 6A: B. Hanglong–Sopbao: 42% (from 10 vehicles/day in 2001, to about 15 in 2004 and 60 by 2008). 54. These findings are corroborated by the records of the toll station at B. Hanglong, where Roads 6 and 6A diverge just west of Viangxai district centre. These show an average 28% a year traffic growth over the five-year period 2003 to 2008. 55. There are signs that a step-change in development is beginning to occur along Road 6A. The reasons for this may include: • The creation of Sopbao district centre at the end of 1997, when Xiangkho district was divided into three. Sopbao effectively became a new town and its development has been rapid; • Sopbao was the poorest part of Xiangkho district and on its creation some 70% of the population were living below the poverty line. It became a focus district for poverty alleviation and by 2005 the number living below the poverty line was reduced to 33%. The average per capita income was estimated by the District to have risen from just $30 in 1997 to $140 by 2004 (a 25%/year increase); • There are signs that parts of the area are emerging from subsistence cultivation to producing cash crops for the market. 56. These signs are reinforced by the results of the 2009 traffic counts, discussed below. 57. On Road 6 there was also strong growth in domestic traffic and in November 2006 an all-season road was completed to Xamtai, a district centre 72 km south of Road 6. The turnoff of this road from Road 6 is in Viangxai district at Houay Hung, 11 km from the border at Nam Soi. Xamtai is an area of weaving and tourism and the new road has already had a significant impact.

Project Traffic Counts

58. During April 2009 the project conducted classified traffic counts at five locations, as follows • Road 6: two sites, one east of Viangxai and one at Nam Soi border • Road 6A: two sites, south and north of Sophao respectively

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• Road 6B: at the border at Pahang. 59. Additionally the records at the Nam Soi border post on Road 6 and the Pahang border post on Road 6B were made available by the border authorities for 2007 (October onwards in the case of Pahang), for 2008 and for the first quarter of 2009. 60. Also on Road 6B the records of the ferry service at Sopbao were inspected and the data of daily traffic January–March 2009 was recorded. (The ferry does not carry motor cycles, which use small boats, and the records only cover paying traffic, so that Government vehicles, for example, are excluded.) 61. The project counts cover the same sections of road as the MPWT counts. Although the locations may differ slightly this is not thought to have a significant bearing on the results, other than for motorcycles. These are predominately used for short local trips which may or may not pass a particular station. In Laos most vehicles with four wheels or more are used for long journeys and a small shift in the traffic counting location normally has a very small effect on the count. 62. The counts were undertaken over two days at each site, during the period 21–28 April 2009. The counts were from 07:00 to 19:00 on each survey day. At one site (Road 6, Viangxai–Xamtai Jct section, Km 33 from Xam-Nua) the count on the second day was extended over 24 hours until 07:00 next morning. From this, factors were derived for each vehicle type to convert 12-hour counts into 24-hour counts, and these factors were applied at each survey point. 63. The resulting estimates of the average 24-hour traffic level are summarised together with those of the earlier counts in FIGURE 2.1 (A–C). FIGURE 2.2 compares 2009 with 2008 and shows the trends in annual traffic growth in recent years (motorcycles excluded). 64. The counts indicate average annual vehicle traffic growth rates between 30% and 60% in recent years. In the last year traffic on Road 6 has nearly quadrupled. This is probably the effect of the new access to Xamtai district2, which has considerable development potential and has now received a regular bus service. Road 6A, also, shows continued rapid traffic growth. 65. This rapid growth occurs in both passenger and freight transport. Light vehicles and light trucks – also buses between Viangxai and the Xamtai Junction – generally show the most rapid traffic increases.

2 This road was completed in November 2006 with the assistance of funding under the ADB‐9 loan project.

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Figure 2.1A

CLASSIFIED TRAFFIC COUNTS, 2001-09, LAO PDR

L0. ROADS 6/217, Traffic crossing Nam Soi border post Average of daily counts by border control officials on every day of year Motorised, Year b MC PC and LDV LGV and Heavy Vehicles Other Total ≥4 wheels 2007 3 7 10 10 2008 3 8 12 12 2009 (January-March) 18* 5 20 43 25 Average annual growth, % 31.1% 70.0% 59.0% *Motor cycles are not recorded in the official data received, and the count from the project origin-destination survey is used (April 2009)

L1. ROAD 6, LINK A, East of Xamtai Jct 2009 count at Nam Soi border Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 00003100004 4 2003 04003001601410 2008 104903400000667 2009 20 8 9 0 4 14 0 1 0 56 36 Average annual growth, % 18.9% 39.1% 31.6%

L2. ROAD 6, LINK B, Houayhung - Viangxai (B. Hanglong) 2009 count at Km 33 from Xam-Nua Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 00003100004 4 2008 11171670002013416 2009 309 2 47 32 15 11 2 12 0 430 121 Average annual growth, % 34.4% 40.3% 79.4% 53.1%

L3. ROAD 6, LINK C, Viangxai (B. Hanglong) - Xam-Nua

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 00701200001010 2004 7 105 5 17 15 7 1 2 19 0 178 66 2008 16 459 6 17 36 14 5 1 10 0 564 89 Average annual growth, % -2.2% 66.9% 32.0% 77.9% 36.7%

L4. ROAD 6, LINK D, south of Xam-Nua (Km 30 from Xam-Nua)

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 323 88 2003 11 191 10 22 11 14 24 283 81 2008 504664 13 7424 Average annual growth, % 4.2% 17.0% 4.2% 37.4% 17.0%

L5. ROAD 6, LINK E, south of Xam-Nua (Km 30 - Houamuang)

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 12 33 2004 12811323 1 4011 2008 302232122 4414 Average annual growth, % 10.4% 0.0% 46.8% 24.6%

L6. ROAD 6, LINK F, Houamuang - Phoulao

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 211 44 2004 11 28 2 3 3 47 8 2008 21 2 5 1 3 32 11 Average annual growth, % 0.0% 25.8% -100.0% 34.6% 15.5%

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Figure 2.1B

CLASSIFIED TRAFFIC COUNTS, 2001-09

L7. ROAD 6A, LINK A B. Hanglong - Viangxai/Sopbao district border

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 24 6 6 2008 1 95 1 37 20 1 5 2 4 166 70 Average annual growth, % 38.9% 60.7% 42.0%

L8. ROAD 6A, LINK B Viangxai/Sopbao district border - Sophao

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 131 55 2004 6352 3 1 9 5615 2008 1 90 36 16 4 2 4 153 62 2009 143 2 47 9 10 5 11 227 84 Average annual growth, % 9.1% 73.4% 14.7% 33.4% 38.0% 4.1% 63.0% 43.3%

L9. ROAD 6A, LINK C Sophao - Sopbao

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2004 13 24 2 3 9 51 14 2008 1 89 32 15 2 3 1 4 147 57 2009 420 2 46 26 8 5 10 517 97 Average annual growth, % -47.3% 77.3% 0.0% 72.6% 73.3% 300.0% 66.7% 2.1% 58.9% 47.3%

L10. ROAD 6A, LINK D

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2001 1 11 2004 24 59 2 5 1 14 105 22 2008 4 95 2 1 2 3 2 109 10 Average annual growth, % 10.4% 95.5% 38.9%

L11. ROAD 6A, LINK E

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2004 41 74 1 1 1 1 119 4 2008 11 103 1 2 2 1 120 6 Average annual growth, % -28.0% 8.6% 0.0% 0.0% 0.2% 10.7%

L12. ROAD 6A, LINK F

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2004 62 74 1 137 1 2008 4541 1 602 Average annual growth, % -49.6% -7.6% 0.0% -18.6% 18.9%

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Figure 2.1C

CLASSIFIED TRAFFIC COUNTS, 2001-09

L13. ROAD 6B, SOPBAO VEHICLE FERRY

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2009 14 5 7 26 26

L14. ROAD 6B, PAHANG

Motorised, Year b MC PC LDV LGV MGV HGV VHGV Bus Other Total ≥4 wheels 2004 5 50 2008 108 42 54 26 12 4 1 247 139 2009 1111 12 165 Average annual growth, % 17.1% 26.2%

Figure 2.2

RECENT TRAFFIC GROWTH IN LAOS

2009 Count Growth on 2008 Average Annual Growth since 2006

L0. Nam Soi border (vehicles crossing) 25 108% 59% (since 2007)

L1. Road 6, Nameo ‐ Xamtai Jct 36 414% 32% annually since 2001

L2. Road 6, Xamtai Jct ‐ Viangxai 121 656% 53%

L8. Road 6A, Hanglong ‐ Sophao 84 35% 43%

L9. Road 6A, Sophao ‐ Sopbao 97 70% 47%

L13. Road 6B, Sopbao vehicle ferry 26 NA NA

L14. Road 6B, Sopbao ‐ Pahang (at Pahang) 5 NA* from zero in 2004

Growth rates are approximate as the sites were slightly different in 2009 *The 2008 traffic count on Section L14 is regarded as atypical

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Origin–Destination Surveys

66. Origin–destination surveys have been carried out at the two border crossings and one of the traffic counting sites on Road 6A. These were intended clarify the types of traffic and the commodity flows on the survey days as well as provide information on the origins and destinations of the traffic. 67. The forms used for these origin-destination surveys were translated into Lao. The English language versions are contained in ANNEXE 1, together with the instructions given to the enumerators. 68. The sites selected for the surveys and the survey sample sizes are shown in FIGURE 2.3. The intention was to interview as many vehicles as possible between 06:00 and 18:00 over two full days at each site. Unlike in Vietnam, motorcyclists were also interviewed. The traffic police were asked to assist with stopping the traffic on Road 6A. Almost a 60% sample was obtained at that site. At the border crossings more than three-quarters of the vehicles were interviewed. At all sites the samples were uneven between vehicle types.

Figure 2.3 O–D Survey Sample Sizes C. Road 6, Nam Soi Border

MC PC LDV LGV MGV HGV VHGV MB LB Total 2009 count, 18 5 20 43 ADT 2009 count, 36 10 40 86 2-day total O–D survey, 31 7 12 4 11 2 67 21/22 April Per cent 86% 190% 43% 78% sampled

D. Road 6A (Km 37)

MC PC LDV LGV MGV HGV VHGV MB LB Total* 2009 count, 143 2 47 9 10 5 4 7 84 ADT 2009 count, 286 4 94 18 20 10 8 14 168 2-day total O–D survey, 218 1 58 10 9 3 8 10 99 17/18 April Per cent 76% 25% 62% 56% 45% 30% 100% 71% 59% sampled *Excluding motorcycles

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A. Road 6B, Pahang Border

MC PC LDV LGV MGV HGV VHGV MB LB Total 2009 count, 11 1 1 1 2 16 ADT 2009 count, 2- 22 2 2 2 4 32 day total O–D survey, 23 1 2 2 3 31 21/22 April Per cent 105% 50% 100% 100% 75%% 97% sampled

Vehicle types: MC = motorcycle PC = passenger car LDV = light delivery vehicle (pickup or van, includes all light four-wheel drive vehicles) LGV = light goods vehicle (4-ton capacity or similar; twin rear wheels) MGV = medium goods vehicle (2-axle trucks of 7–8 ton capacity) HGV = heavy goods vehicle (3 or 4 axle types of 10–15 ton capacity) VHGV = very heavy goods vehicle (truck-trailer combinations of five axles or more) MB = medium bus (small bus of about 30 seats or less) LB = large bus (45-seat or similar).

Main Findings from the Origin–Destination Surveys

Passenger Traffic

69. The questions related to the origin and destination of the journey, the type capacity and occupancy of the vehicle, and, for light vehicles, the journey purpose. 70. For Laos, the average vehicle occupancies were found to be as follows:

Vehicle Type Average Occupancy (No. of Persons) Nam Soi Border Road 6A Pahang Border MC (2 seats) 1.5 1.5 1.2 PC (5 seats) 3.1 1.0 3.0 LDV (2–6 seats) 3.0 5.1 4.0 Medium Bus (16–34 18.5 16.1 NA seats, average 25) Large Bus (45 seats) NA 27.2 NA

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71. Only one PC was captured on Road 6A, travelling to Hanoi, so that is hardly representative. In general the PCs carried about 3 persons and LDVs between 3 and 5. Load factors on buses were just over 60%. 72. Users of MCs, PCs and LDVs were asked their journey purposes, and responded as follows:

Stated Purpose Per Cent of MCs Per Cent of PCs and LDVs Nam Soi 6A Pahang Nam Soi 6A Pahang 1. To/from work 3% 4% 21% 5% 2. Employer’s business 7% 29% 3. Personal business 81% 53% 78% 42% 37% 33% 4 Education 12% 3% 5. Medical 8% 9% 9% 6. Visiting friends or relations 10% 16% 9% 11% 17% (social) 7. Recreation/tourism 10% 1% 26% 67% 8. Commercial (shared taxi)

73. Most cross-border trips are evidently made by small traders, predominantly using motorcycles. The number of PCs and LDVs that cross the borders is very small. On Road 6A most of the traffic is domestic. The majority of motorcycle trips are for personal business, while two-thirds of PC and LDV trips are for personal or employers’ business. The number of trips made for medical purposes, while not large, is noteworthy. 74. The districts of origin and/or destination were given as follows. A. Road 6 (Nam Soi)

Location Per Cent of Traffic Motorcycles PC, LDV and Bus Westbound Eastbound Westbound Eastbound Xam-Nua district 53% Xamtai district 5% Viangxai district 100% 42% Quan Son district 100% 47% Thanh Hoa district 21% Hanoi 21% Other Vietnam, south 11% 75. The motorcycle traffic, as expected, is purely local. The PCs and other light vehicles are mostly travelling between Xam-Nua or Viangxai to and from Nameo village across the border (in Quan Son district), or on to Thanh Hoa district or Hanoi. 1.

