Technical Assistance Consultant’s Report
Project Number: 38015-01 April 2008
REG: Sustainable Tourism Development Project
Prepared by: Asia Pacific Projects Manila, Philippines
For Asian Development Bank
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.
GMS Sustainable Tourism (TA 6279-REG) Final Report
I. PURPOSE AND SCOPE
1. The participating governments of Cambodia, Lao PDR, and Viet Nam have as their primary goal, the promotion of sustainable socioeconomic development that focuses upon poverty reduction, sustainable development of their physical environments, and protection of their natural and cultural heritage. In addition, the participating countries have also adopted the United Nations Millennium Development Goals (MDGs) that commit them to: reduce extreme poverty and hunger by half between 2000 and 2015; ensure environmental sustainability by reversing loss of forest; halve the proportion of the population without improve drinking water, halve the proportion of the population without sanitation, and improving the lives of slum-dwellers; combat HIV/AIDS, malaria and tuberculosis by halting and reversing the spread of these diseases; promote greater gender equality and empower women by providing for equal girls’ enrolment in primary school, increasing women’s share of paid employment, and equal representation in national parliaments; and develop a global partnership for development.
A. INTRODUCTION
2. This Final Report presents the analysis and results of the evaluation of the agreed subprojects for inclusion in the Greater Mekong Subregion (GMS) Sustainable Tourism Development Loan Project 2007-2012 undertaken by Asia Pacific Projects, Inc. on behalf of the Lao People’s Democratic Republic, the Royal Government of Cambodia, and Viet Nam, with the assistance of the Asian Development Bank (ADB, the Bank) project preparatory technical assistance (TA). The TA Fact Finding Mission took place in the three participating countries in August 2005 during which the outcomes, outputs, and scope of activities were agreed with the stakeholders at national and subregional workshops, and outline terms of reference for the TA prepared. A second TA Fact Finding Mission was undertaken in September-October 2006 to evaluate the demonstration subprojects identified in the first Mission, for possible Bank funding. These were subsequently presented at national and subregional workships with stakeholders in each participating country. In January 2007, a final subregional workshop was held in Vientiane to review the Draft Final Report that had been submitted and circulated in November 2006, and in March 2007, the Consultant organized the second Mekong Tourism Investment Forum that focused attention on the financiang of small and medium ecotourism and other CBT-based ventures in the GMS. With the completion of the Loans Fact Finding Mission on 1 March 2008 which was attended by the Team Leader and other team members, the Bank instructed the Consultant to prepare and submit this final report. 3. 4. The TA identifies feasible demonstration subprojects that will be suitable for Bank funding which will assist the participating countries to develop more sustainable and pro-poor patterns of tourism while facilitating the flow of international tourists to their countries through improved tourism facilities and services at land borders and along the GMS Economic Corridors. In addition to the loan components, the TA also identifies a human resource development (HRD) component to be funded on a grant basis, provides inputs on policies, innovative financing approaches, and support a forum for enhancing investment in small to medium tourism enterprises in the participating countries and the GMS as a whole.
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B. BACKGROUND AND OBJECTIVES
5. The participating countries’ strategic approach in the tourism sector has been to work together on issues that are of common concern to them in order to strengthen the contribution that tourism can make to their socioeconomic development, while protecting the valuable natural and cultural heritage on which the tourism sector depends. In recognition of the important contribution that tourism could make toward socioeconomic development, especially poverty reduction and conservation of natural and cultural heritage, the Bank included the tourism sector as one of 11 flagship programs in the ten-year strategic framework of the GMS Economic Cooperation Program. Underlying this framework is the vision of “a GMS that fulfills its vast potential, frees its people from poverty, and provides sustainable development opportunities for all”. In this context, the Bank, at the request of the GMS countries, including those participating in this TA, provided assistance to the GMS countries to prepare a ten-year subregional tourism sector strategy-the GMS Tourism Sector Strategy 2006-2015 (the TSS).
6. At the request of the participating GMS countries of Lao PDR, Cambodia, the People’s Republic of China, and Viet Nam for assistance in implementing key components of the TSS in their countries, the ADB agreed to extend technical assistance to help them identify and evaluate the feasibility of specific subproject proposals and to extend ADB loans and grants for their implementation between 2009 and 2013.
7. The main outcome of this TA feasibility study is a sustainable tourism development project in the participating countries that is suitable for Bank loan and grant funding as well as support through other donors. The main objectives or outputs of the TA are to:
• prepare initial project designs and feasibility evaluations for priority tourism-related subprojects dealing with natural, cultural and urban environment protection and conservation; • develop detailed project concept papers and sample site feasibility evaluations for subprojects dealing with pro-poor, tourism attractions along GMS Economic Corridor Zones and improvement of tourism facilities and services at key international border ports; and • prepare a detailed concept paper for grant funding of a network human resource development subprojects focusing on training of trainers in the areas of SME tourism enterprises and public sector tourism officials.
8. These subprojects are intended to serve as demonstration models for sustainable tourism and pro-poor tourism development for the GMS countries. Subprojects have been selected in four priority areas as specified in the TOR: (i) sustainable tourism development in natural, cultural and urban tourism sites (3) in each country or province in case of PRC; (ii) pro-poor tourism subprojects in provinces or counties in each country or province in case of PRC; (iii) cross border and Economic Corridor tourism facilitation subprojects in country or province in case of PRC; and (iv) human resource development subprojects in at least one country or province in case of PRC. In addition, initiatives for tourism sector SME development and investment promotion will also be prepared in parallel with the design of the subprojects.
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C. OVERALL APPROACH METHODOLOGY AND WORK PLAN
9. The overall approach methodology used in undertaking this TA to design the project is presented in Figure 1.
10. The TA has been executed in accordance with the TOR that requires that three field missions be undertaken during the course of the feasibility study:
o mission by the team leader to identify a short list of subprojects and recommend a final list for discussion and final agreement at an Inception Workshop held on 3 July 2006 in Kunming; o a mission by the full team of consultants to participate in the final selection of subproject sites, undertake an initial evaluation of these sites, and present these findings at a national workshop scheduled at the beginning of each mission in the participating country; and o a second mission by the full team to finalize the project design in each country and to obtain feedback on the design in a second national workshop.
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Figure 1: Overall Approach and Methodology for the TA
11. The first mission commenced on 1 May with the Team Leader making a one week visit to each participating country which resulted in the identification of a shortlist of subprojects and recommendations for a final set of subprojects for discussion and agreement at the Inception Workshop held on 3 July 2006. The mission was completed on 6 June 2006.
12. The second field mission by the full team of consultants commenced in Kunming, Yunnan Province PRC on 2 July with a briefing with Bank officers followed by participation in the Inception Workshop on 3 July. Between 4 July and 6 August 2006, the consultants undertook detailed site investigations and discussions with related stakeholders in Cambodia, Lao PDR, and Viet Nam to prepare and discuss initial recommendations at the national workshops organized at the end of the team’s presence in each country. The mission spent approximately ten days in each country and one week in Bangkok to draft the Interim report. This mission was completed on 12 August. During the course of the first mission, one subregional and three national workshops were held with over 120 stakeholders in the three countries. In addition, over 200 in- depth interviews were conducted and focus groups undertaken in 16 villages in the participating countries.
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13. The third field mission commenced on September 11, 2006 with a Subregional Workshop in Phnom Penh to consider the Interim Report. Between September 11 and October 21, 2006, the consultants undertook field missions in Cambodia, Lao PDR and Viet Nam to conduct consultations and to collect data required for the evaluations of the identified subprojects in each country. During the course of the second mission, 1 subregional and 3 national workshops were held in the three countries.
14. From 5 February to 1 March, 2008, the Team Leader, Environmental Specialist, Pro-Poor Tourism Specialist and the Sociologist and Resettlement Specialist participated in the Loan Fact Finding Mission to inspect the subproject sites, clarify outstanding issues, and assist in the preparation of MOUs for signing with Lao PDR and Viet Nam Government representatives.
15. In January 2007, a final subregional workshop was held Vientiane, Lao PDR to review the Draft Final Report that had been submitted and circulated in November 2006 and to discuss the organization of the second Mekong Tourism Investment Forum under the TA. The Forum that that focused attention on the private sector participation and invesrtment in small and medium ecotourism and other CBT-based ventures in the GMS was held in Ho Chi Minh City, Viet Nam in March 2007.
16. In late 2007, the Cambodian Government advised that because of limitations in its borrowing capacity for 2008, it would not be seeking laon support for the subprojects in Cambodia in this year leaving Lao PDR and Viet Nam as the remaining participants in the Project.
17. With the completion of the Loans Fact Finding Mission to Lao PDR and Viet Nam from 5 February to 1 March 2008, the Bank instructed the Consultant to prepare and submit this final report.
18. Lists of the key informants and stakeholders interviewed by the consultants are provided in Appendix 1.
19. In addition to the workshops and stakeholder discussions, two sets of stakeholder surveys were conducted in the participating countries in August-September 2006.
20. The first set of surveys was administered to 730 foreign and 654 domestic tourists in 10 survey sites: Sambor Prei Kuk and Pream Krasaob in Cambodia; Champassak and Luang Namtha in Lao PDR; and A Luoi, Gia Lai, the Ho Chi Minh trail, and Phong Nha-Ke Bang in Viet Nam. These survey sites were located in the immediate vicinities of the Project’s sustainable tourism subproject sites. The questionnaires for foreign and domestic visitors had the same basic outline. In general, the questionnaires collected information on the basic characteristics of the tourists, characteristics of their trips (e.g. length of stay, size of travel party, etc.), daily expenditures in the area, motives for travel, and activity preferences. The last part of the questionnaire posed questions about the tourists’ interest to visit the proposed project, and their willingness to pay entrance fees as well as environmental protection fees related to the project. The results of these visitor surveys are incorporated into the relevant sections in this report, specifically the market analyses for the individual subprojects.
21. The second set of surveys was conducted in conjunction with the poverty and social analysis of the Project. Household interviews were conducted with residents of communities affected by proposed subprojects in the participating countries. The questionnaires were organized into six broad sections: general household characteristics; health concerns and issues; training needs of
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the household members; community development and participation in community activities; livelihood and sources of income of the households; and the households’ participation and sources of income from tourism. The results of these interviews are incorporated into the social and poverty analysis of this report.
22. Samples of the questionnaires for the visitor surveys and the household surveys are provided in Appendix 2.
D. LAYOUT OF THE REPORT
23. The Final Report is presented in two volumes. Volume 1 is the main report while Volume 2 contains the appendices in support of the main report. The main report has been structured, as far as possible, to flow into the Bank’s internal reporting framework for proposed loans and grants.
24. The Final Report is divided into five parts including this introduction. Part II provides an overview and analysis of the tourism sector’s performance indicators. Part III gives the specification of the overall project in terms of its rationale and outcome, its components and outputs, its special features, and discusses the investment plan-cost estimates for the Project. Part IV of this Final Report discusses the project implementing arrangements in terms of the overall rationale, project management, and consulting services. Finally, Part V presents initial evaluations of the project’s poverty and social impact; its impact on the environment of the country and at the subproject level; its economic impact; and the approach to evaluating financial performance at the subproject, country and overall project level.
E. THE PROJECT TEAM
25. The project team that participated in the field mission that has resulted in this report comprised:
International Team Members:
Team Leader and Tourism Specialist Ludwig Rieder Sociologist/Anthropologist Mary Racelis Environmental Specialist John Hepper Civil Engineer Clint Johnstone Economist Ian Walker Financial Daniel Wang Heritage and Pro-Poor Specialist Steven Schipani SME Investment Specialist Paul Eshoo
National Tourism Specialists:
Cambodia Chhoun Sambath Lao PDR Acksonsay Rattanavong Viet Nam Hoang Thi Lan Huong/Duc Anh
National Sociologist/Resettlement Specialists:
Cambodia Sarin Chea
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Lao PDR Sayasane Kesone Viet Nam Lam Thi Mai Lan
F. ACKNOWLEDGMENTS
26. This work of the study team and the production of this report would not have been possible without the support of the participating country national tourism offices and stakeholders who gave their time to facilitate the field visits to the project sites, review the initial subproject proposals at the national workshops, participated in the field trips, and contributed valuable information and data. The Asia Pacific Project, Inc. (APPI) team gratefully acknowledges the cooperation and assistance provided by all.
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II. SECTOR PERFORMANCE INDICATORS AND ANALYSIS
A. PERFORMANCE INDICATORS AND ANALYSIS
1.0 SOCIO ECONOMIC DEVELOPMENT STRATEGIES
27. The participating governments of Cambodia, Lao PDR, and Viet Nam have as their primary goal, the promotion of sustainable socioeconomic development that focuses upon poverty reduction, sustainable development of their physical environments and protection of their natural and cultural heritage. In addition, the participating countries have also adopted the United Nationals Millennium Development Goals (MDGs) that commit them to: (i) reduce extreme poverty and hunger by half between 2000 and 2015; (ii) ensure environmental sustainability by reversing loss of forest; halve the proportion of the population without improved drinking water, halve the proportion of the population without sanitation, and improve the lives of slum- dwellers; (iii) combat HIV/AIDS, malaria and tuberculosis by halting and reversing the spread of these diseases; (iv) promote greater gender equality and empower women by providing for equal girls’ enrolment in primary school, increase women’s share of paid employment, and equal representation in national parliaments; and (v) create a global partnership for development.
28. All the participating countries have poverty reduction strategies (PRS) that aim to significantly reduce or totally eradicate extreme poverty and hunger. Within the framework of the MDGs, all the countries have committed to at least halve the level of poverty and hunger by 2015.
29. At the regional level, the countries – under the Asia Pacific Economic Cooperation (APEC) and ASEAN cooperation frameworks – have committed to reducing barriers to trade and to seeking greater integration between their economies. In addition, the participating countries are members – together with Myanmar, Thailand, and Guangxi Zhuang Autonomous Region and Yunnan Province of China—of the Greater Mekong Subregion (GMS) cooperation framework— that commits them to work together to enhance connectivity, facilitate economic activity between them, target poverty reduction, and to protect and rebuild the biodiversity of their protected areas.
30. The tourism sector has been identified by the participating countries and their regional and subregional partners as a global and local sunrise industry with the capacity to make substantial and rapid contributions to their socioeconomic development goals. The tourism sector continues to be one of the world’s most dynamic socio-economic growth sectors with growth now being fueled by the rapid development of the developing economies of Asia, especially China and India, and the Middle East. The World Travel and Tourism Council (WTTC) using country Central Bank data and a Satellite Accounting Econometric Model to identify final tourism demand estimates that in 2007, total global tourism demand reached $7 trillion, accounted for around 10% of global GDP, and employed around 240 million persons.1 Most recent United Nations World Tourism Organization (UNWTO) data indicate that total world international tourist arrivals (the main driver of the tourism economy) in 2007 reached 898 million with gross receipts estimated at $714 billion in 20062. The Asia-Pacific region within which the participating countries are located consolidated its position as the second-most visited region in
1 Total global tourism demand as defined by the WTTC includes demand for inbound international travel by nationals of other countries, outbound international travels by country nationals and residents, and travel within a country by its residents. 2 UNWTO World Tourism Barometer, Volume 6, Number 1, January 2008
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the world after Europe, accounting for 167 million arrivals (20% of total world international tourism), and an estimated $123.4 billion in receipts.
31. Between 1990 and 2007, global international arrivals increased at an annual average rate of 4 percent while arrivals to the Asia Pacific Region increased at 7.9%, almost twice as fast. In 2007, the countries of the Greater Mekong Subregion (GMS) attracted around 26 million international arrivals. Between 1995 and 2007, the annual average growth rate of international arrivals to the subregion excluding border pass travelers was around 8.12%, slightly higher than that for the Asia Pacific Region and twice the rate of global tourism. The subregion’s share of global tourism has increased modestly from 2.2 percent in 1995 to 2.9% in 2007 while its share of international arrivals in the Asia Pacific Region increased from 11% in 1995 to 14% in 2007.
32. In terms of the individual GMS countries, Cambodia's international visitor arrivals surged 17.7% in 2007 to reach 2 million; Lao PDR reported growth of 36.5% to reach 1.632 million; Myanmar reported a decline of 5.9% to 0.25 million; Thailand reported a growth of 5.9% to each 14.6 million; and Vietnam finished the year with 4.17 million international arrivals up 16.4%; while the two China provinces of Yunnan and Guangxi Zhang recorded an estimated 3 million international arrivals, up by an estimated 9.1%. The continued strong growth indicates that the GMS is well on track in reaching around 52 million international arrivals by 2015. Although data on domestic tourism is not available for all countries, this is roughly three to five times as large as international tourism and potentially plays an important role in redistributing income within a country.
Table 1: Global International Arrivals in Millions by Region Visited
Year 1990 1995 2005 2006 2007 Europe 270 316 444 460 480 Americas 93 109 133 136 143 Asia & Pacific 58 85 156 168 185 Africa 15 21 37 41 44 Middle East 10 14 38 41 46 World 446 545 808 846 898 The GMS - 10 20 24 26
Source: United Nations World Tourism Organization (2006) and Pacific Asia Travel Association for GMS data.
33. Based upon developments in transportation technology, access infrastructure, expansion and development of new destinations and tourism products, the UNWTO forecasts that total international tourism arrivals are likely to increase to around 1 billion by 2010, and 1.6 billion arrivals by 2020. In turn, international tourism is expected to generate a value of $1 trillion in 2010 rising to $2 trillion by 2020. Given the robust global outlook and based on the impact of developments in the subregional transportation road, air, rail and water networks, coupled with simplification of border processing procedures and normal promotions activities by the private and public sector, the GMS Tourism Sector Strategy 2006-2015 forecasts that international tourism arrivals to the GMS will likely increase by between 6.5% and 6.9% per annum to between 31 million and 32 million arrivals by 2010; and by between 8.5% and 10.3% per annum to between 46 and 52 million by 2015.3 These statistics do not take into account the expected
3 The detailed basis of this forecast is presented in the GMS Tourism Sector Strategy 2006-2015.
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strong growth in the estimated 24 million plus border tourists comprising residents of the GMS using border passes to visit provinces in adjacent countries, nor the anticipated strong growth in domestic tourism demand resulting from rapid economic growth in the GMS economies.
34. The impressive global, regional and subregional performance of the tourism sector, together with its ability to rapidly generate investment, foreign exchange, income and employment opportunities, has been recognized and given high priority by the participating countries who have developed long-term strategies, plans and programs for the development of the sector at the national and subregional levels, within the context of the GMS cooperation program.
35. In the above context, the key performance indicators of the sector include: (i) the volume of international arrivals and their distribution between and within the participating countries, (ii) the average length of stay of tourists in the participating countries, (iii) the seasonal pattern of demand, (iv) tourism receipts as measured by expenditure on tourism and related travel services, and (v) its economic contribution in terms of foreign exchange, GDP, employment and economic linkages, and distribution of its economic benefits within each country. Moreover, if well managed, the sector has the capacity not only to boost economic aggregates, but also to provide livelihood opportunities at the local community level.
36. Because of the nature of its production function, the tourism sector can be linked with communities of high poverty which can supply community-based tourism services direct to tourists, products such as handicraft and agricultural produce for use in larger tourism establishments in major tourism centers, as well as labor. At the same time, a well-managed tourism sector can help to protect important natural and cultural environment assets and the interests of vulnerable groups such as women, children and ethnic minorities in the populations of the participating countries.
2.0 THE TOURISM SECTOR IN THE PARTICIPATING COUNTRIES
37. In 2007, tourism sector demand in the participating countries reached 7.8 million international visitors, spending a total of 57.4 million visitor nights at an average length of stay of around 7.4 days. As shown in Table 2, all the participating countries are seeking to significantly increase international visitor arrivals by 2015. Their respective targets are in line with and in the case of Viet Nam exceed the volumes forecasted under the GMS Tourism Sector Strategy (ADB, 2005) for the year 2015. At present, the participating countries account for around 28% of total arrivals in the GMS. However, the GMS Tourism Sector Strategy 2006-2015 through its focus on marketing the Subregion as a single destination, and product development strategies designed to spread tourism more widely in the Subregion seeks to push this level to 38% by 2015.
Table 2. Current and Projected International Tourism Demand to the Participating Countries 1.
Cambodia Lao PDR Viet Nam Visitor Arrivals (2007) 2.0 million 1.6 million 4.2 million Ave. Length of Stay (Days) 6.5 7.0 8.0 Visitor Nights 13.0 million 11.2 million 33.6 million Projected Arrivals (2015) 5.5 million 3.6 million 9.8 million
Notes: 1 . Targets set by National Tourism Organizations (NTOs).
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2.1 Tourism in Cambodia, Lao PDR, and Viet Nam
38. Cambodia. After a long period of dormancy, the tourism sector in Cambodia was revived in the early 1990s. Led largely by market interest in the Angkor (Siem Reap) heritage sites and a more open air transportation outlook, international tourist arrivals have grown eightfold, from a mere 176,617 in 1994 to around 3 million in 2007. In addition to the international traffic, there were more than 6 million domestic tourists in 2007, according to the MOT.
39. The Kingdom of Cambodia has a rich and diverse base of cultural and natural resources for tourism, with the most important destinations being Siem Reap and Phnom Penh. The primary destination is Siem Reap which is the base for accessing the UNESCO-inscribed Angkor Wat. The capital city of Phnom Penh, aside from being the primary international gateway to the country, is also an important tourist destination in its own right – playing host to several important cultural and historical sightseeing attractions. Other important tourist attractions in Cambodia include the Tonle Sap Great Lake, Preah Vihear, the Sihanoukville resort, Sambor Prei Kuk (Kampong Thom), and Nokor Bachey.
40. A key characteristic of the tourism sector in Cambodia has been the concentration of growth in the two main air gateways: the Siem Reap area and, secondarily, in Phnom Penh. More than 60 percent of total arrivals to Cambodia arrive by air, with a little more than 30 percent crossing various land borders. Thus, it is not an accident that tourism growth truly began to accelerate with the opening of Siem Reap International Airport in 1997. Since then, tourist arrivals have grown at an average growth rate of around 30-40%.
41. The majority of these visitors (estimated at 50%) are Free Independent Tourists (FIT). In 2007, the top source markets for Cambodia were Korea, Japan, USA, France, UK, Thailand, China, Taiwan, Vietnam, Australia. The four East Asian markets (Korea, Japan, China, Taiwan) combined to account for close to one-third (36.3%) of all international arrivals in 2007. The average length of stay for international tourists is currently estimated at 6.5 days. The country’s pattern of tourism remains highly seasonal with visitor arrival volumes in the peak month (December 2007) being up to 2.0 times higher more than in the lowest month (June 2007).
42. As of 2007, it was estimated that there were more than 15,000 hotel rooms, in addition to an estimated 7,500 rooms in guesthouses, in Cambodia. As may be expected, the great majority of this rooms supply is concentrated in Siem Reap and Phnom Penh. It is estimated that tourism generated around $1,400 million in tourist expenditures, with contribution to GDP estimated to range from 7.9 to 12%. In addition, the tourism sector has been credited with generating direct employment for around 180,000 workers.
43. The MOT is targeting 3.12 million arrivals by 2010 and 5.5 million by 2015, bringing in an estimated $1.53 billion in receipts and accounting for 8.35% of GDP. Given this large increase in tourist arrivals, the MOT is also projecting a need to expand the national hotel supply to around 52,000 rooms by 2015.
44. Lao PDR. Over the past decade-and-a-half, tourism to Lao PDR has grown from only 14,400 arrivals in 1990 to 1.63 million visitors in 2007. Average length of stay is estimated at 7.0 days. Tourism to Lao PDR is highly seasonal with arrivals during the peak month (Deecenber 2007) being 1.6 times the volume for the low month (July 2007). In contrast to the other participating countries, the majority (60%) of arrivals to Lao PDR are by land, with the Friendship Bridge between Thailand and Laos as the most active border crossing point. In all, there are 7 border
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crossings for international visitors from Thailand, 3 from Viet Nam, and 1 from Yunnan Province in China. The country’s international air gateway is in Vientiane.
45. Lao PDR’s tourism product is strongly associated with nature and culture, including Buddhist as well as ethnic minority heritage resources. Among these, the most important and popular destination is the UNESCO World Heritage site of Luang Prabang. A second World Heritage Site has also been inscribed at Champaasak near Pakse. Other important sites include the Plain of Jars in Xieng Khouang Province, Vang Vieng on the Nam Song River, Savannakhet, Kong Island on the Mekong River near the border with Cambodia, the ethnic communities of the Boloven Plateau, and of course, the capital city of Vientiane. Special interest and activity tours are also becoming more popular in Lao PDR, particularly a variety of soft adventure activities, river cruies, biking tours, and Lao weaving tours in and around destinations like Luang Prabang.
46. Given the high proportion of border visitors, it is not surprising that Thailand (55%) and Viet Nam (15%) account for the majority of international visitors to Lao PDR. Of the rest, the key markets are the Europe (primarily France, UK, and Germany), and North America (USA and Canada).
47. Lao PDR’s lodging sector appears to have been greatly influenced by the generally backpacker/budget travel character of these European and North American segments. As of the end of 2006, there were 1,193 lodging establishments with 17,633 rooms in the country, with almost two-thirds (62.2%) of these rooms offered through guesthouses rather than hotels. Much of the lodging infrastructure is concentrated in Vientiane, Luang Prabang, and Champassak.
48. The Lao PDR National Tourism Administration (LNTA) estimates that in 2007, tourism generated $233 million in receipts, accounting for 7 to 9 percent of GDP. Direct employment in tourism was estimated by LNTA at 32,000 jobs, with about 450,000 more in indirect employment. For 2015, the LNTA is seeking to achieve 3.6 million international arrivals with receipts of $389 million and targeting an average length of stay to 8.9 days.
49. Viet Nam. Tourism in Viet Nam has been on a steady increase since the country opened to international tourists during the 1980s. Growing at an average annual rate of around 9% between 1995 and 2007Viet Nam surpassed the 2 million tourist arrival mark in 2000 reaching 4.17 million in 2007. On the domestic side, about 18.1 million local tourists were estimated to have traveled around the country in 2007.
50. The seasonal pattern of international tourism to Viet Nam is moderate, with a high month-to-low month ratio of only 1.2. This means that, on average, international visitor arrivals for the highest month of the year are about 1.2 times greater than those for a low month. The average lengths of stay for international tourists to Vietnam was estimated at 8 days in 2007 by the Viet Nam Ministry of Culture, Sport and Tourism.
51. Viet Nam’s main tourism products are based on cultural and natural sightseeing tours, ecotourism, city shopping and sightseeing, and limited beach resort activity. The major tourism attractions include the UNESCO-inscribed natural World Heritage site at Ha Long Bay and the cultural World heritage site at the ancient kingdom of Hue. Ho Chi Minh City and the adjacent Mekong Delta in the South; Hanoi, Sapa and Dien Bien Phu in the North; Hoi An, Hai Van Pass, Dalat and Cham Museum in the centre are the other primary attractions. The beaches at Do Son, Tra Co, Sam Son, Cua Lo, Non Nuoc, Vung Tau are also important attractions with the Mekong Delta region offering a variety of exciting tour options.
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52. China was the biggest source market for Viet Nam in 2007, accounting for 18% of all international visitors. Almost 47% of the international traffic in 2007 were generated by the East Asian markets of Japan, South Korea, Chinese Taipei, and China. France (3.03%) and the United Kingdom (1.94%) were the European markets listed among the top 10 generating markets for Viet Nam in 2007.
53. The country’s two international air gateways – Hanoi and Ho Chi Minh City – account for 67% of all international tourist arrivals. These two airports are also growing in importance from a subregional perspective. They are increasingly being used as staging points for undertaking regional tours in the neighbouring Mekong countries, particularly Cambodia and Lao PDR. In addition to the visitors arriving by air, around 27% of tourists cross into Vietnam by road from China, Laos, and Cambodia. There also exists a rail connection between Viet Nam and China through Kunming in China’s Yunnan Province.
54. As of 2007, Viet Nam’s supply of accommodations totaled 8,556 lodging establishments with a total of 170,551 rooms. Of these, 5,726 establishments are classified as hotels with 127,854 rooms, and 2,830 establishments are classified as guest houses with 42,697 rooms. About 25,500 rooms in 231 3- to 5-star establishments concentrated in Hanoi and Ho Chi Minh City. Total receipts from tourism was estimated at VND 48,000 billion or around $3.2 billion for 2007. Direct employment from tourism stood at an estimated 860,000 with indirect employment estimated as up to 1.7 million.
55. The Viet Nam Ministry of Culture, Sport and Tourism (MCST) is responsible for promoting the country in key international markets. Its marketing and promotional strategies include the negotiation of bilateral tourism agreements with key source markets and neighbours in the region; publicity campaigns and distribution of informational materials for tourists and the travel trade; promotion of regional festivals; overseas marketing offices; and cooperative marketing through the coordination of attendance of the Viet Nam travel trade at key travel trade shows.
56. For 2015, MCST is aiming to bring in around 9.8 million international tourists, and to maintain the average length of stay to 8.0 days. In addition, by then, it expects that 25-30 million Vietnamese residents will also be traveling around the country. All this activity is expected to generate around $7.3 billion in tourist receipts. It estimates that this growth in the tourism sector will also require 1.4 million additional jobs, around 350,000 of which will be indirect employment opportunities.
57. A more detailed description of the tourism sector at the level of the GMS and in each participating country in terms of the scope, institutional framework and long-term strategies and plans for the sector is provided in Appendix ____.
2.2 Economic Impact of Tourism in the Participating Countries
58. In 2007, the sector generated in excess of $10.97 billion from international tourism expenditure in the participating countries (See Table 3). Foreign exchange earnings from tourism have been growing at more than 10% per annum and this has done much to assist the countries in financing their socioeconomic development programs. However, as indicated in the GMS Tourism Sector Strategy 2006-2015 Final Report, the import cost or economic leakage levels associated with international tourism in the participating countries range from 20 to 40% of total foreign exchange receipts. This indicates that, in addition to increasing the overall size of foreign exchange earnings, there is also substantial room for increasing net foreign earnings from tourism in the participating countries through increased linkages between tourism sector and
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other sectors of the national economies. In this context, the GMS Tourism Sector Strategy sets overall economic leakage targets for 2010 at 32%, and 23% of gross foreign exchange earnings for 2015.
Table 3. Economic Impacts of the Tourism Sector in the Participating Countries
Cambodia Lao PDR Viet Nam Int’l Tourism Expenditures in 1,400 233.0 3,200 million $ (2007) Estimated Contribution to 7.9 to 12% 7 to 9% 3 to 5% GDP Target Contribution to GDP 8.35% NA 6.5% (2015) Direct Tourism Employment 180,000 32,000 860,000 Source: Country NTOs and consultant’s estimates
59. GDP contributions from tourism have been increasing in the GMS. Nevertheless, there is considerable scope to increase GDP contribution from international tourism through programs aimed at reducing the high economic leakages in the participating countries. As indicated in the GMS Tourism Sector Strategy4, the GDP contributions of the tourism sector are likely to surge by up to 48% between 2010 and 2015. This is expected to result from a significant boost in arrivals due to the completion of connectivity, access, and marketing activities undertaken as part of the GMS cooperation initiatives. Other things being equal, the contribution of tourism to GDP could accelerate to between 11.7 and 17.8% in Cambodia, 13.4 to 14.8% in Lao PDR, and between 4.5 and 7.4% in Viet Nam.
60. The tourism sector is a highly labor intensive activity that has the capacity to employ large numbers of women, and entry into the sector does not require high educational levels. In 2007, the tourism sector in the participating countries directly employed around 1.1 million persons. In terms of targets, the three countries are seeking to raise direct employment in the sector to in excess of 2.5 million by 2015. Based on surveys of tourism establishments undertaken in Thailand, the tourism sector is a relatively equitable employer of women compared to other industries. For example, in the hotel and restaurant sector, women comprise up to 50% of the rank and file employees. However, women are significantly underrepresented in supervisory and management positions at hotel and restaurant establishments and especially in the transportation, travel and tour and public sector areas of the industry. Wages and salaries for women in the industry are also often lower than that for males. Clearly, much can yet be done to improve both the participation of women in the sector as well as in the area of equality in wages and salaries.
61. The tourism sector creates significant backward linkages in the local economy, stimulating the creation of micro, small and medium enterprises to supply larger tourism service establishments. In this context, the participating countries report that their tourism sectors create substantial indirect employment opportunities. Broadly speaking, the tourism sector’s direct to direct plus indirect employment ratio ranges from 1.5 to 2. Except for Viet Nam, the ratio for the other countries and provinces could still be increased – especially if the participating countries are able to reduce the high economic leakages currently associated with their tourism sectors. The tourism sector in the participating countries has the potential to make significant contributions towards socioeconomic development, poverty reduction, sustainable use of natural and cultural
4 See Section 2.3.1, Appendix 2 of the Final Report of the GMS Tourism Sector Strategy 2006-2015
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resources, and gender equity in employment. However, unplanned tourism development may lead to the opposite effect, resulting in increased inequalities and contributing to unsustainable development. Therefore, the development of the tourism sector should be carefully planned and managed to ensure that it maximizes the sector’s contribution towards the development goals.
3.0 TOURISM AND POVERTY REDUCTION
62. Table 4 reviews the broad dimensions of poverty in the participating countries.
Table 4: GMS Demographic Characteristics
Share of GMS % Annual Population % Rural Per Capita Population Country Population5 Average Below Population GNP ($) Below Poverty Growth Poverty Line Line Cambodia 13.30 2.5 84.1 260 4.78 11.4
Lao PDR 5.35 2.5 80.0 260 1.85 4.4 Vietnam 78.92 1.6 76.0 390 29.20 69.4 Total 97.57 0.7-2.5 75.4 260-390 35.83 85.2 Source: GMS Atlas of the Environment, 2004
63. As noted in Table 4, some 35.8 million people or around 36.7% of the population of the participating countries are regarded as living in extreme poverty. Of these, by far the largest are located in Viet Nam, followed by Cambodia. These people comprise mainly ethnic communities living in the remote border provinces who have been by-passed by the rapid growth experienced by their fellow countrymen living in the main urban centers. In many cases, access to their place of dwelling is poor, agricultural productivity limited, and basic support infrastructure absent.
64. Tourism is seen to have several advantages over other productive sectors for pro-poor initiatives in the participating countries because: customers (tourists) often visit the destinations where the poor reside; tourism is relatively labor intensive (and gender balanced); often poor countries have few other suitable export products; and tourism can use assets that the poor often have access to - natural resources and cultural assets. Tourism can potentially empower poor people to improve their lives by providing opportunities and capacity for: (1) economic gain; (2) employment; (3) small/medium-sized enterprise (SME) development; (4) improved quality of life; and (5) involvement in decision-making on important community development issues. In this context, the UNWTO has mounted a global initiative called Sustainable Tourism for the Elimination of Poverty (UNWTO-STEP), that focuses upon ensuring that an increasing share of the benefits of international tourism growth are channeled towards poverty reduction in the less developed regions of the world, with particular attention to Africa, Asia and the Pacific, the Middle East and South Americas.
65. A review of the current situation with regard to pro-poor tourism development in the GMS indicates that much of the current benefits of tourism bypass the vast majority of persons living below the poverty line. This is especially true in the high poverty-incidence provinces in the border areas of the subregion. Given the advantages of tourism, there is scope to substantially increase tourism’s contribution through appropriate strategies and programs. Through an expanded approach to pro-poor tourism development, the GMS Tourism Sector Strategy seeks to
5 Based on Greater Mekong Subregion Atlas of the Environment, 2004. All numbers are for year 2001.
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lift up to 158,000 people out of extreme poverty by 2010, and up to 1.2 million by 2015. At least 70% of the targeted poverty reduction will need to occur in the participating countries, most especially in Viet Nam.
B. ANALYSIS OF KEY PROBLEMS AND OPPORTUNITIES
1.0 EVALUATION OF TOURISM SECTOR PROBLEMS AND OPPORTUNTIES
1.1 TOURISM ASSETS
66. As noted in the preceding section, the participating countries have an array of cultural and natural tourism assets that provide the base for the development of their tourism sectors. The cultural assets of the participating countries include tangible archaeo-historic sites, colonial historic towns and cities and modern historic sites, as well as intangible cultural assets based on the diversity of their ethnic cultures with their unique traditions, customs and ways of life. These tangible and intangible cultural assets already support a large and growing heritage tourism flow, and the most important sites (e.g. Angkor Wat in Cambodia, Luang Prabang in Lao PDR, etc.) are already experiencing increasing pressure from tourism use. In addition, the prevalence of poor communities in the vicinity make these sites vulnerable to exploitation. Farming activities or the removal and sale of relics and building materials threaten the cultural integrity and sustainability of these sites. Local communities generally do not participate in the management of the sites. In addition, there is a need to enhance the capacities of site managers to manage the impact of tourism development, as well as to develop the knowledge and skill of local guides to properly interpret the heritage values in these cultural assets.
67. In addition to the cultural attractions of the participating countries, there is a range of natural assets and areas to be found in the subregion. These include the coastal forests, beaches and islands of Cambodia and Vietnam; the forested mountain regions between Vietnam and Lao PDR; the karst formations of Vietnam; and the rivers of the subregion of which the Mekong is the most important. These landscapes support a large number of protected areas and wetlands whose biodiversity and scenic quality is of great interest to general sightseeing and special interest tourists alike. Although these natural areas do not garner much tourist attention at the present time, they are likely to come under increasing pressure, with increased connectivity arising from subregional access improvement projects within the GMS. As with the cultural heritage areas, large numbers of poor communities live in the buffer zones around the protected areas. These communities depend upon the protected areas for food security and thus threaten their biodiversity. In this context, tourism can be used to provide alternative livelihood in order to assure the residents’ food security while protecting and enhancing the biodiversity of the participating countries.
68. The major tourist centers in the participating countries are also experiencing rapid and, in many cases, unmanaged growth that threatens the quality of their urban environment. Ultimately, the sustainability of the tourism flows to these sites will also be threatened. Examples include Siem Reap and Kratie in Cambodia, Luang Prabang and Vang Vieng in Lao PDR, and Hoi Anh in Viet Nam. Thus, it is critical to take advantage of the opportunity -- before the main growth surge expected between 2010 and 2015 -- to ensure that the urban environment and the environment in the vicinity of these urban areas is not adversely affected by uncontrolled tourism growth.
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1.2 FACILITATION OF INTERNATIONAL TOURISM FLOWS
69. The participating countries are generally accessible by air through relatively modern airport terminal facilities that are already in need of expansion due to the fast rate of traffic growth; by road through a network of 11 major border checkpoints from adjacent countries; by rail between Viet Nam and China; and by water in the case of Cambodia and Viet Nam. While airport terminals are relatively new and well designed, the land border terminals are generally run down, poorly constructed buildings set in an unattractive landscape that is not welcoming to tourists. Signages advising tourists of immigration and customs procedures are generally absent. Basic tourist information about what to see and do, booking for transport, accommodation and tours, foreign exchange services, refreshments and clean toilets are not available. Border personnel lack the hosting skills to welcome tourists to their country, a condition that is exacerbated by low morale induced by the poor working conditions and low pay. Tourists are often asked to pay additional amounts for processing their visas or for bogus medical vaccination certificates. As a result, most tour operators prefer to take their clients by air rather than risk the uncertainties of passing through a land border in the participating countries. The opportunity to use the land border checkpoints to provide a quick, efficient, welcoming and friendly transfer, provide support facilities, and present the countries’ tourist offering has yet to be developed.
70. The completion of the GMS Economic Corridor Road program by 2010 will provide unprecedented connectivity between the GMS countries and will profoundly affect subregional and national tourism volumes and patterns. However, what may seem to be a major opportunity could in fact result in a significant loss in tourism potential especially for Lao PDR and Cambodia that sit between two major growth nodes on the North-South, East-West and Southern Economic Corridors. Unless action is taken to develop tourist attractions along the new road in the portion of the Corridor crossing these countries, then there is the risk that a significant proportion of tourism expenditure and benefits to local communities will be lost. There is thus an opportunity to develop existing and new attractions along these sections of the Economic Corridor highway to attract tourism flows and benefits into the local communities.
1.3 TOURIST FACILITIES AND SERVICES
71. In 2007, the participating countries are expected to have 142,400 star-rated hotel rooms in 1,700 establishments. In addition, there are an estimated 4,841 guest houses offering 76,839 rooms. The hotel establishments are operating at room occupancies in the range 60 to 75% while guest house establishments are achieving room occupancies in the range 30 to 50%. per annum. Overall, the accommodation establishments are aging and a significant proportion of them require major refurbishment. Accommodation supply is extremely limited in the peak season and on a year-round basis in key destinations such as Hanoi and Ho Chi Minh City. The bulk of the hotel accommodation is located in the gateway cities and major tourist centers such as Siem Reap, Hue, and Luang Prabang. Guest house establishments are more likely to be found in the more remote provincial capitals and tourism centers where poverty levels are high and where livelihood generation for poverty reduction is crucial to social development and stability. However, standards of facilities and services at the guesthouses are generally quite poor. This makes it difficult for tour operators to include the guest houses in their tour programs resulting in lost opportunities to bring tourism to remote areas in order to spread the benefits of tourism more widely and increase the level of poverty reduction. Unlike their larger hotel counterparts that can afford to provide their own in-house training of rank and file staff to meet minimum standards of service and hygiene, guest house establishments cannot. The opportunity thus exists to provide the required training to guest house staff through a public-private sector initiative that
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will raise standards, increase the volume of tourists using them and boost poverty reduction in the more remote parts of the participating countries.
1.4 INSTITUTIONAL ARRANGEMENTS
72. The tourism sector in the participating countries is managed by a network of public sector institutions that work with a counterpart network of private industry associations. The public tourism instutitions are organized at the national, provincial or prefecture, and sometimes district or county level. On the other hand, the private sector groups include hotel, travel agencies, tour operators and sometimes, cross sectoral industry associations. The public sector organizations at the national level are usually responsible for tourism policy, research, international cooperation, planning, development, marketing and regulation of tourist facilities and services. These organizations are usually either Ministries in their own right, or departments within a ministry that has responsibility for tourism, among other concerns.
73. Typical staff numbers at national tourism organizations (NTOs) range from 150 to 300 staff. Provincial tourism offices are generally smaller, with staff complements from 7 to 30 people only. Thus, they tend to have fewer functions – concentrating mainly on regulation of tourism enterprises; implementation of provincial level tourism plans; marketing and promotions; and collection and reporting of tourism statistics. At the district or county level, the tourism functions are generally limited to providing local tourist information and regulation of tourist facilities under the auspices of the provincial or prefecture tourism office.
74. In general, staff capacities and technical skills in the area of policy, planning, research, marketing and product development are limited especially at the local levels. This is one of the main reasons why poverty reduction has yet to be mainstreamed into the policies and programs of these tourism offices. Because of their limited ability to attract additional tourists – especially to the more remote destinations, the local tourism offices are also constrained from sustaining a higher level of poverty reduction in these areas. Clearly, there is a need to better prepare these public sector tourism officials given that much of the implementation of tourism policy, planning and development takes place below the national level.
75. Table 5 provides a detailed summary of the institutional framework for the tourism sector in each of the participating countries.
1.5 POLICY AND REGULATORY FRAMEWORK
76. In most cases, the tourism policies of the participating countries are directly linked to broader national development goals and objectives. In all cases, tourism is seen as a priority sector because of its potential as a new, clean and green sunrise industry that can contribute to national development goals quickly and efficiently. Significantly, the most striking feature of the participating countries’ tourism policies is that they all contain an element directed at poverty reduction or targeting disadvantaged groups. Yet poverty reduction and targeting benefits to disadvantaged groups remains to be mainstreamed into their policies and programs. As a result, only a fraction of the effort is diverted to these causes while most of the energy goes to traditional activities that are not necessarily connected with pro-poor tourism approaches.
77. A review of the regulatory framework and practices governing the tourism sector in each country indicates various levels of regulation. In general, the NTOs are mainly concerned with administering laws and regulations to cover the activities of tourism enterprises and acting as the lead agencies for implementing tourism development policy. These NTO functions are usually
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mandated by a specific tourism law. In the participating countries, these laws have recently been revised to reflect the formal participation and regulation of the private sector in providing tourism services; mandate increased coordination and cooperation with other government agencies; facilitate the participation of the private sector in tourism promotions; and to mainstream tourism policy, planning and development towards the MDGs of poverty reduction, sustainable development and gender equity.
1.6 TOURISM PLANNING
78. All the participating countries have medium- to long-term sector tourism plans that are broadly similar in intent i.e. to become the leading destination in one or more (in some cases all) tourism markets in Asia or the world. These plans, typically ranging from 5 to 20 years, are usually linked to the national development priorities and overall tourism policies. Most of the plans emphasize meeting volume targets, while the concept of ‘yield’ and ‘yield management’ in target setting is generally absent. While the concept of sustainable development is generally included in all the tourism strategies and plans, the basic legal instruments needed to ensure this are not controlled by the NTOs. All plans give product development and marketing as key objectives but generally give insufficient attention to mobilizing the necessary private sector support. In fact, there seems to be a view in some countries that the private sector somehow needs to be controlled and limited in its activities.
79. The safety and security of tourists is also frequently mentioned as an objective. However, the strategies for implementation usually come down to fielding more tourism police at key destinations without a clear concept of their duties and responsibilities. Finally, tourism is seen as a tool for poverty reduction in all the plans and all have strategies and programs directed at this objective. However, it is observed that, in many cases, the target of poverty reduction programs appears to be villages and communities close to major tourist centers, while the more remote communities with attractive tourism resources do not get attention. There needs to be a better understanding of the relationship between tourism and poverty reduction in order to ensure that the approach is more comprehensive, focused, and effective.
1.7 REGIONAL COOPERATION
80. Regional cooperation is frequently included as an objective but less well developed in the strategies of the participating countries. GMS tourism initiatives do not figure large in the current strategies, plans and programs. All NTOs are engaged in bilateral and multilateral cooperation initiatives and frameworks in the tourism area. At the bilateral level, the NTOs generally have agreements with all neighboring countries and their key markets. At the multilateral level, the main cooperation frameworks include APEC, ASEAN, the GMS and other country regional groupings such as BIMSTEC, ACMECS, CLV Tourism Development, Emerald Triangle, and others. Of these, the most important are ASEAN and the GMS. Both have comprehensive tourism programs, backed by full-time Secretariats. However, it is noted that the resources provided by the NTOs to manage their cooperation agreements are generally quite limited. Many of the tourism plans have been produced with donor funding and expertise and it is not clear just how much national commitment and ownership there are towards these. Greater attention needs to be given to developing approaches and processes that will allow the stakeholders to drive the formulation of the strategies and action plans. It is also apparent that there is no consistent approach to tourism planning between the participating countries and most lack a formal monitoring system to determine progress or undertake regular review and
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adjustments. There is clearly a need to introduce a standardized approach to tourism planning that reflects the views of the stakeholders and receives a strong commitment for implementation.
Sector Performance Indicators and Analysis 20
TABLE 5: TOURISM SECTOR INSTITUTIONAL FRAMEWORK IN THE PARTICIPATING COUNTRIES
CAMBODIA LAO PDR VIETNAM
General The institutional framework for national and regional The Lao National Tourism Administration (LNTA) is The institutional framework for tourism policy, planning and Framework (provincial level) tourism policy, planning and programming in responsible for tourism policy, planning and programming at programming at the national and provincial level in Vietnam is Cambodia, in principle, comprises a collaboration process the national and provincial level rests with. The LNTA is highly centralized in the Vietnam National Tourism Administration between the Ministry of Tourism (MOT), the Cambodian headed by a Minister. (VNAT), and embedded within a long-term policy planning National Tourism Authority (CANTA) and the Office of the The LNTA comprises two units: (i) a Tourism Operations Unit framework with a 15 year time-frame. Within this policy framework, Council of Ministers, other relevant Ministries, Institutions, responsible for planning, cooperation, marketing, promotion the planning framework for programme implementation follows a 5- APSARA, and the private sector through the various year timetable. and management (regulation) of tourism enterprises and associations. human resources development; and (ii) an Administration The tourism development policies, plans and programmes at support unit responsible for personnel, administration and the national level are intended to focus upon strategic issues finance. related to tourism development, to ensure the sustainable development of tourism in the country, and provide a framework for the formulation and implementation of detailed regional and provincial tourism policies, plans and programmes. The capacity to develop tourism policy, plans and programmes is seriously constrained by overlapping functions and responsibilities between MOT and the CANTA leading to confusion over who should take the lead; and by limited technical capacities in the technical division of the MOT. Local/ The MOT has provincial tourism offices in most provinces that The LNTA shares the administration of tourism at the There is an extensive network of provincial and city tourism Provincial are closely linked with the provincial governor’s office. These provincial level with the provincial governments. The role of administrations throughout Vietnam. These are usually combined Tourism offices typically range in size from 5 to 10 persons except in the provincial tourism offices is primarily to regulate tourism with trade promotion functions and have considerable autonomy in Siem Reap where the provincial tourism office comprises 86 enterprises, collect data, provide tourist information services, line with the policy of the central government to give greater staff undertaking mainly monitoring and supervisory roles. In participate in promotional campaigns, and implement autonomy and responsibility to the provinces. While tourism policy, general, the provincial offices have only limited tourism programmes under the approved national policies and plans planning and programming skills are weak, their capacity to planning and programming capabilities and are generally not with adjustments for provincial government concerned. In undertake projects at the site level is generally quite good. engaged in the tourism policy, planning and programming general, tourism policy, planning and programming skills are framework other than as implementers. quite limited at the provincial office level – a major barrier to the implementation of pro-poor tourism policies, plans and programmes.
Planning The actual work is undertaken by the technical division of the The Planning and Cooperation Department of the LNTA is in The process of formulating tourism policy, planning and and Policy MOT that comprises 7 departments: (i) Planning; (ii) Marketing principle responsible for preparing policies, plans and programmes at the national and provincial level is led by the Formulation and Promotion; (iii) Tourist Industry Regulation; (iv) Training; programmes at the national and regional level for approval by VNAT’s Planning and Finance Department and is mandated by the Process (v) Cultural Tourism Development; (vi) International the Minister and the Prime Minister and Cabinet. The basic Tourism Law. The overall approach to policy, planning and Cooperation; and (vii) Statistics and Information. The results of process used to develop policy, plans and programmes is to programme development may be characterised as follows: (i) under the collaboration are then put to the Royal Cambodian prepare draft documents (usually with donor-based expert its legal mandate, the VNAT leadership calls for the formulation of Government for its endorsement through the Minister’s assistance) using a range of consultative processes such as the required national, regional or provincial tourism policy, plan and Council via the CANTA. workshops, one-on-one consultations, and comments on programmes on a periodic basis; (ii) the Tourism Research Institute tourism policy, planning and program proposals. The LNTA The technical division of the MOT also undertakes the (TRI) - an attached agency of the VNAT- undertakes the necessary preparation of all regional and provincial level tourism planning then seeks comments and opinions on the drafts from the research and consultations with affected stakeholders; (iii) the related ministries, provincial governors, and other institutions. and programming based on the principles and guidelines of VNAT studies the report and may seek further inputs from key The comments and opinions are then integrated into the draft the national tourism policies, plans and programmes. In government agencies and the provinces where involved; and (v) preparing provincial tourism plans and programmes, emphasis policies, plans and programmes and referred to the Prime once agreement is reached, the VNAT puts the policy, plans and Minister’s Office by the Minister Chairman of LNTA,, for is given to: (i) determining the respective provincial policies, programmes forward to the Government for its consideration and official endorsement. Once draft policies and plans are 21
CAMBODIA LAO PDR VIETNAM plans and programmes in the context of the national tourism approved, the LNTA is responsible for programming the endorsement. policies, plans and programmes; (ii) ensuring that all implementation of the policies and plans at the national level, Once endorsed by the Government, all responsible state agencies, development measures are sustainable; and (iii) building the and at the provincial level, through the provincial tourism as well as economic, political, social, and professional capacity of provincial tourism administrations to implement offices. organizations, People’s armed forces, units and individuals are provincial tourism plans and programmes. All projects at the required by law to implement the related policies, plans and national and regional level under the national and provincial programmes level tourism policy, planning and programming framework are under the regulation of the Ministry of Tourism. The national and provincial tourism policies, plans and programmes should be reviewed, revised and updated every five years.
Tourism The overall policies to promote the development of tourism Tourism has been identified as one sector that can contribute The overall policy of the Vietnamese Government for the Policies are: liberalized air, land and water transportation policies; visa significantly to poverty reduction and national development in development of tourism is to use its outstanding natural, cultural on arrival/exemption for the Cambodians living abroad; the Government’s 2004 National Growth and Poverty and historic heritage to: (i) generate foreign exchange, income, and strengthening/widening the regional tourism cooperation; Eradication Strategy that calls for: (i) promoting community- employment; (ii) connect Vietnam more closely with its neighbours control of negative impacts of tourism; reducing tourism based tourism; (ii) developing small-scale infrastructure; (iii) in the GMS: (iii) develop the full potential of the Indochina tourist economic leakages; increasing international tourism arrivals capacity building for tourism –related micro enterprises and area (Vietnam-Lao-Cambodia); and (iv) raise the standards of living by 20% to 30% annually to 2010; and stimulating the communities giving special consideration to participation of of the population, especially the poorer and disadvantaged sectors development of domestic tourism. women and ethnic minorities and micro-enterprises; (iv) of society. providing training in marketing and ecotourism; and (v) promoting community-based tourism networks in the country and in the GMS subregion. Tourism A new tourism law has been drafted that consolidates the legal The legal framework for the tourism sector comprise of the The legal framework for the tourism sector is currently covered by Regulations framework governing: (i) the regulation (licensing, duties and tourism law and a set of decrees issued by the Prime Minister “Tourism Law” of 14 June 2005. The Law covers: (i) the scope and responsibilities) of tourism-related enterprises; (ii) the covering the regulation of Hotels and Guest houses (Decree applicability of the Law; (ii) provisions for the protection, use and supervision of the development of tourism including tourist 159), Travel Companies (Decree 1150), Tour Guides (Decree development of tourism resources; (iii) provisions for tourism safety, security and tourist duties while in-country; (iii) the 626), and the regulation of the entry and exit of tourists development plans; (iv) provisions for management of tourist creation, maintenance, and monitoring of a Tourism Marketing (Decree 81). Restaurants and tourist retail establishments are resorts, tourist spots, tourist routes and tourist cities; (v) the rights and Promotion Board; and (iv) the provision of an incentive regulated at the provincial and district level. The entry of and obligations of tourists while in the country; (v) the licensing, and and quality assurance scheme. This law is being finalized for tourists is governed by Immigration and Customs decrees and operation of tourist enterprises and tour guides; (vi) international submission to the National Assembly in 2005. regulations that include visa on arrival facilities for nationals of cooperation in tourism; (vii) tourism inspectorate, settlement of most countries. The entry and stay of tourists in Lao PDR is The provision of fiscal and other incentives for investment in tourism claims and petition; and (viii) implementing provisions. tourism is covered by the Investment Law of Cambodia that is regulated by the Consular Department of the Foreign Ministry, There are also a host of government decrees and local ordinances and the immigration, customs, and security organizations. administered by the Cambodian Investment Board. The Board covering the operation of the National Administration of Tourism is supported by the Cambodian Council for development that A new tourism law has been approved and promulgated in late (Resolution 94/2003/NĐ-CP,19 August 2003) and regulation of provides a one-stop information service resource on 2005 that (i) consolidates the existing decrees and ordinances; tourism-related enterprises. investment opportunities in the country with provisions for (ii) provides for the creation of a National Tourism Council to applying for investment licenses on-line. coordinate tourism matters between government agencies; (iii) mandates the creation of a Tourism Marketing and Promotion Board; and (iv) includes new elements related to pro-poor tourism including ecotourism and public opinion and awareness generation.
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CAMBODIA LAO PDR VIETNAM
Tourism A formal Tourism Development Plan sponsored by ADB is in There are two draft Tourism Sector Plans currently in The official plan for the development of tourism is the Master Plan Strategies place for period 2001-2005 but has not been officially existence. The National Tourism Development Plan for Lao on Tourism Development in Vietnam Period 1995-2010, produced and approved by the National Assembly. The goals of this plan PDR was prepared by UNDP /WTO in 1998 for the period in 1994. This document continues to guide the VNAT in its plans Programs are poverty alleviation and sustainable development of tourism 1999-2013. The more recent Draft National Tourism and programmes. resources. The primary objectives of the plan are to: (i) Development Strategy for Lao PDR 2005-2015 was prepared Other planning documents have been prepared including an update generate awareness among government officials and citizens with the support of the ADB. The Government has not of the 1990 WTO/UNDP Tourism Master Plan in 1998. However, about the role of tourism in sustainable development and officially approved these documents at this point in time. this document has not been officially endorsed and is used to redefine the tourism planning structure in Cambodia; (ii) assist There is also a Draft National Ecotourism Strategy and Action provide a longer-term perspective with a view to incorporating MOT in reorganizing itself to effectively implement the plan; Plan 2004-2010. relevant elements into the next 15-year plan. (iii) diversify and enhance the tourism product away from Siem Reap; (iv) and adopt a ‘destination management’ approach to The main strategies being pursued to achieve the goals, The overall strategies of the Master Plan on Tourism Development the development triangle of Siem Reap/Phnom objectives and targets are to: (i) introduce policies and in Vietnam (1995-2010) are: (i) improving the existing organization Penh/Sihanoukville Coastal Zone and Northeast Ecotourism procedures to ensure sound governance in the tourism sector; and management structure; (ii) fine tuning mechanisms and policies Zone. (ii) conduct high-quality training programs to improve the to promote tourism sector growth; (iii) enhancing tourism marketing quality of tourism services and product diversification; (iii) offer and promotion activities; (iv) improving tourism human resources a unique experience based on Lao culture and natural capacities; (v) promoting applied research in tourism and the environment in order to differentiate Lao PDR from other application of science and technology; (v) to protect the tourism destination countries in the subregion; (iv) encourage tourists assets of the country and control adverse social impact of tourism; to visit areas outside the traditional tourist centers; (v) identify and (vi) to proactively pursue international economic integration and develop products such as handicrafts, agricultural and cooperation at the regional and subregional level. produce and furniture to promote export of Lao products; and (vi) position Lao PDR as a premier ecotourism destination.
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2.0 SUBREGIONAL COOPERATION IN THE TOURISM SECTOR
2.1 GREATER MEKONG SUBREGION COOPERATION FRAMEWORK
81. The underlying vision of subregional cooperation in the GMS is a subregion that fulfills its vast potential, frees its people from poverty, and provides sustainable economic opportunities for everyone. To achieve this vision, the overall strategy is to: (1) enhance connectivity; (2) increase competitiveness; and (3) generate a greater sense of community among the GMS countries.
82. The GMS countries with the support of development partners such as the ADB support pro-poor and sustainable development in the GMS through programs and projects that: (1) strengthen connectivity; (2) integrate national markets to promote economic efficiency and private sector development; (3) enhance human development through capacity building at the subregional level especially the participation of women and ethnic groups in regional economic development; and (4) improve the ways in which the natural biodiversity resources of the GMS countries are managed and protected, and their value enhanced. This strategy is being implemented through 11 flagship programs under the GMS medium-term cooperation framework endorsed by the national leaders at Phnom Penh in November 2000.
83. The flagship programs comprise: • The North-South Economic Corridor (NSEC) Development • The East-West Economic Corridor (EWEC) Development • The Southern Economic Corridor (SEC) Development • Telecommunications Development • Regional Power Interconnection and Trading Arrangements • Facilitating Cross-Border Trade and Investment • Enhancing Private Sector Participation and Competitiveness • Developing Human Resources and Skills Competencies • A Strategic Environment Framework • Flood Control and Water Resource Management • GMS Tourism Development
84. Tourism is already included as one of the 11 flagship programs. Nevertheless, significant progress is being made in all the programs. Completion of all the programs – not just the specific program for tourism – will have a profound impact on the development of the tourism sector in the participating countries.
2.2 PREVIOUS COOPERATION INITIATIVES IN THE TOURISM SECTOR
85. Previous cooperation initiatives in the tourism sector of the subregion have focused upon marketing, tourism-related infrastructure, human resource development, the management of natural and cultural heritage resources, pro-poor community tourism development, private sector participation, and facilitation of the movement of tourists.
86. Since 1993, the GMS countries have been cooperating to promote the subregion as a single destination. The Royal Government of Thailand through the Tourism Authority Thailand (TAT), the ‘Jewels of the Mekong Campaign’ and the ‘GMS Destination Marketing Campaign’ involving private sector participation spearheaded the program to promote the subregion as a single destination. The ADB provided assistance and loans to Cambodia, Lao PDR and Viet Nam to facilitate access, ensure environmental sustainability of tourism development in key tourist areas, and promote poverty reduction in the Mekong watershed.
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87. Previous human resource development initiatives have focused on enhancing the skills of tourism leaders, trainers and professional managers through various technical assistance projects spearheaded by the United Nations Economic and Social Commission for Asia Pacific (UNESCAP) with support from other development partners such as ADB, United Nations World Tourism Organization (UNWTO), the Royal Thailand Government through the TAT, and others such as JICA. These have included technical assistance to train trainers in tourism (TA 5647) and tourism hospitality skills development in the GMS (TA 5807). The United Nations Education and Science Commission Organization (UNESCO), with support from the Canadian University Consortium (CUC), has been the focal point in undertaking initiatives to enhance standards in the management of natural and cultural resources for conservation and tourism in the subregion.
88. The annual Mekong Tourism Forum (MTF) had been organized since 1995 to enhance the participation of the private sector in the GMS, by promoting dialogue and exchange of information. UNESCAP, TAT, and ADB have all sponsored various initiatives to identify and address the impediments to travel to and within the subregion. These studies have focused on the facilitation of travel in the Asian Region; North-South Tourism Flows; possibilities for a GMS- wide visa; and cross-border travel, as well as other initiatives.
89. However, at the TWG meeting held in Bangkok in February 2004, it was noted that although much had been achieved (through all the initiatives noted above), the absence of a strategic framework made it difficult to define priorities, obtain support, and bring about a more effective overall outcome for the development of tourism at the subregional level. In this context, the GMS countries sought and received ADB technical assistance to formulate a tourism sector strategy and action plan for the period 2006 to 2015 (TA 6179-GMS).
90. The strategy was completed in June 2005 and had as its main goal and objective to develop and promote the Mekong as a single destination, offering a diversity of good quality and high- yielding subregional products that help to distribute the benefits of tourism more widely; add to the tourism development efforts of each GMS country; and contribute to poverty reduction, gender equality and empowerment of women, and sustainable development, while minimizing any adverse impacts. The strategy will be implemented through seven strategic programs that: (i) foster the development of multi-country tourism in the GMS by stimulating demand from appropriate high-yield markets through joint promotional activities; (ii) provide for joint planning and development of tourism infrastructure in the GMS with a view to ensuring a wider distribution of tourism benefits and supporting pro-poor tourism development in designated priority zones and circuits; (iii) promote upgrading of the skills of the tourism leaders and tourism trainers of the GMS to ensure that the strategy can be implemented and that the qualified staff is in place to manage tourism demand; (iv) promote higher standards in the management of natural and cultural resources for conservation and tourism purposes; (v) help reduce the incidence of poverty and increase rural incomes; (vi) encourage private sector participation and partnerships in planning, investment, marketing and human resource development in the GMS tourism sector; and (vii) identify and reduce impediments to travel to and within the GMS.
