Yunnan Lincang Border Economic Cooperation Zone Development Project

Project Administration Manual

Project Number: 49310-002 Loan Number: {LXXXX} November 2018

People’s Republic of China: Yunnan Lincang Border Economic Cooperation Zone Development Project

ABBREVIATIONS

ADB – Asian Development Bank CCG – Cangyuan Wa County Government DDR – due diligence report DMF – design and monitoring framework EIA – environmental impact assessment EMDP – ethnic minority development plan EMP – environmental management plan FIRR – financial internal rate of return FMA – financial management assessment FSR – feasibility study report GAP – gender action plan GDP – gross domestic product GMS – Greater Mekong Subregion GRM – grievance redress mechanism IEE – initial environmental examination LAR – land acquisition and resettlement LBECZ – Lincang Border Economic Cooperation Zone LIBOR – London interbank offered rate LMG – Lincang Municipal Government MOF – Ministry of Finance MSW – municipal solid waste NDRC – National Development and Reform Commission O&M – operation and maintenance OCB – open competitive bidding PAM – project administration manual PIU – project implementation unit PLG – project leading group PMO – project management office PPMS – project performance management system PRC – People's Republic of China PSA – poverty and social assessment RCI – regional cooperation and integration SDAP – social development action plan SGAP – social and gender action plan SMEs – small- and medium-sized enterprises SPRSS – summary poverty reduction and social strategy SPS – Safeguard Policy Statement TOR – terms of reference TVET – technical and vocational education and training WWTP – wastewater treatment plant YDRC – Yunnan Provincial Development and Reform Commission YFD – Yunnan Provincial Finance Department YPG – Yunnan Provincial Government ZCG – Zhenkang County Government

WEIGHTS AND MEASURES

km – kilometer km2 – square kilometer ha – hectare m3 – cubic meter t/d – ton per day

CONTENTS I. PROJECT DESCRIPTION 1 A. Rationale 1 B. Impacts and Outcome 4 C. Outputs 4 II. IMPLEMENTATION PLANS 7 A. Project Readiness Activities 7 B. Overall Project Implementation Plan 8 III. PROJECT MANAGEMENT ARRANGEMENTS 12 A. Project Implementation Organizations: Roles and Responsibilities 12 B. Key Persons Involved in Implementation 15 C. Project Organization Structure 16 IV. COSTS AND FINANCING 17 A. Cost Estimates Preparation and Revisions 17 B. Key Assumptions 17 C. Summary Cost Estimates and Financing Plan 17 D. Detailed Cost Estimates by Expenditure Category 19 E. Allocation and Withdrawal of Loan Proceeds 20 F. Detailed Cost Estimates by Financier 21 G. Detailed Cost Estimates by Outputs 22 H. Detailed Cost Estimates by Year 23 I. Contract and Disbursement S-Curve 24 J. Fund Flow Diagram 25 V. FINANCIAL MANAGEMENT 26 A. Financial Management Assessment 26 B. Disbursement 27 C. Accounting 29 D. Auditing and Public Disclosure 29 VI. PROCUREMENT AND CONSULTING SERVICES 30 A. Advance Contracting and Retroactive Financing 31 B. Procurement of Goods, Works, and Consulting Services 32 C. Procurement Plan 33 D. Consultant's Terms of Reference 40 VII. SAFEGUARDS 55 A. Environment 55 B. Involuntary Resettlement 61 C. Ethnic Minorities 62 D. Grievance Redress Mechanism 63 VIII. GENDER AND SOCIAL DIMENSIONS 64 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 66 A. Project Design and Monitoring Framework 66 B. Monitoring 68 C. Evaluation 71

D. Reporting 72 E. Stakeholder Communication Strategy 73 X. ANTICORRUPTION POLICY 74 XI. ACCOUNTABILITY MECHANISM 75 XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 75

ANNEX

Social Development Action Plan 77

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

The Lincang Municipal Government as project executing agency; and Cangyuan Wa County Government, Lincang Border Economic Cooperation Zone, and Zhenkang County Government as the project implementing agencies are wholly responsible for the implementation of ADB- financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by executing and implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

A. Rationale

1. Remote location and high poverty levels. Lincang Prefecture is situated in the remote southwest region of Yunnan Province on the border with Myanmar, and is characterized by significant urban and rural poverty. Per capita gross domestic product in the prefecture reached CNY21,967 in 2016 up 10.6% over 2015, however the annual disposable income of urban residents was CNY22,901 per capita, well below the PRC average. The counties of Cangyuan Wa and Zhenkang are officially designated as national poverty counties, and are home to a large share of the prefecture’s urban poor. Many Myanmar nationals live and work in these counties, which are located on the PRC–Myanmar border. Most are seasonal workers who increasingly secure manual jobs in factories established near the land ports and border cities of Lincang Prefecture. Many people from Myanmar use hospitals and schools in the three project counties in preference to the poor municipal services available in Myanmar. Most of the seasonal workers belong to ethnic minorities, which account for a significant proportion of the population in the three counties: 93.9% in Cangyuan Wa County (Wa is the major ethnic group), 52.2% in Gengma Dai and Wa County, and 31.5% in Zhenkang County.

2. Regional cooperation and integration potential. Lincang Prefecture’s location and 300 kilometer (km) border with Myanmar provide the potential for it to become an important trade gateway by which the PRC can reach key Indian Ocean ports, and thereby facilitate access to South Asia, the Middle East, and Europe. Lincang Prefecture complements other border regions of Yunnan by enabling the growing trade between the PRC and Myanmar, which reached $9.7 billion in 2015, up from $3.6 billion in 2010. Much of the trade originates at the local level, and is conducted largely by private sector small and medium-sized enterprises (SMEs). In May 2017, the ministries of commerce of the PRC and Myanmar signed a memorandum of understanding for the joint development of border economic cooperation zones. Lincang Prefecture’s comparative advantage is its location—along the shortest route from Kunming to Myanmar’s Kyaukpyu Port, on the Bay of Bengal. Yunnan’s economic and social development strategies have highlighted the potential for the border areas of Lincang Prefecture to become an important manufacturing and logistics hub along an economic corridor currently being developed through major investment projects such as the Kunming–Mandalay highway and the freight railway linking Kunming to Kyaukpyu.

3. Development needs. Lincang Prefecture’s poor infrastructure and the low competitiveness of its second- and third-tier cities are hindering the enhancement of cross-border trade, and the achievement of sustainable economic and social development. The existing customs and quarantine inspection facilities at Qingshuihe, the prefecture’s main land port, are inadequate to handle the border crossing point’s growing trade volume. Further, the current trading market area and warehouses are outdated and in poor condition, affecting the quality of logistical services provided to local traders and SMEs. A similar situation exists in the town supporting the land port. Qingshuihe’s urban road network is inadequate for current residential and commercial needs and the lack of road capacity makes urban areas difficult to access, causing economic losses and safety concerns for road users and pedestrians. Access to basic utilities is limited—26% of households lack access to clean piped water and 29% are not connected to the sewerage system. Municipal solid waste (MSW) management capacity is limited, sorting facilities are lacking, and collection systems are basic, resulting in considerable environmental pollution and general nuisance. Qingshuihe is crossed by the Nanting River, which lacks flood alleviation infrastructure; some areas experience seasonal flooding, causing significant economic losses. Limited customs and logistical facilities in the city and its land port

inhibit the activity of local enterprises and traders, slowing the flow of goods across the border. In addition, the prefecture's border counties of Cangyuan Wa, Gengma Dai and Wa, and Zhenkang have outdated social services (e.g., schools and hospitals), and are unable to serve growing populations of local urban–rural residents, and of Myanmar migrants.

4. Lincang Border Economic Cooperation Zone. As a first step in addressing constraints to cross-border trade, as well as economic and social development in Lincang Prefecture, on 23 September 2013 the PRC’s State Council approved the establishment of a national-level border economic cooperation zone that aims to (i) eliminate bottlenecks created by inadequate infrastructure, (ii) promote cross-border trade and investment to improve living conditions of residents, (iii) promote sustainable regional economic and social development, and (iv) strengthen neighborly cooperation with Myanmar. The Lincang Border Economic Cooperation Zone (LBECZ) is comprised of several core industrial zones covering 3.47 square kilometers and located in the counties of Cangyuan Wa, Gengma Dai and Wa, and Zhenkang (including a tier 1 national port in Qingshuihe). To boost socioeconomic benefits, the LBECZ Management Committee has devised plans to develop 200 square kilometers of adjacent land in State Council-approved core industrial zones, which will provide complementary commercial and residential development areas; and additional industrial, logistics, and trading capacity. In light of the security situation in Myanmar, the LBECZ is instrumental in building cooperation dialogue with authorities in Myanmar (nationally and in Shan State) to enhance the development of the economic corridor beyond the PRC.

5. Strategic fit. The development of the LBECZ is supported by the national and provincial strategic frameworks for urban development and RCI. The PRC’s Thirteenth Five-Year Plan for National Economic and Social Development, 2016–2020 and the National New-Type Urbanization Plan, 2014–2020 both call for the development of small and medium-sized urban centers in key strategic border areas of the PRC, and establishment of border economic cooperation zones.1 Similar focus for the PRC is the development of border areas and the enhancement of cross-border cooperation to promote connectivity and strengthen economic partnerships in the spirit of open regionalism. Additionally, RCI constitutes an important means to increase integration with the regional and global economy, and is highlighted as a priority in the Thirteenth Five-Year Plan. In 2016, the State Council approved a list of key border areas and trade ports, and identified actions for their development, while the governments of the PRC and Myanmar began an ambitious cooperation program in 2014 intended to develop a “PRC– Myanmar corridor” from Kunming to the sea port of Kyaukpyu, in which the LBECZ plays a key role. The corridor includes highway and railway links, as well as key urban and logistic centers. Many sections of the corridor in both countries are already under construction, with others in the planning and design stage.

6. Urban development and RCI are integral to Yunnan Province’s Thirteenth Five-Year Plan, which emphasizes (i) strengthening cooperation with the GMS countries, (ii) participating in major international economic corridors linking Yunnan and the GMS, and (iii) serving as the gateway for the PRC’s southeast region.2 However, Yunnan Province is constrained by its low urbanization rate; despite rapid development in the Kunming area, many of the province’s small and medium- sized cities suffer from inadequate urban infrastructure and limited connectivity. Through the

1 Government of the PRC, State Council. 2016. The Thirteenth Five-Year Plan for National Economic and Social Development of the People’s Republic of China, 2016–2020. Beijing; and Government of the PRC, State Council. 2014. National New-Type Urbanization Plan, 2014–2020. Beijing. 2 Government of Yunnan Province, State Council. 2016. The Thirteenth Five-Year Plan for Economic and Social Development of the Province of Yunnan, People’s Republic of China, 2016–2020. Beijing. 3

GMS, Yunnan has been prioritizing the development of economic corridors, while highlighting the importance of cross-border cooperation as a way to enhance the benefits for neighboring countries, particularly Myanmar. Yunnan’s RCI action plan includes priority investments for development of the PRC–Myanmar corridor through Lincang Prefecture, which are intended for financing by various sources, including the PRC and Yunnan governments, multilateral development banks, and the private sector.

7. The project (i) supports Strategy 2030 of the Asian Development Bank (ADB) in making cities more livable, fostering RCI, and accelerating progress in gender equality; (ii) is in line with (a) ADB’s urban and water operational plans by promoting green, competitive, and inclusive cities; and (b) ADB’s operational plan for RCI by strengthening connectivity between economies; (iii) is consistent with ADB’s country partnership strategy for the PRC, 2016–2020 in terms of facilitating inclusive urbanization and enhancing RCI; (iv) is included in the country operations business plan for the PRC, 2018–2020, which references inclusive development of small cities; (v) is aligned with the latest strategic priorities of the GMS, and (vi) is in support of the achievement of several sustainable development goals of the United Nations related to health, education, sanitation, economic growth, and sustainable cities.3

8. Continuity of development initiatives and lessons learned. The project is part of ADB’s continuous engagement to assist Yunnan in achieving green and sustainable urban development, and support the PRC in enhancing RCI. The project design incorporates lessons learned from previous ADB-financed urban development projects in Yunnan, as well as in small and medium-sized cities in the PRC. These lessons include enhanced implementation arrangements with integral capacity support from the Yunnan provincial authorities and improved design of project components in order to further support urban–rural integration. The project will also build on ADB’s experience from recent urban development and RCI projects in strategic border areas of the PRC on key issues such as construction and management of logistics and industrial parks and on the role of cross-border migrant workers.4

9. Value addition of ADB assistance. By designing a multisector project that includes urban, social, and trading infrastructure, ADB has strengthened a holistic approach that enhances competitive, green, and inclusive development in the small and medium-sized urban centers of this border region. The project is thus aligned with the livable cities vision endorsed by both the PRC and ADB. Throughout the project implementation, ADB will provide recommendations to LBECZ regarding their master plan review process to introduce best practices in urban planning and development. Although the project is being implemented entirely in the PRC, ADB has ensured cross-border spillover effects by designing each component so that Myanmar nationals will also be beneficiaries. This is particularly the case for (i) trading markets and logistics parks, which will accommodate farmers and traders from Myanmar; and (ii) schools and hospitals, which will benefit large numbers of children and other family members from Myanmar. Output 4 of the project (on institutional capacity development) includes features that complement the infrastructure components, thereby enhancing their RCI impact. Some of these features, such as those focusing on SMEs and technical and vocational education and training (TVET), will be

3 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific. Manila; ADB. 2013. Urban Operational Plan, 2012–2020. Manila; ADB. 2011. Water Operational Plan, 2011–2020. Manila; ADB. 2016. Country Partnership Strategy: People's Republic of China, 2016–2020—Transforming Partnership: People's Republic of China and Asian Development Bank. Manila; ADB. 2018. Country Operations Business Plan: People's Republic of China, 2018–2020. Manila; and ADB. 2018. GMS Economic Cooperation Program: Regional Investment Framework 2022. Manila. 4 Relevant ADB projects are listed in Development Coordination (accessible from the list of linked documents in Appendix 2).

designed to enhance the capacity of entrepreneurs and workers from Myanmar. The project will also be effectively mainstreaming gender equality through its social infrastructure and services components. For instance, the hospitals will have specialized maternity and obstetrics and gynecology departments promoting safe motherhood and women’s reproductive health, and the schools will have gender-inclusive design features and will be staffed by at least 60% women.

B. Impacts and Outcome

10. The project is aligned with the following impacts: (i) economic growth potential for LBECZ and border areas of Myanmar enhanced; (ii) benefits of RCI in LBECZ and border areas of Myanmar realized; and (iii) living conditions and public health of residents of LBECZ and border areas of Myanmar improved (footnote 1). The project will have the following outcome: competitiveness of urban centers, logistics and industrial parks, and land ports in project counties and LBECZ enhanced.5

C. Outputs

11. Output 1: Cross-border trade infrastructure improved. This includes (i) construction and operationalization of a border resident trade market, with a total building area of 107,454 square meters (m2); (ii) construction of an international border cooperation area with a total building area of 171,633 m2; and (iii) construction of five urban secondary roads of 4.55 km and a new 350 meter-long bridge over Nanting River with approach roadway, and rehabilitation of a 523-meter Class II road to link Qingshuihe and Mangka border port.

12. Output 2: Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved. This includes (i) construction of a water supply system in Qingshuihe, including a treatment plant with a total capacity of 20,000 cubic meters per day, a water intake structure and water transmission line of 35 km, and a water distribution network of 28.1 km; (ii) construction of a wastewater treatment system in Qingshuihe, including a treatment plant with a total treatment capacity of 10,000 cubic meters per day and wastewater collection pipe network of 7.26 km; (iii) establishment of a MSW management system with six collection stations with a capacity of 7 tons per day (t/d), and toilets, in Mengding; two transfer stations (capacity of 27 t/d and 21 t/d) and one collection station (capacity of 7 t/d), and a toilet, in Qingshuihe; and MSW handling equipment for both towns; (iv) rehabilitation of 2.38 km of Qingshui River and 1.00 km of Nanpa River, including ecological embankments and landscaping; and (v) delivery of six electric buses and construction of electric charging stations (one each in Mengding and Qingshuihe) for urban public transportation.

13. Output 3: Social infrastructure and services improved. This includes (i) construction of a new PRC–Myanmar Friendship Hospital with 499 bed capacity and a total building area of 56,009 m2; (ii) construction of a new Qingshuihe Hospital with 99 bed capacity and a total building area of 9,006 m2; (iii) construction of a new Cangyuan Guomen No. 2 Elementary School with 1,080 student capacity and a total building area of 13,194 m2; and (iv) upgrading and expansion of the existing Qingshuihe Guomen Elementary School to 1,080 student capacity; and construction of new classroom building, student dormitory, and cafeteria, with a total building area of 7,721 m2.

14. Output 4: Institutional capacity of involved agencies improved. This includes (i) project implementation management and support and safeguards monitoring for the

5 The design and monitoring framework is in Appendix 1. 5

implementation of the environmental management plan (EMP), resettlement plans, ethnic minority development plan, and gender and social development action plans; (ii) cross-border trade and logistics capacity building; (iii) development of SMEs; (iv) teacher training and border elementary school curriculum enhancement; (v) TVET school leadership; (vi) health care services and hospital management improvement; (vii) RCI development and capacity building; (viii) LBECZ master plan development and improvement study;6 and (ix) policy dialogue on water tariff system.

15. The summary of the project outputs and activities is shown in Table 1.

6 The project will provide inputs toward the review of the LBECZ master plan and identify best practices and innovative features of urban planning aimed at enhancing the livability of urban centers in the LBECZ.

Table 1: Project Outputs and Activities No. Output PIU Subproject Project Activity 1 Cross-border trade LBECZ Cross-border capacity (i) 107,454 m2 total building area for border resident trade market constructed; infrastructure improved improvement (ii) 171,633 m2 total building area for international border cooperation area constructed; (iii) 4.55 km of five urban secondary roads constructed; and (iv) new 350-m bridge over Nanting River with the approach roadway and the rehabilitation of 523 m Class II road to link Qingshuihe and Mangka border port constructed. 2 Integrated urban LBECZ Water supply (i) water supply system with a total capacity of 20,000 m3/day, water intake structure and environment water transmission line of 35 km, and water distribution network of 28.1 km constructed; infrastructure in Wastewater collection (ii) wastewater treatment plant with a total treatment capacity of 10,000 m3/day and Mengding and and treatment wastewater collection pipe network of 7.26 km constructed; Qingshuihe National Solid waste (iii) MSW management system with six collection stations with a capacity of 7 tons per day Port areas improved management and (t/d), and toilets, in Mengding; two transfer stations (capacity of 27 t/d and 21 t/d) and one treatment collection station (capacity of 7 t/d), and a toilet, in Qingshuihe; and MSW handling equipment for both towns; Urban development (iv) 2.38 km of Qingshui River and of 1.00 km of Nanpa River rehabilitated, including ecological embankments and landscaping; and (v) six electric buses and an electric charging station, each, in Mengding and Qingshuihe for urban public transportation system installed and purchased. 3 Social infrastructure and ZCG Social infrastructure (i) new PRC–Myanmar Friendship Hospital with 499 bed capacity and a total building area of services improved and services 56,009 m2 constructed; LBECZ improvement (ii) new Qingshuihe Hospital with 99 bed capacity and a total building area of 9,006 m2; (iii) construction of a new Cangyuan Guomen No. 2 Elementary School with 1,080 student capacity and a total building area of 13,194 m2; and (iv) Qingshuihe Guomen Elementary School upgraded and expanded to 1,080 student capacity; and construction of new classroom building, student dormitory, and cafeteria, with a total building area of 7,721 m2. 4 Institutional capacity of LBECZ Capacity (i) project implementation management and support and safeguards monitoring for the involved agencies development implementation of the EMP, resettlement plans, ethnic minority development plan, and improved social safeguards action plans strengthened; (ii) capacity development studies completed; (iii) cross-border trade and logistics capacity building implemented; (iv) small- and medium-sized enterprises development implemented; (v) teacher training and border elementary school curriculum enhanced; (vi) technical and vocational education and training school leadership implemented; (vii) health care services and hospital management improved; (viii) regional cooperation and integration development implemented; (ix) LBECZ masterplan development and improvement study implemented; and (x) Policy dialogue on water tariff system. CCG = Cangyuan Wa County Government, EMP = environmental management plan, km = kilometer, LBECZ = Lincang Border Economic Cooperation Zone, m = meter, m2 = square meter, m3/day = cubic meter per day, MSW = municipal solid waste, PRC = People’s Republic of China, t/d = ton per day, ZCG = Zhenkang County Government. Source: Asian Development Bank.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 2: Project Readiness Activities

2018 2019 Indicative Activities Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Responsibility Establishment of project EA, PMO, IAs implementation arrangement ADB, PMO, Loan fact-finding mission Consultants Approval of FSR YRDC Approval of RPs ADB Approval of RPs by IAs EA, IAs EIA posting on ADB website ADB, Consultants Preliminary design approval PMO, IAs Advance contracting and PMO, ADB retroactive financing YDRC, EA, IAs, Preparation of CUAR PMO YDRC, EA, IAs, Preparation of FROR PMO ADB peer review ADB ADB MRM ADB Approval of CUAR NDRC Approval of FROR MOF Approval of State Council for State Council Loan negotiation Loan Negotiation ADB, MOF, YPG, EA ADB Board approval ADB Loan signing ADB, MOF, YPG, EA Government legal opinion MOF, NDRC, EA provided Loan effectiveness ADB, MOF ADB = Asian Development Bank, CUAR = Capital Utilization Application Report, EA = executing agency, EIA = environmental impact assessment, FROR = Financial Review Opinion Report, FSR = feasibility study report, IA = implementing agency, MOF = Ministry of Finance, MRM = management review meeting, NDRC = National Development and Reform Commission, PMO = project management office, RP = resettlement plan, YDRC = Yunnan Development and Reform Commission, YPG = Yunnan Provincial Government,. Source: Asian Development Bank.