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B. Road 6A (south of Sophao)

Location Per Cent of Traffic Motorcycles PC, LDV and Bus Southbound Northbound Southbound Northbound Son La district 6% 1% Hanoi 1% Et district 9% 15% Xiangkho district 10% 12% Sopbao district 29% 76% 3% 71% Xam-Nua district 58% 84% Viangxai district 13% 9% Viangthong district 2% Vientiane 3% 76. As expected many motorcycles are local in Sopbao district, but more than half are going to or from Xam-Nua. The predominant flow of private cars and other passenger vehicles is between Sopbao and Xam-Nua.

Road 6B (Pahang border)

Location Per Cent of Traffic Motorcycles PC, LDV and Bus Southbound Northbound Southbound Northbound Son La district 100% 100% Xiangkho district 26% Sopbao district 74% 67% Xam-Nua district 33%

Freight Traffic

77. The questions related to the origin and destination of the journey, the type, capacity and load of the vehicle, and the commodity being carried. 78. The average vehicle loading was observed by the enumerators as follows:

Observed load (Scale 0–5), number of vehicles of each type Vehicle Type Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Observed 0 1 2 3 4 5 0 1 2 3 4 5 0 1 2 3 4 5 load: HGV 7 1 3 3 7 7 4 2 1 4 2 1 1 1 0 = empty; 1 = ¼ full; 2 = ½ full; 3 = ¾ full; 4 = full; 5 = overloaded

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79. It seems that the enumerators did not examine the loads of the LGVs, nor did they clearly differentiate between MGVs and HGVs: according to their capacity estimates all the examined vehicles would have been HGVs. 80. The commodity types were recorded as follows:

Commodity Type Observed commodities by number of heavy trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) 0. Empty 7 7 2 1. Rice or other grain 6 2. Fruit or vegetables 1 1 3. Other food or drink 1 4. Livestock 1 5. Logs or lumber; bamboo 6. Construction material 3 1 7. Machinery, equipment 2 4 1 8. Fuel or chemicals 1 9. Mixed or unknown 5 81. The machinery, equipment and construction materials suggest investment which is consistent with the area’s rapid growth. There is little sign of household supplies which are probably carried in lighter trucks, with the trunk haul being from Vientiane to Xam-Nua. The districts of origin and/or destination , by commodity type, were given as follows

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 0. Empty Et district Xiangkho district 1 Son La province 1 Sopbao district 4 2 2 Xam-Nua district 2 1 5 Viangxai district 5 2 Xamtai district Quan Son district 2 1 Thanh Hoa 6 district

35 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 1. Rice or Other Grains Et district 3 Sopbao district 1 1 Xam-Nua district 4 2 Viangxai district 1

82. There is a small flow of rice from Xam-Nua to Et, and in turn Xam-Nua gets some rice from Sopbao and Viangxai.

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 2. Fruit and Vegetables Son La district 1 Sopbao district 1 Xam-Nua district 1 1

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 3. Other Food or Drinks Xamtai district 1 Thanh Hoa 1 district

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 4. Livestock Sopbao district 1 Xam-Nua district 1

36 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 6. Construction Materials, Cement Son La district 1 Sopbao district 1 Viangxai district 3 Thanh Hoa 3 district

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 7. Machinery, Equipment Son La district 1 Sopbao district 3 1 1 Xam-Nua district 1 3 Viangxai district 1 1 Quan Son district 1 Thanh Hoa 1 district

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 8. Fuel, Chemicals Xiangkho district 1 Xam-Nua district 1

Number of Heavy Trucks Road 6 (Nam Soi) Road 6A (Km 37) Road 6B (Pahang) Origin Destination Origin Destination Origin Destination 9. Miscellaneous or Mixed Et district 1 Hanoi 1

37 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Son La province 1 1 Sopbao district 1 Xam-Nua district 1 2 Viangxai district 1 Vientiane capital 1

83. As already observed, supplies for the Xam-Nua area come from Vientiane or Vietnam. There was one truck carrying mats in the reverse direction, as an export to Son La. 84. It was a pity that the light trucks were not interviewed, but most of these would have been carrying local goods within Houaphan province.

Traffic Forecast, Traffic on Roads 6, 6A, 6B

85. For traffic forecasting purposes, the project roads are divided into five sections. L6e. Road 6, Houay Hung (Xamtai Jct) – Nam Soi Border

86. Most of this traffic is local motorcycle trips, for small trade between villages in Viangxai district, or Viangxai town, and Nameo, a small trading town on the Vietnamese side. Cars and other passenger vehicles (LDVs and buses) are more likely to have longer journeys, between Xam-Nua or Viangxai and Nameo or on to Thanh Hoa or Hanoi. These trips are few, however. 87. Similarly with freight, little traffic was found, cement imports from Thanh Hoa being perhaps the most important. Flows of petroleum fuel (imports to Laos) and iron ore (export from Laos) have been observed on the road but not picked up on the survey days. 88. There are very few people living along this 11 km section of the road. 89. On this road section the underlying traffic growth in the eight years since 2001 has been about 32% a year. In fact most of this growth has been in the 2008/09 period. Much is accounted for by heavy trucks. There has also been a rapid growth in PC and LDV traffic. This generally does not cross the border and evidently serves the purpose of bringing travellers to the border who will cross on foot. 90. FIGURE 2.4 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 7–8% a year on average • The growth rate in Houaphan province continuing at no less than the national average • The traffic growth rate continues to outperform the provincial growth rate, due to the increased motorisation of transport in the country and in the district. Private car and bus use will expand faster than motorcycle use. • Iron ore traffic was suspended at the time of the traffic surveys but the quantities are known and this traffic has been added to the counted totals. • Roads 6A and 6B are also improved, and a bridge provided over the Nam Ma at Sopbao. The result of this is assumed to be that Xam-Nua – Hanoi traffic will

38 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

divert to the Pahang route. The choice between the two routes will depend to some extent on preference and it is assumed that one-third of this traffic (e.g. the proportion to or from Viangxai or Xamtai districts) chooses the Nam Soi route and two-thirds (e.g. the proportion to or from Xam-Nua) will choose the Pahang route, which will be shorter. This long distance traffic is very low today. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities, as well as the traffic generation on the Vietnam side of the border. This effect is assumed to be greater for passenger transport than for freight. • Although there will be some expansion of cross-border traffic dues to the Asean free trade and CBTA agreements, this will be limited. The main corridor is to Thanh Hoa, nearly 200 km distant, and Nameo’s role as a small service centre will remain limited if Roads 6A and 6B are constructed to give access to Moc Chau. 91. Taken together, these assumptions lead to the forecast as shown in the table. Underlying annual growth rates of 12% for passenger traffic and 10% for freight traffic are assumed, faster in the early years and slower after 2020. There will also be a faster growth in PCs than motor cycles and LGVs, as roads are improved in the area. 92. These growth rates are only about half the rate of recent growth. It is assumed that such high growth rates as have occurred recently cannot be sustained over the long-term period. There will be fluctuations which cannot readily be predicted but should lead to the average underlying trend growth as predicted here.

L6w. Road 6, Viangxai (B. Hanglong) – Houay Hung (junction with Xamtai road)

93. This section has shown particularly rapid growth, over 50% a year, with most of the growth being in the last two years.

39 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Figure 2.4: Section L6e. Xamtai Jct - Nam Soi Motorised, Section MC PCLDV LGV MGV HGV VHGVMB LB Total ≥4 wheels PCU 2009 20 8 9 0 4 54 0 1 0 96 76 33 Incl. Generated traffic 10%"" 22 9 10 1 2 Incl. Generated traffic 7.5%** 2 4 Incl. Generated traffic 5%** 57 2 Annual % Growth, 2010-12 15 25 20 15 15 15 15 20 20 Annual % Growth, 2012-15 12 20 15 12 12 12 12 15 15 Annual % Growth, 2015-20 8 15 10 10 10 10 10 12 12 Annual % Growth, 2020-25 6 12 8 8 8 8 8 10 10 Annual % Growth, 2025-30 4 10 6 6 8 8 8 10 10 2014 42 25 23 4 8 108 4 3 5 220 178 387 2015 47 30 26 4 9 121 4 3 5 250 203 437 2016 51 34 29 5 10 133 5 3 6 275 225 482 2017 55 39 31 5 11 147 5 4 7 304 249 533 2018 59 45 35 6 12 161 6 4 7 335 276 588 2019 64 52 38 6 13 177 6 5 8 370 306 649 2020 69 60 42 7 15 195 7 5 9 409 340 717 2021 73 67 45 7 16 211 7 6 10 443 370 777 2022 78 75 49 8 17 228 8 6 11 480 402 842

40 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Motorised, Section MC PCLDV LGV MGV HGV VHGVMB LB Total ≥4 wheels PCU 2023 82 84 53 9 19 246 9 7 12 520 438 913 2024 87 94 57 9 20 265 9 7 14 564 476 990 2025 92 105 62 10 22 287 10 8 15 611 519 1073 2026 96 116 65 11 23 310 11 9 16 657 561 1160 2027 100 127 69 11 25 334 12 10 18 707 607 1253 2028 104 140 73 12 27 361 13 11 20 762 658 1354 2029 108 154 78 13 30 390 14 12 22 820 712 1464 2030 112 170 82 14 32 421 15 13 24 883 771 1582 2031 117 187 87 14 35 455 16 15 26 952 835 1711 2032 122 205 93 15 37 491 17 16 29 1026 904 1849

**Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation. Jct.: Junction

41 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

94. A post-evaluation survey of the Houay Hung – Xamtai road (72 km, completed in November 2006 under the ADB-9 project) is currently under way. Its conclusions are not yet available but the project is widely regarded as a success, with new bus services and a substantial amount of new traffic and trade. Houaphan province has also managed to open up a road 37 km beyond Xamtai to B. Muang-Na, which may become a district centre in future, and could be a source of further extensions to the south. Thus the whole area has opened up significantly. At the same time the number of tourists to the historic caves at Viangxai appears to be increasing. 95. All kinds of traffic are sharing in the strong growth, and Viangxai’s role as a district centre appears to be strengthened. It is an alternative to Xam=Nua for many trips. Road 6A north of B. Hanglong is well populated and for these residents – and for many along the improved Xamtai road – Viangxai is the closest town, and their district centre for many of them. 96. The very rapid growth is no doubt linked to the completion of the Xamtai road in 2006. This gives all=season road access to these residents for the first time, and has allowed a regular bus service to flourish. Reductions in bus fares in 2009 may also have encouraged growth. 97. FIGURE 2.5 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 7%–8% a year on average • The growth rate in Houaphan province continuing at no less than the national average • The traffic growth rate continues to outperform the provincial growth rate, due to the increased motorisation of transport in the country and in the district. Private car and bus use will expand faster than motorcycle use. • Road 6A will also improved, leading to additional traffic on Road 6 between B. Hanglong and Viangxay district centre. For some traffic Viangxai will be preferred as a destination over Xam-Nua as it is 10 km shorter distance from the junction at B. Hanglong. • There will be some traffic generated by the road improvement itself, due to the safer road with better riding qualities. This effect is assumed to be greater for passenger transport than for freight. 98. Taken together, these assumptions lead to the forecast as shown in the table. Underlying annual growth rates of 12% for passenger traffic and 10% for freight traffic are assumed, faster in the early years and slower after 2020. There will also be a faster growth in PCs than motor cycles and LGVs, as roads are improved in the area and in Viangxai town. 99. These growth rates are only about a quarter of the rate of recent growth. It is assumed that the high growth rates that have occurred recently have been due to the opening up of Xamtai district and its connection with Viangxai. Although further extensions of the Xamtai road are likely, they will not have such a strong effect at the Viangxai end of the road. There are likely to be fluctuations which cannot readily be predicted but on average should be consistent with the underlying trend growth as predicted here.