91. The strategic programs will be implemented through 13 priority tourism zones and 16 thematic strategic projects dealing with marketing, human resources development, natural and cultural heritage management, management of tourism’s adverse social impacts, facilitation of tourism across GMS borders, promotion of greater private sector participation in tourism, and pro-poor tourism development. The implementation of the strategy will position the subregion as a single destination for heritage, nature and adventure tourism products and markets that seek to benefit the poor in an environmentally and socially responsible manner; create a more equitable distribution of the benefits of tourism among the GMS countries; raise the capacity of the subregion’s tourism human resources to plan, develop and manage the sustainable development of the sector; contribute to the protection of natural and cultural heritage of importance to tourism by building capacities to protect and conserve them; lay the foundation for boosting pro-poor
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tourism development; boost private sector participation and entrepreneurship in the tourism sector including opportunities for participation of female entrepreneurs; and help to protect vulnerable groups, including women, children, and ethnic communities from exploitation and the transmission of diseases such as HIV/AIDS, while enhancing their opportunities and access to wholesome livelihood.
92. A more detailed review of the GMS Tourism Sector Strategy is attached in Appendix 3.
3.0 ACTIVITIES OF DEVELOPMENT PARTNERS IN THE TOURISM SECTOR OF THE PARTICIPATING COUNTRIES
93. Tourism is increasingly being recognized for the role it can play as a mechanism for achieving the key development goals within the GMS, particularly in the areas of sustainable development, natural and cultural heritage conservation, and poverty alleviation. This recognition is reflected, in part, by the growing number of international development organizations involved in tourism- related projects in the subregion, and in particularly in the participating countries.
94. Most of these projects appear to be specific to the host country. However, there are a few which are being implemented in multiple countries. These include the ADB-supported Mekong Tourism Development Project in Cambodia, Lao PDR, and Viet Nam, and the UNESCO Cultural Heritage Specialist Guide Training Program in Cambodia and Lao PDR. The development partners supporting these projects include international organizations (e.g. ADB, UNESCO, European Union, etc.), aid agencies of various countries (e.g. GTZ, SNV, DANIDA, JICA, etc.), as well as international NGOs (e.g. Wild Aid, Conservation International, etc.).
95. Table 6 provides a summary of the tourism-related infrastructure and technical assistance for tourism projects of the ADB in the GMS, as well as technical assistance from other development partners for the tourism sectors of Lao PDR and Viet Nam, respectively.
TABLE 6. EXTERNAL ASSISTANCE FOR TOURISM AND TOURISM-RELATED PROJECTS IN THE GMS and VIETNAM
6A. Tourism-Related Infrastructure Projects with the Asian Development Bank (ADB) Amount Project Year Institution ($Million) Siem Reap Airport (Cambodia) 1996 ADB 17,000 Phnom Penh – Ho Chi Minh City Highway 1998 ADB 52,700 (Cambodia) Phnom Penh – Ho Chi Minh City Highway (Viet Nam) 1998 ADB 144,800 East-West Corridor Project (Viet Nam) 1999 ADB 36,000 Southern Yunnan Road Development 1999 ADB 770,300 East-West Corridor Project (Lao PDR) 1999 ADB 40,000 Mekong Tourism Development Project (Lao PDR, 2003 ADB 30,000 Cambodia, Viet Nam) North-South Economic Corridor (Lao PDR) 2004 ADB 30,000
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6B. Technical Assistance for Tourism and Tourism-Related Projects with ADB Amount Project Year Institution ($000) Mekong-Lancang River Tourism Planning Study 1997 ADB 655 Tourism Skills Development in the GMS 1998 ADB 135 Protection and Management of Critical Wetlands in 1998 ADB 2,070 the Lower Mekong Basin Preventing HIV/AIDS among Mobile Populations in 1999 ADB 610 the GMS GMS Preinvestment Study for the East-West Corridor 2001 ADB 350 GMS Tourism Strategy 2005 ADB 850
6C. Other Technical Assistance for the Tourism Sector in Lao PDR Amount Project Year Institution ($000) Support to Revise the National Tourism Plan 1997 UNDP 210 Nam Ha Ecotourism Project 1999 NZAID,UNESCO 850 Cultural Heritage Specialist Guide Training 2006 ADB,UNESCO Program at UNESCO World Heritage Sites EU Community-based Ecotourism Program 2003 EU 100 GTZ Community-based Tourism Program 2002 GTZ Preparation of Tourism Law 2007 UNWTO,SNV 50 SNV Sustainable Tourism Support Program 2000 SNV DED Tourism Support Program 1999 DED NZAID Tourism Support Program 2008 NZAID Facilitation of Tourism on the East-West Corridor 2006 JICA Xe Pian Ecotourism Project 2006 WWF 400 Plain of Jars Heritage Tourism Program 2005 NZAID,UNESCO 450 Marketing Sustainable Tourism in Lao PDR 2006 EU,SNV 250 Marketing Support for the Lao PDR 2005 IFC Strengthening Human Resources in the Tourism 2008 Luxembourg 5,000 and Hospitality Industry Development National Tourism Strategy Implementation Support 2008 NZAID 2,500 Program Tourism Development on the East-West Corridor 2008 JICA Nam Khan Eco-Valley Project 2008 AFD
6D. Other Technical Assistance for the Tourism Sector in Viet Nam Amount Project Year Institution ($000) SNV Sustainable Tourism Support Programme 2000 SNV EU-HRD in Tourism Project 2002 EU 10,000 Hospitality and Tourism Development in Vietnam Luxembourg 2003 Development 13,000 Pu Luong Nature Reserve Community-based Tourism Project 2003 FFI, DED, Tourism Marketing Support Programme 2005 IFC Cultural Heritage Specialist Guide Training
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Program at UNESCO World Heritage Sites 2006 ADB,UNESCO 20 Nature Conservation and Sustainable Management of Natural Resources in the Phong 2007 KfW,GTZ 12,000 Nha Ke Bang National Park Region Green Corridors Project 2008 WWF SME Development Program, Tourism value- Chains in Quang Binh 2008 GTZ ST-EP Project: Ha Tay Handicraft Villages Tourism Project: Ha Tay Province 2007 UN-WTO, SNV 180 Implementation of the Law on Tourism for UN-WTO, SNV, Sustainable Development and Poverty Reduction 2007 AECI 120 Capacity Building for the Development of Agro- tourism Business in Vietnam: Lao Cai, Son La 2008 Agreterria, SNV Provinces Supporting Formulization of Vietnam Tourism Marketing Plan 2008 AECI 64 Supporting Livelihood Improvement and Biodiversity Conservation in Bach Ma National 2008 IUCN 23 Park Feasibility study: Community-based Tourism Government of Model in Da Krong, Quang Tri 2008 Finland Raising Awareness and Strengthening Policy Making Capacity for the Development of 2007 EU 64 Sustainable Tourism
ADB = Asian Development Bank, AFD = Agency France Pour Development, AECI = Spanish Development Cooperation, DED = German Development Service, EU = European Union, FFI = Flora and Fauna International, GMS = Greater Mekong Subregion, GTZ = German Technical Cooperation, IFC = International Finance Corporation, IUCN = World Conservation Union, JICA = Japan International Cooperation Agency, KfW = German Financial Cooperation, Lao PDR = People’s Democratic Republic, NZAID = New Zealand International Development Agency, SNV = Netherlands Development Organization, UNDP = United Nations Development Program, UNESCO = United Nations Educational, Scientific and Cultural Organization, UN-WTO = United National World Tourism Organization, WWF = World Wildlife Fund.
4.0 KEY ISSUES AND CONCERNS
4.1 SUMMARY OF ISSUES AND CONCERNS
96. As noted earlier, the volume of tourism to the participating countries is expected to increase substantially between 2006 and 2015. However, the current pattern of international tourism in the participating countries may still be characterized as highly concentrated, highly seasonal, volatile, and relatively low in yield, after accounting for economic leakages. Much of this tourism activity does not engage the poorer sectors of society. There is a need to spread the benefits of tourism more widely by targeting areas with high levels of tourism resources and similarly high incidence of poverty. With this, there is also a need to develop more effective pro- poor tourism development approaches that will generate higher levels of sustained poverty reduction.
97. In the above context, the key issue facing tourism in the participating countries is not just about promoting and developing international tourism (though this is, of course, still important) but also about managing this growth to ensure that tourists are offered a diversity of good quality, high-yielding products linked to the GMS; the benefits of tourism are distributed more widely; and that tourism contributes to poverty reduction, gender equality and empowerment of women, and sustainable development, while minimizing any adverse impacts. A number of key issues and concerns need to be addressed if the above overarching outcomes are to be achieved.
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98. Distribution of the Benefits of Tourism: The benefits of tourism are currently concentrated into a few major cities and tourism hubs in the participating countries. Unless these benefits are distributed more widely – especially to the poorer sections of society – tourism will not be able to make a significantly greater contribution towards the poverty reduction strategies and programs of the national governments. The primary causes of the imbalance in the distribution of benefits, in part, reflect the location of major tourism assets in the countries (such as Angkor Wat in Siem Reap, the Imperial City in Hue, Luang Prabang, Lijiang and Guilin), and limited access to the more remote mountain and border provinces where most of the ethnic minorities live. Other factors responsible for the imbalance include delayed recognition by the public sector tourism officials that there are markets that are strongly interested in remote natural and cultural heritage tourism where many of the poor live and for which access conditions need only be acceptable, not perfect; the presence of unexploded ordnance (UXO) along the central mountain range provinces dividing Viet Nam from Cambodia and Lao PDR; Ho Chi Minh. Other key constraints concern a lack of product development and product safety issues especially in regard to UXO.
99. Protection and Management of Natural and Cultural Heritage Assets: The natural and cultural heritage resources of each country are the primary resources upon which tourism depends, now and in the future. These include not only the important natural and cultural sites in each country, but also the intangible cultural heritage as represented by the unique customs, traditions, arts and crafts of over 50 ethnic minorities in the area. The protection of these assets, especially the intangible cultural heritage is crucial to the long term sustainability of the tourism sector in each country. However, a review of the current situation raises a number of concerns: management plans for tourism are out of date, not being followed, or not at all in place at most natural and cultural tourism sites; tourism management capacities of site managers are weak; local communities are not engaged as participants and partners in the management of the sites; poor local communities depend upon site resources to meet their food security requirements thus threatening the viability of these sites; tourism development in these areas in many cases, does not conform to sustainable practices and standards.
100. At the same time, many ethnic communities have been moved into permanent agricultural communities with better access and proximity to services and nearby urban centres. While this has certainly taken pressure off forest resources, one consequence of this has been the weakening of cultural identity and gradual loss of ethnic traditions, customs, art and craft as other cultural influences prevail especially on the younger generation. Unless this issue is effectively addressed, there is a real risk that the unique selling proposition (USP) represented by traditions, customs, art and craft of the ethnic minorities will be lost along with a resulting decrease in their competitiveness as tourist destinations. To address these concerns, the countries need to move to prepare and where necessary, update tourism site management plans, strengthen site tourism management institutional capacities, effectively engage local communities in site management and operation, provide alternative livelihood opportunities to poor local communities, improve interpretation of site values to engender a more protective approach by tourists and the general public; valorize and revitalize interest in the traditions, customs, art and craft of displaced ethnic minorities while protecting those still living in their traditional environment.
101. Quality Standards: The quality of facilities and of service in the tourism establishments, especially among the small-scale accommodation and restaurant establishments located in the more remote provinces is generally poor and hygiene standards, low. Based upon the data on the number of establishments and rooms in guesthouse establishments, it is estimated that there are about 38,700 hospitality staff employed in Cambodia, Lao PDR and Viet Nam and at least that many in the two provinces of China. The reasons for the low quality of facilities, services and hygiene standards include their inability of the owners and operators to afford the cost of training of their staff; insufficient alternative training opportunities available through the vocational training system; the lack of hospitality skills trainers with experience in training staff in small and medium hospitality enterprises; limited understanding by owners and operators of the
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physical facility requirements of their markets; and in many cases, a lack of appreciation of the importance of investing in staff training.
102. Probably the single most important factor is the absence of a pool of trainers able to be fielded to the areas to provide the necessary training for skilled staff as well as for owner and operators. Unless this issue is addressed, tour operators will continue to shun these establishments making it harder to generate the tourism volumes needed to spread the benefits of tourism and contribute more effectively to the poverty reduction goals and targets of the countries. Action needs to be taken to develop a pool of hospitality trainers that can be mobilized to deliver the needed training through support institutions such as the provincial tourism offices, the local chambers of commerce and public and private sector vocational school system.
103. Public Sector Tourism Management Capacities: As noted in Section A1.4, public sector officials at the provincial and local level lack the knowledge, skills and capacities needed to effectively undertake their function. These limitations are a major impediment to the protection of the natural and cultural heritage of importance to the tourism sector, to the development of higher quality standards especially among the small-scale hospitality enterprises, and to the effectiveness of poverty reduction programs through tourism. At the provincial level, many tourism officials do not have the necessary knowledge, understanding and institutional systems needed to mainstream poverty reduction into their programs, as well as to undertake basic tourism planning, marketing, regulation, human resource development, and monitoring functions. At the same time, managers of important tourism heritage sites do not have the competencies needed to ensure that the sites are managed on a sustainable basis, within the framework of tourism management plans.
104. The main causes of the above capacity weaknesses are the low priority given to local tourism office functions as well as to heritage site management, the lack of qualified trainers and training programs that could build capacities in these areas, and a tendency to centralize rather than decentralize the tourism development function. Consequently, these limitations can lead to the delay or outright failure of development partner interventions in tourism at the local level. Unless effectively addressed, this situation threatens the viability of future interventions for sustainable tourism development as well as poverty reduction through tourism.
105. Facilitation of Tourism Movements: The efficient flow of tourism into the participating countries, especially through their land borders, will be crucial if they are to benefit from the impact of the GMS’s Economic Corridor road development program, expected to be completed in 2010. At the same time, the development of selected attractions along sections of the Economic Corridors in each country will be crucial to spreading, more widely, the benefits of the increased tourism flow from the corridors. However, as it stands, the land border checkpoints are still just that: checkpoints that delay, rather than terminals that welcome, facilitate entry and exit, and provide information and other support services to make the tourists’ stay enjoyable and rewarding. In addition, plans and programs for taking advantage of the Economic Corridor roads have yet to be implemented even as the completion of the new corridor roads loom.
106. The reasons for the lack of progress in converting border checkpoints into tourist-friendly entry and departure terminals include: old attitudes towards national and international security, lack of funds for the conversion and upgrade of facilities, lack of inter-agency cooperation, and lack of land for services and terminals. In the case of the economic corridors, the main constraints have been a lack of planning capability and finance for the construction of access and facilities at adjoining attractions.
107. Private Sector Participation: Despite a growing trend for the private sector to participate in the tourism sectors of the participating countries, there remain many impediments to more effective participation. Laws and regulations mandating the role of the private sector remain unclear. Heavily-protected, state-owned tourism enterprises continue to dominate the sector in most of the
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participating countries. Financial and technical support for new tourism enterprise development tends to be limited mainly to large-scale tourism projects that generally involve foreign investment. Such projects can have significant economic leakages, and relatively limited impact in terms of distributing the poverty-reducing benefits of tourism to the areas that need them most. At the same time, the international financial institutions, including the ADB, seem unable to provide financing access for the small to medium tourism enterprise sector. Existing policies and practices need to be reviewed and innovative ways found to support the development of these smaller enterprises, especially in the more remote provinces of the participating countries. If these issues can be effectively addressed, then the key indicators of length of stay and expenditures per day should increase, the overall economic leakage levels reduced to more acceptable levels, and tourism’s contribution to poverty reduction increased dramatically.
4.2 PROBLEM TREE FOR THE TOURISM SECTOR IN THE GMS
108. The aforementioned issues were subjected to a problem analysis that sought to identify the problem tree or hierarchy of problems faced by the participating countries. This problem tree may then be used to define the impact, outcomes, activities and targets for the project.
109. The key problem for the participating countries, collectively, is that the tourism sector’s contribution to the goals of poverty reduction, sustainable development, gender equity, and protection of vulnerable groups (specifically, women and ethnic minorities) from exploitation is limited. This problem represents the overarching theme for the project, continuing from the earlier GMS Tourism Sector Strategy project.
110. Under this broad problem, there are four problem areas that may be identified: poverty reduction, sustainable development, capacity and facilitation of tourism flows. The problem of poverty reduction refers to the observation that tourism development in the subregion, as well as within the individual countries, tends to be concentrated in the major cities and tourism destinations. As a result, poorer communities in remote areas do not participate nor benefit from tourism development as much as they could.
111. Sustainable development is the theme for the second problem area. As discussed in the evaluation of the tourism sector problems and opportunities, it has been observed that the countries’ natural and cultural heritage resources are seriously threatened by the destructive resident use as well as unmanaged tourism development. Expected growth in these areas are expected to put even more pressure on these fragile resources.
112. The problems of capacity are generally categorized into issues arising from institutional or human resource development limitations, or from problems of capacity arising from the lack or absence of infrastructure needed to implement the development programs. Finally, the problems of tourism flow facilitation need to be addressed to maximize the impact of the GMS Economic Corridor Road Development program, as well as to enhance the countries’ ability to spread more widely the benefits from increased tourism activity at the borders and along the economic corridors.
113. Figure 2 illustrates the Key Problems faced by the subregion and the four major problem areas under it. The key indicators and symptoms of each problem area are also presented in the figure.
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Figure 2. Problem Tree - GMS Sustainable Tourism Project
KEY PROBLEM: Tourism contribution to poverty reduction, sustainable development, and protection of vulnerable groups from exploitation in the participating countries is limited.
POVERTY SUSTAINABLE CAPACITY FACILITATION OF REDUCTION DEVELOPMENT Lack of institutional and TOURISM FLOWS A highly concentrated human resource Inefficient flow of pattern of development Current and future use capacity combined with tourism minimizes limits the opportunities patterns by limited infrastructure impact of GMS for poorer communities communities and hamper the Economic Corridors to participate in and tourists threaten participating countriesÕ and limits ability to benefit from tourism sustainability of natural ability to develop spread benefits of development. and cultural resources. tourism in a sustainable tourism from Corridors manner. more widely.
The benefits of Pro-poor Limited private Limited Weak human Need to upgrade Poor facilities Greater tourism in the tourism is not sector infrastructure for resource service quality and systems at cooperation participating considered part participation in protecting the capacities for standards in border crossing needed to tap countries tends of the SME investment natural and sustainable local tourism points limit cross-border to be limited to mainstream and operation cultural tourism establishments tourism flows to opportunities the major urban tourism policies environments at management and between the from GMS centers and and plans of the key tourism and participating Economic tourism hubs. countries. destinations. development. countries. Corridors
Poor NTOs often State- Effects of Destructive Unmanaged Capacities Poor Lack of Border Limited access to do not see owned rapid resident growth in and service funds to facilities are funds areas the tourism tourism growth uses major technical standards at upgrade unattractive provided by outside potential in firms threaten threaten tourism skills of lodging border and burden- NTOs for major cities remote dominate natural and natural and centers. government facilities facilities some to cooperative and hubs. heritage the sector cultural cultural tourism tourists agreements areas heritage heritage officers are sites sites limited
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C. LESSONS LEARNED
114. This section seeks to identify lessons that, through early adoption, will help to ensure that the outcome, outputs and activities of this project are successfully delivered according to the set standards, budgets and timeframes. The Mekong Tourism Development Project (CAM 35282, VIE 35345 and LAO 33434) and other projects undertaken in the subregion such as the Lux- Development supported Strengthening the Hospitality and Tourism Sector Programme in Viet Nam and the UNESCO-LNTA Nam Ha Ecotourism Project in Lao PDR provide a rich source of lessons that can be applied to ensure effective project outcomes.
115. During the first field mission of the team, discussions were held with PCU, PMU, PIU staff and consultant advisors to the MTDP to ascertain issues of concern, and identify areas where project implementation performance could be enhanced. Discussions were also held with proponents of other projects of relevance to this project to identify issues and lessons of relevance to project implementation-especially in the area of natural heritage asset protection and conservation through tourism. The issues and concerns raised, and the lessons they have for this project have been grouped into project coordination, management and administration; financial management; project communications; use of development partners; human resources and pro-poor tourism initiatives.
1.0 PROJECT COORDINATION, MANAGEMENT AND ADMINISTRATION
116. The principle of one project with three or more country participants is in general sound especially given the context of the project within the GMS cooperation framework. The MTDP is structured so that there is one PCU in each country to which report the PMUs responsible for the management of the various subprojects under the three components. At the project site level, there are PIUs that are responsible to the related PMUs for the actual implementation of subprojects and their elements at site. In general, it has been found that where the agency responsible for the PMU and PIU function is the same as that of the PCU-the national tourism organization-project execution in terms of coordination, management, administration and the flow of resources between the three levels works more effectively. Conversely, where different national and provincial government agencies are involved at the PMU and PIU level, coordination, management, administration and the flow of resources is more difficult and delay more likely. While the need to ensure that the correct agencies are engaged is paramount- especially in view of the technical requirements associated with project implementation management and administration, greater attention needs to be given to developing a stronger spirit of cooperation, commitment and partnership between the participating agencies at the country level.
117. There is also a need to simplify the coordination roles between PMUs and PIUs. Where several projects are being implemented in one locality, there is no need for separate PMUs to work with each individual PIU. Having a single PMU to coordinate all project implementation work in the locality – even if these projects are functionally very different -- can facilitate communication and cooperation among PIUs on the ground and generate administrative as well as operational efficiencies through the simplified administrative structure.
118. Observation of the implementation of the MTDP indicates that more attention needs to be given to developing operating procedures and practices among the steering, coordination, management and implementing units, and improving coordination between theses at the national and international level. The PMU and PIUs responsible for the different project components often do not communicate effectively with the PCU at the national level, a problem exacerbated by overworked, part-time PCU staff members. The mechanisms needed to coordinate the work of the three components are often not in place or properly implemented and complicated by the large number of actors and contractors. At the same time, it is noted that the national steering committee structure designed to oversee the execution of the project at the national level in some
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cases act as approving bodies for activities and flow of funds, a function that is beyond their mandate and that may be a significant impediment to project execution. The advisory and guidance role of the steering committees needs to be affirmed and steering committees should not be approving agencies.
119. The release of human and financial resources to the project was quite fast in some counties and much slower in others. Part of the reason for the faster release noted on one case is a more flexible approach to approvals within the parameters of an agreed 6-month detailed work plan that goes down to the site level, and close involvement in the Project of the persons with resource approving authority. It is noted that where the approving authorities are remote from the Project, considerable delays result during the approval process.
120. Although the systems and procedures for administering and implementing ADB projects are generally designed to implement large contracts, some components are implemented through small contracts (less than US$5,000). Given the small amounts involved, these jobs tend to be for short periods of time only. Moreover, a single project– such as the MTDP in Lao PDR – can involve more than a hundred of these small contracts during project implementation. To ensure efficient and effective administration, as well as proper financial control, of these small contracts, there is a need to develop a manual of procedures dealing specifically with small contracts, and empower the PCU or PIUs to draft and procure services under these contracts.
121. The work plans for project components under the MTDP were, in some cases, not effectively integrated. Therefore the PCU relationship with the PIU’s need to be strengthened to ensure enhanced coordination between the project components. At the same time, the countries are reluctant to commit resources to the international coordination aspects of the project. The work plans for the components of the new project need to be well integrated and the appropriate coordination organization structures and systems developed. The PCU organization structure and functions need to be strengthened to ensure enhanced coordination between the project components. In particular, there is a need to ensure that the national tourism offices provide the inputs in key areas on a dedicated basis to ensure active participation and ownership of project outcomes and outputs.
122. Project implementation was supported by a project management consulting firm contracted for each country. The consultant provided a team leader and specific technical consulting inputs over the duration of the project. The working relationship between the consultant and the Executing Agency was in some cases effective and less effective in others. Where the consulting firm and individual consultants shared offices with the PCU and in some cases PIU’s, project implementation was more effective, a spirit of cooperation and teamwork was fostered and coordination of daily tasks, administrative procedures functioned more effectively. In this last case there was also greater transfer of knowledge from the consultants to the PCU and PIUs.
123. The initial project planning, reporting, management and administration systems of the MTDP were problematic because of the inexperience of PCUs, PMUs and PIUs in project administration. Project implementation planning systems could have been better integrated, standardized and structured so that these can be easily linked to project reporting, project management, administration, budgeting and financial management within each country and among participating countries. There is a need for a larger investment in front-end training of PCU and PIU staff in standardized project implementation procedures and standards.
124. Concerning the pro-poor community-based tourism component of the MTDP, a five year Implementation Plan was prepared in each country for the component covering several provinces with indicative budgets, timelines, expected outputs and activities. However, experience in the implementation of the work plans in Lao PDR indicates that the five-year plan should be only indicative and should allow for flexibility during implmentation. Detailed six-month rolling action plans with detailed budgets should be prepared for each province in bi-annual planning
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workshops between the PCU and PIU to ensure effective and efficient project reporting, coordination and control.
125. Resources can be spread too thinly, and impacts can be diluted at the community or site level, if too many small subprojects are implemented simultaneously. Efficiencies can be maximized by adopting a policy to limit the pro-poor projects to one demonstration project (involving a cluster of village-destinations) for each province.
126. Project reporting frameworks and activity approval protocols between the PCU and PIU’s should be clarified from the onset of project implementation, simplified, and standardized. In some cases, project management and administration organization structures and systems do not have the correct balance between the needed control to ensure proper implementation, yet enough flexibility to ensure that there are no unnecessary barriers to the flow of resources, especially funds for implementation to take place. The project coordination, management and administration functions should be co-drafted by the PCU and PIU’s at the projects outset, approved by the EA and explained in a detailed Implementation Plan of the Project that is translated into the local language and discussed in during the projects initial planning workshops.
127. It has been noted that where the PCU and its support staff including international consultants and counterpart staff are located at the offices of the national tourism office, there is a greater degree of commitment, cooperation, coordination and support compared to where the PCU is located elsewhere. This issue is crucial to the effective implementation of the project. High priority should be given to finding the requisite space in each NTO to house the PCU to ensure there is effective coordination and cooperation, knowledge transfer and a sense of ownership of the project by the NTO or Provincial Tourism Department that will be implementing and backstopping he project.
128. The lessons to be drawn from the above observations and issues on the coordination, management and administration of the ongoing MTDP are:
• The roles and responsibilities of the project supervising, coordinating and implementation units need to be clearly defined at the outset using training workshops. • Regular and ad hoc meetings as deemed necessary should be held between the project management group and those responsible for approving the release of project resources, especially funds to ensure that they are briefed as to project requirements and progress, and to head off any potential misunderstandings. • Five-year indicative work plans and related budgets should be standardized, and project implementation supported by six month detailed work plans and budgets at the subproject level. • Biannual planning meetings must be organized at the PCU and PIU level to review progress based on what has been done, what work is currently in progress, and what has not yet been started. The meeting should be chaired by a senior member of the EA to ensure that there is political support and an understanding of the project among senior decision makers at the national and provincial level. • The six-month action plans of the project should be given priority funding within a more flexible approval framework in order to ensure strong counterpart commitment, morale and project implementation momentum. • Strong and effective project implementation planning and reporting systems need to be developed at the outset. This means the development of simple but effective planning and reporting forms in the local language.
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• A project implementation document should be prepared for the project that reflects individual country requirements. This document should also be translated into the language of the country to facilitate communication and support. Procedures manuals should be prepared and training workshops held to ensure that correct procedures and practices are clearly understood • A manual of procedures for administering small contracts need to be prepared along with a standardized contract format that is acceptable to ADB and governments of each country • Follow up audits should be undertaken throughout the course of the project to ensure observance to planning and reporting procedures and to undertake correctional workshops where deemed necessary. This monitoring role should be led by the PCU and backed by external audits.
129. In this context, only one consulting firm should be appointed to provide project management support to the participating countries, not one for each country as is currently the practice in the MTDP. This will enable the necessary standardized system of project coordination, management, administration financing and reporting to be put in place, reduce the cost of international project management services to the countries, and help to strengthen internal project management and administration capacities. These lessons will be incorporated into the design of this project to ensure improved project coordination, management and administration, and enhance the overall outcomes and impacts of the project.
2.0 FINANCIAL MANAGEMENT
130. A key constraint which has resulted in considerable delay in securing the necessary flow of funds to initiate and maintain project implementation momentum is the complicated nature of the financial procedures and practices at the country and ADB level, and in particular, the way they work together. The main reasons for this are:
• necessary documentation on procedures and practices (especially that of the host government) are often not available in an easily readable form; • often the financial procedures and practices of the countries are not clear and too dependent upon the discretion of specific individuals and highly cumbersome approval processes; • responsible managers do not have previous experience with government and ADB financial procedures and practices for loan project execution; • financial procedures manuals are not available; and • insufficient training is provided in the application of national and ADB financial procedures and practices.
131. Therefore, financial procedures and practices should be simplified as far as possible and financial procedures manuals should be prepared at the outset in each country. Training workshops with responsible managers in the application of financial procedures and practices need to be undertaken at the outset of the project. At the PCU and PIU level, a dedicated finance officer and accountant should be allocated to the project and given adequate training to ensure that the requisite human resources are in place to manage both the complicated ADB withdrawal process and financial reporting to national governments.
3.0 PROJECT COMMUNICATIONS
132. The high profile nature of loan projects such as the MTDP attracts considerable political interest at the local level that at times may interfere with project implementation causing unnecessary delays. While this interest is understandable, and to be encouraged, it is important to ensure that this does not become an impediment to project implementation. In this context, more attention
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needs to be given at the outset in communicating to the concerned political stakeholders on the aim and outcome of the project at the sites where it is being implemented. This would take the form of a forum at which the project and site interventions would be presented and discussed with responsible Ministers and political representatives from the provinces and districts where site interventions are proposed.
133. In addition to the need to communicate the project outcomes and outputs to the political sector, there is also a need to communicate these to other stakeholders and the public in general. The MTDP did not have an overall communications plan at the project or country level resulting in much time wasted in explaining the project to stakeholders and the public and most especially to the political sector. To avoid this situation during the GMS STDP a forum should be organized at the outset of project implementation in each country to explain the project outcome, outputs and activities. Regular updates should be provided to the political stakeholders on project progress including holding of further forums, and a communications plan should be developed for the project as a whole and at the country and provincial level to effectively communicate the project’s purpose, activities and outcomes to stakeholders and other interested publics.
4.0 DEVELOPMENT PARTNERS
134. The MTDP works closely with a number of development partners that are engaged in assisting in implementing the three components of the project. Whilst the model of working with development partners adopted in the MTDP has certainly been successful, and should be further encouraged, the MTDP experience indicates that there is a need to pay more attention to clearly defining the inputs of the development partners at the beginning to ensure that these are aligned with the project; and to pay greater attention to coordinating development partner activities with the project work plan, especially the six month rolling action work planning to ensure timely completion of activities. There is also a need to ensure that the lines of responsibility are clearly defined between the project personnel of the development partners in order to avoid confusion and misunderstanding that leads to unnecessary project implementation delays.
135. It is also noted that the work practices of the development partners differ from that of the project and this needs to be understood at the outset in order to ensure that sufficient resources are allocated for the tasks to be undertaken. These practices relate to standards regarding effective time inputs, leave, allowances, full versus part time commitments, and other factors that have an important influence on effectiveness of the partners to contribute to the overall outcome. To clarify and formalize the relationship between the project and its development partners, and to clearly define what each side will do, the standard at which this is to be done and the timing of the completion of this work, consideration should be given to negotiating and signing memoranda of understandings (MOU) and memoranda of agreements (MOA) with the development partners. Standard agreements should be prepared in advance and incorporated into the Project Implementation Document and related procedures manuals.
136. The MTDP has tapped the services of a number of development partners such as UNESCO, UNESCAP, SNV and others that have mainstreamed poverty reduction through tourism as well as conservation and protection of natural and cultural heritage assets. However, much more could be done to tap the services of the volunteer agencies at the multi and bilateral level to support project implementation. This is especially relevant in view of the strong focus on strengthening community capacities to undertake community-based, pro-poor tourism initiatives and take a more active role in participating in the management of natural and cultural heritage assets of importance to tourism and their livelihood. This requires considerable mentoring in the area of tourism hosting, tourism servicing including guiding, micro and small scale tourism enterprise operations at the village level, handicraft production and distribution, and supply of vegetable, fruit, fish and other produce to tourism establishments in the main tourism centers.
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137. To more effectively partner with development partners during the GMS STDP the project should consider developing memoranda of understanding (MOU) and memoranda of agreement (MOA) to clearly define what each side will do, the standard at which this is to be done, the timing of the completion of this work, and the work practices that will be applied. The project should mobilize the mentoring capacity of the voluntary organizations especially for the pro-poor tourism development component of the project. Organizations that have expressed interest in partnering with the project in this respect are the German Development Service DED and New Zealand’s Volunteer Service Abroad.
5.0 HUMAN RESOURCES
138. A review of the human resource situation in the MTDP indicates that there were disparities in the abilities of the PCU and PIU staff to manage and implement the project, especially between provinces and at the PCU level in the national tourism offices. Where project implementation was successful, leaders of the National Tourism Organizations should continue to allow PCU staff to manage the project and establish a mentoring program where experienced staff partner with junior staff to teach them how to effectively manage large, internationally financed development interventions. The competency of the support staff and staff of assisting development partners cannot be assumed as this is found to be generally below what is required to effective undertake the work of implementing the project in some cases. This is complicated by work practices that in effect convert what is supposed to be a full time commitment into part- time contribution at best. At the same time, insufficient time is provided in the budgets for foreign advisors and experts resulting in appointed consultants giving a considerable amount of their time for free to cover up the shortfalls of some counterpart staff.
139. The selection of counterpart staff is frequently based upon the recommendations of the national, provincial and local leaders with often minimal inputs into the process by the project coordination, management and implementation units. These results in persons being appointed that do not necessarily bring the needed skills, time or commitment required for effective project coordination, management and implementation, leading to delay and waste of resources. Many counterpart staff are not dedicated to the project on a full time basis resulting in further significant under resourcing, delays and inconvenience, while placing the more conscientious staff under added pressure. A more transparent and careful recruitment process is required to ensure that counterpart staff are the right people for the position. The preparation of well defined job and person descriptions and wide advertising of these positions is essential while the pool of candidates should be widened to include individuals from outside the public sector. Employment contracts should be negotiated with all counterpart staff with honorariums to obtain their commitment to the project. Additional budgets should be provided to finance modest counterpart staff honorariums.
140. The salaries of counterpart staff in the MTDP are generally quite low and their participation in the project is often contingent on receiving per diem and other allowances from field work and other related project activities. Experience with the MTDP in Lao PDR shows that the morale and sense of mission of the counterpart staff is heightened when project activity is under way and project implementation momentum is maintained. Experience with the MTDP in other participating countries indicates that when implementation is delayed or momentum lost due to the failure in flow of resources-especially funds, then morale and their sense of mission suffers adding to the difficulties of project implementation. It is important to ensure that irrespective of the larger issues facing the implementation of the project, that sufficient activity be provided at the start to build counterpart staff morale, heighten sense of mission and develop momentum and enthusiasm for the project.
141. The approach to capacity building must be systemic in character. Parallel to the human resource development initiatives in the countries, priority must also be given to the development and strengthening of the local institutions that will be tasked to implement, support and sustain the
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projects. In addition to upgrading the individual competencies and skills, capacity building initiatives must also seek support for organizational development of key public, private, and local community institutions.
142. The MTDP also illustrates the need to pay more attention to recruiting international consultants that can work effectively within the countries and their environment and culture. A more effective consultant’s recruiting system is needed that is based upon clearly defined job and person descriptions and careful screening to ensure that the candidates are sensitive to cultural differences and likely to be comfortable with the physical and cultural environment in which they will be working. These recruiting procedures should be included in a recruiting manual for use by those recruiting consultants for the project in each country. This is also the case for national consultants – although this is a tourism related project it often involves working in some of the most remote and least developed parts of the participating countries and with disadvantaged groups. Recruitment of consultants with the character and commitment to thrive in under such circumstances and have the energy to transfer knowledge to PIU staff and local communities is critical to successful project implementation.
143. The project should therefore ensure that a careful recruitment process is followed to ensure that counterpart staff are the right people for the position: sufficient time is provided in the budgets for foreign advisors and experts to undertake the work required; well defined job descriptions are prepared for consultants and national counterpart staff at the PCU and PIU’s; for counterpart staff, wide advertising of support positions is essential and consideration should be given to widen the pool of candidates to include individuals from outside the public sector; budgets should be provided to finance counterpart honorariums.
144. There needs to be more extensive and extended training for counterpart staff to build understanding, commitment and competency and simple activities implemented at the start of the project to heighten the sense of mission, and develop momentum and enthusiasm for the project by counterpart staff.
145. Manuals and procedures to assist in recruiting local and foreign staff that is technically competent, culturally sensitive, and able to work comfortably in the country environment should be developed in the local language and used by the PCU.
146. Institutional strengthening activities should be mainstreamed into project implementation as a core element of capability building.
6.0 PRO POOR TOURISM INITIATIVES
147. In Part B (the Pro-Poor Component) of the MTPD, the importance of involving the tour operators and distribution organizations early in the development of community-based-tourism (CBT) products has been noted. Since this was not done in the initial phases of CBT development in Lao PDR, many of the interventions have struggled, and in some cases it has been necessary to create a tour operator at the site or nearby town to undertake the functions of marketing the products to the travel trade and consumers. This has resulted in a lower than anticipated volume of product sales and lower overall incomes for the concerned communities. Careful selection, screening and training of supporting public sector and NGO staff at the provincial and district level is essential at the outset if the CBT product and the communities that depend on these are to avoid capture by special interests, and be the subject of poor governance, corruption and incompetence.
148. Many of the selected project sites in Part B-Pro-Poor Tourism Component of the MTDP were green field sites where local communities had absolutely no previous tourism exposure and where insufficient allowance had been given for necessary community preparation work. This
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has made it more difficult to get the project demonstration sites going. From a design point of view, in order to get demonstration sites going quickly, the project should focus on selecting sites where some tourism activity already exists. This will ensure quicker uptake of the project intervention, greater participation by local communities and the private sector, and faster delivery of the required demonstration models for replication.
149. Case studies from the Asia Pacific Region such as Nam Ha indicate that poverty reduction through tourism can be maximized when; there is a diversity of actions from micro to macro level, including product development and marketing planning, policy and investment; government policies, good governance, and interdepartmental/ministry cooperation are correctly set and mainstreamed into the policies and activities of the national tourism offices; the wider tourism destination is working well, pro-poor tourism action also tend to work well; tourism takes place in remote areas, even though tourism may be on a small scale, e.g. such as at Nam Ha and the MTDP in Lao PDR; pro-poor tourism strategies involve using current markets to develop new products, e.g. hot-air ballooning in Cambodia or kayaking and tubing in Lao PDR; products and services are commercially viable, e.g. the successful handicraft development of Artisans d’Angkor; there are non-financial benefits that can reduce vulnerability and bring produce/products to markets, e.g. roads and bridges; both parts of the business equation are effectively addressed - the demand for the product/service from the market and the quality/quantity and diversity (supply) of the product/services; poverty alleviation is seen as a long term investment and expectations are realistic; the main stakeholders - governments, the private sector, civil society (NGOs including voluntary support agencies), the poor and donors all have clearly defined roles.
150. Local communities can sometimes lose stewardship of tourism resources and income generating opportunities to outsider concessions because of lack of negotiating power, a lack of capital investment or training and the inability to market and promote local tourism sites. The project should assist communities to secure tourism assets and provide assistance for minor civil works, training and marketing and promotion. Community-operated concessions of waterfalls, caves and village home stays have been demonstrated to be an effective commercial arrangement in Luang Namtha that allows local people to remain stewards of their cultural and natural heritage and maintain a voice in the way tourism development takes place in there community.
151. It should not be assumed that women, youth and ethnic minorities will be equitably involved in tourism-related activities. In poorly-designed tourism interventions undesirable impacts such as children not attending school, unsafe migration and prostitution, the spread of HIV-AIDS, environmental and cultural degradation and crime may increase unless adequate investments are made in planning, information and education campaigns, training and impact monitoring. The project should make adequate provisions to implement activities to try and prevent these problems. The nomination, training and allocation of financial resources to gender and ethnic minority focal points embedded in the PIU’s during the implementation of the MTDP in Lao PDR helped to mainstream gender and ethnic sensitive approaches to tourism development that were guided by preparation of a gender and ethnic minority participation plan national project staff and project consultants.
152. At the same time, there are additional, and perhaps greater opportunities to eliminate poverty through tourism by bringing local producers of produce, food, handicrafts and other goods and services in to the tourism economy by initiating value chain interventions. The GMS STDP should adopt a dual approach in developing pro-poor tourism whereby both tourist attractions and value chains are developed.
7.0 IMPACT MONITORING
153. As noted above, senior policy makers often do not fully understand the potential that well- planned tourism has for eliminating poverty and protecting the cultural and natural heritage
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assets of the GMS. At the same time, project EA’s did establish a number of successful examples of effective pro-poor tourism development models during the MTDP. In cases where EA’s were able to measure benefits to local people, the environment and society through systematic monitoring procedures and communicate these results to senior decision makers, participating country governments developed supportive pro-poor tourism policies. Systematic collection and analysis of monitoring data also proved to be useful in fine tuning the implementation of project activities using data-based decision making. It is therefore strongly recommend that the project allocated adequate resources to perform essential monitoring functions, learns from its mistakes and communicates information on successful initiatives to senior decision makers and the public at large.
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III. THE PROPOSED PROJECT
A. PROJECT RATIONALE
154. As noted in Chapter II on the discussion of the key issues and concerns, the main problems confronting development of a sustainable tourism sector in the GMS countries, particularly Cambodia, Lao PDR and Viet Nam concerns the management of tourism growth rather than the promotion of growth in itself. The current situation in all GMS countries is that the distribution of the benefits of tourism is highly concentrated and makes a suboptimal contribution to poverty reduction; natural and cultural heritage assets of importance for tourism are threatened by inappropriate tourism use; quality standards and standards of hygiene, especially among small scale hospitality enterprises in the more remote provinces of the participating countries are low, making it difficult to attract more tourists to these areas; public sector management capacities to plan, develop, market and manage the sustainable development of the tourism sector are weak; the movement of international tourists across the land borders of the participating countries is impeded by poor border facilities, poorly prepared border staff, lack of tourist information and support services, and inconsistent policies; and the development of small and medium tourism enterprises is impeded by lack of clear laws and regulations and financial and technical support.
155. Therefore, investments are urgently needed in access and protection infrastructure at natural, cultural and urban sites to strengthen the sustainable management of tourism and provide demonstration models concerning how to promote and manage sustainable tourism at heritage and urban sites in GMS countries. Investments in improved heritage management practices, a more inclusive approach to pro-poor tourism development to accelerate poverty reduction and reduce undesirable social impacts, to facilitate the movement of tourists and enhance the quality of service skills and investment in the small to medium hospitality sector are also badly needed.
156. The Kingdom of Cambodia, Lao People’s Democratic Republic and the Socialist Republic of Viet Nam have received a loan from the Asian Development Bank (ADB) to undertake the GMS Sustainable Tourism Development Project. The Ministry of Tourism in Cambodia, Lao National Tourism Administration in Lao PDR and the Viet Nam National Administration of Tourism in Viet Nam are the country-specific executing agencies responsible for the coordination, management and implementation of the project.
B. PROJECT IMPACT AND OUTCOMES
157. In the above context, the main goal of the project is to contribute towards the sustainable socioeconomic development of the participating countries focusing especially on poverty reduction, sustainable development and protection of the natural and cultural heritage and protection of vulnerable groups from exploitation. To achieve this impact, the project seeks to enhance the protection and conservation of natural, cultural and urban heritage assets of importance for tourism sector development; increase the contributions to poverty reduction of pro-poor tourism initiatives by expanding the traditional community-based tourism approach to include participation in tourism-related supply and value chains by poor communities; improve the facilitation of tourism across the land borders and along the economic corridors; raise public sector official tourism management skills at the provincial, prefecture, country, district and site level; improve service and hygiene standards among staff in small to medium hospitality enterprises in the provinces; and enhance locally generated private sector participation in small and medium tourism enterprise investment and operation.
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158. The fact finding mission to consider how the ADB could support the implementation of the Strategy concluded that the countries lacked clear guidelines and approaches in dealing with the management of tourism growth along the desired lines. In this context, the fact finding mission concluded that what was needed was a feasibility study and project design for priority tourism- related development subprojects that would serve as models and best-practice cases for sustainable and pro-poor tourism development (the Project Outcome).
C. COMPONENTS AND OUTPUTS
159. The Project outcome will be delivered through 4 components and related subprojects (the Project Outputs):
Part 1: Sustainable Tourism Development Component: divided into three subcomponents to demonstrate how to use tourism to (i) the protect natural heritage sites of importance to tourism, (ii) protect cultural heritage sites of importance to tourism, and (iii) improve the environment of key urban tourism centers; Part 2: Pro-Poor Tourism Development Component: to demonstrate an expanded approach to poverty reduction through tourism; Part 3: Facilitation of Tourism Component: divided into two subcomponents to demonstrate how to (i) tap the opportunity provided by the Economic Corridors by developing attractions at strategic locations, and (ii) how to improve border facilities and services for tourists; and Part 4: Human Resource Development Component: dealing with the creation of a pool of trainers to train skilled staff in small-scale hospitality enterprises and public sector officials responsible for tourism management at the provincial and site level.
160. In addition to the four core components, the Project also includes a fifth component dealing with SME participation in the tourism sector involving the preparation of a policy paper for the countries and an investment forum planned to be held in Hanoi coinciding with the GMS Tourism Working Group (TWG) Meeting to be held in late March 2007.
161. Seven subprojects in the sustainable tourism development component have been identified by the participating countries based on a detailed selection process guided by clearly defined selection criteria. In addition, the countries also identified 4 pro-poor, 3 border and 4 corridor tourism facilitation subprojects. The subproject selection criteria and approach are summarized in Appendix 4. Table 6 summarizes the agreed subprojects for each component by the participating country and Map 1 shows the location of the sustainable tourism development subprojects in the countries. A description of the project components, subcomponents and their related subprojects is presented below.
1.0 PART 1: SUSTAINABLE TOURISM DEVELOPMENT COMPONENT
162. Part 1 of the project will demonstrate to the participating countries, how tourism can be used to protect important natural and cultural heritage sites and how to improve the environment of key urban tourism centers in the participating countries in order to increase overall sustainability and improve their competitiveness as destinations.
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Table 6: LIST OF AGREED SUBPROJECTS FOR FEASIBILITY EVALUATION
Sustainable Tourism Development GMS Natural Sites Cultural Sites Urban Sites Pro Poor Facilitation at Facilitation on Human Location Tourism GMS Borders Economic Resource Development Corridors Development
Cambodia Peam Krasaob Nature Prasat Sambor Prey Kracheh Town solid Pro-poor initiatives Border Tourism Southern Economic Support for training of Reserve in the GMS Kuk, 7th century waste water collection proposed in: Facilities Improvement Corridor Tourism Zone trainers for small- Cardamom Biodiversity Prasats and ancient and treatment, Siem Reap Province Subproject incorporating covering Koh Kong, scale hospitality Conservation Corridor city in Kampong Thom Kracheh Province Kandal Province in international borders at Sihanoukville, Kep, service skills and (BCC), Koh Kong Province vicinity of Phnom Penh Cham Yeam, Prek and Kampot Province training of public Province City Chak, Poipet, Phnom sector officials at two Preah Vihear Province Dan, O’smach, Chorm, existing training and Battambang Province Don Kralor, Phnom Den, education institutions and Trapaing Phlong.
Lao PDR Siphandone Wetlands in None proposed Vang Vieng Town Pro-poor Tourism Border points included On North-South As above Champasak Province waste water in Subproject in Saravanh as part of North-South Corridor: 5 points plus Vientiane Province Province, Oudomxay Corridor subproject two border points: (i) Province, Huaphanh Nam Ha Protected Province, Bokeo Area Interpretation Province, Xayabouly Center, (ii) Nam Eng Province, and Vang Cave Complex, (iii) Vieng District in Vat Mahaphot and Vientiane Province. ancient site, (iv) Nam Phae Village scenic viewpoint, and (v) Don Chai /Phimonsin Village Handicraft Market
Viet Nam Phong Nha-Ke Bang Protection and None proposed Pro-poor community Border tourist facilities Development of tourist As above UNESCO Listed conservation of ethnic based tourism and improvements at: Lao attractions along the National Park in the minority's cultural supply chain initiatives Bao, Ha Tien, Moc Bai, East-West Economic GMS Northern landscape in Bac Kan in Hue, Quang Tri, Le Thanh, Bo Y, Chalo, Corridor in Viet Nam Annamite's Biodiversity Province. . Quang Binh, Kon Tum, and at Nam Xoi opposite Conservation Corridor Gia Lai and Dak Lak Na Meo. between Viet Nam and provinces of Central Lao PDR Viet Nam.
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1.1 CAMBODIA
1.1.1 Biodiversity Conservation and Protection through Tourism at the Peam Krasaob Wildlife Sanctuary
(a) Background and Desired Outcomes
163. The Peam Krasaob Wildlife Sanctuary is a 23,750 hectare IUCN category II protected area located on the western coastal strip of Koh Kong Province close to the provincial capital of Koh Kong and is part of the GMS Cardamom Range Biodiversity Corridor Initiative. Koh Kong Province received about 27,000 tourists in 2005 with an average of 1,268 backpackers moving through the area by bus every month. With the completion of road and bridge works in the Southern Economic Corridor by 2008, pressure for economic development is already increasing dramatically while tourist volumes are expected to increase exponentially to more than 250,000 per annum. The subproject aims to demonstrate how to:
• control and halt encroachment and destruction of the protected area’s natural resources; • protect the site’s tangible and intangible heritage values and demonstrate how tourism can be used as a tool to assist with the management and protection of coastal resources in the GMS; • improve access to the site and install infrastructure to ensure that visitor flows are properly managed; • develop the human resources necessary to protect and interpret the site and its place among the natural heritage of the GMS; • establish quality standards for natural heritage management and community participation in the GMS; and • provide tourism-related training and new livelihood opportunities for the local community and engage them more effectively in the conservation and management of the site
(b) Subproject Components and Outputs
164. To deliver these outcomes, the subproject will: (i) develop a tourism structure and zoning plan for the Sanctuary; (ii) elevate and upgrade a 5.5 km laterite road that leads to the edge of the mangrove forest in Peam Krasaob Village; (iii) install parking facilities and a food and handicraft market near the village port adjacent to the boundary of the Sanctuary; (iv) construct a Peam Krasaob Coastal Wetlands Interpretation Center and 0.5 - 1 kilometers of raised walking trails and an observation tower inside the mangrove forest; (v) provide training for local people and park managers in the operation and maintenance of the site as well as in the area of fisheries management and protection of coastal marine resources; (vi) establish a data base of cultural practices and indigenous knowledge of the area; (vii) develop a Peam Krasaob Wildlife Sanctuary marketing and promotion plan; (viii) develop a business plans and planning for private sector investment in eco-lodges and environmentally appropriate facilities around the site where local communities can be engaged as partners; and (ix) develop and implement a community-based natural resource monitoring protocol.
(c) Market Analysis
165. In 2002, the province received 27,154 tourist arrivals of which 19,625 were international tourists and 7,529 were domestic tourists and compares with 3,370 international arrivals and 1,642 domestic arrivals in 2002. International visitors to Koh Kong currently stay for an average of 1.61 days and spend an estimated $ 34.43 per day, while domestic visitors stay for
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an average of 4.25 days and spend an estimated $ 36.46 per day. The volume of these markets passing through Koh Kong Province is likely to increase substantially between 2010 and 2015 once the road and bridge works on the Southern Economic Corridor are completed and tourist facilities and services developed. Surveys of tourists in the vicinity of the site in Koh Kong town indicate that the main segments interested in visiting the site comprise international tourists (mainly group and freely independent sightseeing travelers that are generally of mature age, and young back packers interested in the natural and cultural features of the area passing through Koh Kong Province along the Southern Economic Corridor; and domestic tourists coming to the province to visit their friends and relatives, or on sightseeing tours. International visitors comprise mostly Europeans and Thais. Table 7 shows the forecast volume of interested visitors to the site based on their willingness to pay a rate equal to or greater than the entry rate required to recover the projected annual O&M costs.
Table 7: Forecast Volume of Visitors
Year 2011 2012 2013 2014 2015 2020 International 17,436 20,052 23,060 26,519 30,496 30,496 Domestic 6,602 7,263 7,989 8,788 9,667 9,667 Total 24,039 27,315 31,049 35,306 40,163 40,163 Source: Appendix 4
166. It is assumed that the volume of visitors in 2015 will be capped in the interest of conservation of the Wild Life Reserve. The entry price mechanism will be used to stabilize the visitor volumes at the 2015 level.
(d) Site Management and Cost Recovery
167. Tourist facilities under this subproject will be managed by the site’s established Tourism Management Committee consisting of the Provincial Tourism Office, Department of the Environment and other related provincial stakeholders including community leaders. The subproject will focus on building the Management Committee’s capacity to operate the site during project implementation and involve a local or international NGO (WildAID, DANIDA, Conservation International and IRDC are active in the area) from the onset of project implementation to provide ongoing management training and support once the project is complete. A site entrance fee will be charged for international and domestic tourists, which will include entrance to the Interpretation Center and use of the walking trails. A parking fee will be imposed on buses, vans and cars, and for motorbikes. Other revenue generating activities at the site will be concession fees for market stalls and for the gift shop in the Interpretation Center.
168. The subproject will serve as a model for controlling the impact of tourism on local communities and threatened coastal biodiversity resources in Cambodia and the GMS. A more detailed description of this subproject is contained in Appendix 5.
1.1.2 Cultural Heritage Conservation and Protection through Tourism at Sambor Prey Kuk Cultural Tourism Development
(a) Background and Desired Outcomes
169. Sambor Prey Kuk Cultural Landscape is the location of the 7th Century pre-Angkorian city of Isanapura in which the Sambor Prey Kuk monuments are found. In total, nearly 200 archaeological sites have been discovered scattered throughout the more than 20 square- kilometers that comprises the cultural landscape. West of the main temple clusters and O
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Krou Ke stream is the ancient city of Isanapura, by historical accounts once home to more than 20,000 households and linked to Angkor Wat by an ancient road. In 2005, of the over 225,000 tourists that passed through Kampong Thom province, around 6,000 international and 38,000 domestic tourists visited Sambor Prey Kuk. GTZ, DED, Waseda University and the World Food Program have been active at the site. Population pressure and related poverty is already negatively impacting the monuments and cultural landscape, which has limited management and inadequate security. The subproject aims to:
• Control and halt the deterioration of the monument and surrounding cultural landscape; • Improve access and the management of visitor flows at the site; • Protect the site’s tangible and intangible heritage values as a tourism asset in the GMS; • Establish quality standards for cultural heritage management and community participation in the GMS; • Develop physical infrastructure and the human resources necessary to protect the site and support its interpretation as the Ancient Monumental Heritage of the GMS; and • Provide alternative livelihood opportunities for surrounding poor communities and engage them more effectively in the conservation and management of the site.
(b) Subproject Components and Outputs
170. To deliver these outcomes, the subproject will: (i) map and create an updated Geographic Information System for the site; (ii) develop and implement a heritage based zoning plan and training for site managers and community leaders; (iii) undertake minor upgrading and improvement to the site’s 14 km access road; (iv) construct and install a visitor interpretation center, facilities for presentation of site features, protection infrastructure and up to 15 km of interpreted walking trails; (v) build the capacity of local communities in tourism-related livelihood development and cultural heritage management; and (vi) develop and implement a monitoring program.
(c) Market Analysis
171. In 2005, the province within which Sambor Prey Kuk is located received 225,790 tourists most of whom (96%) comprised domestic tourists. Provincial Tourism Office estimates suggest that International tourists stay an average of 1.61 days and spend $ 34.43 per day, while domestic tourists stay an average of 2.37 days, spending an average of $ 27.92 per day. The volume of international and domestic tourism arrivals to Kampong Thom Province increased by an average of 41% and 15% p.a. respectively between 2002 and 2005 reflecting a growing volume of tourists going to Siem Reap by road from Phnom Penh, as well as interest in exploring the other ancient monuments outside the Angkor temples and for holiday vacation purposes in the case of the domestic market. In 2005, Prasat Sambor Prey Kuk received 6,800 international tourists (about 78.5% of total international arrivals to the province) and 38,000 domestic tourists (about 17.5% of total domestic tourists to the province.) International tourists to the site increased by an annual average rate of 40.3% between 2002 (2,461 visitors) and 2005. Data on the growth of domestic tourists to the site are not available but are reported to have increased at a much slower rate less than 10% p.a.
172. With the upgrading of the road between Kampong Thom and Preah Vihear, total tourism traffic is expected to increase significantly by 2010 as well as visitors to Sambor Prey Kuk if properly prepared as proposed under the subproject. Table 8 shows the forecast volume of visitors to the site based on their willingness to pay a rate equal to or greater than the entry rate required to recover the projected annual O&M costs.
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Table 8: Forecast Volume of Visitors
Year 2011 2012 2013 2014 2015 2020 International 18,289 21,033 24,188 27,816 31,988 47,000 Domestic 50,924 53,470 56,143 58,950 61,898 75,236 Total 69,213 74,502 80,331 86,766 93,886 122,236 Source: Appendix 4, Section 4.0
173. Beyond 2015, it is assumed that the volume of international visitors will grow at 8% per annum while domestic visitors will increase at 4.5% p.a. to 2020, and stabilize thereafter.
(d) Site Management and Cost Recovery
174. Tourist facilities developed under this subproject will be managed and operated by the site’s established Tourism Management Committee consisting of the Provincial Tourism Office, Department of Culture and Fine Arts and other related provincial stakeholders including the Sambor Prey Kuk Community Management Board that has elected representatives from the 7 villages surrounding and within the site. The Tourism Management Committee will collect and manage the site entrance fee for international and domestic tourists, which includes use of walking trails, the shuttle bus and visitor center. Other revenues that the Tourism Management Committee will collect are concession fees for market stalls for the gift shop inside the Interpretation Center.
175. The subproject will serve as a model for controlling the impact of tourism on threatened cultural heritage sites and local communities in Cambodia and the GMS. A more detailed description of this subproject is contained in Appendix 4.
1.1.3 Solid Waste Treatment and Drainage Improvement for Kracheh Town
(a) Background and Desired Outcomes
176. Kracheh Town is located on Highway 7 in Kampong Kracheh that links Phnom Penh via Highway 6 with Stung Treng, the border with Lao PDR at Don Kralor and with Rattanak Kiri Province to the border with Viet Nam at Oya Dao. The town is located approximately two thirds of the way between Phnom Penh and Stung Treng and is a major staging center for observing the Mekong Dolphin and as a stop-over en-route between Phnom Penh and North East Cambodia. The town is growing very fast as a result of the completion of road upgrading works on highway 7 to Stung Treng. Growth will be further boosted with the completion of the ongoing road upgrading between Strung Treng and Don Kralor and between Stung Treng and the border with Viet Nam in Rattanak Kiri Province. The existing waste management system is unable to cope with the substantial increase in tourism while blocked drainage causes severe flooding in the town. The subproject aims to:
• improve the urban environmental amenity in the core area of the town through proper collection and sanitary disposal of solid waste; • reduce the incidence of flooding in the core area and faster evacuation of major flooding events through rehabilitation of existing, and construction of, new drainage and improved maintenance; • improve treatment of black water through a campaign to upgrade and regularly de- sludge septic tanks; reduce pollution of the Mekong River and the dolphin habitat; and • increase the attractiveness of the town as an important tourist center on the Mekong River.
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(b) Subproject Components and Outputs
177. To deliver these outcomes, the subproject will: (i) develop a new sanitary landfill on the existing 10 ha. site already used by Kracheh for dumping of solid waste; (ii) reconstruct an existing 2.0 km access track as a 6m wide gravel road with suitable elevation and drainage to ensure all-weather access; (iii) expand and improve the existing drainage system in the Kracheh core town area; (iv) install a solid waste collection and transport system; (v) prepare and implement an awareness program targeted at owners and operators of hotels, guesthouses, restaurants, businesses and residents in the core district of the town on the importance of effective waste management; and (vi) strengthen management systems in the controlling authority through training in urban services management, financial management, asset management and customer relations, and monitoring.
(c) Market Analysis
178. In 2005, Kracheh town received 7,630 international tourists (compared to 1632 international tourists in 2001), and around 75,000 domestic tourists. In the first six months of 2006, international tourists reached 4,827 and domestic tourism reached 68,000 indicating that tourism is growing fast. The Provincial Tourism Office predicts around 10,000 international tourists and 80,000 domestic tourists for 2006. The total tourist market has increased by an average of 17.8% between 2002 and 2005-more than doubling in 2004 as a result of road improvements to Stung Treng. About 75% of international tourists come from Europe, 15% from Asia Pacific and 10% from the USA. The main activities of tourists staying in the town are dolphin sightseeing and resting while en-route between Phnom Penh and Stung Treng. Supporting these are 23 accommodation establishments comprising 6 hotels with 190 rooms and 17 guesthouses with 157 rooms and 24 restaurant establishments with an estimated 1,344 seats, roughly 1.1 restaurants per hotel and guesthouse establishment. Total rooms increased by 58% between 2004 and 2005, while restaurant establishments grew from 7 to 23 between 2004 and 2005 and another one in 2006 to date. Table 9 shows the expected impact on tourist volumes resulting from the completion of further road links to Don Kralor into Lao PDR, the road across to Viet Nam from Rattanak Kiri, possible air port development, and implementation of the Dolphin Discovery Trail for which Kracheh is positioned as the southern gateway.
Table 9: Forecast of International Tourists to Kracheh Province
Year 2005 2008 2009 2010 2011 2012 2013 2014 2015 International Visitors 7,912 11,116 29,050 40,670 43,923 47,437 51,232 55,330 59,757 Domestic Tourists 75,000 94,478 102,037 110,200 115,710 121,495 127,570 133,948 140,646 Total Tourists 82,912 105,594 131,086 150,869 159,633 168,932 178,802 189,279 200,403 Source: Appendix 4, Section 4.0
179. With the development of higher-end accommodation, restaurant and shopping facilities in its role as the gateway to the Dolphin Discovery Trail, the average length of stay and expenditure in the town is estimated to increase from 2 to 2.5 days and $30 to $40 per day for international visitors and from 1 to 1.3 days and $10 to $15 per day for domestic tourists. The total additional accommodation capacity required to service the additional demand by 2015 is estimated at 177 hotel rooms and 71 guest house rooms comprising 3 mid-level tourist hotels with at least 50 rooms each and 6 guesthouses. An additional 8 restaurants are also likely to be required. It is assumed that international visitor growth will average 8% per annum while domestic visitors will average 4.5% p.a. between 2015 and 2020, and stabilize thereafter.