B. Overall Project Implementation Plan

16. A Gantt chart recording outputs with key implementation activities (on a quarterly basis) that is updated annually and submitted to ADB with contract and disbursement projections for following year is presented in Table 3.7

Table 3: Project Implementation Plan

2018 2019 2020 2021 2022 2023 2024 Indicative Activities Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 A. DMF 1. Cross-border trade infrastructure improved 1.1 Prepare preliminary design, Q3 2018– Q2 2020 1.2 Prepare construction drawings, Q4 2018– Q3 2020 1.3 Implement land acquisition and resettlement, Q3 2018-Q3 2019 1.4 Implement GAP, SDAP, and EMDP, Q4 2018– Q4 2024 1.5 Prepare bidding documents, Q4 2018– Q3 2020 1.6 Procure and award contract, Q4 2018–Q4 2021 1.7 Commence construction, Q1 2019–Q1 2024 1.7.1 Commence construction of border trade market, Q2 2019–Q2 2021 1.7.2 Commence construction of international cooperation area, Q2 2019–Q1 2024 1.7.3 Commence construction of urban branch roads, Q1 2019–Q1 2024 1.7.4 Commence construction of Nanting Bridge and No. 6 Road, Q4 2019–Q3 2021 2. Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved

7 Gantt chart available in e-handbook on project implementation at http://www.adb.org/documents/handbooks/project-implementation/ 9

2018 2019 2020 2021 2022 2023 2024 Indicative Activities Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2.1 Prepare preliminary design, Q3 2018– Q3 2020 2.2 Prepare construction drawings, Q4 2018– Q4 2020 2.3 Implement land acquisition and resettlement, Q4 2018–Q4 2019 2.4 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 2.5 Prepare bidding documents, Q4 2018– Q4 2020 2.6 Procurement and award contract, Q4 2018– Q1 2022 2.7 Commence construction, Q1 2019–Q2 2024 2.7.1 Commence construction of water supply system, Q1 2019–Q3 2021 2.7.2 Commence construction of wastewater system, Q1 2019–Q4 2021 2.7.3 Commence construction of MSW system, Q1 2020–Q1 2021 2.7.4 Commence construction of river rehabilitation, Q4 2019–Q1 2022 2.7.5 Commence construction of charging stations, Q3 2023–Q2 2024 2.8 Purchase equipment, Q1 2020–Q4 2022 3. Social infrastructure and services improved 3.1 Prepare preliminary design, Q3 2018– Q2 2020 3.2 Prepare construction drawings, Q4 2018– Q3 2020 3.3 Implement land acquisition and resettlement, Q3 2018–Q3 2019 3.4 Implement SGAP and EMDP, Q4 2018– Q4 2024 3.5 Prepare bidding documents, Q4 2018– Q3 2020

2018 2019 2020 2021 2022 2023 2024 Indicative Activities Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 3.6 Procure and award contract, Q4 2018– Q4 2021 3.7 Commence construction, Q1 2019–Q1 2022 3.7.1 Commence construction of Zhenkang hospital, Q1 2019–Q1 2022 3.7.2 Commence construction of Cangyuan school, Q1 2019–Q4 2020 3.7.3 Commence construction of Qingshuihe hospital, Q2 2019–Q1 2022 3.7.4 Commence construction of Qingshuihe school, Q3 2019–Q1 2022 3.8 Purchase equipment, Q1 2020–Q4 2022 4. Institutional capacity of involved agencies improved 4.1 Recruit and mobilize consultants, Q4 2018–Q1 2019 4.2 Establish PPMS, Q4 2018-Q1 2019 4.3 Establish EIA, resettlement plan, and PPMS monitoring, Q1 2019 4.4 Project implementation support, Q4 2018– Q4 2024 4.4.1 Capacity development on education system, Q4 2018–Q4 2024 4.4.2 Capacity development of hospital management, Q4 2018–Q4 2024 4.4.3 Capacity development of RCI and trade, Q4 2018–Q4 2024 4.5 Conduct of studies and research, workshops, and trainings, Q4 2018–Q4 2022 4.6 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 11

2018 2019 2020 2021 2022 2023 2024 Indicative Activities Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 B. Management Activities 1. Procurement plan key activities to procure contract packages, Q3 2018 2. Consultant selection procedures, Q3 2018– Q1 2019 3. Environment management plan key activities, Q4 2018–Q4 2024 4. Gender action plan key activities, Q4 2018– Q4 2024 5. Communication strategy key activities, Q1 2019–Q4 2024 6. Annual and/or midterm review, Q2 2019–Q1 2023 7. Project completion report, Q3 2023–Q4 2024

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

17. The Lincang Municipal Government (LMG) is the executing agency; and Lincang Border Economic Cooperation Zone (LBECZ), Cangyuan Wa County Government (CCG), and Zhenkang County Government (ZCG) are the project implementing agencies.

18. A project leading group (PLG) has been established, comprising members from concerned government agencies to facilitate the government interagency coordination for the project preparation and implementation. The PLG is headed by the mayor of LMG and with representatives from Lincang Municipal Finance Bureau, Lincang Municipal Development and Reform Commission, and other key bureaus of Lincang municipality. A project management office (PMO) has been established within the LBECZ Management Committee, headed by the director, with staff from other units and offices of LBECZ. The PMO will be responsible in providing overall guidance, supervision, coordination, and management support for project preparation and implementation on behalf of LMG. In CCG and ZCG, a PLG has been established, headed by the implementing agency government head, for government interagency coordination and leadership during project preparation and implementation. In each of the implementing agency, a project implementation unit (PIU) has been established for interagency coordination, and management and implementation of its components. For LBECZ, the project PMO will also serve as the PIU for its components.

19. The implementation roles and responsibilities are summarized in Table 4.

Table 4: Implementation Roles and Responsibilities Project Implementation Organizations Management Roles and Responsibilities Executing Agency (i) Provide overall guidance, supervision, coordination, and Lincang Municipal Government management of project preparation and implementation; (ii) Provide policy guidance during implementation; (iii) Provide coordination with IAs for the project implementation; (iv) Provide project coordination with relevant government agencies, central governments, local governments, and other agencies; and (v) Liaise with provincial government and ADB for management and administration. Project Management Office (i) Provide overall guidance to the implementing agencies, under LBECZ including supervision, coordination, and management of project preparation and implementation, approving withdrawal applications and managing the audit of project financial statements; (ii) Responsible for project coordination and implementation of all project components; (iii) In-charge of all day-to-day management work during the project preparation and implementation period; (iv) Communicate and coordinate with implementing agencies and all involved parties and government agencies for the project implementation; (v) Engage a tendering company to assist and support implementing agencies to carry out contract package procurement;

Project Implementation Organizations Management Roles and Responsibilities (vi) Engage design institutes to complete preliminary design and construction drawing development; (vii) Responsible for financial management, budgeting and planning, consolidation and submission of withdrawal applications, consolidation of project financial statements and facilitation of audit; (viii) Responsible for procurement activities, including bidding documents preparation, review and submission, coordination with ADB for reviews and approvals, procurement, bid evaluation reports, and other procurement-related activities; (ix) Responsible for implementing capacity development component, including engagement of the project management and implementation support consultant, and other consultants to carry out researches and studies; (x) Prepare training plan and carry out training, workshops, and study tours; (xi) Establish project performance monitoring system and carry out project performance monitoring throughout the project implementation; (xii) Establish environmental management plan implementation and monitoring system, engage environmental external monitor to carry out environmental monitoring during project implementation, and provide the guidance on monitoring of climate change impact, biodiversity management, wildlife trafficking, and construction and operations specific environmental impact mitigation activities. Hire environmental supervision officer at PMO and create separate budgets for tree replantation, public consultations, grievance redress as per EMP during construction and operations; (xiii) Establish LAR implementation and monitoring system, engage LAR external monitor to carry out LAR monitoring during project implementation; (xiv) Establish ethnic minority development plan and social safeguard action plan implementation and monitoring system, engage EMDP and SDAP external monitor to carry out the implementation and monitoring; and (xv) Carry out project progress management, prepare and submit the project progress reports, project midterm adjustment report, and project completion report. Implementing Agencies (i) Responsible for daily operation and management of the LBECZa implementation of the subprojects in their municipalities; CCG (ii) Provide PMO with inputs to the required reports as listed in ZCG Table 42. (iii) Establish and maintain the required project accounting arrangement and other implementation recording systems; (iv) Prepare payment requests and submit to PMO for review and confirmation and retain supporting documents under payment request procedure; (v) Maintain the project’s financial records, making them ready for inspection by ADB missions; (vi) Conduct procurement support activities under the guidance of PMO and provide assistance to complete procurement process;

Project Implementation Organizations Management Roles and Responsibilities (vii) Responsible for their subproject implementation and management including progress, quality and safety, contract management, payment application; (viii) Responsible for the implementation of environmental management plan, resettlement plan, and social safeguard action plans, conduct of environment monitoring through EMS, hiring Environment Supervision Consultant for each PIU, biodiversity monitoring surveys; and (ix) Provide assistance to facilitate the monitoring for the implementation of EMP and environment monitoring plan, resettlement plan, EMDP, SDAP, GAP and other safeguard action plans. LBECZ (i) Implement Output 1 project components; (ii) Implement Output 2 project components; and (iii) Implement Qingshuihe Hospital and Qingshuihe Guomen Elementary School in Output 3. CCG Implement Cangyuan Guomen No. 2 Elementary School subproject. ZCG Implement PRC–Myanmar Friendship Hospital subproject. ADB (i) Provide guidance to the executing and implementing agencies to ensure smooth project implementation and achieve the desired development impacts and their sustainability; (ii) Conduct regular loan review missions, a midterm review mission, and project completion review mission; (iii) Review and approve procurement actions; (iv) Process the withdrawal applications; (v) Monitor the status of compliance with all loan covenants including safeguards;b (vi) Review the annual audit report and follow up on audit recommendations; (vii) Regularly update the project performance review reports with the assistance of the executing and implementing agencies; (viii) Regularly update the project information documents for public disclosure on the ADB website, including safeguard documents; and (ix) Monitor implementation of ADB’s anticorruption policies. ADB = Asian Development Bank, CCG = Cangyuan Wa County Government, EMDP = ethnic minority development plan, EMP = environmental management plan, EMS = environment monitoring station, GAP = gender action plan, LAR = land acquisition and resettlement, LBECZ = Lincang Border Economic Cooperation Zone, PIU = project implementation unit, PMO = project management office, PRC = People’s Republic of China, SDAP = social development action plan. a The project PMO established under LBECZ will serve as both project PMO for overall project management and implementing agency PIU for the implementation of project components under LBECZ. b Review of reports by external experts (for Category A project) if any adverse impacts are observed during construction. Source: Asian Development Bank.

B. Key Persons Involved in Implementation

Table 5: Key Persons Involved in Implementation Executing Agency Name: Zhang, Zhizheng Lincang Municipal Government Position: Mayor Phone: +86 0883-2122085 Email: Address: No. 101 Baita Road, Linxiang District, Lincang, Yunnan Project Management Office Name: Jiang, Shiliang under LBECZ Position: Director, Project Management Office and Director General, LBECZ Phone: +86 0883-6520527 Email: [email protected] Address: LBECZ, Xincheng Avenue, Mengding, Gengma County, Lincang, Yunnan Yunnan Provincial Finance Name: Yang, Xunbing Department Position: Director, International Cooperation Division Phone: +86 0871-63956016 Email: [email protected] Address: No. 130 Huashan Nan Road, Kunming, Yunnan Yunnan Development and Reform Name: Zhang, Wenchao Commission Position: Director Foreign Fund Utilization and Investment Division Phone: +86 0871-63113514 Email: [email protected] Address: No 84 Dongfeng Dong Road, Kunming, Yunnan Implementing Agencies Name: Jiang, Shiliang LBECZ Position: Director General, LBECZ Phone: +86 0883-6520527 Email: [email protected] Address: LBECZ, Xincheng Avenue Mengding, Gengma County, Lincang, Yunnan ZCG Name: Dong, Wanchun Position: County Commissioner Phone: +86 0883-6630002 Email: Address: No 165 Taihe Road, Zhenkang County, Yunnan CCG Name: Zhou, Ping Position: County Commissioner Phone: +86 0883-7124368 Email: Address: Cangyuan Wa County Government Asian Development Bank Name: Sangay Penjor EASS Position: Director Phone: +63 2 632 5340 Fax: +63 2 636 2407 Email: [email protected] Mission Leader Name: Antonio Ressano-Garcia Position: Principal Urban Development Specialist Phone: +63 2 632 6298 Fax: +63 2 636 2407 Email: [email protected] CCG = Cangyuan Wa County Government, LBECZ = Lincang Border Economic Cooperation Zone, ZCG = Zhenkang County Government.

C. Project Organization Structure

20. The flow chart shows the reporting lines of essential internal structures of key organizations involved in implementation.

Figure 1: Institutional Arrangement

Asian Development Bank MOF and NDRC/YFD and YDRC

Executing Agency Lincang Municipal Government

Project Leading Group (chaired by Mayor of LMG) (LMG, LDRC, LFB, LHCB, LPB, LSLB, LEPB, LPHB, LEB) Contract

Engineering Project Management Office Under LBECZ and headed by

LBECZ Director Safeguard

Finance

IA 1 - LBECZ IA 2 – Zhenkang CG IA 3 – Cangyuan Wa CG

LBECZ PIU Zhenkang PLG Cangyuan PLG (LBECZ LPCB) • Cross-border trade Zhengkang PIU Cangyuan PIU facilities (Zhenkang HC) (Cangyuan EB) • UrbanBorder roads trade andfacilities • • PRC–Myanmar • Cangyuan Guomen Urbanbridges roads & bridges • QingshuiheUrban environmental elementary Friendship Hospital No. 2 Elementary schoolinfrastructure School • Qingshuihe hospitalGuomen Elementary School • Qingshuihe Hospital

CG = county government, EB = environmental bureau, HC = housing and construction, IA = implementing agency, LBECZ = Lincang Border Economic Cooperation Zone, LDRC = Lincang Municipal Development and Reform Commission, LEB = Lincang Education Bureau, LEPB = Lincang Environmental Protection Bureau, LFB = Lincang Municipal Finance Bureau, LHCB = Lincang Housing and Construction Bureau, LMG = Lincang Municipal Government, LPB = Lincang Planning Bureau, LPCB = Land Planning Construction Bureau, LPHB = Lincang Public Health Bureau, LSLB = Lincang State Land Bureau, MOF = Ministry of Finance, NDRC = National Development and Reform Commission, PIU = project implementation unit, PLG = project leading group, PRC = People’s Republic of China, YFD = Yunnan Provincial Finance Department, YDRC = Yunnan Development and Reform Commission. 17

IV. COSTS AND FINANCING

A. Cost Estimates Preparation and Revisions

21. The cost estimates were prepared jointly by the PMO and ADB with assistance from the transaction technical assistance consultant. The source and basis for the cost estimates were reviewed during the project preparation and have been confirmed by related parties. The process was facilitated by a financial model in Excel software which enabled easy updating or revision as necessary. The model is maintained by both the PMO and ADB. Revision of the cost estimates will be conducted when deemed necessary during implementation. The PMO will be responsible for proposing and drafting any revision, which would be subject to ADB approval.

B. Key Assumptions

22. The following key assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: CNY6.85 = $1.00 (as of 10 September 2018); and

(ii) Price contingencies based on expected cumulative inflation over the implementation period are as follows:

Table 6: Escalation Rates for Price Contingency Calculation Item 2018 2019 2020 2021 2022 2023 Average Foreign rate of price inflation 1.5% 1.5% 1.5% 1.6% 1.6% 1.6% 1.6% Domestic rate of price inflation 2.4% 2.3% 2.3% 2.2% 2.2% 2.2% 2.3% Source: Asian Development Bank estimates.

C. Summary Cost Estimates and Financing Plan

23. The project investment cost is estimated at $402.80 million including taxes and duties of $15.69 million. The total cost also includes physical and price contingencies. The indicative investment plan for the project is summarized in Table 7.

Table 7: Summary Cost Estimates Item Amounta A. Base Costb 1. Output 1: Cross-border trade infrastructure improved 198.92 2. Output 2: Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved 46.08 3. Output 3: Social infrastructure and services improved 76.13 4. Output 4: Institutional capacity of involved agencies improved 7.00 Subtotal (A) 328.13 B. Contingenciesc 43.05 C. Financial Charges During Implementationd 31.62 Total (A+B+C) 402.80 a Includes taxes and duties of $15.69 million, of which $12.20 million will be financed by the Asian Development Bank. Such amount does not represent an excessive share of the project cost. The government will finance taxes and duties of $3.49 million through cash contribution. b In 2018 prices as of 10 September 2018. c Physical contingencies computed at 8% for civil works; and 8% for field research and development, training, surveys, and studies. Price contingencies computed at average of 1.6% on foreign exchange costs and 2.3% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for the ordinary capital resources loan has been computed at the 5-year United States dollar fixed swap rate plus an effective contractual spread of 0.5%

and maturity premium of 0.1%. Commitment charges for the ordinary capital resources loan are 0.15% per year to be charged on the undisbursed loan amount. Source: Asian Development Bank estimates.

24. The government has requested a regular loan of $250 million from ADB’s ordinary capital resources to help finance the project. The loan will have a 25-year term, including a grace period of 6 years; an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; a commitment charge of 0.15% per year; and such other terms and conditions set forth in the draft loan and project agreements. Based on the straight-line method, the average maturity is 15.75 years, and the maturity premium payable to ADB is 0.10% per year. The PRC is the borrower of the loan and will make the loan available through the Yunnan Provincial Government to the Lincang Municipal Government (LMG), and to the LBECZ and Cangyuan Wa and Zhenkang county governments, which will assume the foreign exchange and interest variation risks of the ADB loan.

25. The summary financing plan is in Table 8. ADB will finance the expenditures in relation to civil works, goods, consulting services, and capacity development activities.

Table 8: Summary Financing Plan Amount Share of Total Source ($ million) (%) Asian Development Banka Ordinary capital resources (regular loan) 250.0 62.07 Government 152.8 37.93 Total 402.8 100.00 a Because two of the project counties are officially designated as national poverty counties by the government, the Asian Development Bank has been requested to finance more than 50% of the total project cost. Source: Asian Development Bank estimates.

D. Detailed Cost Estimates by Expenditure Category

Table 9: Detailed Cost Estimates by Expenditure Category (CNY million) ($ million) % of Total Foreign Local Total Foreign Local Total Base Item Exchange Currency Cost Exchange Currency Cost Cost A. Investment Costs 1. Civil works 163.14 1,468.23 1,631.37 23.82 214.34 238.16 72.6 a. Cross-border trade capacity – Qingshuihe 109.69 987.21 1,096.90 16.01 144.12 160.13 48.8 b. Integrated urban environment infrastructure 21.91 197.17 219.07 3.20 28.78 31.98 9.7 - Qinghuihe and Mengding c. Social infrastructure – Qingshuihe 5.64 50.72 56.35 0.82 7.40 8.23 2.6 d. Social infrastructure – Zhenkang 21.15 190.37 211.52 3.09 27.79 30.88 9.4 e. Social infrastructure – Cangyuan 4.75 42.77 47.52 0.69 6.24 6.94 2.1 2. Mechanical and equipment 19.28 173.55 192.83 2.82 25.34 28.15 8.6 3. Environment and social mitigationa 0.63 5.66 6.29 0.09 0.83 0.92 0.3 4. Land acquisition and resettlement 0.00 176.06 176.06 0.00 25.70 25.70 7.8 5. Capacity developmentb 47.95 0.00 47.95 7.00 0.00 7.00 2.1 6. Design, survey, and management 19.23 173.08 192.31 2.81 25.27 28.07 8.6 7. Operation capital 0.09 0.78 0.86 0.01 0.11 0.13 0.0 Subtotal (A) 250.32 1,997.35 2,247.67 36.54 291.58 328.13 100.0 B. Contingencies 1. Physical 17.89 161.05 178.95 2.61 23.51 26.12 8.0 2. Price 11.60 104.36 115.96 1.69 15.24 16.93 5.2 Subtotal (B) 29.49 265.41 294.90 4.31 38.75 43.05 13.1 C. Financial Charges During Implementation 1. Interest during construction 210.96 0.00 210.96 30.80 0.00 30.80 9.4 2. Commitment charges 5.65 0.00 5.65 0.83 0.00 0.83 0.3 Subtotal (C) 216.61 0.00 216.61 31.62 0.00 31.62 9.6 Total Project Cost (A+B+C) 496.42 2,262.77 2,759.18 72.47 330.33 402.80 122.8 Note: Numbers may not sum precisely because of rounding. a Environment and social mitigation includes all costs associated with implementing relevant safeguards, gender, and social dimension action plans. b Includes consulting services, workshops, trainings, and study tours. Source: Asian Development Bank estimates.

E. Allocation and Withdrawal of Loan Proceeds

Table 10: Allocation and Withdrawal of Loan Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Yunnan Lincang Border Economic Cooperation Zone Development Project) Total Amount Allocated

for ADB Financing ($)

Percentage and Basis for Withdrawal from No Item Category Subcategory the Loan Account 1 Civil worksa 214,849,770 Cross-border trade capacity, integrated 183,380,970 Up to 100% of total expenditure claimed 1A urban environmental and social infrastructures–Qingshuihe and Mengding 1B Social infrastructure–Zhenkang 24,493,223 Up to 100% of total expenditure claimed 1C Social infrastructure–Cangyuan 6,975,577 Up to 100% of total expenditure claimed Goods, services, and capacity 2 35,150,230 Up to 100% of total expenditure claimed developmentb Total 250,000,000 ADB = Asian Development Bank. a Includes environment and social mitigation costs. b Includes consulting services, workshops, trainings, and study tours. Source: ADB estimates.

F. Detailed Cost Estimates by Financier

Table 11: Detailed Cost Estimates by Financier ($ million) ADB LBECZ Zhenkang County Cangyuan County % of % of % of % of Amount Cost Amount Cost Amount Cost Amount Cost Total Cost Category Category Category Category A. Investment Costs 1. Civil works 214.03 89.9 17.61 7.4 6.52 2.7 0.00 0.0 238.16 a. Cross-border trade capacity – Qingshuihe 146.05 91.2 14.08 8.8 0.00 0.0 0.00 0.0 160.13 b. Integrated urban environment 29.18 91.2 2.80 8.8 0.00 0.0 0.00 0.0 31.98 infrastructure – Mengding and Qingshuihe c. Social infrastructure – Qingshuihe 7.50 91.2 0.72 8.8 0.00 0.0 0.00 0.0 8.22 d. Social infrastructure – Zhenkang 24.36 78.9 0.00 0.0 6.52 21.1 0.00 0.0 30.88 e. Social infrastructure – Cangyuan 6.94 100.0 0.00 0.0 0.00 0.0 0.00 0.0 6.94 2. Mechanical and equipment 28.15 100.0 0.00 0.0 0.00 0.0 0.00 0.0 28.15 3. Environment and social mitigationa 0.82 89.9 0.06 6.2 0.04 3.9 0.00 0.0 0.92 a. Cross-border trade capacity – Qingshuihe 0.46 92.3 0.04 7.7 0.00 0.0 0.00 0.0 0.51 b. Integrated urban environment 0.13 91.2 0.01 8.8 0.00 0.0 0.00 0.0 0.14 infrastructure – Mengding and Qingshuihe c. Social infrastructure – Qingshuihe 0.07 91.2 0.00 8.8 0.00 0.0 0.00 0.0 0.07 d. Social infrastructure – Zhenkang 0.13 78.9 0.00 0.0 0.04 21.1 0.00 0.0 0.17 e. Social infrastructure – Cangyuan 0.04 100.0 0.00 0.0 0.00 0.0 0.00 0.0 0.04 4. Land acquisition and resettlement 0.00 0.0 21.49 83.6 0.55 2.1 3.67 14.3 25.70 5. Capacity developmentb 7.00 100.0 0.00 0.0 0.00 0.0 0.00 0.0 7.00 6. Design, survey, and management 0.00 0.0 23.88 85.1 3.18 11.3 1.01 3.6 28.07 7. Operation capital 0.00 0.00 0.13 100.0 0.00 0.0 0.00 0.0 0.13 Subtotal (A) 250.00 76.2 63.16 19.2 10.29 3.1 4.68 1.4 328.13 B. Contingencies 1. Physical 0.00 0.0 21.53 82.4 3.79 14.5 0.81 3.1 26.12 2. Price 0.00 0.0 14.02 82.8 2.40 14.2 0.51 3.0 16.93 Subtotal (B) 0.00 0.0 35.54 82.6 6.19 14.4 1.32 3.1 43.05 C. Financial Charges During Implementation 1. Interest during construction 0.00 0.0 25.58 83.1 4.19 13.6 1.03 3.3 30.80 2. Commitment charges 0.00 0.0 0.69 83.1 0.11 13.6 0.03 3.3 0.83 Subtotal (C) 0.00 0.0 26.27 83.1 4.30 13.6 1.06 3.3 31.62 Total Project Cost (A+B+C) 250.00 124.97 20.77 7.06 402.80 % of Total Project Cost 62.1 31.0 5.2 1.8 100.0 ADB = Asian Development Bank, LBECZ = Lincang Border Economic Cooperation Zone. Note: Numbers may not sum precisely because of rounding. a Environment and social mitigation includes all costs associated with implementing relevant safeguards, gender, and social dimension action plans. b Includes consulting services, workshops, trainings, and study tours. Source: Asian Development Bank estimates.