42 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Figure 2.5: Section L6w. Viangxai (B. Hanglong) - Houay Hung (Xamtai Jct)

Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total ≥4 wheels PCU 2009 309 2 47 32 15 51 2 9 3 470 161 401 Incl. Generated traffic 10%"" 340 2 52 10 3 Incl. Generated traffic 7.5%** 34 16 Incl. Generated traffic 5%** 54 2 Annual % Growth, 2010-12 15 25 20 15 15 15 15 20 20 Annual % Growth, 2012-15 12 20 15 12 12 12 12 15 15 Annual % Growth, 2015-20 8 15 10 10 10 10 10 12 12 Annual % Growth, 2020-25 6 12 8 8 8 8 8 10 10 Annual % Growth, 2025-30 4 10 6 6 8 8 8 10 10 2014 648 6 118 66 31 102 4 23 8 1006 357 858 2015 726 7 136 74 34 114 4 26 9 1131 405 968 2016 784 9 149 81 38 126 5 29 10 1231 446 1062 2017 847 10 164 89 42 138 5 33 11 1339 492 1166 2018 915 11 181 98 46 152 6 37 12 1458 543 1280 2019 988 13 199 108 50 168 7 41 14 1587 599 1406 2020 1067 15 219 118 55 184 7 46 15 1727 660 1544 2021 1131 17 236 128 60 199 8 50 17 1846 715 1665 2022 1199 19 255 138 65 215 8 55 18 1973 774 1795

43 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total PCU ≥4 wheels

2023 1271 21 276 149 70 232 9 61 20 2109 838 1936 2024 1347 23 298 161 75 251 10 67 22 2255 908 2088 2025 1428 26 322 174 82 271 11 74 25 2411 983 2253 2026 1485 29 341 184 88 292 11 81 27 2540 1054 2408 2027 1545 32 361 195 95 316 12 89 30 2676 1131 2574 2028 1606 35 383 207 103 341 13 98 33 2820 1213 2753 2029 1671 39 406 220 111 368 14 108 36 2973 1302 2946 2030 1737 42 430 233 120 398 16 119 40 3135 1397 3152 2031 1807 47 456 247 129 430 17 131 44 3307 1500 3375 2032 1879 51 483 262 140 464 18 144 48 3489 1610 3614

**Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

44 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

L6As. B. Hanglong – Sophao L6An. Sophao – Sopbao

100. Road 6A starts from Road 6 at B. Hanglong in Viangxai district, and for the first 10 km it is a sealed road in fairly poor condition. North of Km 10 the road is gravel. At Km 27 the border between Viangxai and Sopbao districts is crossed. At Sophao (Km 44) the road reaches the Nam Ma and turns from a north-easterly direction to north- westerly, to follow the west bank of the Nam Ma as far as Sopbao (Km 63). In Sopbao there is a ferry over the Nam Ma which represents the start of Road 6B on the east side of the river. Road 6A continues along the west bank to Xiangkho and Et districts. 101. The part of Road 6A north of Sopbao is not part of the proposed project and it is proposed for upgrading with World Bank support. The road potentially could link Et district directly with Vietnam’s Son La province, but the improvements planned within Et do not include the bridge which would allow this. Son La province can only be accessed from the area through Road 6B. 102. Two traffic sections have been identified for the present project, south and north of Sophao respectively. The counts reveal that there is not a lot of difference between them, but growth seems slightly faster between Sophao and Sopbao. The latter being a new district centre that is beginning to grow quite rapidly. 103. Traffic on the road has been increasing at over 40% a year, nearer to 50% at the Sopbao end of the road section. 104. Sopbao district was created at the end of 1997 when Xiangkho district was divided into three (Et, Xiangkho and Sopbao). It has a population of about 30,000, and some 47,000 ha of cultivable land. Rice is the staple crop and subsistence livelihoods can be enhanced by livestock rearing or the planting of beams and maize. Developing of access roads is a priority and some progress has been made from the ADB-9 and poverty reduction programmes. A major challenge is to complete many of the tracks these to all-season passability as the aim is to produce rice in two seasons of the year. Land, water from the Nam Ma, and good rice seeds are available and the District aims to become a rice resource and a transit district. 105. FIGURES 2.6 and 2.7 show the forecast growth of traffic on these sections. These are based on the following assumptions: • Continuing national economic growth of 7%–8% a year on average • The growth rate in Sopbao district continues to outperform the national average (Sopbao has shown 25% a year per capita income growth in recent years) • The traffic growth rate will continue strongly, due to the increased motorisation of transport in the country and in the district. Private car and bus use will expand faster than motorcycle use. • Road 6A will also be improved north of Sopbao, and Road 6B will become a permanent year-round border crossing point. These factors will lead to additional traffic on the project section of Road 6A.

45 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Figure 2.6: Section L6As. Ban Hanglong – Sophao

Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total PCU ≥4 wheels

2009 143 2 47 9 10 5 0 4 7 227 84 143 Incl. generated traffic 20%** 172 2 56 5 8 Incl. generated traffic 10%** 10 11 Incl. generated traffic 5%** 5 2 Annual % Growth, 2010-12 15 20 15 15 15 15 15 15 15 Annual % Growth, 2012-15 12 15 15 15 15 15 15 15 15 Annual % Growth, 2015-20 9 12 12 10 10 10 10 12 12 Annual % Growth, 2020-25 6 10 8 8 8 8 8 8 8 Annual % Growth, 2025-30 4 8 8 8 8 8 8 8 8 2014 327 5 113 20 22 11 2 10 17 528 200 403 2015 367 6 130 23 25 12 3 11 19 597 230 461 2016 400 7 146 25 28 13 3 12 22 656 257 510 2017 436 8 164 28 31 15 3 14 24 722 286 565 2018 475 9 183 30 34 16 4 16 27 794 319 625 2019 518 10 205 34 37 18 4 17 31 873 356 692 2020 564 11 230 37 41 20 4 20 34 961 397 766 2021 598 12 248 40 44 21 5 21 37 1026 428 825

46 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total PCU ≥4 wheels

2022 634 13 268 43 48 23 5 23 40 1097 463 887 2023 672 15 290 46 52 25 5 25 43 1172 500 955 2024 712 16 313 50 56 27 6 27 47 1253 541 1027 2025 755 18 338 54 60 29 6 29 50 1339 584 1106 2026 785 19 365 59 65 31 7 31 54 1416 631 1185 2027 817 21 394 63 70 34 7 34 59 1498 681 1270 2028 849 23 426 68 76 36 8 36 63 1585 736 1362 2029 883 24 460 74 82 39 9 39 68 1678 795 1461 2030 919 26 496 80 88 42 9 42 74 1777 858 1567 2031 955 28 536 86 96 46 10 46 80 1882 927 1682 2032 993 31 579 93 103 49 11 49 86 1995 1001 1805

**Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

47 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

106. There will be some traffic generated by the road improvement itself. Out of the 63 km project section, 53 km is presently gravel and its sealing will make its use more attractive to users and transport operators. It will become a safer road with better riding qualities and better public transport. This generation effect is assumed to be greater for passenger transport than for freight. 107. Taken together, these assumptions lead to the forecast as shown in the tables. As for Sections V1 and V2, underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed, but with faster growth continuing in the early years. 108. Moc Chau in Vietnam is a significant market town, 78 km from Sopbao. Once this is easily accessible, it will become a natural service centre for Sopbao and Xam- Nua districts. The present difficulties with the ferry at Sopbao and the remainder of Road 6B have constrained these natural links. The Xam-Nua – Moc Chau corridor – already well populated along Road 6A – has significant potential for growth and as a catalyst for development. Already there are signs of developing Lao exports of maize and paper products (from a new factory in Sopbao, which uses bamboo as its raw material). Moc Chau is located on Vietnamese Road 6 which is a main highway leading to Hoa Binh and Hanoi, from where it connects on to Haiphong. 109. When a bridge over the Nam Ma can be constructed in Et district (assumed possible within about 10 years), further traffic will be generated on Road 6A, as a direct link with Son La district capital in Vietnam. This may take some traffic from the longer route via Road 6B, but will generate new trade and traffic also. Houaphan province has been to a large extent isolated for many years, and its opening to its neighbours is already bearing fruit and will be a catalyst for rapid development in the years ahead. R6B. Sopbao – Pahang Border Crossing

110. The road starts in Sopbao, where a centrally located ferry (with capacity of 45 tons) conveys vehicles across the Nam Ma. Smaller boats are used for motor cycle, bicycle and pedestrian traffic. From Sopbao a gravel road climbs the mountains to reach the border at Pahang, a distance of some 25 km. Moc Chau town is located about 43 km from the border, along a road which is asphalted in Vietnam. 111. The Pahang border crossing is only open to local residents, and has minimal traffic during the rainy season when road and ferry conditions are very difficult. 112. Traffic on the road is light generally, although increasing at a rapid rate. About five vehicles/day, plus 11 motorcycles, were counted at Pahang in April 2009. During the six-month period from October 2008 until March 2009, vehicle traffic (excluding motorcycles) was 140% higher than during the same period a year earlier. 113. There is some local traffic, especially at the Sopbao end of the road. A new feeder road has been developed (under the ADB-9 project) from near the Sopbao end, in a northerly direction. This leads to B. Muang-Nam by the Vietnam border and in future may be extended parallel to the river and/or to the border to reach further villages. 114. The provision of a bridge, located fairly centrally in Sopbao town, is likely to be a catalyst for development. Local traffic will be able to cross at will, without delay or payment, and this is likely to lead to expansion of settlements on the east side of the river. Longer-distance traffic will be able to travel with confidence at all times of year and the extra vehicle utilisation will bring transport costs down. The result is likely to be a significant amount of generated traffic, in percentage terms, although with a small starting point the total volumes will still be small. Rapid growth throughout the medium and long term can be expected, however, as the road corridor develops and attracts investment. If more direct routes from Louangphabang and Vientiane to Xam-Nua are

48 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

developed in future, as envisaged, the corridor could gain additional national and international traffic. 115. Given the nature of the terrain along Road 6B, corridor investments are more likely along the Nam Ma and Road 6A, but the link between Laos and Vietnam along Road 6B would be a major contributing factor to such development. 116. FIGURE 2.8 shows the forecast growth of traffic on this section. This is based on the following assumptions: • Continuing national economic growth of 7%–8% a year on average • The growth rate in Sopbao district continues to outperform the national average (Sopbao has shown 25% a year per capita income growth in recent years) • The traffic growth rate will continue strongly, due to the increased motorisation of transport in the area and the feeder road developments. Private car and bus use will expand faster than motorcycle use, though the latter will continue to rise as more villages obtain road connections. • Road 6A will also be improved north of Sopbao, and Road 6B will become a reliable year-round border crossing point. These factors will lead to additional traffic on Road 6A somw of which will also use 6B. • There will be significant traffic generated by the project itself. The road is presently gravel and its sealing will make its use more attractive to users and transport operators. It will become a safer road with better riding qualities. It will also become an all-season road and this will allow public transport links to develop. There will be time and cost savings to traffic by the replacement of the ferry by a bridge. This generation effect is assumed to be greater for passenger transport than for freight. 117. Taken together, these assumptions lead to the forecast as shown in the tables. As for the other road projects in the area, underlying annual growth rates of 10% for passenger traffic and 8% for freight traffic are assumed, but with significant generation and with faster growth continuing in the early years, sustained by the developing road network elsewhere in Sopbao and northern Laos.