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(d) Site Management and Cost Recovery
180. The solid waste and drainage clearance services in the core area of Kracheh Town will be managed by the Kratche Solid Waste and Drainage Maintenance Company (SWD&M), a public company to be established by the Provincial Department of Transportation and Public Works. The company, shall be chaired by the Governor, shall have a board comprising the key stakeholders including the Department of Transportation and Public Works, Department of Environment, the Tourism Department, the Finance Department and the Department of Urban and Land Planning, and commune leaders. The company shall have full time operating staff that will operate and maintain the solid waste and drainage clearance services and equipment. The company shall charge a monthly user fee for its services commensurate with the capacity of different users to pay. The subproject will focus on building capacity of the SWD&M once it is established to operate the site during project implementation by providing ongoing management training and support.
181. The subproject will serve as a model for controlling the impact of tourism in fast developing tourism urban centers in Cambodia and the GMS. A more detailed description of this subproject is contained in Appendix 4.
1.2 LAO PDR
1.2.1 Biodiversity Conservation and Protection through Tourism at the Siphandone Wetland
(a) Background and Desired Outcomes
182. The Siphandone Wetland, (Siphandone, meaning 4,000 islands in the Lao language) located in the southern part of Champasak province, extends to the border with Cambodia and contains thousands of channels and islands, with the largest and most visited among them being Don Kong, Don Det and Don Kone. The Wetland is part of the Tri-border Biodiversity Corridor that straddles Lao PDR and Cambodia. IUCN and the Mekong River Commission are currently working with the Ministry of Agriculture and forestry to assist in the designation of Siphandone as a Candidate Ramsar Site. The wetland is home to 136 villages with an estimated population of 72,600. Around 75% of these rate themselves as poor. In 2005 Siphandone received over 45,000 visitors (around 250 to 300 per day in the peak season) and supported 41 guest houses with around 140 rooms. In the first 6 months of 2006, the number of arrivals to Kong district had already reached more than 50,000, with the largest concentration of lodging establishments and visitors on Don Khone and Don Det. Siphandone’s biodiversity is seriously threatened by over-fishing and hunting activities by poor communities living in and adjacent to the wetland who depend on it for food security and harvesting of natural resources for income.
183. The subproject aims to:
• Significantly increase the level of participation and ownership in higher value tourism- related livelihood opportunities by local communities living in and adjacent to the wetlands • Ensure that tourism development in the wetlands is environmentally sustainable and contributes to the conservation and protection of the area’s rich biodiversity • Document, conserve and interpret the area’s natural and cultural resources and traditional livelihood practices • Ensure that women, ethnic minorities, youth and the elderly are given opportunities to equitably participate in the tourism industry
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• Facilitate the management and flow of tourists into the wetland through improvements to the site’s physical infrastructure and tourism management systems
(b) Subproject Components and Outputs
184. To achieve these outcomes, the subproject will: (i) prepare a heritage based tourism zoning plan and tourism structure and management plan for the wetlands area; (ii) improve the 4 km access road that connects route 13 to the boat landing at Nakasang Village; (iii) undertake improvements to the existing pathways on Don Det and Don Kone Islands; (iv) undertake environmental improvements at Ban Nakasang, Don Det and Done Kone, including the area along the riverbank and better waste management at the market and in the village; (v) construct visitor information and interpretation facilities on the Nakasang Village side of the Wetlands; (vi) construct fully interpreted access trails at Nakasang, Don Det, Done Kone and other smaller islands; (vii) provide capacity building and support programs for local communities, especially, women, youth and ethnic minorities, to participate in tourism- related livelihoods, and training for site managers to engage local communities in managing and interpreting the natural heritage values of the wetland; and (viii) develop and implement a community-based natural resource monitoring system.
(c) Market Analysis
185. In 2005, the Siphandone Wetlands (the islands portion) attracted 52,359 tourists comprising 30,891 international tourists (about 31% of total international arrivals to Champasak Province) and 21,468 domestic tourists (about 20% of total domestic tourists to the province). International visitors comprised mainly Westerners and a smaller volume of Asians-mainly Thais-attracted by the opportunity to explore the wetlands, its people, the Mekong falls, and its historic sites. The domestic market comprises mainly vacation sightseeing and holiday segments from the province and from Vientiane. The average length of stay of international tourists in the wetland is 4.16 days with estimated average expenditure of around $19.63 per day at the site and for the domestic market, 6.71 days with average expenditure of around $39.12 per day. The international market tends to be spread throughout the year although it is stronger during the dry season from November to April whereas the domestic market is more seasonal.
186. The market analysis indicates that based on the overall prospects for tourism in Champasak Province up to 2015 and given the implementation of the proposed enhanced access, visitor facilities and services, presentation and conservation initiatives of the subproject, the Siphandone Wetlands could expect to attract a large share of the total provincial market. Table 10 shows the forecast volume of visitors to the site based on their willingness to pay a rate equal to or greater than the entry rate required to recover the projected annual O&M costs.
Table 10: Forecast Volume of Visitors for the Siphandone Wetlands
Year 2011 2012 2013 2014 2015 International Tourists 50,832 54,899 59,291 64,034 69,157 Domestic Tourists 29,934 31,431 33,003 34,653 36,385 Total 80,767 86,330 92,293 98,687 105,542
187. Beyond 2015, it is assumed that the growth in the volume of international and domestic tourists visiting the site will decrease from around 7 % p.a. between 2011 and 2015 to 5 % between 2016 and 2020, and stabilize thereafter.
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(d) Site Management and Cost Recovery
188. Tourist facilities developed under this subproject will be managed by the Kong District Tourism Office (DTO) under the same arrangements as that of the Khone Phapeng Waterfall, whereby a % of revenue collected is retained by the DTO for operations and maintenance of the site, and the balance is sent to the provincial treasury. The subproject will focus on building capacity of the DTO and site staff hired by the DTO to operate the site during project implementation and involve an international NGO or development partner (IUCN and WWF are active in the area) from the onset of project implementation to provide ongoing management training and support once the project is complete. Revenue collection for the site will comprise: a fee that the Nakasang Boatmen’s Association will add to the price of each boat crossing to the islands: additional site entrance fees at the control point at the southern end of the old railway bridge for access to the Somphamit Waterfall, and to the interpretative trail, viewing platform and old steam train at Hang Korn Village; parking fees for buses, vans and cars, and for motorbikes; and concession revenue from the main Interpretation Center at Nakasang.
189. The subproject will serve as a model for controlling the impact of tourism in important wetlands of Lao PDR and other GMS countries, especially Cambodia and Viet Nam. A more detailed description of this subproject is contained in Appendix 4.
1.2.2 Vang Vieng Town Waste Water Centralization and Treatment
(a) Background and Desired Outcomes
190. Vang Vieng Town functions as both a tourist center and as a tourist service point half way between Vientiane and Luang Prabang. Tourism volumes are growing at between 15 and 20 percent per annum and the 62 lodging establishments and 82 restaurants are being continually expanded and additional establishments being constructed. Although black waste water is treated by septic tanks, grey water from kitchens, laundries, commercial activities such as cleaning and heavily silted storm water runoff is discharged directly into the drainage system leading to the river. This threatens the environment of the adjoining river that is used by town residents, farmers and tourists. The subproject aims to:
• protect the river water quality for local and tourism use; • contribute to the reduction in downstream river pollution; • enhance the environmental quality of Vang Vieng town as a tourist center and place to live for its residents; and • demonstrate how waste water can be controlled in the smaller but fast growing tourist centers of Lao PDR and the GMS.
(b) Subproject Components and Outputs
191. To achieve these outcomes, the subproject will: (i) expand and improve the existing drainage system in the Vang Vieng core town area; (ii) improve road pavements on selected roads in the town core to bitumen seal standard to ensure storm water drains to side entry pits and does not pond; (iii) ) provide an additional bio-filter to remove a significant percentage of the contaminants including hydrocarbons and sediments containing organics, BOD and heavy metals; (iv) provide a second truck for solid waste collection and carrying daily cover material used in operating the landfill site; (v) survey existing connections and prepare and implement plans to remove illegal connections and provide the necessary documentation on acceptable property drainage connections to the new public drainage system; (vi) design and implement an awareness program targeting residents and business establishments on the need
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for proper waste management systems and practices; and (vii) strengthen management systems in the controlling authority through training in urban services management, financial management, asset management, customer relations, and monitoring.
(c) Market Analysis
192. Vang Vieng town is strategically located on Route 13 about half way between Vientiane and Luang Prabang. The town functions as both a tourist center and as a service point half way between Vientiane and Luang Prabang. The town received 82,110 tourists in 2005, with 50,620 international and 31,490 domestic tourists staying around two nights, spending an estimated $15 to $30 per day in the town. Tourism volumes have been growing at between 15 and 20 percent per annum with foreign tourists almost doubling in the last five years. There are 58 accommodation establishments with a combined capacity of 1,020 rooms and 83 restaurants (i.e. 1.4 restaurants per lodging establishment) that are being continually expanded and additional establishments being constructed. There is now a growing market of 2-3 star hotels (50 + rooms) catering to an international bus tour market, in addition to back- packers who are the predominant group. Average room occupancies are estimated at 25% with international tourists accounting for an estimated 60% of occupied room nights. Room occupancies are quite low since the large increase in rooms capacity in recent years has yet to be absorbed by the market. Table 11 shows the expected impact on tourist volumes resulting from the consolidation of the town as a center for ecotourism development in the region as well as a stop-over point between Luang Prabang and Vientiane assuming that the additional drainage and solid waste improvements proposed under the subproject are undertaken.
Table 11: Forecast of International Tourists to Vang Vieng District & Town
Year 2005 2008 2009 2010 2011 2012 2013 2014 2015 Forecast International Visitors 50,620 68,856 76,292 84,600 87,392 90,276 93,255 96,332 99,400 Domestic Tourists 31,490 39,668 42,842 46,269 49,971 53,968 58,286 62,949 67,985 Total 82,110 108,524 119,134 130,869 137,362 144,244 151,541 159,281 167,385 Source: Appendix 4
193. With the development of higher-end resort accommodation, restaurant and shopping facilities in its role as an important ecotourism center in Lao PDR, the average length of stay and expenditure in the town is estimated to increase from 2 to 2.5 days and $30 to $40 per day for international visitors, and average expenditures of $10 to $15 per day for domestic tourists. The total additional accommodation capacity required to service the additional demand by 2015 is estimated at 200 hotel rooms and 138 guest house rooms comprising 2 mid-level tourist hotels with at least 100 rooms each and 8 guesthouses. An additional 28 restaurants are also likely to be required. It is assumed that international visitor growth will average 10.8% per annum between 2005 and 2010, 3.3% between 2011 and 2015, and stabilize thereafter.
(d) Site Management and Cost Recovery
194. The operations and maintenance of the drainage improvements will be folded into the existing organization created under the ADB Small Towns Project-the Urban Development Administration Authority (UDAA). The UDAA shall recruit additional staff to operate and maintain the drainage improvements and related equipment and charge an incremental user- based fee to recover its costs. The UDAA shall establish a capital reserve to replace equipment and maintain a reserve to meet temporary cash flow shortfalls that may occur from time to time. The subproject will focus on building capacity of the UDAA to operate the site during project implementation by providing ongoing management training and support.
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195. The subproject will serve as a model for controlling the impact of tourism in fast developing tourism urban centers in Lao PDR and the GMS. A more detailed description of this subproject is contained in Appendix 4.
1.3 VIET NAM
1.3.1 Biodiversity Conservation and Protection through Tourism at Phong Nha Ke Bang National Park
(a) Background and Desired Outcomes
196. Phong Nha Ke Bang National Park is a UNESCO Natural World Heritage Site located in Quang Binh Province, approximately 500 km south of Hanoi. The park presently comprises an area of 85,754 hectares of rugged limestone mountains that straddles the Ho Chi Minh Trail and is contiguous with the Hin Nam No National Protected Area in Lao PDR. It was inscribed on the World Heritage List in 2003 for its important biodiversity and geological values, including its significant karst and cave systems and the presence of an extensive range of rare and endangered flora and fauna. There are presently two ethnic minority villages located within the park boundaries, and a proposed extension would expand its area by 33,000 hectares and put an additional 15,000 people within its borders. The national park received 251,657 domestic and 4,256 international visitors in 2005 and total visitor arrivals are projected to increase to 510,000 by 2010 and in excess of 700,000 by 2015. Major concerns are the current lack of effective local participation in the management and servicing of the national park, unsustainable development of tourist facilities in the park’s administration area, and consumption of park biodiversity resources to meet food security needs of its buffer zone communities. The subproject aims to:
• Control and halt encroachment and destruction of the protected area’s natural resources • Protect the site’s tangible and intangible heritage values and demonstrate how tourism can be used as a tool to assist with the management and protection of natural protected areas and UNESCO Natural World Heritage Sites in the GMS • Improve access to tourist sites within the park and install infrastructure to ensure that visitor flows are properly managed and tourism resources are protected • Provide tourism-related training and new livelihood opportunities for men and women in local communities and engage them more effectively in the conservation and management of the park • Develop the human resources necessary to manage and interpret the site and its place among the natural heritage of the GMS • Establish quality standards for natural heritage management and community participation in the GMS . (b) Subproject Components and Outputs
197. To achieve these outcomes, the subproject will: (i) develop a program to support the formation of a tourism management plan for the park’s administrative and service area; (ii) prepare and implement a program to improve access to tourist sites and development of tourism-related interpretative and protective infrastructure, including the development of the proposed Phong Nha Ke Bang Nature Circuit; (iii) improve solid waste disposal and management; (iv) develop and undertake training programs for local people in the development, operation and maintenance of tourist attractions and community-based tourism ventures; (v) document and create a data base of cultural practices and indigenous knowledge of the area; (vi) prepare and implement a marketing and promotion plan and create
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information and promotional materials; and (vii) develop and implement a monitoring system.
(c) Market Analysis
198. In 2005, the park attracted 255,923 visitors of which 4,266 were international visitors (35% of international visitors to Quang Binh Province) and 251,657 were domestic visitors (50.5% of domestic visitors to the province). The park board of management and provincial tourism office is expecting that by 2010, the park will attract 350,000 visitors who are expected to achieve more or less the same share. After increasing at an average of 14.6% per annum from 295,283 visitor arrivals in 2001 to 510,194 arrivals in 2005, the volume of international and domestic tourism to Quang Binh Province is expected to be further boosted between 2006 and 2010 as a result of ongoing improvements in road and air access to the province, the development of more attractions-especially beach resorts, and enhanced marketing and promotions efforts. The province is targeting a total of 1.3 million visitors annually by 2010 who are expected to stay longer and spend more than at present, and the park is expected to receive a substantial share of these.
199. Table 12 gives the resulting forecast of visitors to the park based on the trend in its visitor volumes, the overall outlook for the province, and improvement and development of tourist facilities and services.
Table 12: Forecast of Tourists to Phong Nah Ke Bang National Park
Year 2005 2008 2009 2010 2011 2012 2013 2014 2015 International 4,266 7,619 8,990 14,642 16,789 18,972 21,122 23,164 25,017 Domestic 251,657 310,806 325,061 335,359 366,253 396,137 424,288 449,970 472,469 Total 255,923 318,425 334,051 350,000 383,043 415,109 445,410 473,134 497,486 Source: Appendix 4
200. Table 13 shows the expected volume of visitors likely to undertake the ecotourism circuit based on a survey of willingness to pay at the rate equal to or greater than the entry rate required to recover the projected annual O&M costs.
Table 13: Forecast of Visitors Using the Ecotourism Circuit
Year 2011 2012 2013 2014 2015 International 4,466 5,047 5,618 6,162 6,654 Domestic 71,053 76,851 82,312 87,294 91,659 Total 75,519 81,897 87,930 93,456 98,313 Source: Appendix 4
201. Although the overall volume of visitors to the park may not be affected if the ecotourism circuit is not implemented in the way proposed, and unstructured access is provided, then the average length of stay and expenditure is unlikely to increase as forecast since the time and spending opportunity provided by the ecotourism circuit will not be available. In this situation, the length of stay and expenditure are likely to be the same as they were in 2005.
(d) Site Management and Cost Recovery
202. Tourist facilities developed under this subproject including the Phong Nha Ke Bang Nature Circuit that contains viewpoints, interpreted walking trails, river piers, caves and animal viewing platforms will be managed by the park’s Phong Nha Ke Bang National Park Management Board’s Center for Science and Ecotourism. The subproject will focus on building the Management Board’s capacity to operate sites on the circuit during project implementation and involve an international NGO or Development partner (GTZ, FFI and
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KFW are active in the area) from the onset of project implementation to provide ongoing management training and support once the project is complete. An entrance fee for the circuit will be charged for international and domestic tourists, which will include use of the shuttle bus and access to all sites on the circuit except entrance to Paradise Cave and the animal viewing platforms at Dong Village where permit fees will be charged for guided tours.
203. The subproject will serve as a model for controlling the impact of tourism in important natural heritage sites in Viet Nam and the GMS. A more detailed description of this subproject is contained in Appendix 5.
1.3.2 Cultural Heritage Conservation and Protection through Tourism at the Bac Kan Cultural Landscape
(a) Background and Desired Outcomes
204. Bac Kan Province is located in the Northern Uplands Region of Viet Nam being bordered by Cao Bang Province on the border with Guangxi Zhuang PRC in the north, Lang Son Province in the east, Thai Nguyen Province in the south, and Tuyen Quang Province to the west. The provincial population was 301,500 in 2006 of which around 45,400 lived in the urban of center of Bac Kan Town. Of the total provincial population more than 80% are classified as ethnic minorities, mainly from the Tai-Kadai and Hmong-Mien ethno linguistic groups. The Tay alone number more than 150,000, followed by Dao, Kinh, Nung, Hmong and the Hoa groups. The San Chay ethnic group has the smallest population with only about 300 people.
205. In 2007, Bac Kan attracted 100,305 overnight tourists, of which international tourists accounted for around 5,963 arrivals. Since 2003, international tourism has been growing at around 19.5% per annum, domestic tourism at 26.5% per annum, while the overall tourism volumes grew at 23.4% per annum. As a result, rural communities that were until very recently practicing primarily subsistence agriculture in the isolated valleys and upland areas of the province are now encouraged to plant cash crops and commercial tree species. Only very remote villages continue to practice traditional farming and livelihood activities upon which their cultural practices, rituals and traditions are mainly based. Many rural villagers, especially young people, are migrating to urban centers, and in some cases risk being drawn into the less savory aspects of the tourism industry, i.e. the commercial sex trade.
206. Integration into the cash economy has brought material improvements to villagers’ lives and has also opened up opportunities for better education, health care and access to government services. At the same time, experience from the region shows that a rapid shift to market- based economies, urbanization and unsafe migration leads to an erosion of the cultural heritage, especially language and oral traditions, literature, indigenous knowledge, music, rituals, belief systems, and cultural industries. These problems are endemic to Viet Nam and many areas in the GMS, and if not effectively addressed, place at risk the survival of the region’s rich and diverse cultural heritage which is one of its few remaining unique selling propositions as a destination for tourists, as well as the lifeblood and identity of ethnic communities. The subproject aims to:
• To protect, revive and conserve the traditional cultures of the ethnic minorities living in the province and Northern Uplands Region of Viet Nam while respecting local people’s rights and desire to choose the trajectory of development in their communities
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• Development of an experimental test bed and “best practice model” to demonstrate how tourism can help to protect, revive and conserve traditional ethnic minority cultures • Protect the natural environment, cultural and historic heritage by creating and adopting standards for heritage protection and tourism development • Strengthen and diversify local livelihoods and alleviate poverty by introducing tourism development that involves local ethnic communities in the planning, development, and management of ethnic tourism to ensure that community satisfaction and local job creation are sustaine
(b) Subproject Components and Outputs
207. To achieve these outcomes, the subproject will: (i) undertake institutional strengthening and capacity building programs for local tourism and cultural heritage managers at the provincial and district level; (ii) conduct cultural mapping and create a Geographic Information System and develop an ethnographic database for the province; (iii) review and update the tourism master plan for Bac Kan Province; (iv) develop small scale tourism related infrastructure at selected villages to improve access and support facilities for visitors and residents; (v) develop and implement training programs to revitalize traditional music and cultural industries; (vi) construct the Bac Kan Cultural Center and associated visitor information facilities; (vii) undertake a capacity building program for local communities in tourism- related livelihood development and cultural heritage management; (viii) prepare and implement a private sector investment program focusing on cultural heritage tour operation and provision of eco-lodges at selected sites within the cultural landscape; (ix) prepare and implement a marketing and promotions program to promote CBT and cultural industry products of the Bac Kan cultural landscape; (x) develop and implement a program to raise awareness on prevention of HIV/AIDS, unsafe migration and trafficking in wildlife and antiquities; and (xi) develop and implement a monitoring system.
(c) Market Analysis
208. Bac Kan Province’s main tourism markets are currently drawn by the natural heritage attractions of Ba Be Lake National Park, Dau Dang Waterfall, Puong Cave, its historic revolutionary sites, and the Ba Be Lake Spring Festival. These attract predominantly overnight and day domestic tourists from Hanoi, about 4 hours away by road. Although international tourism is still a small proportion of the total tourism market, this market is also very interested in the traditions and customs of the ethnic minorities of the Northern Uplands Region of Viet Nam as evidenced by the Sapa’s booming tourism industry which is based on a landscape and ethnic diversity similar to that of Bac Kan.
209. The average length of stay in the Province was 2.15 days overall, 2.5 days for international tourists and 1.8 days for domestic tourists. The total number of tourist nights in 2007 was estimated to be 215,656 nights. Total revenue in lodging establishments from domestic and international tourism in 2007 was estimated to reach 21,153 million VN Dong or around $ 1.4 million. Survey data from Central Viet Nam found that expenditure on lodging, food and beverage accounts for around 33% of total trip expenditure. On this basis, it is estimated that total expenditure by tourists in Bacan Province was around $4.2 million in 2007 with per capita spending at around $42.2, and average daily spend of around $19.6 per day.
210. A key factor in the development of tourism to Bac Kan Province has been the lifting of security restrictions, and opening of the border provinces for rapid development including the development of border trade economic zones with China. This has led to significant
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ongoing investment in access, communications, and service infrastructure in the North East border provinces including Bac Kan Province.
211. In this context, the volume of international and domestic tourism that Bac Kan Province could expect to attract between 2006 and 2015 will be determined by rate of developments in access linking the province to Hanoi and other surrounding provinces; the strength of its tourism assets; and the extent to which these assets are improved, expanded and promoted.
212. Taking these factors into consideration, Table 14 gives the likely volume of tourism arrivals to the province between 2007 and 2015.
Table 14: Forecast of Tourists to Bac Kan Province
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 International 5,963 7,305 8,948 10,962 13,428 16,449 20,150 24,684 30,238 Domestic 94,342 115,569 141,572 173,426 203,775 239,436 281,337 330,571 388,421 Total 100,305 122,874 150,520 184,387 217,203 255,885 301,487 355,255 418,659 Source: Based on Growth Scenario
213. A growing proportion of tourists to Bac Kan Province will be middle income groups and free independent travelers seeking mainly cultural tourism experiences and back-packers seeking cultural tourism and adventure experiences in a highly scenic natural karst landscape. Of these visitors to the Province, a significant proportion will come to visit Ba Be Lake National Park. In 2007, around 71% of international tourists to the province, and 60% of domestic tourists to the province visited Ba Be Lake National Park. With the increase in the volume of tourism due to improved road access, the inscription of the Park in the UNESCO World Natural Heritage List, and other factors, the overall share of the Park of total tourism to the province should be more or less similar to the current levels although probably lower in the case of the domestic market. A reasonably conservative assumption would be 70% of international tourists to the province (compared to 71% in 2007), and 50% of domestic tourists to the province (compared to 60% in 2007). Table 15 sets out the likely volume of international and domestic tourists that could be expected at Ba Be Lake National Park using these assumptions.
Table 15: Forecast of Tourists to Ba Be Lake National Park
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 International 4,234 5,177 6,331 7,742 9,467 11,576 14,156 17,310 21,167 Domestic 56,605 67,897 81,404 97,552 112,076 128,697 147,702 169,418 194,210 Total 60,839 73,074 87,735 105,294 121,543 140,273 161,858 186,727 215,377 Source: Based on Growth Scenario
(d) Site Management and Cost Recovery
214. Tourist facilities developed under this subproject will be managed by a Committee under the Provincial People’s Committee of Bac Kan Province with representatives from the Provincial Tourism Office, Department of Culture and Information, leaders of the participating ethnic communities, and other related provincial stakeholders. The Cultural Tourism Management Committee (CTM) will collect and manage entrance fees to the Cultural Center as well as generate concession revenue from the sale of handicraft and a permit fee to be levied on each tourist participating in community-based tours that are booked from the center or through tour operators in the province. The subproject will focus on building capacity of the CTM to operate the site during project implementation and involve an international NGO or development partner from the onset of project implementation to provide ongoing management training and support once the project is complete.
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215. The subproject will serve as a model for saving culture, saving lives as envisaged in Strategic Project 7 of the Tourism Sector Strategy 2006-2015 (TA 6179-GMS) in Viet Nam and the GMS. A more detailed description of this subproject is contained in Appendix 4.
2.0 PART 2: PRO-POOR TOURISM DEVELOPMENT
216. Part 2 of the project will develop an extended model for pro-poor tourism that includes traditional CBT development approaches supplemented by new supply chain initiatives. The pro-poor subproject is designed to involve and benefit more poor communities in the tourism economy while protecting ethnic minority cultures and minimizing the adverse impacts of tourism especially on vulnerable groups such as women, youth and the elderly. Part 2 will be undertaken in multiple provinces and districts in each country. As agreed at the Inception Meeting on 3 July 2006, it is not intended to undertake a detailed feasibility investigation of the pro-poor subprojects but rather to use one site to develop a model of the approach that can be replicated elsewhere in the participating countries. The site selected for the pro-poor demonstration model is A Luoi District, Hue Province, Viet Nam. A detailed description of the pro-poor demonstration model is shown in Appendix 4, while Appendix 5 gives a summary of the Pro-poor Situation in each of the participating countries.
2.1 LOCATION OF PROPOSED PRO-POOR INTERVENTIONS
217. The participating countries have identified the following provinces where they will implement pro-poor initiatives under this project: • Kandal, Siem Reap, Battambang, and Preah Vihear in Cambodia; • Bokeo, Houaphanh, Saravanh, Oudomxay and Sayabouli Provinces, and Vang Vieng District, Vientiane Province in Lao PDR; • Dak Lak, Gia Lai and Kon Tum, Hue, Quang Binh, and Quang Tri in Viet Nam.
218. In Cambodia: the four provinces of Kandal, Siem Reap, Battambang and Preah Vihear that are proposed for pro-poor interventions all have high incidence of poverty. Two provinces, Siem Reap and Kandal contain or are located adjacent to the country’s major tourist centers where the bulk of the larger tourism establishments are located. The other provinces are located well away from these centers but have important attractions that can help to bring tourists to these areas for community based tourism as well as providing an opportunity to participate in supply chain based tourism activities linked to the local tourist centers (Preah Vihear Temples and Battambang City) as well as to the major centers of Siem Reap and Phnom Penh.
219. Potential pilot sites to develop and refine a pro-poor approach that can later be replicated and expanded to other areas in Siem Reap are the villages of Prek Dak, located inside the Angkor Archaeological Zone, and Rokha Village in the Krabai Real Commune. Both Prek Dak and Rokha have already received some assistance from UNESCO in handicraft design and marketing (the main handicraft being rattan and bamboo basketry) and although they have made significant advancements along the pro-poor tourism development continuum, much more can be done. Potential pilot sites in Kandal province near Phnom Penh include the silversmiths and metal sculptors of Po Tauch Village and the 10 villages in Phsadek Commune that includes the famous Oudong Mountain that receives an average of 300 international and 10,000 domestic visitors each month. The weavers living on the Mekong island of Ko Dak and the recreation area near the Kien Svay Temple were also identified as a potential pro-poor tourism site. Po Tauch and Ko Dak both present opportunities to increase the number of tourists visiting villages and strengthen supply chains to major consumer markets in Phnom Penh. These potential pilot sites to develop and refine a pro-poor approach that can later be replicated and expanded to other areas in the provinces as well as those for
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Preah Vihear and Battambang will need to be further identified and confirmed during the initial stages of project implementation.
220. In Lao PDR: the five provinces proposed for pro-poor interventions are Bokeo, Houaphanh, Saravanh, Oudomxay and Sayabouli; and the District of Vang Vieng, Vientiane Province. Major urban tourism centers in Lao PDR are located in Vientiane, Luang Prabang and Pakse, Champasak Provinces. These centers attract the bulk of international tourism to the country and contain most of the larger tourist facilities and services to be found in Lao PDR. In addition to Pakse in Champasak Province, and Pakbeng in Oudomxay Province, the proximity of the major urban tourism centers in Thailand such as Ubon Ratchathani and Chiang Rai is also an important factor. Bokeo, Oudomxay and Sayabouli Provinces, are located in the sphere of influence of Chiang Mai/Chiang Rai and Luang Prabang; Vang Vieng District and Houaphanh are located in the sphere of influence of Vientiane and Luang Prabang respectively; while Saravanh Province is located in the sphere of influence of Pakse in Champasak Province as well as nearby Ubon Ratchathani in Thailand.
221. The five proposed provinces have very high poverty levels, have excellent tourism resources, have had relatively minor interventions in the tourism sector, and are considered by the Lao Government to be excellent locations for piloting a more inclusive approach to poverty reduction through tourism and continuing to replicate and refine the community-based tourism development model that the country has had so much success with. Potential pilot sites to develop and refine a pro-poor approach that can later be replicated and expanded to other areas in the five provinces and one district are Sam Neua and Sam Tai in Houaphanh, Pakbeng in Oudomxay, Hongsa in Sayabouli, Lao Ngam district in Salavanh and Houei Xay in Bokeo. A detailed approach for each of the sites will need to be further identified and confirmed during the initial stages of project implementation.
222. In Viet Nam: the pro-poor subproject is located in central Viet Nam targeting the provinces of Dak Lak, Gia Lai and Kon Tum in the Green Triangle Tourism Zone, Hue, Quang Binh, and Quang Tri in which the East-West Economic Corridor is situated. The major centers for tourism are Ho Chi Minh City in the South and Hue and Da Nang in the central coastal region. Despite the rapid growth of tourism to major centers such as Ho Chi Minh City and Hue-Da Nang, (more than 2 million international tourists to Ho Chi Minh City and more than 360,000 international tourists to Hue-Da Nang in 2005) along with significant increases in tourist facilities in recent years, the benefits of this growth have not been widely distributed outside of the main urban and resort-based tourist enclaves. The operators of existing tourist enterprises in the main tourism centers import much of their vegetables, fruits, flowers, food and beverage, souvenirs, and other supplies from outside the region resulting in high economic leakages and weak backward linkages into the provincial economies between them. In addition, although poorer provinces between the two growth centers are rich in natural, cultural and historic resources, they have largely missed out on capturing the benefits from tourism because of their inability to develop and market tour programs. This subproject seeks to redress this problem by expanding the traditional pro-poor community-based tourism approach where individual or clusters of tour programs are developed and operated by communities, to a more inclusive model that will link the production of agricultural goods and handicrafts by poor communities into the national tourism economy.
2.2 MANAGEMENT AND COST RECOVERY
223. Tourist facilities developed under this subproject are ‘pro-poor tourism service complexes’ that including district or provincial visitor information centers and local goods markets, preferably located on the same plot of land. Small-scale village and district level infrastructure such as community lodges, river piers, walking trails, sanitary facilities, viewpoints and signage may also be constructed under the subproject. In at least one district
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of each target province, one small inbound community-based tour (CBT) Guide Service will be established that is operated under the supervision of a Pro-poor Tourism Management Committee (PTMC) consisting of the District Tourism Office, Culture and Information Office, Department of Industry and leaders from communities included in the CBT tours. The PTMC will collect fees from the Guide Service including a CBT access permit fee; a tourism promotion fee equal to a percentage of all CBT tours sold by the Guide Service; manage revenues that the supply-chain initiatives will generate including an annual concession fee from the small stall local goods markets that will be constructed under the project in each province, as well as a marketing and promotion fee imposed on crafts and produce sold.
2.3 A LUOI DISTRICT PRO-POOR TOURISM DEVELOPMENT DEMONSTRATION MODEL
2.3.1 Background and Desired Outcomes
224. A demonstration model to show the approach that should be taken in developing pro-poor tourism initiatives in the selected provinces of the participating countries is provided for A Luoi District, Hue Province. The choice of A Luoi District as a suitable model is based upon its remote location in the border highlands west of Hue City, its relatively recent opening up for tourism, presence of highly attractive natural and cultural heritage tourism assets, large percentage of extremely poor ethnic minority groups with capacity to host tourists or produce products that can be supplied to the tourism sector in the major urban tourism centers of the region, and proximity to the major urban tourism centers of Hue City and Da Nang City where a substantial investment in hotels, resorts, restaurants, tourism shopping, and tour operations has already taken place. This demonstration model aims to show how the pro-poor tourism subproject will:
• Increase substantially the volume of poverty reduction generated through tourism • Help to secure and conserve key cultural and natural tourism assets in the provinces through alternative livelihood development; • Ensure that women and ethnic minorities are given equitable opportunities to participate in and benefit from the tourism economy; • Provide a body of knowledge and experience on poverty reduction through tourism that can be replicated in other provinces of Viet Nam and other GMS countries.
2.3.2 Subproject Components and Outputs
225. Two clusters of villages have been selected to demonstrate the approach to developing pro- poor tourism initiatives. This approach may be replicated in selected sites in other provinces in Viet Nam and the other participating countries. The two areas targeted for the demonstration model in Viet Nam are: (i) development of three CBT programs that include village-guided walks and home stays along an ecotourism circuit that links A Roang, A Ka, A Chi, Ka Lo, Ka Ron, A Ho and A Min villages, as well as field trips to the former A Shou military airport, visits to A Bia or Hamburger Hill, a famous American War site, and tours to an old-growth forest near A Roang Commune that is a proposed Saola reserve; and (ii) the development of tourism industry supply-chains that involves the production of handicrafts among seven villages in A Doit Commune with 387 households and a population of 2,070 people. The commune is predominantly populated by the Ta Oi ethnic group, but also contains smaller numbers of Katu and Kinh families. The models aim to demonstrate:
• the approach and methodology that should be applied to evaluating and implementing effective pro-poor tourism initiatives at the local level within provinces, prefectures, counties and districts; • how the volume of poverty reduction generated through tourism can be boosted
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substantially beyond the simple CBT model used in the past; • how to ensure participation and ownership of the development and operation of pro- poor initiatives by local communities with outsiders as development partners-most especially the private sector in the area of marketing; • how to secure and conserve key tourism cultural and natural assets in the provinces through alternative livelihood development; • how to ensure that women and ethnic minorities are given equitable opportunities to participate in and benefit from the tourism economy; and • how to build a community-based monitoring and evaluation system.
226. The model provides a body of knowledge and experience on poverty reduction through tourism that can be replicated in other provinces of the participating countries and throughout the GMS. To achieve these outcomes, the subproject will: (i) prepare a community-based tourism tour product development and awareness program; (ii) identify and develop tourism industry related supply chain opportunities; (iii) undertake capacity building for tourism- related local micro-enterprises and communities; (iv) design and implement small-scale tourism-related infrastructure; (v) prepare and implement a gender development participation program; (vi) prepare and implement an ethnic minorities’ participation program; (vii) prepare and implement a marketing and promotion program; (viii) encourage the promotion of community-based tourism networks and tourism stakeholder associations; (ix) develop and implement a project performance monitoring system; and design and publish a manual to guide the preparation and implementation of pro-poor tourism initiatives in each country.
2.3.3 Market Analysis
227. Thua Thien Hue Province, within which the A Luoi District is located, received a total of 1.05 million visitors in 2005, of which 369,000 were international visitors and 681,000 were domestic visitors. The number of annual arrivals has increased by over 100% since 2000 with international visitors growing at an annual average rate of 12.2% between 2001 and 2005 and domestic visitors growing at 4.9% per annum over the same period. The province is targeting a total of 2.5 million visitors annually by 2010. The province’s main attractions are its tangible and intangible cultural heritage among which are included the nineteenth- century walled citadel, the remnants of its Imperial City, the seven palatial Royal Mausoleums and its rich and diverse remotely located ethnic minority cultures. A Luoi District boasts as its main attractions its extensive primeval forest areas, its revolutionary relics, its battle site remnants, the highly scenic Truong Son range, and its ethnic minorities groups with preserved customs and traditions and its location on the historic Ho Chi Minh Trail-considered to be favorable for developing eco-tourism, cultural and historical tourism. Luoi visitor arrivals numbered an estimated 22,580 in 2005 of which 12,580 were day visitors and 10,000 were overnight visitors. Day visitors are estimated to have comprised 4,200 international and 8,380 domestic travelers respectively, while overnight visitors are estimated to have comprised 1,400 international and 8,600 domestic travelers respectively.
228. Based upon the expected growth in tourism arrivals to the province, improvements in access to the A Luoi District and continued implementation of its tourism development plan, Table 16 shows the A Luoi District Tourism Office forecasts of international and domestic tourist arrivals to 2020.
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Table 16: Forecast of Visitor Arrivals to A Luoi District
Year 2005 2010 2015 2020 International Visitors 5,600 9,139 13,429 19,732 Domestic Visitors 16,980 31,462 42,103 56,342 Total 22,580 40,601 55,531 76,074 Source: Appendix 4
229. A growing proportion of visitors will be middle income groups and freely independent travelers seeking mainly natural, cultural and historic tourism sightseeing experiences; and back-packers seeking natural, cultural tourism and adventure tourism experiences including staying in ethnic villages. The level of demand that the proposed pro-poor tourism initiatives will generate in terms of the sale of community-based-tourism (CBT) and other packages, and the supply chain-based sales of handicraft in the district, based on survey and experience from other locations in the GMS is shown in Table 17.
Table 17: Forecast Volume of CBT and Supply Chain Activity in A Luoi District
Year 2011 2012 2013 2014 2015 Total Visitors 43,220 46,010 48,984 52,154 55,531 Community-Based-Tourism Activity - Forecast CBT Packages Sold 2,119 2,261 2,413 2,576 2,749 Supply-Chain-Based Activity - Forecast On-Site Sales of Handicraft 43,220 46,010 48,984 52,154 55,531 - Forecast Value of Off-Site Sales of Handicraft for A Doit Commune $215,500 $226,275 $237,589 $249,468 $261,942 Source: Appendix 5
230. To measure demand for the type of cultural products being produced in A Doit Commune comprising contains 7 villages with 387 households and a population of 2,070 people, surveys of handicraft market vendors and souvenir shop owners in Da Nang and Hoi An (n = 41), Hue City (n = 33) and Hanoi (n = 26) were conducted as part of the project preparation assessment. Retailers were shown photographs of the type of handicrafts that are being produced in A Doit, and shop owners in Da Nang and Hoi An reported that they could sell 3,100 pieces of merchandise per month, in Hue 2,170 pieces and in Hanoi, 3,825 pieces. Based on the median wholesale prices that the shop owners in the three surveyed locations would pay village producers for the variety of bags, textiles and other products they make, the total potential gross revenue stream for A Doit is US$17,962 per month or US$215,544 per annum.
2.3.4 Site Management and Cost Recovery
231. Tourist facilities developed under this subproject are ‘pro-poor tourism service complexes’ that including district or provincial visitor information centers and local goods markets, preferably located on the same plot of land. Small-scale village and district level infrastructure such as community lodges, river piers, walking trails, sanitary facilities, viewpoints and signage may also be constructed under the subproject. In at least one district of each target province, one small inbound community-based tour (CBT) Guide Service will be established that is operated under the supervision of a Pro-poor Tourism Management Committee (PTMC) consisting of the A Luoi District Tourism Office, Culture and Information Office, Department of Industry and leaders from communities included in the CBT tours. The PTMC will collect fees from the Guide Service including a CBT access permit fees; a tourism promotion fee equal to a percentage of all CBT tours sold by the Guide Service; manage revenues that the supply-chain initiatives will generate including an annual concession fee from the small stall local goods markets that will be constructed under
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the project in each province, as well as a marketing and promotions fee imposed on crafts and produce sold.
3.0 PART 3: FACILITATION OF TOURISM COMPONENT:
232. The provision of tourist information, booking and reservation services, better visitor amenities, enhanced sense of arrival and faster border crossing processing times through better equipment and border staff morale would do much to facilitate the flow of tourism across the land borders by building the image of the country and the GMS, developing local tourism economies, and spreading the benefits of tourism more widely through longer stays and expenditures. Part 3 of the project will develop a detailed model for improving border facilities and services for tourists and for tapping the opportunity provided by the Economic Corridors for developing attractions at strategic locations. The borders subcomponent of Part 3 will be undertaken in Cambodia and Viet Nam, while the development of tourist attractions along the Economic Corridors roads will be undertaken in all the participating countries. As with the pro-poor component, it is not intended to undertake a detailed feasibility investigation of all sites under the facilitation subcomponents, but rather to use one site to demonstrate a model approach that can be replicated elsewhere in the participating countries.
3.1 FACILITATION OF TOURISM DEVELOPMENT AT GMS LAND BORDERS
3.1.1 Location of Proposed Land Border Tourism Interventions
233. Improvements to land border facilities have been proposed by Cambodia, Viet Nam, Guangxi Zhuang Autonomous Region and Yunnan Province in China, and as part of the development of attractions along economic corridors in Lao PDR. The criteria used by the participating countries to select the borders are set out in Appendix 3.
234. Cambodia has proposed the following land borders for priority attention in this project:
• Poi Pet in O’Chrov District, Banteay Meanchey Province opposite Ban Klong Luek border point in Arenyaprathet District, Sa Kaeo Province, Thailand; • Prom in Pailin Province on the border with Thailand opposite Takra in Chanthaburi Province; • Cham Yeam in Mundul Seima District, Koh Kong Province opposite Hat Lek in Khlong Yai District, Trat Province, Thailand; • O’smach in Samrong District and Chorm in Anlong Veng District, Odor Meanchey Province opposite Chong Chorm in Kab Choeng District in Surin Province and Phu Sing District in Si Sa Ket Province of Thailand; • Don Kralor in Thala Barivat District, Stung Treng Province opposite Voeun Kham border in Muang Khong District, Champasak Province in Lao PDR; • Phnom Den in Kirivong District, Takeo Province opposite Tin Bienh in Tin Bien District, Ang Giang Province in Viet Nam; • Trapaing Phlong in Pohneakret District, Kampong Cham Province opposite Xamat border in Tin Bienh District, Ninh Province in Viet Nam; and • Prek Chak in Kampot Province opposite Ha Tien in Kien Giang Province in Viet Nam.
235. Except for Phnom Den, Trapaing Phlong and Prek Chak, all the proposed border points offer visa on arrival. The others require pre-arranged visas to enable visitors to enter.
236. Lao PDR has proposed upgrading of tourist facilities at the two main borders on the North- South Highway at Boten in Luang Namtha Province opposite Mohan in Xishuangbana Prefecture in Yunnan Province, China; and at Houei Xai in Bokeo Province opposite Chiang
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Khong in Chiang Rai Province, Thailand. In addition, a new border terminal facility is proposed to be developed on Highway 13 at Veun Kham in Champasak Province, opposite Dong Kralor in Stung Treng Province in Cambodia. Visa on arrival facilities are available at Boten and Houei Xai but not at Veun Kham at this point in time.
237. Viet Nam has proposed the following land border points for priority attention in this project:
• Ha Tien in Kien Giang Province opposite Prek Chak in Kampot Province in Cambodia on the Southern Economic Corridor; • Moc Bai in Tay Ninh Province opposite Bavet in Svay Rieng Province in Cambodia on the Southern Economic Corridor; • Le Thanh in Gia Lai Province opposite Ratanakiri Province in Cambodia in the Development Triangle of the Central Highlands with Cambodia and Lao PDR; • Bo Y in Kon Tum Province opposite Yalakhuntum in Attapeu Province in Lao PDR in the Development Triangle of the Central Highlands with Cambodia and Lao PDR; • Lao Bao in Quang Tri Province opposite Dansavanh in Khammuan Province in Lao PDR on the East West Corridor with Lao PDR; • Chalo in Quang Binh Province opposite Ban Na Phau in Khammuan Province in Lao PDR on the East West Corridor with Lao PDR; and • Nam Xoi in Thanh Hoa Province opposite Na Meo in Houaphan Province in Lao PDR on the East West Corridor with Lao PDR.
238. Border terminal improvements are currently under way at Lao Bao which involves the construction of a GMS one-stop-check border terminal on the East-West Corridor, at Nam Xoi where a new terminal building is being constructed opposite a newly completed terminal at Nam Meo on the Lao side. Transit into Viet Nam through the nominated border check points in Viet Nam require visas to be arranged prior to arrival.
3.1.2 Land Border Tourism Facilitation Demonstration Model
(a) Background and Desired Outcomes
239. The standard flow pattern at the borders in the participating countries is for tourists to move to the immigration and customs terminal through the border zone to complete the necessary forms and submit these with photographs and fees for processing where visa on arrival is available or submit arrival forms and passports with previously arranged visas. After this, tourists clear customs and then move out of the border frontier area either by bus, car, or other means of transportation. In the case of the new GMS one-stop-check border points such as that being constructed at Lao Bao in Viet Nam on the East West Corridor and planned at Prek Chak in Cambodia on the Southern Economic Corridor, the only difference is that the above entry formalities will be processed in the country of departure after which tourists will move straight through the opposite country terminal unless there is a reason for them to stop for information, booking of transportation and accommodation, money exchange, use of toilets, etc. In each case, tourist information, booking, reservation and other services will need to be provided at the end of existing or new land border terminals or in the process, i.e. at the end of the immigration and customs border terminal either in the form of an extension or a stand alone structure at or near the car park.
240. Although the scale of development at existing border points will vary from border to border, the basic package of developments at each type of site would remain essentially the same. This scalability and replicability makes it possible to use two demonstration models to illustrate and define an overall approach to improving the nominated land borders from a tourism point of view in the participating countries and the GMS as a whole. To illustrate the approach to the improvement of existing border facilities from a tourism point of view, and
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for developing new border points with tourism facilities built-in, two points have been selected as demonstration models: (1) Prek Chak on the border with Viet Nam in Kampot Province to illustrate the approach to providing tourist information and support facilities at new GMS one-stop-check border terminals, and (2) at Phnom Den in Takeo Province, also on the border with Viet Nam to illustrate how to incorporate tourist facilities and services at existing border points. These reflect the type and scale of land border port facilities to be found in the participating countries and provide a good basis for demonstrating the specific responses to improving tourist facilities and services and formalities processing at land border entry ports in the GMS countries. The two border models aim to:
• develop scalable and replicable approaches to improving border facilities and speeding up processing formalities from a tourism point of view; • build a more favorable image and sense of arrival in the participating countries as tourist destinations within the GMS; • contribute to the development of local tourism economies through enhanced information on what to do and see in the area and to book transportation, accommodations and tour services; and • spread the benefits of tourism more widely through longer stays and expenditures in the participating countries and in the GMS.
241. The models will provide a body of knowledge and experience on how to improve tourist facilities and services, and speed up border processing formalities that can be replicated in the nominated sites of the participating countries and throughout the GMS.
(b) Subproject Components and Outputs
242. To achieve these outcomes, the subproject will: (i) prepare a tourism structure and management plan for the model borders; (ii) design and construct landscaping and access improvements; (iii) install signage and interpretative materials; (iv) construct tourist information centre facilities; (v) construct parking and toilets; (vi) design and implement training of border personnel in tourism hosting and servicing; (vii) provide equipment for tourist information and immigration and customs functions; (viii) improve terminal building aesthetics and function through renovation; and design and implement a monitoring and evaluation system.
(c) Market Analysis
243. The 17 international points of entry of which 13 are land borders between Cambodia and Thailand, Lao PDR and Viet Nam received 533,433 international arrivals in 2005. The annual average growth rate of international arrivals at Cambodia’s’ land border checkpoints has been 23.5% between 2002 and 2005 and shows signs of accelerating significantly as access conditions improve, terminal facilities are upgraded, new ones constructed and tour operators develop more confidence in directing tours across the borders into Cambodia. Table 18 gives a forecast of the likely volume of international arrivals across the nominated border points between 2006 and 2015 based on a review of the factors influencing the growth of arrivals.
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Table 18: Cambodian Border Foreign Passport Holders Inbound Forecasts
Border Checkpoints 2006 2010 2011 2012 2013 2014 2015 Poipet 343,652 991,358 1,084,248 1,185,842 1,296,955 1,418,480 1,551,392 Cham Yeam 24,360 58,494 63,975 69,970 76,526 83,696 91,539 O'smach 5,753 33,724 36,884 40,340 44,120 48,254 52,775 Chorm 1,043 10,922 11,945 13,064 14,289 15,627 17,092 Phnom Den 2,274 16,675 18,237 19,946 21,815 23,858 26,093 Traipang Phlong 3,706 7,632 8,347 9,129 9,985 10,920 11,943 Dong Kralor 9,319 38,459 42,062 46,003 50,314 55,028 60,185 Prom 864 20,736 22,679 24,804 27,128 29,670 32,450 Prek Chak 0 58,494 63,975 69,970 76,526 83,696 91,539 Total 390,972 1,236,493 1,352,353 1,479,068 1,617,657 1,769,231 1,935,007 Source: Appendix 4, Section 4.0
244. Beyond 2015, the long-term annual growth of arrivals is likely to be around 8% per annum. d) Site Management and Cost Recovery
245. The operation and maintenance of the border tourism facilities shall be the responsibility of the Provincial Tourism Offices (PTOs) in which the border facilities are placed. The PTO shall establish a management committee that will be responsible for recovering the cost of operations and maintenance of the border tourism facilities either through a terminal fee to be collected prior to clearing immigration and customs on departure and/or through revenues generated from the tourism information through concessions, sale of literature, and commissions on hotel and transportation bookings.
246. At the Third Subregional Workshop held in Vientiane, Lao PDR on February 2007 to discuss the Draft Final Report, it was noted that the Border Output of the Project would likely experience considerable implementation delays (as has already occurred in the MTDP) because of regulatory restrictions on tourism development within border precincts. For this reason, the country stakeholders agreed to drop the Border component of the Facilitation of Tourism Output from the scope of the Project.
3.2 FACILITATION OF TOURISM DEVELOPMENT ALONG ECONOMIC CORRIDORS
247. Development of new, and upgrading of existing tourist attraction points along the GMS Economic Corridors, have been proposed by all the participating countries. Cambodia has proposed developments along the Southern Economic Corridor linking Bangkok in Thailand with Ho Chi Minh City in Viet Nam; Lao PDR has proposed developments along the North- South Economic Corridor linking Kunming in Yunnan Province, China with Bangkok in Thailand; Viet Nam has proposed developments along the East-West Economic Corridor linking Myanmar, Thailand and Lao PDR with Central Viet Nam.
248. In Cambodia, the Southern Economic Corridor transverses the coastal provinces between the Thai border at Koh Kong City and the Prey Chak border crossing with Viet Nam in Kampot Province. The Corridor passes through the provinces of Koh Kong, Sihanoukville, Kep and Kampot. Seven sites are proposed for development. The sites are, from north to south: construction of the Koh Kong City Visitor Information Center, construction of the Phnom Penh National Tourist Information Center, Exhibition Center and Night Market, establishment of the Cardamom Mountains Protected Area Network Ecotourism Circuit, improvement of access and upgrading of facilities and interpretation at Teuk Chhu Waterfall, construction of Tourist Information Centers in Kampot and Sihanoukville and upgrades of access and presentation of the caves in Kampong Trach, Kampot Province
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249. In Lao PDR, it is proposed to develop 5 tourist attraction sites and 2 immigration checkpoints located along the North-South Economic Corridor (route 3) in Namtha and Vieng Phoukha Districts of Luang Namtha Province. The proposed sites include: (i) the Nam Ha National Protected Area Interpretation Center and Concession Area at Chalensouk Village, (ii) Nam Eng Cave Complex and Picnic Area, (iii) Vat Mahaphot and Associated Ancient Historic Sites Interpretative Trail, (iv) Bor Kung Nature Park and (v) Nam Phae Village Scenic Viewpoint. Modest improvements to the border checkpoints at Boten and Houi Xai to make the facilities more tourist-friendly will also be included in the subproject.
250. In Viet Nam, The East-West Economic Corridor (EWEC, route 9) in Viet Nam is located entirely within Quang Tri Province. Four areas and thematic signage have been earmarked for development under the subproject by the Quang Tri Provincial People’s Committee. The proposed developments are the: (i) Dong Ha City Visitor Information Center and Commercial Area, (ii) Kalu Hot Springs and Recreation Area; (iii) Cat Cultural Village; and (iv) Ke Sanh Combat Base (Ta Con) Historic Site, and (v) Quang Tri Heritage Trail Thematic Signage and Roadside Layovers. To ensure that local people are able to participate in and benefit from tourism development, and that the benefits of tourism are spread widely to communities along the EWEC, the subproject will train local people how to manage and operate new, and where appropriate, existing tourist sites.
3.2.1 Economic Corridor Tourist Attraction Developments Demonstration Model
(a) Background and Desired Outcomes
251. To demonstrate the approach to developing tourist attractions adjacent to the GMS Economic Corridors in the participating countries, the section of the North-South Economic Corridor in Lao PDR has been selected as the model. This model is reasonably representative of the types of environments, tourist attractions, and local communities likely to be found along the economic corridors in the participating countries and deals with the most challenging aspect of tourism in the GMS economic corridor development program, i.e. how to capture tourist traffic off a relatively short section of a main economic corridor highway running between two major growth centers such a Bangkok and Kunming.
252. The subproject targets 5 tourist sites and 2 immigration checkpoints located along the North- South Economic Corridor (route 3) in Namtha and Vieng Phoukha Districts of Luang Namtha Province. All tourist sites proposed under the subproject are in Luang Namtha Province within 500m of the new road alignment. There are two international immigration checkpoints at each end of the corridor; one at Boten in Luang Namtha (China-Lao PDR) and one at Houei Xay in Bokeo (Thailand-Lao PDR). At present, because nearly no tourists stop to visit the subproject’s identified sites of interest because of lack of access and facilities, there are few opportunities for communities to participate in and capture economic benefits from the tourism industry. The subproject will therefore prepare local communities in and adjacent to the sites to participate in and benefit from tourism, effectively conserve natural and cultural resources, operate concessions, and develop the capacity of site managers and provincial and district tourism staff to manage and interpret the cultural and natural heritage values at the selected sites.
253. The Facilitation of Tourism on Economic Corridor model aims to:
• create economic opportunities for local communities located along the corridors, lengthen the time tourists spend in participating countries, reduce poverty, and create jobs, especially for women and ethnic minorities; • protect the integrity of the natural and cultural heritage at the sites by installing
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appropriate infrastructure and management systems; • develop interpretative materials and displays to add value, understanding, and appreciation of the selected sites; • improve tourist processing procedures and tourist information displays at the gateway borders (in the case of Lao PDR, the Boten and Houi Xay immigration checkpoints)
254. The model will provide a body of knowledge and experience on how to develop attractions along the GMS Corridors that can be replicated by the participating countries throughout the GMS.
(b) Subproject Components and Outputs
255. To achieve these outcomes, and using Nam Eng Cave Complex and Picnic Area as a specific case, the project will: (i) prepare a tourism development and management plans for the site; (ii) design and construct infrastructure including access roads, parking lots, ticket booths, information centers, walking trails, markets, interpretation and sanitary facilities; (iii) undertake community preparation and livelihood support programs; (iv) provide tourism management training for site managers and local tour-guide training program; (v) develop and implement a marketing and promotion program; (vi) publish and circulate a manual of procedures and practices for developing tourist attractions adjacent to economic corridors in the GMS; and (vi) prepare and implement an impact monitoring and evaluation program.
(c) Market Analysis
256. A review of the international and domestic tourism markets that the proposed attractions along the North-South Economic Corridor could expect to draw indicates that these will comprise a combination of international and domestic markets making Luang Namtha Province their main destination, and transit tourists passing along the Economic Corridor between China and Thailand once the current road works are completed. Based on forecasts of the likely composition and size of these markets to 2015, and estimates of the expected distribution of visitors between the sites as set out in Appendix 5, Table 19 shows the expected volume of visitors based on their willingness to pay a rate equal to or greater than the entry rate required to recover the projected annual O&M costs.
Table 19: Forecast Volume of Visitors to Proposed Attraction Sites on the North-South Corridor
Year 2011 2012 2013 2014 2015 Nam Ha NPA Interpretation Center 22,019 24,556 27,425 30,673 34,356 Nam Eng Cave 22,019 24,556 27,425 30,673 34,356 Vat Mahaphot Historic Site 8,257 9,209 10,284 11,502 12,883 Bor Kung Nature Park 8,257 9,209 10,284 11,502 12,883 Nam Phae Village Scenic Site 8,257 9,209 10,284 11,502 12,883 Total 68,809 76,738 85,703 95,854 107,361 Source: Appendix 4
257. Beyond 2015, it is assumed that the volume of international tourists visiting the sites is assumed to be capped at the 2015 rate as a measure to protect the environment of the sites. This will be achieved through the pricing mechanism.
(d) Site Management and Cost Recovery
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258. Tourist facilities developed under this subproject will be managed by the Luang Namtha North-South Economic Corridor Management Committee consisting of the Provincial Tourism Office, Nam Ha NPA Management Unit, Vieng Phoukha District Tourism and Information and Culture Office and community leaders from Chalensouk, Nam Eng, Dong Vieng and Nam Pae Villages. The subproject will focus on building the Management Committee’s capacity to operate the site during project implementation and involve an international NGO or development partner (ADB, UNESCO, EU, GTZ, ADRA and WCS are active in the area) from the onset of project implementation to provide ongoing management training and support once the project is complete. The Committee’s revenue will come primarily from entrance and concession fees charged at the various attraction sites on the North-South Economic Corridor.
259. A detailed description of the subproject and developments planned for the economic corridors in participating countries is shown in Appendix 4.
PART 4: HUMAN RESOURCE DEVELOPMENT COMPONENT
260. Part 4 of the project will create a pool of master trainers to meet training needs in the area of small-scale tourism and hospitality operation and in public sector tourism management. The master trainers will train trainers in each participating country who in turn will train operators and staff in small-scale hospitality enterprises, and public sector officials responsible for tourism management at the national, provincial and site level. The two subcomponents under Part 4 will be undertaken in all participating countries with funding based on grants to be arranged with selected donors.
4.1 Sub-Component 4.1: Creating a Pool of Master Hospitality Trainers
(a) Background and Problems Being Addressed
261. The need to have quality service standards in small hotels, guest houses and other stand alone lodging accommodations as well as in restaurants and other tourist-oriented establishments such as souvenir shops located in the main tourism centers is regarded as critical to the competitiveness of the more remote provinces and tourist centers where the poor are often located- especially in tourist-oriented establishments in the tourist priority zones where tourism potential is high but people are poor. People living there, especially women and ethnic communities can be employed in tourist-oriented establishments, given the proper skills training. However, as noted in the Strategic Project related to this issue in the GMS Tourism Sector 2006-2010 (TA6179-GMS), there is a dearth of experienced and qualified trainers to undertake this task in all the participating countries, and the required standards and support structures are not in place. It is estimated that at least 20 trainers per country per annum need to be trained for the next five years, with women constituting, as far as practicable, 50% of the trainers.
262. Two approaches to implementing this subproject were considered: (i) undertaking of the preparatory work, master trainer training and cascade training of trainers at one institution in each country; or (ii) undertaking of the preparatory work, master trainer training in one center of the participating countries, and tasking the cascade trainer training to specific institutions in each participating country. A review of the two alternatives suggests that the first option would provide a more standardized, coordinated, cost effective and efficient approach and has been selected as the approach that should be adopted. These required activities as well as the development of the train the trainers programs for the master trainers will be conducted in English in a common centre in one of the participating countries, but the echo or cascade trainer programs will be conducted in each country in the national language
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at a selected institution. This will ensure that owners of the smaller lodging establishments and restaurants/F & B outlets will also have the opportunity to be trained as trainers.
263. The following within participating country institutions were identified as being potentially able to perform the role of the center to train the master trainers for tourism vocational skills: the Paul Dubrule School of Hospitality and Tourism in Siem Reap; the Pakpasak Vocational College in Vientiane City in Lao PDR; at the Viet Nam Institute of Tourism, in Hanoi, Viet Nam; at the Guilin Institute of Tourism, Guilin, Guangxi Zhuang Autonomous Region, China; and at the Yunnan Provincial Tourism School, in Kunming, Yunnan Province China. A review of the capacity and degree of orientation to the tourism SME sector of these nominated institutions suggested that the Paul Dubrule School of Hospitality and Tourism in Siem Reap would be the best location for the centralized master trainer training function of developing the necessary trainer and training standards, materials and manuals, and training of the master trainers; as well as undertake the cascade training function for Cambodia. This facility has some of the most modern tourism vocational training facilities and systems in the GMS; has an excellent track record of vocational training with training staff of the highest caliber; is more orientated at small and medium tourism and hospitality enterprise vocational training; is based in a major tourist destination with significant pro-poor tourism development initiatives in the surrounding region; and is centrally located in terms of accessibility from the other participating countries. The cascade training program will be undertaken in all other participating countries and provinces at the following institutions: at Pakpasak Vocational College in Vientiane City in Lao PDR; and at the Hue Tourism School, in Hue City, Viet Nam.
(b) Subproject Components
264. In the above context, the subproject aims to:
• ensure a consistent quality of service in the participating countries so that they will attract tourists who will stay longer, spend more, and who will undertake repeat visits. • develop a corps of master skills trainers in hospitality, 50% of whom, as far as practicable, are women, who will train other trainers in their respective countries in a cascade effect; and • put in place the trainer capacity to train skilled staff in small scale tourism and hospitality enterprises at the required standards and volume in each participating country/province.
(c) Components and Outputs
265. To achieve these outcomes, the project will: (i) prepare a training needs assessment for staff in small-scale hospitality establishments in the participating countries; (ii) develop service standards for SME tourism and hospitality enterprises and related training standards based upon ASEAN models; (iii) develop gender sensitive training manuals in F & B Service, Cookery, Housekeeping, Bartending, Front Office Reception; Security and Safety following international/ASEAN competency standards; (iv) produce teacher training kits on how to train according to competency standards; (v) produce CD ROMs and web-based training materials; (vi) create a web-based “Knowledge Centre’ which will be accessible to a wide audience in the participating countries; (vii) produce translated versions of the foregoing in the languages of the participating countries; (viii) undertake the training of master trainers; (ix) provide support to the identified institutions that will undertake cascade training of industry trainers in each country; and (x) develop and implement with the support of the participating country institutions, a program monitoring and evaluation system. Outputs (i) to (viii) and (x) will be undertaken at the Paul Dubrule School of Hospitality and Tourism in Siem Reap, and output (ix) will be undertaken at the nominated institutions in the other
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participating countries. The Paul Dubrule School of Hospitality and Tourism in Siem Reap will also undertake the cascade training of local trainers.