G. Detailed Cost Estimates by Outputs

Table 12: Detailed Cost Estimates by Outputs ($ million) Integrated urban environment infrastructure in Mengding and Institutional Qingshuihe Social infrastructure capacity of Cross-border trade National Port areas and services involved agencies infrastructure improved improved improved improved % of % of % of Cost Cost Cost % of Cost Item Total Cost Amount Category Amount Category Amount Category Amount Category A. Investment Costs 1. Civil works 238.16 160.13 67.2 31.98 13.4 46.04 19.3 0.00 0.0 2. Mechanical and equipment 28.15 4.05 14.4 4.7 16.7 19.4 68.9 0.00 0.0 3. Environment and social mitigationa 0.92 0.51 55.0 0.14 15.0 0.28 30.0 0.00 0.0 4. Land acquisition and resettlement 25.70 16.32 63.5 4.75 18.5 4.64 18.0 0.00 0.0 5. Capacity developmentb 7.00 0.00 0.0 0.00 0.0 0.00 0.0 7.00 100.0 6. Survey, design, and management 28.07 17.91 63.8 4.39 15.6 5.77 20.6 0.00 0.0 7. Operation Capital 0.13 0.00 0.0 0.13 100.0 0.00 0.0 0.00 0.0 Subtotal (A) 328.13 198.92 60.6 46.08 14.0 76.13 23.2 7.00 2.1 B. Contingencies 1. Physical 26.12 16.19 62.0 3.66 14.0 6.27 24.0 0.00 0.0 2. Price 16.93 10.69 63.1 2.32 13.7 3.92 23.2 0.00 0.0 Subtotal (B) 43.05 26.87 62.4 5.98 13.9 10.19 23.7 0.00 0.0 C. Financial Charges During Implementation 1. Interest during construction 30.80 18.67 60.6 4.22 13.7 7.25 23.5 0.66 2.1 2. Commitment charges 0.83 0.50 60.6 0.11 13.7 0.19 23.5 0.02 2.1 Subtotal (C) 31.62 19.17 60.6 4.33 13.7 7.44 23.5 0.67 2.1 Total Project Cost (A+B+C) 402.80 244.97 60.8 56.40 14.0 93.76 23.3 7.67 1.9 Note: Numbers may not sum precisely because of rounding. a Environment and social mitigation includes all costs associated with implementing relevant safeguards, gender, and social dimension action plans. b Includes consulting services, workshops, trainings, and study tours. Source: Asian Development Bank estimates.

H. Detailed Cost Estimates by Year

Table 13: Detailed Cost Estimates by Year ($ million) 2019 2020 2021 2022 2023 2024 Total Cost Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 A. Investment Costs 1. Civil Works 238.16 23.82 47.63 71.45 59.54 23.82 11.91 a. Cross border trade facility – Qingshuihe 160.13 16.01 32.03 48.04 40.03 16.01 8.01 b. Integrated urban environment 31.98 3.20 6.40 9.59 8.00 3.20 1.60 infrastructure – Mengding and Qingshuihe c. Social infrastructure – Qingshuihe 8.23 0.82 1.65 2.46 2.06 0.82 0.41 d. Social infrastructure – Zhenkang 30.88 3.09 6.18 9.26 7.72 3.09 1.54 e. Social infrastructure – Cangyuan 6.94 0.69 1.39 2.08 1.73 0.69 0.35 2. Mechanical and equipment 28.15 2.82 5.63 8.45 7.04 2.82 1.41 3. Environment and social mitigationa 0.92 0.09 0.18 0.28 0.23 0.09 0.05 4. Land acquisition and resettlement 25.70 2.57 5.14 7.71 6.43 2.57 1.29 5. Capacity developmentb 7.00 0.70 1.40 2.10 1.75 0.70 0.35 6. Survey, design, and management 28.07 2.81 5.61 8.42 7.02 2.81 1.40 7. Operation capital 0.13 0.01 0.03 0.04 0.03 0.01 0.01 Subtotal (A) 328.13 32.81 65.63 98.44 82.03 32.81 16.41 B. Contingencies 1. Physical 26.12 2.61 5.22 7.84 6.53 2.61 1.31 2. Price 16.93 1.69 3.39 5.08 4.23 1.69 0.85 Subtotal (B) 43.05 4.31 8.61 12.92 10.76 4.31 2.15 C. Financial Charges During Implementation 1. Interest during construction 30.80 3.08 6.16 9.24 7.70 3.08 1.54 2. Commitment charges 0.83 0.26 0.23 0.18 0.10 0.08 0.04 Subtotal (C) 31.62 3.34 6.39 9.42 7.80 3.16 1.58 Total Project Cost (A+B+C) 402.80 40.46 80.63 120.77 100.60 40.28 20.14 % Total Project Cost 100% 10% 20% 30% 25% 10% 5% Note: Numbers may not sum precisely because of rounding. a Environment and social mitigation includes all costs associated with implementing relevant safeguards, gender, and social dimension action plans. b Includes consulting services, workshops, trainings, and study tours. Source: Asian Development Bank estimates.

I. Contract and Disbursement S-Curve

Figure 2: Contract Award and Disbursement S-Curve

260.0

240.0

220.0

200.0

180.0

160.0

140.0

120.0 $ million 100.0

80.0

60.0

40.0

20.0

0.0 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024 2024 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Award 0.0 0.0 0.0 5.0 11.3 17.5 23.8 30.0 42.5 55.0 67.5 92.5 111.3130.0148.8167.5180.0192.5205.0217.5235.0250.0250.0250.0 Disbursement 0.0 0.0 0.0 0.0 0.0 10.0 12.5 15.0 20.0 25.0 37.5 50.0 62.5 75.0 100.0125.0150.0175.0200.0225.0231.3237.5243.8250.0 Year-Quarter Contract Award Disbursement

Table 14: Contract Award and Disbursement Contract Award ($ million) Disbursement ($ million) Year Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total 2019 0.00 0.00 0.00 5.00 5.00 0.00 0.00 0.00 0.00 0.00 2020 6.25 6.25 6.25 6.25 25.00 0.00 10.00 2.50 2.50 15.00 2021 12.50 12.50 12.50 25.00 62.50 5.00 5.00 12.50 12.50 35.00 2022 18.75 18.75 18.75 18.75 75.00 12.50 12.50 25.00 25.00 75.00 2023 12.50 12.50 12.50 12.50 50.00 25.00 25.00 25.00 25.00 100.00 2024 15.00 17.50 32.50 6.25 6.25 6.25 6.25 25.00 Total Contract Award 250.00 Total Disbursement 250.00 Source: Asian Development Bank estimates. 25

J. Fund Flow Diagram

Figure 3: Fund Flow Diagram ADB direct payment A sian D evelopment B ank

Loan

Ministry of Finance

YFD direct payment Yunnan Provincial Finance Department

(on behalf of Yunnan Provincial Government) (Advance Account)

Lincang Municipal Finance Bureau

(On behalf of LMG - EA)

Advance Account Payment PMO

LBECZ Finance Bureau Z henkang Finance Bureau Cangyuan Finance Bureau

(On behalf of LBECZ – IA1) (On behalf of Zhenkang CG – IA2) (On behalf of Cangyuan Wa CG – IA3)

Contractors/

Suppliers Contractors/ Consultants / Contractors/  Cross-border trade facilities

 Urban roads and bridges Suppliers Monitors Suppliers

  PRC–Myanmar  Implementation  Cangyuan Guomen Urban environmental infrastruture  Qingshuihe Guomen Elementary School Friendship Hospital  Monitoring No. 2 Elementary

 Qingshuihe Hospital  Technical assistance School

Legends: Onlending/relending Loan repayment Disbursement Withdrawal application/claim

ADB = Asian Development Bank, CG = county government, EA = executing agency, IA = implementing agency, LBECZ = Lincang Border Economic Cooperation Zone, LMG = Lincang Municipal Government, PMO = project management office, PRC = People’s Republic of China, YFD = Yunnan Provincial Finance Department.

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

26. The financial management assessment (FMA) was conducted in April 2018 in accordance with Asian Development Bank’s (ADB) Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note.8 The assessment covered funds flow arrangements, staffing, accounting and financial reporting systems, internal and external auditing arrangements, and financial information systems for the Lincang Municipal Government (LMG, the executing agency) and the implementing agencies. The LMG has set up a project management office (PMO) to manage and monitor the overall project implementation process; communicate and coordinate with ADB, Ministry of Finance, and National Development and Reform Commission; approve and submit tendering documents and fund withdrawal applications to ADB; submit consolidated project audited financial statements; and supervise the monitoring and evaluation of environment, resettlement, and social issues during project implementation. The director of Lincang Border Economic Cooperation Zone (LBECZ) is assigned as the PMO director. There are 10 full-time staff are working in the PMO respectively in charge of project comprehensive administration, finance, procurement, resettlement, and environment. The FMA was conducted for the financial management capacity of the finance bureaus of LMG, LBECZ, Zhenkang, and Cangyuan.

27. The Yunnan Provincial Finance Department (YFD), particularly its International Cooperation Division, as the project advance account holder, has sufficient financial management experience for donor-funded projects, including ADB and World Bank loans. YFD has managed several foreign loan projects involving urban development, agriculture, environment, and transportation sectors.

28. The financial management capacity of LMG was assessed as adequate. The assessment concluded that the skills in the general financial management practices such as bookkeeping, statutory reporting, project budgeting and costing, corporate treasury, and budgeting were sufficiently developed. This is due to the good conventional accounting environment and standardized practices within the People’s Republic of China (PRC) Government’s finance departments. The financial management capacity of LBECZ, Zhenkang, and Cangyuan was assessed as adequate since they are similarly operating under PRC Government’s standard financial management and accounting systems. While the executing and implementing agencies have adequate financial management capacity, they are new to ADB project implementation procedures and requirements.

29. Based on the assessment, the key financial management risks identified are lack experience in implementing foreign-funded projects, the managers and financial personnel have little knowledge of ADB policies and procedures, and continued availability of upper government funding to the county and city governments. The lack of ADB project implementation experience may delay project implementation due to ineffective management in terms of reporting, disbursement, safeguards monitoring, and other required project management tasks. It is concluded that the overall premitigation financial management risk of executing and implementing agencies is moderate. The assessment concluded that (i) there are established accounting and financial management policies and procedures in the PRC, which are strictly followed by the

8 ADB. 2005. Financial Management and Analysis of Projects. Manila; ADB. 2009. Financial Due Diligence: A Methodology Note. Manila.

implementing agencies; and (ii) they have sound accounting and financial management capability and are experienced in managing urban development and construction projects. Table 15 lists the risks and mitigating measures.

Table 15: Summary of Risks and Mitigating Measures Risks Mitigation Measures Project encounters delay in procurement and Engage experienced loan implementation consultants to assist implementation due to lack of experience at executing and implementing agencies, aligned with training and executing and implementing agency levels on capacity development to improve management capacity, supported ADB-funded projects by enhanced monitoring and guidance by loan implementation consultants Project encounters delay in implementation Secure assurances from the executing and implementing agencies due to weak management and coordination on availability of adequate staffing for PMO and PIUs to deliver daily capacity of the PMO and implementing management and operation function in a timely manner agencies Financial sustainability is dependent on Government assurances on subsidies have been included in the continued availability of upper government loan agreement and will continue to provide counter part funds to funding to the project county governments support the O&M costs of the project ADB = Asian Development Bank, PIU = project implementation unit, PMO = project management office. Source: ADB.

30. The identified risks in financial management will be closely monitored during project implementation. The executing and implementing agencies have agreed to implement an action plan as key measures to address the deficiencies. It was agreed that the executing and implementing agencies will further strengthen their capabilities by (i) setting up clear institutional arrangements and coordination mechanisms; (ii) completing staff deployment in appropriate financial management positions with English language support; (iii) developing methodologies for managing foreign exchange and interest rate risks; and (iv) undertaking more training, particularly on ADB policy and procedures. Table 16 demonstrates a financial risk mitigation plan to be adopted by the executing and implementing agencies during the project implementation.

Table 16: Financial Risk Mitigation Plan Action Responsibility Timing Recruitment of experienced project management PMO After loan negotiation consultants to assist the project implementation Training on ADB financial management requirements, PMO, implementing 2 months before loan including accounting and auditing, disbursement, and agencies, YFD, ADB, effectiveness foreign exchange and interest risk management Yunnan Audit Office Close monitoring to timely identify potential issues in PMO, implementing On regular basis and at least counterpart funding agencies, YFD, ADB twice a year during project implementation Separate the accounting and auditing functions by PMO, implementing After loan signing restructuring the current finance departments at the IA agencies level with adequate accounting staff ADB = Asian Development Bank, PMO = project management office, YFD = Yunnan Provincial Finance Department. Source: ADB.

B. Disbursement

31. The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) and detailed arrangements agreed upon

between the government and ADB.9 Online training for project staff on disbursement policies and procedures is available.10 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control.

32. The project will use the combination of direct payment, reimbursement, and advance fund procedures for disbursements of the loan. Responsibilities by the PMO on the disbursement activities are summarized as follows: (i) prepare disbursement projections based on the implementing agencies' respective projections, (ii) request budgetary allocations for counterpart funds, (iii) remind implementing agencies to submit supporting documents for review and endorsement, and (iv) consolidate, prepare, and send withdrawal applications through YFD to ADB.

33. YFD is responsible for making direct payments to contractors and suppliers, and transfer funds to the implementing agencies from the advance account. YFD is also responsible for sending loan withdrawal applications to ADB to initiate either advance account replenishment or where appropriate, to request direct payments by ADB to consultants or suppliers.

34. Advance fund procedure. To facilitate project implementation and funds flow to ADB upon loan effectiveness, an advance account will be established and maintained by YFD. The currency of the advance account is the US dollar.11 The advance account is to be used exclusively for ADB's share of eligible expenditures. YFD, who administers the advance account, is accountable and responsible for proper use of advances from the advance account.

35. The total outstanding advance to the advance account should not exceed the estimate of ADB’s share of expenditures to be paid through the advance account for the forthcoming 6 months. YFD may request for initial and additional advances to the advance account based on an Estimate of Expenditure Sheet setting out the estimated expenditures to be financed through the account for the forthcoming 6 months.12 Supporting documents should be submitted to ADB or retained by YFD in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account.

36. Statement of expenditure procedure. The statement of expenditure (SOE) procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account.13 Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.

37. Before the submission of the first withdrawal application, LMG, through YPD, should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of LMG, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is stipulated in the Loan

9 The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement- handbook). 10 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning. 11 The bank charges on the imprest account will be financed from the proceeds of the loan. 12 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as amended from time to time), 13 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from time to time).

Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid by YFD and subsequently claimed to ADB (i) through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements (CPD) system is encouraged for submission of withdrawal application to ADB.14

38. The direct payment procedure can apply for large works contracts. If the government initially funds eligible expenditures from its own resources, the reimbursement procedure will be used.

39. For the counterpart funds, the PMO shall cause the implementing agencies to allocate the designated funding for the project as indicated in the loan and project agreements. Counterpart funds from the government will be disbursed by the implementing agencies to contractors, suppliers, service providers, and people affected by land acquisition and resettlement. The disbursement procedures will follow the project implementing agreement mutually signed between each implementing agencies and YFD, as well as the local financial management practices by each counties and cities.

C. Accounting

40. The executing agency will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following International Financial Reporting Standards. The executing agency will prepare consolidated project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices.

41. The executing and the implementing agencies shall maintain separate accounts and records for the project and, through the project implementing agencies and the onlending agreements, shall cause all implementing agencies to prepare and provide to LMG and ADB statements of utilization of the project funds. The PMO shall prepare consolidated annual financial statements for the project in accordance with financial reporting standards acceptable to ADB and have such financial statements audited annually by independent auditors whose qualifications, experience, and terms of reference are acceptable to ADB.

D. Auditing and Public Disclosure

42. The executing agency will cause the detailed consolidated project financial statements to be audited in accordance with the equivalent national standards adopted by PRC, by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the executing agency.

43. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the loan were used only for the purpose(s) of the project; and (iii) whether the borrower or executing agency was in compliance

14 The CPD facilitates online submission of WA to ADB, resulting in faster disbursement. The forms to be completed by the Borrower are available online at https://www.adb.org/documents/client-portal-disbursements-guide.

with the financial covenants contained in the legal agreements (where applicable).

44. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor.

45. The YFD, executing and implementing agencies have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.15 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.

46. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Public Communications Policy 2011.16 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.17

VI. PROCUREMENT AND CONSULTING SERVICES

47. A project procurement risk assessment was conducted for the project, in accordance with ADB's Guide on Assessing Procurement Risks and Determining Project Procurement Classification (2014). Overall project procurement risk is moderate.

48. The main weaknesses identified include (i) lack of experience of the implementing agencies in internationally-financed projects; and (ii) managers and financial personnel have little knowledge of ADB policies and procedures.

49. Proposed mitigation measures include training to be provided to relevant staff of the implementing agencies and PIUs, and other stakeholder agencies. The procurement training was delivered by the ADB officials and consultants during the project preparation to the implementing agencies and PIUs on topics in ADB procedures for procurement of goods, works, and consulting services to ensure that the non-familiarity with ADB procurement has been addressed. The next

15 ADB’s approach and procedures regarding delayed submission of audited project financial statements: (i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed. (ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months. (iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan. 16 Public Communications Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications. 17 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011. Public Communications Policy. Paragraph 97(iv) and/or 97(v).

procurement training will be delivered by the loan implementation consultants during the project implementation to ensure that procurement activities are undertaken in full conformity with ADB procurement guidelines and regulations.

50. A procurement market assessment was undertaken to understand and assess the availability of potential qualified bidders. Based on the nature of the project, the contract to be procured include civil works, goods, and consulting services.

51. The civil works include roads (new or upgraded) and bridges, river rehabilitation, wastewater treatment plant and associated pipelines, water treatment plant and associated pipeline, and facilities for border market, cooperation area, hospitals, and schools. These works are common in PRC and the market is highly competitive with sufficient providers. Currently, there are thousands of enterprises in PRC with general contractor licenses.18

52. The goods contracts include equipment for border market, cooperation area, hospitals, schools, and charging stations. Most of the equipment to be procured in this project are very common. The market for the equipment is very competitive with sufficient suppliers. However, there are also some very specialized equipment, i.e., magnetic resonance imaging instruments to be used in hospitals. For such extremely specialized equipment, a handful manufacturers can account for more than 80% of market shares. Therefore, oligopoly if not monopolistic competition may exist; and it is suggested to advertise the packages in a wider range, i.e., internationally, to attract foreign competition.

53. Consulting services include project management and institutional support, external monitoring, and various capacity building packages. The market for consulting services has been growing very fast in the past decade. There are now many suppliers in the market to provide services, especially in design, construction management and monitoring. However, not many of them have highly specialized expertise or international experiences required in the consulting service packages funded by the loan in this project. Therefore, it is suggested to advertise internationally for most of the consulting service packages.

A. Advance Contracting and Retroactive Financing

54. To expedite project implementation, the government requested ADB to approve (i) advance contracting, which includes the recruitment of consultants and procurement of civil works; and (ii) retroactive financing of eligible expenditures.

55. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).19 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB prior approval.

56. Advance contracting. Advance contracting will include (i) tendering and bid evaluation for civil works packages, (ii) recommendation for contract award, and (iii) recruitment of consultants. The advance contracting includes one civil works package and four consulting service contracts. These contracts include the civil works for Nos. 1–3 Roads, Nanting Bridge (C-

18 In 2016, there were 47,018 enterprises with municipal engineering general contractor licenses, of which 18 have Special Category certificates; 3,000 have Category I certificates; 12,000 have Category II certificates; and 32,000 have Category III certificates. Other than the general contractor qualifications, there are also special contractor qualifications with a large number of license holders. 19 Available at https://www.adb.org/documents/adb-procurement-policy.

RD01) and No. 6 Road, and the connection bridge (C-RD03) under Output 1; and the project management and implementation support consulting services (CS1), and three start-up individual consultants (CS5-1, CS5-2, and CS5-3). The issuance of invitations to bid and bidding documents under advance procurement action will be subject to ADB prior approval.

57. Retroactive financing. Under retroactive financing, the PIUs would implement project activities using their own funds. The government was informed that as a general rule, retroactive financing is permitted only if (i) it is specifically agreed by ADB and the borrower; (ii) the goods, works, and consulting services for which it is requested are procured in accordance with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time); (iii) the amount to be retroactively financed does not exceed 20% of the loan amount; (iv) the expenditures must have been incurred before effectiveness of the relevant loan but, generally, not earlier than 12 months before signing of the loan agreement; and (v) due diligence on the proposed contracts for advance contracting and retroactive financing on engineering, environmental, financial, social, and other safeguard requirements has been completed to satisfy project preparation requirements. In either instance, detailed assessments (due diligence) on each retroactive financing proposal must demonstrate that (a) the expenditures incurred are genuine, reasonable, and material to getting the project off the ground; and (b) they were incurred for proper reasons, in a transparent manner over a reasonable period of time. The government has been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project.

B. Procurement of Goods, Works, and Consulting Services

58. All procurement of goods and works, including consulting services, will be undertaken in accordance with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).20

59. Open competitive bidding (OCB) is the preferred method for procurement in this project. In order to achieve value for money, it is important to seek bids from qualified bidders. Based on the nature and value of contracts, bidders can be sought from national market or international market. For civil works contracts, OCB AN (advertised nationally) method will be used unless the contract value is $40 million and above, in which case OCB AI (advertised internationally) method will be used. For goods contracts, OCB AI method will be used for contracts with $5 million and above, contracts with highly specialized equipment involved, or contracts identified with limited competition. Otherwise, OCB AN method will be used. For consulting service contracts, OCB AI method will be used for all contracts funded by ADB loan, with different selection methods based on the contract values. For low value works and goods contracts (smaller than $100,000), request for quotations procedure will be used.

60. OCB using national advertisement will be used for all 25 civil works contracts. Two goods contracts will require international advertisement, and the remainder will use national advertisement (Table 17). Contracts for goods and works estimated to cost less than the $100,000 can be procured using request for quotation procedure. The first draft bidding documents for civil works and goods for each implementing agency (translated in English) shall be submitted to ADB for review regardless of the amount. Subsequent bidding documents will be reviewed on post- review sampling basis.

20 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 33

Table 17: Summary of Goods and Works Contracts Estimated Value Estimated Number Procurement Review Bidding General Description (cumulative) of Contracts Method (Prior/Post) Procedure Works 176,602,243 10 OCB / AN Prior 1S1E Works 82,037,453 15 OCB / AN Post 1S1E Goods 18,376,767 2 OCB / AI Prior 1S1E Goods 9,811,089 10 OCB / AN Post 1S1E 1S1E = single-stage, one-envelope, AI = advertised internationally, AN = advertised nationally, OCB = open competitive bidding. Source: Asian Development Bank.

61. To facilitate project management and implementation, provide capacity building and institutional strengthening, and undertake external monitoring, an estimated 77 international and 439 national person-months of consulting services are required for project management and implementation support consultants, startup support consultants, external monitors, and capacity development consultants. Consulting firms will be engaged using the (i) quality- and cost-based selection (QCBS) method with a quality–cost ratio of 90:10, and (ii) consultants’ qualifications selection (CQS) method. Individual consultants will also be engaged through individual consultant selection (ICS). The summary of consulting services contracts is in Table 18. The terms of reference for all consulting services are detailed in Section D.