49 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Figure 2.8: Section: L6B. Sopbao – Pahang

Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total PCU ≥4 wheels

2009 11 1 16 0 6 7 0 0 0 41 30 50 Incl. generated traffic 100%** 22 2 32 6 4 Incl. generated traffic 50%** 2 9 Incl. generated traffic 25%** 9 2 Annual % Growth, 2010-12 15 20 15 15 15 15 15 15 15 Annual % Growth, 2012-15 12 15 15 15 15 15 15 15 15 Annual % Growth, 2015-20 9 12 12 10 10 10 10 12 12 Annual % Growth, 2020-25 6 10 8 9 9 9 9 9 9 Annual % Growth, 2025-30 4 8 8 8 8 8 8 8 8 2014 42 5 64 4 18 18 2 12 8 173 131 229 2015 47 5 74 5 21 20 3 14 9 198 151 263 2016 51 6 83 5 23 22 3 16 10 219 168 292 2017 56 7 93 6 25 24 3 17 12 243 187 324 2018 61 7 104 6 28 27 4 19 13 269 208 360 2019 66 8 116 7 30 30 4 22 15 298 232 400 2020 72 9 130 7 34 33 4 24 16 331 258 444 2021 77 10 141 8 37 36 5 27 18 357 280 482 2022 81 11 152 9 40 39 5 29 19 386 304 523

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Motorised, Section MC PC LDV LGV MGV HGV VHGVMB LB Total PCU ≥4 wheels

2023 86 12 164 10 43 42 6 32 21 416 330 568 2024 91 14 177 11 47 46 6 35 23 450 358 617 2025 97 15 192 11 52 50 7 38 25 486 389 670 2026 101 16 207 12 56 54 7 41 27 521 420 723 2027 105 17 224 13 60 58 8 44 29 558 454 779 2028 109 19 241 14 65 63 8 47 32 599 490 840 2029 113 20 261 16 70 68 9 51 34 643 529 906 2030 118 22 282 17 76 74 10 55 37 689 572 977 2031 122 24 304 18 82 80 10 60 40 740 617 1054 2032 127 26 328 20 88 86 11 64 43 794 667 1137

**Generated traffic is applied from the assumed opening year (2014) in the 'with project' situation.

51 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Annexe 1

Forms and Instructions Used for Origin–Destination Surveys

52 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

GMS TA 6478: Road 217: Origin-Destination Survey VIETNAM Location Day Date: Weather: Interviewer: ALL VEHICLES MC, PC, LDV BUSES GOODS VEHICLES NO. NO. NO. HOUR VEH. PLATE FROM TO PUR- OF PASS. OF LOAD LOAD OF COMMODITY DISTRICT (if in Thanh Hoa (write full TYPE TYPE DISTRICT (if in Thanh Hoa Province) Province) POSE PERS. CAP. PASS. CAP. UTIL. PERS. name) PROVINCE (if not 06-18 PROVINCE (if not Thanh Hoa) Code Thanh Hoa) Code Tonnes 1-5 Name Code

1 2 3 4.1 4.2 5.1 5.2 6 7 8 9 10 11 12 13.1 13.2

1

2

3

4

5 4.2 and 5.2. O-D 13. 2. VEHICLE TYPE 3. PLATE TYPE CODES 6. PURPOSE 10. CAPACITY COMMODITY 1 motor cycle 1-63 Province codes (NOT Thanh (MC) 0 No plates Hoa) 0 no reply No. of tonnes vehicle is 0 empty 2 passenger car legally allowed to 1 Rice or other (PC) 1 Vietnamese vehicle 64 Laos 65 China 1 to/from work carry grain 2 employer's 2 fruit or 3 4wd, pickup, jeep (LDV) 2 Lao vehicle 66 Thailand 67 other country business vegetables 4 Small truck 3 other food or (LGV) 3 Other country, UN 71 Quan Hoa 72 Ba Thuoc 3 personal business 11. UTILIZATION drinks 4 5 Medium truck (MGV) 4 Other 73 Tang Thanh 74 Cam Thuy education 0 empty or almost empty 4 livestock 75 Thach Thanh 76 5 logs or lumber, bamboo, sugar 6 Heavy truck (HGV, 3 or 4 axles) Vinh Loc 5 medical 1 about 1/4 full cane 7 Very heavy truck (VHGV, 5 or more axles) 77 Thieu Yen 78 Ngoc Lac 6 visiting friends or relations 2 about half full 6 construction materials, cement 8 Medium bus 7 machinery, (MB) 79 Thong Xuan 80 Tho Xuan 7 recreation/tourism 3 about 3/4 full equipment 4 full or almost 8 fuel or 9 Large bus 81 Trieu So'n 82 Dong So'n 8 shared taxi full chemicals 9 0 miscellaneous Other 83 Nong Kong 84 Nhut Xuan 5 overloaded or unknown

53 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

ORIGIN–DESTINATION SURVEYS: VIETNAM (Road 217)

Objective: To find out what journeys people are making by what kinds of motor vehicles (between which places), and why; and what goods are being carried. Method: Each vehicle is stopped, to the extent possible, and the driver is interviewed. If it is a paid driver (chauffeur), it’s the main passenger who should be interviewed. If it is a shared taxi, it is the taxi driver who should be interviewed. There will be a parallel traffic count. This will enable the O-D survey, if not covering 100% of vehicles, to be expanded by the number of vehicles of each type on the road in one day, to give a total picture of trip-making by motor vehicle at the survey points. INSTRUCTIONS TO SURVEYORS

Location______Location of survey (Place name and Km point)

Day______Day of the week

Date______day/month/year

Weather______For example fine, cloudy, rain

Interviewer______Name of interviewer

1–3: ALL VEHICLES

1. Hour______The time. Just the hour is enough.

2. Vehicle Type____ Put the code (see code list on bottom of form. Also a separate sheet gives more details)

3. Plate Type______Put the code (see code list on bottom of form)

Columns 1-3 can often be completed before the vehicle comes to a stop.

4–5: ALL VEHICLES

The driver should be approached with a short explanation, such as ‘Hello, we are making a plan to improve Road 217 between Thanh Hoa province and Laos. We would be very grateful for your help in answering some short questions about your journey.’

4.1 From______Where have you come from? This is the original place where they started the present journey. We need the district name, if it is in Thanh Hoa province, or the province name if from another province. If they name a place, and you don’t know which district or province it i is in, then ask them or find out. You will have to code it later! Also ignore overnight stops. If they’ve come from Da Nang, but slept somewhere along the way, it’s ‘Da Nang’ that we want.

4.2 Code______See code list. If in Thanh Hoa province, it’s the DISTRICT that we need. Other provinces should be coded from 1-63 as normal in Vietnam. There are also codes for other countries.

5.1 To______Where are to going to? This is the final place where they want to go. Ignore overnight stops – it’s where they want to go that we need, not where they rest or sleep on the way. See above re the need to get the actual district name. Note: the destination cannot be the same as the origin! We want details of the one-way trip! (The only exception is very short trips where the origin and destination are both in the same district in which the survey is being carried out.)

5.2 Code______See code list

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6/7. MC/PC/LDV Fill these two columns for all motor cycles, passenger cars (including 4- wheel drive), jeeps and pickups. Ignore them for buses, minibuses and trucks.

6. Purpose______Ask ‘What is the reason for your journey?’. According to their answer, put the code in here. The codes are shown at the bottom of the form. Note: going home is not a reason! If they are going home, ask them why they left home in the first place! All journeys must have one of the eight codes below. See code list for full explanation. Code 8 is for a shared taxi with different passengers who have paid the taxi driver separately for their different journeys. Funerals, visits to churches or temples, etc., are regarded as ‘visiting friends and relations’ (social trips). Going to the market or shopping is regarded as ‘personal business’.

7. No. of persons___ The number of occupants of the vehicle, including the driver.

8/9. BUSES Fill these two columns for all buses and minibuses.

8. Pass. Cap.______What is the passenger capacity of the vehicle? This is normally the number of passenger seats. Ask the driver or conductor (or count the seats).

9. No. of Pass._____ Count the number of passengers (not crew) on the vehicle.

10–12. GOODS VEHICLES Fill these columns for all goods vehicles other than pickups.

10. Load Cap.______Ask the driver the carrying capacity of the truck, in tonnes.

11. Load Util.______Look in the vehicle (or ask the driver) to see how full it is. Use the codes shown below.

12. No. of Pers. ____ The total number of people being carried by the vehicle – in the cab, or standing at the back, or wherever. We need the total number of all travellers.

13.1 Commodity____ Ask the driver what goods he is carrying. Write the answer that he gives you.

13.2 Code______Select the most appropriate code from the list below. Notice that in 13.1 we want the actual commodity, as explained by the driver, or as seen. 13.2 should contain your assessment of what commodity group these goods fall under.

That’s it! Use one line for each vehicle. When the form is full, start a new one. Try to interview as many vehicles and motor cycles as you can. Be sure to have plenty of vehicles of each type.

If anybody makes any comments or suggestions about the road or the transport system, please write it on the back of the form!

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GMS TA 6478: Road 217: Origin-Destination Surveys

JOURNEY PURPOSES FOR ORIGIN-DESTINATION SURVEY

The question should be asked of the main user of the vehicle – the person who wants to make the trip. This may not be the driver of the vehicle, who may be working for the main user.

Purpose Explanation 1 To/from work Travel in own (unpaid) time to or from the place of work 2 Employer’s business Travel paid for by the employer, in working time, such as business travel for meetings, surveys, to collect or deliver something, etc. – the person travelling is being paid to travel 3 Personal business Travel in own (unpaid) time, for shopping, going to market or the post office, or to a bank, or to deliver a letter, etc. 4 Education Travel to or from school, university or other place of learning 5 Health Travel to or from hospital, clinic, doctor or other health facility 6 Visiting friends or Social visits to friends or family members – includes relations social occasions such as weddings, funerals, religious gatherings, etc., as well as visits to grandmother, etc. 7 Recreation/tourism Travel to or from a sporting event, or travel for fun, to visit a waterfall, the cinema, disco, have a picnic, etc. Also tourists to the area. 8 Shared taxi Only for shared taxis where the driver is being paid by different people who have different journey purposes

56 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics GMS TA 6478: Roads 6, 6A, 6B: Origin-Destination Survey LAO PDR Location Day Date: Weather: Interviewer: ALL VEHICLES MC, PC, LDV BUSES GOODS VEHICLES NO. NO. HOUR VEH. PLATE FROM TO PUR- OF PASS. NO. OF LOAD LOAD OF COMMODITY DISTRICT (if in Houaphan TYPE TYPE DISTRICT (if in Houaphan Province) Province) POSE PERS. CAP. PASS. CAP. UTIL. PERS. (write full name) 06-18 PROVINCE (if not Houaphan) Code PROVINCE (if not Houaphan) Code Tonnes 1-5 Name Code

1 2 3 4.1 4.2 5.1 5.2 6 7 8 9 10 11 12 13.1 13.2

1

2

3

4

5

20 4.2 and 5.2. O-D 10. 2. VEHICLE TYPE 3. PLATE TYPE CODES 6. PURPOSE CAPACITY 13. COMMODITY 1 motor cycle 1-17 Province codes (NOT (MC) 0 No plates Houaphan) 0 no reply No. of tonnes vehicle is 0 empty 2 passenger 701 M. Xam-Neua 702 M. car (PC) 1 Lao vehicle Xiangkho 1 to/from work legally allowed to carry 1 Rice or other grain 3 4wd station wagon 703 M. Viangthong 704 M. 2 employer's (SW4) 2 Vietnamese vehicle Viangxai business 2 fruit or vegetables 4 Pickup, jeep 705 M. Houamuang 706 M. (LDV) 3 Other country, UN Xamtai 3 personal business 11. UTILIZATION 3 other food or drinks 5 'Tok-tok' 4 (TT) 4 Other 707 M. Sopbao education 0 empty or almost empty 4 livestock 6 Small truck 5 logs or lumber, bamboo, sugar (LGV) 18 Thanh Hoa province 5 medical 1 about 1/4 full cane 7 Medium truck (MGV, 2 axles) 19 Son La province 6 visiting friends or relations 2 about half full 6 construction materials, cement 20 Hoa Binh, Hanoi, other northern 7 machinery, 8 Heavy truck (HGV, 3 axles or more) Vietnam 7 recreation/tourism 3 about 3/4 full equipment 10 Medium 21 Other Vietnam (south of Thanh bus (MB) Hoa) 8 shared taxi 4 full or almost full 8 fuel or chemicals 65 China 66 Thailand 67 Other 9 miscellaneous or 11 Large bus O Other country 5 overloaded unknown

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ORIGIN–DESTINATION SURVEYS: LAO PDR (Roads 6, 6A, 6B)

Objective: To find out what journeys people are making by what kinds of motor vehicles (between which places), and why; and what goods are being carried. Method: Each vehicle is stopped, to the extent possible, and the driver is interviewed. If it is a paid driver (chauffeur), it’s the main passenger who should be interviewed. If it is a shared taxi, it is the taxi driver who should be interviewed. There will be a parallel traffic count. This will enable the O-D survey, if not covering 100% of vehicles, to be expanded by the number of vehicles of each type on the road in one day, to give a total picture of trip-making by motor vehicle at the survey points. INSTRUCTIONS TO SURVEYORS

Location______Location of survey (Place name and Km point)

Day______Day of the week

Date______day/month/year

Weather______For example fine, cloudy, rain

Interviewer______Name of interviewer

1–3: ALL VEHICLES

1. Hour______The time. Just the hour is enough.

2. Vehicle Type____ Put the code (see code list on bottom of form. Also a separate sheet gives more details)

3. Plate Type______Put the code (see code list on bottom of form)

Columns 1-3 can often be completed before the vehicle comes to a stop.

4–5: ALL VEHICLES

The driver should be approached with a short explanation, such as ‘Hello, we are making a plan to improve rhe roads between Houaphan Province and Vietnam. We would be very grateful for your help in answering some short questions about your journey.’

4.1 From______Where have you come from? This is the original place where they started the present journey. We need the district name, if it is in Houaphan province, or the province name if from another province. If they name a place, and you don’t know which district or province it is in, then ask them or find out. You will have to code it later! Also ignore overnight stops. If they’ve come from Vientiane, but slept somewhere along the way, it’s ‘Vientiane’ that we want.

4.2 Code______See code list. If in Houaphan province, it’s the DISTRICT that we need. Other provinces should be coded from 1-17 as normal in Laos (see list at end of this document). There are also codes for other countries.