266. To support the development of the cascade training program in the nominated institutions in the other participating countries, the project will: (i) assist in arranging the accreditation of the train the trainer courses in the participating country; (ii) help to renovate required training areas and facilities; provide necessary training equipment and materials; (iii) fund the hiring of the master trainers; (iv) fund the production of training manuals and teaching materials in the local languages; (v) provide scholarship support for industry experienced personnel and trainers seeking to upgrade their training skills to attend the training courses; and (vi) assist in implement the reporting system for monitoring and evaluate the impact of the project linked to the common center.
4.2 Sub-Component 4.2: Creating a Pool of Master Trainers for Training of Public Sector Tourism Officials
(a) Background and Problem Being Addressed
267. As noted in the Strategic Project related to this issue in the GMS Tourism Sector 2006-2010 (TA6179-GMS), interviews, stakeholder consultations, and desktop research found that middle level public sector officials at the national and provincial tourism organizations and other government agencies whose work has an impact on tourism, need capacity building/training in sustainable tourism development and management. However, the necessary standardized training material, trainer capacity to provide the training of public sector officials, and suitable training venues are currently not in place in the participating countries. The following education and training institutions were considered to undertake the training of trainers’ activities: the Royal Academy of Cambodia based in Phnom Penh; the Faculty of Social Science, Department of Tourism and Hotel Management in the National University of Laos; the Viet Nam Institute of Tourism, in Hanoi, Viet Nam.
268. Two approaches to implementing this subproject have been considered: (i) undertaking of the preparatory work, master trainer training and cascade training of trainers at an institution in each country; or (ii) undertaking of the preparatory work, master trainer training in one center of the participating countries and tasking the cascade trainer training to specific institutions in each participating country. A review of the two alternatives suggests that the first option would provide a more standardized, coordinated, cost effective and efficient approach and has been selected as the approach that should be adopted. Based on a review of the nominated institutional capacities of the participating countries including the recently expanded Guilin Institute of Tourism in Guangxi Zhuang Autonomous Region in the People’s Republic of China, it was considered that on the basis of its extensive tourism education training facilities and staff, its use of the English language for management training and its designation as a UNWTO center for tourism education in the Asia Pacific Region, that the Guilin Institute of Tourism may be best placed to undertake the centralized master trainer training function; while the nominated institutions in the participating countries take responsibility for sending their trainers for training as master trainers and arranging for cascade training of trainers in their borders.
(b) Subproject Outcomes
269. In this context, the subproject aims to:
• create a standardised approach to the training of public sector officials concerned with tourism;
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• develop a corps of middle level public officials in each of the GMS countries who are tourism specialists, especially in the participating countries and in GMS tourism; and • exchange ideas and experiences in tourism in GMS/Asia, thus enriching the dialogue on tourism development and management.
(c) Components and Outputs
270. To achieve these outcomes, the subproject will: (i) undertake a training needs analysis (TNA) in participating countries; (ii) develop customized training programs based on the TNA; (iii) develop teacher training materials and case studies; (iv) create reading materials on best practices/lessons learned; (v) develop teacher training kits or manuals; (vi) produce CD ROMs and other digitized training materials; (vii) translate all teaching materials into the languages of the participating countries; (viii) develop and maintain a web-based “Knowledge Centre” accessible to anyone interested in GMS tourism development; (ix) train master trainers from the participating countries at the Guilin Institute of Tourism; (x) provide support to the identified institutions that will undertake cascade training in each participating country; and (xi) develop and implement with the support of the participating country institutions, a program monitoring and evaluation system. Outputs (i) to (ix) and (xi) will be undertaken by the Guilin Institute of Tourism in Guilin, and output (x) will be undertaken at the nominated institutions in the other participating countries.
271. To support the development of the cascade training program in the nominated institutions in the other participating countries the project will: (i) assist in arranging the accreditation of the train the trainer courses in the participating country; (ii) help to renovate required training areas and facilities; provide necessary training equipment and materials; (iii) fund the training of the master trainers; (iv) fund the production of training manuals and teaching materials in the local languages; (v) provide scholarship support for industry experienced personnel and trainers seeking to upgrade their training skills to attend the training courses in country; and (vi) assist in implementing the reporting system for monitoring and evaluating the impact of the project linked to the common center.
D. SPECIAL FEATURES
1.0 SUBREGIONAL COOPERATION
272. The GMS Tourism Sector Strategy (TSS) recognizes that a cooperative approach to tourism development is needed if the subregion’s member countries are to make significant progress – through tourism – toward the achievement of the MDGs. This Project builds on that principle through programs and institutional mechanisms that will enhance economic and social integration as well as multisectoral cooperation among the participating countries.
273. For this Project, all the subproject sites are located within GMS priority tourism zones identified in the TSS. These tourism zones are defined by areas with important natural and cultural heritage resources shared by two or more members of the GMS. In addition, almost all of these priority tourism zones are border areas that are home to ethnic minority communities that are often tied – culturally, economically, and socially – to the countries on both sides of the geo-political borders of the area.
274. The importance of border areas in the context of subregional tourism is recognized in two ways by the TSS. First, the border crossing points can either facilitate or constrain subgregional travel. The removal of burdensome immigration and customs procedures may encourage tourists to engage in multi-country trips within the GMS. Second, the border areas themselves can be venues for tourism activity in their own right. The Project will promote ease of travel across the land borders of the participating countries by upgrading the border
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facilities such that they are operated more like terminals for welcoming tourists than gates for filtering entrants into the country. In addition, the Project will enhance the core tourism product of border areas through the development of clusters of tourism attractions, facilities and services along the Economic Corridors that cross from one GMS country to the next.
275. The Mekong Tourism Coordination Office (MTCO) will serve as the overall coordination point for the Project. As the institutional successor to the Agency for Coordinating Mekong Tourism Activities (AMTA), MTCO is tasked to undertake extended functions beyond the marketing of the subregion as a single destination, but also to assist the countries to coordinate the implementation of the 29 strategic projects under the TSS and this project. This is an important new capability at the subregional level, and will greatly assist in the implementation of this project.
2.0 COUNTRY SPECIFIC LOANS AND SUBREGIONAL ASSISTANCE
276. The Project seeks to build capacity and promote equity through tourism in each of the participating countries, as well as in the GMS as a whole. As with the first Mekong Tourism Development Project (MTDP), this Project will involve loans, one each to the participating countries of the GMS. These loans are intended to strengthen each country’s ability to harness tourism for poverty reduction, sustainable resource use, and protection of vulnerable groups such as women, children, and ethnic minorities. In addition, the Project provides for grants to be applied to human resource development (HRD) programs for upgrading the capabilities of each country’s corps of tourism educators and trainers, as well as public sector tourism managers.
277. In addition, the Project seeks to promote greater participation and involvement of the private sector in tourism development within the GMS as a whole. Technical assistance has been provided to determine appropriate strategies for promoting public-private partnerships in marketing and product development, as well as facilitating increased private sector investment in small and medium tourism enterprises in the GMS – including the non- participating member countries. To this end, a Mekong Tourism Investment Forum was held in Ho Chi Minh City, Viet Nam in March 2007.
3.0 COST RECOVERY MECHANISMS AND FINANCIAL SUSTAINABILITY
278. Notwithstanding the policy that the loan funds for the subprojects may be passed on to the provincial agencies by the central government in the form of grants, cost recovery mechanisms will be built into all the tourism-related infrastructure projects to ensure their underlying sustainability. These cost recovery schemes (based on user charges, entrance fees and environmental levies) will as far as possible, be used to recover substantial portions of the capital and/or operations and maintenance (O&M) costs for each project. Surveys of foreign and domestic tourists are being conducted to validate their willingness to pay admission fees and other user fees at the different project sites. Similarly, surveys of commercial businesses and residents in the towns of Kracheh, Cambodia and Vang Vieng, Lao PDR are being conducted to assess their receptiveness to environmental user fees for the environmental management infrastructure proposed for their respective areas.
4.0 PRIVATE SECTOR PARTICIPATION
279. The approach to tourism development in the GMS is one that builds on partnerships between member countries, and between the public and private entities of the tourism sector. Through the MTCO, the member countries of the GMS are promoting greater involvement by the private sector in the marketing of the GMS as a single destination. Ultimately, the TSS envisions strong public-private partnerships, perhaps in the form of private sector-led
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convention and visitors bureaus, engaged in marketing and promoting tourism to each of the member countries.
280. However, for this Project, the priority will be to facilitate private sector investment in small and medium enterprises. These smaller enterprises are the kinds of businesses most needed and most appropriate for the scale and type of tourism development proposed for the priority tourism zones. Yet, financing support for these types of investments is very difficult to find given the traditional preference by governments and lending institutions for large-scale investment projects. This Project will seek to identify the constraints to SME investment in tourism within the GMS as a whole. It will also propose programs and mechanisms not only for investment promotion, but also for investor support and assistance.
5.0 POVERTY
281. Poverty reduction is an explicit goal of the Project, as well as of the country subprojects. Many of the project sites are in areas noted for higher incidences of extreme poverty. The Project directly addresses the issue of poverty in these areas by building on and expanding the Pro-Poor Tourism initiatives of the MTDP. The new model of pro-poor tourism adopted for this model recognizes the need to establish a critical mass of linked attractions, facilities, and support services for tourism activity to be sustainable. Thus, pro-poor tourism development in this Project will be undertaken on a larger destination scale rather than the village-level projects of the MTDP. The Project will seek to demonstrate a model of pro-poor tourism development based on clusters of poor communities rather than individual villages. The cluster approach allows communities without significant natural or cultural resources to indirectly participate in tourism through backward or forward linkages with destination communities. By strengthening these linkages, the economic impacts of tourism can be enhanced.
282. Another feature of the new Pro-Poor Tourism Development Model is a conscious effort to link the pro-poor tourism areas to the mainstream tourism sector of each country. The model views the pro-poor tourism attractions as components of the national and subregional tourism supply chains. If these destinations are not properly linked to the mainstream tourism sector, they will have a more difficult time gaining access to the international and domestic tourist markets.
6.0 GENDER DEVELOPMENT
283. Tourism is an industry that has great potential for increased employment and entrepreneurship opportunities for women. However, tourism can also be used to exploit women through unfair labor practices, prostitution, drug abuse, as well as exposure to HIV/AIDS and other sexually transmitted diseases. Thus, it is critical that the Project be able to protect women from the harmful aspects of tourism development, even as it seeks to maximize the economic benefits for women from participation in tourism.
284. A gender analysis is being undertaken to analyze the roles, responsibilities and needs of both men and women in the subproject sites. Based on this, gender action plans for each participating country will be developed – specifying actions that can be taken to enhance the roles of women and maximize the benefits to them from the Project.
7.0 RESETTLEMENT
285. Social impact assessments will be undertaken to determine the land acquisition and resettlement implications of each subproject. Resettlement plans will be prepared for all subprojects that are likely to require significant involuntary resettlement.
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8.0 ETHNIC MINORITIES
286. Almost all the pro-poor tourism development sites included in the Project are in areas with significant ethnic minority populations (e.g. Banah ethnic minority in the Gia Lai project in Viet Nam). As with the earlier discussion on women, ethnic minorities are in position to greatly benefit from the enhanced economic opportunities in tourism. However, they are also highly vulnerable to exploitation. In addition, tourism may pose a threat to their ways of life by corrupting or commercializing traditional practices, as well as competing with communities for scarce natural resources.
287. The Project, guided by ADB’s Indigenous People’s Policy, takes extra care to incorporate mechanisms for protecting and enhancing the value of the tangible and cultural heritage in the subproject sites. After close consultation with ethnic minority groups and other stakeholders, ethnic minority development plans will be drawn up for each participating country.
9.0 HUMAN RESOURCE DEVELOPMENT
288. The implementation of plans, programs and projects by the public sector aimed at sustainable tourism development, and the provision of quality service, especially by the small and medium tourist enterprises in the provinces outside the main tourist centers in the participating countries, is an essential prerequisite to building a more sustainable and pro- poor pattern of tourism. This requires strong human capabilities in the area of policy reform, planning, research, project management and administration at the public sector level and enhanced service and hygiene practices in the small and medium tourist enterprises. In this context, this project has identified a human resource development grant component that will contribute to these outcomes.
E. PROJECT INVESTMENT AND FINANCING PLAN
289. The detailed assumptions on the base costs supported by initial engineering design concepts and sketches for each subproject are set out in Appendix 6. The summary of the investment and financing plans at the country and overall Project level are presented below.
1.0 CAMBODIA
1.1 ASSUMPTIONS
290. Inflation and exchange rate6 assumptions for calculating price contingencies and project costs (based on purchasing power parity) are set out in Table 20, and assume international inflation of 1.2% from 2008 and domestic inflation of 3.7% from 2010 onwards over the project implementation period. The exchange rate Riels / US$ in 2006 of 4,000 is adjusted for the difference between foreign and local inflation, with foreign expenditure in local currency converted to US$ by the forecast exchange rate in the year of construction. This leads to a loss on foreign exchange and a reduced funding requirement when expressed in US$.
291. Physical contingencies are assumed at 10% with taxes and duties estimated at 8.5%, with domestic costs and local contracts including VAT at 10.0%.
6 Provided by Asian Development Bank
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Table 20: Inflation and Exchange Rate Assumptions
Year 2006 2007 2008 2009 2010 2011 2012 Foreign Inflation Rate 1.6% 2.8% 1.2% 1.2% 1.2% 1.2% 1.2% Local Inflation Rate 4.5% 3.5% 3.0% 3.4% 3.7% 3.7% 3.7% Exchange Rates - Riels 4000 4,114 4,142 4,216 4,308 4,414 4,523 Physical Contingencies: Foreign 10.0% Local 10.0% Taxes and Duties (% Total Base Costs) 8.5%
1.2 DETAILED PROJECT COSTS
292. The total costs of the Project are set out in Table 21, comprising three Sustainable Development subprojects, namely Peam Krasop, Sambo Pre Kuk and Kratie (Urban Development) ; the Pro-Poor Component covering four provinces; the Facilitation of Tourism Component comprising Southern Economic Corridor subproject; the Human Resources Development Component; and Project Implementation Component. Physical contingencies have been assumed at 10%, while price contingencies represent 6.7% of base costs and physical contingencies. Overall the Components amount to a total cost of $12.532 million. Of these, $7.607 million (61%) represent foreign costs and $4.925 million (39%) represent local costs.
Table 21. Cost Estimates by Components (US$ ‘000)
Component Foreign Local Total I Project Base Costs by Component A Sustainable Tourism Development Resettlement and Land Acquisition 0 100 100 Peam Krasop (Natural Heritage Site) 876 420 1,296 Sambo Pre Kuk (Cultural Heritage Site) 1,026 570 1,596 Kratie (Urban Development) 887 340 1,227 B Pro Poor Tourism Development Pro-Poor Projects 1,020 480 1,500 C Facilitation of Tourism Southern Economic Corridor 910 390 1,300 D Human Resources Development Human Resource Development 360 110 470 E Project Implementation Project Implementation 1,134 666 1,800 Subtotal 6,213 3,076 9,289 II Taxes and Duties 0 1,120 1,120 Total Base Cost 6,213 4,196 10,409 III Contingencies Physical Contingency 621 420 1,041 Price Contingency 458 309 767 Total Contingencies 1,079 729 1,808 IV Financing Charges Interest During Construction 315 0 315 V Total Costs 7,607 4,925 12,532 % of total costs 61% 39% 100% Source: Consultant estimate
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1.3 FINANCING PLAN
293. The proposed financing plan for the Project is set out in Table 22. The Government has requested ADB to provide a loan of $10.0 million equivalent from its Special Funds resources to finance about 80% of the total cost of the Project. The loan will finance the full amount of the foreign exchange costs of $7.607 million and about 49% of local costs amounting to $2.393 million. The Balance of subproject funding representing $2.532 million in local costs will be met by the Government. The ADB loan will have a maturity of 32 years, including a grace period of 8 years, and a service charge of 1% per year during the grace period and 1.5% thereafter. It is intended that the ADB loan, Bilateral grant monies, and Government contributions will be passed through as government grants to the respective implementing agencies.
Table 22: Tentative Financing Plan (US$ ‘000)
Percent US$ '000 FINANCING PLAN FX LC Total FX LC Total ADB - Loan 100.0% 48.6% 79.8% 7,607 2,393 10,000 Government -Equity 0.0% 51.4% 20.2% 0 2,532 2,532 Total 100.0% 100.0% 100.0% 7,607 4,925 12,532 % of total costs 61% 39% 100% Source: Consultant Estimates
2.0 LAO PDR
2.1 ASSUMPTIONS
294. Inflation and exchange rate7 assumptions for calculating price contingencies and project costs (based on purchasing power parity) are set out in Table 24, and assume international inflation of 1.2% from 2008 and domestic inflation of 5.0% from 2007 onwards over the project implementation period. The exchange rate Kip / US$ in 2006 of 10,000 is adjusted for the difference between foreign and local inflation, with foreign expenditure in local currency converted to US$ by the forecast exchange rate in the year of construction. This leads to a loss on foreign exchange and a reduced funding requirement when expressed in US$.
295. Physical contingencies are assumed at 10% with taxes and duties estimated at 8.5%, with domestic costs and local contracts including VAT at 10.0%.
Table 23: Inflation and Exchange Rate Assumptions
Year 2006 2007 2008 2009 2010 2011 2012 Foreign Inflation Rate 1.6% 2.8% 1.2% 1.2% 1.2% 1.2% 1.2% Local Inflation Rate 5.3% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Exchange Rates - Kip 10,000 10,364 10,586 10,983 11,396 11,824 12,268 Physical Contingencies: Foreign 10.0% Local 10.0% Taxes and Duties (% Total Base Costs) 8.1%
7 Provided by Asian Development Bank
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2.2 DETAILED PROJECT COSTS
296. The total cost of the Project are set out in Table 24, comprising three Sustainable Development subprojects, namely Siphandone Wetlands Natural Heritage Project, Vang Vieng Urban Development ; the Pro-Poor Component covering seven provinces; Facilitation of Tourism Component comprising North - Southern Economic Corridor subproject; the Human Resources Development Component; and Project Implementation Component. Overall these Components amount to $10.970 million with taxes and duties. Physical contingencies as noted above, are assumed at 10%, while price contingencies represent 6.7% of Base Costs (and physical contingencies). Of the total grant, $7.540 million (69%) represents foreign costs and $3.430 million (31%) represent local costs.
Table 24: Cost Estimates by Components (US$ ‘000)
Component Foreign Local Total I Project Base Costs by Component A Sustainable Tourism Development Siphandone Wetlands Natural Project 1,240 670 1,910 Vang Vieng Urban Development 890 400 1,290 Subtotal 2,130 1,070 3,200 B Pro Poor Tourism Development Bokeo Province 262 138 400 Houaphanh Province 262 138 400 Oudomsay Province 262 138 400 Saravanh Province 262 138 400 Vientiane Province 262 138 400 Xayabouly Province 262 138 400 Subtotal 1,570 830 2,400 C Tourism Corridors North South Corridor 615 315 930 East-West Corridor 245 125 370 Subtotal 860 440 1,300 D Human Resources Development Training Master Hospitality Trainers 200 60 260 Training Public Sector Tourism Officials 200 50 250 Subtotal 400 110 510 E Project Implementation 1. Consulting Services 860 280 1,140 2. Support to PCU/PIUs 410 110 520 3. Capacity Building 50 10 60 4. External Monitoring for Resettlement 5 10 15 5. External Financial Auditing of PCU/PIUs 10 10 20 6. External Monitoring and Evaluation 15 0 15 Subtotal 1,350 420 1,770 Total Base Cost a 6,310 2,870 9,180 III Contingencies Physical Contingency b 630 290 920 Price Contingency c 600 270 870 Total Contingencies 1,230 560 1,790 V Total Costs 7,540 3,430 10,970 % of total costs 69% 31% 100%
a Includes Taxes and duties
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b Physical contingencies (%): 10% c Price Contingencies computed at 6.7% of base cost (and physical contingencies); includes provision for potential exchange rate fluctuation under assumption of a purchasing power parity exchange rate.
Source: Asian Development Bank Estimates
2.3 FINANCING PLAN
297. The proposed financing plan for the Project is set out in Table 26. The Government has requested ADB to provide a grant of $10.000 million equivalent from its Special Funds resources to finance about 91% of the total cost of the Project. The Grant will finance all the foreign exchange costs of $7.54 million or 69% of total costs, and local costs of $2.460 million, 22% of project costs or 72% of domestic costs. The provision for local cost financing under the Grant is justified due to the country’s economic situation and project considerations to ensure timely provision of financing.
Table 25: Tentative Financing Plan (US$ ‘000)
Total Source Foreign Cost Local Cost % Cost Asian Development Bank 7,540 2,460 10,000 91.16% Government 0 970 970 8.84% Total 7,540 3,430 10,970 100.00% Source: Asian Development Bank
3.0 VIETNAM
3.1 ASSUMPTIONS
298. Inflation and exchange rate8 assumptions for calculating price contingencies and project costs (based on purchasing power parity) are set out in Table 26, and assume international inflation of 1.2% from 2008 and domestic inflation of 5.0% from 2007 onwards over the project implementation period. The exchange rate VND / US$ in 2006 of 16,000 is adjusted for the difference between foreign and local inflation, with foreign expenditure in local currency converted to US$ by the forecast exchange rate in the year of construction. This leads to a loss on foreign exchange and a reduced funding requirement when expressed in US$.
299. Physical contingencies are assumed at 10% with taxes and duties estimated at 8.7%, with domestic costs and local contracts including VAT at 10.0%.
8 Provided by Asian Development Bank
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Table 26: Inflation and Exchange Rate Assumptions
Year 2006 2007 2008 2009 2010 2011 2012 Foreign Inflation Rate 1.6% 2.8% 1.2% 1.2% 1.2% 1.2% 1.2% Local Inflation Rate 6.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Exchange Rates - VND 16,000 16,693 17,050 17,690 18,355 19,044 19,759 Physical Contingencies: Foreign 10.0% Local 10.0% Taxes and Duties (% Total Base Costs) 8.7%
3.2 DETAILED PROJECT COSTS
300. The total cost of the Project are set out in Table 27, comprising three Sustainable Development subprojects, namely Phuong Nha Khe Bang National Park, Bac Kan Ethnic Heritage Support ; the Pro-Poor Component covering nine provinces; Facilitation of Tourism Component comprising East - West Economic Corridor subproject; the Human Resources Development Component; and Project Implementation Component. Overall these Components amount to $11.111 million with taxes and duties. Physical contingencies as noted above, are assumed at 10%, while price contingencies represent 6.7% of Base Costs (and physical contingencies). The total cost of the Project is broken down to $7.940 million (71.5%) representing foreign costs and $3.170 million (28.5%) representing domestic costs.
Table 27: Cost Estimates by Components (US$ ‘000)
Component Foreign Local Total I Project Base Costs by Component A Sustainable Tourism Development Phong Nga Ke Bang 1,381 668 2,048 Bac Kan Interprtation/Cultural Centre 1,021 545 1,566 Subtotal 2,402 1,213 3,614 B Pro Poor Tourism Development 5 Provinces 1,348 778 2,126 Subtotal 1,348 778 2,126 C Tourism Corridors East-West Corridor 810 401 1,211 Subtotal 810 401 1,211 D Human Resources Development Training Master Hospitality Trainers 187 50 237 Training Public Sector Tourism Officials 218 55 273 Subtotal 406 104 510 E Project Implementation 1. Consulting Services 1,155 0 1,155 2. Support to PCU 246 44 290 3. Support to PIUs 178 131 309 4. Capacity Building 26 7 33 5. External Monitoring for Resettlement 2 6 8 6. External Financial Auditing of PCU/PIUs 20 20 40 7. External Monitoring and Evaluation 20 0 20 Subtotal 1,648 207 1,855 Total Base Cost a 6,614 2,703 9,317 II Contingencies Physical Contingency b 661 270 932 Price Contingency c 484 198 682 Total Contingencies 1,145 468 1,613 Total Costs 7,759 3,170 10,930 III Financing Charges Construction Financing Charges 181 0 181 Subtotal 181 0 181 Total Costs 7,940 3,170 11,111
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Component Foreign Local Total % of total costs 71.5% 28.5% 100.0% a Includes Taxes and duties b Physical contingencies (%): 10% c Price Contingencies computed at 6.65% of base cost (and physical contingencies). Source: Asian Development Bank Estimates
3.3 FINANCING PLAN
301. The proposed financing plan for the Project is set out in Table 28. The Government has requested ADB to provide a loan of $10.0 million equivalent from its Special Funds resources to finance about 92% of the foreign exchange cost of the Project. The Human Resource Development Component totaling $856,000 (excluding taxes and duties of $50,000) will be financed by Bilateral Donors. The Balance of subproject funding representing $7.260 million will be met by the Government. The ADB loan will have a maturity of 32 years, including a grace period of 8 years, and a service charge of 1% per year during the grace period and 1.5% thereafter. It is intended that the ADB loan, Bilateral grant monies, and Government contributions will be passed through as government grants to the respective implementing agencies.
Table 28: Tentative Financing Plan (US$ ‘000)
Source Foreign Cost Local Cost Total Cost % Asian Development Bank 7,940 2,060 10,000 90% Government 0 1,111 1,111 10% Total 7,940 3,171 11,111 100% Source: Asian Development Bank
4.0 OVERALL PROJECT
4.1 PROJECT COSTS
302. In November 2007, the Government of Cambodia advised that it would not be in position to apply for loans in 2008. Thus, the Cambodia subprojects have been excluded in this summary of the overall Project costs.
303. The total cost of the Project are set out in Table 29, comprising the Sustainable Development subprojects in each Country; the Pro-Poor Component; Facilitation of Tourism Component; the Human Resources Development Component; and Project Implementation Component. Overall these Components amount to $38.240 million with taxes and duties accounting for a further 8.4 %, estimated at $3.220 million, giving a Base Cost of $41.460 million. Physical contingencies are assumed at 10%, while price contingencies represent 6.7% of Base Costs (and physical contingencies). Thus contingencies total $7.190 million or 17.3% of Base Costs. The Service Charge on the ADB loan of 1% on the funds drawn down of $898,000 represents 2.2% of Base Costs. Taken together contingencies and financing charges add 19.5% to Base Costs, resulting in a total to be financed of $49.548 million of which $30.218 million (61%) represents foreign costs and $19,330 million (39%) represents domestic costs.
304. Note, interest during construction (service charge) has been estimated at 1% on $10.0 million, with HRD funding provided as a grant by ADB or Bilateral Donors.
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Table 29: Project Investment Plan (US$ ‘000)
Part Foreign Local Total Cost Cost Cost a 1. Lao PDR A. Base Costs b Output 1 Sustainable Tourism Development 2,130 1,070 3,200 Output 2 Pro-Poor Tourism Development 1,570 830 2,400 Output 3 Tourism Corridors 860 440 1,300 Output 4 Human Resources Development 400 110 510 Output 5 Project Implementation d 1,350 420 1,770 Subtotal 6,310 2,870 9,180 B. Contingencies c 1,230 560 1,790 C. Financing Charges During Implementation 0 0 0 Total 7,540 3,431 10,970 2. Viet Nam A. Base Costs b Output 1 Sustainable Tourism Development 2,402 1,213 3,614 Output 2 Pro-Poor Tourism Development 1,348 778 2,126 Output 3 Tourism Corridors 810 401 1,211 Output 4 Human Resources Development 406 104 510 Output 5 Project Implementation d 1,648 207 1,855 Subtotal 6,614 2,703 9,317 B. Contingencies c 1,145 468 1,613 C. Financing Charges During Implementation 181 0 181 Total 7,940 3,171 11,111 3. Total Project 15,481 6,602 22,081 a Includes taxes and duties of b In mid 2007 prices c Physical contingencies including field research and development, training, surveys and studies have been computed at 10%. Price contingencies are computed at 6.65% of base costs (and physical contingencies).
d Includes the cost of Consulting Services Source: Asian Development Bank
4.2 FINANCING PLAN
305. The proposed financing plan for the Project is set out in Table 30. The Governments in each country have requested ADB to provide a loan of $10.0 million or US$20.0 million in total, or the equivalent from its Special Funds resources to finance the foreign exchange costs of
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the Project (60% of total costs) and a proportion of the local costs (21% of total costs)9. The Balance of subproject funding representing $4,595 million will be met by the Governments. The ADB loan will have a maturity of 32 years, including a grace period of 8 years, and a service charge of 1% per year during the grace period and 1.5% thereafter. It is intended that the ADB loan, Bilateral grant monies, and Government contributions will be passed through as government grants to the respective implementing agencies.
Table 30: Tentative Financing Plan (US$ ‘000)
Total Source Foreign Cost Local Cost % Cost 1. Lao PDR Asian Development Bank 7,154 2,847 10,000 84.75% Government 0 1,800 1,800 15.25% Total 7,154 4,647 11,800 100.00% 2. Viet Nam Asian Development Bank 7,747 2,253 10,000 78.16% Government 0 2,795 2,795 21.84% Total 7,747 5,048 12,795 100.00% 3. Overall Project Asian Development Bank 14,900 5,100 20,000 81.32% Government 0 4,595 4,595 18.68% Total 14,900 9,695 24,595 100.00%
9 These percentages look at the overall net funding rather than the fact that in Cambodia the Governemnt would have to finance a share of the foreign exchange costs.
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IV. PROJECT IMPLEMENTING ARRANGEMENTS
A. REVIEW OF PRIOR IMPLEMENTING ARRANGEMENTS
306. The participating governments of Cambodia, Lao PDR, and Viet Nam have as their primary goal, the promotion of sustainable socioeconomic development that focuses upon poverty reduction, sustainable development of their physical environments, and protection of their natural and cultural heritage. In addition, the participating countries have also adopted the United Nations Millennium Development Goals (MDGs) that commit them to: reduce extreme poverty and hunger by half between 2000 and 2015; ensure environmental sustainability by reversing loss of forest; halve the proportion of the population without improve drinking water, halve the proportion of the population without sanitation, and improving the lives of slum-dwellers; combat HIV/AIDS, malaria and tuberculosis by halting and reversing the spread of these diseases; promote greater gender equality and empower women by providing for equal girls’ enrolment in primary school, increasing women’s share of paid employment, and equal representation in national parliaments; and develop a global partnership for development.
307. This lessons that, through early adoption, will help to ensure that the outcome, outputs and activities of the Project are successfully delivered according to expected standards, budgets and timeframes are reviewed below. These lessons have been based upon the experience with the nearly completed Mekong Tourism Development Project (MTDP) and other projects undertaken in the subregion such as the Lux-Development supported Strengthening the Hospitality and Tourism Sector Programme in Viet Nam and the UNESCO-LNTA Nam Ha Ecotourism Project in Lao PDR provide a rich source of lessons that can be applied to ensure effective project outcomes.
308. In the MTDP, the implementation management arrangements are based upon the national tourism offices as the executing agencies (EA) with overall supervision at the regional and national level undertaken by a Subregional Steering Committee (SSC) and National Project Steering Committees (NPSC) in each participating country. Reporting to the NPSC is a National Project Coordinating Unit (PCU) that is responsible for the coordination of the implementation of the project in each country. The PCUs are under the EAs in all three countries although in Viet Nam, An Giang and Tien Giang provinces are the EAs for Part A of the Project. Implementing Agencies (IAs) outside the NTOs in Cambodia include: (i) the Ministry of Public Works and Transport, (ii) State Secretariat of Civil Aviation, and (iii) the Municipality of Phnom Penh; in Lao PDR, they include: (i) the Department of Communications, Transport, Posts and Construction of Luang Prabang and Khammouan provinces, and (ii) the Department of Civil Aviation; and in Viet Nam, they are the EAs of An Giang and Tien Giang provinces. In addition to those directly connected with the EA and the provincial tourism offices (PTOs) there are thus several project management units (PMUs) and related project implementation units (PIUs) under IAs that are not directly connected with the NTO EAs other than through the EA-driven NPSC cooperation and EA- based PCU coordination framework of the project. The PMUs are responsible for managing specific subprojects through one or more PIUs. The PMUs and PIUs are generally the responsibility of the IAs. In the case of the infrastructure subprojects under Part A of the MTDP, there is usually one PMU and one PIU for each subproject. However, in the case of the Pro-poor subprojects under Part B of the MTDP, there is one PMU and a number of PIUs at the provincial level depending upon the number of pro-poor interventions undertaken.
309. A review of the implementation arrangements for the MTDP during the field trips and at two workshops found that:
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• The SSC and NPSCs rarely meet formally, do not have clearly defined terms of reference and lack a clear agenda while the former Agency for Coordinating Mekong Tourism Activities (AMTA) was unable to perform its intended role as secretariat to the SSC, thus further weakening subregional coordination capacities. While they are to some extent inutile, in Viet Nam, the NPSC has taken a strong position and acts more as an approving agency rather than as a cooperating, coordinating and reviewing organization and is one reason for the significant delays in the implementation of the MTDP in Viet Nam; • the current PCU/PMU/PIU implementation structure at the country level requires many levels of cooperation, coordination and communication between the EA and IAs that are in practice difficult to achieve. This has contributed to project implementation delays especially in Cambodia and Viet Nam; • the cooperation, coordination and communications policies, systems and procedures within and between the SSC/NPSCs/PCU/PMU/PIU implementation framework could have been more clearly defined at the outset to promote a more uniform approach to project implementation across the Project; • notwithstanding the presence of NPSCs, cooperation, coordination and communications between the EA-PCU and the externally IA-based PMUs and PIUs could be strengthened. This reflects the low position of tourism among the national government ministries and agencies, making it harder to ensure cooperation and that the flow of funds for works is timely; • in general, the MTDP design assumed that a standard project implementation approach would work in each participating country. However, experience has shown that there are significant differences in the capacity of the EAs and IAs at the national and provincial level to implement subprojects. Thus, the same approach does not necessarily fit all. For example, in Cambodia and Lao PDR, the provinces tend to have less autonomy compared to their counterparts in Viet Nam who have considerable autonomy and capacity to implement. This was partially recognized in Viet Nam where two provinces were given EA responsibility over the Part A-infrastructure component.
310. The main lessons to be drawn from the above projects concerning project coordination, management, implementation and administration, especially from the ADB financed Mekong Tourism Development Project are:
311. The roles and responsibilities of the SPSC, NPSC, PCU and PIUs need to be clearly defined and documented.
(i) Five-year indicative work plans, and six month detailed work plans and budgets at the subproject level should be prepared and approved at the projects inception.
(ii) Training on project procedures, especially financial management should be provided to PCU and PIUs. Follow up audits and refresher courses by an international or national consultant familiar with ADB and government financial procedures should be undertaken throughout the course of the project.
(iii) Biannual planning meetings must be organized between the PCU and each PIU to review project progress, achievements, need to modify the original plan and plan for the next semester. The meeting should be chaired by a senior member of the EA to ensure that there is political support and an understanding of the project among senior decision makers at the national and provincial level.
(iv) The six-month action plans of the project should be given priority funding within a flexible approval framework in order to ensure strong counterpart commitment, morale and project implementation momentum.
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(v) Strong and effective project implementation planning and reporting systems need to be developed at the outset. This means the development of simple but effective planning and reporting forms in the local language.
(vi) A manual of procedures for administering small contracts need to be prepared along with a standardized contract format that is acceptable to ADB and governments of each country.
(vii) At the PCU and PIU level, dedicated finance officer and accountant should be contracted and given adequate training to ensure that the requisite human resources are in place to manage both the ADB withdrawal process and financial reporting to national governments.
(viii) A communications plan to publicize the project outcome and outputs to other stakeholders and the public in general should be created during the first 6 months of the project and implemented as part of the projects awareness raising programs.
(ix) The project should actively seek partnerships with development partners such as UNESCO, UNESCAP, SNV and standard agreements should be prepared in advance and incorporated into the Implementation Plan of the Project and related procedures manuals.
(x) Leaders of the National Tourism Organizations (NTOs) should establish a mentoring program where experienced staff partner with junior staff to teach them how to effectively manage large, internationally financed development interventions.
(xi) Well defined job descriptions and wide advertising of PCU and PIU positions should be done to ensure that competent people are recruited to fill project positions. As an added incentive to compensate counterpart staff, separate budgets should be provided.
(xii) Experience from the MTDP illustrates the need to pay more attention to recruiting international consultants that can work effectively within the countries and their environment and culture. Detailed terms of reference, with clearly defined job and person descriptions need to be prepared.
312. The selection of pro-poor tourism interventions for assistance should adhere to a set of selection criteria that can be applied objectively across proposed sites. The project should adopt a common set of selection criteria to guide implementation of the pro-poor subproject that includes both the development of tourist attractions, tour circuits and value chain interventions.
(i) To ensure that local people retain stewardship of tourism resources and income generating opportunities, the project should work with communities and government authorities to train and allow local people to operate tourist attractions under formal management agreements.
(ii) Pro-poor tourism development requires substantial investments in awareness raising, training, capacity building and marketing and promotion. The project should dedicate at least half of the pro-poor subproject’s financial resources to such tasks.
(iii) Approaches to sustainable tourism development that is gender sensitive and inclusive of ethnic groups, youth and the disadvantaged should be set out in a strategy and mainstreamed into project activities by a dedicated Social Specialist in each PIU.
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(iv) The project must allocate adequate resources to implement a monitoring and evaluation protocol that allows the PCU and PIU’s to identify and correct mistakes as well as gather information on successful initiatives that can be communicated to senior decision makers and the public at large.
313. While this Project is similar in some respects to the MTDP, it is also different in its outputs, coverage and scope. For example, in addition to its focus on sustainable tourism management of natural and cultural sites, and a much larger number of provinces in which pro-poor initiatives will be undertaken, the Project includes a large number of attraction sites along three economic corridors. Furthermore, only one non-tourism IA for the Urban Environment Improvement Subproject in Vang Vieng Town in Vientiane Province, Lao PDR will be involved. All the other subprojects will have provincial tourism IAs. Although the regional nature of the project appears to make it necessarily more complicated than it might otherwise be, this aspect is an essential part of the overall regional cooperation approach that is aimed at addressing common problems and issues in the tourism sector, and will result in considerable savings of resources by avoiding unnecessary duplication. However, as noted above, a well-led, integrated, simplified and flexible approach will be essential to efficient and effective Project implementation.
314. Given the above evaluation of the implementation arrangements in the MTDP, the scope of the implementation task associated with the Project, as well as discussions with the EAs, IAs and other stakeholders at the national stakeholders’ workshops held in each participating country, the following implementation arrangement options have been evaluated for their efficiency and effectiveness:
• an improved version of the existing arrangements under the MTDP involving the clustering of project management and implementation functions where practical; and • a single project coordination and management structure covering all components and subprojects to be housed at the offices of the EA including the project management functions of external IAs, with project implementation at the provincial or site level.
315. The implementing arrangements can be simplified by limiting the number of PMUs operating in the field, where technically appropriate, through clustering subprojects under a PCU/PMU framework at the EA level and making PIUs responsible for all interventions in any one province where these occur assuming the appropriate competencies. For example, instead of separate PIUs for subprojects under the sustainable tourism, pro-poor, facilitation and HRD components of the Project where the project management function is part of the PCU in the EA, then there should be one PIU that will be responsible for the implementation of these functions at the provincial level in the provincial tourism office (PTO). The only exceptions will be where the technical requirements at the PIU level require a separate PIU function such as in the case of the urban environment improvement subprojects under the sustainable tourism development component. All the other subprojects should be manageable under one PIU at the provincial level. Thus, if a particular province has a sustainable tourism (other than urban environment infrastructure subprojects) corridor and pro-poor tourism initiative under the Project, there will be only one PIU, not three. In some cases, the PCU may also undertake the PIU functions-such as in the case of the HRD component. The project coordination, management and implementation arrangements need to be tailored to the capacities of the actors in those countries to undertake this role. For example, in Cambodia and Lao PDR, the central government tends to play a bigger role in project management compared to Viet Nam where these roles are more decentralized to the provinces. In Viet Nam, where most of the Project activities are located in the provinces of Central and North East Viet Nam, the NPSC could comprise the provinces themselves chaired by the MCST and the PCU and PMU structure can be combined in one cost efficient location that need not necessarily be Hanoi.
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316. Within the above context, it is recommended that the proposed project implementation arrangements basically follow that of the MTDP but with organizational refinements and improvements suggested above to simplify the approach and enhance Project performance efficiency and effectiveness. The basis of the recommended approach was discussed and agreed at the workshop with stakeholders.
317. Overall, it is envisaged that the project will be executed by the national tourism organizations in Cambodia, Lao PDR and Viet Nam-the EAs. The coordination, management and implementation of the project will be undertaken at three levels:
1. at the international level through a Subregional Project Steering Group (SPSG) and the Mekong Tourism Coordination Office as secretariat; 2. at the national level through a National Project Steering Group (NPSG) and Project Coordination and Management Units (PCU); and 3. at the project implementation level through Project Management Groups (PMGs) within the EA sitting alongside the PCUs where the IAs are PTOs, outside IA Project Management Units (PMUs) and Project Implementation Units (PIUs) where required for technical reasons, and integrated project implementation Units (PIUs) at the provincial level where the PTO is the IA.
318. The composition, roles and responsibilities of the proposed project management organizations and functions is discussed below.
B. PROJECT MANAGEMENT ORGANIZATION AND FUNCTIONS
319. Supervision, coordination, management and implementation of the Project in Lao PDR and Viet Nam will be undertaken through: (i) a Subregional Project Steering Committee (SRPSC); (ii) a National Project Steering Committee (NPSC) in each country; (iii) a Project Coordination Unit (PCU) in each country; (iv) Provincial Project Steering Committees (PPSC) in each of the provinces where the Project is being implemented; (v) Provincial Implementation Unit’s (PIU) in each province; and (vi) Community Tourism Groups (CTGs) in the participating communities in Viet Nam as well as NGOs in Lao PDR.
320. Subregional Project Steering Committee. To coordinate the exchange of lessons learned and promulgate models developed by the Project at the GMS level, a SRPSC will be established. The SRPSC will include senior representatives from the National Tourism Organizations (NTOs) of the participating countries and representatives of the other GMS countries as observers. Representatives of the Ministries of Finance, Planning, Culture, Environment and Natural Resources could also be invited to the meetings. The Mekong Tourism Coordination Office (MTCO) will act as a secretariat of the SRPSC. The main functions of the SRPSC will be to: (i) exchange lessons learned in implementing the project and the development of sustainable tourism models in the GMS; (ii) coordinate development interventions on the GMS economic corridors; and (iii) oversee the creation, publication and dissemination of manuals on best practice models of developing sustainable tourism in the GMS produced jointly by the participating countries. The SRPSC will be chaired on a rotational basis between the two participating countries. The SRPSC will meet at least twice a year, when possible, in conjunction with the GMS Tourism Working Group (TWG) meetings. At each meeting the host country will also plan a one-half day thematic workshop that focuses on an issue of importance to sustainable tourism in the GMS. Topics might include tourism development in cross-border protected areas, tourism and gender, tourism development on GMS economic corridors or pro-poor tourism. All GMS countries may be invited to participate in these thematic technical workshops.
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Figure 3: Organization of the Project
National Project Sub-regional Project Steering Steering Executing Agency; Committee; NTO, MoF, MP/MoPI, Committee; NTO-Based NTO, MP/MoF, PCUs MTCO Secretariat MoPI,
Provincial Project Steering Committees: Lao PIUÕs: Lao PDR: (10) Viet Nam: (5)
Local Communities, Development Tourism, Heritage and Urban Managers Partners and NGOÕs
Institutional relationship Management relationship Technical/Advisory relationship
321. National Project Steering Committee. At the national level a NPSC will be established to provide policy guidance to the PCU and PIU’s and assist the PCU to coordinate the implementation of each subproject between relevant ministries. The NPSC will be chaired by the Minister of Tourism or his nominated representative, and include representatives from LNTA, Ministry of Finance, Ministry of Planning and the EREA in Lao PDR; and the MTCS, MOF, MPI and SBV in Viet Nam; as well as other relevant ministries and provincial authorities participating in the Project in both countries. The project coordination unit (PCU) in each country will be the secretariat for the NPSC. The NPSC will (i) address any planning and coordination issues arising out of the progress reports, (ii) facilitate permissions to assist with the timely release of funds to the PIU’s and PCU; (iii) facilitate the selection of national project staff for the project; and (iv) ensure the timely approval of work permits and visas for international staff working on the project. It will meet at least four times per year to review the quarterly progress and monitoring reports prepared by the PCU and ensure that information on project progress is disseminated to relevant government agencies.
322. Project Coordination Unit. The PCU will be based at the National Tourism Office in each country. In the case of Viet Nam, where most of the Project is being implemented in Central Viet Nam, a separate field office will be established in Thua Tien Hue Province to house the consulting staff of the PCU. The PCU will be headed by a full-time National Project Director, six full-time permanent professional staff and supporting staff. International and domestic consultants will be based in the PCU, with the majority of consultant positions and time allocated to the PIUs in the provinces.
323. The PCU will be responsible for: (i) serving as a secretariat for the NPSC; (ii) coordination of all the subprojects within each country; (iii) ensuring timely and accurate reporting from each of the subprojects; and consolidation of reports from all PIUs, including technical, financial, social, environmental, and resettlement issues for presentation to the SRPSC, NPSC and ADB; (iv) coordination of the pro-poor community-based tourism development initiatives in the provinces; (v) coordination with other Government agencies to schedule and organize bi-annual NPSC meetings; (vi) development of best practice manuals on the development of sustainable cultural, natural, pro-poor and tourism development on economic corridors in the GMS; (vii) oversee the Human Resource Development component; (viii) ensure that legal and institutional strengthening measures are undertaken in each subproject, including compliance with loan covenants and assurances.
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324. The main tasks to be undertaken by the PCU include: (i) initiation of project preparation activities, including set-up of financial and management systems and procedures, and preparation of PCU office equipment procurement and engagement of consultants; (ii) working closely with the PIU’s to program and budget the project’s overall implementation program and assisting the PIU’s formulate bi-annual project work plans and budgets; (iii) maintaining accurate records of the different subproject accounts, which will be reported to the ADB in a timely and accurate manner; (iv) advising the PIU’s on revenue enhancing activities related to the recovery of cost for construction, operation and maintenance of the project facilities and equipment; (v) recruiting and supervising consultants, to ensure the effective implementation of the project; (vi) recruitment of an auditor and submission of audit reports; (vii) recruitment of a monitoring agency for land acquisition and resettlement; (viii) coordination of all monitoring and evaluation activities; (ix) coordinating with other Ministries and development partners; (x) leading institutional strengthening measures designed to facilitate project implementation, subproject replication, and sub regional cooperation; (xi) providing secretariat support to the NPSC; and (xii) ensuring that information about the projects outcomes, outputs and activities are communicated to senior political leaders, government ministries and departments and development partners. The PCU should also advise and assist the PIU’s to develop methods to effectively communicate information about the project to local communities and provincial officials.
325. Additional duties of the PCU include: ensuring that all requisite government approvals are in place to allow implementation and that these are renewed in a timely fashion where required; providing project administration and technical support to the PIUs; undertaking specified monitoring, evaluation and reporting activities; ensuring smooth and timely disbursement of funds and related accounting and financial reporting to the PCU including record and review of withdrawal applications from PIUs, preparation of consolidated project accounts, and for the recruitment and supervision of an independent auditor and to timely follow up on its reports; advising the PIU’s on how to ensure the project is in compliance with assurances and covenants.
Figure 4: Organization of the PCU in Lao PDR Long term consultants: National Project Director 1. Team Leader/Tourism Sector Specialist (I&L) 2. Ecotourism Planner (I&L) 3. Civil Engineer (I&L) Short term consultants: National Project Coordinator 4. Finance &. Accounting Specialist (I&L) 5. Supply Chain and SME Specialist (I&L) Technical staff: Support staff: 6. Heritage Tourism Specialis(I&L) • Financial Controller • Office 7. HRD Specialist (I&L) • Social Specialist Manager 8. Gender+Social Dev. • Environment Specialist • Accountant Specialist (I&L) • Marketing and Promotion Specialist • Secretary 9. Monitoring Specialist (I&L) • Architect/Construction Supervisor • Office 10. Rresettlement Specialist (I) • Heritage Specialist Assistant 11. Environmental Specialist (I&L) 9 provinces, 10 PIUÕs
Institutional relationship Management relationship Technical relationship
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Figure 5: Organization of the PCU In Viet Nam
National Project Director Based in PCU-Office in Consultants: National Project Manager 1. Team Leader/Tourism Sector Specialist (I) (PCU-Field Office in Hue) 2. Ecotourism Planner (I &L in Lao PDR & 1& 2 local positions in Viet PCU Staff: Nam) • Social Specialist PCU VNAT-Office Staff: 3. Civil Engineer (I&L) • Environment Specialist 4. Finance &. Accounting • Tourism Training and Development Financial ControlleTechnical Specialist (I&L) Specialist staff: 5. Supply Chain and SME • Monitoring and Evaluation Specialist Specialist (I&L) • Accountant/Secretary Financial Controller 6. Heritage Tourism Social Specialist Specialis(I&L) 7. HRD Specialist (I&L) 8. Gender+Social Specialist (I&L) 9. Monitoring & Evaluation PIUÕs (5) Specialist (I&L) 10. Resettlement Specialist (I)
Institutional relationship Management relationship Technical relationship
326. Project Implementation Units. At the project implementation level, except for the the Vang Vieng urban environment improvements in Lao PDR, Project Implementation Units (PIUs) for all subprojects will be based in the Provincial Tourism Departments of the provinces in the respective countries.10 At the Vang Vieng urban environment improvement subproject in Lao PDR, the PIU will be sited in the district’s Urban Management Authority. The PIUs will be established to implement all subprojects being undertaken in each province. In Lao PDR, the Project will have 10 fully staffed PIUs, and in Viet Nam 5 fully staffed PIU’s. Each PIU will be led by a PIU Director approved by the Provincial Government in the case of Lao PDR and the Provincial People’s Committee in the case of Viet Nam. In Viet Nam, to assist the PIU’s achieve the project’s planned outputs, and ensure more effective and timely deployment of project resources, the National Project Manager, consultants, local experts, and a contingent of support staff will be based in the PCU’s Field Office in Thua Tien Hue Province for the duration of the Project.
327. The PIUs shall be headed by a PIU Director drawn from the Provincial Tourism Department (except in the case of the IA for the Vang Vieng urban improvement subproject in Lao PDR) and comprise professional staff recruited from the Tourism, Environment and Social departments of the province and supported where necessary by externally hired project staff. The Provincial Tourism Department/IA will appoint a PIU Manager/Monitoring Focal Point and Tourism Development and Training Officer, and may either provide directly or engage an Environment Officer, Marketing and Promotion Specialist, a Heritage Specialist, a Social Specialist, and an Accountant/Secretary. These counterpart staff will work in the PIU on a part-time basis for between 20-30 hours per week depending on the scale of project interventions in each province.
328. The PIUs will be responsible for: (i) working with the project consultants on the appraisal of feasibility studies, conceptual and detailed design; (ii) procurement of goods and civil work
10 Comprising the provinces of Champasak, Bokeo, Luang Namtha, Savanakhet Oudomxay, Sayabouli, Houaphanh, Salavanh and Vientiane which will delegate to Vang Vieng District in Lao PDR; and the provinces of Hue, Quang Binh, Quang Tre, Bac Kan and Cao Bang in Vietr Nam.
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contracts, including the preparation of bid documents and bid evaluation; (iii) coordinating the consultants on supervisory and construction activities in their provinces and ensuring that the infrastructure components of the subproject are implemented according to the certified design; (iv) approve payments to contractors and maintain disbursement records; (v) ensuring that sustainable tourism, pro-poor and tourism development on economic corridors subprojects are properly implemented; (vi) ensuring compliance with loan covenants at the site in each province including the updating of IEEs, and implementation of environmental management plans to meet government and ADB requirements; (vii) the day-to-day supervision of construction of the subproject elements at site; (viii) coordinate the process of establishing appropriate cost recovery mechanisms; (ix) keep the related Community Tourism Groups (CTG) and Provincial Project Steering Committee (PPSC) informed of project initiatives; (x) hold regular meetings to raise and discuss key issues and concerns, and follow up on recommendations and resolutions of the PPSC and CTG’s; (xi) coordinate institutional strengthening and capacity building activities at the local level; (xii) preparing monitoring and evaluation reports for transmission to the PCU; and (xiii) and prepare and submit quarterly progress reports to the PCU. In addition, in Loa PDR, the PIUs will keep the related LCP and PICC informed, hold regular meetings to raise and discuss key issues and concerns, and follow up on recommendations and resolutions.
Figure 6: Organization of the PIU’s
PIU Director Provincial Community Project Steering Tourism Committee Groups/NGOs PIU Manager/Monitoring Focal Point
PIU staffing:* • Social Specialist • Tourism Training and Development Officer • Heritage Specialist • Environment Specialist • Market and Promotion Specialist • Accountant/Secretary
Institutional relationship Management relationship Technical relationship
*If Provincial Tourism Departments do not have adequate numbers of technical staff, local expertise from other departments or the private sector may be employed to assist the PIU.
329. In Lao PDR, to ensure that a high level of community consultation takes place in every step of the implementation process, the PIU will have as an advisor: a Local Community Panel (LCP) representing stake holders in the local community; and a provincial level inter-agency coordination committee (PICC) representing concerned agencies covering where appropriate natural and cultural heritage site management, urban environment management, public works
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and construction, road transportation, border authorities, and concerned district to ensure that all the interests and concerns of the related agencies are reflected in the outcome. These will be formed at the inception phase and will meet as required to advise the PIUs on matters of concern to the community and government stakeholders regarding project implementation at the site level. The LCP’s will be responsible at the site level for: reviewing the implementation proposals of the PIU; raising issues of concern to the affected community; ensuring that the concerns of the community are adequately reflected in the implementation program; assisting in the implementation of the community awareness program; and ensuring that the community plays its role in the area of community-based monitoring and evaluation.
330. It shall be the responsibility of the PIU Director to organize the PICC and to arrange regular meetings at which the rolling implementation work plan, progress and issues of concern will be discussed, agreed and resolved. The PICC will be responsible for: ensuring that the concerns of the other agencies are adequately reflected in the implementation program; ensuring that project implementation is effectively coordinated between the concerned agencies in the province; ensuring that the concerned agencies in the province extend full cooperation to the PIU; and reviewing progress in the implementation of the project.
331. Provincial Project Steering Committee. The Provincial Project Steering Committee (PPSC) representing concerned agencies covering natural and cultural heritage site management, urban environment management, public works and construction, road transportation, border authorities, and other relevant provincial authorities will be formed to ensure that all the interests and concerns of the related agencies are reflected in the project’s outcomes. The PPSC’s will be chaired by a senior member of the Provincial Government in the case of Lao PDR and the People’s Committee in the case of Viet Nam and the PIU will serve as secretariat to PPSC meetings The PPSC will be formed during the first 3 months of the project implementation and the PIU Director will organize at least 4 meetings of the PPSC each year under the guidance of the Provincial People’s Committee at which work plans, project progress and issues of concern will be discussed, agreed and resolved.
332. The PPSC will be responsible for: (i) ensuring that the concerns of the other agencies are adequately reflected in the Project’s implementation plan; (ii) ensuring that project implementation is effectively coordinated between the concerned agencies in the province; (iii) ensuring that the concerned agencies in the province extend full cooperation to the PIU; (iv) ensuring that the project is implemented in compliance with local regulations and provincial policies; (v) ensuring counterpart funds are budgeted and disbursed; (vi) ensuring that resettlement plans and compensation schemes are followed; and (vii) reviewing progress in the implementation of the project.
333. Community Tourism Groups. To ensure that a high level of community consultation takes place in every step of the implementation process, the PIU’s will work with participating communities to establish Community Tourism Group’s within villages’ traditional administrative structure and involve mass organizations such as the Women’s Union, Youth Union and traditional village leadership in guiding implementation of the project. The CTG’s will be responsible at the site level for: (i) raising issues of concern of participating communities to the PIU; (ii) ensuring that the concerns of the community are adequately reflected in the implementation program; (iii) assisting in the implementation of the community awareness program; and (iv) ensuring that the community is involved in community-based monitoring and evaluation. A representative of each CTG will be invited to regular PPSC meetings by the PIU Director.
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C INSTITUTIONAL IMPLEMENTATION CAPACITIES
334. As learned from a review of the ongoing Mekong Tourism Development Project (MTDP) in Cambodia, Lao PDR and Viet Nam, the capacity of the institutions that are responsible for managing and administering the implementation of the Project in each country, will play a crucial role in the successful and timely completion of the subprojects and their operation according to forecast. The current institutional framework as it relates to the Project in each participating country is examined and the capacity of the key actors evaluated. Recommendations are then made to strengthen institutional capacities for undertaking project coordination, management, administration, and most especially, project financial management were necessary in order to reduce the risk of underperformance in implementation and operation or outright failure to complete the Project.
1.0 PROJECT INSTITUTIONAL FRAMEWORK
335. In general, the institutional framework governing the implementation of the Project in each participating country comprises executing agencies (EAs) that are responsible for policy, coordination and overall management at the national level; implementing agencies (IAs) that are responsible for the-day-to-day tasks of project implementation at the site, and supporting agencies especially in the financial management area referring specifically to the Ministries of Finance (MOF) at the internal level, and the ADB at the external level.
336. The executing agencies for this project comprise either the national tourism offices (NTOs) or in the case of Viet Nam, where there is a considerable degree of autonomy in project coordination, management and implementation, at the provincial level through the Provincial People’s Committee Governments.
337. The IAs for this project in each participating country comprises mainly the provincial tourism offices except for:
• the two urban environment improvement subprojects in Cambodia and Lao PDR where the Ministry of Public Works and Transport and the Ministry of Communications, Transport and Construction respectively will be the IAs; and • at Phong Nga Ke Bang National Park where the Provincial People’s Committee Government will be the IA.
338. The institutional framework governing the national and provincial tourism organizations in each participating country is reviewed in detail in Table 5, Section 2 of the main text.
339. The Ministry of Public Works and Transport in Cambodia and the Ministry of Communications, Transport and Construction in Lao PDR are located in the respective capital cities. As with the Ministry of Tourism, these work closely at the provincial level with provincial public works departments in the case of Cambodia and the communications, transport and construction departments in the case of Lao PDR. The provincial departments that will be responsible for the implementation of the urban environment subprojects in Cambodia and Lao PDR report to the Provincial Governor but work closely-often under close supervision- with the related ministry. As with the tourism institutional framework, the ministries set the overall policy, regulatory, planning and financing framework for public works based on inputs from the provincial departments and national priorities. The provincial departments then implement the specific component of the program at the site level based on annual national and provincial budget provisions.
340. In the case of Phong Nga Ke Bang National Park, the Ministry of Agriculture & Rural Development (MARD) is the IA responsible for the overall administration of the policy and
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regulation of Viet Nam’s national park system within the framework of the Law on Forest Protection and Development (29/2004/QH11). MARD administers special use forests (SUF) including national parks throughout the country that represent different ecological systems. As of February 2003, there were 126 special use forest (SUF) planned and gazetted, covering an area of 2,541.675 ha. In cases where a national park covers more than one province, MARD, through the related department such as the Forest Protection Department (FPD) also takes site management responsibility. The FPD also supports the Minister to monitor and professionally manage the national park system. Where the national park lies in one province, as in the case of Phong Nga Ke Bang National Park, and where capacity for management is demonstrated, the Provincial People’s Committee (PPC) is responsible to the State for the management of the as regulated by Decision Nr.245/QD-TTg (21/12/1998) of the Prime Minister on “state management responsibilities of all levels over forests and forest lands”. The PPCs are decentralized to comprehensively and directly manage almost all protected areas in the SUF system in their administrative areas (including national parks). At the park management level, not-for-profit management boards are appointed to take care and control of specific protected areas. At present management boards have been established in 25 national parks and 40 nature reserves out of a total of 126 SUFs. The Phong Nga Ke Bang Management Board is one of the 25 established national park boards.
341. In terms of the financial management framework within the participating countries, in both Cambodia and Lao PDR the Ministries of Finance in the two countries receive budgetary applications from line ministries (the executing agencies (EAs)) concerning ADB loans or government counterpart funds, review them and after necessary adjustments either approve or reject them. If approved, the flow of funds irrespective of their size is directed through the related Ministry (EA) that then directs these to the implementing agency (IA). In Vietnam, while the approval procedures are similar, the provincial government has authority to approve projects with total budget under US$ 15 million. Here, an application for the ADB loan can directly go from provincial government to the Ministry of Finance without passing through an EA. If counterpart funding is required by ADB, the provincial government has to budget for this in its annual budget plan.
2.0 EVALUATION OF INSTITUTIONAL CAPACITIES
342. The institutional capacities to support project implementation were evaluated for the following elements:
• technical capacities in the area of project management including coordination, management and administration; • financial management and control; and • other factors including policy and regulatory support, governance and reforms, organizational restructuring, and private sector participation.
2.1 Project Management
343. Based on the lessons learnt from the ongoing MTDP (see Section ___ in Part __ of this Report), the following issues need to be addressed in order to strengthen their capacity to effectively coordinate and manage the Project in their countries. At the EA level:
• the EAs need to give greater commitment towards assigning full-time counterpart staff to project coordination and management; • the gap between the project management knowledge and skills of counterpart staff assigned in the EA, and that required to effectively execute the Project remains high; • counterpart staff are not fully motivated as they do not receive enough additional emoluments to put in the extra effort required;
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• more technical support is required to bridge the project management expertise gap; • the coordination mechanisms especially where other executing agencies are involved remains weak and is often personality dependent; and • the organizational structures of the EAs at least in the NTOs are not structured for project management and related governance issues.
344. At the IA level:
• the technical staff available to administer the administration of specific subprojects is very limited and often the subproject has to compete with several other activities of the responsible IA staff; • the technical capacities to manage and administrate the implementation of specific subprojects continue to be limited by inadequate knowledge and skills; • considerable down time results from poorly motivated counterpart staff that receive relatively little by way of emoluments for their participation in the Project; and • much greater use of outside technical staff is required in order to bridge the knowledge and skill gap while developing through counterpart in-situ learning situations, improved knowledge and skills in this area.
345. Institutional Issues regarding capacity of the MARD, the Provincial People’s Committee Government and the Phong Nga Ke Bang National Park Management Board to execute and implement the subproject include:
• the organisation and management capacity of the management board is weak as indicated by the absence of management plans to manage the natural heritage features or effectively conserve biodiversity in the face of rapid mining of biodiversity resources by poor communities living in adjacent buffer areas; • the facilities and equipment of the Phong Nga Ke Bang management board is wanting, and project administration qualifications and experience quite limited; • the functions, tasks and organizational structure of the management board needs to be clearly defined and better integrated; • the professional expertise and skills of protected area managers need to be improved. • need to improve skills to plan for natural resources management, biodiversity conservation, and tourism and to implement those plans; and • weak community participation in the work of the management board.
346. Given the need to ensure that the subproject works do not adversely impact on the environment of the park, and the need to development strong community participation in the implementation process, capacity building among the professional and technical staff of the management board will be essential. At the same time, the organizational structure of the park needs to be adjusted so that it is more streamlined and better integrated than it currently is.