Table 18: Summary of Consulting Services Contracts Estimated Estimated Value Number of Selection Review Type of General Description (cumulative) Contracts Method (Prior/Post) Proposal Comments Consulting Services 4,900,000 7 QCBS Prior FTP/STP Q:C = 90:10 Consulting Services 930,000 4 CQS Prior STP Consulting Services 140,000 3 ICS Prior CQS = consultants’ qualifications selection, FTP = full technical proposal, ICS = individual consultant selection, Q:C = quality and cost ratio, QCBS = quality- and cost -based selection, STP = simplified technical proposal. Source: Asian Development Bank.

C. Procurement Plan

62. The procurement plan indicating procurement or selection methods, estimated costs of contracts, thresholds and review procedures for goods, works, and consulting service contract packages has been prepared and presented below as the basis for discussion. The procurement plan shall be executed in the manner in which it has been approved by ADB. The procurement plan shall be updated annually or as needed throughout the duration of the project.

Table 19: Basic Data Basic Data Project Name: Yunnan Lincang Border Economic Cooperation Zone Development Project Project Number: 49310-002 Approval Number: TBD Country: People’s Republic of China Executing Agency: Lincang Municipal Government Project Procurement Classification: A Implementing Agency: Lincang Border Economic Procurement Risk: Moderate Cooperation Zone, and Zhenkang and Cangyuan Wa County Governments Project Financing Amount: $402.80 million Project Closing Date: 31 December 2024 ADB Financing: $250.00 million Cofinancing: N/A Non-ADB Financing: $152.80 million Date of First Procurement Plan: 18 April 2018 Date of this Procurement Plan: 30 June 2018 Procurement Plan Duration: 18 months Advance contracting: Yes eGP: No

A. Methods, Review and Procurement Plan

63. Except as the Asian Development Bank (ADB) may otherwise agree, the following methods shall apply to procurement of goods, works and consulting services.

Table 20: Procurement of Goods and Works Procurement of Goods and Works Method Comments Open Competitive Bidding (OCB) Advertised Internationally (AI) Contract packages with the values exceeding the thresholds set for AI will require international advertisement. All other packages can be advertised nationally following open competitive bidding procedures. Advertised Nationally (AN) ADB prior review applies to (i) all OCB advertised internationally, (ii) all packages with values over $10 million or above. All other packages will be for post review sampling by ADB. OCB (AI) for Works $40 million or more OCB(AI) for Goods $5 million or more OCB (AN) for Works Beneath that stated for OCB (AI) Works OCB (AN) for Goods Beneath that stated for OCB (AI) Goods Request for Quotations Below $100,000 Source: Asian Development Bank.

Table 21: Consulting Services Consulting Services Method Comments Quality- and Cost-Based Selection (QCBS) Prior review, FTP/STP, Quality and Cost Ratio = 90:10 Consultants’ Qualifications Selection (CQS) Prior review; STP Individual Consultant Selection (ICS) Prior review FTP = full technical proposal, STP = simplified technical proposal. Source: Asian Development Bank.

B. List of Active Procurement Packages (Contracts)

64. The following table lists goods, works, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan duration (September 2018-March 2020).

Table 22: List of Goods and Works Goods and Works Package General Estimated Procurement Bidding Advertisement Review Comments Number Description Valuea Method Procedure Date

Output 1: Cross-border trade capacity improved Civil Works: C-MKT01 Qingshuihe market 8,855,395 OCB / AN Post 1S1E Q1 / 2019 site development C-MKT02 Qingshuihe market 9,009,524 OCB / AN Post 1S1E Q2 / 2019 sheds C-MKT03 Qingshuihe market 17,239,143 OCB / AN Prior 1S1E Q3 / 2019 warehouses and service buildings 35

Goods and Works Package General Estimated Procurement Bidding Advertisement Review Comments Number Description Valuea Method Procedure Date C-MKT04 Qingshuihe market 3,826,286 OCB / AN Post 1S1E Q1 / 2020 administration buildings C-ICA01 Qingshuihe ICA 2,112,989 OCB / AN Post 1S1E Q1 / 2019 Phase I site development C-ICA02 Qingshuihe ICA 12,215,143 OCB / AN Prior 1S1E Q4 / 2018 Phase I (FTZ manufacturing, service and apartment) C-ICA03 Qingshuihe ICA 5,157,253 OCB / AN Post 1S1E Q1 / 2020 Phase II site development C-RD01 Qingshuihe No. 1, 32,106,016 OCB / AN Prior 1S1E Q4 / 2018 No. 2, and No. 3 Roads C-RD02 Qingshuihe No. 4 18,419,317 OCB / AN Prior 1S1E Q2 / 2019 and No. 5 Roads C-RD03 Nanting Bridge and 20,868,152 OCB / AN Prior 1S1E Q4 / 2018 Advance Approach Road contracting / and No. 6 Road Retroactive financing Goods: E-MKT02 Qingshuihe market 222,222 OCB / AN Post 1S1E Q4 / 2019 equipment E-ICA01 Qingshuihe ICA 507,937 OCB / AN Post 1S1E Q1 / 2020 Phase I equipment

Output 2. Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved Civil Works: C-ENV01 Qingshuihe water 11,191,451 OCB / AN Prior 1S1E Q1 / 2019 supply intake and transmission line C-ENV02b Qingshuihe water 4,985,010 OCB / AN Post 1S1E Q2 / 2019 supply treatment plant C-ENV03 Qingshuihe water 5,354,508 OCB / AN Post 1S1E Q4 / 2019 supply distribution piping network C-ENV04c Qingshuihe WWTP 5,174,712 OCB / AN Post 1S1E Q4 / 2019 civil works and equipment C-ENV06 Qingshui River and 9,259,234 OCB / AN Post 1S1E Q4 / 2019 Nanpa River Rehabilitation Goods: E-ENV01d Qingshuihe and 1,983,450 OCB / AN Post 1S1E Q4 / 2019 Mengding MSW management system

Output 3. Social infrastructure and services improved Civil Works: C-SS01 PRC-Myanmar 31,460,558 OCB / AN Prior 1S1E Q1 / 2019 Friendship Hospital civil works

Goods and Works Package General Estimated Procurement Bidding Advertisement Review Comments Number Description Valuea Method Procedure Date C-SS02 PRC-Myanmar 3,733,333 OCB / AN Post 1S1E Q4 / 2019 Friendship Hospital Road C-SS03 Qingshuihe hospital 5,505,032 OCB / AN Post 1S1E Q2 / 2020 civil works C-SS04 Cangyuan Guomen 7,584,178 OCB / AN Prior 1S1E Q4 / 2018 No. 3 Elementary School civil works C-SS05 Qingshuihe 3,755,274 OCB / AN Post 1S1E Q2 / 2019 Guomen Elementary School upgrade civil works Goods: E-SS03 Cangyuan Guomen 1,238,095 OCB / AN Post 1S1E Q1 / 2020 No. 2 Elementary School equipment Qingshuihe Guomen E-SS04 624,349 OCB / AN Post 1S1E Q3 / 2019 Elementary School upgrade equipment 1S1E = single-stage, one-envelope, AI = advertised internationally, AN = advertised nationally, CW = civil works, FTZ = free trade zone, ICA = International Cooperation Area, MSW = municipal solid waste, OCB = open competitive bidding, WWTP = wastewater treatment plant. a The cost estimates included in the procurement plan are prepared by the design institute engaged by LMG, following the official guidelines for project design in the People’s Republic of China (PRC). Efforts have been made to incorporate the recent trends in prices on the market. However, the actual contract value may still vary by a sizable margin after open competition due to market dynamics in the PRC. b Includes equipment purchase and installation of $2,577,111. c Includes equipment purchase and installation of $1,134,810. d Includes civil works of an estimated amount of $736,841. Source: Asian Development Bank.

Table 23: List of Consulting Services Consulting Services Package General Estimated Selection Type of Advertisement Review Comments Number Description Value Method Proposal Date Output 4: Institutional capacity of involved agencies improved CS1 Project 2,500,000 QCBS Prior FTP Q4 / 2018 Q:C = 90:10 management and Advance implementation contracting / support Retroactive financing CS2 External 330,000 CQS Prior STP Q3 / 2019 environmental monitoring CS3 External land 200,000 CQS Prior STP Q3 / 2019 acquisition and resettlement monitoring External ethnic 200,000 CQS Prior STP Q3 / 2019 minority CS4 development plan monitoring

CS5-1 Start-up contract 80,000 ICS Prior - Q4 / 2018 Advance management and contracting / procurement Retroactive specialist financing 37

Consulting Services Package General Estimated Selection Type of Advertisement Review Comments Number Description Value Method Proposal Date CS5-2 Start-up 30,000 ICS Prior - Q4 / 2018 Advance environment contracting / specialist Retroactive financing CS5-3 Start-up 30,000 ICS Prior - Q4 / 2018 Advance resettlement contracting / specialist Retroactive financing CS6 Border trade and 600,000 QCBS Prior STP Q2 / 2019 Q:C = 90:10 logistics development capacity building CS7 Teacher training 360,000 QCBS Prior STP Q3 / 2019 Q:C = 90:10 and curriculum development CS8 Healthcare service 330,000 QCBS Prior STP Q3 / 2019 Q:C = 90:10 and hospital operation and management improvement CS9 RCI development 360,000 QCBS Prior STP Q1 / 2020 Q:C = 90:10 and capacity building CS10 TVET planning and 200,000 CQS Prior STP Q1 / 2020 development CS11 Small- and 300,000 QCBS Prior STP Q2 / 2020 Q:C = 90:10 medium-sized enterprises development planning CS12 LBECZ 450,000 QCBS Prior STP Q2 / 2019 Q:C = 90:10 development master planning study and improvement CQS = consultants’ qualifications selection, EIA = environmental impact assessment, EMDP = ethnic minority development plan, EMP = environmental management plan, FTP = full technical proposal, ICS = individual consultant selection, LAR = land acquisition and resettlement, LBECZ = Lincang Border Economic Cooperation Zone, Q:C = quality and cost ratio, QCBS = quality- and cost -based selection, RCI = regional cooperation and integration, STP = simplified technical proposal, TVET = technical and vocational education and training. Source: Asian Development Bank.

C. List of Indicative Packages (Contracts) Required under the Project

65. The following table lists goods, works and consulting services contracts for which the procurement activity is expected to commence beyond the procurement plan duration and over the life of the project (i.e., those expected beyond the current procurement plan duration).

Table 24: Indicative List of Packages Goods and Works Package Estimated Procurement Bidding General Description Review Comments Number Valuea Method Procedure

Output 1: Cross-border trade capacity improved Civil Works: C-ICA04 Qingshuihe ICA Phase I (FTZ 9,019,429 OCB / AN Post 1S1E Q4 / 2020 manufacturing and custom inspection facilities) C-ICA05 Qingshuihe ICA Phase II 13,105,714 OCB / AN Prior 1S1E Q2 / 2021 service and support facilities C-ICA06 Qingshuihe ICA Phase III site 5,019,081 OCB / AN Post 1S1E Q3 / 2021 development C-ICA07 Qingshuihe ICA Phase III 12,412,571 OCB / AN Prior 1S1E Q4/ 2021 facilities Goods: E-MKT01 Qingshuihe market trade and 396,825 OCB / AN Post 1S1E Q1 / 2021 logistics information system E-ICA02 Qingshuihe ICA Phase II 1,142,857 OCB / AN Post 1S1E Q2 / 2021 equipment E-ICA03 Qingshuihe ICA Phase III site 1,380,952 OCB / AN Post 1S1E Q3 / 2022 equipment E-RD01 Nanting Bridge and No. 6 272,875 OCB / AN Post 1S1E Q1 / 2021 Road equipment

Output 2. Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved Civil Works: Qingshuihe wastewater OCB / AN Post 1S1E Q4 / 2020 C-ENV05 1,270,393 collection piping network Goods: E-ENV02b Qingshuihe and Mengding 2,041,527 OCB / AN Post 1S1E Q1 / 2022 electric charging stations

Output 3. Social infrastructure and services improved Goods: E-SS01 PRC-Myanmar Friendship 8,730,159 OCB / AI Prior 1S1E Q1 / 2021 Hospital equipment E-SS02 Qingshuihe hospital 9,646,608 OCB / AI Prior 1S1E Q1 / 2021 equipment 1S1E = single-stage, one-envelope, AI = advertised internationally, AN = advertised nationally, ICA = International Cooperation Area, FTZ = free trade zone, OCB = open competitive bidding. a The cost estimates included in the procurement plan are prepared by the design institute engaged by LMG, following the official guidelines for project design in the People’s Republic of China (PRC). Efforts have been made to incorporate the recent trends in prices on the market. However, the actual contract value may still vary by a sizable margin after open competition due to market dynamics in the PRC. b Includes civil works of an estimated amount of $206,405. Source: Asian Development Bank.

D. List of Awarded and Completed Contracts

66. The following table lists the awarded contracts and completed contracts for goods, works and consulting services.

Table 25: List of Awarded and Completed Contracts Goods and Works Package General Contract Date of ADB Date of Comments Number Description Value Approval of Contract Completion 39

Award None.

Consulting Services Date of ADB Package General Contract Date of Approval of Contract Comments Number Description Value Completion Award None.

E. Non-ADB Financing

67. The following table lists goods, works and consulting services contracts over the life of the project, financed by Non-ADB sources.

Table 26: Non-ADB Financing Contracts Goods and Works Estimated Estimated Procurement General Description Value Number of Comments Method (cumulative) Contracts None.

Consulting Services Estimated Estimated Selection General Description Value Number of Comments Method (cumulative) Contracts None.

F. Open Competitive Bidding (Advertised Nationally) Annex

68. The Borrowers Law of Tendering and Bidding of the People’s Republic of China promulgated by Order No. 21 of the President of the People’s Republic of China on August 30, 1999, are subject to the following clarifications required for compliance with the Guidelines: (i) All invitations to prequalify or to bid shall be advertised in the national press, or official gazette, or a free and open access website in the Borrowers country. Such advertisement shall be made in sufficient time for prospective bidders to obtain prequalification or bidding documents and prepare and submit their responses. In any event, a minimum preparation period of thirty (30) days shall be given. The preparation period shall count (a) from the date of advertisement, or (b) when the documents are available for issue, whichever date is later. The advertisement and the prequalification and bidding documents shall specify the deadline for such submission. (ii) Qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents, and in the prequalification documents if the bidding is preceded by a prequalification process. (iii) If bidding is preceded by a prequalification process, all bidders that meet the qualification criteria set out in the prequalification document shall be allowed to bid and there shall be no limit on the number of prequalified bidders. (iv) All bidders shall be required to provide a performance security in an amount sufficient to protect the Borrower/Project Executing Agency in case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such performance security.

(v) Bidders shall be allowed to submit bids by mail or by hand. (vi) All bids shall be opened in public; all bidders shall be afforded an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening. (vii) All bid evaluation criteria shall be disclosed in the bidding documents and quantified in monetary terms or expressed in the form of pass/fail requirements. (viii) No bid may be rejected solely on the basis that the bid price falls outside any standard contract estimate, or margin or bracket of average bids established by the Borrower/Project Executing Agency. (ix) Each contract shall be awarded to the lowest evaluated responsive bidder, that is, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (a) to be substantially responsive to the bidding documents and (b) to offer the lowest evaluated cost. The winning bidder shall not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted. (x) Each contract financed with the proceeds of the Loan shall provide that the suppliers and contractors shall permit ADB, at its request, to inspect their accounts and records relating to the performance of the contract and to have said accounts and records audited by auditors appointed by ADB. (xi) Government owned enterprises in the Borrower’s country may be permitted to bid if they can establish that they (a) are legally and financially autonomous, (b) operate under commercial law, and (c) are not a dependent agency of the Borrower/Project Executing Agency. (xii) Rebidding shall not be allowed solely because the number of bids is less than three (3).

D. Consultant's Terms of Reference

69. The outline terms of reference for the consulting service packages are detailed below.

1. Package CS1: Project Management and Implementation Support

70. Project implementation and institutional strengthening consulting service of estimated 32 person-months of international consultants and 191 person-months of national consultants will be engaged by QCBS method with a quality and cost ratio of 90:10 with full technical proposal procedure. The consultants will assist PMO in: (i) setting up institutional framework, operational procedure, document control, design supervision, and contract management systems for the project and work plan to guide and facilitate the project implementation. This should utilize and adapt as necessary the arrangements set up for the earlier ADB projects in Yunnan province; (ii) establishing a project performance management system (PPMS) in accordance with ADB requirements, including establishing baseline and operation mechanism for data collection, analysis and reporting; (iii) developing comprehensive project implementation plans and procedures for monitoring and controlling overall project activities; (iv) conducting technical review and providing expert comments on detailed engineering design in accordance with the design codes and standards; (v) conducting critical review on both commercial and technical bidding documents to ensure they are prepared in accordance with ADB procurement guidelines and 41

PRC MOF/NDRC standard bidding document templates, and all major items in the design drawings and design documents are included in the bill of quantities (BOQ); (vi) Supervise of project activities and review implementation of environmental management (EMP) and coordinate with PMO’s Environment Supervision Officer and three PIUs Environment supervision consultants to complete environmental monitoring in accordance with the requirement set in the project administration manual (PAM); Review and revise as needed the EMP, Environment Monitoring Plan in accordance with covenants of the loan agreement, inspect the implementation of EMP, including grievance redress and public consultations, and preparing, submitting and updating related periodic monitoring reports. (vii) providing guidance for the updating and implementation of RP and coordinate to complete land acquisition and resettlement monitoring in accordance with the requirement set in the PAM; (viii) providing guidance for the implementation of EMDP and coordinate to complete ethnic minority development plan monitoring in accordance with the requirement set in the PAM; (ix) providing guidance for the implementation of social safeguard action plans such social development action plan (SDAP) and gender action plan (GAP), and coordinate to complete social action plan monitoring in accordance with the requirement set in the PAM; (x) providing construction management to ensure the work is conducted in accordance with construction drawings, contract documents, national and local construction codes, and management for progress control, construction quality and safety control, and conducting routine site visits and providing technical inputs to construction planning, supervision and monitoring for quality control of the project construction; (xi) conducting contract management for monitoring contract implementation progress, reviewing the contractors’ claims for payments, reviewing and certifying contract variations, etc.; (xii) establishing an efficient and effective financial management system for the project implementation in accordance with ADB policy and procedural requirements and implementing such financial management system, providing guidance in financial management, preparing and submitting the unaudited financial statements semiannually and the auditing report annually; (xiii) establishing PPMS management and monitoring system, conducting survey and data collection for the project performance monitoring including the baselines at the beginning of the project implementation and annual reporting for the project performance during the project implementation; (xiv) identifying project implementation training needs (including environmental related training) and developing and submitting the training plan at the beginning of the project implementation, providing training to meet the project implementation needs during the project implementation; (xv) assisting EA/IAs to conduct midterm adjustment analysis, determining midterm adjustment contents, preparing and submitting midterm adjustment report, and assisting PMO to complete the project midterm adjustment; (xvi) conducting project completion analysis, preparing and submitting the project completion report within three months of project completion; and (xvii) other project implementation related tasks as needed.

71. The Loan Implementation Environment Consultants are internal consultants providing loan based EMP implementation, monitoring and training functions and will work with PMO’s

Environment Supervision Officer and three Environment Supervision Consultants of the PIU’s: (a) assist PMO and PIUs to establish a project-level environmental management system, consisting of relevant staffing, inspection, monitoring, grievance redress mechanism (GRM), and reporting; (b) assist PMO to update the EMP including the mitigation measures and environmental monitoring program therein, based on the detailed engineering design and submit for executing agency (EA) and ADB’s clearance and disclosure; (c) assist the IAs to optimize technical design of the project works from environmental aspect; assure the environmental mitigation measures are well undertaken in construction and operation; (d) guide local environmental monitoring stations or other licensed institutes to conduct environmental impact monitoring as per requirements specified in the EMP during construction; review the external environmental impact monitoring; compare the predicted with the actual environmental impacts, assessing the effectiveness of the mitigation measures, and suggesting enhancement measures, as required; (e) provide training to PMO, PIUs, and project stakeholders on ADB’s environment safeguard requirement; (f) provide training for the GRM access points; (g) guide CSC environment engineers and review compliance with the EMP based on site visits for each subproject, and develop a schedule for conduct of environmental monitoring with EMS. The EMS findings will be reported in the Environment Monitoring Report format acceptable to ADB every quarter along with the progress report; (h) review site specific EMPs prepared by CSC Environment engineers; (i) assist PMO and PIUs in organizing public meetings in the subproject areas to present and discuss EMP implementation progress, solicit community opinions and concerns, and agree on required corrective actions; and (j) submit English and Chinese internal monitoring reports to ADB with quality acceptable to ADB every 3 months during implementation of project. The National Biodiversity Specialist for 2 person-months is required for reviewing and verifying the aquatic and terrestrial monitoring surveys reports submitted by two short team Biodiversity Survey Specialists hired by the IAs under separate contracts.

72. The indicative inputs are summarized in following below.

Table 27: Project Management and Implementation Support National International person- No. Title person-months months 1 Urban development specialist/Team leader 18 0 2 Civil engineering specialist/Deputy team leader 0 48 3 Urban road and bridge specialist 0 12 4 Water supply and wastewater specialist 0 12 5 Municipal solid waste engineering specialist 0 6 6 River rehabilitation specialist 0 6 7 Building design and construction specialist 0 12 8 Hospital construction and management specialist 0 6 9 School construction and management specialist 0 6 10 Information system specialist 2 6 11 Procurement and contract management specialist 0 20 12 Financial and economic specialist 4 12 13 Environmental specialist 4 10 14 Biodiversity specialist 0 2 15 Social, gender, indigenous people specialist 2 12 16 Resettlement specialist 0 12 17 Project performance management system specialist 2 6 18 Wildlife trafficking specialista 0 3 Total 32 191 a Wildlife trafficking specialist will be engaged to support the government with cross-border dialogue on trade and wildlife trafficking issues, assessment, monitoring and reporting. 43

2. Package CS2: External Environmental Monitoring

73. An external environmental monitoring Experts/Agency/NGO will be engaged to conduct a third party independent review of EMP implementation monitoring for the entire duration of project implementation. The PMO will retain qualified and experienced external experts21 (national consultants who are individuals or through firm/institute or qualified NGOs to verify monitoring information for projects with significant impacts and risks. They will be engaged using CQS method. The external environment monitoring experts will verify and review the following: (i) conduct independent verification of the project’s environmental management performance, undertake site visits as required, identify any environment-related implementation issues, propose necessary corrective actions, reflect these in a corrective action plan (ii) review project progress and compliance with the EMP based on field visits, and the review the semiannually environment monitoring reports submitted by the environmental monitoring stations and reported by implementing agencies. The findings will be reported in the format acceptable to ADB every quarter and provide list of required corrective actions; (iii) determine if any adverse impacts have occurred during project implementation compare the predicted impacts with the actual environmental impacts, assessing the effectiveness of the mitigation measures, and suggesting remedial and enhancement measures, as required; (iv) participation in ongoing stakeholder consultations and evaluation and reporting on how environmental grievances, if any, are handled and make recommendations to resolve any issues or problems, and providing independent advice to the PMO and relevant implementing agency; and (v) submit English and Chinese external monitoring reports to ADB with quality acceptable to ADB every 3 months during implementation period and during operations.