5.1 To______Where are to going to? This is the final place where they want to go. Ignore overnight stops – it’s where they want to go that we need, not where they rest or sleep on the way. See above re the need to get the actual district name. Note: the destination cannot be the same as the origin! We want details of the one-way trip! (The only exception is very short trips where the origin and destination are both in the same district in which the survey is being carried out.)

5.2 Code______See code list

6/7. MC/PC/LDV Fill these two columns for all motor cycles, passenger cars (including 4- wheel drive), jeeps pickups and tok-toks. Ignore them for buses, tok-toks and trucks.

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6. Purpose______Ask ‘What is the reason for your journey?’. According to their answer, put the code in here. The codes are shown at the bottom of the form. Note: going home is not a reason! If they are going home, ask them why they left home in the first place! All journeys must have one of the eight codes below. See code list for full explanation. Code 8 is for a shared taxi with different passengers who have paid the taxi driver separately for their different journeys. Funerals, visits to the temple, etc., are regarded as ‘visiting friends and relations’ (social trips). Going to the market or shopping is regarded as ‘personal business’.

7. No. of persons___ The number of occupants of the vehicle, including the driver.

8/9. BUSES Fill these two columns for all buses and minibuses.

8. Pass. Cap.______What is the passenger capacity of the vehicle? This is normally the number of passenger seats. It is marked on the vehicle. If not clear, ask the driver or conductor (or count the seats).

9. No. of Pass._____ Count the number of passengers (not crew) on the vehicle.

10–12. GOODS VEHICLES Fill these columns for all goods vehicles including tok-toks.

10. Load Cap.______This is the number of tonnes the vehicle is allowed to carry. It is often marked on the vehicle. If not clear, ask the driver the carrying capacity of the truck, in tonnes.

11. Load Util.______Look in the vehicle (or ask the driver) to see how full it is. Use the codes shown below.

12. No. of Pers. ____ The total number of people being carried by the vehicle – in the cab, or standing at the back, all of them. We need the total number of travellers.

13.1 Commodity____ Ask the driver what goods he is carrying. Write the answer that he gives you.

13.2 Code______Select the most appropriate code from the list below. Notice that in 13.1 we want the actual commodity, as explained by the driver, or as seen. 13.2 should contain your assessment of what commodity group these goods fall under.

That’s it! Use one line for each vehicle. When the form is full, start a new one. Try to interview as many vehicles and motor cycles as you can. Be sure to have plenty of vehicles of each type.

If anybody makes any comments or suggestions about the road or the transport system, please write it on the back of the form!

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GMS TA 6478: Roads 6, 6A, 6B: Origin-Destination Surveys

JOURNEY PURPOSES FOR ORIGIN-DESTINATION SURVEY

The question should be asked of the main user of the vehicle – the person who wants to make the trip. This may not be the driver of the vehicle, who may be working for the main user.

Purpose Explanation 1 To/from work Travel in own (unpaid) time to or from the place of work 2 Employer’s business Travel paid for by the employer, in working time, such as business travel for meetings, surveys, to collect or deliver something, etc. – the person travelling is being paid to travel 3 Personal business Travel in own (unpaid) time, for shopping, going to market or the post office, or to a bank, or to deliver a letter, etc. 4 Education Travel to or from school, university or other place of learning 5 Health Travel to or from hospital, clinic, doctor or other health facility 6 Visiting friends or Social visits to friends or family members – includes relations social occasions such as weddings, funerals, religious gatherings, etc., as well as visits to grandmother, etc. 7 Recreation/tourism Travel to or from a sporting event, or travel for fun, to visit a waterfall, the cinema, disco, have a picnic, etc. Also tourists to the area. 8 Shared taxi Only for shared taxis where the driver is being paid by different people who have different journey purposes

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PART TWO ECONOMIC BACKGROUND

1. The potential for economic corridor development A. Location and Characteristics of project corridors i. Project Rationale 118. The project connects the mountainous Houaphan province in north-east Laos with north and central Vietnam, and with the seaport of Haiphong as well as other seaports along the Vietnamese coast. Houaphan province’s road connections internally within the Lao PDR have historically been weak, but the recent reconstruction of National Road 6 from Road 1 to Xam-Nua (the capital of the province) has generated new traffic growth and new income from tourism. 119. Road 1 includes links from the west (Louangphabang) and the south (Xiangkhouang province). Onward connections with other roads extend these links to Myanmar and parts of Thailand to the west, and Vientiane capital and north-east Thailand to the south. There are proposals to improve these linkages, which when achieved will lead to further traffic development to and through Houaphan. 120. The project completes two distinct corridors: 1. Xam-Nua – Pahang, where through the Vietnamese road network it links with the town of Moc Chao and Vietnamese Road 6 which is the main highway between Son La and Hanoi in the north of Vietnam. The Xam-Nua – Moc Chau distance is about 150 km. China can also be reached along this corridor;

2. Xam-Nua – Thanh Hoa, which links with the north-central part of Vietnam and ports along the coast. This road passes through the east part of Houaphan province the whole length of Thanh Hoa province, giving access to Thanh Hoa town, about 250 km from Xam-Nua.

121. After some delay due to its poor connections with the rest of the Lao road system, Houaphan province is now developing rapidly and a transition has begun from a subsistence economy to one based on agricultural trade and tourism. The development of the two corridors and the facilitation of border crossings and trade will be timely measures that reinforce these trends and give a further stimulus to economic development and overcoming poverty in the province. At the same time it will give new trading and travel opportunities to the population along the Vietnamese parts of the corridors. 122. Over the longer term, it is proposed to improve the links between Xam-Nua and Louangphabang, Myanmar, Vientiane and Thailand. Road 4 south from Louangphabang through Xaignabouli to Thailand is already being developed. More significant may be future links to Myanmar and the development of a more direct route to Vientiane and north-east Thailand. Long term plans already exist for these and for a direct connection between Et, at the north end of Road 6A, and Vietnam. All these long term proposals will gradually bring more activity to the corridors.

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Socio-Economic Situation and Economic Potential of Project Area

i. Houaphan

123. The province of Houaphan borders Xiangkhouang and Luangphabang provinces to the south and west, and Vietnam to the north and east. The province has an estimated population of 285,766 in an area of 16,500 km2, with an average population density of 17 persons/km2. 124. Houaphan has eight districts: Viangxai, Xam-Nua, Xamtai, Viengthong, Houameuang, Xiengkho, Sopbao and Et. Project Road 6 passes through Viangxai district on its way to Vietnamese Thanh Hoa district at the Nam Soi/Nameo border, Project Roads 6A (part)/6B start in Viangxai district and proceed north through Sopbao district. At Sopbao district centre there is a ferry over the Nam Ma which represents the start of Road 6B, leading to the Pahang border. Road 6A continues on the west side of the Nam Ma and reaches Xiangkho and Et districts. This part of 6A north of Sopbao centre is not included in the present project. 125. Houaphanh is one of the least developed provinces in the Lao PDR. According to the United Nations Development Program (UNDP) , the poverty headcount ratio for the province is 52% (decreasing from over 70% in 1997/1998). Only 22% of villages have access to electricity and fewer than 40% have access to an all-season road. Markets are located in only 2% of the villages. About two-fifths of the villages in have a primary school up to grade 5. Over two-thirds of the villages are classed as poor. Table 1: Profile of the Districts in Houaphan Province

No. of Population Road access* Market** Electricity*** School**** Poor ***** No. of District house- village Total Women holds 1 2 3 1 2 3 1 2 1 2 3 1 2 Xam-Nua 109 8,322 55,066 26,989 44 59 6 3 1 105 17 92 59 47 3 20 89 Xiengkho 59 4,397 26,450 12,867 24 35 0 1 10 48 22 37 31 28 0 46 13 Viangthong 71 4,113 26,216 13,128 44 26 1 1 1 69 23 48 24 42 5 14 57 Viangxai 110 5,752 34,500 16,979 50 59 1 1 4 105 51 59 53 53 4 37 73 Houameuang 77 4,426 30,521 14,890 33 39 5 3 5 69 4 73 21 56 0 33 44 Xamtai 166 8,947 59,586 29,931 49 95 22 2 1 163 7 159 29 137 0 12 154 Sopbao 68 4,307 26,414 13,199 25 43 0 4 0 64 23 45 25 39 4 44 24 Et 78 4,394 27,013 13,304 15 26 37 1 4 73 17 61 17 44 17 17 61 Total 738 44,658 285,766 141,287 284 382 72 16 26 696 164 574 259 446 33 223 515 Source: Planning and Investment Department, Houaphanh Province,, 2008 Notes: *1: Road access all year round; *2: Road access only during the dry season; *3: No road access **1: daily market; **2: market not daily; **3: No market; ***1: with access to grid electricity supply, ****2: No grid electricity supply; ****1: with primary school up to grade 5; ****2: with incomplete primary school. ****4= No school *****1: Non-poor; ****2: Poor. 126. For 2008, the gross domestic product of the province was estimated to be 756 billion kip or 2,645,276 kip (about US $310) per capita. The economic growth was 9.98% compared to 2007. The total income of the province was 36.5 billion kip while the expenditure was 142.7 billion kip, leading to a substantial shortfall. The main economic activities are: • Agriculture and forestry which accounts for 66% of economic activity. The main activities are growing crops (rice, maize, cassava, soya beans and ginger) and raising livestock. The gathering of non-timber forest products is also a significant source of income. Such products include yam, mulberry bark, styrax (bezoin) resin, cardamom, cinnamon, sticklac and bamboo stems. These are exported, while bamboo shoots, wild vegetables and wild insects are gathered for domestic consumption.

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• Services which account for 19% of economic activity. • In 2008, tourism generated nearly 12 billion kip – one-third of total provincial income. Tourism has been identified by the provincial government as one of five sectors to drive local economic development in the future. • Manufacturing which accounts for 15% of economic activity. This includes weaving (particularly in Xamtai and Xam-Nua districts), mining (iron, gold, silver, copper, lead, stone) and small-scale manufacture (furniture, drinking water, chopsticks). 127. The Sixth Five-Year Development Plan for Houaphan Province (2006-2010) targets that by 2011, in comparison with 2005: • The area of permanent paddy rice will increase by 6.3% while the upland rice area will decrease by about 15.5%. • The area with irrigation will increase by 85%. • Total rice production is targeted increase by 21%. Cropping area is planned to increase by about 30%. • The major increase will be related to livestock with the estimated increase of about 75%, with 47% for cattle and buffalo respectively. • The income from industry and handicraft will increase by about 170% and the income from hydro-electric power and weaving materials will represent about one-third and one-fifth respectively of the total income from industry and handicraft activities. 128. Houaphan is included in the ‘Northern Heritage Route’ which connects the provinces of Houaphan, Louangphabang and Xiangkhouang. It is anticipated that the inclusion of Houaphan in this route will encourage a greater number of visitors to add the province to their itinerary. Houaphanh is an area of outstanding scenic beauty with a wide variety of natural and cultural attractions. The most significant of these are summarized in Tables 2 and 3 below: Table 2: Key Natural Attractions in Houaphan Province

Attraction Location

Viangxai Caves Viengxay District Nam Et/Phou Louey National Viangthong District Protected Area (NPA) Saleui Waterfall Xam-Nua District

Viangthong Hot Springs Viangthong District

Nam Nour Waterfall Viengxai District

Nameuang Hot Springs Xam-Nua District

Nam Xam NPA Xamtai District

Scenic Routes All Districts

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Table 1: Key Cultural Attractions in Houaphan

Attraction Location Textile Weaving Village Xamtai District

Ban Phiengphoung Sopbao District (Yao & Hmong Ethnic Groups) Ban Homphan Viangxai District (Yao & Hmong Ethnic Groups) Ban Chak Kieng Viengxai District (Hmong Ethnic Group) Traditional Weaving Houses Xam-Nua District

Source: Houaphanh Province Tourism Development Strategy 2007-2020

129. The revenue from tourism is expected to increase eightfold with the number of tourists increased by 150%. The projected growth in visitor numbers and revenue from tourism is summarised in Tables 4 and 5 below. Table 2: Projected Growth in Visitor Numbers to Houaphan 2006 – 2020

International Domestic 2006 1,625 2,135 2007 2,438 2,562 2008 3,657 3,074 2009 5,486 3,689 2010 8,229 4,427 2011 10,698 5,577 2012 13,907 7,482 2013 18,079 9,927 2014 23,503 12,645 2015 30,554 16,439 2016 39,720 21,371 2017 51,636 27,782 2018 67,127 36,117 2019 87,265 46,952 2020 113,445 61,038 Source: Houaphanh Province Tourism Development Strategy 2007-2020

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Table 3: Projected Revenue from Tourism by 2020

Visitor Average length Average Total revenue, arrivals of stay spend per US $ million day, US$ International 113,445 3 days 50 17.0

Domestic 61,038 3 days 25 4.6

Total 174,483 21.6

Source: Houaphanh Province Tourism Development Strategy 2007-2020

130. Based on the Master Plan for Northern Economic Development of the Lao PDR, 2008–2020, developed by the Ministry of Planning, Houaphan Province should emphasise the following economic activities: 131. Hydropower development: • Nam Sim for domestic supply, with capacity of 8 MW, to be completed in 2013. • Nam Et for export, with capacity of 450 MW, planned for 2011–2015. • Nam Xam 1–5, with combined capacity of 750 MW, planned for 2016–2020. 132. Agricultural development up to 2020: • Establishment of maize and soy bean seed centres; • Establishment of a cattle rearing centre for production of meat; • Establishment of goat breeding centre; • Establishment of a demonstration centre for fooder grass; • Promotion of bamboo and rattan bush growing on 50,000 ha. 133. Mining development: • Exploration of iron ore in the eastern part of the province.