2.2 Financial Management
347. A financial management assessment was conducted following ADB guidelines to examine the institutional and system requirements which are needed to support the ADB loan project from its inception through completion and where necessary, through the life of the loan. The assessment aims to ensure that the Executing Agencies (EAs) and Implementing Agencies (IAs) are technically, managerially and financially capable of efficiently and effectively implementing the proposed ADB project and related components or subprojects. The broad
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issues regarding the accounting systems and regulations at the national level are discussed below.
2.2.1 Financial Management Procedures
348. The Vietnam government has established specific procedures and regulations in executing and implementing ODA and loan projects. These procedures require many kinds of horizontal and vertical coordination and approval requirements at various levels that complicate the project implementation process. In September 2006, the Ministry of Planning and Investment proposed a draft decree on official ODA with initiative to decentralize and move control of ODA projects from State to project owners. Such devolution in management should help to simplify the overall approach and improve co-ordination of management, inspection, and monitoring of concerned authorities in the country. Cambodia and Lao PDR, have established fund flow arrangements and procedures only for their Ministries of Finance. In Cambodia and Lao PDR, counterpart fund commitment can be problematic when EA and the IAs are different ministries. In either way, the three countries often are in a situation that projects are physically under delivered due to lack of institutional and managerial capacity and overly complicated fund flow arrangements.
2.2.2 Accounting Standards
349. In regard to accounting policies, standards and budgetary procedures, the Ministry of Finance of Cambodia has been gradually introducing the International Accounting Standards (IASs) to the country, with the support of French Government and World Bank. While, international projects still use more often stand alone accounting system as requested by donors. Accounting standards for loan projects are based upon agreement during loan negotiation. It is not necessary that the projects have to follow national accounting standards. The accounting policy framework is different in Lao PDR. National standards are followed by project management but could be adjusted to meet ADB or other creditor’s guidelines. With the ADB support, the Ministry of Finance has approved its new Government Accounting Regulations and Procedures (which referred IASs) based on piloting in four ministries and one province and now extends the applications to the remaining 28 ministries and 17 provinces. Vietnam, the only country among the three, is on the IASB list. Vietnamese Accounting Standards were based on IASs that were issued up through 2003, though some modifications were made to reflect local accounting regulations and environment.
2.2.3 Auditing
350. In regard to internal and external audits, there is no internal audit department at the government agency level in Cambodia. Here all audits are conducted by the Ministry of Finance. The Ministry of Tourism has engaged KPMG for external audit of the first ADB loan project. In Lao PDR, project executing agencies conduct regular internal audits. Lao National Tourism Authority and Ministry of Communication and Post, Transport and Construction, conducts their internal financial audits every 6 months. For external audit, the Lao National Auditing Authority conducts annual audit in executing agencies. The report is sent to ADB directly by the Lao National Auditing Authority which is recognized by ADB. In Viet Nam, the State Audit Office is the government audit organization to audit entities owned or controlled by central, provincial and local governments. Audit firms owned by the state, local interests, and foreign interests are available to conduct external audit services. The Vietnamese Auditing Standards are based on International Standards on Auditing.
2.3 Financial Management Capacities
351. An assessment of the capacities of the EAs and IAs connected with the implementation of the subprojects in each country was undertaken using the standard ADB Financial
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Management Assessment Questionnaire for the 10 sub-projects and model sites in Cambodia, Lao PDR and Vietnam. The questionnaire focused on: (i) organizational structure and institutional resources of the agencies such as financial staff, qualification, and extent of financial support available in terms of operating budgets as well as the adequacy of agency accounting information systems; (ii) Accounting policies and budgetary procedures, capacity in develop consolidated financial statements; (iii) funds flow arrangements, i.e. flow of funds from ADB and government and experiences of the agency in the loan transfer process; (iv) internal and external auditing arrangements; and (v) other aspects such as payments, cash management and safeguard of entity’s assets etc. The detailed results of the survey are set out in Appendix ___ and indicate that technical support will be required in order to ensure that these units are managerially and financially capable of efficiently and effectively implementing the proposed ADB project and related components or subprojects. Specifically, the survey found that there will be a need to:
Strengthen the financial management systems with special emphasis on financial governance of accountability and transparency at central executing and management level of the EAs and IAs; Introduce ADB guidelines and expert support to develop position descriptions that clearly define duties, responsibilities, and lines of supervisions and limits of authority for all of the related EA and IA-based PCU/PMU and PIU officers, managers and staff in relation to financial management concerned with the execution and implementation of the Project and its subprojects. Advise on establishing effective financial performance monitoring system with focus on capabilities of the EAs and IAs-based PCU/PMUs and PIUs to adjust inputs and outputs responding to uncertainties and constantly measure the impact and use of inputs and outputs. Develop guidelines, manual, implementation and documentation procedures of financial management, disbursements from ADB, procurement and sub-contracting, accounting and reporting, as well as internal and external control and monitoring, auditing. Advise the EAs and IAs-based PCU/PMUs and PIUs on the establishment of analytical project cash book and reporting, invoice-processing procedures which could generate financial reports on project components. Work with them to establish standard reporting formats and timetables and advice on the preparation of key financial statements, in particular the cash flow statements. Support the establishment and enhancement of computerized financial management and reporting system to assure efficient financial recording system reflecting and consistent with the project’s physical progress. Provide training on project annual and periodic budgeting, applications for ADB’s advances and replenishments. The consultant should provide support to the IA-based PIUs for sub-project budgetary planning according to periodical Action Plan of the Project (APP) and the Implementation Plan of the Project (IPP). Identify potential accounting, reporting and auditing issues and suggest workable options of accounting and auditing arrangements in the course of project implementation. Develop skills in preparing periodical financial projections of operating revenues and O&M costs for the sub-projects aimed to achieve financial objective of O&M cost recovery during normal operations following project completion. Capacity building should also be provided to the staff of IA-based PIUs, which could potentially become the nucleus of the managing units of the sites after the project completion. Assess and document the institutional development and the transition process from a “project” to an “operational unit” at the end of the project. Provide training programs to EA-based PCU/PMUs’ financial controller, chief accountant and all other accounting staff at IA-based PIUs in identified challenging areas as indicated above.
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352. It should be noted that, while introducing these interventions, standards, guidelines and physical inputs through the ADB loan project, the principle should be to make the financial system as simple and practical as possible, while fully complying with ADB reporting and monitoring requirement.
3.0 OTHER FACTORS
353. The following policy and regulatory reform issues need to be addressed to provide an improved framework for project implementation and O&M sustainability:
• The compliance policy framework in the three countries towards environmental assessment and management is fragmented, weak and the subject of overlapping functions; • The current criteria and guidelines for IEE, EIA and EMP for developments are inadequate and poorly applied while the resources required by provincial government environmental authorities are insufficient for the tasks that they must perform; • policies requiring public sector-based operating units at natural and cultural heritage sites to remit set percentages of their gross income to the provincial treasury needs to be revised since the annual provincial allocations to recover O&M are never sufficient, resulting in eventual failure to sustain the facilities and desired outcome; • existing policies with regard to the management of natural and cultural heritage sites by public sector institutions needs to give more attention to including participation of the affected local communities and other stakeholders; • policies towards the role of the privates sector particularly in relation to community-based pro-poor tourism and tourism in natural and cultural heritage sites are not velar in the participating countries; • the management of social safeguards and social risks in the area of land acquisition and resettlement, affordability, labor, gender and other risks such as human trafficking, HIV/AIDS transmission, drug use, child labor, and exploitation are not sufficiently mainstreamed into the policies and regulations of the concerned EAs and IAs; and • Cambodia and Lao PDR have yet to fully adopt International Accounting Standards (IAS) to help make project financial management more transparent, while Viet Nam needs to update its IAS adopted in 2003.
354. Action in respect to these policy and regulatory reforms would help not only to strengthen the implementation of the subprojects, but will help to create the framework needed to support the sustainability and replicability of the Project.
D. TECHNICAL SUPPORT
Consulting Services
355. Consulting services will be required to assist the Project’s Project Coordination Unit (PCU) in Lao PDR and in Viet Nam, and the 14 provincial Project Implementation Units (PIU) (9 in Lao PDR and 5 in Viet Nam) to implement the Project. In Lao PDR, Two (2) packages consulting services will be required: (i) the first package of services comprises the recruitment of individual international and national consultants by the PCU to provide technical support to the PCU and PIUs in the implementation of the Project; and (ii) a second package comprising the recruitment of a single firm to provide design and construction supervision services for the sustainable tourism development and tourism corridors outputs (except in the case of the Vang Vieng urban environment improvement subproject) of the Project using national civil engineering consultants. These services will be procured by the PCU based in Vientiane. In Viet Nam, two (2) packages of consulting services are also required: (i) the first package of services to be provided by a single firm will comprise
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international and national tourism development and civil engineering design consultants; and (ii) a second package of consulting services to be provided by a single form for construction supervision engineering services using national civil engineering consultants. In Viet Nam, the first package will be recruited by a Committee headed by MCST with the participation of the five provinces involved in the Project in Viet Nam. The second package of construction supervision engineering services in Viet Nam shall be procured directly by the individual provinces.
SCOPE OF CONSULTING SERVICES & ACTIVITIES:
356. In the first package of services in both Lao PDR and Viet Nam will involve consulting services designed to ensure that the project management and reporting systems, accounting management systems, capacity building programs and monitoring and evaluation programs in the PCUs and PIUs are suitably developed and maintained throughout the project implementation. However, unlike the case of Lao PDR, in Viet Nam, the consulting services will also include design services. The second package of consulting services in Lao PDR will provide design and construction supervision services to the PIUs except for the Vang Vieng subproject; while in Viet Nam, the second package will provide only construction supervision services to the PIUs in the participating province.
Package 1: Tourism management Consulting Services
357. The consultants will be responsible for effectively leading and taking the initiative to implement and manage the project including responsibility for the design (in the case of Viet Nam), undertaking of necessary surveys, supervising construction (in the case of the pro- poor output in Lao PDR), undertaking capacity building, Project monitoring and other aspects of the GMS Sustainable Tourism Development Project. Furthermore, the consultants will provide both direct and indirect assistance to the PIUs and PCU to ensure the effective coordination and implementation of the whole project. Without limiting the scope of the consultants’ support role, the individual consultants responsibilities in the case of Lao PDR, and a single firm in the case of Viet Nam include:
(i) providing advice and guidance to the PCU and PIUs on ADB’s procedures and guidelines for project implementation and management in general; (ii) assisting the PIU’s and PCU in reviewing, reporting and endorsing subprojects and prepare them for submission to the Government and ADB; (iii) assisting the PIU’s and PCU to establish and maintain a database on all subprojects under preparation, in the approval process and under implementation. This important database is for facilitating contract and performance monitoring and to establish key cost indicators for cost comparisons in order to ensure cost effectiveness in contracting. Moreover, the data will provide up-to-date monitoring and evaluation of all aspects of the proposed project; (iv) assisting in mobilization and management of project resources including financial resources, consultants and any other resource made available to the proposed project; (v) initiating and assisting the PCU in establishing a project monitoring and management system that will enable the PCU to identify potential problem areas and to take pro-active action in order to mitigate and avoid delays in the design, contracting implementation and completion of sub-projects; and (vi) assisting the PIUs and PCU, where required, in drafting contracts, loan withdrawal applications, reports, and other relevant documents and a submitting them to the Government and ADB. The consultants will also provide assistance to the PCU and PIU’s in contract negotiations, supervision and overall management.
Package 2: Design and Construction Supervision Services
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358. The firm providing design and construction supervision in Lao PDR will be responsible for leading and taking the initiative to implement and manage, design, and supervise construction for the sustainable tourism development and tourism corridors outputs of the Project. Furthermore, the firm will provide both direct and indirect assistance to the PIUs and PCU to ensure the effective coordination and implementation of the design and construction supervision of the related outputs of the Project. Without limiting the scope of the support role, the tasks and responsibilities of the design and construction supervision consulting engineering firm include:
(i) providing advice and guidance to the PCU and PIUs in the area of design and construction supervision connected with the related outputs of the Project; (ii) undertaking the detailed design, specifications and documentation of all project civil works components in the related Project outputs; (iii) assisting in the preparation of terms of reference, specifications and contract documents for procuring construction services; (iv) assisting in the selection of contractors; and (v) supervising the construction of the various contract packages for the related outputs of the Project including provision of monthly construction progress reports; and (vi) undertaking commissioning testing and certification prior to acceptance of the completed works.
In the case of Viet Nam, where the second package involves only construction supervision, the above responsibilities will be limited to the construction supervision elements only.
PLANNING AND REPORTING
359. Action Plans. Upon the project’s inception, the Team Leader and related national and international consultants, in close coordination with the PCU, shall prepare the project’s first Action Plan of the Project (APP) that integrates each of the project subcomponents and plans for each of the project’s PIU’s. The APP will include a detailed description of activities that are to be carried out over a six-month period in each PIU and the PCU. The APP will include quantitative and qualitative targets to be accomplished and a detailed schedule of actions and activities to be performed. The APP will also detail the specific responsibilities for carrying out the tasks and key assumptions underlying the timely and effective carrying out of tasks and activities. Each APP will have the character of a signed commitment between the different PIUs, PCU and the Government agencies concerned. The APP will be a revolving document. The first will outline tasks and activities to be carried out, in the first six months. Subsequent APPs, in addition to the schedule of activities, will also include performance assessments and measures taken to remedy any shortcoming to ensure that the proposed project stays on target, and to make certain that management actions are taken to remedy any and all issues facing individual project subcomponents. The first signed six month APP is due not later than three months after the consultants’ arrival.
360. Detailed Implementation Plan of the Project (IPP). A detailed Project Implementation Plan, covering the full five year period of project implementation and outlining all the schedules, results to be generated, systems and procedures to be applied in implementing the proposed project, information management and the monitoring and evaluation of both deliverable and impacts on society, will be prepared. The Project Implementation Plan will be prepared concurrently with the preparation of APP, but will be due for delivery not later than six months after the consultants’ arrival.
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361. Regular Reporting: The preparation and submission of the APP every six-months, one for each PIU and the PCU will constitute the regular reporting for the project and its implementation and evaluation.
362. The project Team Leader will produce the following reports in the English language:
• Quarterly progress reports to be prepared within two weeks of the end of each quarter and submitted to the Government and ADB. • Project completion report within three months of physical completion of Project
363. Other international and domestic consultants, upon arrival on the project and following consultation with the Team Leader, PCU and PIU’s, will produce a detailed work plan for the duration of each consultant’s contract. The work plan is due no later than three weeks after the consultants begin work on the project. Consultants will submit to the Team Leader and PCU individual English Language Project Activity Reports in the approved project format as well as a Final Report prior to completion of individual assignments.
364. Final Project Report: A Final Project Report will be prepared and submitted to the Government, ADB and all participants in the project implementation team, 5 years after commencement of the proposed project. The detailed content and topic coverage will be determined by the PCU in consultation with the Government agencies concerned and the ADB at least one-half-year ahead of the submission date.
OTHER GENERAL REQUIREMENTS
365. The consultants will: • Be available for the duration of the proposed project, providing the full 189 person months time in Lao PDR and 204 person-months time in Viet Nam for the first package and 66.6 person months for the design and construction supervision package in Lao PDR; and 36 person-months for the construction supervision package in Viet Nam. The consultants are expected to commence their services as soon as possible, but preferably not later than 1 January 2008. • Be attached to and based within the PCU’s Project Field Office, located in Hue Province in Central Viet Nam from where the consultants will carry out their duties. The consultants will have frequent interactions with the PIU’s and PCU and will assist and carry out on-the-job training as a routine part of their activities.
366. It is expected that the consultants will have as many as possible of the following credentials:
• Relevant general management or technical education and background. • A through understanding of the systems, procedures guiding the implementation, management and administration of loan projects supported by the ADB. • Practical working experience in the management and administration of projects supported by the ADB at the field level and project management and administration. • A thorough working experience of the management and administration of externally assisted projects in Lao PDR and Viet Nam. • Have a demonstrated ability to work closely and effectively together with counterpart staff of executing agencies and public sector organizations in GMS countries. • Have extensive in-country experience in undertaking design and construction supervision contracts.
367. All project documentation will be in the English language, with translation into local languages as required. In particular all training manuals, etc. will be both in English and local languages; for on-the-job training, the use of the English language is preferred.
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SCHEDULE OF CONSULTING REQUIREMENTS
368. The schedule of consulting person months is provided in Table 31 below. In Lao PDR, the Project will require a total of 255.5 person months of consulting services (79.5 person- months of international and 176 person-months of local services).
Table 31: Required Consulting services in Person Months 2009-2013
Lao PDR Viet Nam Inter- Inter- Local Total Local Total national national Package 1:Tourism Development and Design Consultants Team Leader/Tourism Sector Specialists 30.0 30.0 30.0 30.0 Financial Accounting Specialists 1.0 1.0 2.0 2.0 Heritage Tourism Specialists 4.0 9.0 13.0 2.0 9.0 11.0 Social and Gender Specialists 4.0 18.0 22.0 4.0 18.0 22.0 Ecotourism Planners 15.0 30.0 45.0 5.0 60.0 65.0 HRD Specialists 4.0 12.0 16.0 2.0 12.0 14.0 Supply Chain & SME Specialists 5.0 15.0 20.0 2.0 15.0 17.0 Monitoring and Evaluation Specialists 2.0 10.0 12.0 2.0 10.0 12.0 Tourism Sector Specialists 30.0 30.0 Civil Engineer - Design Specialist 10.0 4.0 14.0 Environmental Specialists 3.0 12.0 15.0 Resettlement Specialist 1.5 1.5 Subtotal 65.0 124.0 189.0 63.5 140.0 203.5 Package 2: Design and Construction Supervision Civil Engineer/Construction Supervisor 36.0 36.0 Civil Engineer 10.0 10.0 Environment Specialist 3.0 3.0 Resettlement Specialist 1.5 1.5 Environment Specialist 12.0 12.0 Civil Engineer 40.0 40.0 Subtotal 14.5 52.0 66.5 36.0 36.0 Total 79.5 176.0 255.5 63.5 176.0 239.5 Source: Implementation Cost Schedule
369. In Viet Nam, a total of 239.5 person-months of consulting services (63.5 person-months of international and 176 person-months of domestic services) will be required.
370. The detailed terms of reference of the individual consultants in the two packages of consulting services in Lao PDR and Viet Nam is provided in Appendix 9. Except where indicated otherwise in Attachment A, the number of person months indicated will be provided in both Lao PDR and Viet Nam. The indicative timing of the required consulting inputs is presented in Figure 7.
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GOVERNMENT INPUTS
371. The Lao National Tourism Administration and the MCST) and the participating provincial governments will provide suitable counterpart staff to work in the PCU and PIU’s as indicated in Appendix 9. The Governments will also make available to the consultants support facilities physically located in the National Executing Agency (PCU) and PIU’s, including all relevant and available reports, documents, maps, and photographs etc. The actual disposition and number of counterpart staff will be determined together with the consultants at the time of contract negotiation.
372. Office space, transport for field trips, communications facilities (telephone, fax, and internet), computers, stationery and other relevant materials will be provided to the consultants as part of the consulting services contract.
SCHEDULE OF PROJECT ACTIVITIES
373. The Schedule for the deployment of the international and local consultants for Lao PDR and Viet Nam during the course of the Project is provided in Figure 7 below.
Government Counterpart Inputs
374. The Government through Ministry of Tourism in Cambodia, Lao National Tourism Administration in Lao PDR and the Viet Nam National Administration of Tourism in Viet Nam will provide suitable counterpart staff to work in the PCU/PMand PIU’s. These staff shall comprise: • a National Project- Director • a National Project Coordinator • a Financial Controller • a Chief Accountant • a Secretary • a Messenger/Driver
375. In the PCU/PMUs attached to the EA, the counterpart staff depending upon the scope of activities of the subprojects to be implemented, will comprise: • a Subproject Supervisor • a Tourism Development and Training Officer • a Pro-Poor Tourism Development and Training Officer • a Marketing and Promotion Officer • a Natural and Cultural Heritage Officer • a Social Development Officer • an Environmental Officer • a Construction Supervisor • an Accountant Secretary; and where appropriate • a driver messenger
376. In the PIUs attached to an IA the counterpart staff, depending upon the scope of activities of the subprojects to be implemented, will comprise: • a PIU Director • a Tourism Development Training Officer • an Environment Officer • a Social Development Officer • an Accountant/Secretary; and where appropriate • a driver/messenger
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377. It is envisaged that these staff will be provided on a 10 to 30 hour per week or on an as needed basis depending upon the workload in their unit for the duration of the Project. Appendix 9 gives the indicative job descriptions and main duties for these positions across the PCU, PMU and PIU structure for the Project. The actual disposition and number of counterpart staff will be determined together with the consultants at the time of contract negotiation.
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Figure7: Estimated Timing of Consulting Services for the GMS Sustainable Tourism Project Project Year Consulting Services 1 2 3 4 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 International Consultants: Team Leader/Tourism Sector Specialist Ecotourism Planner Financial Accounting Specialist Environmental Specialist Civil Engineer Heritage Tourism Specialist Social and Gender Development Specialist HRD Specialist Supply Chain & SME Development Specialist Monitoring Specialist Resettlement Specialist National Consultants: Tourism Sector Specialist Environmental Specialist Financial Accounting Specialist Monitoring Specialist Civil Engineer Heritage Tourism Specialist Social and Gender Development Specialist Ecotourism Planner Supply Chain Dev. Specialist
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E. PROJECT IMPLEMENTATION SCHEDULE
378. The Project will be undertaken in three overlapping phases over a five year period. The first phase will involve: (i) Establishment of the PCU/PMUs and the PIU offices including procurement of related equipment; (ii) the recruitment and training of the PCU/PMU/ and PIU staff in project implementation coordination, management and administration procedures and practices; (iii) community and stakeholder awareness building; (iv) institutional strengthening in the EA and IAs; and (v) undertaking necessary investigations, survey, design and documentation of packages to prepare the ground for smooth and efficient implementation of the subprojects.
379. The first phase will commence on 1 January 2009 and more or less be completed by 31 December 2009. The second phase will focus on:
• the contracting and supervision of the construction of civil works; • training of local communities to participate in tourism-based livelihood; and • pre-operational training of operating staff for the subprojects.
380. This phase will commence on July 2009 and last until 31 January 2011. The third phase will focus on:
• providing operations and maintenance mentoring support to the completed subprojects; • ensure completion of and outstanding institutional strengthening requirements and reforms; and • undertake final project evaluation.
381. This phase will be undertaken between 1 January 2011 and 31 December 2012.
382. The Project is anticipated to be completed on 31 December 2013. The Project Implementation Schedule is shown in Figure 8.
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Figure _8_: Implementation Schedule for the GMS Sustainable Tourism Project
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F. PROCUREMENT
383. The goods and services required by the Project cover: large and small equipments; civil works ranging from large to smaller works at community level; technical surveys and design work; and procurement of services in the area of capacity training, external resettlement monitoring and evaluation and external financial auditing. The component of these goods and services to be financed by the Bank shall be procured in accordance with the Bank’s Guidelines for Procurement.
384. In undertaking procurement for the Project, the PCU/PIUs shall observe the following guidelines:
(i) larger equipment items such as vehicles, and equipment for operations and maintenance will be procured through national shopping procedures; (ii) small equipment items such as office computers, printers, furniture, etc shall be procured locally by direct purchase based on submission of three invoices; (iii) contracts for major civil works shall be undertaken using national competitive bidding (NCB) procedures for packages between $50,000 and $1,500,000 and local competitive bidding based on shopping for works valued up to $50,000; (iv) services related to use of local training staff shall be procured on a direct purchase basis with at least three written proposals; and (v) services relating to external resettlement monitoring, and evaluation and external financial auditing of PCU and PIU activities shall be procured using least cost selection LCS procurement procedures as appropriate.
385. Where appropriate and practical, locally-based small contractors and local communities themselves will be encouraged to undertake construction, procured through LCS in order to enhance participation, project ownership, strengthen local economic linkages and ensure a more sustainable outcome.
386. Detailed procurement plans will be prepared by the PCU for the next financial year and submitted to the Bank for approval. The Indicative Contract Packaging for the Project is presented below.
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INDICATIVE PROCUREMENT PLAN
A. General
Project Information Country Socialist Republic of Viet Nam Lao People’s Democratic Republic Name of Borrower NA NA Project Name GMS Sustainable Tourism GMS Sustainable Tourism Development Project Development Project Loan or TA Reference To be determined (tbd) To be determined (tbd) Date of Effectiveness tbd tbd Amount US$ (total from all $10,110,000 $10,980,000 financiers): Of which Committed, US$ tbd tbd Executing Agency Ministry of Culture, Sport and Ministry of Tourism Tourism Approval Date of Original tbd tbd Procurement Plan Approval of Most Recent tbd tbd Procurement Plan Publication for Local tbd tbd Advertisement11 Period Covered by this Plan 2009 - 2013 2008 - 2013
B. Procurement Thresholds, Goods & Related Services, Works and Supply & Install
Threshold Procurement Methods
NCB works Less than $1,500,000 NCB goods Less than $500,000 Shopping Works Less than $50,000 Shopping Goods Less than $50,000
C. Procurement Thresholds, Consultants Services
Threshold Procurement Methods
Quality Cost Based Selection (QCBS) At least $200,000 Consultants Qualifications Selection (CQS) Less than $200,000 Least Cost Selection (LCS) Less than $100,000
D. Proposed Detailed Contract Packages
11 General procurement notice, invitations to pre-qualify and to bid, calls for expressions of interest
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Table 32: Proposed Detailed Contract Packages
Description Number Cost Estimate Aggregated Mode of Expected Prior Responsible of per Contract Total Procurement Date of Review Agency Contracts Cost Advertisement Y/N Estimate A. Civil Works Lao PDR: 1. Siphandone 1 1,243.000 1,243,000 NCB Works 1st qtr 2010 Y PCU 2. Vang Vieng Drainage 1 848.000 848,000 NCB Works 1st qtr 2010 Y PCU 3.Tourism Corridors 1 1,219,000 1,219,000 NCB Works 1st qtr 2010 Y PCU 4. Various (Pro poor) 30 10,000 – 810,000 Shopping Works 2009-2010 N* PCU 50,000 Viet Nam: 1. Phong Nga Kebang 1 997,000 1,101,000 NCB Works 1st qtr 2010 Y PIU 2. Bac Kan Cultural Centre 1 1,052.00 1,162,000 NCB Works 1st qtr 2010 Y PIU 3. Tourism Corridors 1 864,000 985,000 NCB Works 1st qtr 2010 Y PIU 4. Various (Pro-poor)* 30 10,000–50,000 954,000 Shopping Works 2009–2010 N* PIU 5. HRD 2 1,000–10,000 6,000 Shopping Works 1st qtr 2010 Y PIC B. Equipment Lao PDR: 1. Siphandone 1 5,000-25,000 50,000 Shopping Goods 3RD qtr 2010 N PIU 2. Vang Vieng Drainage 1 5,000-60,000 100,000 NCB Goods 3RD qtr 2010 N PCU 3.Tourism Corridors 1 1,000-5,000 30,000 Shopping Goods 3RD qtr 2010 N PIU 4. Various (Pro poor) 30 30,000- - NCB Goods 2009–2010 N PIU 100,000 5. Vehicles (PCU/PIUs) 9 10,000-15,000 119,000 Shopping Goods 1st qtr 2009 Y Viet Nam: 1.Phong Nga Kebang 3 5,000–60,000 482,000 NCB Goods 3RD qtr 2010 N PIU 2. Bac Kan Cultural Centre 2 5,000–50,000 65,000 Shopping Goods 3RD qtr 2010 N PIU 3. Tourism Corridors 7 1,000–5,000 22,000 Shopping Goods 3RD qtr 2010 N PIU 4. Various (Pro-poor)* 12 30,000– - NCB Goods 2009–2010 N PIU 100,000 5. Vehicles/other 2 10,000–25,000 104,000 Shopping Goods 1st qtr 2009 Y PCU (PCU/PIUs) 6. HRD Equipment 10 1,000–25,000 55,000 Shopping Goods 2009–2010 Y PCU C. Consulting Services Lao PDR: 1. Design and Construction 1 378,000 378,000 QCBS 2nd qtr 2009 Y PCU Supervision 2. Tourism/Management 18 ** 8,000-200,000 792,000 LCD/CQS 2009-2011 Y PCU Consultants Viet Nam: 1. Tourism Management 1 1,080,000 1,080,000 QCBS 2nd t qtr 2009 Y PCU and Design Firm 2. Construction and 1 76,000 76,000 LCS 2009-2011 Y PCU Supervision Firm 3. External monitoring and 3 8,000-40,000 68,000 LCS 2009-2013 Y PCU Resettlement/auditing/M&E
TOTAL Contract 153 11,749,000 Packages
* Only the first contract for each province will be reviewed ** Also includes the contracts for monitoring resettlement auditing and external project monitoring and evaluation.
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G. CONTRACTING SUPERVISION AND CAPACITY BUILDING
387. Supervision of the indicative contract packages shown in Table ___ and the related works program will be managed by the PCU and PIU managers under the supervision of the Project Coordinator. This will require close coordination and cooperation with the related IAs, and careful and active supervision of contractors will be essential to ensure that the programmed work is achieved to the required standard, at budget, and on time. Careful planning of deliveries and work schedules at the outset will assist in averting potential delays in completion of program works.
388. The PCU and PIU Directors and supervisors will ensure that an effective reporting system acceptable to the participating countries and the Bank is put in place to report progress and compliance with technical specifications and requirements. The PCU and PIU supervisors will be required to monitor resources and take the action necessary to avoid implementation delay and budget over runs. All milestones for works should be carried out in the presence of the local communities and their representatives to ensure participation, ownership and commitment of the beneficiaries. At the completion of each major milestone in the works program and prior to handing the completed works over for O&M, testing should be conducted with the O&M management and staff to confirm compliance with required standards. On hand-over to the IA responsible for subproject O&M, a document detailing the works undertaken with as-built drawings together with the test results shall be handed over to the concerned IA.
Capacity Building
389. To facilitate the effective completion of the Project by its staff and the staff of the concerned IAs responsible for the O&M of the subprojects, a series of training modules should be provided as part of the project. These modules should focus upon: planning and modeling techniques, project management and administration practices and techniques, project construction supervision practices and techniques, maintenance techniques, ADB Bank procedures and practices, construction resource management, environmental and social monitoring, and equipment training for field staff. These training modules shall be undertaken by the international and national consultants as well as specialist trainers contracted for this purpose.
390. To ensure cost recovery of the O&M costs related to the operation of the completed subprojects, the concerned IA O&M staff should receive training in: management and administration; accounting, billing and cost control procedures and practices; human resource recruiting, development and management; asset management and valuation; and auditing of the physical condition of the subproject and its furnishings, fittings and equipments.
H. FINANCIAL MANAGEMENT AND REPORTING
391. The EAs will maintain separate accounts for the Project, and submit independently audited financial statements within at least nine (9) months after the end of the financial year. The disbursement of the Project loan funds shall comply with the Bank’s guidelines and procedures.
392. Disbursement shall be for the supply of goods and services including consulting services based on the indicative packages identified above. Disbursement will be based on annual financial projections prepared by the PCU in each country and periodic (as needed) project withdrawal applications to ADB made. On approval, the loan funds shall be disbursed to the designated Bank in each participating country where they will be held in an imprest account, which has a limit of US$ 300,000. The PCU will make periodic withdrawal applications to the designated Bank each month, based on the budget projections in the work plan. The released funds will then be transferred into a
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“project account” at a commercial bank near the location of the PCU. Based upon previously prepared and agreed specific activity budgets, the PIU/PMUs will send their financing proposals to the PCU which shall review and where deemed acceptable, approve them and transfer the funds to the PIU/PMU’s project sub-account. When the funds run down to a previously defined level in the PIU/PMU’s “project account” the process is repeated.
393. The general arrangements for the flow of funds above $50,000 is set out in the Figure 9. below.
Flow of Funds Contracts Above $50,000
6. ADB reviews request and liaises with MoF and PCU/PIU 5. Ministry of Finance processes prior to approval for payment request and sends to ADB
Asian Development Bank Ministry of Finance
4. Ministry of Finance and PCU review PIU funding requests
7. ADB sends funds direct to Provincial Project Coordination PIU impressed 2. PIU sends request Unit (PCU) accounts and direct for funds directs to to contractors Ministry of Finance based on 6 month 3. Provincial PIUÕssend activity budget plan copy of request for funds to PCU6
1. Provincial PIUÕs prepare Project Implementation request for funds based Contractors Units (PIU) on 6 month Activity plan
394. The above flow of funds applies to Viet Nam and in the case of Lao PDR, it will also apply to amounts of less than $50,000. In the case of Viet Nam, where the provinces exercise greater control over project implementation, to ensure timely funds flow and to simplify the flow of funds, it is proposed that funding requests for amounts below $50,000 can be passed directly to Ministry of Finance and on to the ADB which will pay the requested funds subject to meeting the financial management guidelines direct to the provincial imprest accounts. Figure 10 shows how this approach will work.
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Flow of Funds Contracts Below $50,000
6. ADB reviews request and liaises with MoF and PCU/PIU 5. Ministry of Finance processes prior to approval for payment request and sends to ADB
Asian Development Bank Ministry of Finance
4. Ministry of Finance and PCU review PIU funding requests
2. PIU sends request for funds directs to Project Coordination 7. ADB sends funds Unit (PCU) direct to Provincial Ministry of Finance PIU impressed based on 6 month accounts activity budget plan 3. Provincial PIU’s send copy of request for funds to PCU6
1. Provincial PIU’s prepare Project Implementation request for funds based Contractors Units (PIU) on 6 month Activity plan
8. PCU/PIU pays direct to contractor
395. The accounting, auditing and reporting procedures will be established in accordance with accounting principles and practices acceptable to the Bank and the participating country. Separate accounts will be maintained by the EAs and IAs for the subprojects and records maintained of all project expenditures. These records shall be consolidated into a set of accounts that shall be audited by externally appointed independent auditors acceptable to the Bank and the participating country. Certified copies of the audited accounts in English shall be furnished to the Bank no later than three (3) months after the close of the financial year for which they cover. The annual audit report should include a separate audit opinion on the use of the imprest account and statement of expenditure procedures.
396. The PCUs will submit to the Bank a quarterly progress report on disbursement and percentage completion of project activities. The content of the quarterly reports is also used to define and graph the percentage of construction works completed. In the case of construction projects, the percentage of works that are completed is monitored and reported. In the case of the pro-poor component, the outputs reported will be the percentage of targets achieved on each activity in the 6-month activity project plan (APP). Reports shall be sent to the Bank and the participating governments on a quarterly basis using prescribed forms. An indicative list of activities and suggested forms for the Project activity planning, implementation and monitoring framework is presented in Appendix 10.
I. PROJECT PERFORMANCE MONITORING AND EVALUATION
397. The Project Performance Management System (PPMS) activities are used to identify, record and analyze (monitor and evaluate) data and information to ensure that planned interventions will achieve their objectives, will be sustainable and result in positive impacts for beneficiaries. A PPMS that will be established and implemented by the PCU and PIU’s for the entire length of the project.
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An international and national monitoring and evaluation specialist will assist the PCU and PIU’s to establish the PPMS as early as possible during year 1 of the project. 398. In accordance with the PPMS Handbook of the ADB and Project objectives, the PPMS assists: (i) the Project in the development of pro-poor tourism, meaning tourism that delivers economic and social benefits to the poor, implementation, and operation and management of project interventions; (ii) the capacity building of national, provincial and local government agencies in planning and implementing development interventions and the provision of support services to participating communities; and (iii) the management of the Project in implementation and subsequent management, operations and maintenance of the Project interventions and reporting. The PPMS provides a tool to determine the efficiency and effectiveness, and cost of implementation approaches, as well as provide data, information and reports for management decisions to refine approaches to project implementation when needed. It involves stakeholders from the community/village, district, provincial and national levels. The Project will provide financial and technical support to government agencies involved in the implementation of the system and work to integrate aspects of the PPMS into regular monitoring protocols used by government agencies participating in the project.
Project Objectives and Scope
399. The PPMS takes into account the impact that the Project intends to contribute to implementing the GMS Tourism Sector Strategy and to bring about a more environmentally and socially sustainable pattern of tourism development that is more inclusive and brings equitable livelihood opportunities for GMS citizens, especially ethnic groups, women and youth. It also recognizes that the project is intended to develop models of pro-poor tourism, in natural and cultural areas and along economic corridors that can be replicated throughout the GMS. The Project will result in improved capacity of government tourism institutions, the private sector and of local communities to plan, construct, manage, operate, and maintain community-based pro-poor tourism developments and small-scale infrastructure, as well as enhance sustainable visitor capacities at urban, natural and cultural heritage sites of importance for tourism. It is expected that the Project will run for 5 years, commencing January 1, 2009.
Project Population & Beneficiaries
400. The Project will be located Loa PDR and Viet Nam. In Lao PDR, project outputs will be delivered in 9 provinces (Bokeo, Champasak, Luang Namtha, Oudomxay, Sayabouli, Houaphanh, Vientiane, Salavanh and Savannakhet) and involve approximately 150 villages; and in 5 provinces (Cao Bang, Bac Kan, Quang Binh, Quang Tri and Thua Tien Hue) and involve approximately 80 villages in Viet Nam. The Project will focus mostly on poor rural communities for the pro-poor tourism development output, and benefit local communities and heritage managers in and around the Siphandone Wetlands, in the Vang Vieng urban area, and along the North-South and East-West Economic Corridor in Lao PDR, and at Phong Nga Khe Bang National Park, the Bac Kan Cultural Landscape, and along the East-West Economic Corridor in Viet Nam. The Project is targeting a total of 259,800 direct and indirect beneficiaries of which 179,800 are located in the 9 provinces of Lao PDR comprising 37,300 direct and 142,500 indirect beneficiaries, and 180,000 beneficiaries are located in the 5 provinces of Viet Nam comprising 25,000 direct and 55,000 indirect beneficiaries. In addition, the Project will benefit an estimated 2000 trainers involved in vocational training for small and medium tourism enterprises and professional development training for public sector tourism officials, and benefit indirectly an estimated 55,000 small and medium tourism enterprise skilled staff, and 4,800 public sector tourism officials at the national, provincial and district levels. Direct beneficiaries are defined as those people, including men, women, youth and ethnic minority groups that benefit from the project, for example, by gaining employment and income from guiding,
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producing handicrafts, selling souvenirs, selling food, operating accommodation establishments, or working as boat or vehicle drivers. Direct beneficiaries are also those that receive skills and knowledge training because of the project. Indirect beneficiaries are defined as those who benefit from access to improved infrastructure built by the project, improved communication infrastructure induced by the project, new market opportunities to sell raw agricultural products that are processed into goods consumed by tourists, and an increase in extended family members access to health care and education because of higher household income gained from involvement in the tourism industry. A detailed estimate of direct and indirect beneficiaries by project outcomes is shown in table 33.
Table 33: Estimated Project Beneficiaries
Project area Poverty Direct Indirect Total Total Incidence Beneficiaries Beneficiaries Beneficiaries beneficiaries (%) 1 that are poor Output 1: Sustainable Tourism Development 19,300 42,500 61,800 0 - Siphandone Wetlands 7,500 37,500 45,000 - Vang Vieng Urban Environment Improvements 11,800 5,000 16,800 Output 2: Facilitation of Tourism on Economic Corridors 4000 40000 44000 0 - North-South Corridor 2000 20000 22,000 - East-West Corridor 2000 20000 22,000 Output 3: Pro-Poor Tourism Development 12,000 60,000 72,000 0 - Bokeo 2,000 10,000 12,000 - Oudomxay 2,000 10,000 12,000 - Houaphanh 2,000 10,000 12,000 - Sayabouli 2,000 10,000 12,000 - Vang Vieng 2,000 10,000 12,000 - Salavanh 2,000 10,000 12,000 Output 4: HRD Vocational and Professional development 500 8,200 8,700 0 - Voactional Training for Touriem SMEs 300 6700 7,000 - Professional Training for Public Sector Tourism Officials 200 1500 1,700 Total La PDR 35,800 150,700 186,500 0 Viet Nam: Output 1: Sustainable Tourism Development 7,500 55,000 62,500 21,335 - Bac Kan province 26.5 3,500 17,500 21,000 5,565 - Quang Binh province 38.0 4,000 37,500 41,500 15,770 Output 2: Facilitation of Tourism on Economic Corridors 2,500 25,000 27,500 7,590 - Quang Tri Province 27.6 2,500 25,000 27,500 7,590 Output 3: Pro-Poor Tourism Development 15,000 75,000 90,000 25,164 - Bac Kan province 26.5 3,000 15,000 18,000 4,770 - Cao Bang province 20.3 3,000 15,000 18,000 3,654 - Hue province 27.4 3,000 15,000 18,000 4,932 - Quang Binh province 38.0 3,000 15,000 18,000 6,840 - Quang Tri province 27.6 3,000 15,000 18,000 4,968 Output 4: HRD Vocational and Professional development 1500 49600 51100 0 - Voactional Training for Touriem SMEs 900 47100 48,000 - Professional Training for Public Sector Tourism Officials 600 2500 3,100 Total Viet Nam 26,500 204,600 231,100 54,089 Total for Project 62,300 355,300 417,600 54,089 1. Based on various data sources, filed observationa and site surveysin Lao PDR and Viet Nam
Stakeholders
401. In the design of the PPMS all concerned national stakeholders will be included. These are:
a. National Level
Lao PDR
• The Executing Agency (EA) is the Lao National Tourism Administration (LNTA)
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• The Project Coordination Unit is located in the LNTA’s Department of Planning and Cooperation • An national steering committee has been set up with the Director General level representatives of the LNTA, the Ministry of Finance, and the Ministry of Planning
Viet Nam:
• The Executing Agency (EA) is the Viet Nam National Administration of Tourism (VNAT) • The Project Coordination Unit (PCU) is in the Viet Nam National Administration of Tourism (VNAT) with a project PCU-field Office located in Thua Tien Hue Province • An national steering committee has been set up with the Director General level representatives of VNAT, the Ministry of Finance, the Ministry of Planning and Investment and the Ministry of Environment and Natural Resources
b. Provincial Level
Lao PDR:
• A provincial level inter-agency coordination committee (PICC) representing concerned agencies covering where appropriate natural and cultural heritage site management, urban environment management, public works and construction, road transportation, environmental managers, and concerned district authorities to ensure that all the interests and concerns of the related agencies are reflected in the project outcome. • In each province, a Provincial Implementation Unit has been set up within the Provincial Tourism Department • Each PIU include technical staff based at provincial level that will support district and village level project implementation partners and beneficiaries and coordinate with the PICC and Local Community Panel (LCP)
Viet Nam:
• In each province, a Provincial Implementation Unit (PIU) has been set up within the Provincial Tourism Department or Provincial Department of Tourism and Trade • A provincial level inter-agency coordination committee (PICC) representing concerned agencies covering, where appropriate, natural and cultural heritage site management, urban environment management, ethnic minority affairs, youth, women, public works and construction, road transportation, environmental managers, and concerned district authorities to ensure that all the interests and concerns of the related agencies are reflected in the project outcome. • Each PIU includes technical staff based at the provincial level that will support district and village level project implementation partners and beneficiaries and coordinate with the PICC and Local Community Panel (LCP)
c. Village level
• Local Community Panel (LCP) representing stake holders in the local community including village-level mass orginizations such as the Youth Union, Women’s Union and and traditional leadership
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Existing Monitoring Systems
Tourism Statistics
402. The present extent of tourism-related data collection at the national level concerns the collection of data on annual visitor arrivals, number of hotel and guesthouses, number of rooms and occupancy rates. Information is also collected on the number of restaurants and entertainment establishments, tour operators, tourist spending and foreign exchange receipts generated by tourism nationally and compiled into Annual Statistical Reports on Tourism. Only some of this data is disaggregated by province in Lao PDR and data on employment in the tourism industry, number of communities or community beneficiaries from tourism and the environmental and social effects of tourism is not systematically collected or measured. At the provincial level in Viet Nam, annual statistics yearbooks contain a chapter with detailed data on number of hotels, restaurants, tourism receipts, arrivals and arrival forecasts. Data on number of communities or community beneficiaries from tourism and the environmental and social effects of tourism is not systematically collected or measured.
403. Information on the participation of women, ethnic minorities and the poor in the tourism industry is not part of the national tourism surveillance system, mainly because of a lack of capacity on the part of public management authorities to collect and report this data. This problem is exacerbated by a lack of a simple, easy to implement standardized monitoring system.
404. One of the major problems in implementing a national monitoring system to accurately measure the economic, social and environmental benefits that tourism can produce is that there is a lack of financial resources and capacity to collect, process, and analyze information. These tasks are considered to be a burden, and are usually done only if a Project provides the necessary financial and technical support. The sustainability of such a process is linked to the ability of tourism to generate public revenues that can be used to implement monitoring protocols once project resources are finished.
405. Several projects in the GMS region have developed pilot pro-poor tourism monitoring systems including the UNESCO-LNTA Nam Ha Ecotourism Project12 and the ADB Financed Mekong Tourism Development Project13. While these have provided rich lessons in how to monitor pro-poor tourism interventions there is still a lack of standardization in monitoring approaches and a lack of capacity to carry them out at the national, provincial, district and village level.
PPMS Approach
406. The conceptual approach of the Project Performance Management System is to design a system that is integrated, participative and as easy as possible to implement. Ideally, the methodology will build on existing procedures, consider lessons learned in the GMS, and test the application of the system throughout the project area before making adjustments and scaling-up aspects of the system to the national level.
407. The PPMS will incorporate: (i) stakeholder consultation from the national, provincial, district and village level to develop and implement the system; (iii) assessment techniques at the village level to compliment secondary data sources; (iv) the organizational structure of the Project and institutional capabilities of the EA; (v) the need to establish indicators, data sources, data processing and report
12 UNESCO LNTA Nam Ha Ecotourism Project, 1999 – 2008 13 Mekong Tourism Development Project, 2003 - 2008
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production responsibilities for PIU’s under each project output; (vii) ways to measure evidence to establish causality between project inputs and project outputs as well as evidence of the overall impact of the project; (viii) a methodology for data collection, processing, analysis and reporting (information dissemination) at national, provincial, district and village level; (ix) determine PPMS resource requirements (staff, equipment, costs); and (x) a simple but effective approach.
408. At each level, consideration will need to be given to what level of managerial and technical support will be required to provide sufficient backing to the project teams that will work directly with government agencies and participating communities. The EA’s existing institutional capacity to implement the PPMS, including available management information systems (MIS) to track selected indicators, will be reviewed and expanded where necessary.
409. The PPMS will be established with the assistance of international and national consultants, PCU and PIU staff and will be implemented in collaboration with government staff from tourism, cultural and natural heritage, and town planning authorities. Information on broad tourism trends will be collected at the national level by the PCU, and provincial information and information specific to project interventions will be collected by PIU’s. Data will be collected annually from the public and private sector and communities on, for example, visitor arrivals, tourism revenue, the distribution of tourism revenues, employment in tourism or tourism-related jobs, participation of women, youth and ethnic groups in tourism, the environmental and social effects of tourism and local people’s satisfaction with the way tourism is organized in their communities. Data will be collected, compiled and analyzed at the PIU level and passed on to the PCU for compilation into unified reports and for dissemination of these reports back to the PIU’s, the National Project Steering Committee and in international meetings such as GMS Tourism Working Group Meetings and the project’s bi-annual Subregional Project Steering Committee Meeting. The PIU will publicize the contents of these reports at the provincial, district and community level, and utilize the data for decision making regarding the formulation of bi-annual action plans of the project and the implementation of management actions.
Project Performance Management System (PPMS)
410. The PPMS will operate throughout the life of the Project, until the impact evaluation stage at the end of the Project.
411. The PPMS defines indicators and reporting systems to enable the Government, ADB, and all stakeholders to evaluate the progress and impact of each outcome, and the Project as a whole. To implement the PPMS, financial resources amounting to US$ 170,000 or US$ 10,000 per pro-poor (11), natural heritage (2), cultural heritage (1), urban environment (1) and economic corridor (2) interventions over a period of 5 years has been allocated under the project. This figure does not include consulting services or regular salaries of PCU and PIU staffs that will be paid for by the government and through other project mechanisms. Monitoring will include, for example: • Outputs delivered: Number of people trained, number of infrastructures built, number of pieces of promotional materials produced • Outcomes: Increases in income, increased equitable participation by women, ethnic groups and youth, reduction in adverse environmental conditions, increased visitation • Impact: Models of environmentally and socially sustainable tourism development are adopted that create equitable livelihood opportunities for GMS citizens, especially ethnic groups, women and youth.
412. The five outputs of the Project will be monitored and the Project’s impact assessed.
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Project Impact: The regional Sustainable Tourism Development Project (the Project) will contribute to the implementation of the GMS Tourism Sector Strategy and the provision of equitable livelihood opportunities for GMS citizens. The Project outcome will be the development of a sustainable, culturally and environmentally sound pro-poor tourism approach for the GMS.
Project design and monitoring framework
413. The design and monitoring framework is in Appendix 1. The system will be designed to monitor and evaluate the project outcome and outputs of each of the main activities of the five components.
Key Performance Indicators
414. Examples of key performance indicators to assess the effectiveness of the project in achieving outputs 1 – 5 are summarized in table 34. These indicators will be reviewed and refined as part of the establishmen of the PPMS during the early stages of the project.
Project Implementing Arrangements 124 Table 34: Examples of Key Performance Indicators (Cumulative 2009-2013)
Loa Viet Key Performance Indicators GMS # PDR Nam A. Impacts 1 Additional receipts per annum from international tourism to GMS ($ millions) 389 7,328 32,000 2 Additional jobs created directly in the tourism sector of the GMS - - 1,200,000 3 Number villages of around 100 families each with access to additional livelihood opportunities 100 80 - 4 Number of households having access to additional livelihood in the 5 Project provinces 15,000 8,000 - 5 Percent reduction in Swidden-based agriculture plots in the target villages 50% 50% - 6 Rate of deforestation in the Project provinces and GMS is reversed (Y/N) y y y 7 Number of destinations in the GMS that are applying models developed by the project 10 8 Rates of unsafe migration are decreasing in the 5 project provinces y y y B. Model sustainable tourism development projects operational 1 Number of protection and access infrastructure sets installed, operated and maintained 4 4 - 2 Number of site managers and operators trained in sustainable tourism 500 1,000 - 3 Number of model tourism or interpretation plans for natural, cultural and urban tourism areas 4 5 - 4 Number of model tour-circuits - 2 - 5 Number of positive press articles or mass media productions on the sites 10 10 - 6 Number of manuals on sustainable culture and nature tourism development 3 2 - C. Pro-poor community-based tourism and supply chains developed and operational 1 Number of community-based tours developed 3 5 - 2 Number of training programs developed 18 10 - 3 Number of pro-poor service suppliers established and employing women and ethnic groups 9 5 - 4 Number of inbound tour services suppliers employing women and ethnic groups established 18 10 - 5 Number of pro-poor tourism complexes constructed and operating 9 5 - 6 Number of provincial gender tourism strategies prepared 9 5 - 7 Number of provincial ethnic minority participation programs prepared 9 5 - 8 Number of different types of guide books, brochures and websites produced 27 15 - 9 Number of trade fairs staged per annum 1 1 - 10 Number of monitoring reports produced and disseminated 9 5 - 11 Number of Manuals on CBT and value chains produced 1 1 - D. Community-based tourist facilities on the GMS Economic Corridors 1 Percentage of women and ethnic minorities employed 30% 50% - 2 Number of different attraction sites developed in the Corridors 7 5 - 3 Number of Corridor-based community-tourism management plans prepared 2 1 - 4 Number of different types of guide books, brochures and websites produced 27 15 - 5 Number of Corridor monitoring reports produced and disseminated 2 5 - 6 Number of Corridor-based Manuals on CBT and value chains produced 1 1 - E. Capacity of public sector tourism officials and tourism SME service providers developed 1 Number of public sector tourism officials trained 2,000 2,000 - 2 Number of train the trainer courses undertaken 50 50 - 3 Number of data collection systems in place (provinces) 17 64 - F. Efficient project management services fully operational 1 Regional, national and provincial steering committee and PCU in operation 1 each 1 each - 2 PIU’s established and operational 10 5 - 3 Number of consulting services mobilized (person-months) 302 239.5 - 4 Annual Audits carried out 5 5 - 5 Bi-annual reviews 10 10 - GMS Sustainable Tourism (TA 6279-REG) Final Report
Loa Viet Key Performance Indicators GMS # PDR Nam E. Sustainability 1 Adequate Government support pro-poor community-based tourism initiatives (Y/N) y y - 2 Community institutions manage the pro-poor community-based tourism developments (Y/N) y y - 1 3 Revenue from CBT developments is sufficient for O&M and long-term monitoring (Y/N) y y - 4 Private sector organizations cooperate as partners with local communities (Y/N) y y - 5 Public revenues sufficient to cover incremental O&M costs of new tourism infrastructure (Y/N) y y - 6 Local community panels formed with voice in tourism development in their communities (Y/N) y y -
1. O&M = Operations and Maintenance
Activity Indicators
415. More detailed target indicators are expected to be prepared for each set of activities as part of the bi-annual action plans of the project to deliver each output including the following:
Output 1 Model sustainable tourism development projects operational:
• Extensive community participation with 180 villages complete and enhanced awareness of the benefits and costs of tourism by year 3. • Completed and approved planning and documentation by year 2. • Completed infrastructure design by year 2 • All IEEs, EIAs, EMPs completed and approved by year 2 • All resettlement plans prepared and being implemented by year 3 • All Gender/Ethnic minorities participation program designed and being implemented by year 3 • All construction and supervision completed by year 4 • All institutional strengthening and capacity building for O&M designed by year 2 and completed by year 3 • The design of the marketing and promotion program completed by year 3 and being implemented by year 4 • All monitoring and evaluation systems designed and operational by year 2
Output 2: Pro-poor community-based supply-chain tourism projects developed and operational:
• All institutional strengthening and capacity building completed by year 2 • Community awareness and participation program designed and being implemented by year 2 • Community-based tourism product development program designed by year 2 and being implemented by year 3 • All capacity building trainings for tourism enterprises and communities designed and completed by year 4 • All design and construction of small-scale infrastructure completed by year 4 • Design and implementation of Gender/Ethnic minorities participation program by year 2 • Community-based marketing and promotion program designed and being implemented by year 3
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• Monitoring and evaluation system designed and operational by year 2
Output 3: Community-based tourist facilities on the GMS Economic Corridors:
• Design and implementation of community awareness and participation program completed by year 4 • All planning, infrastructure design and documentation works completed by year 2 • All IEEs, EIAs, EMPs completed and approved by year 2 • All resettlement plans prepared and being implemented by year 2 • The Gender/Ethnic minorities participation program designed and implemented by year 2 • All construction and supervision completed by year 4 • All institutional strengthening and capacity building for O&M completed by year 3 • Tourism Corridors marketing and promotion program designed and being implemented by year 3 • All monitoring and evaluation systems designed and operating effectively by year 2
Output 4: Capacity of public and private sector tourism staff developed:
• Master training and trainer curriculum/training materials prepared by year 2 • Master trainers recruited and training of master trainers commenced at central institutions by year 2 • Renovation, furnishing, fitting and equipping of training centres completed by year 2 • Cascade training of trainers being undertaken at training other centres by year 4 • Monitoring and evaluation system designed and operational by year 2
Output 5: Efficient project management services fully operational
• All PCUs and PIUs established in year 1 • All long-term consultants recruited by year 1 with other recruited as needed without delay • All PCU and PIU office and equipment purchased and operational by year 1 • All PCU and PIU counterpart and support staff recruited and in place by year 1 • All management, including the PPMS, and financial reporting systems designed and operational by year 1
416. The overall monitoring and evaluation framework for the Project is outlined below.
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Table 35: Monitoring Framework for Cultural and Natural Heritage, Pro-poor Tourism and Facilitation of Tourism on Economic Corridors Subprojects
MONITORING DESIGN SUMMARY PERFORMANCE TARGETS RISKS/ASSUMPTIONS MECHANISMS
Impact By 2016 in the GMS: Assumptions The GMS Tourism Sector Strategy • Receipts from international • Reports and • GMS governments adopt is implemented tourism to the GMS increased statistics from the approach developed from $23 billion to $55 billion. government by the Project on pro- agencies, poor sustainable tourism Sustainable tourism development • 1.2 million new jobs in the tourism sector created in the development • Adequate human provides livelihood opportunities partners and for the GMS citizens GMS resources to enforce and nongovernmental strengthen environmental • Destruction of natural and organizations. cultural resources resulting and cultural heritage
from unsustainable tourism protection laws, practices reversed in the GMS regulations and guidelines in place
Risks
• Adverse economic or social upheavals such as war, political instability or natural disasters occur • Governments are unable to mobilize public and private resources to implement strategic GMS projects Outcome By 2013: Assumptions A sustainable, culturally and • At least 75,000 people in the • Review missions • Adequate planning environmentally sound pro-poor project sites benefit from and bi-annual controls and regulation tourism approach for the GMS tourism development project steering are in place and enforced developed. • Destruction of natural and committee meetings cultural resources resulting • Movement of tourists • Project survey along economic corridors from unsustainable tourism reports practices reversed in the increase project sites • Benefit monitoring • Tourists continue to • A pro-poor sustainable tourism and impact demand sustainable development approach based evaluation reports tourism products on model projects is agreed by • Official government the participating countries and reports and widely disseminated statistics. • Reports of other bilateral and multilateral agencies
Outputs For each project site (Vang Vieng Assumptions • Benefit monitoring 1. Model sustainable tourism and Siphandone in Lao PDR; and Gia Lai and Phong Nha-Ke Bang and evaluation • Site managers have the development projects reports protecting natural, cultural and in Viet Nam) necessary technical and • Monitoring of water urban heritage sites of management capacities. • Protection and access quality, pollution importance to tourism are • Adequate resources infrastructure installed, levels, and levels of operational operated and maintained dedicated to tourism solid and liquid planning and heritage • 2 site managers and operators waste generation, trained on sustainable tourism research. treatment and practices disposal. • Tourism master plans for • Environmental model natural, cultural or urban awareness surveys sites developed for community, and • Manual on culture-based for residents and
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MONITORING DESIGN SUMMARY PERFORMANCE TARGETS RISKS/ASSUMPTIONS MECHANISMS tourism in the GMS developed businesses in core • Manual on nature-based town areas. tourism in the GMS developed • Benefit monitoring • Manual on urban-based and evaluation tourism in the GMS developed reports • Project completion report
2. Pro-poor community-based and For each of the 10 participating Assumptions supply-chain tourism projects provinces • Quarterly project developed and operational • At least 3 community based progress reports • Proper selection of tourism tours developed, • Review missions activities based on generating US$ 50,000 and bi-annual community assets and • Training program developed on project steering preferences environment, culture, and committee meetings • Local authorities tourism for tour operators and • Number of ‘hits’ committed to pro-poor guides each new CBT tour tourism development • At least 1 pro-poor product or or destination service supply is, generating generates on • Planning and US$ 100,000 in annual internet web- environmental controls turnover that include women searches and enforcement and ethnic minorities • Interviews with measures in place • At least 1 inbound tour service tourists, tour • Communities willing and to be established and 1 tour operators and able to operate and company will open branch guides, hotel and maintain small office. Offices will employ a destination infrastructure minimum of 30% women and managers, • The project can recruit ethnic minorities as a merchants and qualified, versatile staff proportion of district population communities and consultants to • At least 1 pro-poor tourism • Benefit monitoring perform the variety of service complex (information and evaluation tasks envisioned under center and handicraft market) reports the project • Gender and tourism strategy • Annual pro-poor • Adequate resources are produced. Gender focal points monitoring report allocated for monitoring recruited • Project completion activities • Ethnic minority participation report program produced. • Guidebook brochure and website produced and annual trade fair held to promote local products. • CBT and supply chain monitoring protocol established and nnual report published. • Manual on CBT and tourism value chain development in the GMS produced 3. Community-operated facilities For each of the two economic Assumptions tourist and services along the corridors (North-South corridor in • Review missions GMS economic corridors that bring Lao PDR and, East-West corridor and bi-annual • Site managers will be economic benefits to local in Viet Nam) project steering able to manage and communities improved • Minimum of 30% women and committee meetings control the increased ethnic minorities as a • Interviews with flow of tourists to proportion of district population tourists, tour subproject sites employed at the sites operators and • Communities and local • Economic tourism corridor guides, hotel and authorities encourage management plan produced destination local ownership and • Guidebook, brochure and managers, operation of sites website produced for each merchants and developed under corridor communities subproject • Site monitoring protocol • Benefit monitoring • The project can recruit established for each corridor. and qualified, versatile staff and annual report published. evaluation reports and consultants to • Manual on development of • Annual destination perform the variety of tourist attractions on economic monitoring report
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MONITORING DESIGN SUMMARY PERFORMANCE TARGETS RISKS/ASSUMPTIONS MECHANISMS corridors in the GMS produced • Project completion tasks envisioned under report the project
4. Human resource capacity of Assumptions public and private tourism • At least 2000 tourism officials • Post-training stakeholders developed have acquired the knowledge evaluations and • Tourism officials attend to plan and manage reports, including the training sessions and sustainable tourism projects student feedback apply the knowledge • At least 1500 trainers are and evaluations. • Trainers are willing to conducting efficient capacity • Benefit monitoring conduct training sessions building programs for tourism and evaluation and apply acquired SMEs reports knowledge. • Project completion report
5. Efficient project management PCUs and PIUs fully staffed • Post-training The project can recruit services fully operational operate efficiently evaluations and qualified, versatile staff reports, including and consultants to perform student feedback the variety of tasks and evaluations. envisioned under the project
J. PROJECT REVIEW ARRANGEMENTS
417. The project will be supervised by the Bank through two (2) Project Review and Monitoring Missions each year and monitored through the quarterly reports provided by the PCUs and coordinated by the Subregional Project Director. In addition to the normal annual reviews, the Bank and the participating governments will undertake a mid-term review two years after project implementation commences. This review will include a detailed review and evaluation of:
• the Project scope, • implementation arrangements, • feedback from the PPMES activities, • resettlement and compensation, • consultation with community groups and affected persons, • performance of the consultants and participating NGOs, • achievement of scheduled targets, • progress on institutional and policy reforms and capacity building measures, and • cost recovery mechanisms for each subproject.
418. Remedial action will be undertaken as and where required to ensure effective project implementation and delivery of intended impacts, outcomes and outputs.
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V. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS
A. SUMMARY INITIAL ENVIRONMENTAL EXAMINATION REPORT
1. 0 INTRODUCTION
419. This report presents the initial environmental examination of the evaluation of the agreed subprojects for inclusion in the Greater Mekong Subregion (GMS) Sustainable Tourism Development Loan Project 2007-2012 undertaken by Asia Pacific Projects, Inc. on behalf of the Lao People’s Democratic Republic, the Royal Government of Cambodia, the People’s Republic of China, and Viet Nam, with the assistance of the Asian Development Bank (ADB, the Bank) project preparatory technical assistance (TA).