74. External environment experts having various sector expertise (approx. 3-4 in number) will be hired until the project completion report is issued through the loan proceeds. The external experts must have relevant expertise in construction, water and sanitation, electric vehicles, biodiversity, forestry etc. if possible. The external experts are mentioned in table below:

Table 28: External Environmental Monitoring National No. Title person-months 1 External environmental monitoring 36

3. Package CS3: External Land Acquisition and Resettlement Monitoring

75. An external land acquisition and resettlement monitoring agency will be engaged to conduct RP implementation monitoring for the entire duration of project implementation. The PMO will engage the national consultants by firm/institute during implementation, using CQS method. The external LAR monitor will: (i) monitor the internal RP(s) compliance; (ii) conduct routine inspection on RPs implementation; (iii) provide training to project stakeholders on ADB’s LAR safeguard requirement; (iv) review project progress and compliance with the RPs based on field visits, and

21 ADB SPS 2009 - External experts mean experts not involved in day-to-day project implementation or supervision

review the LAR impacts. The findings will be reported in the format acceptable to ADB; (v) make recommendations to resolve any issues or problems, and providing advice to the PMO and relevant implementing agency; and (vi) Prepare and submit English and Chinese external monitoring reports to the PMO and ADB with quality acceptable to both the PMO and ADB every 6 months during implementation of plans.

76. The RP implementation monitoring is shown in the following table:

Table 29: External Land Acquisition and Resettlement Monitoring National No. Title Person-months 1 External land acquisition and resettlement monitoring 22

4. Package CS4: External Ethnic Minority Development Plan Monitoring

77. An external ethnic minority development plan monitoring agency will be engaged to conduct EMDP implementation monitoring for the entire duration of project implementation. The PMO will engage the national consultants by firm/institute during implementation, using CQS method. The objectives of the external monitoring includes: (i) ensuring that the EMDP is being properly implemented and the overall objectives of the EMDP are being met; (ii) collecting data and information to identify progress; (iii) analyzing data to describe impacts of EMDP measures; (iv) ensuring that appropriately participatory approaches have been adopted; (v) monitoring indicative actions proposed to identify issues during the implementation; and (vi) ensuring that the grievance mechanism is effective, and updating the monitoring indicators if necessary.

78. The external EMDP monitor will: (i) monitor the internal EMDP compliance; (ii) conduct routine inspection on EMDP implementation; (iii) provide training to project stakeholders on ADB’s EMD safeguard requirement; (iv) review project progress and compliance with the EMDP based on field visits, and review the EMDP impacts. The findings will be reported in the format acceptable to ADB; (v) make recommendations to resolve any issues or problems, and providing advice to the PMO and relevant implementing agency; and (vi) Prepare and submit English and Chinese external monitoring reports to the PMO and ADB with quality acceptable to both the PMO and ADB every 6 months during implementation of plans.

79. The EMDP implementation monitoring is shown in the following table:

Table 30: External Ethnic Minority Development Plan Monitoring National No. Title person-months 1 External ethnic minority development plan monitoring 22

5. Package CS5: Start-up Consultants

80. A group of start-up consultants will be engaged to assist executing and implementing agencies, and PMO for the preparation and implementation of the project before the project implementation support consulting team is mobilized. The start-up consultants will assist PMO in 45

bidding document preparation and procurement assistance, EMP update and implementation, RP update and implementation, etc. The start-up consultants include a procurement specialist, and environmental specialist and a LAR specialist. The consultants shall be engaged through ICS for initial project implementation support. The consultants will assist the PMO in: (i) establishing initial project management system including internal procedures of routine data filling and information exchange for procurement, and required reporting on project progress and safeguards; (ii) assisting PMO for recruiting consulting services for the project implementation support consultant through QCBS method in accordance with ADB guidelines and procedural requirements; (iii) assisting PMO for coordinating the preparation of bidding documents under advance contracting and retroactive financing in accordance with ADB guidelines and procedural requirements, providing technical review of the bidding documents and assisting the procurement of the advance contracting packages and the implementation of the retroactive financing packages; (iv) work with PMO’s Environment Supervision Officer and update the EIA and EMP/EMoP for ADB approval prior to the construction of the civil work contracts, providing guidance for EMP implementation and monitoring system development, and collecting EMP baseline data; hiring of Environment Monitoring Stations for developing baseline for environmental parameters on air, water, noise, soil, biodiversity information to be collected before startup of construction. Assist PIUs in contracting of Environmental Supervision Consultants (three ESCs - one at each PIU) for review of civil works contract and approve site specific EMPs; (v) updating the RPs for ADB approval prior to the implementation of the RPs, establishing RP implementation and monitoring framework, inspecting the RP implementation and collecting the RP implementation data, preparing and submitting RP implementation progress report; (vi) ensuring the communications strategy, grievance redress system, information disclosure systems are established and functioning and that external monitoring agencies for safeguards are engaged before start of physical works; (vii) collecting necessary information for reporting requirement of ADB including, semiannual implementation progress report, and project administration manual update for inception mission; and (viii) providing training on project management, procurement, disbursement, financial management, and PRC’s national and ADB’s environmental and social safeguards policy and procedures.

81. The start-up consultants is shown in the following table:

Table 31: Start-up Consultants National No. Title person-months 1 Contract management and procurement specialist 8 2 Environment specialist 3 3 Resettlement specialist 3

6. Package CS6: Border Trade and Logistics Development Capacity Building

82. The purpose of this capacity building component is to improve the management and development of the Qingshuihe Border Resident Trade Market (BRTM) and the Qingshuihe International Cooperation Area (ICA) with the goal of reaching full occupancy and maximizing the

trade and output values of these facilities. A border resident trade market is already operating in Qingshuihe, and will relocate to the new facility, while the international cooperation area is an entirely new facility. Each faces different management challenges.

83. The border trade market area, and corresponding trade volumes that it can handle, will increase by 20–30 fold. Management systems that are currently in place do not necessarily scale, potentially leading to inefficiencies and delays, and lower trade revenues; and larger trade volumes will create opportunities to provide supporting services that are not currently offered. In addition, new functions have been added, such as the general trade zone, which will require new systems and procedures.

84. In the case of the ICA, this is an entirely new facility with a new management structure and inexperienced staff. Market demand and competition for the facilities is insufficiently understood to guide the positioning, and to optimize the build out of various production and logistic facilities and the development of services and staffing to best meet current and emerging business needs.

85. The objectives of this capacity building component are to : (i) improve the efficiency and effectiveness of the BRTM operations and management, (ii) provide a better understanding of the potential market demand for and competitiveness of the facilities of the ICA, (iii) assist in creating a marketing and business development strategy for ICA, and (iv) strengthen overall management capabilities.

86. An operations and maintenance (O&M) assessment and improvement plan for the trade market area aimed at redesigning business operations to improve efficiencies, and the effectiveness of the trade market platform. The assessment will cover (i) operations strategy, (ii) identifying opportunities for new and streamlined processes and procedures to facilitate border trade and customs clearance and protocols, and (iii) the facilities plan, including the phasing of facilities construction. A business forum will be organized to gain feedback from trade and distribution firms on their needs. The assessment will also serve as an input for developing the information systems, and information and communications technology platform.

87. A strategic business development and marketing plan for the ICA, which will involve several inter-linked activities: (i) a detailed market analysis; (ii) a competitiveness analysis and advantage assessment; (iii) the formulation of a marketing plan, including positioning and business attraction strategies; (iv) the formulation of an operations plan and zone-specific programs and services; and (v) the formulation of a facilities plan, including construction phasing. The detailed market analysis will include a survey of small and medium-sized enterprises (SMEs) in manufacturing, trade and logistics, which will be conducted in conjunction with the Strengthening SME Development component described in the SME capacity development section.

88. The capacity development component aims to provide additional supports to facilitate the further development of the two project components under the project output 1: (i) border resident market; and (ii) international cooperation zone. The project components will build new border resident trade market to help the border trade development, and the international cooperation area to promote the establishment of production and manufacturing to serve the border as well as regional trade development. The capacity development component will conduct detailed investigation and survey for the current border trade and regional cooperation situation including the operation in the current border resident trade market as well as the custom inspection and processing procedures, identify the obstacles hindering the trade development and the 47

opportunities for the border trade growth, and develop the short-term and long-term planning to help the operation of the border trade market and business development for the international cooperation area. Specifically, the scope of the work for consulting team may include but not limited to: (i) Detailed survey and investigation of the current border resident trade market on border trade development, custom inspection and processing procedures, market operation and management, problems and obstacles hindering the border trade development, etc. (ii) Detailed survey and investigation on border trade production and manufacturing, market development tread and demands, current productions and manufacturing in the border area, market potential and border trade development trends, problems and opportunities for the development of production and manufacturing in the border area. (iii) Detailed survey and investigation on the border trade and production in border area in Myanmar side, identify problems and obstacles in border trade between Myanmar and the PRC as well as opportunities for the border trade development with the PRC. (iv) Detailed survey and investigation on the development of free trade zone (FTZ) development, conduct demand survey and analysis on the FTZ in the border area, and identify the opportunities in development of FTZ in the project area. (v) Conduct detailed financial and economic analysis to propose the best option for the improvement of border trade development and the establishment and development of the international cooperation zone. (vi) Develop short and long-term operation and border trade development planning for the border resident trade market, provide recommendations on the improvement of border trade market operation and border trade growth. (vii) Develop short and long-term development planning for the international cooperation area, identify the productions and manufacturing to be established in the area based on the market demands, provide recommendations on the development of the international cooperation zone and business development planning to help the business growth. (viii) Development of training plan and provide training for border resident trade market development improvement and the establishment and production growth for the international cooperation area.

89. The consulting team will be led by an international regional cooperation and trade development specialist, assisted by border trade and logistics specialist and border resident trade market specialist to develop the short and long-term border resident trade market development planning, and the by the industrial production specialist, FTZ operation and management specialist to develop the short and long-term development plan for the international cooperation area. The consulting team will also include a Myanmar international trade specialist to provide trade and industrial development information from Myanmar side, a custom operation and management specialist to assess the custom operation and improvement, a finical and economic specialist and trade planning specialist to help on the development of the short and long-term planning. The proposed consulting team’s inputs are shown in the following table.

Table 32: Border Trade and Logistics Development Capacity Building International National No. Title person-months person-months 1 Regional development and trade specialist/Team leader 4 0 2 Border trade and logistics specialist/Deputy team leader 0 12

International National No. Title person-months person-months 3 Myanmar trade specialist 2 4 4 Border resident market management specialist 0 3 5 Border trade industrial production specialist 0 3 6 Logistics development specialist 0 3 7 Free Trade Zone (FTZ) operation and management specialist 0 3 8 Custom management specialist 0 3 9 Economic and financial specialist 2 6 10 Border trade planning specialist 1 3 Total 9 40

7. Package CS7: Teacher Training and Curriculum Development

90. The project capacity development component will assist Cangyuan and Gengma/Qingshuihe to develop teacher training program and the elementary school curriculum enhancement in consideration of large number of Myanmar students enrolled in the two elementary schools to be constructed or expanded under this project. The major tasks for the consultants may include but not limited to: (i) Design methodology and tools to collect information and data on teachers and headmasters, and their training needs in Cangyuan and Gengma counties, and guide the consulting team to carry out data collection and analysis. (ii) Assist the Education Bureaus of Cangyuan and Gengma to develop a comprehensive and sustainable 5-year local teacher capacity development plan, which will make reference to international and national good practices. (iii) Ensure that the Plan meets the requirements laid out in the Opinion on Comprehensively Deepen the Reform of Construction of Modern Teacher Force issued by the State Council in 2018. (iv) Delineate different well-structured training modules (such as subject knowledge, pedagogy, and ICT literacy for education) and targets different teacher categories, including pre-service teachers, in-service teachers, backbone teachers, multi- subject teachers, dual-language teachers, and headmasters in the Plan. (v) Develop the Plan based on systematic needs assessment generated by the government TMIS. (vi) After approval of the Plan by the Education Bureaus, guide the consulting team, the Education Bureaus, and relevant teacher training institutes to implement the Plan, while providing technical inputs for developing training programs and materials. (vii) Provide related capacity building to officials assigned by the Education Bureaus. (viii) Facilitate participation of Cangyuan and Gengma in Green Pepper Plan and Education for Poverty Alleviation programs that interest Cangyuan and Gengma schools. (ix) After approval of the Plan, in collaboration with the Education Bureaus of Cangyuan and Gengma, and relevant teacher training institutes, develop training programs and materials (including those for life skills teachers and managers, and a Student Dormitory and Canteen Management Manual), and assist Education Bureaus and relevant teacher training institutes in delivering training programs for teachers and headmasters to implement the Plan, under the guidance of the International and national Teacher Capacity Building Specialists.

91. The proposed consulting team is in the following table.

Table 33: Teacher Training and Curriculum Development International National No. Title person-months person-months 1 Education and elementary school development specialist/Team 4 0 leader 2 Teacher human resource development specialist/Deputy team 0 6 leader 3 Elementary curriculum development specialist 0 6 4 Myanmar education specialist 1 3 5 Teacher training specialist 0 4 Total 5 19

8. Package CS8: Healthcare Service and Hospital Operation and Management Improvement

92. The capacity development component will help the hospital management to develop a comprehensive plan for the improvement of the hospital services, the operation and management. The consultants shall be in close coordination with the provincial and city healthcare agencies, ADB, and other TA consultants, and under the supervision of the team leader, the consultant will: (i) carry out a demand analysis by reviewing the population and public health profiles in the project areas, taking into account migration and regional integration; (ii) perform functional planning of the hospitals, considering the local epidemiological profile and existing service supply. This includes the scope of health services, departments and specialties, human resource plan, equipment and goods procurement list etc.; and (iii) develop an initial hospital management guideline according to government regulations including human resource plan, quality assurance and continuous improvement, financial management, IT, logistics, medical waste management, patient referral mechanisms etc.

93. The proposed consulting team shall include healthcare service and management specialist and health facility planner and other supporting specialists with the experience in medical services and/or public health, preferably with ADB-related experience. Experience of large hospital management and the experience of establishing modern hospitals are desirable. The proposed specialist team is shown in the following table.

Table 34: Healthcare Service and Hospital Operation and Management Improvement International National No. Title person-months person-months 1 Healthcare service and management specialist/Team leader 4 0 2 Hospital operation and management specialist/Deputy team 0 6 leader 3 Border medical service specialist 0 6 4 Myanmar medical service specialist 2 4 5 Health facility planner 0 3 Total 6 19

9. Package CS9: RCI Development and Capacity Building

94. The purpose of this study is to gain an enhanced understanding of the strategic role of the LBECZ within the larger Yunnan-Myanmar development area, and to propose pro-active steps to systematically increase its competitiveness and capacity to deliver on this role. While the general positioning of the LBECZ within the Yunnan border area and the Belt and Road Initiative (BRI) is fairly well understood, how competing efforts at other Yunnan land ports and the various regional cooperation initiatives are progressing and will impact the LBECZ region has not been fully explored. A competitive assessment of the LBECZ vis-à-vis other corridors, and an improved

understanding of the development potential and trajectories of border areas along major trade corridors will greatly strengthen the visioning and planning for the region, which in turn will guide investments in trade and economic development in this region over the next 10-20 years.

95. This component will also help to strengthen the overall planning in the region by identifying the most effective development strategies for the LBECZ region, targeting investment to key sectors, and improving the spatial organization of key activity zones, so that the LBECZ region can achieve higher returns on investment and strengthen the overall border regional economy. The prime objectives of the study will be to: (i) Undertake a detailed assessment of the larger Yunnan development area and the PRC–Myanmar trade related initiatives in terms of international and regional trade and cooperation, and identify the relative roles of various land border zones; (ii) Conduct detailed survey and investigation of the current regional cooperation and integration development, especially for countries in the Southeast Asia under GMS including Myanmar, Lao, Cambodia, Vietnam, Thailand, Yunnan/PRC, identify regional and countries cooperation and development strategies and the strategy fits of the proposed project, problems and development opportunities; (iii) Conduct detailed survey and investigations on the PRC--Myanmar cooperation and development planning, especially the development of the PRC–Myanmar economic development zone, border cooperation and the development of border industrial parks in both sides of the border, and identify the development opportunities and cooperation areas for LBECZ development project; (iv) Identify the relative strategic role of the LBECZ, Zhenkang and Cangyuan within this wider trade and economic development framework. Based on comparative advantage in Yunnan, and development potential that draws on learning from international experience on border trade development along major trade corridors; (v) Conduct a Strengths, Weaknesses, Opportunities and Threats (SWOT) assessment of the LBECZ to deliver on this strategic role, including an institutional and spatial assessment; (vi) Assess different development timelines and scenarios linked to completion of key Lincang–Kyaukpyu Port corridor infrastructure and policies in both the PRC and Myanmar; (vii) Develop a strategy and action program to enhance LBECZ’s regional development role and competitiveness in cross-border trade and cooperation; (viii) Identify linkages between the strategies and other RCI projects such as ADB Lincang–Mekong River and BRI; and (ix) Develop short-term and long-term business and production development planning for LBECZ including commercial development, production and manufacturing development, logistics planning and development, tourism development, etc.

96. The proposed consulting team is shown in the following table.

Table 35: RCI Development and Capacity Building International National No. Title person-months person-months 1 RCI development specialist/Team leader 4 0 2 Regional development planning specialist/Deputy team leader 0 9 3 International and Myanmar trade development specialist 2 4 4 International cultural and social exchange specialist 1 3 5 Social service and public involvement specialist 0 3 Total 7 19 RCI = regional cooperation and integration. 51

10. Package CS10: TVET Planning and Development

97. The project capacity development aims to assist LBECZ to establish the TVET development planning and programs to cope with demands on the technicians and skilled labors for the development of production, manufacturing, logistics, border trading and other areas as the fast development of LBECZ. The project will also assist the local municipal government to address the training and management of the large amount of Myanmar immigrated labors and businesses.

98. The Consulting Firm will support the establishment of new majors meeting the needs of enterprises in priority industries at key TVET and HE institutions in Lincang, namely, Lincang Technician School, Lincang Agriculture Vocational Education School, Lincang Finance and Trade Vocational Education School, and West Yunnan University. It will also support the development of short-term skills training courses for migrant workers and local communities meeting the needs of workforce in labor-intensive industries at these key TVET and HE institutions. The consulting firm will: (i) Review recent trends in priority industries (agriculture, equipment manufacturing, logistics/supply chain management) and identify key products, technologies, processes that need to be developed and/or upgraded; (ii) In consultation with government bureaus (education, HRSS, agriculture, tourism, SME, industry and commerce, etc.), industry associations, enterprises, and key TVET and HE institutions, and by designing and conducting surveys, identify new majors and short-term skills training courses to be developed at key TVET and HE institutions; (iii) Assist Education Bureau and key TVET and HE institutions in establishing improved governance structures involving enterprises, industry associations, as well as mechanisms to increase school-enterprise cooperation (including deployment of part-time teachers from industries), and to develop curriculum, training materials, methods, facilities, and assessment jointly with enterprises and industries; (iv) Assist Education Bureau and key TVET and HE institutions in identifying and partnering enterprises to develop new majors, including the development of job profiles and competency framework, curriculum, training materials, training methods, training facilities, and assessment; (v) Assist key TVET and HE institutions and partner enterprises in developing job profiles and competency framework, curriculum, training materials, training methods, training facilities, and assessment; (vi) Assist key TVET and HE institutions, relevant government bureaus, enterprises, and industries in developing curriculum, training materials, training methods, training facilities, and assessment for new short-term skills training courses.

99. The proposed consulting team is shown in the following table.

Table 36: TVET Planning and Development International National No. Title person-months person-months 1 TVET development and planning specialist/Team leader 3 0 2 Industrial production and development specialist/Deputy team 0 6 leader 3 TVET training planning specialist 0 3 4 TVET training specialist 1 3 Total 3 12 TVET = technical and vocational education and training.

11. Package CS11: Small and Medium-sized Enterprises Development Planning

100. The purpose of this project is to provide advisory support on the creation of an SME development program. SMEs dominate trade, logistics, manufacturing and service activities within the LBECZ area, and are the primary target of the Border Trade Area facilities being funded by ADB. As such the success of the Border Trade Area, and the Lincang border region more generally, depends on the development and growth of the SME sector. To facilitate SME development in general, and at the same time, enhance the attractiveness of the LBECZ as a business location, the LBECZ should provide SME development support, including economic platforms, incentives, business development services and financing.

101. The objectives of this project are to assist the LBECZ in this goal by: (i) providing a clearer picture about the growth and composition of SMEs in the Lincang border area, as well as their issues and constraints, to better understand SME support needs; (ii) providing knowledge and information to LBECZ policymakers about SME development programs; and (iii) formulating a strategy for SME development in the LBECZ border area. The project advisory support will consist of the following interlinked activities: (i) A baseline survey of small and medium-sized enterprises (SMEs) in Lincang Border Area, focusing especially on the Mengding district. The baseline survey will seek to (a) create a profile of the SME population, (b) identify the challenges and opportunities faced by Lincang Border SMEs, and (c) determine the need for facilities, business support and development services, and financing. The formulation of the survey will be done in conjunction with the ICA Marketing and Development Strategy (see above), and the findings shared. (ii) A study tour for policymakers from LBECZ and Cangyuan and Zhenkang border counties, to a Guanxi land border development zone to observe good practice in the provision of SME development services and financing. (iii) An international workshop in Mengding to share national and international good practices in the design and provision of SME development programs. (iv) The formulation of a strategy to strengthen the development of SMEs in the Lincang border area, with a special focus on practical measures to develop business development services and SME financing.

102. A core team of one international consultant and three national consultants will be involved in all four activities outlined above in order to ensure continuity across the entire SME development component. They will coordinate closely with the ICA Marketing Assessment and Development project advisory team. The proposed consulting team is shown in the following table.

Table 37: Small and Medium-Sized Enterprises Development Planning International National No. Title person-months person-months 1 SME development specialist/Team leader 5 0 2 SME industrial development specialist/Deputy team leader 0 10 3 SME training planning specialist 0 4 4 SME training specialist 0 4 Total 5 18 SME = small and medium enterprises.