B. Socio-Economic Situation and Economic Potential of Project Area: Northern Corridor

134. The northern of the two corridors starts at B. Hanglong in the Viangxai district of Houaphan province and at about Km 37 it passes into Sopbao district, in which the rest of the corridor up to Pahang is located. Beyond Sopbao, the northern part of Road 6A not covered by the present project but is planned for improvement with assistance from the World Bank. It serves the districts of Xiangkho and Et. 135. Et and Sopbao are new districts formed in 1997 by the division of the former large Xiangkho district into three. The main motivation for the division was the need to more firmly address the high levels of poverty in the area.

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136. Sopbao has an area of 1494 km2, and a population of about 28,000, giving a population density of about 19 persons/km2. It is primarily an agricultural and forest district, and some two-thirds of the forest is said to be bamboo, a product which is increasingly of interest in as an industrial input, and which renews itself rapidly. Already a paper factory has just opened in the new Sopbao town, and its output uses the project corridor via Pahang. 137. The district remains poor but progress has been very rapid. The district reports that 70% of the population were classified as ‘poorest’ in 1997, but this figure fell to 33% by 2005. The national poverty reduction fund has been very active in the district, investing in footbridges, water supply, irrigation, schools, health facilities and other infrastructure. GDP per capita rose from about US $30 in 1997 to $140 by 2004, and has continued to grow since. Agricultural exports including maize are now starting, whereas the economy formerly was entirely based on subsistence rice production. 138. Lack of infrastructure has been a constraint as Road 6A has been the only all-season road. Road access is seen a vital so that land can be cleared and agricultural activities developed. 139. The strategic vision of the district is to build itself as a resource base for rice, maize and other cereals. They have ample land and good rice seeds. They also see their future as a transit district because of the access to Vietnam and Vietnam’s Highway 6, which gives connections to Son La, Hoa Binh, Hanoi and Haiphong. 140. The district sees the improvement of Roads 6A and 6B, especially a bridge on 6B over the Nam Ma, as its most urgent need. 141. The extension of the corridor to Highway 6 in Vietnam, via the Vietnamese town of Moc Chau, has not been investigated by the current project. It is understood that the road between Pahang and Moc Chau is already paved and in fairly good condition. 142. There is already traffic growing on this corridor from a very small base. Maize exports to Vietnam are reported, and cement imports in the opposite direction. Maize production is expected to grow rapidly. The new paper factory in Sopbao aims to use the Pahang route for its exports.

C. Socio-Economic Situation and Economic Potential of Project Area: Eastern Corridor

i. Quang Son District

143. This corridors from Xam-Nua both pass through the Viangxai district of the Lao PDR, where both road projects start. Road 6 passes through the part of Viangxai district which is famous for its caves. These are an attraction in their own right and also have significant historical interest due to the part they played in the revolutionary war of the 1960s and 1970s. South of Viangxai, a new road constructed with ADB assistance provides a 71-km link from Road 6 to Xamtai district, which is also of notable tourist interest as a major centre of Lao traditional weaving. Road 6 then leads to the Nam Soi/Na Meo border crossing and Vietnamese Road QL 217 in the Quang Son district of Thanh Hoa province. This route which traverses four districts in Thanh Hoa province is the Vietnamese part of the overall project. 144. The first 90 km of the road from the Lao border is in Quang Son district. This has a population of 35,757 people (2008 estimate) of whom 20,738 (nearly 60%) are said to live along the road. The district occupies 931 km2, with a population density of 38 persons/km2.

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145. Its economic potential is based on its forest resources and the international trading link with the Lao PDR. 146. In 2008 the economy of the district is said to have grown by 9.1% over 2007. The GDP per capita is estimated to be US $303. Some 40% of the population live below the poverty line, down from about 54% in 1997. The cultivated area was expanded by 12% in 2008, to reach over 7,000 ha, and agricultural production at nearly 10,000 tons was up by 18% in the year. The average production of food per person was 270kg/year, which is below the recommended subsistence level. 147. Income is also earned from livestock and fishing, and the gathering of non-timber forest products. Bamboo has become an important export from the district. 148. Industry is limited to handicraft production and building construction. Its growth is comparatively low, being estimated at 5.1% for 2008. 149. Commercial revenue from sales across the border into Laos are said to have been worth US $605,000 in 2008, up by 13.5% in the year. 150. The district states that the main problems it has to address include the following: • Economic growth is not yet stable, as it depends on weather conditions. Changes in the economic structure to reduce weather-dependence are still slow, and subsistence lifestyles are still prevalent. • Technology is not yet applied to agricultural production on any significant scale. • The control of the exploitation and use of natural resources needs strengthening and illegal exploitation takes place. • Administration remains cumbersome and land acquisition procedures are slow and complicated. • Pollution of the environment is said to be a problem. 151. The district targets an economic growth rate of over 10.2% a year, which could raise per capita incomes to approaching US $400 within about three years. By the end of this period it expects the economic structure to consist of agricultural and fishing: 54%; industry: 16%; and services: 30%.

ii. Ba Thuoc District

152. Ba Thuoc District is the next district on QL 217 after Quang Son. It has its centre in the town of Canh Nang. It has 67,074 people in an area of 774 km2 (87 persons/km2). 153. 154. The district reports its economic growth rate in 2008 as reaching 12.1%. Income per capita rose by 7.2% in the year to reach US $327. It has a more developed economy than Quang Son and some 53% of the district’s income comes from agriculture, services accounting for 41% and industry just 5%. Industrial output is said to have grown by 14% in 2008, however. 155. Total agricultural production in 2008 amounted to 32,626 tons. 156. Livestock breeding is an important activity, with the number of cattle and buffalo estimated as about 22,000. Fishing, the gathering of non-timber forest products, handicrafts and domestic construction are also important. Income from the sale of goods and services grew by 37% in the year. The main exports from the district are manioc starch and labour – efforts to expand food processing locally have not yet been wholly successful.

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157. The population is said to be well educated, but major challenges remain: • Agriculture: the application of technology on production is still limited • Exports are small in scale and less than planned • The progress of project implementation through the state budget or government bonds remains slow, and as in Quang Son land acquisition is slow and complicated. • Pollution of the natural environment is said to exist. 158. For 2009 the district aims for an economic growth rate of 13% or more, with particularly strong growth in industrial and agricultural production.

iii. Cam Thuy District

159. Cam Thuy district has an area of 425km2. With 111,638 people in 2008, this represented a population density of 263 persons/km2. 160. It is primarily an agricultural district with agriculture accounting for 50% of the district’s economic output, services 36% and industry 13%. Its economy grew by 10% in 2008, and its income per capita reached US $376 in the year. The farming area is 18,484 ha and production reached 57,042 tons in 2008. Livestock numbers include about 18,000 cattle and buffalo. Fishing and gathering of non-timber forest products also add to income. 161. The district states its main challenges as including: • Agriculture and forestry: the technological modernisation of cultivation still limited • Lack of management skills in managing enterprises and co-operatives • The progress of project implementation is slow. 162. For 2009 the district targets an economic growth rate of at least 11.9%, and for 2010 an economic growth rate of 13.8% is targeted.

iv. Vinh Loc District

163. In 2008 Vinh Loc had an estimated population of 86,980 in its area of 157.6 km2. This represents a population density of 552 persons/km2. Food production reached an average rice equivalent per person of 545 kg in the year. 164. The district has abundant stone reserves of high quantity, suitable both for construction material and fine arts. The Hồ citadel, a historical monument dating back to 1397, provides good potential as a basis for developing a tourist industry. 165. For 2008 the district’s economic growth rate is estimated to have been 11%, compared with 8.6% in 2007. Income per capita has reached US $500/year. The district’s economy is made up of agriculture (50%), services (31%) and industry (19%). The farming area is 14,653 ha, which is reducing slightly as industry grows. Total agricultural production in 2008 reached 61,472 tons. The number of cattle and buffalo, at 20,104, showed a decline in the year. Forestry is expanding. The sale value of goods and services expanded by as much 50% in 2008. 166. The district reports the same main challenges as the other districts along the road. It targets an economic growth rate of 12.2% in 2009.

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v. Thanh Hoa Province

167. East of Vinh Loc, QL 217 reaches QL 1, the main north-south highway, at Do Len in Ha Trung district. As explained in the traffic section of this volume, however, much of the traffic on the corridor turns south at Vinh Loc and heads towards Thanh Hoa city and district, the capital town of Thanh Hoa province. The corridor is thus effectively a route between Xam-Nua and Thanh Hoa town, which traverses Viangxai district in Laos and through the heart of Thanh Hoa province in Vietnam, through the four districts already described. The province as a whole comprises 24 districts and has a population of 3.7 million, while Thanh Hoa City has a reported population of 176,000, making it the dominant city on the corridor. 168. The corridor connects the sparsely populated mountain areas with the industrial east of Thanh Hoa province. Most of the corridor is rural in nature and depends on good linkages with the more highly developed areas for its economic development. As the road moves east from the border the population densities increase and incomes grow. Road improvement can be expected to reinforce this trend.

69 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

PART THREE ECONOMIC ANALYSIS

1. General Approach

169. For the main highways (Roads 6, 6A and 6B in Laos and 217 in Vietnam), a conventional cost-benefit analysis has been undertaken. 170. This involved forecasting the level of traffic on each road with and without the proposed improvements. The costs to the traffic for using the roads were then calculated using the HDM-4 program which predicts operating costs and speeds on different standards of roads. 171. The traffic forecasts included normal and generated traffic. The amount of diverted traffic was assessed as being negligible, although the few noted journeys between Xam- Nua and Hanoi would be likely to divert from the route via Na Meo to the route via Pahang. 172. The benefit to generated traffic was assumed to be less than the benefit to normal traffic. The program assumes this benefit is 50% of the benefit to normal traffic. This is in accordance with consumer surplus theory as applied in such situations. The assumption is that some of the generated traffic would have been generated with only a small road improvement. Other generated traffic is only generated if there is the full improvement. On average, then, it can be assumed that the new travellers have a benefit equal to half the full improvement as experienced by normal traffic.

2. Economic Prospects

173. The economies of both the Lao PDR and Vietnam have shown strong growth in recent years and have proved resilient to the world economic downturn of 2008–09. GDP in Laos and Vietnam increased in 2008 by 4.5% and 6.2% respectively. The latest predictions for 2009 are for GDP in Laos to grow by 6.5% and in Vietnam by 4.9%. Trend growth rates of 6%–7% a year in Vietnam and 7%–8% a year in Laos are widely expected to be resumed from 2010. 174. Growth in the project provinces (Houaphan in Laos and Thanh Hoa in Vietnam) is also strong. The districts in Vietnam through which the road passes report economic growth rates of 9%–12% in 2008, as discussed in the previous section of this document. Houaphan also grew strongly and is an economy in transition, with subsistence farming being increasingly supplemented by cash crop production and greater income from tourism. The strong economic growth rates have combined with rising vehicle ownership. Very rapid traffic growth is evident on all the project roads.

3. Traffic Forecasts

175. The traffic studies and forecasts are summarized in fully explained in Part One of this document. The finding is that traffic growth has been very rapid on all the project road sections in recent years. Average annual traffic growth on the project roads in the Lao PDR has been between 25% and 60%, and in Vietnam generally between 15% and 30%. These rapid increases are forecast to reduce over the next few years and gradually fall to more normal rates of increase related to predicted growth in GDP. 176. Generated traffic will be most significant where the road conditions are the least favourable at present. These are Roads 6A and 6B in Laos which are predominantly gravel roads today, and where a ferry is needed in the absence of a bridge over the Nam Ma on Road 6B. The new all-weather link between Xam-Nua and the Vietnamese market town of

70 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Moc Chau (and beyond to Hanoi and Haiphong on Vietnamese Road 6) is expected to become a significant trading route.