420. The TA identifies feasible demonstration subprojects that will be suitable for Bank funding which will assist the participating countries to develop more sustainable and pro-poor patterns of tourism while facilitating the flow of international tourists to their countries through improved tourism facilities and services at land borders and along the GMS Economic Corridors. In addition to the loan components, the TA also identifies a human resource development (HRD) component to be funded on a grant basis, provides inputs on policies, innovative financing approaches, and support a forum for enhancing investment in small to medium tourism enterprises in the participating countries and the GMS as a whole.
421. The SIEE provides a summary of the IEE’s undertaken for the demonstration projects in the Lao People’s Democratic Republic, the Royal Government of Cambodia and Viet Nam. The IEE’s for the selected sustainable demonstration projects provide (i) an introduction to the subproject; (ii) a description of the project; (iii) screening of potential environmental impacts and mitigation measures; (iv) institutional requirements and environmental monitoring program (v) public consultation and information disclosure; (vi) findings and recommendations; and (vii) conclusions.
422. A detailed description of each subproject is provided in Section III Part B (Components and Outputs) and in Appendix 5 (Detailed Subproject Descriptions). Detailed cost estimates and engineering concept diagrams for the proposed works are provided in Appendix 7. Initial environmental examinations for each subproject in each country are provided in Appendix 11.
2.0 DESCRIPTION OF THE PROJECT
Project Area
423. Cambodia, Lao People’s Democratic Republic (Lao PDR) and Viet Nam are all part of the Greater Mekong Subregion, which also embraces Myanmar, Thailand and the People’s Republic of China (Yunnan Province and Guangxi Autonomous Region).
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424. The three countries - Cambodia, Lao PDR and Viet Nam account for a total land area of 749,540 km2 and a total population in excess of 98 million people. The population density in Viet Nam is 10 times greater than Lao PDR and 3.4 times higher than Cambodia. Cambodia has a much higher proportion of lowlands (70%) in comparison with Viet Nam (20%) and Laos (30%). About 53% of Cambodia and Lao PDR is forested with only 30% of land remaining forested in Viet Nam14.
425. The climate is typically tropical monsoonal with pronounced wet and dry high seasons, high rainfall, humidity and temperatures. These climatic conditions vary with latitude and altitude within the countries – the mountains and highland areas receive considerably higher precipitation and less extreme temperatures than the floodplains or coastal plains.
426. The Mekong River flows through all three countries and continues to deposit fertile alluvial silt in the extensive floodplains within Cambodia and delta to the South China Sea in southern Viet Nam. Other major water features are the Red River in Viet Nam, Tonle Sap Lake in Cambodia and the Siphandone Wetlands in southern Lao PDR. The Mekong represents a major source of water for agriculture, human settlement, hydro-electricity production and freshwater fisheries in the countries. The wetlands found in the lowlands of the Mekong Basin, the deltas of the major rivers and the coastal plain of Thailand are critical habitats for fish species and other aquatic life.
427. All three countries have significant and diverse biodiversity values – the varying landforms and climate has led to a rich assemblage of flora and fauna. The WWF complied a list of 200 ecoregions within the world of highest significance for biodiversity conservation of which 5 are found within these three countries. These are the Annamite Ranges Moist Forests, Indochina Dry Forests, Northern Indochina Sub-tropical Moist Forests, Cardamom Mountains Rain Forests and the Mekong River and its catchment. About 1,200 species of fish have been identified in the Mekong River, including the well known endangered species such as the Irrawaddy dolphin, Mekong catfish and Giant barb. Each country has established an impressive network of conservation areas that include Biodiversity Conservation Areas, Protected Areas, National Parks, Nature Reserves and Landscape Protected Areas.
428. There are limited areas of good arable land outside of the lowlands and plains and as a consequence of high population densities, there continues to be unsustainable practices that threaten the integrity of these natural areas. These pressures include the poverty (about 38% of the total population in each country is below the poverty line); ongoing slash and burn agricultural practices in the highland areas; overexploitation of fishery resources; illegal hunting of wildlife; illegal harvesting of forest products; growing rural to urban migration and industrial development associated with urbanization; and the long term effects of wars including unexploded ordnance and chemical spray contamination. These conflicts are compounded by a lack of adequate urban services and waste treatment systems; lack of effective land and water resource management; limited integration and resources for environmental agencies to carry out roles of policy development, monitoring and enforcement; and political interference.
429. Cambodia, Lao PDR and Viet Nam have all initiated important steps towards achieving a framework for sustainable development with the approval of a range of environmental laws
14 ADB and United Nations Environment Programme Regional Resource Centre for Asia and the Pacific. 2004. Greater Mekong Subregion Atlas of the Environment
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and adoption of some international Treaties, Conventions and Bilateral Agreements. However the ability to implement these legal mechanisms remains problematic with only limited institutional capacity being currently available. The countries have benefited from the support for environmental sustainable programs facilitated by the Association of Southeast Asian Nations, United Nations, Mekong River Commission, ADB and many NGOs.
3.0 PROJECT OUTCOME
430. The main goal of the project is to contribute towards the sustainable socioeconomic development of the participating countries focusing especially on poverty reduction, sustainable development of the environment and protection of vulnerable groups from exploitation. To achieve this goal, the project seeks to:
• enhance the protection and conservation of natural, cultural and urban heritage assets of importance for tourism sector development; • increase the contributions to poverty reduction of pro-poor tourism initiatives; • improve the facilitation of tourism across the land borders and along the Economic Corridors; • raise public sector official tourism management skills at the provincial, prefecture, country, district and site level; • improve service and hygiene standards among staff in small to medium hospitality enterprises in the provinces; and • enhance locally generated private sector participation in small and medium tourism enterprise investment and operation.
4.0 PROJECT COMPONENTS
431. The Project outcome will be delivered through 5 components and related subprojects, these being:
• Sustainable Tourism Development Component: divided into three subcomponents to demonstrate how to use tourism to (i) protect natural heritage sites of importance to tourism, (ii) protect cultural heritage sites of importance to tourism, and (iii) improve the environment of key urban tourism centers; • Pro-Poor Tourism Development Component: to demonstrate an expanded approach to poverty reduction through tourism; • Facilitation of Tourism Component: divided into two subcomponents to demonstrate how to (i) tap the opportunity provided by the Economic Corridors by developing attractions at strategic locations, and (ii) how to improve border facilities and services for tourists; • Human Resource Development Component: dealing with the creation of a pool of trainers to train skilled staff in small-scale hospitality enterprises and public sector officials responsible for tourism management at the provincial and site level; and • SME Private Sector Participation Component: a component to facilitate the role of the private sector in the development of tourism, especially in the more remote provinces.
432. Table 36 summarises the agreed subprojects for each component for each participating country. A detailed description for each subproject is provided in Appendix 5.
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5.0 DESCRIPTION OF THE ENVIRONMENT
Environment Situation in Cambodia
433. The environment situation has been prepared based on a review of available information sources and field observations15.
434. Cambodia covers 181,040 km2 and is bounded on the north by Thailand and by Laos, on the east and southeast by Viet Nam, and on the west by the Gulf of Thailand and by Thailand. The country has several geographic regions. The largest region is Tonle Sap Basin and the Mekong Lowlands accounting for about 75% of the total land area. The Tonle Sap Basin- Mekong Lowlands region consists mainly of plains with elevations generally of less than 100 metres. As the elevation increases, the terrain becomes more rolling and dissected and the region is flanked by mountain ranges to the southwest (the Cardamom Mountains and the Damrei Mountains (Elephant Range) and to the north (Dangrek Mountains). Higher land to the northeast and to the east merges into the Central Highlands of southern Viet Nam. The Cardamom Mountains in the southwest rise to more than 1,500 metres. The Elephant Range, running toward the south and the southeast from the Cardamom Mountains, rises to elevations of between 500 and 1,000 metres. These two ranges are bordered on the west by a narrow coastal plain that contains Kampong Saom Bay, within the Gulf of Thailand. The Dangrek Mountains, located to the north of the Tonle Sap Basin consist of a steep escarpment with an average elevation of about 500 metres.
435. The climate in Cambodia is monsoonal and has marked wet and dry seasons of relatively equal length. Both temperature and humidity generally are high throughout the year. During the cool-dry season from November to February the temperatures are cooler (average 20-28º C.); the hot-dry season runs from March to May (average 30-35º C.); the rainy season from June to August the temperatures are relatively cool (average 22-30º C.); and during the cool-wet season from September to October the temperatures increase (average 25-30º C.). The southern third of the country has a two-month dry season; the northern two-thirds, a four- month one. Rainfall varies considerably across the country with rainfall increasing with elevation- the lowlands averages 130-190 cms per year whereas the seaward slopes of the south-west highlands (Kompong Som and Kampot provinces) receive more than 500 cms of rain per year.
436. Two water features dominate the landscape of Cambodia – the Mekong River and the Tonle Sap Lake. The Mekong enters from Laos and flows for about 500km through the country, at times being 5kms wide, before reaching southern Viet Nam. Flooding generally occurs along the river during June to November. Tonle Sap Lake is a vast lake with the rising waters of the Mekong River during the rainy season flowing back to extend the lake size to about 8000 km2 as compared with the dry season size of 2500 km2. The annual flooding, combined with poor drainage immediately around the lake, transforms the surrounding area into marshlands unusable for agricultural purposes during the dry season.
15 The information sources included the ADB Cambodia Country Analysis 2004, ADB 2004 Environmental Atlas of the Greater Mekong Region, www.country-studies.com/cambodia/geography.html, www.mongabay.com/reference/ country_studies/cambodia/GEOGRAPHY.html, geography.about.com/library/maps/blcambodia.htm None of the Provinces in Cambodia were able to identify or provide reliable environmental baseline information for their Province.
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437. Except for the smaller rivers in the southeast, most of the major rivers and river systems in Cambodia drain into the Tonle Sap or into the Mekong River. The Cardamom Mountains and Elephant Range form a separate drainage divide. To the east, the rivers flow into the Tonle Sap, while on the west they flow into the Gulf of Thailand. Toward the southern end of the Elephant Mountains, however, because of the topography, some small rivers flow southward on the eastern side of the divide.
438. Seven main biodiversity regions have been identified in Cambodia16 including the southwestern coastal ranges and marine waters; northern lowlands; northeastern forests; Kompong Cham; Mekong Delta region; Tonle Sap floodplains; and the northwestern region. The Cambodian Government instigated a National Protected Area System in 1993 and currently about 15% of the country is protected as national parks, wildlife sanctuaries, protected landscapes or multiple-use management areas.
439. There are 123 mammal species, 307 bird species and 843 fish species recorded in Cambodia with 17% of the mammal species considered to be threatened or endangered; 6% of the bird species and 2% of the fish species17. The river systems provide habitat for over 500 fish species18 and the highlands areas provide valuable habitat to many rare and endangered species, and the wetlands as important habitat for migratory birds and breeding grounds for many fish species. Among Cambodia’s larger animals are tigers, leopards, rhinoceroses, elephants and various species of bear, deer and wild cattle. Many of these species are threatened along with many of the smaller mammals due to unsustainable forest practices, over-hunting and illegal wildlife trade.
16 ADB 2001 Environments in Transition: Cambodia, Lao PDR, Thailand, Viet Nam 17 ADB 2002 Key Indiactors of Developing Asian and Pacific Countries 18 Rainboth 1996 as referenced in ADB Cambodia Country Analysis 2004,
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Table 36 : LIST OF AGREED SUBPROJECTS FOR FEASIBILITY EVALUATION
Sustainable Tourism Development Human GMS Natural Sites Cultural Sites Urban Sites Pro Poor Tourism Facilitation at GMS Facilitation on Resource Economic Location Development Borders Development Corridors Cambodia Peam Krasop Nature Prasat Sambo Prey Kratie Town solid Pro-poor Tourism Border Tourism Southern Economic Support for Reserve in the GMS Kuk, 7th century waste water Subproject in Siem Facilities Improvement Corridor Tourism training of Cardamom Prasats and ancient collection and Reap Province, Subproject Zone covering Koh trainers for small- Biodiversity city in Kampong treatment, Kratie Phnom Penh City incorporating Kong, scale hospitality Conservation Thom Province Province and environs, Preah international borders Sihanoukville, Kep, service skills and Corridor (BCC), Koh Vihear and Pailin at Cham Yeam, Prek and Kampot training of public Kong Province Province Chak, Poipet, Phnom Province sector officials at Dan, Osmach, Chorm, two existing Don Kralor, Phnom training and Den, and Trapaing education Phlong institutions Lao PDR Siphandone None Vang Vieng Town Pro-poor Tourism Border points included On North-South As above Wetlands in waste water in Subproject in as part of North-South Corridor: 5 points Champassak Vientiane Province Saravanh Province, Corridor Subproject plus two border Province Oudomxay points – (i) Nam Ha Province, Huaphanh Protected Area Province, Bokeo Interpretation Province, and Vang Center, (ii) Nam Vieng District in Eng Cave Complex, Vientiane Province (iii) Vat Mahaphot and ancient site, (iv) Nam Phae Village scenic viewpoint, and (v) don Chai/Phimonsin Village Handicraft Market Viet Nam Phong Nha-Ke Bang Protection and None Pro-poor community Border tourist facilities Development of As above UNESCO Listed conservation of based tourism and improvements at: Lao tourist attractions National Park in the ethnic minorities, supply chain Bao, Ha Tien, Moc along the East- GMS Northern cultural landscape in initiatives in Hue, Bai, Le Thanh, Bo Y, West Corridor in Annamites Bac Kan Quang Tri, Quang Chalo, and at Nam Viet Nam Biodiversity Binh, Kon Tum, Gia Xoi opposite Na Meo Conservation Lai, and Dak Lak Corridor between Viet provinces of Central Nam and Lao PDR Vietnam
Project Benefits, Impacts, Assumptions, and Risks 151 440. Cambodia retains about 50% of the original moist forests, one of the largest proportions of areas of forest cover in the Greater Mekong Subregion (ADB 2004). However Cambodia’s natural forest resources have been degraded over time by widespread use of swidden agricultural practices, unsustainable large scale logging and forest harvesting practices, weak regulatory laws, corruption and the impacts of war. Along the southern coastline, saltmarshes and mangrove habitats have been threatened by commercial shrimp farming that has cleared the mangroves, introduced fertilizers and created high levels of wastewater.
441. The principal policy instruments for environmental and natural resource management within Cambodia are the Royal Decree on the Creation and Designation of Protected Areas November 1993 and the Law on Environmental Protection and Natural Resource Management 1996. In addition there have been Subdecrees approved for organization of the Ministry of Environment (1997); water pollution control (1999); environmental impact statements (1999); solid waste management (1999); organizational structure and functioning of the Cambodia National Mekong Committee (1999) and management of the Tonle Sap Biosphere Reserve (2001). The country has also adopted the following international Treaties, Conventions and Bilateral Agreements – Convention Concerning the Protection of the World Cultural and Natural Heritage; Convention on Wetlands of International Importance; United Nations Framework Convention on Climate Change.
442. The Ministry of Environment (MOE) is primarily responsibility for environmental management within Cambodia. However other Ministries are involved including Ministry Agriculture, Forestry and Fisheries; Ministry of Water Resources and Meteorology; Ministry of Rural Development; Ministry of Public Works and Transport; Ministry of Interior; Ministry of Tourism; Ministry of Planning; Cambodia National Mekong Committee and the Council of Ministers. The MOE has a range of powers that include the management of Protected Areas, environmental policy, the EIA process and ensuring compliance with international environmental treaties and conventions. By virtue of the 1999 Declaration of Organisation of the Provincial and Municipal Environment Department, a range of environmental responsibilities have been delegated to the Provincial, District and Commune level, although limited resources affect the capacity to undertake these responsibilities.
443. The key environmental issues in Cambodia are insufficient legislative framework; uncoordinated institutions; unsustainable extraction of fishery and forest resources; lack of land and water resource management; and unplanned urban and industrial development19. Cambodia is one of the highest landmined and unexploded ordnance affected countries in the world and this reduces the potentially productive land for agriculture and other uses such as tourism – they also pose a risk of contaminating both soil and water. A Five Year Mine Action Strategic Plan is being developed by the Cambodian Mine Action and Victim Assistance Authority20.
19 ADB Cambodia Country Analysis 2004, 20 ADB Cambodia Country Analysis 2004, GMS Sustainable Tourism (TA 6279-REG) Final Report
Environment Situation in Lao PDR
444. Sustainable Tourism Development Project (the Project) will contribute to the implementation of the GMS Tourism Sector Strategy and the provision of livelihood opportunities for GMS citizens. The Project outcome will be the development of a sustainable, culturally and environmentally sound pro-poor tourism approach for the GMS. The Project seeks to: (i) enhance the protection and conservation of natural, cultural and urban heritage assets of importance for tourism sector development; (ii) increase the contributions to poverty reduction of pro-poor tourism initiatives; (iii) develop sustainable Tourism Corridors; (iv) raise public sector official tourism management skills at the provincial, district and site level; and (v) improve service and hygiene standards among staff in small to medium hospitality enterprises in the provinces.
445. The Project will have five outputs: (i) model sustainable tourism development projects protecting natural, cultural and urban heritage sites of importance to tourism are operational; (ii) pro-poor community-based and supply-chain tourism projects are developed and operational; (iii) community-operated facilities along the GMS economic corridors bringing economic benefits to local communities improved; (iv) human resource capacity of public and private tourism stakeholders are developed; and (v) efficient project management services are fully operational.. Environmental assessment was conducted for small-scale infrastructure under outputs 1 through 3 while environmental consideration was included in Component 4.
Description of the Environment
446. Lao PDR is part of the Greater Mekong Subregion, which also embraces Cambodia, Vietnam, Myanmar, Thailand and the People’s Republic of China (Yunnan Province and Guangxi Autonomous Region). Lao PDR accounts for a total land area of 236,800 km2 and a total population in excess of 6 million people. About 70% of the country is mountainous with only 20% of the land area being alluvial plains and terraces of the Mekong and its tributaries. About 53% of Lao PDR is forested. The climate is typically tropical monsoonal with pronounced wet and dry high seasons, high rainfall, humidity and temperatures. These climatic conditions vary with latitude and altitude within the country – the mountains and highland areas receive considerably higher precipitation and less extreme temperatures than the floodplains.
447. The Mekong River flows through the Siphandone Wetlands in southern Lao PDR. The Mekong represents a major source of water for agriculture, human settlement, hydro-electricity production and freshwater fisheries in the countries. The wetlands are crucial feeding and rearing habitats for one of the most diverse fish fauna areas other aquatic life in the world. About 1,200 species of fish have been identified in the Mekong River, including the well known endangered species such as the Irrawaddy dolphin, Mekong catfish and Giant barb.
448. The key environmental issues in Laos are insufficient legislative framework; uncoordinated institutions; limited resources for management and enforcement; unsustainable extraction of fishery and forest resources; political intervention; lack of land and water resource management; unplanned development; and UXO’s. Lao PDR has initiated important steps towards achieving a framework for sustainable development with the approval of a range of environmental laws and adoption of some international Treaties, Conventions and Bilateral Agreements. However the ability to implement these legal mechanisms remains problematic with only limited institutional capacity being currently available. The country have benefited from the support for environmental sustainable programs facilitated by the Association of Southeast Asian Nations, United Nations, Mekong River Commission, ADB and many NGOs.
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Potential Impacts and Environmental Management Plan
449. Due to small scale of interventions, potential negative impacts associated with the design, construction and operation of the proposed subproject activities will be temporary, minor, and localized in extent and can be mitigated to acceptable levels.
450. Visitor Impacts on Cave System. A baseline survey will be conducted if construction of a walkway and lighting system within the Tham Eng cave site on the North-South Economic Corridor will be selected as part of the subprojects under the component 3. This is expected to indicate that the impacts can be effectively mitigated through the adoption of careful planning, design, construction and operation of the site.
451. UXO. A baseline survey is also required to undertake a level 3 survey of UXO to ensure the risks of exposure by the community and visitors is minimal with the development of small scale tourism infrastructure. This is a precautionary measure as one of the provinces selected for pro-poor program is an affected areas for UXO, there needs to be confirmation that UXO clearance is undertaken in areas where there is to be site disturbance for the subproject including all below-ground works and construction.
452. Construction Impacts. The subprojects involve small construction works (e.g. scenic lookout, market place, toilets, walking trails) and possible environmental impacts from construction may include loss of vegetation, increased dust, noise, traffic, wastes and soil erosion. These impacts will be temporary and will be addressed by the use of a number of specific environmental screening criteria incorporated within the EARF.
453. Induced Impacts. The implementation of the sub-projects is expected to generate an increase in visitors and this will result in increased demands for wastewater, solid wastes, visitor facilities and services. The interventions have been prepared to upgrade existing locations and facilities to ensure improved sustainability in the long term. The IEE identifies a range of appropriate mitigation measures, baseline surveys and monitoring systems to minimise the impacts on the environment resulting from growth in visitor numbers.
454. Environmental Benefits. The Project will improve the environmental and health situation in and in the vicinity of the subproject sites and in a potentially larger area if the models and approaches towards the development of the subprojects are replicated as envisaged. Water born diseases are a significant health factor in the vicinity of all the subproject sites— especially the sustainable tourism and pro-poor sites. The Project will reduce solid waste water pollution in the Vang Vieng River in Lao PDR, as well as improve the overall amenity of the town as a tourist destination. The Project will also demonstrate the use of low impact visitor access infrastructure in sensitive environments such as at the Siphandone Wetlands and at key attractions along the North-South Economic Corridor in Lao PDR.
Public Consultation
455. A series of public consultation was conducted at the national, provincial, commune and village levels during the project preparation. Overall, the consulted agency representatives and villagers supported the proposed project activities and provided variable inputs to the location and design of interventions. No major issues were identified with the proposed projects and the public consultation allowed ideas were integrated in the design of mitigation measures and monitoring programs. Public consultation is an on-going and integral process of the project
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implementation. Continuous dialogue with the project affected and/or beneficiary communities as well as relevant governments will be carried out during the detailed design and implementation.
Environmental Assessment Framework
456. An environmental assessment and review framework (EARF) will be prepared to guide the screening of subprojects, set out institutional arrangements in relation to environmental management and monitoring, and define environmental assessment requirements complying with the applicable laws and regulations of the Government and with ADB’s environment policy and Environmental Assessment Guidelines.
457. The PIU [please fill in the name] has the main responsibility of implementing the environmental management plan while the EA is responsible for coordinating relevant local agencies to ensure adequate quality of IEEs, obtain approval from WREA and monitor overall subproject and EMP implementation.
458. The Project costs for outputs, 2 and 3 include estimated costs for environmental personnel at the PCU and PIU level. Costs have also been allocated for monitoring baseline conditions and undertaking environmental assessments during the life of the project implementation.
Conclusion
459. An initial environmental examination (IEE) prepared for subprojects in Lao PDR found that the majority of proposed interventions will not adversely affect environmentally sensitive areas, nor will they cause significant changes in the physical, biological, and social environment. Any environmental effects would be minor and easily mitigated through the adoption of sound environmental planning, design, construction and management practices at all sites. No EIA or EMP is required for the Project.
460. A special study will be conducted if the proposed interventions at the Tham Nam Eng cave site will be selected to ensure that karst environments would not be adversely disturbed or impact upon. For subprojects under Output 2, a level 3 survey of UXO is required prior to any site disturbance including all below-ground works and construction.
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Environment Situation in Viet Nam
Introduction
461. Sustainable Tourism Development Project (the Project) in Viet Nam21 will contribute to the implementation of the GMS Tourism Sector Strategy and the provision of livelihood opportunities for GMS citizens. The Project outcome will be the development of a sustainable, culturally and environmentally sound pro-poor tourism approach for the GMS. The Project seeks to: (i) enhance the protection and conservation of natural, cultural and urban heritage assets of importance for tourism sector development; (ii) increase the contributions to poverty reduction of pro-poor tourism initiatives; (iii) develop sustainable Tourism Corridors; (iv) raise public sector official tourism management skills at the provincial, district and site level; and (v) improve service and hygiene standards among staff in small to medium hospitality enterprises.
462. The Project will have five outputs: (i) model sustainable tourism development projects protecting natural, cultural and urban heritage sites of importance to tourism are operational; (ii) pro-poor community-based and supply-chain tourism projects are developed and operational; (iii) community-operated facilities along the GMS economic corridors bringing economic benefits to local communities improved; (iv) human resource capacity of public and private tourism stakeholders are developed; and (v) efficient project management services are fully operational. Environmental assessment was conducted for small-scale infrastructure22 under outputs 1 through 3 while environmental consideration was included in output 4.
Description of the Environment
463. 3. The Project area has a typical tropical monsoon climate with 2 distinct seasons. The dry season lasts from January to August and the rainy season from September to December. The total rainfall in the rainy season makes up for about 75% of the average annual rainfall, which is about 1,800-1,850 mm. In the dry season rainfall is limited, but a rainy spell in May may cause short duration flooding. Surface and groundwater quality varies among the project area. The water quality of some rivers in the project area meets the national standard for irrigation water while some do not meet the drinking water standards.
464. The Phong Nga Ke Bang National Park is the UNESCO-inscribed natural World Heritage site in the project area. It has three zones: (i) administrative zone where tourism activities are allowed; (ii) conservation zone where activities for protection and conservation purposes are allowed; and (iii) strictly protected zone where only the activities for scientific research and study purposes are allowed. The main tourism activity so far is to visit the Phong Nha cave located in the administrative zone. A master plan for an entire park management is being developed under the GTZ fund.
21 The Project covers the following 5 provinces: Quang Binh,Thua Tien Hue, Quang Tri, Bac Kan and Kao Ban. 22 Small-scale infrastructure includes the following four categories of civil work: (i) construction or update of existing footpath, boat landing areas, and drainage; (ii) improvements of existing waste collection and management practices; (iii) construction or rehabilitation of existing markets; and (iv) protective and improvement measures in caves.
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465. There are nine communes living in the buffer zone23. The communities are mainly Kinh and have limited arable land, water resources and employment opportunities, resulting in a pressure to illegal extraction of forest resources. Under the poor-poor component relatively large percentage of the communities are ethnic minority groups. They are primarily engaged in agriculture but are experiencing food shortage. Many households have limited access to basic medical and social services.
Potential Impacts and Environmental Management Plan
466. Due to small scale of interventions, potential negative impacts associated with the design, construction and operation of the proposed subproject activities will be temporary, minor, and localized in extent and can be mitigated to acceptable levels.
467. UXO. A baseline survey is required to undertake a level 3 survey of UXO for all site developments to ensure the risks of exposure to the community and visitors is minimal. Under the pro-poor activities, water quality assessment is also required as a precautionary measure within A Luoi District, to ensure the risk of any residue chemical contamination in the local area is cleared.
468. Impacts on Fauna and Fauna. The proposed small-scale infrastructure under output 1 and 2 will be conducted only within the administrative zone of the Phong Nga Ke Bang National Park. Within this zone, there are some endangered species identified in the zoning map. However, the proposed small-scale civil work will be outside the ecologically significant areas and civil work is not likely to have any significant impacts. A baseline survey on vegetation surrounding the intervention sites will be conducted during the detail design to assess vegetation impacts and take into account the design and construction of the interventions.
469. Visitor Impacts on the Natural Environment. Increased visitors to natural areas can lead to degradation, damage or loss of natural values. Many of the interventions are small scale nature based tourism products, purposefully designed to have limited impact on the natural and cultural values. A baseline survey will be conducted to assess the existing visitor impact within Phong Nga Ke Bang National Park on (i) viewing of the Hatinh Langurs; and (ii) the condition and values of Phong Nha and Dong Tien caves. A baseline study will enable to formulate effective mitigation measures and adopt careful planning, design, construction and operation of the improved visitor facilities and tourism operations at these sites.
470. Waste collection and treatment. Increased visitors will generate increased waste and wastewater. Proposed design includes a provision of waste collection bins and quipment, installation of gross pollutant traps in the existing drains, and improved management and hygiene practices at the solid waste site. The existing landfill site has sufficient capacity to treat increased wastes. Monitoring of waste collection will be undertaken to measure the volume and types of waste so as to design and modify current waste collection and treatment practices and awareness programs.
471. Construction Impacts. The subprojects involve small construction works (e.g. scenic lookouts, walking trails, parking areas, picnic facilities, interpretation). Possible environmental impacts from construction may include loss of vegetation, increased dust, noise, traffic, wastes and soil erosion. These impacts will be temporary and will be addressed by the use of a number of mitigation measures incorporated in the IEE and within the EARF.
23 An enlarged buffer zone covering 13 communes has been proposed but has not yet been approved.
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472. Environmental Benefits. The Project will improve the environmental and health situation in and in the vicinity of the subproject sites and in a potentially larger area. The interventions are planned to address existing environmental issues and manage increased visitation. The linking of sites along routes will improve the diversity and quality of the visitor experience and allow more local people to benefit from involvement in tourism. The projects will allow for greater awareness of the natural and cultural values and adoption of management practices to ensure sustainable tourism use. The Project will help reduce solid waste pollution in the Song Chay River in Phong Nga Ke Bang National Park and reduce sanitation issues in local villages. The Project will also demonstrate the use of low impact visitor infrastructure in sensitive karst environments such as at Phong Nga Ke Bang National Park.
Public Consultation
473. A series of public consultation was conducted at the national, provincial, commune and village levels during the project preparation. Overall, the consulted agency representatives and villagers supported the proposed project activities and provided variable inputs to the location and design of interventions. No major issues were identified with the proposed projects and the public consultation allowed ideas to be integrated in the design of mitigation measures and monitoring programs. Public consultation is an on-going and integral process of the project implementation. Continuous dialogue with the project affected and/or beneficiary communities as well as relevant governments will be carried out during the detailed design and implementation.
Environmental Assessment and Review Framework
474. The IEE prepared for the Phong Nga Ke Bang National Park subproject will guide the PIU to prepare for an EIA24 based on a detail design. The EIA report will be submitted to the Provincial Peoples Committee through provincial DONRE for approval. Subprojects to be selected under outputs 2 and 3 will follow the environmental assessment and review framework (EARF) to screen subprojects, set out institutional arrangements in relation to environmental management and monitoring, and define environmental assessment requirements complying with the applicable laws and regulations of the Government and with ADB’s environment policy and Environmental Assessment Guidelines.
475. The PIU to be set up in the Provincial Peoples Committee of the participating project provinces has the main responsibility of implementing environmental management plan while the Viet Nam National Administration for Tourism (VNAT) is responsible for coordinating relevant local agencies to ensure adequate quality of IEEs, obtain approval from PPC through DONRE and monitor overall subproject and EMP implementation. The Project costs include baseline survey costs for UXO, vegetation and visitor impacts as well as environmental personnel (4 person months for international and 12 person months for national consultants) at the PCU and PIU level.
24 According to the Decree No. 80/2006/ND-CP of August 9, 2006, a project is classified either one requiring an EIA report or one requiring a CEP. Appendix I of the Decree requires an EIA report for any project that will be carried out in a part of a national park regardless of its scope, scale and impacts. The required contents of an EIA are equivalent to those of an IEE under the ADB’s Environment Policy. The discussion with the provincial DONRE in Quang Binh confirmed that (i) the proposed interventions are small in scale and impacts; and (ii) the proposed baseline survey and monitoring will be adequate to address potential negative impacts in the design and location of interventions.
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Conclusion
476. An initial environmental examination (IEE) prepared for subprojects in Viet Nam found that the proposed interventions will not adversely affect environmentally sensitive areas, nor will they cause significant changes in the physical, biological, and social environment. Any environmental effects would be minor and easily mitigated through the adoption of sound environmental planning, design, construction and management practices at all sites.
Subproject Environmental Descriptions
477. A full description of the physical, ecological and socio-economic values for each subproject is provided in Appendix 10 of the TA report.
6.0 FORESCASTING ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES
478. Table 37 provides a summary listing of those projects which will have no significant impacts to those subprojects that may have components where this potential to cause adverse impacts and where an IEE should be prepared. Measures to mitigate any environmental impacts for each subproject in each country are provided in Appendix 11 of the TA report.
479. Three subprojects have been assessed as category B under the criteria of the ADB Environmental Assessment Guidelines 2003 and with consideration to relevant environmental legislation within the three countries , where an IEE is required to determine if an EIA and EMP need to be prepared. These three subprojects are:
(i) Clearing about 2.25ha of mangrove forest within Peam Krasop Wildlife Sanctuary in Cambodia to allow for construction of a 500m coastal walkway; (i) Construction of a walkway and lighting system within the Tham Nam Eng cave site on the North-South Economic Corridor in Lao PDR; and (ii) Construction and operation of a solid waste management site at Kratie in Cambodia.
480. Subprojects (i) and (ii) are not considered to be developments that will cause major adverse environmental impacts but an IEE is recommended as a precautionary measure given the sensitivity of karst and mangrove environments to disturbance. It is expected that the proposed works can be mitigated through the adoption of careful planning, design, construction and operation of the sites but that an IEE will help inform those practices. Subproject (iii) is a major site works and the preparation of an IEE is an important step in assuring that adequate institutional resources and mitigation measures are put into place.
481. The measures to reduce or mitigate the potential impacts identified with these proposed works are listed in Table 36. The Table indicates the (i) site works/activity, (ii) potential environmental impacts, (iii) magnitude of impact, (iv) the extent of impact and (v) mitigation measures that can be taken. The magnitude assesses whether the impacts of the works will be minor or significant given consideration of (i) absolute and relative amount of ecosystem affected and (ii) intensity of impact. The extent of the impact is based on the likely duration of the environmental impacts (S = short term (<1yr), M= medium term (1-10 yrs), L= long term (>10 yrs). In most cases the mitigation measures are capable of reducing or minimising the impacts over time.
(i) Peam Krasop Wildlife Sanctuary Walkway
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482. The new walkway will result in a loss of mangrove forest (about 2.25ha) but this is considered relatively minor (less than 0.01%) given the extensive area of this habitat within the area. There is already some fragmentation of the mangrove forest in the local area caused by the port construction and the locally constructed walkway. The potential impacts of the walkway can be reduced by a number of mitigation measures including:
• obtaining specialist architectural and engineering advice for the design, materials and construction • restricting the walkway to 500m length • making the walkway 2.5m wide to reduce the impact zone and fragmentation involved with longer return walks • careful selection of the route (e.g. using existing clearings between trees) • use of an elevated walkway above the mangrove forest (e.g. 100m) • applying environmental standards for work practices to limit extent of mangrove removal and reduce litter/site impacts • install handrails along walkway
483. However taking a pre-cautionary view, the proposed new walkway will impact on undisturbed mangrove forest vegetation, and was thus considered as Category B requiring an IEE to be prepared. The IEE indicates that the environmental impacts of the proposed new walkway can be minimized with the adoption of a range of mitigation measures involving good site planning, design and construction techniques. It is crucial that a master plan be prepared prior to commencement of any substantial future and that a baseline survey of the mangrove forest be undertaken. An outline of the baseline survey and an environmental monitoring plan for these values has been prepared.
(ii) Tham Nam Eng Cave
484. The cave is currently being used for village organized cave tours using headlamps or torches with only limited environmental management practices in place. The increased visitation levels and potential for increasing cave tours will not be sustainable in the long term unless environmental management practices are adopted. The proposal is to construct a walkway and introduce a lighting system within the first 200m of the Tham Nam Eng cave that can cope with increased visitors. It will have the following benefits:
• formalizes the current cave tours for larger groups to the 200m point within the cave which appears to be robust and capable of handling increased visitors (e.g. wide chamber); • allows for smaller guided groups with suitable caving equipment to proceed further recognizing the physical mobility constraints for some visitors; • reduces the potential impacts of larger groups e.g. dispersion of mud, walkway can be designed to allow viewing rather than touching of features; • improved visitor group management including safety; and • provide a choice for visitors (e.g. time, experience, age/capability) and different priced cave tour programs.
485. Taking a pre-cautionary approach, given the fragile nature of karst systems, it is considered appropriate for an IEE to be prepared for the construction of a walkway and introduction of a lighting system within the first 200m of the Tham Nam Eng cave. Whilst it is considered that such works can be designed and installed without creating adverse environmental impacts, it
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would be beneficial to have expert speleological advice to assess and then guide this work based on current best practice for achieving sustainable cave tour experiences. The IEE should also consider the potential impacts upon the bat habitat near the entrance of the cave as a result of such works. An outline of the baseline survey and an environmental monitoring plan for these values has been prepared.
(iii) Kratie Town
486. The environmental impact issues of primary concern in relation to land filling operations are typically water quality and air quality. Surface waters and groundwater can be polluted by leachate from landfill sites as it can cause serious water pollution if it is not properly managed. Surface water run-off from land surrounding a landfill disposal can also cause unacceptable sediment loads in receiving waters, while surface water infiltration of wastes can lead to excessive generation of leachate. Landfill gas contains methane, carbon dioxide and a variety of potentially corrosive, toxic or odorous components. Emissions of methane and carbon dioxide contribute significantly to the ‘greenhouse effect’. Uncontrolled migration of landfill gas to the root zone of plants may lead to vegetation dieback. Methane can also present an explosion risk and if not used, a wasted energy/fuel source.
487. The screening of impacts indicates that there will be potential environmental impacts associated with the proposed developments for the Kratie Town landfill site. The site visit and consultation process suggest that the physical characteristics of the selected area may be a suitable for developing a sanitary landfill and that the potential impacts are most likely to be confined to the site and buffer area. However, in the absence of any baseline survey information, IEE, EIA or EMP it is appropriate that a precautionary approach be taken and that a comprehensive IEE be undertaken to assess whether an EIA and EMP are required. A program for the initial baseline surveys has been prepared along with an environmental monitoring plan, based on the baseline information surveys having been conducted. As a first step, it will be necessary to conduct a UXO clearance check for the site and to remove any UXO to a suitable depth where earthworks (e.g. road construction, drilling, earth removal) may occur.
Project Benefits, Impacts, Assumptions, and Risks 161 Table 37 : Overall Assessment of Subprojects Environmental Impact
Country Tourism Development Component Subproject Potential for No Significant Adverse Environmental Environmental Impacts Impacts CAMBODIA 1. Sustainable Tourism Natural Heritage Protection and Conservation Peam Krasop Wildlife Sanctuary • • Mangrove forest wetland All other works walkway Cultural Heritage Protection and Sambor Prei Kuk Cultural Heritage • Conservation Monument Urban Tourism Centre Environment Kratie Town Solid Waste Management • • Improvement Solid waste management All other improvements site 2. Pro Poor Siem Reap, Phnom Pehn • 3. Facilitation of Tourism Southern Economic Corridor • Border checkpoints • LAO PDR 1. Sustainable Tourism Natural Heritage Protection and Conservation Siphandone Wetlands • Urban Tourism Centre Environment Vang Vieng Town Improvements • Improvement 2. Pro Poor • 3. Facilitation of Tourism North South Economic Corridor and • • checkpoints Tham Nam Eng cave site All other sites only VIET NAM 1. Sustainable Tourism Natural Heritage Protection and Conservation Phong Nha-Ke Bang World Heritage • Park Cultural Heritage Protection and Gai Lai Ethnic Minorities • Conservation 2. Pro Poor A Luoi and Hue Provinces • 3. Facilitation of Tourism East West Economic Corridor • Border checkpoints •
GMS Sustainable Tourism (TA 6279-REG) Final Report
Table 38 : Mitigation Measures for Category B Subprojects Site Subproject Impacts Magnitude Extent Mitigation Measures /Activity Peam Krasop Construct new Drainage flows and A L • Upgrade existing tracks where possible including widening of existing track, Wildlife walking paths localized site erosion re-route sections at better grade to reduce drainage and erosion risks, Sanctuary including a link Damage to historic sites compacted gravel surface and install drainage deflection to disperse run-off. from the new entry Increased litter • Design track route to minimize impacts on known historic features site to reach the • Involve archaeologist in track siting and/or guiding site works or adopt three temple sites guidelines/protocols for such works to minimize site impacts and a single • Visitor signage and improve village awareness of litter reduction with bins looped trail located at trackheads between the three sites Construct viewing Impact on historic features A L • Siting of the platforms would be informed by archaeological surveys already platforms e.g. disturbance to undertaken and the desired route to view and photograph monuments (many foundations of these areas are already worn-out) Visual impact • Design the platforms to be of low elevation with no digging of post holes or foundations • Use of timber decking or natural gravel source Install Visual impact A M • Interpretation to be based on the Thematic Interpretation Plan for the site interpretation and which may utilize various interpretation techniques to communicate to visitors signage • Minimize site signs and interpretation panels to avoid clutter • Locate main interpretative panel near track head to each of the monument sites Tham Nam Eng Install walkway Damage to cave features B L • Install steel mesh walkway to improve visibility of cave floor, improve user Cave site and lighting from construction works, safety and to allow sections to be pre-made outside of cave for installing system into cave installing of lights and • Review minimal lighting system for small group use that allows switch-off as (200m) increased visitors group moves through sections of the cave Litter • Locate the walkway in the centre of the river passage to minimize touching of features • Make visitors aware of cave care practices including no leaving of litter – weekly check and clean-up also adopted • Monitor cave condition on an annual basis from base-line condition assessment prior to installing walkway Kratie solid Upgrade access Site disturbance A L • Use existing road where practical to minimise site impacts waste site road Increased run-off with road • Install drainage drains with regular dispersal to adjacent lands via small widening grassed swales UXO • Confirmation of UXO clearance to third level
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Site Subproject Impacts Magnitude Extent Mitigation Measures /Activity Excavation and Erosion A L • Planned and managed works to reinstate surfaces after excavation construction works Loss of vegetation • Minimize clearing of vegetation and retain existing vegetation where possible to upgrade landfill UXO for screening of site site • Confirmation of UXO clearance to third level
Unloading, Odour, animal foraging, A L • Cover waste daily or often enough to reduce problems spreading and wind and dispersal of litter • Install gas vents compacting of waste • Identify appropriate measures to reduce rodents and reduce birds at tipface at the site Unloading, Odour, animal foraging, A L • Cover waste daily or often enough to reduce problems spreading and wind and dispersal of litter • Install gas vents compacting of waste • Identify appropriate measures to reduce rodents and reduce birds at tipface at the site Composting Odour A L • Maintain aerobic conditions during the composting process facilities Operations and Leachate from landfill site B L • Ensure under-lying soils are relatively impermeable (e.g. clay-lined base) or use base maintenance causing contamination of liner with drains installed during construction to allow runoff and leachate to be surface and ground water collected Landfill gas causing odour • Install gas vents and manage gas venting flaring or collection and utilization of gas if and nuisance to neighbours feasible Incineration of hazardous • Maintain buffer area around landfill site, fencing and rodent control waste • Incineration of hazardous waste Health and safety of workers • Regular inspection and development of practical operation and maintenance procedures • Adequate environmental monitoring programs in place • Adequate funding, training and supervision • Incorporate safety provision in the operating procedures, preparation of contingency plan for response to accidents and enforcement of safety standards • Reference to useful documents such as World Bank 2004 Pollution Prevention and Abatement Handbook Section II Management of Hazardous Waste Upgrade access road Site disturbance A L • Use existing road where practical to minimise site impacts Increased run-off with road • Install drainage drains with regular dispersal to adjacent lands via small grassed widening swales UXO • Confirmation of UXO clearance to third level
A = minor impacts, B = significant impacts, S = short term (<1yr), M= medium term (1-10 yrs), L= long term (>10 yrs)
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7.0 INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MONITORING PLAN
Institutional Requirements
488. The institutional requirements for each subproject in each country are provided in Appendix 10 of the TA report.
489. In Cambodia the Ministry of Environment (MOE) is primarily responsible for environmental management within Cambodia. However other Ministries may be involved in projects including Ministry Agriculture, Forestry and Fisheries; Ministry of Public Works and Transport; Ministry of Interior; Ministry of Tourism; Ministry of Planning; and the Ministry of Tourism. The MOE has a range of powers that include the management of Protected Areas, environmental policy, the EIA process and ensuring compliance with international environmental treaties and conventions. By virtue of the 1999 Declaration of Organisation of the Provincial and Municipal Environment Department, a range of environmental responsibilities have been delegated to the Provincial, District and Commune level, although limited resources affect the capacity to undertake these responsibilities. The Ministry of Environment (MOE) using the criteria in the sub decree on Environmental Impact Assessment Process, makes a judgement as to whether projects require an IEE, EIA or EMP. There are no specific criteria relating to natural and historic areas of significance and only tourism developments involving more than 50ha require an IEE or EIA.
490. In Lao PDR, the Environmental Protection Law 1999 provides overall responsibility for environmental protection to the Science, Technology and Environmental Agency (STEA). The Regulation on Environmental Assessment under the Law states that any projects affecting the environment requires a project description to enable the Development Project Responsible Agency (DPRA) to (i) undertake a project environment screening to issue an environmental compliance certificate prior to commencement of any works or (ii) to determine whether an IEE is required to ascertain whether an EIA is to prepared.
491. There are no standard guidelines for the environment screening in Lao PDR and judgement is based on experience and considering suggested guidelines in other countries and agencies (e.g. World Bank, ADB). Component (i), (v) and (vi) would not require the preparation of an IEE under the current application of the Regulation on Environmental Assessment process.
492. In Viet Nam, the Ministry of Natural Resources and Environment (MNRE) through the Environmental Impact Assessment and Appraisal Department within MNRE has the role to appraise environmental impact assessment reports of projects; issue environmental standards; and to carry out uniform management of the issue and revocation of certificates of eligibility of environmental standards in accordance with the law. Each Provincial Department of Natural Resources and Environment (DNRE) has an Environmental Management Division (EMD) with responsibility for ensuring environmental protection and management of provincial matters in accordance with the environmental laws. The guidelines for determining whether a project requires an IEE, EIA or EMP is set out under the Environment Protection Law and Appendix 1 of Circular 490 (1998), which lists projects to be submitted for ratification of reports on EIA. Those listed in Category 1 require an IEE will be required to make "environmental standards registration papers" and submit them to the State agencies in charge of environmental protection for consideration. Once approval is granted, the PMU has to make a report on the assessment of environmental impacts and submit it to the State agency in charge of environmental protection for evaluation. Other projects are deemed to be Category 2 requiring that a "registration of satisfaction of environmental standards" to be prepared for submission to the State body in charge of environmental protection for consideration.
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493. All three countries share similar institutional constraints in dealing effectively with environmental impacts and management - overlapping mandates with other ministries, fragmented legal framework for environmental management, limited or unreliable data for baseline monitoring, limited human resources and shortage of financial resources. Most provincial offices have minimal capacity to carry out the functions of environmental management including defining illegal activities, inspection and monitoring of pollution sources, environmental education programs, assessment of IEE and EIA, enforcement and data management. Clearer lines of responsibility need to be determined for environmental matters at the provincial and district level. At the District level, the environmental offices generally experience a lack of trained persons to carry out inspection and monitoring activities. There is a shortage of equipment and laboratories for testing and the dearth of any reliable baseline environmental data. Due to the lack of communications infrastructure, skilled manpower and efficient management, environmental problems in remote areas often take a long time to be acted upon. Human resource development and further technical assistance are all required before environmental management can function more effectively at the local level.
494. Whilst the policy and institutional framework for environmental management continues to be improving, the capacity to plan and actually achieve environmental sustainability is very limited. Many challenges and problems remain, primarily the inconsistencies in legislation, the lack of coordination amongst government agencies and provincial governments and the lack of financial, technical and manpower resources25. The environmental agencies need to be resourced to prepare specific environmental guidelines and regulations for the different sectors of the economy.
495. Overlapping jurisdiction amongst agencies with environmental responsibility and other government ministries and bodies can make implementation of laws very difficult to achieve sustainable outcomes. It is not uncommon to find mining, forestry, agriculture, tourism, wildlife, fisheries, marine environment, and oil and gas exploration issues all come under an array of ministries without the mechanisms to plan and coordinate their policies such that the lines of communication and consultation are always open amongst them, and the protection of the environment can be pursued as an integrated whole. All too often EIA’s appear to be requested after the licence or approval is given to investment rather than to assess whether the project is appropriate or should be in a different location. The guidelines or triggers for requiring an IEE, EIA or EMP vary between each country and are generally based on lists rather than the capacity to create impacts. For instance, in Cambodia there is no provision for an IEE, EIA or EMP unless the tourism project is using more than 50ha of land. IN Lao PDR, reliance is placed on reference to outside the country guidelines such as the World Bank or ADB, that are not specific about tourism developments or small-scale infrastructure projects. For many industries, there are no laws or regulations that set out clear pollution control standards. Even where such laws exist, they are usually copies of standards from other countries, rather than being designed to ensure they are practical and realistic to the respective country.
496. The most serious environmental problem is that of waste treatment. All three countries have limited waste treatment facilities and lack sufficient landfill space. Consequently, solid and liquid wastes, including household and industrial wastes, are often discharged directly into the environment without being treated. In the rural areas there is often no waste system in place and in many cities, the sewerage and sanitation systems are failing to match the demands of a growing population and migration from the rural areas.
497. Despite evidence of good collaboration between the countries and supporting NGOs in some subprojects, the crucial management tools to help achieve environmental sustainability do not appear to be in place for many of the natural areas. These tools include:
25 www.worldbank.com
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• Baseline inventory of the natural resources and their conservation significance. • Management plans for the natural areas to establish a policy framework and to guide sustainable development and practices. • Master plans for guiding tourism development and use. • Environmental impact assessments for proposed tourism developments prior to developments taking place, that include addressing the alternative options for reducing or avoiding unacceptable impacts. • Detailed environmental management guidelines for the use and management of the environmental resources by tourism activities. • Measures for assessing the limits of acceptable change for the natural area. • Codes of practice to guide the operations of both visitors and tourism operators. • Recovery plans for endangered or threatened species that may be threatened by increased visitor activities. • Monitoring programs to assess the level of impacts generated by tourism developments and other land uses.
Environmental Monitoring Plans
498. A number of the subprojects will require Environmental Monitoring Plans to be prepared and these are listed in Table 37. The plans are required to monitor the impacts of:
• the proposed tourism access and facilities on the mangrove forest environs at Peam Krasop Wildlife Sanctuary in Cambodia; • increased visitor use on the biological values of Sambo Prei Kuk cultural site in Cambodia; • any contamination by leachate at Kratie solid waste site in Cambodia; • pollution from the landfill site at Kratie on surface water; • gas composition, combustion efficiency and flow rate at Kratie solid waste site; • proposed walkway and lighting system within Tham Nam Eng cave on the North-South Economic Corridor in Lao PDR; • visitor impact on patterns of behaviour for the Hatinh Langurs at the proposed observation platform in Phong Nga Khe Bang National Park, Viet Nam; • tourism development and visitors on the condition and values of Phong Nha and Dong Tien Son caves in Phong Nga Khe Bang National Park, Viet Nam; and • waste collected, transported and treated at the solid waste site in Phong Nga Khe Bang National Park, Viet Nam.
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Table 39 : Recommended Environmental Monitoring Plans
Current Stakeholder Country Objective Survey and Sampling Methods Baseline Responsibility Consultation Information Cambodia To monitor the impacts of The survey should: Conservation MOE, MoF, MOE the proposed tourism International MOT, MWC, access and facilities on • Map the changes in the water levels on the shoreline and the extent of survey data Province, the mangrove forest mangrove forest within 1 km of the tourism facilities for the District and environs at Peam Krasop • Identify and assess any changes in the condition of mangrove forest inundated villages Wildlife Sanctuary. • Assess whether there has been any changes in the quality of habitat values forests of Koh especially for any indicator species identified within the baseline survey Kong Province • Report on any adverse changes or impacts and what should be done to including mitigate these impacts on the mangrove forest (e.g. a response to increased Peam Krasap litter should be for greater litter awareness education program) Wildlife Sanctuary The basic monitor of the baseline conditions of forest mangrove environs (extent, condition) should be undertaken every year by minor review and then a major assessment undertaken in 5 years to review the results of the 5 years of baseline monitoring information.
The budget for environmental monitoring has been included in the operating costs for the subproject. Cambodia To monitor the impacts of The survey should: No baseline MFAC, MOE PCU increased visitor use on • Review data collected since the baseline survey information Province, the biological values of • Map the changes in the vegetation types available but District and Sambo Prei Kuk cultural • Identify and assess any changes in the environmental condition of the budget villages site. vegetation communities allowed for • Assess whether there has been any changes in the quality of habitat values initial baseline especially for any indicator wildlife species identified within the baseline assessment in survey Year 1 • Report on any adverse changes or impacts and what should be done to mitigate these impacts on the biological values at Sambo Prei Kuk
The basic monitor of the baseline conditions of the vegetation types and habitats (extent, condition) should be undertaken every year by minor review and then a major assessment undertaken in 5 years to review the results of the 5 years of baseline monitoring information.
The budget for environmental monitoring has been included in the operating costs for the subproject.
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Current Stakeholder Country Objective Survey and Sampling Methods Baseline Responsibility Consultation Information Cambodia To ensure regular, Monitoring will take place at the four (4) bore sites drilled for the baseline survey. Recommended Province and PIU to engage representative sampling of The water tests should be undertaken on a quarterly basis for the first 3 years then baseline survey District offices of a suitably groundwater is conducted to vary the frequency of sampling after this time if it can be consistently demonstrated of groundwater MOE and MPWT qualified and ensure early detection of that the parameters measured do not pose an environmental risk. The monitoring will provide experienced any contamination by parameters are to include: information for hydrogeologist leachate and to demonstrate • on a quarterly basis PH, Conductivity, TDS, Total Nitrogen, Ammonia, monitoring compliance with any Nitrate, Nitrite, Orthophosphate, Total phosphorus, Redox potential (Eh) , statutory requirements at DOC, COD, Total CN (as CN), Total Iron and dissolved iron (Fe), Copper Kratie solid waste site (Cu), Zinc (Zn), Chromium (Cr), Manganese (Mn), Nickel (Ni), Lead (Pb), Cadmium (Cd), Chloride, Calcium, Sulphate, Sodium (Na), Potassium (K), Magnesium (Mg); • on a 6 month basis for Arsenic (As), Mercury (Hg), Selenium (Se), Total Petroleum Hydrocarbons (TPH) and Benzene,, Toluene, Ethyl-Benzene, and Xylene (BTEX); and • on a 12 month basis Polynuclea, aromatic hydrocarbons, Organophosphate pesticides, Organochlorine pesticides, Polychlorinated biphenyls. Further assessment should be undertaken and the need for remediation investigated whenever the concentration in a discharge is likely to cause a significant change above background concentration (i.e. determined from upstream ground or surface waters) for one or more of the parameters. Cambodia To ensure surface water is Monitoring points should be established at the point(s) of discharge from the Recommended Province and PIU to engage monitored on a regular basis to landfill. Parameters to be sampled and analysed are: baseline survey District offices of a suitably detect and respond to any • on a quarterly basis PH, Conductivity, TDS, Redox potential (Eh), Turbidity, of surface water MOE and MPWT qualified and pollution from the landfill and Total Suspended Solids , Alkalinity (as CaCO3), Total Nitrogen, Ammonia, will provide experienced to demonstrate compliance with Nitrate, Nitrite, Orthophosphate, Total phosphorus, DOC, COD, E. coli , Total information for hydrogeologist any statutory requirements at CN (as CN), Total Iron and dissolved iron (Fe), Aluminium (Al), Copper (Cu), monitoring Kratie solid waste site Zinc (Zn), Chromium (Cr), Manganese (Mn), Nickel (Ni), Lead (Pb), Cadmium (Cd), Chloride, Calcium, Sulphate, Sodium (Na), Potassium (K), Magnesium (Mg); • on a 6 month basis for Arsenic (As), Mercury (Hg), Selenium (Se), Total Petroleum Hydrocarbons (TPH) and Benzene,, Toluene, Ethyl-Benzene, and Xylene (BTEX); and • on a 12 month basis Polynuclea, aromatic hydrocarbons, Organophosphate pesticides, Organochlorine pesticides, Polychlorinated biphenyls. The water tests should be undertaken on a quarterly basis for the first 3 years then vary the frequency of sampling after this time if it can be consistently demonstrated that the parameters measured do not pose an environmental risk. Further assessment should be undertaken and the need for remediation investigated whenever the concentration in a discharge is likely to cause a significant change above background concentration or water quality objectives if established (i.e. determined from upstream ground or surface waters) for one or more of the parameters
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Current Stakeholder Country Objective Survey and Sampling Methods Baseline Responsibility Consultation Information Cambodia To ensure regular Landfill gas monitoring should include both surface and subsurface programs. No baseline Province and PIU to engage monitoring of gas Subsurface monitoring devices should be installed in areas of the site where waste information District offices of suitably composition, combustion has been placed and either intermediate or final cover has been applied. available for the MOE and MPWT qualified efficiency and flow rate is Installation may either form part of a gas collection network or comprise a nest of site environmentali undertaken to enable annual monitoring bores positioned around the perimeter of the site. The depth of the st reporting of emissions from monitoring network should be equal to the greatest depth of waste. Devices should the system at Kratie solid be capable of detecting sufficiently low concentrations of landfill gas to identify off- waste site site migration. Surface monitoring should demonstrate that the cover and (where present) gas collection system is effectively controlling landfill gas emissions. Areas of the site where waste has been placed and either intermediate or final cover has been applied should be traversed in a systematic pattern with a handheld detection device. Readings should be taken on calm days (i.e. winds below 10 kph) at a height of 5 cm above the ground, as well as in depressions or surface cracks.
Monitoring should be conducted on a quarterly frequency and should measure methane concentrations as a minimum. Where odours are of particular concern, surface monitoring should also measure hydrogen sulphide. The landfill operator may apply to vary the frequency of sampling five years after closure of the tipping area if it can be demonstrated that there have been no emissions. Further assessment and remediation should be undertaken if subsurface concentrations exceed 1.25% (v/v) or if surface concentrations exceed 500 ppm (v/v).
Where landfill gas is not collected, regular monitoring should be undertaken to detect whether landfill gas presents a source of odour or an explosion or toxicity hazard, and to estimate greenhouse gas emissions. Cambodia To maintain records of the Keep records of the general volume of waste (m3) transported and dumped at the No baseline Involvement of PIU with waste collected, transported landfill site during the year. information is and treated at the Kratie available. Provincial waste records and solid waste site. Analyse the waste collected within the town by undertaking surveys at the landfill managers and surveys site for 2 weeks during the rainy season and 2 weeks during the dry season of the contractors conducted by broad categories of waste by volume e.g. plastic, food, paper, cloth, building waste materials etc. management
Keep records of the frequency of clean-up of waste collected. staff.
Survey the condition of the river environs (e.g. level of waste observed) up to 100m below the drainage lines twice a year. (It will be necessary for the river environs to be cleaned-up after drainage works are completed so as to provide a reasonable baseline for observing increased waste in the future.) Lao PDR To monitor the The monitoring should determine: Proposed MOE, MOT, PCU environmental impacts of baseline survey Province, District the proposed walkway and • whether the overall environmental condition of the cave and villages lighting system within Tham environs/features/fauna has altered from the baseline survey using the Nam Eng cave. indicators • whether as a result of any adverse change, there should be changes to the use and management of the cave; and
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Current Stakeholder Country Objective Survey and Sampling Methods Baseline Responsibility Consultation Information • if required, what upper limit of visitor numbers or other measures to the cave should be set to ensure sustainable tourism. The basic monitor of the baseline conditions of the cave should be undertaken every year by minor review and then a major assessment undertaken in 5 years to review the results of the 5 years of baseline monitoring information. The budget for environmental monitoring has been included in the operating costs for the subproject. Viet Nam To assess the visitor impact The monitoring should determine: No specific Several PIU with on patterns of behaviour for baseline international wildlife the Hatinh Langurs at the • Initial baseline study to identify current numbers, behavioural patterns (e.g. information NGOs (WWF, consultant to proposed observation time of use, frequency of use, activities undertaken, social pattern of use of available but IUCN, Birdlife, FFI, undertake platform in Phong Nga Khe the cliff-face). National Park Zoo Cologne and initial baseline Bang National Park • Study to set indicators for monitoring visitor impact over time from viewing holds some data Frankfurt study. location on opposite side of the river. on critically Zoological Society, Monitoring of • Records of visitor numbers to the viewing location over each year kept based on endangered SNV, CPI) indicators by shuttle bus service records. primates Monitoring of indicators on a yearly basis (internal review) and more comprehensive analysis of data by a wildlife consultant every 5 years. Viet Nam To assess the impact of The monitoring should determine: The Vietnam Involvement of PIU with tourism development and Karst Research National Park speleologist visitors on the condition and • Undertake site inspection of the caves using available karst geomorphological Institute has managers and consultant values of Phong Nha and map to assess the condition of the caves and its features. completed a cave guides. (e.g. Vietnam Dong Tien Son caves in • Determine areas of priority need within the caves for environmental karst Karst Phong Nga Khe Bang management intervention e.g. cleaning, installing visitor barriers, reduced or geomorphologic Research National Park alternative lighting, setting visitor limits, management control. al survey Institute, • Priorities for intervention undertaken as resources permit. mapping of most international • Identify indicators for future monitoring of the cave conditions based on the of Phong Nha consultant) baseline survey cave. Viet Nam To maintain records of the The monitoring should : No baseline Involvement of PIU with
waste collected, transported 3 information is National Park records and and treated at the solid • Keep records of the general volume of waste (m ) transported and dumped at available. managers and surveys waste site in Phong Nga the landfill site during the year. contractors conducted by Khe Bang National Park. • Analyse the waste collected within the town by undertaking surveys at the Park staff. landfill site for 2 weeks during the rainy season and 2 weeks during the dry season of the broad categories of waste by volume e.g. plastic, food, paper, cloth, building materials etc. • Keep records of the frequency of clean-up of the gross pollutant traps and volume of waste collected. • Survey the condition of the river environs (e.g. level of waste observed) up to 20m below the trap twice a year. (It will be necessary for the river environs to be cleaned-up below the trap immediately after installation so as to provide a reasonable baseline for observing increased waste in the future.) 499.
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8.0 PUBLIC CONSULTATION AND DISCLOSURE
500. The methodology in preparation of the SIEE and IEE involved (i) site visit(s) to the subproject locations; (ii) meetings with relevant stakeholders including national, provincial, district, commune and village representatives and NGO’s; (iii) review of environmental legislation, policies and processes; (iv) review of available reports, data and information relevant to the subprojects; (v) web research; (vi) presentation and discussion of the key findings for the subprojects at national workshops (two in each of the three countries during the first and second mission trips) and subregional workshops (Kunming at commencement of the project and Phnom Pehn after completion of the Interim Report); (vii) and review of the information gained from industry, visitor and community/village surveys undertaken for the overall project. The process allowed for review and input from stakeholders in each country on the subprojects, team members and the ADB Environmental Specialist.
501. The main purpose of the above consultation was to achieve background information on the subprojects including relevant policy, past research, environmental issues and response to the initial ideas for the components. There was a dearth of relevant baseline environmental information to assist with the IEE due to the limited resources, skills and priority given to such investigations at the district and provincial level. In all subprojects other than Vang Vieng urban improvements covered under the Small Towns Development Project funded by ADB, there has been no IEE, EIA or EMP prepared prior to developments that have already taken place. Consequently considerable information for the background of the IEE has been obtained by internet research investigations and the site visits. A list of those agencies and individuals consulted with during the preparation of the IEE’s for the subprojects is provide in the TA final report.
502. The basis for future stakeholder consultation for each subproject has been identified and outlined in the TA final report.