12. Package CS12: LBECZ Development Master Planning Study and Improvement

103. The capacity development component aims to provide supports and valuable inputs on the improvements to the LBECZ master plan development. The current LBECZ master plan is under final adjustment and approval processing. The master plan will need to be updated to cope with the development needs for LBECZ, especially the development of RCI and growth of border trade and border production. It will also provide the inputs and the supports as well as the recommendations for the development of next government 14th five-year plan. The current LBECZ master plan shall be reviewed and strengthened. First of all, the master plan for the urban development will be reviewed for land use, traffic planning, municipal services, etc. with the improvement recommendations provided. The master plan shall address the development needs for the industrial production and manufacture development in consideration of regional cooperation and integration. The border tourism is another area that should be studied and developed together with industrial and trade development in the border area. Lincang and Mengding have the special tourism resources, especially the cities and tourism sites in the border area in Myanmar side. The tourism development should be included in the master plan development. The urban green development shall be the focus of the urban planning and development. The current master plan shall be reviewed and the detailed study on urban green development shall be carried out and the improvement recommendations will be provided. The smart city development is promoted by the PRC central government as the new requirement for all municipalities, and the contents of the smart city development and the information system shall be included in the urban master plan. The urban green transportation is another key element in all cities and towns. The current public transportation system in Mengding/Qingshuihe is not well developed yet. The detailed study on green public transportation development shall be conducted and the recommendations shall be provided on green public transportation, non-motorized traffic, pedestrian and bicycle traffic, etc. shall be considered and included in the updated urban masterplan. The specific tasks for the consulting team may include but not limited to: (i) Detailed survey and investigation of the urban development for municipalities and urban areas in LBECZ to understanding the current situation in the urban development and identify the problems and opportunities for improvement. (ii) Reviewing the current LBECZ master plan on urban planning, land use, municipal services, social and cultural services, etc. and providing recommendations for improvement. (iii) Conducting detailed industrial production and manufacturing study to meet the needs for border trade and regional cooperation development needs, developing the relevant sections in the masterplan for the industrial and trade development for LBECZ. (iv) Conducting detailed border trade and logistics development study to develop the development strategy for border trade and develop the border trade section in the LBECZ masterplan. (v) Conducting detailed analysis of urban/forestry afforestation requirements as per Loan Covenants and attaining Co2 mitigation as per Climate Risk and Variability Analysis (CRVA) for the project activities. The Tree replacement/green belt development programs at various subproject locations must emphasize environmental and ecological protection, natural resources and biodiversity22 protection, river protection and restoration, sponge city development, etc. while

22 According to SPS, the borrower/client will need to identify measures to avoid, minimize, or mitigate potentially adverse impacts and risks and, as a last resort, propose compensatory measures, such as biodiversity offsets, to achieve no net loss or a net gain of the affected biodiversity.

ensuring that the trees planted would be high in Co2 fixation but must be local variety thereby ensuring no invasive species is planted. The consultant will also develop green development section for the masterplan. Design a proper system of trees plantation and tree survival tracking and monitoring system over the project period. (vi) Conducting detailed information system and smart city development study in line with the government initiatives for information system development and applications in the urban development. The study shall identify the areas of information system development and the application smart city, and the sections for the information system development shall be developed and included in the LBECZ masterplan. (vii) Conducting detailed study on urban green transportation development to develop the masterplan planning in considerations of public transportation, new energy bus system, non-motorized traffic, pedestrian and bicycle traffic including public sharing bikes, etc. (viii) Developing the training plan to address the key issues in masterplan development and providing training for the management staff in EA and IAs for capacity development on urban planning and masterplan development.

104. The consulting team will be led by an international urban development and planning specialist, assisted by a team of specialists for urban planning, industrial production and manufacturing, border tourism development, urban green development, smart city and information system development, and urban green transportation development specialist to address the special development needs in these areas and develop the input and recommendations for the LBECZ masterplan. Greening specialist would have requisite knowledge in tree species of the Yunnan area. Besides the function of monitoring the development of green belt around subprojects, the specialist will also perform the function of implementation and monitoring of the forestry afforestation scheme in coordination with Forestry Bureau on behalf of PMO. The specialist will monitor and report the green belt and forestry tree 23 plantation requirements for Co2 sequestration and replantation as per mandatory requirements of the project. The expert will ensure that only local species24 are replanted in the project funded areas. The proposed consulting team is shown in the following table.

Table 38: LBECZ Development Master Planning Study and Improvement International National No. Title person-months person-months 1 Urban development and planning specialist/Team leader 5 0 2 Urban planning specialist 2 9 3 Industrial park development specialist 0 3 4 Border tourism development specialist 0 6 5 Urban green development specialist 0 3 6 Smart city development specialist 0 3 7 Urban green transportation development specialist 1 3 Total 8 27

23 As per Loan Covenants 24 Avoiding any invasive species plantation in the region 55

VII. SAFEGUARDS

A. Environment

105. Environment Due Diligence. The project is classified as environment category A following ADB’s Safeguard Policy Statement (SPS 2009). The EIA incorporates the results of the Domestic EIAs that were approved by the project city environment protection bureau (EPBs). The project environmental impact assessment (EIA) and environmental management plan (EMP) identify the environmental mitigation and monitoring measures needed during project implementation to address identified environmental risks and impacts. These documents comply with the PRC’s regulatory requirements and ADB’s policies and requirements including ADB's Safeguard Policy Statement (SPS, 2009). The EIA concludes that the project’s anticipated environmental impacts can be mitigated through full and effective implementation of the EMP. The EIA will be disclosed on the ADB website at least for 120 days prior to ADB’s board consideration.

106. Potential impacts. The EIA identified potential impacts during construction and implementation. These include earthwork for all civil work of road construction, water treatment plant and wastewater treatment plant, water piping and drainage network construction, border resident trade market and international cooperation area as well as the construction of schools and hospitals. The construction activities will have environmental impacts from soil erosion and sedimentation, construction noise and dust, construction site wastewater discharge and garbage disposal, road traffic safety for school children and local residents, etc. Avoidance of impact through design, site management and mitigation measures through construction management is identified for each impact in the project EMP which will be implemented by the contractors and monitored and reported by the PMO. In all cases, where the EMP requirements are strictly followed, it is expected that construction impacts will be kept at acceptable levels. None of the project sites is located or adjacent to environmentally-sensitive areas and biodiversity and climate change impacts are expected to be minimal and suitable mitigation measures will be adopted during detailed design and implementation. There is potential increase in illegal logging wildlife trafficking in the border areas of Yunnan due to rich diversity of the area. The EIA concludes that full and effective implementation of the EMP, together with the prescribed capacity building and training, grievance redress will result in minor residual impacts that are within the limits of the PRC standards defined in the EMP.

107. Environmental benefits. The long-term implementation benefits of project include: (i) Development of cross-border trading infrastructure would require creation of new facilities for solid waste collection, drainage, wastewater, water supply in the port area. It would reduce air, water and solid waste pollution, improve road connectivity and better the economy of the area by creating wide scale employment for the community. (ii) Construction of water supply facilities, water transmission and distribution pipelines, wastewater treatment facility, solid waste management collection and transfer stations for the entire port area to improve urban environment. It would develop infrastructure for MSW collection and transport equipment that would lead to reduction of air pollutants and wastewater pollution, improvement of existing sewerage network and wastewater treatment system, and reduce polluted sewage discharging to the rivers (iii) Construction of new municipal roads and new bridge, procurement of electric public transportation vehicles and setting up of electric charging stations to provide

efficient transportation, will reduce air pollution, traffic hazards and develop a pioneering approach in provision of electric charging piles for electric vehicles across two towns; (iv) Construction of river embankments and landscaping would significantly improve the green cover, reduce soil erosion and provide sustainable surrounding ecological environment. (v) Construction and expansion of schools and hospitals would cater to increased community needs through provision of schools and state-of-the-art health care facilities that are not currently available at city level. This initiative also corresponds to Lincang Municipal Government’s own ongoing upgradation of its own waste handling facilities.

108. Public consultation and grievance redress mechanism. Information disclosure and two rounds of public consultations were conducted during the EIA in accordance with the PRC Guideline on Public Consultation in EIA (2006) and ADB’s SPS. Public concerns about air and water pollution, labor issues, climate impacts, and waste management were documented and have been addressed in the project design. Public consultations are conducted during the project design and the EIA review, and will continue throughout project implementation and any environmental grievances will be handled in accordance with the grievance redress mechanism established for the project. According to EMP, a project-specific GRM has been established to receive and manage any community concerns which may arise due to the project. The PMO is the lead agency that will have final responsibility for management, implementation and reporting of the GRM. The PMO Environmental Supervision and Social Officers will coordinate with ESCs to implement the public consultation and GRM procedure as per the following tasks: (i) instruct the PIUs, local EPBs and contractors on their responsibilities in the GRM; (ii) establish a simple registry system, to document and track grievances received (including forms to record complaints and how they have been resolved); (iii) report on progress of the GRM in the semiannual project progress reports and the semiannual environmental and resettlement monitoring and progress reports to ADB; and (iv) arrange future public consultations for the project. The GRM procedures, reporting timelines, roles and responsibilities of all agencies, and GRM contact persons in each PIU, are described in the EMP.

109. Capacity building and training programs. Capacity building in environmental management will be provided by the LIEC to the PMO, implementing agencies, contractors, and construction and supervision company’s Environmental Engineers in accordance with the training plan in the EMP, to ensure adequate institutional capacity for managing the environmental impacts. The training program will be developed by LIEC and ESCs of the IAs under supervision of PMO Environment Supervision Officer. Each module of training should last at least one day with specific program and should include interactive problem solving tasks. The following table lists the training requirements.

Table 39: Training Programme - Summary of Training Needs Training topic: Summary of training purpose and Recipients/ Frequency or content Participants target date Introduction to EMP Overview of EMP including site All PIU At beginning of information, pollution risks and controls, engineers/con project and program. Preparation of site specific tractors EMPs and training on implementation to staff of Construction contractor(s) 57

Training topic: Summary of training purpose and Recipients/ Frequency or content Participants target date Review of EMP, Review of EMP including new changes All PIU One year after Refresher training on and updates Engineers/con project start, or EMP tractors more frequently if required Training on specific pollution risks and controls Emergency case To identify on-site potential accident All PIU During the response planning scenario and how to plan potential Engineers/ project emergency response actions. contractors/ implementation Local residents Air Quality Monitoring Ambient Air Quality, Volatile Organic All PIU During the Compounds, Particulate Matter, etc. Engineers project Greenhouse Gases /contractors implementation Water Conservation Water Monitoring and Management, All PIU During the Process Water Reuse and Recycling, Engineers project drainage system /contractors implementation Waste water and Liquid Effluent Quality, Discharge to All PIU During the Ambient Water Quality Surface Water, Discharge to Sanitary Engineers project Sewer Systems, Land Application of /contractors implementation Treated Effluent, Septic Systems, Wastewater Management Hazardous Materials General Hazardous Materials All PIU During the Management Management, Hazard Assessment, Engineers project Management Actions, sludge /contractors implementation management from WTP and WWTPs. Fire safety, disaster Fire, and Explosion Prevention, Control All PIU During the management Measures, Disaster Management and Engineers project Response, Emergency onsite procedures /contractors implementation Flora and Fauna, Wildlife trafficking, killing of mammals, All PIU During project Wildlife, aquatic fauna fish, reptiles and amphibians in the area, Engineers, implmenetation Conservation illegal logging of trees, medicinal plants, Local workers, etc. public officials Occupational Safety, Occupational Health and Safety All PIU During the Health and Safety Emergency Preparedness and Response, Engineers project Community Involvement and Awareness /contractors implementation Waste Management General Waste Management, Waste All PIU During the Management Planning, Waste Recycling Engineers project and Reuse, Treatment and Disposal, /contractors implementation Waste Storage, Transportation, Treatment and Disposal, Commercial or Government Waste Contractors Monitoring and evaluation Participatory M&E of Simple methods for recognizing adverse Local During the impacts. impacts on environment residents, project Methodology of monitoring and evaluation Construction implementation on the water quality contractor Energy Efficiency and Introduction to energy efficiency, heat loss, Local During the Green Buildings green building concept residents, project facility implementation management bodies Project management M&E, Implementation assessment the All PIU At the beginning and implementation program. Engineers of the project /contractors

ADB = Asian Development Bank, PMO = project management office, CSC = construction supervision company, EMP = environmental management plan, GRM = grievance redress mechanism, M&E = monitoring and evaluation, WTP = water treatment plant, WWTP = waste water treatment plant. Source: Asian Development Bank.

110. In addition to the training on EMP implementation for mitigation, monitoring and reporting listed above, the Startup Environment consultant (hired under CS5) will also provide training to PMO and PIU staff on (i) inclusion of the EMP in project tenders and review of bids; and (ii) methodology for development of the GRM, including access points, roles, and responsibilities for project implementing agencies.

111. Environmental management plan update and bidding documents. In the design stage, the PMO will coordinate between the design institute and the EIA institute to incorporate the EMP mitigation measures into the detailed engineering designs with allocated environmental mitigation budgets. Any changes to the designs will be reviewed and approved by the government and ADB, and the EMP and environmental monitoring plan will be updated as needed. The EMP includes a comprehensive monitoring plan which covers both internal monitoring (by contractors during construction and operation) and external monitoring. The results of monitoring will be included in the project progress reports. A loan implementation environmental consultant (LIEC) will be engaged using the ADB loan to assist the PMO Environment Supervision Officer and PIUs Environment Supervision Consultants. The EMP will be a part of the bidding documents when procuring all civil work packages. To ensure that bidders respond to the EMP provisions, the PMO and the IAs will prepare and provide the following specification clauses for incorporation into the bidding documents: (i) budget for EMP implementation in the bidders’ proposals; (ii) environmental clauses for contractual terms and conditions; and (iii) the updated project EIA and EMP, and the domestic environmental impact assessment reports. In the design stage, the PMO will coordinate between the design institute and the EIA institute to incorporate the EMP mitigation measures into the detailed engineering designs with allocated environmental mitigation budgets.

112. To ensure that contractors comply with the EMP, the PMO will prepare and provide the following for incorporation into the bidding documents: (i) a list of environmental management requirements to be budgeted by bidders in their proposals, (ii) environmental clauses for contractual terms and conditions, and (iii) the updated EMP. The contractors and construction supervision companies will incorporate the EMP mitigation measures in their construction plans and will also be responsible for internal environmental monitoring during construction. Environmental impact monitoring will be conducted by the Environment Monitoring Stations who will be contracted by the PIUs. Assurances for environmental safeguards have been prepared and are included in the loan and project agreements.

113. Wildlife Trafficking: Due diligence was undertaken on wildlife trafficking during project preparation. While it was found that Quingshuihe is not a major wildlife trafficking trade center between Myanmar and PRC, ADB and the LBECZ agreed for the loan to include adequate capacity building measures to support wildlife law enforcement. The Project Management Consultants’ budget includes 3 months for a national wildlife trafficking consultant to provide a training program at the border posts in Quingshuihe area. It is proposed to include a $5,000 allocation to allow the training program to be implemented.

114. Implementation arrangements: LMG, the executing agency (EA), LBECZ, Zhenkang and Cangyuan county governments (implementing agencies) through the PMO’s Environment Supervision Officer will be responsible for ensuring that the project will be designed, constructed, and operated in accordance with (i) the domestic environmental, health, and safety laws, 59

regulations, procedures, and guidelines; (ii) ADB’s SPS, and (iii) the project EIA/EMP and environmental monitoring plan. The LMG holds the final responsibility for the implementation and compliance with the EMP and submit semiannually environmental monitoring report to ADB for review and disclosure at ADB website.

115. Project implementing agencies will supervise and provide guidance to the contractors to ensure that the EMP is effectively implemented. They will consolidate monthly environmental monitoring reports; ensure timely disclosure of the project EIA/ and/or EMPs in locations and forms accessible to the public; and take corrective actions when necessary to ensure no environmental impacts. The responsible parties for environmental management and supervision are outlined in the following table.

Table 40: Environmental Management and Supervision Agency Environmental Management Roles and Responsibilities LMG - Executing • Responsible for overall policy and direction control; Agency • Responsible for project coordination with LBECZ and county governments, liaison with ADB, financial management and administration; and • Providing guidance to PMO. PMO • Primarily responsible for implementation of project components, including finance and administration, technical and procurement matters, monitoring and evaluation, and safeguard compliance; • Assign one environment specialist as PMO’s Environment Supervisor who will (i) supervise contractors and their compliance with the EMP; (ii) conduct regular site inspections; (iii) act as local entry point for the project GRM; (iv) review environmental quality monitoring results provided by the IA; • Communicate and coordinate with ADB for project management and implementation; submit the project implementation progress reports and safeguard compliance monitoring reports to ADB; • Submit bidding documents, bid evaluation reports and other necessary documentation to ADB for review and approval; • Engaging loan implementation consultants, including environmental specialists to assist in supervision, tracking and reporting on EMP implementation for all packages; • Engage local environmental monitoring stations and external environment monitoring for environmental impact monitoring according to the EMP environment monitoring plan; and • Consolidate data from environmental monitoring reports into semiannual environmental monitoring reports and submit them to ADB for review and disclosure. ADB • Monitor and supervise the overall environmental performance of the project; • Review and approve the semiannual environment monitoring reports and disclose the reports on ADB website in line with ADB Public Communications Policy (2011); and • Conduct due diligence of environment issues and advise on corrective actions during the project review missions. Implementation • Responsible for day-to-day management work during the project preparation Agencies and implementation periods; (IAs) • assign an environmental specialist to supervise and monitor the implementation of the EMP; and liaison with PMO: • Responsible for all day-to-day work during the project implementation: • Communicate and coordinate with PMO/EA for project management and implementation;

Agency Environmental Management Roles and Responsibilities • Incorporate EMP clauses in bidding documents for civil works; • Establish local level dedicated Project Complaints Coordinating Unit in accordance with the project GRM; • Supervise and monitor EMP implementation and reporting to the PMO; and • Participate in capacity building and training programs; • Hire Environment Monitoring stations (EMS) to regularly monitor environment parameters at each sub-contract worksite; and • Hire Environment Supervision Consultants (3 IAs) and two biodiversity experts for LBECZ IA (one short term Terrestrial and one short term Aquatic monitoring experts). ESCs will monitor work by EMS. Contractor, • Construction contractors will develop site-specific EMPs on the basis of the Construction project EMP and will be responsible for implementing mitigation measures Supervision during construction under the supervision of the CSCs. Companies (CSCs), • CSCs will be selected through the PRC’s bidding procedure by the IAs. Environmental • CSCs will be responsible for supervising construction progress and quality, Supervision and EMP implementation on construction sites. Consultants (ESCs), • Each CSC shall have at least One Environmental Engineer on each Biodiversity Experts subproject construction site to: (i) supervise the contractor’s EMP implementation performance; (ii) prepare the contractor’s environmental management performance section in monthly project progress reports to be submitted to the IAs and PMO; (iii) ensure occupational health and safety management at work sites. These Engineer’s will be hired by the respective CSCs. • ESC’s will work under guidance of PMO Supervision Officer and assist respective PIUs in construction level monitoring on day-to day basis. • Two Biodiversity experts will assist ESC in providing biodiversity site specific data required for ADB monitoring and reporting. Guide Construction Contractors in adhering to EMP requirements for terrestrial and aquatic issues at each site concerned. Loan Implementation • LIEC is part of the Loan Implementation Consultant team hired under CS1: Environmental Project Management and Implementation Support. consultant (LIEC) • Provide technical assistance to the PMO/IAs for implementing the EMP; • Provide training to the staff of the PMO/IAs, contractor and CSCs; Training needs are mentioned in the PAM in section VIII safeguards. • Assist the PMO/IAs in preparing site specific EMPs; • Review updated EMP; • Confirm that mitigation measures have been included in engineering detailed design; • Review bidding documents to ensure that the EMP clauses are incorporated; • Advise on mitigation measures, provide technical support, and conduct environmental training; • Conduct annual EMP compliance review; and • Support PMO in preparing project progress reports including EMP implementation status summary and any additional mitigation measures taken. County/city Conduct environmental impact monitoring according to the EMP monitoring plan Environment and submit monitoring results to the PMO and PIUs. EMS will be appointed by Monitoring Stations PIUs with technical guidance from Start-up Environment Consultants mentioned in (EMS) or certified CS5. environmental entity External Monitoring • Review and analyze project related significant environmental impacts, Experts/Agency progress of implementation of mitigation measures as outlined in the project 61

Agency Environmental Management Roles and Responsibilities EIA/EMP, participation in ongoing stakeholder consultations and evaluation and reporting on how environmental grievances, if any, are handled; • Provide recommendations and suitable actions to PMO on any corrective actions; • Prepare and submit semiannually external monitoring reports to ADB for review and disclosure at ADB website. County/city EPB • Inspect the facilities during construction and operation to ensure compliance; and • Enforce applicable environmental laws and regulations. ADB = Asian Development Bank, CSC = contractor, construction supervision company, EA = executing agency, EMP = environmental management plan, EMS = environmental monitoring stations, EPB = environmental protection bureau, ESC = environmental supervision consultant, GRM = grievance redress mechanism, IA = implementing agency, LBECZ = Lincang Border Economic Cooperation Zone, LIEC = loan implementation environmental consultant, LMG = Lincang Municipal Government, PMO = project management office, CSC = construction supervision company, Source: Asian Development Bank.

116. An Environment Monitoring System (EMS) deployment program specifying the parameters to be measured, monitoring/measurement methods, sampling locations, frequency of measurements, performance indicators or targets, detection limits, and thresholds limits that signal the need for corrective action will be developed by the LIEC and PIU Environment Supervision consultants. The EMS should be certified agencies at least under nationally recognized regulations to ensure that measurements and data provided are accurate, reliable and defensible.

117. ADB will review and approve semiannually EMP monitoring reports and disclose on the ADB website in line with ADB Public Communications Policy (2011). The external monitoring reports will be submitted by the External Monitoring Experts every quarter separate from the periodic EMP monitoring reports.

118. Site specific EMP (Contractor's Environmental Management Plan) based on the EMP must be prepared prior to the commencement of civil works construction activities. The contract should specify that the contractor should report monthly on the implementation of the Contractor's Environmental Management Plan.

119. If there are any changes in Project scope or unanticipated environmental and/or social risks and impacts that arise during construction, implementation or operation of the project that were not considered in the EIA and the EMP, the PMO should promptly inform ADB. The PMO shall (i) assess the significance of any unanticipated impacts; (ii) evaluate the options available to address them; and (iii) prepare or update the EIA and EMP to incorporate these impacts.

B. Involuntary Resettlement

120. The project is category B for involuntary resettlement. There are 145 households (766 persons) who will be affected by the acquisition of collective farmland (1,038.37 mu) in the Mengding subproject. There are 28 households (110 persons) who belong to the Wa and Yi ethnic groups. The impacts are found to be insignificant since loss of land per household is less than 5% of their total landholdings and households have other sources of income.25 For the Cangyuan subproject, the impacts are found to be marginal where four households (20 persons) will lose about 7.65 mu of cultivated land while one household (4 persons) will be affected by

25 A mu is a Chinese unit of measurement (1 mu = 666.67 m2).

house demolition. These five households are from the Wa and Dai ethnic group. Impacts are also found to be marginal for the Zhenkang subproject where an estimated 38.24 mu of collective land will be affecting nine households (41 persons) from the De’ang ethnic group. An estimated 125 mu unallocated state-owned rubber forest land in Mengding and a 39.53 mu state-owned construction land owned by a real estate company in Cangyuan will be required. For Zhenkang, where 85.26 mu of state-owned construction land was acquired in the past, due diligence indicated that there are no outstanding issue. There are three resettlement plans that have been prepared in consultation with the affected people and various stakeholders to address land acquisition and resettlement issues. The resettlement plans have been prepared in accordance with the PRC laws and regulations and ADB Safeguard Policy Statement (SPS).

121. The government will ensure that (i) the resettlement plans agreed between the government and ADB are updated based on final technical design and submitted to ADB for review and concurrence prior to land acquisition activities, and implemented in accordance with applicable government laws and regulations and ADB’s SPS; in case of any inconsistency between government laws and ADB’s policy, the latter will prevail; (ii) all affected persons are given adequate opportunity to participate in resettlement planning, updating, and implementation; (iii) counterpart funds for land acquisition and resettlement activities are provided according to the budget and project schedule; (iv) any additional costs in excess of the resettlement plan budget estimates are met within the project schedule; (v) the PMO and all implementing agencies will designate adequate staff and resources to supervise and monitor updating and implementation of the resettlement plans and submit semiannual internal monitoring reports to ADB; and (vi) a functional and effective grievance mechanism is established.

122. The implementing agencies will not hand-over a specific section of a contract to the civil works contractor until (i) payment of compensation has been fully disbursed to the affected people and rehabilitation measures are in place for that specific section as per the resettlement plan; (ii) affected people who were compensated for that specific section have vacated the site; and (iii) the specific section is free from any encumbrances.