4. Vehicle Operating Costs

177. Vehicle operating cost (VOC) data was collected from vehicle operators and dealers in both Laos and Vietnam. These are shown in Figures 3.1 and 3.2. Economic costs net of taxes and other transfer payments were derived as shown in the figures. 178. Values of time for both passengers and goods were also estimated and together with the VOC data entered into the HDM program. Due allowance was made for predicted changes in real incomes and fuel prices, as follows: Assumed future Value(s) used in Component Estimate for 2009 development program* Rising 4%/year, due to Value of passenger GDP growth US $1.50, as reached by US $1 working time/hour exceeding population about 2019 growth Value of passenger US $0.45, as reached by non-working time/ US $0.30 As above about 2019 hour Value of cargo time US 7.5 cents** US 7.5 cents US 7.5 cents per ton/hour Vietnam: US $0.60 Vietnam: US $0.85 (petrol), US $0.55 Rising 4% a year on (petrol), US $0.80 Economic cost of (diesel) average, to (diesel)*** fuel/litre approximately double Laos: US $0.69 (petrol), over 20-year period Laos: US $0.90 (petrol), US $0.62 (diesel) US $0.85 (diesel)***

*the HDM program requires a single value to be entered. Values will continue to increase after 2019 in real terms so the choice of this figure is intended to represent an average over the full evaluation period which extends to 2033.

**Based on an assumed average value of US $500/ton and an assumed average ‘shelf-life’ of goods of nine months.

***These values are expected to be reached by about 2021 and continue to increase in real terms

71 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

FIGURE 3-1: VEHICLE TYPES AND CHARACTERISTICS: VIETNAM LOWLAND Consumption data refer to a reasonable non-congested bitumen road, IRI= 4.5 MC PC LDV LGV MGV HGV VHGV Bus Bus No- Honda Toyota Ford Hyundai Isuzu Isuzu Volvo Hyundai Hyundai te Dream Corolla Ranger HD 65 FRR90N CYZ51 FH 25s 45s (Mazda B) 3t 7t 15t 23t Financial cost, 2009 (US$) (a) $883 $34,524 $30,800 $26,000 $40,000 $50,000 $139,000 $56,000 $82,000 Import duty 83% 83% 80% 60% 20% 18% 30% 30% Excise duty 45% 15% 15% 15% 15% 15% 30% 15% VAT 5% 5% 5% 5% 5% 5% 5% 5% 5% Economic cost, 2009 (US$) (b) $550 $11,828 $13,305 $11,419 $19,763 $32,938 $93,120 $30,124 $49,863 Assumed average value (US$) (c) $330 $6,505 $7,318 $6,280 $10,870 $18,116 $51,216 $16,568 $27,425 Assumed life length (years) 6 10 10 8 10 10 12 10 10 Metric HP 60 110 140 85 210 360 500 182 220 Gross vehicle weight (GVW) (kg) 90 1,630 2,500 5,500 10,500 26,000 44,000 11,500 14,500 Capacity - passengers (places) 2 5 2 2 - - - 25 45 Capacity - goods (kg) 0 - 1,000 3,000 7,000 15,000 23,000 - - Average no. of crew 0.0 0.5 2.0 2.0 2.0 2.0 2.0 2.0 Average no. of other occupants (d) 1.5 2.4 1.3 ? ? 0.5 - 18 28 Average load (tons) (d) - 0.3 1.5 3.5 7.0 11.0 - - Type of fuel (P or D) P P D D D D D D D Fuel price - (US$/l) - fin. 0.69 0.69 0.58 0.58 0.58 0.58 0.58 0.58 0.58 Fuel price - (US$/l) - econ. 0.60 0.60 0.55 0.55 0.55 0.55 0.55 0.55 0.55 Oil price - (US$/l) - fin. 4.40 4.40 4.40 4.40 4.40 4.40 4.40 4.40 4.40 Oil price - (US$/l) - econ. 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Fuel consumption (l/100 km) 2.2 10 12 20 32 38 60 20 30 Oil consumption (l/1000 km) 0.3 2.5 5.0 8.0 15.0 17.0 25.0 8.0 12.0 No. of axles 2 2 2 2 2 3 4 2 2 No. of tyres 2 4 4 6 6 10 12 6 6 Typical tyre size 250*17 195*15 245*16 245*16 825-R20 1100*20 295*80 900*20 1100*20

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MC PC LDV LGV MGV HGV VHGV Bus Bus No- Honda Toyota Ford Hyundai Isuzu Isuzu Volvo Hyundai Hyundai te Dream Corolla Ranger HD 65 FRR90N CYZ51 FH 25s 45s (Mazda B) 3t 7t 15t 23t Price per tyre (US$) - fin. $14 $82 $178 $178 $208 $228 $403 $218 $228 Price per tyre (US$) - econ. $10 $60 $130 $130 $153 $167 $296 $160 $167 Estimated tyre life (km) 10,000 30,000 30,000 30,000 30,000 30,000 40,000 30,000 30,000 Maintenance hours/year 5 20 25 80 100 120 150 100 150 Maintenance labour cost (US$/h) $1 $3 $3 $3 $3 $3 $3 $3 $3 Spare parts consumption ($/yr) $28 $100 $120 $300 $400 $600 $800 $400 $500 Insurance (US$/yr) (e) $3 $19 $45 $71 $71 $125 $162 $88 $138 Crew wages (US$/month/person) - $200 $200 $240 $325 $400 $215 $300 Hourly Utilisation Ratio 30% 40% 40% 50% 50% 45% 60% 60% 60% Productive time (hours driven/yr) 450 500 1,000 1,200 1,200 1,200 1,600 1,000 1,200 Average mileage (km/year) 12,000 15,000 25,000 28,000 28,000 28,000 40,000 40,000 60,000 Overhead costs (%) - - - 10% 10% 10% 12% 15% 15% Annual vehicle tax (US$/year) $0 $4 $4 $6 $9 $9 $5 $6

Notes: (a) dealers' prices (b) financial cost less import duty, excise duty and VAT. For motor cycles (assembled in Vietnam), the economic cost (of inputs) is assumed similar to Lao c.i.f. price (c) 50% of vehicle price plus residual value. The residual value is assumed to be 10% of price for new vehicles. (d) As found in project origin-destination survey, April 2009 (tonnage figures approximate). 'Other occupants' of LGVs and MGVs not counted (pity)

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FIGURE 3-2: VEHICLE TYPES AND CHARACTERISTICS: VIETNAM MOUNTAINS Consumption data refer to a reasonable non-congested bitumen road, IRI= 4.5 MC PC LDV LGV MGV HGV Bus Bus No- Honda Toyota Ford Hyundai Isuzu Isuzu Hyundai Hyundai te Dream Corolla Ranger HD 65 FRR90N CYZ51 25s 45s (Mazda B) 3t 7t 15t Financial cost, 2009 (US$) (a) $883 $34,524 $30,800 $26,000 $40,000 $50,000 $56,000 $82,000 Import duty 83% 83% 80% 60% 20% 30% 30% Excise duty 45% 15% 15% 15% 15% 30% 15% VAT 5% 5% 5% 5% 5% 5% 5% 5% Economic cost, 2009 (US$) (b) $550 $11,828 $13,305 $11,419 $19,763 $32,938 $30,124 $49,863 Assumed average value (US$) (c) $330 $6,505 $7,318 $6,280 $10,870 $18,116 $16,568 $27,425 Assumed life length (years) 6 10 10 8 10 10 10 10 Metric HP 60 110 140 85 210 360 182 220 Gross vehicle weight (GVW) (kg) 90 1,630 2,500 5,500 10,500 26,000 11,500 14,500 Capacity - passengers (places) 2 5 2 2 - - 25 45 Capacity - goods (kg) 0 - 1,000 3,000 7,000 15,000 - - Average no. of crew 0.0 0.5 2.0 2.0 2.0 2.0 2.0 Average no. of other occupants (d) 1.5 3.8 1.9 ? ? 0.3 14 20 Average load (tons) (d) - 0.3 1.5 3.5 7.0 - - Type of fuel (P or D) P P D D D D D D Fuel price - (US$/l) - fin. 0.69 0.69 0.58 0.58 0.58 0.58 0.58 0.58 Fuel price - (US$/l) - econ. 0.60 0.60 0.55 0.55 0.55 0.55 0.55 0.55 Oil price - (US$/l) - fin. 4.40 4.40 4.40 4.40 4.40 4.40 4.40 4.40 Oil price - (US$/l) - econ. 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Fuel consumption (l/100 km) 2.2 10 12 20 32 38 20 30 Oil consumption (l/1000 km) 0.3 2.5 5.0 8.0 15.0 17.0 8.0 12.0 No. of axles 2 2 2 2 2 3 2 2

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MC PC LDV LGV MGV HGV Bus Bus No- Honda Toyota Ford Hyundai Isuzu Isuzu Hyundai Hyundai te Dream Corolla Ranger HD 65 FRR90N CYZ51 25s 45s (Mazda B) 3t 7t 15t No. of tyres 2 4 4 6 6 10 6 6 Typical tyre size 250*17 195*15 245*16 245*16 825-R20 1100*20 900*20 1100*20 Price per tyre (US$) - fin. $14 $82 $178 $178 $208 $228 $218 $228 Price per tyre (US$) - econ. $10 $60 $130 $130 $153 $167 $160 $167 Estimated tyre life (km) 10,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Maintenance hours/year 5 20 25 80 100 120 100 150 Maintenance labour cost (US$/h) $1 $3 $3 $3 $3 $3 $3 $3 Spare parts consumption ($/yr) $28 $100 $120 $300 $400 $600 $400 $500 Insurance (US$/yr) (e) $3 $19 $45 $71 $71 $125 $88 $138 Crew wages (US$/month/person) - $200 $200 $240 $325 $215 $300 Hourly Utilisation Ratio 30% 40% 40% 50% 50% 45% 60% 60% Productive time (hours driven/yr) 450 500 1,000 1,200 1,200 1,200 1,000 1,200 Average mileage (km/year) 12,000 15,000 25,000 28,000 28,000 28,000 40,000 60,000 Overhead costs (%) - - - 10% 10% 10% 15% 15% Annual vehicle tax (US$/year) $0 $4 $4 $6 $9 $5 $6

Notes: (a) dealers' prices (b) financial cost less import duty, excise duty and VAT. For motor cycles (assembled in Vietnam), the economic cost (of inputs) is assumed similar to Lao c.i.f. price (c) 50% of vehicle price plus residual value. The residual value is assumed to be 10% of price for new vehicles. (d) As found in project origin-destination survey, April 2009 (tonnage figures approximate). 'Other occupants' of LGVs and MGVs not counted (pity)

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FIGURE 3-3: VEHICLE TYPES AND CHARACTERISTICS: LAO PDR Consumption data refer to a reasonable non-congested bitumen road, IRI= 4.5 MC PC LDV LDV LDV LGV MGV HGV Bus Bus No- Honda Honda Toyota Toyota Hyundai Isuzu Isuzu Hyundai Hyundai te Dream Accord Vigo Vigo average HD 65 FRR90N CYZ51 25s 45s 4x2 4x4 3t 7t 15t Financial cost, 2009 (US$) (a) $1,029 $33,750 $24,750 $34,650 $29,700 $24,750 $35,000 $55,000 $52,500 $79,500 Import duty 40% 40% 30% 30% 30% 30% 30% 30% 20% 20% Excise duty 20% 75% 25% 25% 25% 25% 10% 10% 20% 20% Turnover tax 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Economic cost, 2009 (US$) (b) $557 $12,523 $13,846 $19,385 $16,615 $13,846 $22,250 $34,965 $33,144 $50,189 Assumed average value (US$) (c) $334 $6,888 $7,615 $10,662 $9,138 $7,615 $12,238 $19,231 $18,229 $27,604 Assumed life length (years) 6 10 10 10 10 8 10 10 10 10 Metric HP 60 110 140 160 150 85 210 310 182 220 Gross vehicle weight (GVW) (kg) 90 1,500 2,500 2,500 2,500 5,500 10,500 26,000 11,500 14,500 Capacity - passengers (places) 2 5 2 2 2 2 - - 25 45 Capacity - goods (kg) 0 - 1,000 1,000 1,000 3,000 7,000 15,000 - - Average no. of crew 0.0 0.5 0.5 0.5 2.0 2.0 2.0 2.0 2.0 Average no. of other occupants (d) 1.5 3.1 4.0 4.0 4.0 3.0 3.0 3.0 17.0 27.0 Average load (tons) (d) - 0.3 0.3 0.3 1.5 3.5 7.0 - - Type of fuel (P or D) P P D D D D D D D D Fuel price - (US$/l) - fin. 0.92 0.92 0.69 0.69 0.69 0.69 0.69 0.69 0.69 0.69 Fuel price - (US$/l) - econ. 0.66 0.66 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 Oil price - (US$/l) - fin. 4.62 4.62 4.62 4.62 4.62 4.62 4.62 4.62 4.62 4.62 Oil price - (US$/l) - econ. 4.20 4.20 4.20 4.20 4.20 4.20 4.20 4.20 4.20 4.20 Fuel consumption (l/100 km) 2.2 10 12 14 13 20 32 38 20 30 Oil consumption (l/1000 km) 0.3 2.5 5.0 6.0 5.5 8.0 15.0 17.0 8.0 12.0 No. of axles 2 2 2 2 2 2 2 3 2 2