9.0 FINDINGS AND RECOMMENDATIONS
503. The screening process for the subprojects has involved the following steps:
(i) Undertaking background research, site visits and consultation concerning the subproject; (ii) Assessing the individual components of the subprojects to determine which of the components have the capacity to cause any environmental impacts; (iii) Screening of the components against a list of potential environmental impacts to identify whether there will be a risk of low (L), moderate (M) or high (H) impacts; (iv) Determining the category of the components under the criteria of the ADB Environmental Assessment Guidelines 2003 and the relevant environmental legislation within each country to determine whether an IEE, EIA or EMP may be required, and if so whether additional studies are required to complete the IEE; (v) Identifying the measures to reduce or mitigate the potential impacts identified with works for the components including the site works/activity, potential environmental impacts, magnitude of impact, extent of impact and mitigation measures that can be taken; (vi) Assessing the positive and negative environmental impacts of the proposed components; (vii) Preparing the TOR for baseline surveys and Environmental Monitoring Plans where required; (viii) Analysing the findings and recommending what process is required to mitigate and manage the environmental impacts associated with the subproject.
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504. The results of the screening process indicated that the majority of the subprojects will not adversely affect environmentally sensitive areas, nor will they cause significant changes in the physical, biological, and social environment. This is not unexpected as the TA has a clear mandate to facilitate sustainable tourism development and this has been a guiding influence in the selection process for the subprojects and the identification of appropriate components for implementation. In many ways the components of the subprojects are planned interventions to ensure the locations and communities can be better placed to become involved and benefit from tourism, to improve management of existing environmental impacts and to create the capacity to accommodate expected growth in visitation on a sustainable basis. For the majority of subprojects there is no need for an EIA or EMP to be prepared and the IEE investigations is sufficient to manage and mitigate the expected impacts. 505. 506. There are 9 subprojects where baseline surveys are recommended to assist with the management of the environmental impacts. These recommended baseline surveys are listed in Table 40.
Table 40 : Recommended Baseline Surveys
Country Subproject Purpose of Baseline Survey Required Location Cambodia Peam Krasop Wildlife To survey the extent and condition of the mangrove forest environs Sanctuary within 1km of tourism development Sambo Prei Kuk cultural site To survey the extent and conservation significance of biological values Kratie landfill site To undertake a level 3 survey of UXO at the site to ensure the risks of exposure by the workers and community is minimal with all site works and operations Kratie landfill site To ensure the landfill site is (i) located on stable land that is able to support the weight of the landfill over an extended period; and (ii) provides a natural unsaturated attenuation layer below any liner system to minimise downward movement of leachate. Kratie landfill site To ensure the landfill site will minimize potential impacts on groundwater and surface water. Kratie landfill site To ensure the development and operation of the landfill site causes minimal impact upon threatened flora and fauna and threatened forest and non-forest vegetation communities Lao PDR Pro-Poor Tourism To undertake a level 3 survey of UXO to ensure the risks of Development Initiative exposure by the community and visitors is minimal with the development of small scale tourism infrastructure. North South Economic To assess the potential environmental impacts of constructing a Corridor 200m walkway and lighting system within Tham Nam Eng cave. Viet Nam Phong Nha-Ke Bang To undertake a level 3 survey of UXO to ensure the risks of National Park exposure by the community and visitors is minimal with the development of walks within the National Park. Bac Kan Ethnic Minorities To undertake a level 3 survey of UXO to ensure the risks of Cultural Heritage exposure by the community and visitors is minimal with the Conservation program proposed developments in Bac Kan. East West Economic To undertake a level 3 survey of UXO to ensure the risks of Corridor exposure by the community and visitors is minimal with the proposed developments along the corridor. Pro-Poor Tourism To undertake a level 3 survey of UXO to ensure the risks of Development Initiative exposure by the community and visitors is minimal with the development of small scale tourism infrastructure. Pro-Poor Tourism To assess the potential risk to visitors and local community in the Development Initiative soils and water remaining from chemical sprays used in the war.
507. For the following subprojects, the baseline surveys are necessary to form part of the IEE investigations to allow effective judgment as to whether an EIA and EMP will be required for these subprojects:
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(i) Clearing about 2.25ha of mangrove forest within Peam Krasop Wildlife Sanctuary in Cambodia to allow for construction of a 500m coastal walkway; (ii) Construction of a walkway and lighting system within the Tham Nam Eng cave site on the North-South Economic Corridor in Lao PDR; and (iii) Construction and operation of a solid waste management site at Kratie in Cambodia.
508. Subprojects (i) and (ii) are not considered to be developments that will cause major adverse environmental impacts but an IEE is recommended as a precautionary measure given the sensitivity of karst and mangrove environments to disturbance. It is expected that the proposed works can be mitigated through the adoption of careful planning, design, construction and operation of the sites but that an IEE will help inform those practices. Subproject (iii) is a major site works and the preparation of an IEE is an important step in assuring that adequate institutional resources and mitigation measures are put into place.
509. There are 5 subprojects where environmental monitoring plans are recommended to be instigated to assist with the management of the environmental impacts. These subprojects and the objectives of the plan are set out in Table 41.
Table 41: Recommended Environmental Monitoring Plans
Country Subproject Purpose of Environmental Monitoring Location Plan
Cambodia Peam Krasop Wildlife To monitor the impacts of the proposed tourism access and facilities Sanctuary on the mangrove forest environs. Sambo Prei Kuk cultural site To monitor the impacts of increased visitor use on the biological values of Sambo Prei Kuk cultural site. Kratie landfill site To ensure regular, representative sampling of groundwater is conducted to ensure early detection of any contamination by leachate and to demonstrate compliance with any statutory requirements. Kratie landfill site To ensure surface water is monitored on a regular basis to detect and respond to any pollution from the landfill and to demonstrate compliance with any statutory requirements. Kratie landfill site To ensure regular monitoring of gas composition, combustion efficiency and flow rate is undertaken to enable annual reporting of emissions from the system Kratie landfill site To ensure the development and operation of the landfill site causes minimal impact upon threatened flora and fauna and threatened forest and non-forest vegetation communities Lao PDR North South Economic To monitor the environmental impacts of the proposed walkway and Corridor lighting system within Tham Nam Eng cave. Viet Nam Phong Nha-Ke Bang To assess the visitor impact on patterns of behaviour for the Hatinh National Park Langurs at the proposed observation platform Phong Nha-Ke Bang To assess the impact of tourism development and visitors on the National Park condition and values of Phong Nha and Dong Tien Son caves Phong Nha-Ke Bang To maintain records of the waste collected, transported and treated National Park at the solid waste site.
10.0 CONCLUSIONS
510. The majority of proposed components involved with the subprojects will not adversely affect environmentally sensitive areas, nor will they cause significant changes in the physical, biological, and social environment. These subproject components are all deemed to be Category C under the
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ADB Environmental Assessment Guidelines 2003 and consistent with the relevant environmental legislation within the respective countries. Any environmental effects would be minor and easily mitigated through the adoption of sound environmental planning, design, construction and management practices at all sites. No EIA or EMP is required for these components of the subprojects.
511. There are 3 components of the total subprojects that are deemed to be Category B under the ADB Environmental Assessment Guidelines 2003 although not necessarily would they require an IEE or EIA under the relevant environmental legislation within the respective countries. In these subprojects, baseline surveys are necessary to form part of the overall IEE investigations so as to make a more effective judgment as to whether an EIA and EMP will be required. The components are:
(i) Clearing about 2.25ha of mangrove forest within Peam Krasop Wildlife Sanctuary in Cambodia to allow for construction of a 500m coastal walkway; (ii) Construction of a walkway and lighting system within the Tham Nam Eng cave site on the North-South Economic Corridor in Lao PDR; and (iii) Construction and operation of a solid waste management site at Kratie in Cambodia.
512. Whilst initial investigations suggest the above components are not considered to be developments that will cause major adverse environmental impacts, it is recommended that further studies be undertaken to support the IEE as a precautionary measure given the sensitivity of mangrove and karst environments to disturbance, and the potential for solid waste sites to cause impacts on groundwater, surface water, air and biological values.
513. Including the above three identified components, there are 9 subprojects where baseline surveys are recommended to assist with the sustainable management of the environmental impacts.
514. Including the above three identified components, there are 5 subprojects where environmental monitoring plans are recommended to assist with the sustainable management of the environmental impacts.
515. The TOR for preparation of the baseline surveys and environmental monitoring plans has been prepared.
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B. SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
1.0 INTRODUCTION
516. Sustainable, equitable, pro-poor, and socially responsible tourism means striving for poverty reduction outcomes as well as enabling poor and vulnerable groups to gain greater access to the benefits of tourism. A poverty-reducing tourism program not only implies increased incomes for disadvantaged men and women; it also means their managing and actually managing and even owning local tourism assets. A crucial element in accomplishing this is the active involvement of communities in planning, implementing, monitoring, and evaluating development programs, of which tourism projects form an integral part. In addition, strengthened by the empowering experience of decision-making, community members can better protect themselves from the risks of tourism-related exploitation and threats to their well-being.
517. But who are the poor? The disadvantaged? The vulnerable? The excluded? Two approaches are normally utilized to identify them: quantitative statistical compilations and qualitative participatory poverty assessments. The former emphasize income and food indicators, along with health and educational status. The latter encourage people to describe their understanding of what it means to be poor, why they are poor, and what can be done to change their lives for the better. Both approaches have been pursued as part of the Project preparation.
518. In Cambodia, Lao PDR, and Viet Nam, national economic growth over the past decade has been impressive, considering especially the legacy of warfare and destruction which all of them share. Poverty incidence in the three countries has dropped dramatically over the past 15 years. The pace of this decline appears to be slowing down, however, with economic disparities widening within countries. Poverty maps illustrate this trend, revealing some regions of a country with rates as high as 80 percent living below the poverty line, while others show levels closer to 20 percent and below. Almost uniformly, the poorest regions are mountain settlements where ethnic minority groups cluster. Cities and towns as well as lowland agriculture areas are the least poor.
519. These disparities emphasize the need for more targeted approaches to poverty reduction, and it is in this light that tourism offers new hope. Its potential to make a difference for poor men and women in the Mekong subregion stems mainly from understandable tourist tendencies to visit beautiful natural settings, distinctive cultural communities, and impressive historical monuments. And those are also the places where most of the Mekong region’s poor people live.
520. The current and anticipated influx of tourists open up new possibilities for labor intensive production and services, and poor communities’ gaining the knowledge and experience needed to manage and control their assets. These include their waterfalls, caves, flowing rivers, ancient cities, picturesque communities, and breathtaking scenic views. Turning these sites into comfortable stopping off places for tourists will become possible through the Project’s modest infrastructure additions – paved roads and walkways, visitor interpretation centers, clean water, toilets, better lighting in caves, drainage, small markets, and signage. The host people will have learned the basics of hospitality services, and at the same time offer them crafts, souvenirs and food for sale. Trained tour and trekking guides will introduce the visitors to the historical and environmental delights of the area. This is a new kind of tourism, one that consciously seeks to benefit both the tourists and their hosts.
521. Since the poorest groups throughout the subregion are made up of women, women heads of households, ethnic minorities, war disabled, and poor resettled people, they are best positioned to benefit from poverty-reducing tourism. Consider expanded markets for traditional crafts, like
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weaving, embroidery, pottery, and wood craft; cultural performances in ethnic minority villages that feature traditional dances, songs, rituals, and heritage musical instruments; increased production of agricultural items, fish, and livestock for sale to food stalls, restaurants, and guesthouses; and in urban areas, the expansion of small-scale businesses and the service sector. Add to this tour and trekking guides and the construction or repair jobs created, and the objectives of pro-poor tourism become real.
522. Increasing tourist numbers have their social costs, however. These emerge in the heightened risks posed by trafficking in women and children, child labor, HIV-AIDS, drugs, and the loss of cultural traditions. Children may be negatively affected when their involvement in selling handicrafts and food leads them to drop out of school, subjects them to long working hours, or exposes them to dangers like child pornography, abuse, and prostitution. Drugs proliferate, whether in the more sophisticated forms favored by tourists, or opium addiction from home-grown poppies. Unexploded ordnances threaten all villagers who venture off customary trails as trekking guides, or search the fields for edible plants.
523. A poverty-reducing tourism program therefore necessarily proceeds from a perspective that emphasizes benefits to poor and vulnerable groups, while helping them avoid the social risks that accompany expanded tourism.
2.0 DESCRIPTION OF THE PROJECT
524. The Project will take place in seven sustainable development sites, three model sites for pro-poor community-based tourism with supply chains, corridor and border facilitation, and six comparable learning sites. These are located as follows:
Cambodia
Peam Krasop Natural Heritage Conservation, Koh Kong, Champasak Province Sambo Prei Kuk Cultural Heritage Monuments, Kampong Thom Kratie Urban Center, Rattanakiri Province Model: Border, Phnom Den, Takeo Province Pro-Poor Tourism, Siem Reap Province, Phnom Penh and environs Southern Economic Corridor, Koh Kong, Sihanoukville, Kem, Kampot Provinces
Lao PDR
Siphandone Wetlands Natural Heritage Conservation, Champasak Province Vang Vieng Urban Center, Vientiane Province Model: North-South Corridor, Luang Namtha, Bokeo, Nam Eng Cave Pro-Poor Tourism, Oudomxay, Huap Hanh, Bokeo, Xayabouly Provinces and Vang Vieng District, Vientiane Province Border, Bokeo
Viet Nam
Phong Na Khe-Bang Natural Heritage Conservation, Quang Binh Province Gia Lai Cultural Heritage, Cultural Minorities and Intangible Culture Model: Pro-Poor Tourism, A Luoi, Gia Lai Province, Central Highlands East-West Corridor, Lao Bao to Dong Ha City Border, Lao Bao to Nam XSoi
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Approach and Methodology
525. To arrive at a better understanding of poverty, preliminary studies were undertaken at the subproject sites in July 2006 to explore the situation of the villagers, their participation in community activities and decision making, gender and ethnic minority development, and openness to, as well as experience and expectations of tourism. From this came the formulation of more systematic research instruments for intensive studies carried out in August – October 2006. This three-country efforts undertook household surveys in all sustainable development and model sites with a total of 598 household respondents, supplemented by 59 focus groups discussions that gathered together women, ethnic minorities, young adults, disabled, and poor people. Sixty key informant interviews were conducted of village chiefs, heads of local associations, women’s union representatives, shopkeepers, restaurant owners, and others.
526. Preliminary results of these studies were conveyed to government and NGO participants at three concluding National Workshops in Phnom Penh, Vientiane, and Hanoi from mid-September to early October, with the comments of the participants duly noted. This Poverty and Social Impact Analysis Report draws on the primary and secondary data furnished by the National Consultants and derived from communities, officials, and NGOs from the three countries; her own field observations; and the extensive literature available on the GMS countries. The detailed results, recommendations, strategies, and plans of the initial poverty and social analysis for the Project in each participating country are presented in Appendix 10. The overall results are summarized below.
3.0 SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
3.1 Linkages to the Country Poverty Analysis: Cambodia, Lao PDR, Viet Nam
527. In all three countries, the government has made poverty reduction a major policy and implementation priority. Poverty reduction is enshrined in national economic and social development strategies and medium term development plans. Special units in government have been set up to carry out studies, develop anti-poverty strategies, and ascertain where the poor are, so that effective targeting strategies can be transformed into actual programs and projects. Monitoring progress in poverty reduction has become especially important, not only by covering the entire population, but by disaggregating information on the basis of regions, sex, age, ethnicity, rural-urban, and other significant variables.
528. In addition, a wide range of projects are underway in poor communities, assisted by multilateral institutions, like the Asian Development Bank, the World Bank, and United Nations agencies like UNDP, UNICEF, FAO, WHO, and others, bilateral donors, and numerous International NGOs. As a result, the governments have been able to take firm steps to identify the poor in both income and vulnerability terms. Deeper insights into the views and outlooks of poor men and women through participatory poverty assessments have yielded policy and program implications. The results are seen in substantial poverty declines in the last decade of the 20th century. More recent trends showing a slowing down of the pace coupled with increasing disparities even within villages leave no room for complacency.
529. Growing tourism therefore is welcomed by villagers as a source of new income, but also as bringing some relief from the humdrum round of their daily lives. Tourists come to see the sights, meet local people, taste the food, buy handicrafts, ride tuktuks and motorbikes, learn about ancient cultures, and simply have a good time. In the process, whether they are conscious of it or not, they will be helping poor Cambodians, Lao, and Vietnamese to share a bit of the world’s wealth.
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3.2 Poverty Analysis
530. Although the three countries, Cambodia, Lao PDR, and Viet Nam, show many similar trends, each has distinctive approaches to carrying out poverty and vulnerability reduction objectives. The following section discusses the issues and developments specific to each country.
CAMBODIA
531. Drawing on the lessons learned from the implementation of the Cambodian National Social Economic Plan, and the Cambodian National Tourism Development Plan 2001-2006, the Cambodian National Poverty Reduction Strategy, 2003-2009 has focused its attention on communes as pivotal points for planning and taking action toward reducing poverty. This is strategic since 90% of the poor are located in rural areas. To encourage people’s initiatives, commune chiefs and councils are now elected and responsible for working out the Village Development Plan and managing the Community Development Fund. All decisions are to be made in consultation with their constituents, and finalized with the people’s views in mind.
532. While the process of shifting from a hierarchical form of governance to a more open participatory style is always difficult, there are signs that this shift is beginning to take place. Commune chiefs are conscious of the need to consult and inform communities of plans being made involving the residents, and of the corresponding opportunities available to them. Exactly how this consultative process is carried out, however, varies from one commune to another, very much depending on the chief’s own leadership style.
An Overview of the Project Sites
533. The four subprojects represent distinctive ecological settings that lend themselves to being models for specific types of communes. Although ethnic minorities are found in Cambodia, they form a very small percentage of the populace who live in the northern mountain areas. There are virtually none in the subproject sites.
534. Peam Krasop is largely populated by fisherfolk households recently resettled from their island locations in a coastal protected zone onto the mainland site. There they have the advantage of a house plot and channels for their boats to get to the sea, a primary school right in the settlement, a health center fairly near by, access to clean water and garbage disposal, and a road to Koh Kong, which however is rutted and nearly impassable in the rainy season. The prospects for casual labor are good, since the settlement constitutes the core of a prospective port and tourist site because of its extensive mangrove forests and multi-island setting.
535. While women, especially, value being closer to basic service amenities and having the promise of higher incomes in future, like their husbands, they worry about the interim insecurity into which the disrupting move has plunged them. They are now far from their fishing grounds, meaning additional inputs of diesel fuel or muscle power. Among the subproject sites, Peam Krasop has the highest proportion (52%) of households which rate themselves as either poor (40%) or very poor (12%).
536. Being “very poor” is even worse than being “poor” because “those who are very poor are without enough food to feed their children.” “They have land but no house, no boat, no fishing tools, no job, many children and many debts.” “Some are widows, but even if they are married, their husbands are drunkards and do not earn much.” “They work like coolies, peeling crabs all day for small pay.” 537.
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538. The resettled populations of Peam Krasop represent the dilemmas faced by all three governments, that is, having to protect the natural environment from over exploitation and sometimes also to address security concerns in the uplands, they resettle the residents to improved locations that will bring them closer to the road, basic amenities and the mainstream economy. But being wrenched from familiar economic systems and social capital, and trying coping mechanisms that no longer apply often means greater poverty to the resettled groups. If resettlement is a must, then better preparation is called for through a participatory process in which the affected persons are consulted and trained ahead of time to adapt to their new surroundings. Otherwise, from a subsistence lifestyle which they feel they know how to handle, they become displaced, poor people.
539. Sambor Prei Kuk represents an agricultural community subsisting in and around the temple site. As one group put it, “Very poor people live in small houses made of wood and thatch. They have no rice land. Some do not even have land on which to build a house, so they occupy someone else’s land. They live by selling their labor and collecting forest products for their daily food.” “Most poor families are those where women are the head [with no male], who have many children and not enough food for them to eat regularly—only two meals a day. They wear very old clothing.”
540. The prospect of increased tourist numbers is welcome because they bring prospects for supplementing their regular earnings. Tourism planning, therefore, that integrates the primary income base with tourism as a secondary and supplementary earning source will be more successful than a separate single track tourism strategy. This implies linking up with government ministries engaged in development programs in the communes.
541. Focusing on women to move into tourism-related activities is likewise a sound strategy because women themselves are clamoring for access to opportunities that they can manage even though they are minimally literate or educated. This is also culturally acceptable to the men, who see women as providing the supplementary maintenance tasks on the farm, even though the women work more hours on the farm plots than the men. Supplementary income implies “filling in spare time” and a flexible time schedule that will enable women to continue managing their farm and home tasks while getting into new earning activities. Herein lies a contradiction. Women are so overloaded with work that additional involvement in tourism-related enterprises may exacerbate their already poor health. At the same time, it will definitely increase their status. Community discussions, therefore, involving men and women, must consider how her tasks overall will have to be re-allocated in light of her new contributions to the household economy.
542. Kratie urban center exemplifies the attraction of cities and towns for migrants from upland and other rural settlements. Only a few of the survey respondents rated their household as poor (16%), while 82% said they had just enough to live on. Two per cent even admitted to being relatively well off. The town’s high economic standing explains why migration to urban areas is increasing. When one compares rural and urban poverty situations, the rural poor make up 40-45% of the population. This figure reaches as high as 70-80% in the Tonle Sap basin, while Phnom Penh shows a low 10-15% poor.
543. Yet, complacency is not in order for urban areas, since those who are poor have special problems surviving in a cash-based economy with only little social capital, compared to what they had in their more familiar rural surroundings. Moreover, for the young migrants attracted to the excitement of town living, a high proportion if not a majority of whom are women, many may find themselves working in karaoke bars, discos and massage parlors, all too often fronts for the commercial sex trade. These risks are exacerbated in flourishing border towns like Phnom Den.
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LAO PDR
544. Lao PDR has taken a development path that builds on the strengths of its six million multi-ethnic people, most of whom live in rural communities as lowland farmers and livestock raisers, fisherfolk, or as upland swidden farmers. Four main sectors are highlighted in government development policy: agriculture/forestry, education, health, and infrastructure, especially rural roads. Supporting sectors listed as representing potential growth are tourism, mining, rural electrification, and agro-forestry. Cross-sector priorities cover gender, information, culture, population, social security, and capacity building. Three complementary national programs complete the picture – National Drug Control, UXO Decontamination, and the National Action Plan for HIV/AIDS/STD.
545. It is also worth noting that the National Strategy Plan calls not simply for poverty reduction but poverty elimination, being entitled the National Growth and Poverty Eradication Strategy (NGPES). That orientation highlights the importance of constantly striving to reach the very poorest, usually the bottom 5% -10%, until they are actually eliminated from that slot because they have moved above the poverty line. The NGPES framework emphasizes that the people’s initiatives should chart their future because they were best placed to devise local solutions in their own natural habitat, combining productive forces and technology with their own values and traditions.
546. Poverty measurement is still at its initial stages, but the Lao government has moved rapidly in devising approaches to reaching the1,800,000 people living below the poverty line. North region comes out the poorest at 52.5% of the population below the poverty line. That figure is much higher than those shown for Central region at 34.9% and Southern region at 38.4%. The skewing is due in large measure to the heavy concentrations of ethnic minorities in the north, who are also the poorest in Lao PDR. When further disaggregated by province, these regional assessments reveal the staggeringly high poverty rates in certain provinces and the disparities across the country, from 74.6% in Houa Phanh to 12.2% for Vientiane municipality.
547. Participatory poverty assessments have demonstrated the link between lacking rice land and being poor; ownership of livestock indicates wealth. People’s worries, therefore, revolve around how much land they have for cultivation. For many of the ethnic minorities engaged in swidden forest farming, declining productivity poses serious livelihood threats. But the real danger, they insist, is when government resettlement schemes take them out of the endangered forests and place them in production regimes alien to their upland economic systems.
548. Most rural lowland cultivators blame their poverty on land problems, insufficient water for irrigation, environmental degradation, natural disasters, livestock losses from disease coupled with no veterinary services, and lack of cash for livelihood investments. In addition, they register many complaints: poor local leadership, being pressured into resettlement, inadequate health services, too many children, little understanding of the market system, low agricultural prices, the presence of UXOs and opium addiction.
549. In order to be able to target the poorest and most vulnerable populations for increased investments, an impressive diagnostic system derived from extensive field investigations has been developed with assistance from the ADB and other donors. The results allow the authorities to determine which villages and districts should be targeted for assistance. Measuring poverty as vulnerability is also seen as more meaningful than settling for consumption alone. Vulnerability in this case refers to those groups within an already poor village who are placed in positions of even greater risk because social, economic and political conditions thrust them into desperate situations. Being in a vulnerable state generates coping mechanisms through which people deal with risks on an immediate as well as
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longer-term basis. This is where pro-poor tourism can make a difference, being a labor-intensive industry that aims to reduce poverty through small-scale ventures undertaken by vulnerable people.
550. In terms of health, maternal mortality leads the list of disturbing figures, in the North at 540 per 100,000 live births, Central by 440, and South, by an alarming 700. Clearly, the lower poverty rates for the South are skewed in favor of men, since MMR is an important indicator of poverty. Educational levels show similar gender disparities in the national literacy rate of 68.5%, which when disaggregated by gender becomes 82% for men and only 55% for women. In regional terms, all three areas show similar disparities ranging from 34 to 23 percentage points of difference. Ethnic minorities fare the worst. The overall rate of 60.2%, when disaggregated by gender become 73.5% for men and 47.9% for women. Among the Hmong-Mien, men’s literacy is 45.7% and women’s 8.1%.
An Overview of the Subproject Sites
551. The tourism project in Lao PDR has selected two sustainable development subprojects: Siphandone Wetland Biodiversity Conservation, Champasak Province, and Vang Vieng Urban Center, Vientiane Province. A third serves as a model site for the three GMS countries, namely, the North-South corridor running from Luang Namtha to Bokeo. The three subproject areas offer excellent examples for learning how to promote tourism aimed at poverty reduction because they represent extremely different ecological situations: a river/coastal island/farming environment, a tourist town, and mountain settlements. Moreover, the first two sites are populated by the majority Lao Loum, while the mountainous environment is composed totally of Khamu-speaking ethnic minorities – the Khamukuan (89%) and Khamuyuan (11%).
552. The people of Siphandone Wetlands have settled on their 4000 thousand islands in a confluence of rivers that attracts thousands of tourists every year. Boat-owning fisherfolk benefit from ferrying tourists back and forth between the mainland and the islands, from taking them on river cruises, and by selling their fish catch to the restaurants and 43 guesthouses that cater largely to backpackers. Their Boatmen’s Association helps organize their services to tourists. The poorer ones, who rely on their own muscle power because they lack an engine for their boat, hope that improved tourism revenues will enable them to buy the much-coveted equipment soon. Siphandone earnings from tourism opportunities are seasonal, however, so most families still rely for their survival on rice and vegetable cultivation on nearby farm plots. If they manage to save a bit of money, some may open small stalls to serve snacks, drinks, groceries and souvenirs during the dry season. Poverty is thus very real to Siphandone residents, especially for those on the islands less visited by tourists.
553. The North-South Corridor shows the highest poverty rates. The ethnic minority Khamukuan and Khamuyuan residents at the various prospective tourist stopping-off points make a living not from sporadic tourists, but from upland subsistence rice farming and associated activities. Few of the travelers along the corridor visit the various sites, partly because these are not advertised or sufficiently attractive for tourists. Tracks are muddy, the cave is not well lit, and there are neither informational materials nor toilets.
554. Thus, despite a sprinkling of visiting tourists, local people continue to grow corn and vegetables, and raise small livestock for their living. Women, who spend many of their waking hours cultivating the farm plots and fetching water in addition to taking care of the household and family, sometimes engage in handicraft and sewing. They mention wanting to capitalize on these skills in relation to tourism in future. Some households organize mini-enterprises, work as laborers or as an occasional tourist guide when the rare occasion arises.
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555. Vang Vieng urban center presents a distinct contrast to the two rural subproject sites, largely because of its cash-based economy linked to the tourist influx. Women run the majority of guesthouses and restaurants in Vang Vieng. So profitable are they that a number of households have sold or rented out their rice land to start small businesses in town catering to tourists. These may range from small grocery stores and transport to laundries and performing at cultural festivals. Handicraft manufacturing is likewise a women’s industry, and both cotton and silk weaving are done in several villages. Weavers are eager to learn new designs for more sales. The ethnic factor enters in here, since Hmong women are known for their exquisite embroidery and welcome the opportunity to return to weaving in order to diversify their income sources beyond farming.
556. It is easy to forget when one notes the comparatively high economic and tourist-attracting statistics of Vang Vieng that it also harbors many poor people. Indeed, in relation to the rural subproject sites, the number of self-rated poor households in Vang Vieng is highest at 32%. Urban living clearly poses particular disadvantages to those who arrive with few assets beyond their own labor. Among these are migrants from upland areas that have been disrupted by warfare and economic dislocation. Some are young men and women who have left their rural homes to seek their fortunes in a more exciting urban setting. In Vang Vieng their lack of rice land means they must fall back on their work skills to find employment in an extremely competitive job environment. Even if they do land a job washing dishes at a restaurant or working at a construction site, these opportunities remain irregular, and place the poor worker in an uncertain and therefore stressful economic situation.
557. Livelihood strategies are clearly changing. The Women’s Union is eager to help women move into more modern forms of employment by receiving training, for example, in front desk reception and hospitality patterns, serving in restaurants, and enterprise management. Already the government provides some of these learning opportunities. Such changes have come with sometimes dubious consequences, however. Young women are migrating to towns and cities, eager to get away from the tedious and hard work of farming. Young men likewise abandon their agricultural communities to become construction laborers or security guards in town.
558. Cultural values are undermined as money begins to dominate people’s lives. Dress codes and norms of modesty change, and sex, prostitution, and HIV/AIDS appear on the scene. Parents express apprehension over their teen-aged children, fearing that they may be attracted to Western behaviors, and succumb to drinking, immodest dressing, and premarital sex, like in Thailand. They also bewail the growing number of petty thieves and pickpockets who victimize passersby. The line between catering to tourist needs while retaining Lao cultural perspectives is becoming increasingly blurred.
559. The 2006 socio-economic survey of 138 households adds further insights into how the people in the subproject sites live and view their world. In Siphandone and Vang Vieng, 92% and 90% respectively, are Lao Luum, the overall majority, whose first language is Lao. In the Nam Eng/Luang Namtha area of the North-South Corridor, however, the vast majority of the population (89%) is Khamukuan, and the remaining 11% are Khamuyuan. Khamu is the first language of both these ethnic minority groups.
560. Noticeable differences appear among the subproject sites. Vang Vieng has the highest proportion (32%) who rate themselves as poor or very poor households. The rest of the households claim they have just enough to live on (53%), or are relatively well off (15%). Compare these ratings with those for Nam Eng/Luang Namtha, where only 11% of the ethnic minority households identify themselves as poor or very poor, and the remaining 89% see themselves as either having just enough to live on (83%) or being relatively well off (6%). As for Siphandone, three in five households (60%) state they have just enough to live on, 22% are poor or very poor, and 18% are relatively well off.
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561. In summary, residents in all three subproject sites have expressed great interest in acquiring the skills that would enable them to engage in tourism ventures. What is viable in each case very much depends upon their current sources of livelihood and whether these lend themselves to the tourist connection. They welcome tourism as supplementary income in a situation which will also give significant attention to improving their main sources of livelihood – agriculture or fishing or upland farming. Ethnic minority groups would add: “and not the expense of our culture and traditions.” Urban poor groups would follow the same pattern in seeking access, not to agricultural land or an engine for a fishing boat, but assets like credit, technical skills with job opportunities.
562. Ways in which people cope with crisis can also guide program developers in consultation with the people. In terms of crafts, much depends on whether the enterprise-seeking groups have traditionally been crafts producers or whether they must learn new crafts-making skills to get into that craft market. In the first case, it may be a matter of improving design, finding steady markets, or introducing new technology; in the latter, it can mean introducing a whole new concept of work and modified social relations.
563. Further, if women are primarily the new entrepreneurs, their desire to learn basic accounting and become literate needs to be taken into account. Their health and well-being (e.g., freedom from domestic violence, non-discrimination in the business world) must also take high priority. Reordering family tasks in the household so as not to unduly burden women with new ones will likewise prove important. For minority groups, tapping into mainstream skills will necessarily involve them more with the outside world of the majority population. They will need training to deal with that transition, too.
VIET NAM
564. Viet Nam’s new five-year Socio Economic Development Plan (SEDP), 2006-2010, embodies its national strategy for poverty reduction and growth. Its thrust builds on the ten-year long term strategy that had each province and sector prepare a five-year plan, 2001-02005 and annual plans as well. From the information gathered, the National Program on Hunger Elimination and Poverty Reduction (HEPR) and Program 135 were adopted as the government’s approach to fighting poverty.
565. The Comprehensive Poverty Reduction and Economic Growth Strategy (CPRGS) in 2002 introduced better coordination through an inter-ministerial Steering Committee. Viet Nam was supported in these efforts by numerous donors, including the ADB, whose geographic focus targeted the high- poverty Central Highlands. Instrumental in these efforts is a study examining the causes of the decline or acceleration in poverty in the three subregions of the Central Region (North and South Central Costs, and Central Highlands, including the role of government policies in poverty reduction and economic growth.
566. With an anticipated annual average GDP growth of 7.5-8.0%, Viet Nam aims to eliminate hunger (food poverty) by 2010 and reduce poverty by half from the 2002 incidence rate of 29%. This will be done thorough addressing major development challenges: (a) sustaining high economic growth and poverty reduction; (b) creating jobs for new labor market entrants; (c) reducing inequality through targeted poverty reduction; (d) supporting social development by improving health and education services, gender equality, and social inclusion; (e) protecting the environment; and (f) improving governance.
567. The definition of poverty from the Asian-Pacific Conference on Poverty Reduction, held in Bangkok in September 1993 has been adopted by the government: “Poverty is a situation in which a proportion of the population does not enjoy the satisfaction of basic human needs that have been
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recognized by the society depending on the level of economic and social development and local customs and practices.” At the same time a more quantitative approach sets a range of poverty lines depending on the area (mountainous, island, rural lowland and urban), from VND80,000 per capita per month to VND150,000 per capita per month. Following the 1997-09 Living Standard Survey 15% were below the food poverty line and 37.4% below the overall poverty line.
568. To meet its ambitious poverty reduction objectives, the government recognizes that rural areas must take highest priority, since poverty incidence is five times the level of urban areas in general poverty terms, and 7.5 times higher for food poverty. Disaggregating further, regional disparities also need to be taken into account. The largest concentrations of poor people are located in the Northwest Mountain (general poverty 78.7 and food poverty 46.5) and the Central Highlands region (51.8 and 29.5, respectively). Within the central highlands, Gia Lai province emerges as the poorest.
569. Poverty levels are also linked to ethnic minority status. Despite dramatic declines among the majority Kinh populations from 1993-2003, the 45 ethnic minority groups, which also experienced some decline in that period was still at 69.3% below the upland poverty line in 2002. Women bear the brunt.
570. The dynamics in the situation can be illustrated by calling that the successful coffee and pepper farms in the Central Highlands attracted large numbers of migrants in 1995-99. Many of the poorer ones were ethnic people too – Tay, Nung, Dao and H’mong. In addition to straining social services, like schools and health centers, they damaged the forest environment. The coffee boom, then decline, worsened conditions for local ethnic residents, who suffered from price fluctuations, low technology cropping techniques, lack of knowledge, and poor health.
571. The Project’s selection of the Central Highlands to serve as the main areas for all three major subprojects thus fits in with government’s priorities. It is for this reason that the following discussion will focus on that region.
572. Four categories of the poorest or most vulnerable have been identified in the Central Region:
• Local ethnic minorities: These are groups living in chronic poverty, deprived of health and education services. • Women with low literacy: Being poor in knowledge and human assets, and living in underdeveloped conditions, they are hard–pressed to improve their lives or sources of income; nor do they have a voice in decisions affecting them in their areas of work. • Landless farmers: without assets for their livelihoods, probably because they have sold their land or they are migrants, they fall into a vulnerable category unable to take advantage of government poverty reduction policies. • Ethnic minority migrants: Their vulnerability stems from the insecurity of their situations, since their access to social services may be denied in relation to their illegal status; although migration prevention and population resettlement policies have not been effective, compensatory policies like land distribution or credit and social services to “illegal’ migrant groups have not yet been implemented. They were supposed to have remained in their home communities.
An Overview of the Subproject Sites
573. The Project will operate in three sites: Phong Nha Ke-Bang World Natural Heritage Park, Quang Binh Province; Gia Lai Cultural Heritage Minorities and Intangible Culture, Pleiku, and Pro-poor tourism A Luoi, Gia Lai Province,
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574. Phong Nha Ke-Bang World Natural Heritage Park’s 85,754 hectare area has a natural beauty marked by striking karst cliffs, clear blue rivers, and an extensive underground cave system. This led to UNESCO’s designating the Park a World Heritage Site in 2005. The tourists’ and environment’s gain was tempered by dislocation for many, and increased poverty. Numerous Kinh communities, who have traditionally relied on shifting cultivation in forests and drawn on forest products for their livelihoods, now find themselves summarily resettled in agricultural areas with little or no arable land, limited irrigation water and few job opportunities. While there are rivers, they are not accustomed to boats as a way of life, unlike the longer term residents.
575. With the Park now suddenly categorized as “special-use forests,” no commercial exploitation is allowed and any attempt to extract forest resources becomes illegal. Although sustainable collection of firewood and non-timber forest products (NTFPs) is still permitted in adjacent “protection forests” under the aegis of district management boards, even small-scale commercial logging is forbidden there now. Surveillance by park rangers and the fear of being caught deters some residents from re- entering the forest, but hunger forces others to run the risk. They justify this in saying that after all, “forest products are gifts from heaven” over which no one can claim ownership.
576. Local men have had to look for special wood and incense in far away sites, even in neighboring countries, but these are risky business ventures. The women continue collecting non-timber projects nearby, like palm leaves and firewood, even though this can be illegal. Their forests, say the women, used to contribute 70% to 80% of their household incomes. Discussions with one commune leader revealed his awareness of the difficult situations faced by resettled groups: “That is why we do not enforce these regulations very strongly as we know that people have few alternatives and little choice but to violate the rules. We often look the other way.”
577. Government policy-makers defend the relocation process by citing the threats posed to forests and wildlife with the increase of upland households in shifting cultivation. They emphasize the importance of orienting the resettled families to other less environmentally destructive sources of livelihood, and in that light look to tourism as a promising alternative. Moreover, they argue, placing entire communities within the reach of basic services brings them distinct benefits. This applies especially to the younger generation, who more likely than their elders want access to schools, health services, modern consumer items (bicycles, motor bicycles, television), and broader contact with mainstream society. Many parents, especially women, in the community discussions in the mainly Kinh village emphasized the importance of education for their children through the secondary level and preferably even the university so that the graduates could get good jobs later on.
578. Beyond that frequently repeated priority, both men and the women expressed a strong interest in exploring improved home gardens to produce fruits, vegetables and livestock for tourist consumption. Although they did not produce any handicrafts, they would be willing to learn how to make saleable items. They mentioned, however, that an earlier attempt by the local tourism office to train women in handicraft production had failed when the products could not be sold; no concurrent marketing system had been developed. They insisted that they could learn to operate food stalls, restaurants and guest houses as long as they had the training, and follow-up technical and financial support. “We can tackle any kind of work no matter how hard it might be, so long as it brings income!” Women were especially eager that their children go to school, where they would learn English and appropriate skills to qualify as tourist or trek guides. At the same time, the women emphasized that while they and their husbands work equally in the fields, when they reach home, the situation changes dramatically. The husbands rest, while the women continue to do the arduous work of cooking, cleaning, fetching water and firewood, tending the animals, and taking care of the children. Women’s time becomes an issue in tourist proposals that rely on their skills.
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579. Gia Lai Cultural Heritage Conservation: Cultural Minorities and Intangible Culture is located in the Central Highlands Subregion/Tay Nguyen and has long been associated with the highest poverty levels in Viet Nam. When the government initiated its poverty reduction program in 1993, Central Highlands was among those meriting close attention because of it 70% poverty rate. By 1998, the poverty figure had dropped to 52.4%. Following a trend in the rest of country, however, Central Highlands’ subsequent rate of decline slowed down and by 2002, the poverty rate has become virtually static at 51.8%.
580. This was so even though Central Highlands had achieved an impressive average economic GDP growth rate of 12.5% in 1999 and 9.2 in 2002 (ADB 2005d: 9-11). The disconnect reveals the links between poverty and inequality, evident in worsening economic disparities. The upper 20% of the Central Highlands population earns 13 times more than the bottom 20% (the comparable national figure is 8.9). Poverty also has an ethnic face in that poverty incidence for the cluster of 45 ethnic minority groups comes to a staggering 83%.
581. Because of the high concentrations of poor ethnic minority groups, whether long-term residents or recent migrants, targeting tourism benefits to reach ethnic minorities becomes a desirable strategy for this chronically food-poor group. With 1,146,000 people spread out over 15,494,900 hectares of often steep, unusable mountain sides, and more migrating in everyday, the growing population faces serious problems of land access, livelihood and environmental degradation.
582. Ethnic minority residents cited the characteristics of poor and very poor households, a selection of which follows: “They have land but very small plots that only produce food for 5-6 months of the year. The rest of the time they have to find other work.” “The house is dilapidated with earth floors, no bricks. Parents have to lie on the ground.” “They have not enough money to maintain children in school.” “No bicycles, no motorbike.” The household lacks basic belongings, like pots, dishes, bowls, bed, and mosquito net.” “Family members are frequently ill” “Lacking clothing – having to wait until their clothing becomes dry enough to wear when they need to go out.” “Lack of cash to buy salt.”
583. The villagers generally welcome the tourists brought by tour companies and readily agree when the company announces to them that another batch is coming. The participating households are compensated with 40% of the total amount set aside by the tourist company, while 60% goes to the Commune’s People’s Committee. According to the chief, villagers would like more tourists to come as they make people cheerful. The income is also valued of course. At the same time, he believes that the villagers should get a larger share of what the tourists pay to the company. He has not felt comfortable about raising the matter to the company, however.
584. The chief responded enthusiastically to the query as to whether the village young people would like to become expert weavers if such a program were started, especially with the help of the local expert weavers. But, he added, that the marketing process should be in place before any training was conducted. They have already undergone a bad experience along those lines. He also mentioned approving a provincial program aimed at rehabilitating traditional cultures, art, dance, music and musical instruments.
585. Vietnamese ethnologist-anthropologists are quite articulate about tourism among ethnic minorities. While they do not seem to object to tourists entering villages to look at everyday aspects of people’s lives or to join in celebrations, since these bring income to very poor people, they do criticize tour companies heavily. They charge the latter with using ethnic minorities for strictly profit motives, caring little about protecting their cultural heritage and environment. In so doing, they deprive the
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communities of the very element that makes them attractive to tourists. Ethnic groups merely perform but with their “spirit” gone. But it does not have to be this way, if ethnic minorities had more say and actually owned local tourism business ventures.
586. Moreover, said one anthropologist, since ethnic minorities live their culture holistically, they should as much as possible continue shifting cultivation and the responsible forest utilization they have been used to, with some assistance through new technology. Unless this is done, their lives will be compartmentalized and cultural expression relegated to becoming detached museum remnants of their past.
587. Once their children interact regularly with outsiders and no longer pursue forest-related activities, they lose an appreciation of what it means to be Hmong or Kati or Tay. Indeed, some may even disparage their own culture. Social observers would add that coming from a minority situation, even a striving younger generation of ethnic representatives will likely struggle along at the bottom of the socio-economic hierarchy for some time before they can compete on an equal basis with their more experienced market-oriented Kinh neighbors. Thus, young ethnic men and women may well become the new poor in an increasingly economically disparate society. Yet, experience worldwide shows that it is possible and desirable to give value to ethnic cultures, while being exposed also to outside influences in compatible ways.
588. The GMS Model in A Luoi, Pleiku, Gia Lai Province, Central Highlands Region will formulate strategies and programs illustrating the ways in which poor villagers of Kinh and ethnic minority extraction, can seize tourism opportunities to move out of poverty. Unlike sustainable tourism sites, which capitalize on their natural and cultural heritage assets and on urban centers, the locations targeted for the Pro-Poor Tourism Initiative focus on “the linkage between tourism and the opening- up of new markets for farm, handicraft, and other products arising from improvements in access and information” (ADB 2005a:44).
589. A Luoi was chosen as a model site because it contains all the ingredients for testing the community based tourism and supply chain initiatives, pro-poor tourism scheme. Poverty levels are high, women are eager to increase the household incomes, and ethnic minority groups abound. The village is an example of those already engaged in some community-based tourism but eager to and capable of expanding those efforts, or those interested in joining a network of potential “supply chain” villages engaged in active production and trading.
590. Some of the implications for the project would mean that stakeholders like traders, middlemen/women, and retailers should recognize that they share the goal, not only of generating tourist income but also of enabling poor households, women and ethnic minorities, to benefit from, manage and control tourism activities. Moreover, since young adults are seen as those most likely to learn quickly the new and more complex approaches to earning from tourism, and parents are eager for them to participate, program planners should give particular attention to the involvement and training of young men and women from poor households and ethnic minorities.
3.3 Participation
591. All three countries have affirmed their commitment to community based planning, implementation, monitoring and evaluation. Legislation and policy documents underscore the importance of village or commune level participation in decisions affecting them. This would apply to the implementation of tourism policies and plans.
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592. Because the project contains modest infrastructure improvements and concomitant training and community capacity building and mobilization elements, the people in the subproject sites can be reassured that their meetings and discussions connect with real happenings. This means they will be more likely to get involved in the various training and issue-raising community meetings. Since women and ethnic minorities occupy an especially strong position as decision-making partners in the process, their progress in this regard will be carefully monitored.
593. The participation of villager residents in the planning, implementation, and monitoring of sustainable pro-poor tourism is key to the success of the project. If they are to increase their incomes, manage, and even own, tourism-associated assets, they will have to engage in a complex learning process. The project’s plans for facilitating community participation will help make this happen. Training programs built into project implementation will assist greatly, but in the end, it is the villagers’ interaction with leaders and fellow members through open, informed, and creative community dialogues, together with the capacity to plan and take sustained action, that will spell the difference between success and failure. When people participate in planning, implementation and monitoring local activities, they become avid stakeholders for productive outcomes.
594. Community leaders are expected to consult with the community on their opinions and preferences before any significant decisions are made, so that the people’s views are integrated into the decision- making process. Much depends, however, on the chief’s individual leadership style. Leaders accustomed to traditional “top-down” decision-making, find it difficult to shift to more participatory governance processes. In this they are often sustained by similarly “top-down” district and provincial hierarchies to which they must answer. Yet, the persistence of hierarchical decision-making is understandable, it being the system to which leaders and most of the population have long been accustomed. Survey findings revealed that most residents leave decision-making to the village leader, whom they respect – or sometime fear.
595. Women still play a minor role in community decision-making and efforts are underway to reverse this pattern. A few women now hold membership in village councils, and there is even the rare woman village chief. While the figures appear low, they nonetheless appear to be breakthroughs that are expected to grow in the coming years.
596. Ethnic minorities suffer much the same marginalized fate. This stems in part from language differences, the majority group’s propensity to look down on their ethnic cousins, and the corresponding tendency of ethnic minorities to shy away from the majority. This reduces the ethnic minority interests in mainstream gatherings and, in addition, distances them from positive breakthroughs. Ethnic women have a double disadvantage in finding themselves regularly relegated to the fringes of community discussion. The same is true for other marginalized groups – differently abled people, resettled or displaced poor migrant groups, and young people.
597. District and provincial officials, tour operators and private sector enterprise supporters also play an important role in facilitating the participatory process in line with good governance and efficient business processes. They can help reverse the “top-down” tendency by transforming their own styles into more open and inclusive ones.
598. One set of exhortations from an experienced NGO is well worth considering:
• Take a holistic approach: focus on people, processes and technologies coming from long time community use but also drawing on new external technologies suited to the situation
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• Develop practical leaders: set thinking forums to solve problems, connect people, leverage knowledge for results, match members’ needs with one another, communicate regularly with district leaders, and apply best practice.
• Adopt an on-going learning process: learn from the experience of others; identify and apply the lessons learned; clarify and augment lessons; examine carefully and adapt; document lessons learned; disseminate, distribute and apply.
599. In that light, project implementation will strive to build capacities of poor and vulnerable groups in their communities through active participation in decision making. This will be led by experienced NGOs in collaboration with local leaders, district and provincial authorities, and representatives of mass organizations. Particular attention will go to the poor and food poor, women, women heads of households, young adults, ethnic minorities, especially the women and young people, people with disabilities, and resettled or displaced migrants. Training in a wide range of participatory and technical skills related to tourism will be part of the process. Study tours in the country and in neighboring countries will round out the ongoing learning process.
3.4 Gender Development
600. Although women’s multiple roles make them a dominant force in the agricultural and fishing sectors, together with household and family care, and maintaining the traditions that bind communities and generate social capital, they remain a distinctly poor group in Cambodia. This applies not only to lack of income and control over household earnings, but also to lower levels than males of health, education, land rights, small enterprise credit, and participation in governance. In addition, they suffer from being trafficked, incurring HIV/AIDS, and becoming victims of domestic violence.
601. The intention to mainstream women’s issues into overall development appears prominently in government and NGO plans, especially in the social sectors. Usually tasked to oversee this thrust is the women’s ministry or union, which with significant donor support and assistance from NGOs, is actively engaged in training both women and men toward gender equity. Nonetheless, when key indicators of well-being are examined today, women still come off badly. The Gender Development Index for the three countries based on life expectancy, school enrollment, and a decent standard of living defined in literacy and income terms, shows low ranking. At the same time, progress made over the past decade is also emphasized as a positive sign of commitment.
602. Maternal mortality rates in the high 400 to 500 per 100,000 live births are among the highest in the East Asia and Pacific Region, along with equally disturbing female illiteracy and schooling rates. Discrimination in education is most pronounced at the secondary and tertiary levels. Gender disaggregated data in key areas of development are still difficult to obtain, in part because they are not collected with that variable in mind.
603. The element that gives the greatest cause for alarm, especially among women’s groups, are the high domestic violence rates. Since traditional social norms accord women low status, few of the male perpetrators are punished even if identified. Rape, violence against commercial sex workers, and trafficking of women and girls across the border to Thailand are increasing.
604. Many women are heads of households, a legacy of the long wars in the subregion. Moreover, women contribute the majority of agricultural labor and even more in fisheries production, where they do the processing and marketing. Their rural locations expose them to the dangers of unexploded ordnances and landmines still buried in their surroundings, and in the case of Viet Nam, the continuing, damaging after-effects of Agent Orange.
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605. Despite gender equity figures showing women lagging far behind men, there have also been significant improvements in women’s health and education. Most women in the labor force remain self-employed in small informal enterprises. A healthy competitiveness in business is difficult to achieve though, not only because of women’s low education and literacy levels, but owing to their lack of access to productive resources and services like credit, land and land titles, agricultural inputs and extension services.
606. Attaining higher level elective or appointive positions remains elusive but is progressing slowly. Observers note that women speak out in village meetings when: (a) there are large numbers of women present, (b) discussions are conducted in small groups, (c) women councilors or focal points are present, and (d) the time of day is conducive to their attendance. The importance of women’s shared participation becomes evident in the differences in infrastructure choices favored by women versus men. Women, for example, favor smaller water projects like wells, while men prioritize irrigation systems. Programs and projects that build in a Gender Action Plan (GAP) appear more likely to generate favorable results for women than otherwise, since they include targeting mechanisms and a strong monitoring component.
607. The sustainable pro-poor tourism project has an enormous potential to make a significant positive impact on the situation of women in lowland agriculture, fishing, and upland communities. This is because it happens at the community level and features local planning, implementation, monitoring and evaluation through a facilitated participatory process involving NGOs, district level decentralization, and academic institutions. The participation of women and the promotion of gender sensitive programming mean that the poverty reduction aims of the project will remain closely integrated with women’s well-being. Through the participatory process involving all vulnerable groups, community-specific activities will emerge representative of the cultural diversity of the three countries.
608. Women farmers, for example, can choose tourism-related ventures to build on their access to land or river environments which they have farmed or fished for centuries. Thus, increasing agriculture or fish production through improved technology and credit, and selling their heightened surplus to restaurants and guest houses are activities they can manage. Adding crafts or other micro-credit/SME earning activities will not be foreign to them, since they are traditionally the financial managers in the household and are familiar with the market economy even if they have not had much of a chance to participate in it.
609. Ethnic minority women, on the other hand, can assess tourism possibilities in the context of subsistence farming, scenic locations, weaving traditions and ceremonial celebrations that interest tourists – but developed on the community’s terms. At the same time, younger members of the ethnic minority population can venture into the mainstream arenas of cash-based economic activities, employment, schools, and health centers, a prospect that still makes some of their parents exceedingly fearful but young women themselves hopeful. At the same time, their new status as money earners and their capacity to plan for themselves will add to their intrinsic worth and prevent their being sold to prospecting traffickers. A key topic in the various planning and training programs will be how to reconcile cultural traditions with tourism demands, and the actions that need to be taken so that in so far as possible, everyone wins.
610. As for urban women, their significantly higher educational levels and their living in a largely cash- based economy will resonate with what pro-poor tourism has to offer. Since these urban women will be able to hone their skills and take advantage of job openings in hotels, restaurants, transportation companies, internet cafes, and tourism agencies, or get into their own small businesses, their incomes
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will rise. So too will the situations of their rural families improve as a result of remittances sent home. In the process their own standing will be raised.
611. Further, the availability of work that allows them to earn in a socially acceptable way should dissuade them from joining the seamier side of urban life – karaoke bars, massage parlors, and other establishments that turn out to be fronts for drugs, prostitution and the diseases that go with them.
612. The recommendations of the Gender Action Plan (GAP), articulated by the Lao Women’s Union in 2005 and affirmed and further developed at a Vientiane Workshop in September 2006 show the ways in which gender and tourism plans can dovetail in all three countries:
Lao PDR Gender Action Plan Tourism Responses of the Project
• Strengthen the development of gender In all project documentation information, that is, sex-disaggregated and planning, gender data quantitative and qualitative data: and developments will be closely monitored and recorded
• Enhance the gender knowledge of Training programs at provincial and government senior officials district levels will include gender training
• Target socio-economic development for The rural poor and vulnerable the rural poor, especially poor ethnic groups are the primary stakeholders, minorities including ethnic minorities
• Promote small and medium enterprise The pro-poor subproject featuring development community-based tourism and supply chain development, especially for poor women, is one of the six key activity sets
• Address issues of gender-based violence In line with ADB and Lao PDR and trafficking in persons principles, social risks like these will be specifically monitored
3.5 Social Safeguards and Other Risks
3.5.1 Resettlement
613. All three countries have policies on resettlement and abide with the ADB guidelines in this regards. The Project deliberately avoided resettlement prospects by locating the modest infrastructure contributions on public land for the most part, with the approval of the appropriate government officials. Where land to be used for construction was communally owned, discussions were held with the village or commune chiefs and councils, along with other interested villages, to ascertain whether compensation would have to be made. In all cases the villagers welcomed the infrastructure improvements. In a number of cases, the community sought moderate compensation at agreed amounts and pledged to allocate these payments to a Village Development Fund. Where seven houses in two communities were to be moved to make way for a road or trail, discussions were held with each Affected Person and the moving and compensation terms agreed in the presence of the village chief, following ADB guidelines. In the case of a market that would be temporarily transferred while the new market was under construction, stallholders, village and district leaders
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convened and agreed to the shift as well as the disturbance amounts and benefits the stallholders would have in the new market.
3.5.2 Affordability
614. The terms of reference of community facilitators will include training and mobilizing activities aimed at developing villages capacities’ to assess pricing and their own capacity to pay. The resulting breakthroughs may constitute anything from women running their own small businesses through the production of goods or services, and doing the accounting and marketing, to communities exerting control over the use of local waterfalls or caves, setting the fees to be charged, and deciding how the resulting community fund will be organized and managed.
615. The two urban subprojects are the only ones where residents will be expected to pay fees for the upgraded infrastructure to improve waste water and solid waste disposal, and control flooding. Survey findings indicated they are willing to pay. They do expect, however, that the services will be provided efficiently and as stipulated. All believe that the infrastructure envisioned will benefit the town, the businesses, and attract more tourists. A sliding payment scale may have to be discussed by town authorities with the customers, according to the socio-economic levels of the payers. Local authorities were firm in saying they would have consultations on the matter.
616. There are a substantial number of poor people living in the town, who are mainly casual laborers earning irregularly. While the residents of both towns are significantly better off economically than those in the Project’s rural subproject areas, they nonetheless point out that they have many expenses, fees and taxes to pay as urban residents. Hence, fees should be exacted only to the levels necessary. In summary, the Project has taken serious note of the willingness-to-pay issue and dealt with it satisfactorily by speaking with prospective customers in close consultation with local officials.
3.5.3 Labor
617. Tourism is seen as offering one of the best ways of providing poor people with added earnings. The 2006 survey respondents highlighted its income-generating benefits (57%). Yet, the importance of tourism went beyond its economic advantages. They also welcomed tourists because “they make our daily lives more interesting” and because “we want to show them our culture and our community.”
618. Because poor and vulnerable groups lack credit and experience in money-making enterprises beyond selling agricultural and household produce, involvement in business ventures will require training, apprenticeships especially for younger adults, and exposure to a kind of informal on-the-job training. On another plane, existing village programs that target the poorest residents, like resettled or displaced people, or women heads of households, for job allocation and skills training programs, can serve as models for prioritizing poverty concerns at village level.
619. Since pro-poor or modest tourism is largely linked to the informal economy that features small family-owned enterprises, women are in the best position to tap into the tourism market. One way is to expand their farming and fishing-related activities into business ventures. While their husbands, fathers, and brothers can sell their labor through construction jobs in slack seasons, women are hampered by illiteracy and poor numeracy, the lack of business skills, and their roles as nurturers of children, elderly parents, and disabled husbands, in addition to household needs. This applies especially to women heads of households, who may not necessarily be poorer than other women, but who remain extremely vulnerable in the event they suffer an illness or accident.
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620. Moreover, women’s already heavy workloads must be carefully considered. If they choose to take on a new business and/or training, adding to the many hours of work in which they already engage and further jeopardizing their health, there will have to be some readjustments. These can range from re- allocating household chores to bringing drinking water sources closer to the village to mitigate the daily two-hour walk for water.
621. Clearly, despite their relative unfamiliarity with tourism, survey findings indicate that people prefer to venture into what they know and can manage best. For women this means cooking, preparing and selling food and beverages. For men, the construction fall-out, even if not specified in the survey, would generate employment for them. Virtually all expressed a strong willingness to take the steps necessary for moving into their preferred tourism domains.
622. At the same time, it should be reiterated that those villagers who cultivate their rice fields and raise livestock in the backyard (the vast majority) feel most comfortable continuing to rely on this reasonably stable livelihood base. Tourism thus occupies for them a niche regarded as supplementary income, especially for women, who could be relieved of some agricultural and household tasks if tourist-related activities appear more profitable. On the other hand, for poor villagers without the stability of riceland to cultivate, and who rely on irregular work with unstable incomes, as is the case for resettled or migrant families, the prospects offered by tourism loom as promising full-time earning activities
3.5.4 Indigenous Peoples
623. The three countries count large number of ethnic minorities in their total populations, especially Lao PDR and Viet Nam, although there is general agreement that their numbers are considerably higher than reported in census figures. Their ethnic minority status is usually linked to their longtime residence in remote mountainous areas, where they live through swidden agriculture and forest resources. Their relationship to the land is now threatened, however, by over-exploitation of the terrain, partly from increases in population and lowland migrants pushing into the area.
624. Moreover, government policies emphasizing the importance of IPs being better integrated into the societal mainstream and away from protected forests have often meant their removal from the swidden cultivation that gave them life and that affirmed their culture, social relations, and spiritual well-being. The resettled IPs are allocated residential land near the road, enabling them to gain access to schools, health centers, new forms of income, and to interact more regularly with the Khmer populace.
625. Because of the way they cluster, these “minorities” may actually be “majorities” in their particular areas. All the countries, however, recognize the existence of a dominant group, usually lowland Khmer, Lao-Tai, and Kinh, who speak the dominant language of the country. Indigenous peoples have usually attempted to distance themselves from the majority groups, but find this increasingly difficult as the latter encroach upon their territory and the indigenous people are encouraged to resettle. Issues of indigenous land rights thus come to the fore.
626. Although many now live near a road, school, and clinics, this does not mean that they actually participate in these institutions. Deprived of their forest resources and out of step with the prevailing majority culture and market systems, they have little alternative but to turn to lowland farming, seek construction labor, or find other ways of surviving. This is where community mobilization around getting into tourism activities on their terms comes to the fore. These outcomes are possible but
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daunting, since IPs associate involvement with the mainstream as leading to cultural loss, humiliation and discrimination by the majority.
627. Prodded on by local and international NGOs, ethnographers, sympathetic officials, the Asian Development Bank, the World Bank, and other donor groups, plus the ethnic minorities themselves, government policies are moving in directions more supportive of IP rights. The IP contention that their livelihood and culture are inextricably linked to their protective, time-tested uses of the forest is still only faintly heard but gaining attention, especially in light of their apparent impoverishment upon resettlement. Community-based forest management, add their supporters, can be environmentally feasible if the IPs traditional roles as protectors of the forest are respected but also updated to address new population, development, technological, communication, and integration challenges.
628. The Project focuses strongly in ethnic minority areas in Viet Nam, has one ethnic-centered subcomponent in Lao PDR, and is keeping a watch over the handful of ethnic individuals in the Cambodia project sites. A Khmer-Islam group near Peam Krasop will receive special attention, especially in relation to women, in tourism development there. The IP issue will be kept in the forefront of community activities as well as in the process of community monitoring and Project monitoring. Moreover, in addition to the indicators of poverty and vulnerability common to all disadvantaged groups, the issue of cultural identity will be central to discussions of ethnic minority rights.
3.5.5 Other Risks and/or Vulnerabilities
629. The Project has built into its plan information programs for local communities, especially those close to the borders, to be vigilant on the various social risks that may accompany tourism. These will be integrated into local training programs. In addition, collaboration with NGO and government ministries active in preventing and dealing with the specific risk problem is an integral part of the project.
Trafficking
630. The places to watch for high profile problems in trafficking, drugs, and HIV/AIDs transmission are primarily the border towns on the frontier with Thailand. Thousands of women are taken across the border. Although laws have been passed to curb trafficking, they have been barely enforced. This stems partly from the reluctance of the victimized women and children to testify against the perpetrators. Collusion and corruption among local authorities further sustain trafficking. Occasionally, however, police raids on prostitution dens succeed in closing them down and charging their owners for the offense in court. Few, however, ever have to serve any sentences.
631. Trafficking does not affect women and girls alone. Even men can be trafficked through a kind of indentured labor system slotting them into construction or farm jobs in Thailand at very low pay with little freedom to disengage. Children are similarly victimized (see Child Labor section below).