C. Ethnic Minorities

123. The project is category B for indigenous people following ADB’s SPS. Four towns in three project counties have been identified as locations of project components. The entire residents of Mengding Town and Mangka Town would directly benefit from project output 1, all residents of Mengding Town would directly benefit from project output 2, and then the whole population of Zhenkang County and 1,080 students from Cangyuan County will directly benefit from project output 3 since the new-built Zhenkang County Hospital will serve all residents in Zhenkang County although it is located in Nansan Town. In addition, the sub component of the primary school construction in Cangyuan County would serve 1,080 students from Mengding Town. All the 288,924 residents in project areas will directly benefit from the urban infrastructure and municipal social services to be provided through the project, of which the 123,650 inhabitants are ethnic minorities, accounting for 42.8% of total project beneficiaries. Among EM beneficiaries, Dai, Wa, Yi and De’ang Minorities make up of 83.57% of the total EM population. The Wa share the largest percentage of total beneficiaries along with 34,080 people or 11.8%, followed by The Dai with 33,103 people or 11.46%, The Yi with 32218 people or 11.15% and The De’ang having 3,933 people or 1.36%. The remaining 20,316 ethnic people or 7.03% of total beneficiaries include Lahu, Lisu, Bulang, Bai, Miao, Jingpo, Hui, Zhuang, Buyi, Manchu, Yao, Hani, etc.

124. An ethnic minority development plan (EMDP) has been prepared to facilitate the inclusion of ethnic minority people in all project activities. The EMDP also includes measures to ensure that 63

their customs and beliefs will be respected throughout project construction and operation. The overall objectives of this EMDP are to ensure that (i) the project provides the opportunity for the local residents, including ethnic minority groups, to reap project benefits; (ii) benefits for the ethnic minorities are at least equal to the mainstream ethnic group in the PRC–the Han; (iii) the ethnic minorities’ full participation in the project design and implementation; and (iv) the project does not cause adverse impacts to ethnic minorities.

125. The actions to be implemented under the EMDP are for the most part to be included as part of the project’s administrative budget. Where local government agencies collaborate with actions in the EMDP, the local government administrative budgets will cover the costs of local government staffing and other related costs. Each implementing agency will nominate at least one person responsible for overseeing the implementation of the EMDP, SDAP and GAP, and to coordinate the social monitoring. The ethnic and religious affairs office in each county/city will provide support as necessary, as well as the community offices, the county/city centers for disease control, and the labor bureaus.

126. Prior to the commencement of any component, the PMO and the implementing agencies will ensure that briefings on ADB’s policies with respect to ethnic minorities, and on the EMDP, are provided both for their own members and the implementing agencies. The ethnic and religious affairs offices will assist in these briefings. Contractors, their supervisors, and workers will also be required to undergo briefings on local ethnic minority customs and beliefs, and to ensure that no offense to ethnic minority beliefs or customs occurs during construction. The national social, gender and ethnic minority development specialist in the project implementation consulting services will support the EMDP implementation and monitoring. The EMDP endorsed by the government has been disclosed to ethnic minority people targeted by the project and uploaded on the ADB website. Detailed monitoring and reporting arrangements are included in the Section IX.B and the project agreement.

D. Grievance Redress Mechanism

127. A project safeguards grievance redress mechanisms (GRMs), as detailed in the resettlement plans, EMPD, and EMP is established, within 60 days of the loan effectiveness date, or before implementation of land acquisition and resettlement or other advance construction activities, whichever is the earliest. The GRMs set out procedures for managing public concerns and safeguard issues (environment, involuntary resettlement and land acquisition) which may arise during project implementation. The resettlement GRM will be established prior to any land acquisition and resettlement and prior to any advance construction works. The GRM comprises a set of clear procedures to receive, record, and address any concerns or complaints raised; specific contact details of individuals from the executing and implementing agencies, contractors' teams, and other relevant authorities and stakeholders. All contractors and work staff will be briefed on the project safeguards GRM. Multiple entry points to the GRM will be available including face-to-face meetings, written complaints, hotline number and telephone conversations, anonymous drop-boxes for written comments, and/or e-mail. During implementation and prior to the project completion review, complaints and their resolution will be reported to ADB in semiannually project progress reports and/or semiannual safeguard monitoring reports.

128. Prohibited investment activities. Pursuant to Asian Development Bank’s (ADB Safeguard Policy Statement (2009) (SPS), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS.

VIII. GENDER AND SOCIAL DIMENSIONS

129. A poverty and social assessment (PSA) was undertaken during the project preparation phase in accordance with ADB guidelines on gender and social dimensions. The PSA included a review of secondary data, a household survey, focus group discussions and key informant interviews. The PSA assisted in the design of the various subprojects to ensure they are socially inclusive and implemented with a high degree of community participation, especially for the local people including women, ethnic minorities, poor and other vulnerable persons in the project areas.

130. Summary poverty reduction and social strategy. The beneficiaries are identified as the long-term residential population of the targeted subproject areas of three project town/counties of LBECZ, Zhenkang and Cangyuan. It is estimated that the directly beneficiaries of this project is about 288,924 and the indirectly beneficiaries is about 1,464,016.

131. A social development action plan (SDAP) has been developed to ensure that important social and poverty issues are addressed during project implementation, which is designed to enhance project benefits and mitigate any likely negative impacts. Any adverse impacts need to be avoided or mitigated, and project benefits should be inclusive of vulnerable groups (i.e., the poor, women, ethnic minority and others). The SDAP emphasizes social inclusion and equitable access to the new economy, and gender-specific measures are also included in the resettlement plans, gender action plan (GAP), and ethnic minority development plan (EMDP).

132. The project will generate 700 jobs (480 skilled and 220 unskilled) during construction and 1,080 jobs (443 skilled and 637 unskilled) during operations. The executing and implementing agencies provided assurance that the priority for employment will be vulnerable groups such as women, the poor and ethnic minorities.

133. Design features. The project design directly responds to issues raised by the poverty and social analysis. Key design features include (i) setting employment targets for women, ethnic minorities, and the poor during project construction and operation stage; (ii) strengthening public participation and consultation in decision-making related to project components during the project design stage and implementation; and (iii) public awareness and training on job skills and legal requirements, especially for immigrated labors, etc. The EMDP and SDAP outlined actions to ensure mitigation of adverse impacts and for beneficiaries to maximize benefits or positive impacts of the project. In addition, it ensures (i) protection of labor that will be employed on project works by providing training or awareness for the contractors/sub-contractors and employees on core labor standards (i.e. equal pay for equal work, no child labor, equal job opportunities etc.), and (ii) mitigation of communicable diseases including HIV/AIDS and STI, and human trafficking awareness and prevention; (iii) road safety awareness and prevention of road accidents in communities and schools located near the project construction sites. The EMDP and SDAP outlined actions to ensure mitigation of adverse impacts and increase positive impacts of the project. Implementation and monitoring of the EMDP and SDAP is included in the loan assurances.

134. To address the risk of spread of HIV/AIDS/STI, the project requires (i) inclusion of clauses on HIV/AIDS/STI and other communicable disease awareness for the contractors/subcontractors and employees into contract bidding documents; (ii) conduct of public health and HIV/STI prevention education to the civil works’ contractors and labor force; (iii) establishment of health measures for construction workers (e.g. setting up a temporary infirmary, using local medical resources); and (iv) conduct of diverse publicity activities on HIV/AIDS (e.g. brochures, posters and leaflets). 65

135. Gender Impact. The proposed project will provide equal access and opportunities to both men and women. The project is classified as effective gender mainstreaming (EGM) and a gender action plan has been developed and the principles include: (i) equality of project benefits and opportunities designed to share between men and women; (ii) systematic approaches created to reduce gender disparities in the project areas; (iii) sex disaggregated data collection before, during, and after the project implementation; (iv) female representation increase in the decision- making process at all management levels, and (v) participation in urban expansion planning and infrastructure project preparation.

136. The project will implement a gender action plan (GAP) that will facilitate employment opportunities and improvement of livelihoods for women through training, and mitigate possible negative impacts of the project on women due to land acquisition and resettlement and environmental impacts. It will address gender concerns in the project outputs in the project area. The GAP will enhance women’s active and equitable participation in the project. Furthermore, gender-specific measures are included in the resettlement plans (RPs) and a social development action plan (SDAP) and an ethnic minority development plan (EMDP). The social, gender, and ethnic minority development specialist will be provided under the capacity development component to ensure effective implementation of the SDAP, GAP and EMDP. A loan assurance for implementation of the GAP has been included.

137. Other social aspects. As per the loan assurances, construction workers hired from the local communities will be trained on sanitation knowledge campaigns, health and occupational safety measures while working at the construction sites, and capacity building will be undertaken to protect their legal labor rights during construction or operations.

138. Labor issues. Core labor standards will be complied with based on national laws. Civil works contracts will stipulate priorities to (i) employ local people for works, (ii) ensure equal opportunities for women and men, (iii) pay equal wages for work of equal value, (iv) pay women’s wages directly to them, and (v) not employ children or forced labor. Specific targets for employment have been included in the EMDP, SDAP and GAP. The project EA in conjunction with the IAs is responsible for coordinating activities and ensures the implementation of the SDAP, GAP and EMDP. The EA will monitor contractors’ compliance with these project assurances in conjunction with the Human Resources and Social Security Bureau, and Civil Affairs Bureau. The EA shall assign or appoint 1 social / gender and ethnic minority development staff during project implementation to ensure timely and appropriate implementation of the SDAP, GAP and EMDP. The social development/gender and EM development specialist in the project consulting services will assist the coordinator in EA and social, gender and ethnic minority development staff.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

Table 41: Design and Monitoring Framework Impacts the Project is Aligned with Economic growth potential for LBECZ and border areas of Myanmar enhanced; benefits of regional cooperation and integration in LBECZ and border areas of Myanmar realized; and living conditions and public health of residents of LBECZ and border areas of Myanmar improved (PRC Thirteenth Five-Year Plan, 2016–2020)a

Data Sources and Reporting Results Chain Performance Indicators with Targets and Baselines Mechanisms Risks Outcome By 2025: Competitiveness of a. Lincang Prefecture trade volume with Myanmar a. Yunnan provincial Security urban centers, increased by 10% annually (2017 baseline: yearbook situation in logistics and $775 million) Myanmar industrial parks, b. Annual reports of worsens and land ports in b. LBECZ border trade volume increased by 20% LBECZ project counties annually (2017 baseline: $520 million) Enterprises and LBECZ c. Lincang education do not invest enhanced c. Student enrollment rate in elementary school in bureau annual in LBECZ project counties increased by 0.5% annually reports because the (2017 baseline: 18,741 students) returns are d. Lincang health too low d. Ratio of medical staff per population in LBECZ bureau annual increased by 2% annually (2017 baseline: reports 242 medical staff) e. PMO quarterly e. Urban residents’ rate of satisfaction with use of project progress road, water supply, wastewater, and municipal reports solid waste increased to 60% (2017 baseline: 31% [road], 23% [water supply], 11% [wastewater], and 20% [solid waste]) Outputs By 2024: 1. Cross-border 1a. Border resident trade market of 107,454 m2 1a–d. PMO quarterly Weak trade infrastructure constructed and operationalized, with women project institutional improved accounting for at least 50% of employees in progress and staff technical and administrative staff positions and reports capacity to 40% in management positions (2018 baseline: implement 0) the project, 1b. Border international cooperation area of particularly 171,633 m2 constructed (2018 baseline: 0) for 1c. Five urban secondary roads of 4.55 km procurement constructed; 350 m-long bridge constructed; 523 m Class II road rehabilitated Changes in (2018 baseline: 0) government's 1.d Project construction results in 530 jobs, 30% of administrative which are held by women (2018 baseline: 0) procedures 2. Integrated 2a. Qingshuihe water supply system of 20,000 2a–f. PMO quarterly delay urban environment m3/day capacity constructed and project provision of infrastructure in operationalized, with at least 50% of jobs held progress counterpart Mengding and by women (2018 baseline: 0) reports funds for the Qingshuihe 2b. Qingshuihe wastewater treatment system of project National Port areas 10,000 m3/day capacity constructed and improved operationalized, with at least 50% of jobs held by women (2018 baseline: 0) 2c. 2.38 km of Qingshui River and 1.00 km of Nanpa River rehabilitated (2018 baseline: 0) 67

Data Sources and Reporting Results Chain Performance Indicators with Targets and Baselines Mechanisms Risks 2d. Public transportation electric charging stations constructed in Mengding and Qingshuihe, with a total of 40 charging posts including safety features for women, and 6 green energy buses delivered to county government authorities (2018 baseline: 0) 2e. Mengding and Qingshuihe municipal solid waste management system established with total capacity of 27 tons per day (2018 baseline: 0) 2f. Number of jobs during project construction is 350, 30% of which are held by women (2018 baseline: 0) 3. Social 3a. A new Cangyuan Guomen No. 2 Elementary 3a–e. PMO quarterly infrastructure and School constructed with 1,080 student capacity project services improved (of which at least 40% are girls) and 13,194 m2 progress building area with gender-inclusive design and reports amenities, and fully staffed, with women in at least 60% of staff positions (2018 baseline: 0) 3b. A new PRC–Myanmar Friendship Hospital constructed with 499 inpatient bed capacity and 56,009 m2 building area (including maternity and obstetrics and gynecology departments) (2018 baseline: 0) 3c. A new Qingshuihe Hospital constructed with 99 inpatient bed capacity and 9,006 m2 building area (including maternity and obstetrics and gynecology departments) (2018 baseline: 0) 3d. Existing Qingshuihe Guomen Elementary School upgraded, with capacity expanded to 1,080 students of which at least 40% are girls, and with additional classroom, dormitory, and cafeteria buildings (totaling 7,721 m2) constructed (2018 baseline: 0) 3e. Project construction provides 200 jobs, 30% of which are held by women (2018 baseline: 0) 4. Institutional 4a. At least one study or development plan 4a. Capacity capacity of completed on each of the following: (i) cross- development involved agencies border trade and logistics capacity building, study completion improved (ii) small and medium-sized enterprises reports development, (iii) teacher training and border elementary school curriculum enhancement, (iv) technical and vocational education and training school leadership, (v) health care services and hospital management improvement, (vi) regional cooperation and integration development and capacity building, (vii) LBECZ master plan development and improvement study, and (viii) policy dialogue on water tariff system to meet the PRC regulations (2018 baseline: 0) 4b. Technical and managerial knowledge and 4b. Training skills of 100 staff increased, of which 50% are completion and women (2018 baseline: 0) participants’ survey reports

Key Activities with Milestones 1. Cross-border trade infrastructure improved

Key Activities with Milestones 1.1 Prepare preliminary design, Q3 2018–Q2 2020 1.2 Prepare construction drawings, Q4 2018–Q3 2020 1.3 Implement land acquisition and resettlement, Q3 2018–Q3 2019 1.4 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 1.5 Prepare bidding documents, Q4 2018–Q3 2020 1.6 Procure and award contract, Q4 2018–Q4 2021 1.7 Commence construction, Q1 2019–Q1 2024 2. Integrated urban environment infrastructure in Mengding and Qingshuihe National Port areas improved 2.1 Prepare preliminary design, Q3 2018–Q3 2020 2.2 Prepare construction drawings, Q4 2018–Q4 2020 2.3 Implement land acquisition and resettlement, Q4 2018–Q4 2019 2.4 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 2.5 Prepare bidding documents, Q4 2018–Q4 2020 2.6 Procure and award contract, Q4 2018–Q1 2022 2.7 Commence construction, Q1 2019–Q2 2024 2.8 Purchase equipment, Q1 2020–Q4 2022 3. Social infrastructure and services improved 3.1 Prepare preliminary design, Q3 2018–Q2 2020 3.2 Prepare construction drawings, Q4 2018–Q3 2020 3.3 Implement land acquisition and resettlement, Q3 2018–Q3 2019 3.4 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 3.5 Prepare bidding documents, Q4 2018–Q3 2020 3.6 Procure and award contract, Q4 2018–Q4 2021 3.7 Commence construction, Q1 2019–Q1 2022 3.8 Purchase equipment, Q1 2020–Q4 2022 4. Institutional capacity of involved agencies improved 4.1 Recruit and mobilize consultants, Q4 2018–Q1 2019 4.2 Establish project performance monitoring system, Q4 2018–Q1 2019 4.3 Establish environmental impact assessment, resettlement plan, and project performance monitoring system, Q1 2019 4.4 Support project implementation, Q4 2018–Q4 2024 4.5 Conduct studies and research, workshops, and trainings, Q4 2018–Q4 2022 4.6 Implement GAP, SDAP, and EMDP, Q4 2018–Q4 2024 Project Management Activities Project management support and environmental impact assessment, resettlement plan, GAP, and SDAP monitoring implemented Inputs Asian Development Bank: $250 million (loan) Government: $152.08 million Assumptions for Partner Financing Not applicable EMDP = ethnic minority development plan, GAP = gender action plan, km = kilometer, LBECZ = Lincang Border Economic Cooperation Zone, m = meter, m2 = square meter, m3 = cubic meter, PMO = project management office, PRC = People’s Republic of China, Q = quarter, SDAP = social development action plan. a Government of the PRC, State Council. 2016. The Thirteenth Five-Year Plan for National Economic and Social Development of the People’s Republic of China, 2016–2020. Beijing. Source: Asian Development Bank.

B. Monitoring

139. Project performance monitoring. The project performance management system (PPMS) indicators, their relevance, and monitoring practicalities will be discussed with the executing agency, implementing agencies, and project beneficiaries during project implementation. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported through the semiannual progress reports of the project management office (PMO) and after each ADB review mission. These semiannual reports 69

will provide information necessary to update ADB's project performance reporting system.26 At the start of project implementation, the PMO and implementing agencies, with the project implementation consulting services, will develop integrated PPMS procedures to generate data systematically on the inputs and outputs of the components, as well as the indicators to be used to measure the project’s impact and outcome taking into account the components’ scope. The PMO will be responsible for monitoring and reporting on project performance. The basis for performance monitoring will be the design and monitoring framework (DMF), which identifies performance targets for the impact, outcomes, and outputs of the project. By collecting data from the sources identified in the DMF, the PMO will be able to report on an annual basis the performance of the project. Specific reporting requirements will be set out in the agreement between ADB and the government. The PMO will collect the data, calculate the indicators, analyze the results, and prepare a brief report describing the extent to that the project is generating the intended outputs and outcomes, as well as the overall impact on the project municipalities. The relevance and practicability of data collection for indicators was confirmed with the PMO and the implementing agencies. Meanwhile, the agreed socioeconomic and environmental indicators to be used will be further enhanced to measure project impacts. The PMO and the implementing agencies agreed and confirmed that they will (i) refine and integrate the PPMS framework at the start of project implementation; (ii) confirm that targets are achievable; (iii) develop recording, monitoring, and reporting arrangements; and (iv) establish systems and procedures no later than six months after project inception.

140. Compliance monitoring. The executing agency, implementing agencies, and the project management consultant, will conduct compliance monitoring, submit reports and information to ADB concerning the use of the loan proceeds, project implementation, project implementation performance, and compliance of loan and project covenants. These reports will include (i) semiannual progress reports on project implementation; and (ii) midterm adjustment report, and (iii) a project completion report, which should be submitted not later than three months after the completion of the project facilities. The compliance status of loan and project covenants will be reported and assessed through the semiannual progress report. ADB review missions will verify these statuses.

141. Safeguards monitoring. Three types of environment safeguard monitoring will be conducted under the EMP: compliance monitoring; internal monitoring; and, external monitoring. The environmental monitoring program, including roles, responsibilities, monitoring frequency and variables, is described in the EMP. ADB and the PMO will monitor the status of EMP implementation through: (i) monthly/quarterly PIU project progress reports and provide semiannually environmental progress reports to ADB; (ii) reports by the Loan Implementation Environment Consultant to PIUs and ADB; and (iii) review missions. EMP implementation will be coordinated by the PMOs’ Environment Officer, supported by the PIUs, project municipal and county EPBs, and Loan Implementation Environment Consultant, to ensure overall compliance of all relevant agencies with the EMP.

142. Internal monitoring and reporting by construction supervision companies (CSCs). During construction, CSCs and designated Environmental Supervision Consultants (Internal) will be responsible for conducting internal EMP monitoring and supervision in accordance with the monitoring plan defined in the EMP. During construction, the monitoring will include biodiversity monitoring, air quality, noise measurements, earth spoils and dredged spoil dispersal sites. The results will be reported through the CSCs’ reports to the IA’s. The two short term Biodiversity

26 ADB's project performance reporting system is available at: http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool

survey experts will provide ESCs in providing biodiversity site specific survey data during construction required for ADB monitoring and reporting. The ESCs will guide Construction Contractors in adhering to EMP requirement at each subproject site.

143. Environmental impact monitoring by Environment Monitoring Station (EMS). The IAs will contract the local EMSs to conduct environmental impact monitoring in accordance with the monitoring plan. Monitoring will be conducted during construction and operation period, until a project completion report (PCR) is issued.

144. EMP implementation monitoring and progress reporting. The LIEC will review project progress and compliance with the EMP based on consultation with Environmental Supervision Consultants (Internal), field visits, and the review of the environmental impact monitoring conducted by the EMSs. The findings of the LIEC will be reported to ADB through the semiannually EMP monitoring and progress reports. The reports will include (i) progress made in EMP implementation, (ii) overall effectiveness of the EMP implementation (including public and occupational health and safety), (iii) environmental monitoring and compliance, (iv) institutional strengthening and training, (v) public consultation (including GRM), and (vi) any problems encountered during construction and operation, and the relevant corrective actions undertaken. The LIEC will help PMO prepare the reports and submit the English report to ADB for appraisal and disclosure.

145. Project readiness inspection. Before construction, the LIEC will assess the readiness of the PMO and implementing agencies for environmental management, based on a set of indicators in the EMP and report to ADB and PMO. This assessment will demonstrate that environmental commitments are being met and environmental management systems are in place before construction starts, and/or suggest corrective actions to ensure that all requirements are met.

146. External Monitoring by Independent Experts/Agency/NGO: The PMO shall employ qualified and experienced external environment experts/agency/NGO (As per CS2) for environmental monitoring as required for Category A project implementation through the loan proceeds.

147. External monitoring reports would cover qualitative verification of reports by the implementing agencies and contractors of many of the same parameters as the internal monitoring. PIU’s internal report would focus on the quantitative measurement of selected environmental variables at and near construction sites to ensure compliance with regulatory standards whereas the external experts report would focus on qualitative aspects of how any adverse environmental impact was occurring could be mitigated. The external monitoring report would document progress of implementation of mitigation measures as outlined in the project EIA/EMP and participation in ongoing stakeholder consultations and evaluation and reporting on how environmental grievances, if any, are handled.

148. The independent reporting by external monitoring experts/agency/NGO will provide recommendations and suitable actions to PMO. The external monitoring report will be provided to ADB every quarter for review and disclosure at ADB website. The reporting of monitoring results to internal and external audiences is required to verify compliance. For category A project27 that includes highly complex and sensitive projects, semi-annually reporting as a minimum during construction and annually during operation to ADB is required.

27 For projects designated as highly complex and sensitive, semiannually reporting to ADB is required. 71

149. Project completion environmental audits. Within three months after each subproject completion, or no later than one year with permission of the city EPBs, environmental acceptance monitoring and audit reports of each subproject completion shall be (i) prepared by a licensed environmental monitoring institute in accordance with the PRC Guideline on Project Completion Environmental Audit (2001), (ii) reviewed for approval of the official commencement of individual subproject operation by environmental authorities, and (iii) finally reported to ADB through the semiannual EMP monitoring and progress reporting process.