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MC PC LDV LDV LDV LGV MGV HGV Bus Bus No- Honda Honda Toyota Toyota Hyundai Isuzu Isuzu Hyundai Hyundai te Dream Accord Vigo Vigo average HD 65 FRR90N CYZ51 25s 45s 4x2 4x4 3t 7t 15t No. of tyres 2 4 4 4 4 6 6 10 6 6 Typical tyre size 250*17 165*14 265*16 265*16 265*16 825*20 1100*20 900*20 1100*20 Price per tyre (US$) - fin. $30 $90 $206 $206 $206 $206 $250 $290 $265 $290 Price per tyre (US$) - econ. $20 $60 $137 $137 $137 $137 $167 $193 $177 $193 Estimated tyre life (km) 10,000 30,000 30,000 30,000 30,000 20,000 30,000 30,000 30,000 30,000 Maintenance hours/year 5 20 25 30 27 80 100 120 100 150 Maintenance labour cost (US$/h) $1 $4 $4 $4 $4 $4 $4 $4 $4 $4 Spare parts consumption ($/yr) $30 $100 $120 $100 $120 $300 $500 $600 $400 $500 Insurance (US$/yr) $44 $67 $67 $67 $67 $67 $133 $133 $317 $317 Crew wages (US$/month/person) - $150 $150 $150 $175 $175 $180 $200 $240 Hourly Utilisation Ratio 20% 40% 40% 40% 40% 50% 50% 45% 60% 60% Productive time (hours driven/yr) 300 400 500 500 500 800 1,000 1,200 1,000 1,200 Average mileage (km/year) 9,000 15,000 15,000 15,000 15,000 25,000 32,000 40,000 40,000 60,000 Overhead costs (%) - - - - 10% 10% 10% 15% 15% Annual vehicle tax (US$/year) $4 $12 $12 $12 $12 $12 $12 $28 $31 $31 Notes: (a) dealers' prices (b) financial cost less import duty, excise duty and turnover tax (c) 50% of vehicle price plus residual value. The residual value is assumed to be 10% of price for new vehicles. (d) As found in project origin-destination survey, April 2009 (tonnage figures approximate). 'Other occupants' of LGVs and MGVs not counted

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5. The Economic Evaluation

179. Full details of the existing road pavements and condition were entered into the HDM program, together with maintenance procedures and costs and the traffic data. Details of the proposed new road sections were also entered. 180. The program calculated the future condition of the roads with and without the proposed improvements and the operating and time costs to users that result. 181. The benefits of each project alternative were then compared with the costs and the results are included in Appendix J3 of the main volume of the report. The evaluation period was 20 years after construction and a residual value of 40% of the construction costs was assumed. All streams of future costs and benefits were discounted at 12% to arrive at a net present value for each alternative. Economic internal rates of return (IRR) were also derived by the program.

6. Results

182. The results contained in Appendix J3 are summarized below: Economic IRR Compared with Base (‘Without Project’) Alternative Road Sections AC DBST alternative alternative

A. Lao PDR

Roads 6A/6B, B. Hanglong– – 15.1% Pahang

Road 6, Viangxai–Nam Soi – 13.7%

B. Vietnam

QL217, Na Meo–Junction QL15 5.2% 5.8% West QL217, Junction QL15 East–Cam 10.7% 11.5% Thuy

QL217, Cam Thuy–Vinh Loc 11.9% 15.4%

QL217, Vinh Loc–Do Len (Jct 10.7% 12.3% QL1) Roads 6 and 217 combined, 10.6% 11.7% whole length, Viangxai–Do Len

183. The two core corridor projects of B. Hanglong–Pahang (Roads 6A and 6B) and Viangxai–Do Len (Roads 6 and 217) may be considered as being economically justified to DBST standard. They show economic internal rates of return of over 10%. 184. When individual road sections in Vietnam on Road 217 are considered, it seems that the high cost of the proposed alternatives for the mountainous section are not supported by the predicted level of traffic benefits. If a lower cost solution can be found for this section,

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the combined project between Viangxai and Do Len on this basis could be expected to show an economic internal rate of return of over 12%. 185. Two sections of QL217 show a rate of return for the lower cost DBST option that is above 12%. Given the technical advantages of the asphalt concrete solution, however, and that this solution gives an EIRR of over 10% on these sections, the choice of the asphalt concrete solution would appear to be justifiable.. 186. The developmental benefits are highest for the B. Hanglong–Pahang project. This is because they generate the most additional traffic as they are gravel roads at present, with a ferry connection between them that adds to time and cost. The rest of the project network is already paved. 187. The distribution of benefits among road user groups depends on the policy towards the setting of bus fares. Private transport users will obtain the full benefits, and competition in the trucking industry will ensure that the reduced freight transport costs are passed on to users and consumers. It is more problematic in the bus industry as competition is controlled and tariffs are proposed by the operators and set by the public authorities. There is no automatic mechanism by which they reduce if operating costs fall. There is a danger that the benefits will be retained by the operators. 188. It has been shown in earlier reports3 that the present arrangements for providing bus services result in low vehicle utilisation and consequent high costs. A study is needed of new systems that increase efficiency in the bus transport industry and ensure that benefits are passed on to users, while retaining the advantage of administrative simplicity that characterises the present system of providing transport through transport associations. A greater amount of competition needs to be injected into the industry to improve services and reduce costs. 189. As regards the results of the economic analysis, sensitivity and risk analysis have been included in Appendix J. Alternative assumptions on traffic forecasts, vehicle operating costs, and construction costs have been tested., and the values of time and of fuel. The optimum timing can be further considered for road sections that do not appear to reach the required economic internal rate of return if constructed in 2011 as envisaged here.

3 For example Roads for Rural Development Project (ADB TA 3756 LAO), Final Report, 2003. There has apparently been no significant reform of the bus industry in either country that has introduced more competition since that date.

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PART FOUR ROAD MAINTENANCE FINANCING

1. General Approach

A. Vietnam 190. In Vietnam, the current budget allocated for periodic and routine maintenance of the national road network is estimated by the VRA as being able to meet less than half of the actual requirement. The shortage of funds for road maintenance is a major challenge for the transport sector of Vietnam as at the same time many roads need upgrading in view of the rapid traffic growth and the period of damage and low investment during the war and its aftermath. According to the World Bank (January 2009) 84 percent of Vietnam’s national roads are currently paved, up from 61 percent in 1997. 191. The VRA takes the maintenance challenge very seriously and is investing in computer-assisted road maintenance programming. In this way it is intended to minimize the negative consequences of the underfunding. The strategy has been quite successful so far as Road 217 is concerned, as its condition is fair. The past investment has been reasonably safeguarded and traffic can move normally. 192. The national legislation does allow roads to be tolled, where such tolls would have the purpose to recover some or all of the capital costs of road improvements. There is no dedicated road maintenance fund and no tolls are levied for maintenance purposes. The maintenance of Road 217 is funded from the national budget and this is expected to remain the case.

B. Lao PDR 193. The Lao PDR established a Road Maintenance Fund in January 2001 and operations began in February 2002, with initial support mainly from the World Bank but also from other donors. 194. The Fund’s revenue was intended to come from seven main sources: • A fuel levy, now 300 kip/litre (equivalent to US 3.5 cents/litre). This is collected by the provinces through which the fuel is imported. The intention is that the levy per litre will be increased by 50 kip a year for the next few years. Houaphan is one of eight provinces import fuel and thus contributes to the fund. Some 80% of the Fund’s revenue comes from this fuel levy • An annual surcharge on the registration fee for heavy vehicles (presently averaging US $25/vehicle). It is understood, however, that these sums are being retained by the DCTPCs in the provinces and are not passed to the fund. • Fines for overloading. Weigh-stations have been established in strategic locations around the country and one is located on Road 6, just east of Ban Hanglong. Some 2% of the Fund’s revenue comes from this source at present. • Tolls on roads and bridges. A toll station is located on Road 6, just west of the Ban Hanglong junction, where it intercepts traffic between Xam-Nua and the Project Roads 6 and 6A. Toll rates at present are motor tricycles 1,000 kip; cars, jeeps or pickups 5,000; buses 8–35 seats or trucks <7-ton gross vehicle weight (GVW) 5,000; buses with 36 or more seats 10,000; trucks of 7-ton GVW or more 15,000; and truck/trailer combinations (18–22 wheels) 25,000 kip. Special vehicles such as logging trucks with more than 22 wheels pay 100,000 kip. Road tolls account for about 18% of the Fund’s revenue at present. It is planned to raise the toll fees by about 10%/year. • International transit charges on trucks. Under the transit agreement between Laos, Thailand and Vietnam, the number of foreign trucks passing through Laos can be

74 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

expected to increase in the future. The agreement has just started to be implemented on Lao Road 9, on the transit route between Thailand and the Vietnamese port of Da Nang. • Funding from local and foreign sources. This includes grants and loans. This source is being phased out but support from Sida (Sweden) was still ongoing in 2007/08, equivalent to about 10% additional revenue. • Other revenue including interest on dividends or investments. This is not significant. 195. The Fund is managed and administered by the Minister (MPWT), who is assisted by an Advisory Board. 196. 90% of the Fund’s revenue is supposed to be used for maintenance of national roads. In practice this is now less, about 60%. The remainder is mostly intended for provincial, district and local roads. As an increasing proportion of the national road maintenance needs are covered by the Fund, the share for non-national roads can increase further. This may be some way off, however. The Fund’s assessment is that it is still only able to fund about one-third of the total maintenance need. 197. The accounts of the Fund since its first full year after inception are summarised in FIGURE 4.1. External support accounts for only 9.1% of the 2008/09 budgeted income, whereas in 2002/03, the first full year of the Fund, it accounted for 84.3%. In the last few years the Fund has been able to devote increasing resources to local road maintenance and also introduce activities in the construction of weigh stations and road safety.

75 Preparation of Second Northern GMS Transport Network Improvement Project Supplementary Appendix Volume 5 Traffic and Economics

Figure 4.1 Lao Road Maintenance Fund, Income and Expenditures 2002/03 to present

2008/09 Description 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 (budget)

Income 145.4 83.0 113.5 144.2 152.6 165.8 190.0 Fuel levy 13.8 20.7 35.3 61.0 98.2 127.0 147.6 Road tolls 8.9 13.6 15.9 16.9 20.3 21.9 23.1 Weighing stations/overloading 2.5 2.5 3.2 3.1 2.1 2.5 2.0 World Bank, Sida 122.5 46.2 59.1 66.3 33.9 Sida contribution for local roads 17.2 17.3 Other, and price adjustments -2.3 -3.1 -1.9 -2.8

Expenditure, National Roads 132.9 85.6 98.7 113.2 103.9 105.5 114.2 Routine maintenance 2.4 7.0 6.4 7.8 19.7 69.6 70.3 Periodic maintenance 125.6 51.5 60.5 52.7 56.0 6.3 6.0 Rehabilitation 0.0 6.9 4.7 16.6 9.8 0.7 0.0 Emergency maintenance 2.3 13.9 19.4 25.4 11.2 22.8 29.7 Bridge maintenance 2.6 6.3 7.7 10.7 7.2 6.1 8.2 Expenditure, Local Roads 3.4 5.0 4.7 17.5 39.2 55.3 79.7 Routine maintenance 0.0 0.4 1.8 0.0 0.0 15.6 14.0 Periodic maintenance 1.6 0.1 0.2 10.9 24.9 24.6 26.1 Rehabilitation 0.0 0.0 0.8 3.1 9.2 6.0 3.9 Emergency maintenance 1.1 0.3 0.5 0.7 0.0 5.7 21.4 Bridge maintenance 0.0 0.0 0.3 1.1 2.2 1.7 5.1 Construction 0.0 3.3 0.3 0.1 0.0 0.0 6.6 VUDAA (Vientiane) 0.7 0.9 0.8 1.6 2.9 1.7 2.6 Other Expenditure 4.6 4.6 5.0 5.1 6.2 7.8 14.8 Administration 4.6 4.6 5.0 5.1 5.8 7.2 7.5 Construction of weigh stations 0.4 0.6 1.0 Road safety 6.3 Total Expenditure 140.9 95.2 108.4 135.8 149.3 168.6 208.7 Source: Lao Road Maintenance Fund 198. The planned increases in the fuel levy and the road tolls, coupled with the continued strong growth in road traffic, are likely to lead to the Fund being able to continue to increase its contribution to the road maintenance requirement. Its revenue increased by 29% (in kip terms) in 2007/08 compared with the previous year. This followed the period of years since its foundation when revenue grew by over 40% a year. The budget for 2008/09 presupposes a 16% increase. 199. The annual maintenance capacity has broadly kept pace with the revenue increase. The two need to be matched. The condition of the main road network has improved markedly in recent years and this trend is expected to continue.

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