150. Resettlement monitoring. The PMO, together with the concerned implementing agencies, will monitor RP implementation and submit semiannual monitoring reports to ADB. Upon completion of land acquisition and resettlement, the PMO will submit a resettlement completion report to ADB. The PMO will also engage an external resettlement monitor to carry out verification and compliance monitoring. The external resettlement monitor will submit semiannual monitoring reports to the PMO and ADB.

151. Ethnic Minority Development Plan. The monitoring of the ethnic minority development plan (EMDP) will be conducted semiannually. Monitoring and reporting methodologies are specified in the EMDP. The PMO will engage a qualified EMDP monitor to carry out the monitoring semiannually and ensure compliance with the provisions of the EMDP, and submit the semiannual monitoring report to ADB and PMO. The final monitoring report of the EMDP monitor will constitute a completion report on the EMPD process and detail the extent to which the EMPD has (i) complied with ADB policy; (ii) met the objectives stated in the EMPD; and (iii) contributed to the welfare and inclusion in the project areas.

152. Social Gender and Ethnic Minority Action Plan Monitoring. The PPMS will include monitoring of the SDAP and GAP. Clear targets and indicators have been established and some indicators, such as those on employment, are also captured in the design and monitoring framework (DMF). The social / gender and EM development specialists will assist the PMO and IAs set up effective monitoring systems, and work with the focal points in the PMO and IAs to ensure implementation of the SDAP and GAP. The SDAP and GAP will be monitored semiannually and reported via the semiannually project progress reports and during ADB review missions.

C. Evaluation

153. ADB, executing agency and implementing agencies will undertake a semiannual review mission to evaluate the progress of project implementation. ADB, executing agency and implementing agencies will undertake a comprehensive midterm review two years after the start of project implementation to have a detailed evaluation of the scope, implementation arrangements, resettlement, achievement of scheduled targets, and progress on the agenda for policy reform and capacity building measures. Feedback from the PPMS activities will be analyzed. Within three months of physical completion of the project, the PMO will submit a project completion report to ADB.28

28 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public- Sector-Landscape.rar

D. Reporting

154. The PMO and implementing agencies will provide ADB with (i) semiannual progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) PPMS progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, (d) audited financial statements, and (e) updated implementation plan for the next 12 months; (iii) submission of semiannual reports on the progress of resettlement safeguards monitoring, environment safeguards monitoring, social safeguard action plans monitoring report and ethnic minority development plan monitoring report covering GAP, EMDP, and SDAP; (iv) submission of midterm adjustment report after 2 years of implementation, (v) submission of project completion report six months after completion of the project; and (vi) submission of audited project accounts and financial statements six months after the end of fiscal year.

Table 42: Key Reporting Requirements Report Reference Timing of Reporting Project performance management system Project Agreement, Develop comprehensive project Schedule, No later than 6 months after performance management system paragraphs loan effectiveness procedures Reporting of baseline and progress Annual, may be included in data including environmental the project progress reports management plan Semiannual project progress reports Project Agreement, Semiannual, within two Schedule, Article month after the end of each period Audited project accounts and financial Project Agreement, Not later than 6 months after statements auditor's report Schedule, Article the closure of fiscal year (end of June) Resettlement monitoring Internal monitoring reports for the Project Agreement, Include summary in the executing and implementing agencies Schedule, semiannual project progress (semiannually) paragraphs reports Resettlement completion report Prior to loan closure (within 3 months after project completion) Environmental reports Project Agreement, Construction phase–environmental Schedule, Semiannual management plan monitoring and paragraphs progress report Construction phase–external Semiannual environmental management plan Operations phase–external monitoring Semiannual, until a project report completion report is issued Social safeguard monitoring of GAP, Project Agreement, Semiannually; may be EMDP, and SDAP Schedule, included in the progress paragraphs reports Project completion report Project Agreement, Not later than 6 months after Schedule, Article the physical completion of the project EMDP = ethnic minority development plan, GAP = gender action plan, SDAP = social development action plan. Source: Asian Development Bank.

E. Stakeholder Communication Strategy

155. Project information will be communicated through public consultation, information disclosure mechanism in ADB’s and government’s website, meetings, interviews, focus group discussions, and community consultation meetings, in accordance with ADB’s requirements of information disclosure policy.29

156. Environment. Meaningful consultation, participation and information disclosure at each project city / county has been conducted during feasibility study and environmental impact assessment in accordance with the PRC Interim Guideline on Public Consultation in EIA (2006) and ADB’s Safeguard Policy Statement (2009). Information disclosure and public consultation included newspaper disclosure; informal communication with key stakeholders, including residents, local authorities. During construction, the affected people will be consulted through questionnaire surveys and interviews by the environment supervision consultants (ESCs) . The project’s environmental information shall be disclosed by the local EPBs, PMO and ADB as follows: (i) the project EIA is disclosed at www.adb.org; (ii) the Chinese EIAs are disclosed on the website of the relevant Environmental Protection Bureaus; and (iii) the semi-annually EMP progress and monitoring reports will be disclosed at www.adb.org. A GRM has been defined to prevent and address community concerns, reduce risks, and assist the project in maximizing environmental and social benefits.

157. Involuntary resettlement. Consultations with the affected households and other stakeholders have been undertaken and will continue during resettlement plan updating and implementation. Resettlement information booklets have been prepared and distributed to the affected households during project preparation. Disclosure will continue to be carried out during resettlement plan updating and implementation.

158. Ethnic minority, and social and gender action plan. Consultations with communities have taken place and will continue at different points in the implementation of the EMDP, SDAP and GAP not only to inform people about the components or specific activities, but also to enable people in the community to ask questions, make suggestions, state preferences, and express concerns. Special attention will be paid to the participation of women, ethnic minorities, and any other vulnerable groups, such as the poor. The PMO has disclosed the EMDP in Han and local minority languages (Dai, Wa) by posting copies in ethnic minority communities and during the consultation meetings with local leaders and ethnic minority representatives during project preparation. Disclosure will continue to be carried out during project implementation.

159. Public awareness and education program on social services, safety and health, environmental and river protection, flood risk, recycle, road traffic safety for nearby communities and schools etc. will be conducted as part of the project components and actions to enhance the involvement of women are included in the GAP.

160. Public disclosure. Public disclosure of all project documents will be undertaken through the project PMO and on the ADB website, including the project datasheet, design and monitoring framework, EIA report, resettlement plan, EMDP and GAP and the report and recommendations of the President. Disclosure of external social and environmental monitoring reports will be undertaken during project implementation.

29 https://www.adb.org/site/disclosure/public-communications-policy

X. ANTICORRUPTION POLICY

161. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.30 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.31

162. To support these relevant provisions are included in the loan agreement, and the bidding documents for the project. ADB’s Anticorruption Policy (1998, as amended to date) will be explained to and discussed with the executing and implementing agencies. Consistent with its commitment to good governance, accountability and transparency, ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive, or coercive practices relating to the project. To address the risks on governance and corruption related to procurement of civil works, relevant provisions of ADB’s Anticorruption Policy will be included in the loan agreement and the bidding documents for the project. In particular, all contracts financed by ADB in connection with the project will include provisions specifying the right of ADB to audit and examine the records and accounts of executing agency, implementing agencies, and all contractors, suppliers, consultants, and other service providers as they relate to the project. The executing agency has indicated its commitment to promote good governance and establish a corruption-free environment under the project. Further to this, a number of good governance and anticorruption provisions have been included in the loan and project agreements.

163. The executing and implementing agencies will comply with ADB’s Anticorruption Policy (1998, amended from time to time). The executing agency agrees (i) that ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive, or coercive practices relating to the project; and (ii) to cooperate fully with, and to require contractors and suppliers to cooperate fully with, any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation.

164. The executing agency will (i) conduct periodic inspections on the contractors’ activities related to fund withdrawals and settlements; and (ii) ensure that all contracts financed by ADB in connection with the project include relevant provisions of ADB’s Anticorruption Policy (1998, as amended to date) in all bidding documents for the project specifying the right of ADB to audit and examine the records and accounts of the PMO, implementing agencies, and all the contractors, suppliers, consultants, and other service providers as they relate to the project.

165. The executing agency and the implementing agencies will also (i) involve the agencies responsible for oversight of each implementing agency in bidding and construction to enhance construction quality control and supervise effective work; (ii) introduce a dual-signing system in which each works contract winner also signs an anticorruption agreement with the employer; (iii) periodically inspect the contractors’ activities related to fund withdrawals and settlements; (iv) require the project management consulting service to support the PMO and implementing agencies to ensure good governance, accountability, and transparency in project operations; and (v) in consultation with relevant ministries at the central level, update rules and regulations on

30 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 31 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp 75

corporate governance and anticorruption to enhance the transparency of the operations of the executing agency and implementing agencies.

166. The executing and implementing agencies will comply with ADB’s Anticorruption Policy (1998, amended from time to time). The executing agency agrees (i) that ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive, or coercive practices relating to the project; and (ii) to cooperate fully with, and to require contractors and suppliers to cooperate fully with, any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation.

XI. ACCOUNTABILITY MECHANISM

167. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.32

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

168. The PAM is a living document and is subject to change after ADB Board approval of the project's report and recommendation of the President. It is concise yet informative, providing checklists of all activities related to project implementation along with the necessary procedures for the PMO to effectively implement and monitor the project.

Table 43: Changes to the Project Administration Manual No. Changes/Updates Date Remarks 1 PAM initial draft agreed 28 Apr 2018 Agreed during the loan FF mission 2 Discussed and agreed during loan negotiation Agreed during the loan negotiation FF = fact-finding.

32 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

Social Development Action Plan Responsible Objectives Target /Actions Indicators Agencies Time Budget

1. MITIGATION MEASURES

1.1 Mitigating land acquisition and house demolition impacts 1.1.1 The compensation for  Make temporary transition arrangement to  Number of households receiving LMG, PMO, 2019– Project the affected people would total XX affected households. HD compensation with the amount LBECZ 2022 resettlement be fully and timely made.  Make full compensation to total 159 affected and time. Management budget. households timely.  Number of households receiving Committee, PIUs, temporary accommodation project county Baseline: 0% compensation or welfare houses government and with the amount and time. Resettlement specialist. 1.1.2 The income level for  Provide skill trainings to 831 affected people  No. of livelihood restoration LMG, PMO, 2019– Government affected households would among which XXX are women such as small measures for affected LBECZ 2022 regularly be fully restored to the pre- business, handicraft, food processing, beauty, families/population prepared. Management budgeted project level. hairdressing and other services.  The types and number of skill Committee and programs  Provide livelihood restoration measures for 159 training provided to affected Resettlement (CNY0.25 affected households. families/population. specialist; Human million).  The number of participants in skill Resources and Baseline: 0% training by gender. Social Security

Bureau; Women’s Federation; Ethnic Affairs and Religion Bureau. 1.2 Mitigating construction activities related issues 1.2.1 Ensure that the  The environment protection and site safety  The number of cases and specific PMO; Project 2019– Project civil working site operations measures must be included in the bid and records of violation of PRC Labor contractors and 2022 work budget. comply with PRC Labor Law tender documents and contracts. Law and regulations of construction and regulations of  Safety signs and corresponding protective construction safety on the supervisors; construction safety including measures like safety barriers must be construction site. Environment the availability of personal presented on the construction site, if there are  The number of accident records Protection protective equipment on the Myanmar workers, all the signs should be and other complaints due to lack Bureau; Work prepared in both Chinese and Myanmar of traffic signs and safety barriers construction site, such as Safety languages. on the construction site. helmets and gloves. Supervision  Construction safety training must be provided to  The number of participants 100% workers. receiving the safety training by Bureau; Social gender. development and Baseline: 0% gender specialist. 1.2.2 Mitigation or  Dust reduction measures must be taken on the  The amount of dust reduction PMO; Project 2019– avoidance of construction construction site. measures taken on the contractors and 2022 Appendix 77

Responsible Objectives Target /Actions Indicators Agencies Time Budget disturbances to residents  Construction work can’t be carried out during construction site. construction and students. night time.  The number of complain cases or supervisors;  Site management must be in place to ensure records from residents. Environment clean-up on completion and to avoid side drain  The actions taken to address the Protection block due to construction wastes. issues raised by residents. Bureau; Work  Arrange the schedule to implement the  The schedule of the Safety construction of Qingshuihe Guomen implementation should in the Supervision Elementary School Upgrade project during the holiday. Bureau; Social school holiday to avoid the potential safety development and hazard during construction. gender specialist. Baseline: 0% 1.2.3 Strengthen public  Conduct publicity activities/trainings on  The number and type of training PMO; Project 2019– Project civil health management in HIV/AIDS and STI, and other communicable on public health, HIV/AIDS and contractors and 2022 work budget particular prevention of diseases prevention to contractors/workers and STI prevention awareness construction combined HIV/AIDS, STI, and other local residents and school children. All public conducted. supervisors; with communicable diseases awareness campaigns should be in both  The proportion of participants by Disease Control government during the construction Chinese and Myanmar languages. 100% gender (local residents). and Prevention regularly works. contractors and workers would be trained.  The proportion of contractor and Center; Social budgeted  Distribute training materials on HIV/AIDS and workers trained by gender and by development and programs STI to the contractors and/or workers and local poor minorities. gender specialist. residents and school children such as posters  Forms of HIV/AIDS and STI and brochures in both words and pictures prevention materials distributed to which are easy to be understand by illiterates, the contractors/workers and the and in culturally-sensitive manner. public.  Set up measures of communicable diseases  The number of measures of prevention for construction workers (i.e., communicable diseases condoms provision, regularly physical prevention for construction examination). workers. Baseline: 0%  The number of persons accessed by such measures by gender and by poor minorities. 1.2.4 Respecting the ethnic  The training on full compliance with the ethnic  No. of training on compliance with PMO; contractors; 2019- Project civil minority cultural and culture and local norms should be provided to the ethnic culture and local norms Ethnic and 2022 work budget tradition on construction all workers. held. Religion Affairs sites. Baseline: 0%  No. of workers trained by gender. Bureau.  No. of leaflets or posts distributed to contractors and workers. 1.2.5 Safeguard the labor  Provide labor safeguard training to the project  Types and number of trainings on PMO; project 2019– Project civil rights of ethnic workers, contractor and related employers. labor standards, sex- contractors and 2022 work budget.

Responsible Objectives Target /Actions Indicators Agencies Time Budget female workers and workers  Make sure that 100% of employees to sign the disaggregated. construction from poor families such as labor contracts with employers.  Number of labor contracts for local supervisors; social signing the labor contract  100% of ethnic workers, female workers and workers disaggregated by development and and equal pay for equal workers from poor families have equal pay for minority, sex and poverty. gender specialist; work etc. equal work.  Satisfaction degrees on equal pay Human  100% of Myanmar workers have been paid for equal work by gender. Resources and according to the contract and not less than the  The proportion and number of the Social Security local minimum wage standard which is explanation in Myanmar language Bureau; Women’s CNY1,350 per month per capita or 13 per hour for the Myanmar workers’ labor Federation. per capita. contracts.  There should be a explanation of key points of contracts in Myanmar language attached to the labor contract of Myanmar workers.  It is not allowed to use child labor (under 16 years old). Baseline: 0% 1.3 Ensuring all kinds of residents participation in project equally 1.3.1 Establish proper  Contact information of appeal acceptors like  Number of appeal acceptors. PMO; design 2019– Project grievance redress email, telephone number and mailing address  Time, place, language used, way institute; project 2024 management mechanism for the should be disclosed to project residents. and frequency of disclosure of county budget participation of all kinds of  The disclosure of grievance redress grievance redress mechanism. government, PIUs residents, especially mechanism should be reached by residents in  Feedback record of the opinions minority, poor, women and open areas in both words and pictures for easy by gender. illiteracy. understanding.  Making the publicity through the village committee in the project area. Baseline: 0% 1.3.2 Ensure local residents  70% minority participation in community  Number of participants PMO; project 2019– Project particular ethnic minorities, campaign and behavior change program. disaggregated by sex and poverty. county 2024 management women and poor people  50% women and 10% poor people  Time, place, way of community government; budget participation public participation. campaign. PIUs; social education campaign and  Local ethnic minorities should be consulted with development and behavior change time and place of public education activities. gender specialist. communication strategy. Baseline: 0% 1.3.3 Ensure the local  Job information should be disclosed in the  The way, time, location, and PMO; project 2019– Project residents especially minority community and local Labor Market Center. contents of job information issued. contractors and 2024 management and poor people can  The job information should be announced at  Poor people “satisfied” with the construction budget receive employment least 1 month in advance, with indication that time, place and the way of supervisors; information during the different nations and gender should have equal disclosure of job information. project county Appendix 79

Responsible Objectives Target /Actions Indicators Agencies Time Budget project construction and employment opportunities and equal pay for government; operation period easily and equal work. PIUs; Human timely.  Time, place and the way of disclosure of job Resources and information should be suitable for poor people. Social Security Baseline: 0% Bureau. 1.4 Ensure poor people voicing their concerns in public hearings in case raising tariff 1.4.1 Ensure poor people  Poor people’s voices should be heard during  Total number of representatives PMO; Mengding 3 No budget participation in public the public hearings for raising solid waste participating in public hearing. township months needed. hearings. dispose fee and water tariff. The  Number of representatives from government, before representatives from poor families should not poor families participating in public DRC, Women’s raising be less than 30% and the female should not be hearings. Federation, Social tariff less than 30%. development and Baseline: 0% gender specialist; Civil Affairs Bureau. 1.5 Strengthen public safety education and training 1.5.1 Strengthen public  Conduct publicity safety in particular  The number and type of training PMO, PIUs, 2019– Project safety education in schools preventing human trafficking of people and on public safety education Women’s 2024 management in project area. traffic safety education in school. conducted. Federation, budget  Conduct safety risk prevention training for  100% of the students should Disease Control teachers. participant in the education. and Prevention  Enhance safety risk prevention education for  The times and participants of the Center, Education students in residence. training for teachers. Bureau, schools in Baseline: Mangdong Elementary school in Cangyuan the project area Wa County with 1349 students and 130 teachers, and Public Qingshuihe Guomen Elementary school in Mengding Security Bureau. township with 290 enrolled students and 16 teachers. The baseline for Cangyuan Guomen No 2 Elementary School is 0. 1.5.2 Conduct publicity  The hospital uses the publicity column and  The times of the information PMO, PIUs, 2019– Project safety in particular publicity website to update knowledge of updating and the propaganda Disease Control 2024 management prevention and treatment of prevention of infectious diseases every month, activities conducted by the and Prevention budget infectious diseases and the theme propaganda activities at the hospital. Center, Zhenkang education for local residents hospital are at least two times a year.  The numbers of distribute paper County Hospital and training for the doctors  Disease Control and Prevention Center brochures and broadcast videos, and Qingshuihe in both the PRC and distribute paper brochures and broadcast update publicity column, conduct Hospital. Myanmar videos, update publicity column, conduct public public health knowledge lecture health knowledge lecture and provide and provide consulting services to consulting services to the residents. the residents.  Conduct training workshops of malaria and  Times of training workshops and

Responsible Objectives Target /Actions Indicators Agencies Time Budget dengue fever for both the PRC and Myanmar participants. doctors. Baseline: In 2017, Disease Control and Prevention Center of Zhenkang has distribute 93958 paper brochures and broadcast 10 types of videos, update publicity column for 726 times, conduct public health knowledge lecture for 560 times and provide consulting services for 5072 persons. They also conduct 2 training workshops for 30 doctors from both the PRC and Myanmar. 2.ENHANCEMENT MEASURES 2.1 Providing employment opportunities for local residents, especially for poor families, women and minority people 2.1.1 Recruit local workers  During the project construction, 60% of  No. of the local unskilled workers PMO; project 2019– Project civil during project construction unskilled workers will be employed from the employed from the local area. contractors and 2024 work budget. and operation periods, and local areas (including Myanmar workers), with  No. of total local unskilled workers construction giving the proper work preferential consideration for poor, vulnerable, employed supervisors; PIUs, positions to the local women and ethnic minorities.  No. of women workers Human residents especially non-  During the project operation period, at least  No. of the unskilled workers Resources and skilled jobs for poor families 50% of unskilled jobs will be given to local employed from poor households. Social Security and women. residents with preferential consideration for  No. of workers from ethnic Bureau. ethnic minority people, poor and women. minorities.  Ensure that these targets and trainings are in bidding documents and contracts with contractors. 2.2 Strengthening project management capacity for SDAP, EMDP and GAP implementation and monitoring 2.2.1 Ensure the project  Recruiting one national social development and  One 10 person-months social PMO and PIOs. 2019- Project implementation consultant gender specialist to support EMDP, GAP, and development and gender expert 2024 budget team has social SDAP implementation with 10 person-months engaged. (USD development and safeguard inputs and one national resettlement specialist  One 8 person-months resettlement 5000*18 expert. to support resettlement plan implementation expert engaged. person- with 8 person-months inputs. months=900 Baseline is 0% 00). 2.2.2 Ensure an external  Recruiting a qualified external monitoring  An external monitoring agency PMO and PIUs. 2019– No budget agency to be involved. agency to monitor and evaluate the SEMDP engaged timely. 2024 needed. implementation annually combined with RP  Five monitoring reports, including external monitoring. one final monitoring and evaluation report, would be Baseline is 0% submitted to ADB.

Appendix 81

Responsible Objectives Target /Actions Indicators Agencies Time Budget 2.3 Enhancement of Capacity of Community development and regional cooperation 2.3.1 Encourage local  Local people are consulted and encouraged to  No. of local people who PMO, PIUs, and 2019– No budget people to participate participate in the designing, implementation and participated in design and village committees 2024 needed. actively in the community management of the community development management of community development and regional and regional cooperation together with PIOs. development and regional cooperation plan and its cooperation implementation Baseline is 0%  No. of women members who participated in these consultations 2.4 Improve Institutional Capacity of Involved Agencies

2.4.1 Teacher training and  Add psychological teacher or related course in  The number of psychological PMO, PIOs, 2019– Included in school leadership capacity school to solve psychological problems of teachers and related courses. Qingshuihe 2024 the capacity building students which could also speed up the  The type of newly added courses. Guomen building adaptation of Burma resident students.  The number of security staff and Elementary component.  Add ethnic cultural courses, computer courses related security measures. School and and vocational technology courses in Cangyuan curriculum design. Guomen No 2  Increase security force to meet the increased Elementary resident students. School. Baseline: 0. 2.4.2 Border trade and  Provide technical trainings (such as  the time, places, content of the PMO, PIUs, 2019– Included in logistics capacity building international trade, computer, accountancy, trainings and No. of participants village 2024 the capacity logistics etc.) for companies/enterprises (gender relevant); committees, and building potential employees in each year for 4 years.  No. of the project affected people Human component. Women participants of the trainings should who participate in cross-border Resources and account for 50% or more. trade or related businesses Social Security  At least 70% of project affected population are Bureau able to participate in cross-border trade or related businesses. Among them, 40% are women. Baseline: Will collected from the resettlement plan. GAP = gender action plan, EMDP = ethnic minority development plan, LBECZ = Lincang Border Economic Cooperation Zone, LMG = Lincang Municipal Government, PIU = project implementation unit, PMO = project management office, PRC = People's Republic of China, SDAP = social development action plan, STI = sexually transmitted infection. Source: Asian Development Bank.