632. Multi-pronged efforts are underway to protect children and women, spearheaded by NGOs and donor agencies in collaboration with various government ministries. Strategies include community education, awareness and action networks, publication of brochures and media events highlighting these dangers, and prosecution of perpetrators in court followed by a jail term if the legal effort succeeds.
HIV/AIDS
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633. Commercial sex has also been closely linked with the transmission of HIV/AIDS. With strong donor support, the government and NGOs mounted programs of education, counseling and behavior change, condom promotion, treatment of sexually transmitted diseases, messages on non- stigmatization of AIDs victims, and voluntary testing. A new source of worry is that with condom use having increased among commercial sex workers, new infections are appearing among women and children, brought by husbands who have been away from home.
634. Virtually every government ministry plays a part in addressing the epidemic. All have set up institutional mechanisms for addressing the epidemic on an inter-ministerial basis. They are supported by bilateral donors, multilateral organizations like the Asian Development Bank, UNAIDS, and UNICEF, private entities like the Gates Foundation and the Global Fund for HIV/AIDS, TB and Malaria, and by numerous NGOs working on the ground.
Drugs
635. Drugs pose a further threat. Security forces try to block at border points amphetamines brought in by tourists. Heroin and marijuana sold in drug dens have been halted at least temporarily by occasional police raids. In some of the northern areas of Lao PDR and elsewhere, opium addiction remains a serious problem. Some 25% of street children, predominantly boys, start on the drug path early by sniffing glue, with the likelihood of moving into stronger drugs and thereby exposing themselves to HIV/AIDS infection.
Child Labor
636. Regrettably, children are not exempted from heavy exploitative or stressful labor. Often abducted from their home communities or picked up on city streets and sold to syndicates, the latter farm them out to fishing boat owners as cheap labor, or put them out to beg on Thai city streets. Government entities and NGOs all over the subregion are engaged in information and advocacy programs to stop child labor, and charge the perpetrators in court.
Unexploded Ordnances (UXOs) and Landmines
637. All three countries deal with the continuing threat of mines or unexploded ordnances (UXOs), composed of bombs, hand grenades, bullets. In the millions, they still endanger ordinary citizens on a daily basis. Rarely were maps drawn to record the locations of these hidden instruments of death and dismemberment. The result: thousands of dead or maimed Cambodians, Lao, and Vietnamese, nearly all ordinary citizens going about the business of making a living.
638. Families are prevented from cultivating nearby farmland or pasturing their animals there, and thousands more are blocked from secure travel to water sources, schools, new land for house construction, and to a lesser extent, to markets, pagodas, health centers, business activities, bridges, dams, and neighboring villages. In addition to the tragedy of loss, the sudden demise of a family member affects earning capacity, and for survivors, requires medical remedies and costs often for the rest of his/her life, along with the time of a caretaker-earner.
639. Mine clearing continues with significant donor assistance, suggested priority areas being those that have a maximum impact on poverty reduction. Assistance for rehabilitation and the socio-economic reintegration of disabled, and development assistance in mine-affected communities also merit high priority. Land use and land use legislation that take people’s ownership rights into consideration also feature in government policy.
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640. The Project includes careful attention to UXOs and mines. It has not opted to develop any new terrain that may have them buried there.
4.0 INSTITUTIONAL REQUIREMENTS AND MONITORING PROGRAMS
4.1 Review and Evaluation Current Institutional Capacities
641. Sustainable pro-poor tourism development is part and parcel of national social policy aimed at poverty reduction. The tourism minister and leading officials will have to undertake strong advocacy with their counterparts in other ministries prioritizing community based initiatives and community mobilizing for small-scale tourism development as most beneficial to poor and vulnerable groups. Ministries with strong poverty reduction frameworks can become important allies of sustainable development and pro-poor tourism.
642. To strengthen their capacity to promote pro-poor tourism as mainly a community-based effort but also requiring external support, MOT officials and Executing Agency staff will need exposure to the new outlooks entailed through seminars and workshop. These should cover not only tourism policies aimed at benefiting poor people, but also the less familiar frameworks of community-generated planning, implementation, monitoring and evaluation; and participatory leadership and decision- making. These have to become part and parcel of mainstream tourism planning and policies.
643. Particular attention should go to incorporating issues of gender, ethnicity, disability, resettlement and dislocation, vulnerable children and youth, and victims of negative social impacts, all of whom should be recognized as legitimate participants in project discussions. Useful would be lessons from community-driven development efforts in the countries and the rich NGO experience. Especially productive would be greater exposure to the lesson learned from teams in the Nam Ha pro-poor tourism project in Lao PDR.
4.2 Recommended Implementation Arrangements
• Include Provincial and District Tourism authorities, their Urban counterparts, tour operators, and the PMU and PIU specialists for Community Facilitation and Gender Development, as well as those for Resettlement and Evaluation in workshops and training sessions on community facilitation for tourism, preferably in the actual subproject sites.
• Encourage commune and village officials to be open to new techniques of community facilitation and decision in keeping with participatory governance norms.
• Liaise with other ministries to emphasize the crucial link between pro-poor tourism and the other ministries’ activities. This will mean periodic meetings with them to review project plans and development and ascertain how a synergistic approach can best be implemented.
• Enable the PMU and PIU specialists for Community Facilitation and Gender Development, as well as those for Resettlement and Evaluation, to play pivotal roles in the training, liaising (including with NGOs) and facilitation functions in administrative and financial matters. They should also work closely with their International and National Consultant counterparts.
• Incorporate these social and participation concerns into the monitoring and evaluation framework for the Project, with particular attention to impact.
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• Initiate a regular Poverty and Social Analysis study, with accompanying reflection sessions to lodge tourism actions squarely within the contexts of poverty reduction, social development and risk mitigation frameworks.
5.0 CONCLUSIONS AND RECOMMENDATIONS
644. Tourism offers new hope for getting more income into the hands of poor people in the countryside. The focus on empowering people at the community level is meaningful, since they are the natural caretakers of local areas. They would be obvious allies in the government’s drive to protect endangered environments and people. They also make up the majority of the populace.
645. A number of specific recommendations have been made in the above text, which can be summarized in the following listing:
• Identify the poor and vulnerable in specific communities through facilitating community planning and mobilization of the local village and commune populations. • Give particular attention to enabling various categories within the poor and vulnerable to have a say in tourism and related decisions affecting them; recognize that various sub-groups may need different approaches to reducing their poverty and vulnerability. • Mount strong advocacy and information programs on social risks requiring vigilance in the community in the course of welcoming tourists; complement these with action plans aimed at preventing as well as protecting victims; clear tasking of responsibilities is crucial. • Draw on the strengths of NGOs with experience in community planning and empowerment, and include them in the subproject planning, implementing and monitoring-evaluation activities. • Strengthen the capacity of district, provincial, and national authorities in the tourism and related ministries to be facilitative rather than authoritarian in dealing with local communities, and genuinely supportive of good governance and prioritizing tourism that embodies poverty reduction. • Document progress and problems en route through participatory monitoring and evaluation approaches that build in the key objectives at the people and government levels, and thereby generate meaningful assessments of outcomes and impacts over time. • Learn from successful community-based development efforts that can enrich tourism operations, drawing on a wide range of local initiatives operating in GMS and Southeast Asian countries.
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C. PROJECT FINANCIAL ANALYSIS
1.0 INTRODUCTION
646. This financial analysis of subproject investments for the proposed ADB Greater Mekong Subregion Sustainable Tourism Development Loan Project 2007-2012 has been conducted in accordance with The Guidelines for the Financial Governance and Management of Investment Projects Financed by the Asian Development Bank.
647. This financial analysis focuses on subprojects under the Sustainable Tourism Development Component located in three participating countries:
• Cambodia: 1) Peam Krasaop Wildlife Sanctuary Ecosystem Conservation and Tourism; 2) Sambor Prey Kuk Cultural Tourism Development; and 3) Kracheh Town Solid Waste Treatment and Management.
• Lao PDR: 1) Siphandone Wetland Biodiversity Conservation & Tourism; 2) Vang Vieng Town Waste Water Centralization and Treatment.
• Vietnam: 1) Phong Nga-Ke Bang World Natural Heritage Conservation; 2) Gia Lai Ethnic Minorities Cultural Tourism Circuit Development.
648. In addition to the above subprojects, financial analyses have also been conducted on three selected sample or model sites covering: (i) the Aluoi District, in Hue Province of Vietnam for the pro-poor model; 9 selected borders in Cambodia for the borders tourism improvements model; and (iii) the North-South Economic Corridor in Luang Namtha Province, Lao PDR for the development of tourism attractions along the economic corridor model.
649. In preparing this financial analysis, it is understood that the Ministries of Finance of the participating countries will contract the loans based on approved cost estimates and pass these on as grants to project Implementing Agencies (IAs) that may include national or provincial government agencies. Since full cost recovery of the capital costs is only required to be demonstrated in the economic analysis, the main aim of this financial analysis is to test and verify whether the subprojects in each country can generate sufficient revenues from tourism or user charges to achieve cost recovery of their operations and maintenance (O&M) costs.
650. The data, observation and analysis provided in this financial evaluation have been based upon broad consultations with stakeholders as well as field inspection and discussions during the two field missions conducted in Cambodia, Lao and Vietnam from 4 July to 12 August and from 11 September to 9 October 2006, respectively.
651. The general assumptions used at the Project level are first identified followed by a discussion of the subproject revenue and costs assumptions and the outcome of these on the capacity of the subprojects to recover their O&M costs. Next, the sensitivity of the subprojects to revenue and O&M cost risks is examined, and overall conclusions and recommendations are made.
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2.0 GENERAL ASSUMPTIONS
652. Financial projections for the proposed Project are based on the following general assumptions:
• the ADB funding will be a loan to each Government of the participating countries through their Ministry of Finance (MOF) which will be passed on as grants to project IAs at the provincial level; • capital costs of the project comprise: investment costs to civil works, purchase of O&M equipment including operations equipment and administrative and fit-out equipment, and initial working capital if any; • the financial objective of these subprojects is to generate sufficient revenues to the site management unit from tourism or user charges for cost recovery of the Operations & Maintenance costs only; • the design and construction will commence from 1 January 2008 and be completed by 31 December 2010, spreading over three years; • the financial projections for the project are in 2006 constant prices and cover a ten-year period of operation from 1 January 2011 to 31 December 2020. The project sites are under pilot operations in 2011 and 2012 with many capacity building activities under the project. 12 months is set as month of balance to calculate annual financial results; • the site management bodies (either government agencies or government established management boards), are non-taxable entities, and are not obligated to pay income taxes except for the case in Kracheh town where a public company will be established for solid waste management. In case of supply chains of selling handicrafts or operating community tours, net gross sales will be after VAT. • value added taxes (VAT) for all tourism and supply-chain related transactions are at the rate of 10% for the Kingdom of Cambodia, 5% for Lao PDR and 10% again for Viet Nam. In the case of Kracheh Town subproject in Cambodia to project income statement, the corporate profit tax was used at rate of 20%; and • the accounting currency used in the evaluation is US dollars. The Currency of Cambodia is Riel or KHR, Kip or LAK for the Currency of Lao PDR and Dong or VND for the Currency of Viet Nam. Exchange rates: $ 1.00 = KHR 4,225, $ 1.00 = LAK 10,180, $ 1.00 = VND 16,005.
3.0 PROJECT REVENUE
653. The operating units for the series of subprojects under each component of the Project in each participating country are projected to derive revenue from one or more of the following sources:
• entrance fees to natural and cultural heritage sites; • user charges for services such as solid waste collection and disposal; • parking fees where not concessioned out; • concession fees on income producing facilities undertaken by the private sector; and • the sale of interpretative materials at interpretation and visitor centers developed as part of the Project.
654. Entrance fees have been set having regard to existing entrance fee levels where applicable and entrance fees at other similar sites where no entry fees have been previously charged, the impact of the proposed improvements in terms of O&M cost recovery requirements and surveys of the
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market’s willingness to pay. User charges for utility services such as solid waste management at the Kracheh Town subproject in Cambodia, and for enhanced drainage and solid waste removal at the Vang Vieng Town subproject in Lao PDR have been based upon the level of fees required to recover O&M costs and surveys of willingness to pay on the part of residents and commercial establishments as measured by household and commercial establishments surveys, especially tourist establishments.
655. Parking fees are normally charged at most natural and cultural tourism sites. The level of parking fees has been based upon existing practice with modest increases in some cases to reflect enhanced visitor parking amenities such as graded parking areas, shaded areas and toilet facilities. In some cases, the collection of parking fees is concessioned out to a private group or to a local community group as in the case of the Sambor Prey Kuk subproject in Cambodia.
656. Concession fees result from making available areas such as market stalls, parking facilities, toilet facilities, and outlets in the interpretation and visitors centers to the private sector or local community groups to operate under a concession agreement. In return, these groups pay a concession fee that is normally between 5 and 10% of the gross income collected except in the case of the border subproject where a higher fee of 40% was assumed given the low O&M costs involved here. Revenue is also likely to be generated from the sale of interpretative material such as booklets, brochures, maps, etc. connected with the site and sold in the interpretation/information center by the public sector operating unit.
657. It should be noted that in the case of the natural and cultural heritage site subprojects, the net revenue for the recovery of recurrent O&M costs is usually less than gross revenue collected since in most cases the public sector operating entities for the subprojects are required to remit a given percentage of the gross income to the provincial treasuries or other beneficiaries. In other cases, there is a requirement to remit a percentage of the gross revenue to a community development fund or a provincial tourism promotion fund. The level of remittance (or royalty) connected with each of the natural and cultural heritage subprojects ranges from 20 to 45% while the community development and provincial promotion funds are generally set at around 5% of gross revenue. These deductions, where they occur, are shown in detail for each subproject in Appendix 13.
658. The detailed revenue assumptions for each source of income for each subproject are set out in Appendix 13. Table 40 summarizes the net revenue generated from the various sources for each subproject under the Project after remittances to government treasury including VAT, contribution to provincial tourism promotion funds and community development funds.
4.0 PROJECT OPERATING AND MAINTENANCE COSTS
659. For the purpose O&M cost recovery, the following O&M costs components have been identified for estimating operating costs by direct estimation methods as follows: maintenance of civil works; maintenance of O&M equipment; payment of employees; vehicle operations; administrative and general expenses; marketing and promotion; and monitoring and evaluation. In addition to the above O&M costs elements, provision has also been made for a reserve for replacement of operations equipment, and for initial working capital to cover operating revenue and cost shortfalls in the initial years. The overall approach to estimating these costs is discussed below.
4.1 Civil O&M Equipment Maintenance Costs
660. The cost of maintenance for civil works and O&M equipment was based upon consultation with the civil engineer, national consultants and domestic agencies, and percentage-of-initial-development- cost ratios developed to provide the required estimates. The capital cost of the original civil works
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and O&M equipment were based on the detailed subproject investment costs prepared for this Project. Typical maintenance ratios run at 2% per annum of the cost of civil works and 7% per annum for of the cost of O&M equipment. Coefficients of O&M equipment replacement were developed through consultations with the civil engineer having regard to national practice in the participating country.
4.2 Staff Costs
661. To estimate the cost of staff required to undertake the O&M tasks involved in the operation of each subproject, the main O&M activities associated with each subproject was identified and staff schedules of the required positions prepared. In some cases, there was a need to absorb staff units in already operating situations such as at the Sambor Prei Kuk Cultural Heritage subproject in Cambodia, at the Phong Nga Ke Bang National Park Ecotourism Circuit subproject in Viet Nam and at the Vang Vieng Town Urban Environment Improvement Subproject in Lao PDR. Once the staff positions had been fixed, the number of days of operation were then identified and the number of shifts required per day to determine the total staff requirements for each position. The staff monthly salaries and wages were then estimated using local rates. Where necessary, in order to reflect skill levels not currently available locally, the pay rate was increased to reflect what the position would earn for comparable skills in other locations in the participating country.
662. On-costs related to social security, holiday leave, sick leave and other mandatory payments followed normal practice in each country. In general, these run between 5 and 15% of total wages and salaries depending upon the staff position and level of permanency of the staff position. In addition to the normal staff costs, in some cases, such as at the natural and cultural subproject sites, provision has been made for HRD costs involving up-skilling training, and training of new staff resulting from staff turnover. These costs are based upon the expected number of staff requiring these types of training, the number of training courses required to meet these training needs, and the unit cost of mounting each training course on an annual basis.
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Table 42. Summary of the Overall Project Net Revenue Flow - 2006 constant price US$ 000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Country Subproject $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Cambodi Peam Krasop Wildlife Sanctuary 76.35 86.10 103.89 111.16 126.04 128.60 129.40 130.28 131.26 132.36
a Sambor Prei Kuk Cultural Tourism 130.62 146.65 215.41 215.33 227.37 233.31 233.22 233.12 233.02 232.91
Kratie Town Environ. Development 111.75 113.74 115.05 116.65 118.68 156.31 158.16 159.27 161.97 207.87 Border Facilitation - case study 66.85 70.67 74.84 79.41 84.40 84.40 84.40 84.40 84.40 84.40
PDR LAO Siphandone Wetland Eco-tourism 86.12 92.03 98.41 105.30 112.74 112.90 112.90 112.90 112.90 112.90
Vang Vieng Environ. Development 96.71 100.12 105.31 109.93 114.83 128.19 129.80 131.45 133.12 156.60
North-South Economic Corridor 57.57 63.84 73.96 82.37 91.90 92.07 92.07 92.07 92.07 92.07
Nam Viet Phuong Nha Ke Bang Natural Park 181.56 196.85 211.33 224.60 236.29 285.44 285.44 285.44 285.44 285.44
Gia Lai Ethnic Cultural Tourism 124.40 130.05 137.88 146.24 155.17 155.17 155.17 155.17 155.17 155.17
A Luoi Pro-poor Sample Site 19.82 20.95 22.13 23.61 25.15 25.99 26.88 27.84 28.86 29.95 Note: Net Revenue* - Gross Revenue after remittances to government treasury incl. VAT and contribution to provincial tourism fund and community development fund
Source: Appendix 13
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4.3 Vehicle Operations Costs
663. These costs including gasoline, LPG and diesel for driven vehicles proposed at Sambor Prei Kuk Cultural Heritage Site, for shuttle buses at Phong Nga Ke Bang National Park as well as for trucks and tractors for solid waste collection and transport to landfills in Krachech Town in Cambodia and Vang Vieng Town in Lao PDR were estimated on the basis of the likely distance in km traveled annually. The unit rate per km for the operations of each type of vehicle was based upon unit prices current in the vicinity of the subproject site.
4.4 Administration and General Costs
664. Administrative costs include office rental, utilities including water and power, stationery, telecommunication and post, transportation and travels, accounting, auditing and legal expenditures, insurance, postage and other miscellaneous expenses. Office rentals were based upon estimates of the required office space and the monthly rental rates applicable at the location. The cost of utilities such as water and power were based on estimates of the likely level of use created by each subproject in terms of unit requirements on a daily and annual basis. Coefficients of utility consumption for water and electricity were then applied to derive the estimated costs. The costs, of stationery, travel and telecommunications were estimated on the basis of likely fixed usage rates per month and then flexed out to an annual figure. Accounting and audit services were estimated on an annual basis having regard to local cost regime. The costs of O&M equipment and third party insurance have been based on comparable rates at the location.
4.5 Marketing and Promotions Costs
665. Marketing and promotions costs have been based upon a mix of activities including production of promotional materials (brochure, maps, booklets, and website), attendance at trade fairs and media programs, reproduction of booklets and other collateral tourist kits for sales as well as reproduction of environmental and cultural awareness materials. For promotional materials, the type and volume of materials are first estimated and unit production costs prepared based on local or nearest supplier provider costs. In the case of the web site, provision is made for an annual web site fee and monthly maintenance costs at rates currently applicable in the locality of the subproject. The cost of attendances at trade fairs and media programs where applicable, have been based on the number of events considered to be necessary annually and the unit cost of attendance estimated based on current experience in the participating country. Media and publicity programs are costed in a similar way. The reproduction of existing collateral materials where necessary, has been based upon the likely volume required per annum and the unit cost in the area of producing this volume of material.
4.6 Monitoring and Evaluation Costs
666. Monitoring and evaluation costs relate to the cost of monitoring environmental and social baseline conditions, annual reporting and community seminars to get feedback, and to undertake major periodic assessment every 5 years. The cost of monitoring environmental and social baseline conditions has been based upon the estimated amount of this activity required annually in each subproject in terms of the consulting staff time and cost requirements as well as number of community participants involved based on current experience in the area or in the participating country. Annual community seminars to obtain feedback have been based on locally applicable rates and the time and cost of consultants to arrange and facilitate these meetings, the estimated number of persons per meeting, the number of meetings required annually, and the unit cost of each meeting based on local experience. The cost of the 5-Year Major Assessments in the environmental and social area
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have been based upon locally applicable rates as well the time and cost of consultants to undertake the necessary assessments including in the case of the social assessment and the cost of focus group discussions.
4.7 Other Costs
667. In addition to the cost elements identified above, other costs elements have also been identified and include: reserve for replacement of operations equipment, provisions for provincial tourism promotions funds, and provisions for community development funds. Payments into a reserve to fund replacement of operations equipment have been assumed as follows: (i) operations equipment such as vehicles and trucks etc. are replaced every 10 years with a 20% residual value; and (ii) office equipment such as PCs, air-cons, phone/fax, copy machines, furniture etc. are replaced every 5 years without residual value. In each case, the equivalent of 10% or 20% of the capital equipment in question less the residual value has been set aside annually to allow for replacement at the required time.
4.8 Summary of O&M Cost Forecasts
668. The detailed O&M costs assumptions for each subproject are set out in Appendix 13. Table 43 shows the forecast O&M costs for the subprojects in each country. As noted in Appendix 13 and related Tables, the key O&M elements vary depending upon the type of subproject under consideration:
• for the natural and cultural heritage and Economic Corridor subprojects, the main O&M cost elements comprise payment to employees (20% to 38% of total), replacement reserve, (7 to 12% of total), maintenance of civil works and equipment (16 to 43%) and administration and general costs (9% to 29% of total); • for the urban environment improvement sites, the main O&M cost elements comprise payment to employees (15% to 19% of total), replacement reserve, (19 to 20% of total), civil works and equipment maintenance (27% to 37%), and administration and general costs (11%); • for borders subproject, the replacement reserve accounts for 42% of the O&M cost with civil works and equipment maintenance at 54%; and • for the pro-poor subproject, payment to employees accounts for 36% of the total followed by administration and general costs at 20%.
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Table 43. Summary of the Overall Project O&M Costs Flow - 2006 constant price US$ 000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Country Subproject $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Cambodi Peam Krasop Wildlife Sanctuary 66.50 79.32 114.42 116.51 121.96 119.04 119.13 124.43 119.34 119.46
a Sambor Prei Kuk Cultural Tourism 122.62 139.94 207.31 212.74 222.82 219.15 219.15 224.95 219.15 219.15 Kratie Town Environ. Development 96.79 107.27 136.85 138.27 142.26 141.41 142.19 146.98 143.82 144.66 Border Facilitation - case study 40.88 54.45 69.50 69.50 69.50 69.50 69.50 69.50 69.50 69.50
PDR LAO Siphandone Wetland Eco-tourism 43.80 60.80 95.48 97.91 103.84 101.84 102.58 108.37 104.23 105.16 Vang Vieng Environ. Development 92.75 113.53 123.32 124.25 127.64 126.09 126.48 130.88 127.28 127.69
North-South Economic Corridor 38.37 53.56 72.52 73.09 75.23 73.73 73.73 77.43 73.73 73.73
Source: Nam Viet Phuong Nha Ke Bang Natural Park 143.09 159.94 234.64 242.35 253.13 249.13 249.13 255.33 249.13 249.13 Gia Lai Ethnic Cultural Tourism 73.16 104.55 137.74 140.31 146.68 144.93 146.38 153.14 149.61 151.41
A Luoi Pro-poor Sample Site 15.22 17.90 21.88 21.98 24.68 22.19 22.31 26.13 22.56 22.70 Appendix 13
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5.0 OPERATING AND MAINTENANCE COST RECOVERY PERFORMANCE EVALUATION
669. To evaluate the O&M cost recovery performance of the Project at the subproject, Country and Project level, the forecast total revenues (net of any remittances, VAT and other expenses taken from gross receipts) and O&M costs have been compared to identify where cost recovery is achieved. Detailed analyses for each subproject are provided in Appendix 13 . Table 44 gives a summary of the overall project net cash flow performance on an annual basis between 2011 and 2020, while Table 43 gives an aggregated picture of performance based on cumulative net cash flows.
670. In Cambodia, the analysis of the balance between projected revenue and O&M costs between 2011 and 2020 indicates that O&M cost recovery is achieved in all years in the case of the Sambor Prei Kuk and Border Tourism Facilitation subprojects. On the other hand, both the Peam Krasaop and Kracheh subprojects underperform for two to three years. In the case of Peam Krasaop, although there is a negative balance for 2013 and 2014, no initial working capital is required as the deficit can be covered by net earning from previous years. In the case of the Kracheh subproject however, where the shortfall occurs in 2013, 2014 and 2015 (the initial years), initial working capital of around $ 46,000 will be required.
671. For Lao PDR, the analysis indicates that O&M cost recovery is achieved in all years for the Siphandone Wetlands subproject and the North-South Economic Corridor subproject. The Vang Vieng drainage and solid waste enhancement subproject experiences negative balances for four sequential years from 2012 and 2015 after which it produces moderate surpluses. To cover the deficits in the early years, this subproject will require initial working capital of around $55,000.
672. In Viet Nam, cost recovery is achieved in all years for the Gia Lai subproject and the A Luoi sample pro-poor site. Phong Nga Ke Bang experiences deficits in 2013, 2014 and 2015. However, no initial working capital is required to meet these as surpluses generated in previous years more than adequately cover the deficits in subsequent years.
673. The general conclusion is that with the exception of the two urban subprojects that require initial working capital, O&M cost recovery is achieved and modest surpluses generated for 8 subprojects and model sites. To improve the O&M cost recovery performance of the subprojects, the participating countries may chose to adopt policy stances that relax their requirements in regard to government treasury remittances of a portion of gross receipts, VAT and provision of funds for provincial promotion funds and community development. The impact on the balance of forecast revenue and O&M costs were evaluated for a policy scenario in which cash inflows to cover O&M costs are gross revenues before any deduction of remittances to government treasury including VAT, provincial tourism promotion fund, and community development fund. Table 44 shows the result of this analysis.
674. In Table 44, it has been assumed that the various deductions from gross revenue are waived and that the gross revenue is available to the management units for cost recovery and reserve purposes. As expected, without the initial deductions from gross revenue, the overall position improves considerably for all subprojects especially for the Kracheh Town Solid Waste subproject where no working capital would be required while the working capital requirements for the Vang Vieng drainage and solid waste improvement subproject would be halved. Given the need to manage income and financial risk of operations, this analysis strongly suggests that the participating countries should adopt policies for the subprojects designed to reduce payments to government treasury including VAT, and allowing site operators to retain more revenue in order to sustain their operations.
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Table 44: Base Case Summary of the Overall Project Net Cash Flow – Balance between Revenues and O&M Costs, 2006 constant price US$ 000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Accum. Initial Net working Country Subproject Cash Capital $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Flow Requir. Cambodia Peam Krasop Wildlife Sanctuary 9.85 6.78 -10.52 -5.35 4.09 9.56 10.27 5.85 11.92 12.90 55.35 no Sambor Prei Kuk Cultural Tourism 8.00 6.72 8.10 2.59 4.55 14.16 14.07 8.17 13.87 13.76 93.99 no Kratie Town Environ. Development 14.95 6.48 -21.80 -21.61 -23.58 14.91 15.97 12.29 18.15 63.21 78.96 45.56 Border Facilitation - case study 19.21 10.29 1.44 9.28 16.68 18.35 18.35 14.65 18.35 18.35 144.93 no
PDR LAO Siphandone Wetland Eco-tourism 42.32 31.23 2.93 7.39 8.91 11.06 10.32 4.53 8.67 7.74 135.08 no
Vang Vieng Environ. Development 3.96 -13.41 -18.01 -14.32 -12.81 2.09 3.32 0.57 5.84 28.91 -13.85 54.60
North-South Economic Corridor 19.21 10.29 1.44 9.28 16.68 18.35 18.35 14.65 18.35 18.35 144.93 no
Nam Viet Phuong Nha Ke Bang Natural Park 38.47 36.91 -23.31 -17.75 -16.84 36.32 36.32 30.12 36.32 36.32 192.87 no Gia Lai Ethnic Cultural Tourism 51.24 25.50 0.14 5.93 8.49 10.24 8.79 2.04 5.56 3.76 121.68 no
A Luoi Pro-poor Sample Site 4.60 3.05 0.25 1.63 0.47 3.80 4.57 1.70 6.29 7.25 33.61 no Note: Net cash flows are computed based on net revenue after deductions of royalty to government treasury incl. VAT, provincial tourism promotions fund and community development fund from the gross revenues
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Table 45: Executive Summary of Cash Flow Analysis for Subprojects in the Participating GMS Countries (Year 2011-2020) Year with Accumulated Accumulated Accumulated Accumulated Initial working capital Country and Subproject negative Gross Revenue Net Operating Revenue* O&M Costs Net Cash Flows Requirement Cash Flows US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 Kingdom of Cambodia Peam Krasop Wildlife Sanctuary 2013-2014 1570 1155 1100 55 no Sambor Prei Kuk Cultural Tourism no 3200 2101 2007 94 no Kratie Town Environ. Development 2013-2015 1577 1419 1340 79 46 Border Facilitation - case study no 887 798 651 147 no LAO PDR Siphandone Wetland Eco-tourism no 1581 1059 924 135 no Vang Vieng Environ. Development 2012-2015 1270 1206 1220 -14 55 North-South Economic Corridor no 1766 830 685 145 no Vietnam Phuong Nha Ke Bang Natural Park 2013-2015 4956 2478 2285 193 no Gia Lai Ethnic Cultural Tourism no 1909 1470 1348 122 no A Luoi Pro-poor Sample Site no 326 251 218 34 no
Note: Net Operating Revenue - gross revenue minus royalty to government, community development fund and tourism promotion fund as well as VAT, for recovering operations and maintenance costs.
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Table 46: Adjusted Base Case Scenario - Summary of the Overall Project Net Cash Flow - Balance between Revenues and O&M Costs, 2006 constant price US$ 000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Accum. Country Subproject Net Cash Initial working $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Flow Capital Requir. Cambodi Peam Krasop Wildlife Sanctuary 22.80 21.38 7.09 20.73 33.65 71.48 72.57 68.58 75.12 76.63 470.03 no
a Sambor Prei Kuk Cultural Tourism 34.28 36.22 51.44 77.27 103.16 179.67 179.51 173.55 179.17 178.99 1193.27 no Kratie Town Environ. Development 27.37 19.11 -9.01 -8.65 -10.39 32.27 33.54 29.99 36.15 86.30 236.68 no Border Facilitation - case study 33.40 24.07 13.65 18.72 24.27 24.27 24.27 24.27 24.27 24.27 235.47 no
PDR LAO Siphandone Wetland Eco-tourism 84.73 76.56 51.40 59.25 64.43 66.67 65.93 60.13 64.27 63.35 656.72 no
Vang Vieng Environ. Development 9.05 -8.14 -12.47 -8.53 -6.77 8.84 10.16 7.49 12.85 37.15 49.62 26.87
North-South Economic Corridor 84.13 82.28 84.85 102.16 120.32 122.17 122.17 118.47 122.17 122.17 1080.89 no
Nam Viet Phuong Nha Ke Bang Natural Park 220.04 233.75 188.02 206.86 219.45 321.76 321.76 315.56 321.76 321.76 2670.73 no Gia Lai Ethnic Cultural Tourism 88.40 64.34 41.32 49.61 54.84 56.59 55.14 48.39 51.91 50.11 560.66 no
A Luoi Pro-poor Sample Site 10.52 9.31 6.86 8.68 7.98 11.56 12.60 10.02 14.91 16.19 108.64 no Note: Net cash flows are computed based on gross revenue before any deductions of royalty to government treasury incl. VAT, provincial tourism promotions fund and community development fund
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6.0 SENSITIVITY ANALYSIS
675. Risk and sensitivity analyses have been conducted for each subproject based on the risk of variation in the demand forecasts, and adverse movements of O&M costs. As noted in the discussion of the results of the cost forecasts, maintenance costs for civil and O&M equipment, payment to employees, and administrative and general costs are the largest components of the total O&M cost structure and any significant variations in these is likely to affect the overall cost recovery performance of the Project. Similarly, on the revenue side, the absolute volume of demand has a significant impact on the ability of the subprojects to recover their O&M costs.
676. Based on an analysis of the type and level of financial risk to which the subprojects are prone (See Appendix 14 ), four scenarios have been used to assess the sensitivity of the subprojects and Project to recover O&M costs against the base case:
o capital costs are higher by 10% than forecast; o payments to employees are higher by 10% than forecast; o administration and general costs are higher by 10% than forecast; and o the volume of visitor demand is 10% below the levels forecast.
677. In evaluating the sensitivity of the subprojects to the above adverse supply and demand outcomes, two key indicators have been used: (i) the years in which negative accumulative net cash flows were found; and (ii) the ratio of accumulated revenue to O&M costs for the whole period. The accumulative net cash flow is a good indicator of the adequacy of financial management since if the accumulative net cash flow in a specific year is positive, then there would be no liquidity risk. If it is negative, the operation will need working capital to balance the deficit. The revenue can either be gross revenue or net revenue after remittances (royalty) to government treasury including VAT, provincial tourism promotions fund and community development funds have all already been deducted from gross revenues. The second indicator is computed by dividing the accumulative operating revenue by accumulative O&M costs and gives an average estimate of the O&M cost recovery over time and the need for defensive action such as the provision of working capital at the outset. Table 45 shows the results of the above scenarios on O&M cost recovery for the subprojects. The overall findings on a country by country basis are summarized below:
Kingdom of Cambodia:
• Peam Krasop Wildlife Sanctuary Subproject shows negative accumulative cash flows for up to 3 years across all the sensitivity tests. This suggests more careful business planning and management to control costs and to promote and maximize demand. • Sambor Prei Kuk Cultural Tourism continued to produce positive O&M cost recovery on the supply side risks, but the demand side risk is accompanied by negative accumulative net cash flows during the whole period of operation evaluated. • Kratie Town Urban Development was found highly sensitive to changes in user number or the rate of fee collections. Given the increase of each cost, O&M cost recovery falls well behind. • Cambodian Border Tourism Facilitation was found to be fairly insensitive to supply and demand induced liquidity risks and indicates that cost recovery continues to be achieved throughout the period.
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Lao PDR
• Siphandone Wetland Eco-Tourism was found to have low liquidity risk from the demand or supply side. • Vang Vieng Urban Development was found to have a high risk of liquidity as the subproject is highly sensitive to any adverse changes in cost items and user demand. • North-south Economic Corridor Subproject was found to have low liquidity risk from the demand or supply side.
Viet Nam
• Phuong Nha Ke Bang Natural Park Circuit: Negative accumulative net cash flows were found in year 2015 in all four scenarios. However, the risk of liquidity to Phuong Nha Ke Bang is rather low. The park has good access to commercial bank; and the provincial government is considering moving the current practice of 55% of the Park revenue to the government. The park can retain all, after a contribution to local communities around the national park. • Gia Lai Cultural Tourism Subproject was found with negative accumulative cash flow in 2020 when testing variations in demand. For the Gia Lai subproject, the risk is associated with the culture centre development activities as 76% of the gross revenue comes from entrance fees to the centre. • A Luoi Pro-poor Site showed negative accumulative cash flow in 2015 when tested for a 10% decrease of demand. For A Luoi pilot site, the risk could be related to the CBT village circuit tours that are forecasted to generate 49% of total site revenue.
678. In general, the performance of O&M cost recovery is more sensitive to the demand side compared to the supply side of the subprojects and model sites. See level of OR/OM ratios in Table 45. Managing and maximizing demand and human movement in tourism activities is generally more challenging than managing and controlling costs. It is therefore recommended that more resources are provided to strengthening institutional capacity, PPP partnership to develop entrepreneurship and managerial skills. In view of the need for financial sustainability, the project should make more efforts to build up local capacity in developing tourism business planning and management skills for sustained cash flows for pro-poor tourism.
679. Each of the subproject operating units will have to develop a business plan as an operations guide to accommodate the risks presented in this report. Within the business plan, the risks identified in this PPTA should become annual monitoring indicators. The business plan should be a soft produce of the project during the implementation phase, and must be updated every year.
680. It should be noted that the base case used to test the sensitivity of the subproject cash flows assumes conservatively that demand growth beyond 2015 will be static except for the two urban environment improvement subprojects. A relaxation of this assumption would be justified, thus boosting revenue in the period 2016 to 2020. Furthermore, as noted, if a greater proportion of the gross revenue could be retained for O&M cost recovery, then the cost recovery performance for each subproject would have been improved.
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Table 47: Sensitivity Analysis Summary of Subprojects in Cambodia, Lao PDR and Viet Nam $000 Scenario Scenario One Scenario Two Scenario Three Scenario Four Subproject/Scenarios Base case Capital costs + 10% Payment to empl.+10% Admin. Costs + 10% Demand - 10% Year - Negative Year - Negative Year - Negative Year - Negative Year - Negative Participating Countries OR/OM OR/OM Accum. Cash OR/OM % Accum. Cash Accum. Cash OR/OM % Accum. Cash Accum.Cash OR/OM % % % Cambodia: Flow Flow Flow Flow Flow Peam Krasop Wildlife Sanctuary no 105 2013-2016 102 2013-2014 103 2013-2016 102 2013-2020 98 Sambor Prei Kuk Cultural Tourism no 105 no 102 no 102 no 102 2011-2020 97 Kracheh Environ. Development 2013-2015 106 2013-2020 102 2013-2020 104 2013-2019 105 2013-2020 98 Border Facilitation no 123 no 112 no 110 Lao PDR: Siphandone Wetland Eco-tourism no 115 no 110 no 112 no 112 no 105 Vang Vieng Environ. Development 2012-2015 100 2011-2020 95 2012-2020 99 2012-2020 99 2011-2020 94 North-South Economic Corridor no 121 no 115 no 119 no 118 n0 106 Viet Nam: Phuong Nha Ke Bang Park no 108 2015 106 2015 105 no 107 2015 99 Gia Lai Ethnic Cultural Tourism no 109 no 105 no 106 no 108 2020 100 A Luoi Pro-poor Sample Site no 115 no 113 no 111 no 112 2015 104 Note: OR - gross revenue after deduction of royalty to government, community development fund and tourism promotions fund as well as VAT; O&M - operations and maintenance costs GMS Sustainable Tourism (TA 6279-REG) Final Report
D. PROJECT ECONOMIC ANALYSIS
INTRODUCTION
681. The economic analysis is undertaken in accordance with ADB Guidelines, including Guidelines for the Economic Analysis of Projects, Handbook for Integrating Poverty Impact Assessment in the Economic Analysis of Projects, and Guidelines for Integrating Risk Analysis in the Economic Analysis of Projects.
682. Where appropriate the analysis of the Tourism subprojects and the overall project include the following:
• Examination of alternatives and least cost analysis of alternative project development options • Calculation of the EIRR and sensitivity analyses of subprojects and overall project
ECONOMIC ASSUMPTIONS
683. Economic analysis is carried out using economic prices, with financial prices adjusted to allow for transfer payments including taxes, duties or subsidies, and to correct for any other market distortions. For the present study, the following general assumptions will be adopted:
• All costs are expressed in current 2006 prices • Civil works are assumed to have a useful economic life of 25 years, with design and construction spread over three years. Mechanical and electrical equipment have a life between 5- 10 years depending on the exact nature of the asset. No residual values are assumed in year 25. • The real opportunity cost of capital employed in the economic analysis is assumed to be 12% per annum, and represents the social opportunity cost of capital (SOCC) for each country. • All economic costs, in particular imported tradeable inputs, are net of duties and taxes. • Capital costs include physical contingencies, but exclude price contingencies and interest during construction (as a result of any relending and debt financing) • An average official exchange rate per US$ 1.00 is employed when converting foreign exchange costs to their local currency equivalent26 in each country
Table 48 : Average Exchange Rates Used in the Project Analyses
Country Currency $ Equivalent Cambodia Riel 4,000 Lao PDR Kip 10,000 Vietnam Dong 16,000
• Shadow Foreign Exchange Rates adopted for each country, summarised in the following Table are applied to tradable inputs to convert to border price equivalents (- the UNIDO approach).
26 The exchange rate adopted will be that ruling at the time of completing the final project costing and analyses in 2006.
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• It is assumed that there are no significant distortions in the wage rates for skilled labour. In the case of unskilled labour, underemployment exists in each of the three economies, resulting in the opportunity cost of unskilled labour being less than the promulgated minimum wage rates. The rates assumed in the analysis are summarised in the Table below. The Shadow Wage Rate Factors (SWRF) above are used to place an economic value on unskilled labour costs to the project. The proportion of unskilled labour component of each project is estimated for each subproject.
Table 49: SFER and SWRFs adopted in the Economic Analysis
Country SFER SWRF Cambodia 1.10 0.70 (1) Lao PDR 1.05 0.71 (2) Vietnam 1.10 0.60 (3)
Source : 1. RRP: CAM 34382, Proposed Grant to the Kingdom of Cambodia for the Tonle Sap Rural Water Supply and Sanitation Sector Project, September 2005: 2. RRP: LAO 34197, Proposed Grant to the Lao People’s Democratic Republic for the Northern and Central Regions Water Supply and Sanitation Sector Project, July 2005; 3. RRP: VIE 30292, Proposed Loan Socialist Republic of Viet Nam: Central Region Water Resources Project, November 2005
• Incremental operating and maintenance costs are those prepared for the financial analysis of each subproject, net of taxes , duties or subsidies and adjusted by SEFR and SWRF
LEAST COST ANALYSIS
684. In the case of the two urban infrastructure / environmental improvement projects in Kratie in Cambodia, and for Vang Vieng in Laos, least cost alternatives have been examined for the alternative treatment of wastewater treatment cost and analysed. For the natural and Urban Cultural projects the least cost means of providing facilities was examined, but in most cases an alternative cost option does not exist. However, where possible the alternative development options for a site are examined. The principal assumptions made with respect to the least cost analysis are the same as the economic assumptions discussed above. Appendix 18 gives the details of the least cost analysis undertaken for the Project.
CALCULATION OF EIRRS
685. The economic analysis is undertaken by comparing the cost and benefits of the with and without the project. The basis for project evaluation is a comparison of benefits and costs between the with-project (base) case and the without project (alternative) case. The project analysis period is 25 years following expected full operation by 2009. The subproject construction period is assumed to be 36 months allowing for design and procurement (18 months) and construction (18 months) with design commencing from 2007 with construction to be completed by beginning of 2010. For economic evaluation purpose, all projects are assumed to be constructed over a three year period commencing in 2007.
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CALCULATION OF ECONOMIC COSTS
INTRODUCTION
686. The capital and operating costs for each subproject are based on the least cost project that meets design capacity requirements. Taxes and duties are deducted from financial costs, and tradeable inputs are converted to border price equivalents by the application of a SFER, while unskilled labour costs are adjusted for any underemployment in the economy by the application of SWRF.
CAPITAL COSTS
687. Capital costs are those prepared for each Component subproject. The Project Implementation costs provided under the loan are allocated to each subproject. In addition the grant financed Human Resource Development Component has also been allocated across all the subprojects in each country. This reflects the need for training of Government agencies at the provincial level along with training in the provincial hotel and tourism sector to provide better services to the growing ecotourism sector. In addition to the Base Costs, a 10% physical contingency was added. No residual values are assumed at the end of the 25 year evaluation period. For the Sustainable Tourism Projects and the A Lui Pro-Poor model, the Economic Corridor model and the Borders model project, the following annual disbursement of capital costs is assumed for the project capital costs, Human Resource Development (HRD) Costs, and Project Implementation (PI) Costs. In the case of HRD and PI a percentage of the costs is allocated to each project, based on the expected total project investment for the country.
Table 50 : Annual allocation of Project Costs
Allocation Annual Expenditure 2008 2009 2010 2011 2012 Total Capital Costs Annual Expenditures, % Land Acquisition & Compensation 100% 100% Planning 70% 20% 10% 100% Civil Works 80% 20% 100% Operation Equipment 20% 80% 100% Administration / Fitout Equipment 20% 80% 100% Preparation and Training 20% 20% 60% 100% Monitoring 20% 80% 100% Human Resource Development Planning 60% 40% 100% Civil Works 20% 80% 100% Operation Equipment 20% 80% 100% Administration / Fit out Equipment 60% 40% 100% Preparation and Training 25% 25% 25% 25% 100% Monitoring 25% 25% 25% 25% 100% Project Implementation International Consultants 30% 40% 30% 100% Domestic Support 30% 40% 30% 100% Incremental Administration 30% 40% 30% 100%
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Table 51 : Economic Adjustments to Capital Costs
Economic Adjustments Capital Costs FX SFER Unsk. Lab. SWRF Land Acquisition & Compensation 0% 1.11 0% 70% Planning 70% 1.11 10% 70% Civil Works 40% 1.11 5% 70% Operation Equipment 80% 1.11 5% 70% Administration / Fitout Equipment 80% 1.11 5% 70% Preparation and Training 20% 1.11 5% 70% Monitoring 10% 1.11 5% 70% Total Human Resource Development Planning 70% 1.11 0% 70% Civil Works 40% 1.11 5% 70% Operation Equipment 80% 1.11 10% 70% Administration / Fitout Equipment 80% 1.11 10% 70% Preparation and Training 50% 1.11 10% 70% Monitoring 10% 1.11 10% 70% Total Project Implementation International Consultants 80% 1.11 0% 70% Domestic Support 0% 1.11 5% 70% Incremental Administration 0% 1.11 10% 70% Total Note : SFER and SWRF are those adopted for Cambodia.
CAPITAL COST REPLACEMENT AND REHABILITATION.
688. The economic analysis assumes that replacement capital costs, with 10% of capital costs provided for rehabilitation every 5 years, operational equipment such as vehicles and boats replaced every 10 years, and office equipment computers, faxes etc replaced every five years.
Table 52 : Routine Replacement Capital Cost Assumptions
Replacement capital Costs % Original Years Civil Works 10% 10 Operation Equipment 100% 10 Administration / Fit - out Equipment 100% 5
OPERATION AND MAINTENANCE COSTS
689. Incremental operating and maintenance costs are those prepared for the financial analysis of each subproject, net of taxes, duties or subsidies and adjusted by SFER and SWRF. Operating costs for the projects are set out in the standard format below with the following assumptions for application of SFER and SWRF.
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Table 53 : Operating Costs Schedule with SFER and SWRF Assumptions.
Operating Costs FX SFER Unsk. Lab. SWRF Maintenance Civil Works 20% 1.11 20% 70% Maintenance of Equipment 80% 1.11 0% 70% Salaries and Wages 0% 1.11 30% 70% Vehicle expenses 80% 1.11 0% 70% Administrative Costs 30% 1.11 20% 70% Marketing 30% 1.11 0% 70% HRD/Training 30% 1.11 0% 70% Monitoring 10% 1.11 0% 70% Total
CALCULATION OF ECONOMIC BENEFITS
690. The major economic benefits of the Project are increased spending by foreign tourists visiting the project areas. Moreover, environmental and health benefits will arise from improved water, sanitation, and solid waste management and different types of resource savings due to the activities of the Project. While road access improvements will result in reduced vehicle operating costs and travel time savings, it is not intended that the project undertake traffic counts to assess the volume of vehicle movements. However, increased tourism spending as a result of the projects is used as the basis of the derivation of economic benefits.
INTERNATIONAL TOURISM BENEFIT STREAM
691. The Project will ease the constraints hampering tourism development in the project areas by rehabilitating and upgrading transportation infrastructure, i.e. roads, and river passenger quays, and providing, drainage , wastewater and solid waste management services in some important tourist destinations. The Project will also enhance the region’s attractiveness by rehabilitating and upgrading existing sites and also by opening new Natural and Cultural attractions that would be almost inaccessible without the Project.
692. Tourism benefits will arise from the Project due to increased :
(i) numbers of tourists visiting the project areas, (ii) tourist length of stays in the project areas, and (iii) spending by tourists.
693. The sections below set out estimates of tourist expenditure in the GMS, estimation of multipliers and the multiplier effects. and finally the estimated economic impact. This analysis was carried out as part of the GMS Tourism Sector Strategy, 200527 in order to identify the economic benefits of tourism to each economy and the GMS as a whole. For the subprojects, forecasts were developed over the period 2011 to 2015. For the remainder of the evaluation period benefits are held constant at the 2015 level ( as are operating costs).
TOTAL TOURISM EXPENDITURE
694. Based on the total volume of international arrivals, average length of stay and average daily expenditure for 2004, total expenditure by tourists within the GMS in 2004 was estimated at just over $12.1 billion. When payments for air fares, if using a national carrier of the GMS, airport
27 GMS Tourism Sector Strategy, 2005. Asian Development Bank
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taxes and visa fees are included, then total receipts from international tourism amount to $14.78 billion.
Table 54 : Estimated Receipts from International Tourism in 2004 ($ m)
GMS Country Total Expenditure Airport and Visa National Carriers Total Receipts from in Country Fees Receipts Int. Tourism $ million $ million $ million $ million Cambodia 578.4 37.0 0.0 615.4 China - Guangxi 315.4 21.0 79.4 415.8 - Yunnan 330.6 21.0 81.1 432.7 Lao PDR 91.3 8.0 27.0 126.3 Myanmar 145.8 12.0 41.5 199.4 Thailand 9,021.6 153.0 1,325.4 10,500.0 Vietnam 1,634.6 218.0 641.8 2,494.4 Subregion 12,117.7 470.0 2,196.2 14,784.0 Source : GMS Tourism Sector Strategy, 2005
695. The related output, income, employment, imports (leakage), government revenue, income distribution and industry linkage effects of international tourism demand are summarized below.
OUTPUT AND EXPENDITURE EFFECTS
696. The final output effect of tourism on the GMS economy covers, in addition to the direct output, both indirect and induced effects. These effects are normally calculated using input-output economic models. Although these are not available for most of the economies of the sub-region, a UNESCAP Study, 1996 28 of the economic impact of tourism on member countries including Thailand found that the output multipliers ranged from 1.503 in Thailand to 2.212 in Sri Lanka. This suggests that for every unit $1.00 of direct tourism expenditure, the output impact for the countries studied ranged from $1.503 to $2.212.
697. Adopting the Thailand multiplier for the GMS as a whole, a reasonable assumption given that it accounts for the bulk of the estimated output, then the final estimated output derived from international tourism in the GMS countries is estimated at $22.2 billion in 2004. As might be expected, Thailand dominates the share of total output not only because of its high share of international tourists but also because of its broadly based economy that can meet most of the requirements of international tourism demand at a domestic level. Because of its economic strength, Thailand is also a major supplier of outputs to the tourism sector of the other GMS countries.
LEAKAGE AND INCOME EFFECTS
698. The production of output generates income in the economy as factors of production (capital, labor, land and government) are employed to produce goods and services. In turn, they are paid for their use. The income impact of tourism expenditure on an economy takes into account economic leakages through imports and represents the net income contribution to a country from
28 The Economic Impact of Tourism in the Asian Region, Economic and Social Commission For Asia and the Pacific (ESCAP), United Nations, New York, 1996. A study on the economic impact of tourism in the Asian region was undertaken by ESCAP with financial assistance from the Government of the Republic of Korea.
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tourism (GDP). As with the output effects, there are three types of income effects: direct, indirect and induced income effects. Thr estimated size of the leakage and income effects of international tourism in the GMS countries is shown below.
Table 55 : Estimates of the Income (Leakages) Multiplier Associated with International Tourism in the GMS in 2004
Total Output Foreign Foreign Direct plus Estimated Estimated GMS from Int. Exchange Leakage Indirect Income from Govt. Country Tourism Leakage Factor Income Int. Tourism Revenue Multiplier Multiplier
$ million $ million $ million $ million $ million $ million Cambodia 924.9 0.40 370.0 0.600 554.9 96.5 China - Guangxi 624.9 0.24 156.2 0.076 468.7 65.2 - Yunnan 650.3 0.24 162.6 0.076 487.7 67.8 Lao PDR 189.8 0.40 75.9 0.600 113.9 19.8 Myanmar 299.6 0.40 119.8 0.600 179.8 31.5 Thailand 15,781.5 0.035 473.4 0.965 15,308.1 1,646.0 Vietnam 3,749.1 0.35 1,312.2 0.650 2,436.9 391.0
GMS Range 22,220.1 0.12 2,670.1 0.87 19,550.0 2,317.8 Source : GMS Tourism Sector Strategy, 2005
699. It is noted that Thailand’s strong and broad-based economy gives it a high capacity to meet almost all tourism supplies (food, beverage, tourism commodities, materials, transport, and other goods and services) and thus ensures a very low level of foreign exchange leakage. In the case of Cambodia and Lao PDR, the foreign exchange linkage multiplier was estimated at 0.40 and for Vietnam (with greater self sufficiency) 0.35. Nevertheless in these three countries the loss from the local economy is very high when compared with Thailand (0.035) and even China (at 0.24). Thus, a key element of the tourism strategy should be to help reduce the high level of leakages especially in the less developed GMS countries by increasing economic linkages through pro- poor tourism development and encouraging greater private sector participation in the supply chain.
NET BENEFITS OF TOURISM.
700. One of the objectives of the current project is to extend tourist visits (both in terms of total numbers and also length of stay / number of nights) and levels of expenditure by providing better information, interpretation, access and facilities to various tourism sites. In order to assess the investment of this site investment it is necessary to determine the net benefit to the economy of tourist expenditures. Thus the tourism benefits gained by the subprojects are the increased expenditure of the foreign tourists and the multiplier effects on the country’s economy, which are induced by the project and retained by the project country29.
APPLICATION OF MULTIPLIERS TO SUBPROJECTS
701. As noted above, one of the objectives of the subprojects is to provide where possible, community driven opportunities in terms of experiences, home stays and supply chains that will provide a
29 United Nation’s Economic and Social Commission for Asia and the Pacific (ESCAP). 1996, and GMS Tourism Sector Strategy, ADB Manila, 2005
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high level of community benefits. These in turn will result in a much lower leakage, as more local resources rather than imports will be utilised.
702. The duration of a stay is one of the major determinants of benefits from tourism. Length of stay depends on several factors, such as the availability of tourism products, purpose of visit and prices for tourism services. Tourists in a country with a wide range of tourism attractions stay longer than in countries with few products. The objective of the projects is to increase the volume of tourists, length of stay and daily expenditure.
703. The current tourist arrivals, average stay, and spending in the subproject area, and projections under with and without project scenarios, are estimated by subproject taking into account recent development trends, attractiveness of the subproject area, constraints on tourism development in the area, and the impact of the subproject on removing/releasing the constraints.
CAMBODIA
704. A JICA Study of Siem Reap, 2005 30 estimated that tourism (560,000 international visitors) generated $98 million of expenditures, of which $31.7 million (32%) was spent on imports (leakage) and $66.5 million (68%) spent in the local economy. In addition induced expenditure was estimated at $75 million. This results in an overall income multiplier of 1.76. This maybe compared with an expenditure multiplier of 1.50 adopted in the GMS Tourism Strategy Study, and an income multiplier of 40%.
30 Interim Report, The Study of Integrated Masterplan for Sustainable Development of Siem Reap/Angkhor Town in the Kingdom of Cambodia, JICA, 2005
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Table 56 : Siem Reap Tourism Expenditure 2004 and Multipliers ( $ million)
Income Domestic Domestic Expenditure Multiplier Revenues Expenses US$m US$m US$m US$m Initial Expenditure 98.20 31.70 66.50 37.20 1.00 0.32 0.68 0.38 Induced 75.00 Total 173.20 55.91 117.29 65.61 Expenditure Multiplier 1.76
705. Tourism expenditures are based on a survey of current tourists, with the benefits also taken as a proportion of daily expenditure as the attractions will not induce an additional night’s stay in the case of all tourists.
LAO PDR.
706. Tourism expenditures are collected annually by survey with the average spend in Luang Prabang in 2005 estimated at $56/tourist/day. Surveys undertaken in Luang Namtha and Champasak reflect the back packer market and have expenditure of the order of $16 per day. The expenditure and income multipliers adopted by the GMS Tourism Strategy for Laos PDR are used.
707. The actual economic analysis of each subproject is based on the market surveys undertaken in Champasak and Luang Namtha. In the case of Vang Vieng, average tourist expenditure is assumed to be similar to these locations as again it is predominantly a backpacker market transiting between Vientiane and Luang Prabang. However, there are now 2-3 star hotels catering to a more middle class bus market, thus increasing the average tourist spend may be expected in the future for Vang Vieng.
VIETNAM
708. Tourist expenditures for Vietnam are based on VNAT Expenditure Survey, 2004, where average expenditure of FIT was $74.80/tourist/night31. The GMS Sector Strategy expenditure and income multipliers for Vietnam were applied to these expenditures.
709. Average daily tourist expenditures, income multipliers and leakage adopted for Vietnam are set out in the Table below.
710. Tourism expenditures are based on a survey of current tourists, with the benefits also taken as a proportion of daily expenditure as the attractions will not induce an additional night’s stay in the case of all tourists.
Summary of Multipliers Adopted for Subprojects
711. In a general equilibrium framework such as multiplier approach input-output modelling, and CGE modelling, the general economic "benefits" of increased expenditure (tourism in this case) can be presented by additional output (sales), income, tax, and employment etc. When output/sales is used as the 'benefits", the "costs" should include all the inputs - not only the
31 Table 218, page 452, Statistical Yearbook of Vietnam, 2005
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project costs (capital plus O&M), but also the production costs of producing these outputs (i.e. input costs). In other words, the cost of hotel supplies, transport etc should be included in the cost side, instead of being deducted from the revenue side.
712. Alternatively where income is used as the benefit, then the costs are the subproject capital and O&M costs. That is incremental tourism spending (direct) times income multiplier represents the benefit, while on the cost side, costs are represented by project cost (capital plus O&M) only.
713. In the current project, because of data limitations and lack of access to input output models for each country/province, the second more simplified approach was adopted with the following income multipliers applied to incremental project expenditure in each country. The Table below summarises the multipliers adopted for subproject economic analysis.
Table 57 : Summary of Income Multipliers Adopted for Subprojects
Income Multiplier, % Cambodia 0.60 Laos PDR 0.60 Vietnam 0.65 Source : GMS Tourism Sector Strategy
32 DOMESTIC TOURISM BENEFIT STREAM
714. Domestic tourism also increases economic activities by increasing demand for goods and services. Thus, like foreign tourism, domestic tourism also generates income, employment and revenue through multiplier effects in the economy. Besides these advantages, domestic tourism is more stable than international tourism, it causes less cultural and social disturbances, and is less sensitive to international events. Domestic tourism can supplement foreign tourism if it is planned properly.
715. International tourism to the Asian and Pacific region is seasonal, which reduces returns of tourism projects to the economy. Promotion of domestic tourism during the off-season can increase the returns from those investments. Although domestic tourism increases investors’ profitability, some economists have argued in the past, that this expenditure may not increase the economic profitability, since consumption at the destination results in savings at the original place of residence. Similarly, use of accommodation implies under-utilisation of residential houses. In other words, domestic tourism is not an exogenous factor which generates additional activities in the economy. In economic terms, the net addition to the economy is the difference between the output generated by domestic tourism in the destination minus that generated at their origin had there been no tourism. However, more recent studies have refuted this claim and argue that domestic tourism makes a positive net benefit to GDP, that is, the output generated by domestic tourism is greater than the transfers of domestic expenditures avoided.
716. Asian economies are growing very fast and per capita incomes are rising continuously. Once a country passes a threshold per capita income level, then travel expenditure begins to increase quite rapidly. The demand for income elastic products like travel and tourism rises sharply. Investors in the tourism sector also promote domestic tourism by offering off-season discounts and other low-cost packages. Paid holidays are another important factor for domestic tourism. Although domestic tourism is one important economic activity in many countries, it is usually
32 Section E, pages 37- 45, The Economic Impact of Tourism in the Asian Region, Economic and Social Commission For Asia and the Pacific (ESCAP), United Nations, New York, 1996. A study on the economic impact of tourism in the Asian region was undertaken by ESCAP with financial assistance from the Government of the Republic of Korea.
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not recorded or monitored. In fact, little or no attention is given to domestic tourism. Therefore, information on domestic tourism is greatly lacking.
717. Only India, Philippines and Thailand have analyzed domestic tourism. It has been observed that the number of domestic tourists in India was far more than the foreign tourists. Similarly, the growth rate of domestic tourism was many times higher than international tourism. India has a wide range of tourism products; it has some world-famous beaches and snow-capped mountains; it is one of the centres of Eastern culture and civilization; it is the home of Hinduism, Buddhism and Islam and it is a country of geographical diversity. These attractions motivate people living in big cities to travel. Likewise there has been steady growth in domestic tourism both in Vietnam and Cambodia and to a lesser extent in Lao PDR.
718. The greater proportion of tourists in these countries originate from urban centres and visit other urban centres and tourist spots, which suggests affordability of travel and the need to visit places away from their urban homes. There are several motivations for travel. In general, the main purpose of visit seems to be leisure, holidays or pleasure. Over 50 per cent of total domestic tourists in India, Thailand and Malaysia travel for leisure. However, in the Philippines, only 25.2 per cent travel for pleasure.
719. International tourists allocate about 50 per cent of their expenditures for food and accommodation. However, domestic tourists spend relatively lower proportions on food and accommodation, with a greater proportion of expenditure allocated to shopping, as is a significant proportion to transportation services. The relatively low proportion of expenditure on food and accommodation may be related to their familiarity with the language, food and market. In addition, many domestic tourists stay with their friends and relatives which saves money on food and accommodation.
720. The per capita daily expenditure of domestic tourists has been found to be much lower than that of international tourists. On average, foreign tourists’ daily expenditure in the Philippines was 42 per cent higher than the daily expenditure of domestic travellers. The VNAT reports average domestic tourism expenditure by province for 2004, with the overall country average of VND 506,200.33 Cambodia and Lao PDR do not undertake expenditure surveys of domestic tourists
34 ECONOMIC IMPACT OF DOMESTIC TOURISM
721. As part of the ESCAP 1996 Report only India, Malaysia and Thailand estimated the multiplier effects of domestic tourism. The strongest direct plus indirect (DPI) output effects due to domestic tourism were recorded in India. Therefore, despite the low apparent expenditure. Domestic tourism in India generated more than 50 per cent of the output generated by foreign tourism. The DPI output, income and employment multiplier coefficients due to domestic tourism in the three selected countries were comparable to the expenditures of international tourists.
722. Accordingly in our view the ESCAP studies give a strong justification to include domestic tourism activity in the economic analysis. Expenditures are not simply transfer payments as some economists in the past have argued. Where specific information on domestic tourism patterns are not provided, then it is proposed to take 50% of international expenditures (based on the Indian experience above) and apply the same gross profit margins etc applied to international tourism above, to arrive at an estimate of the economic benefit stream of domestic tourism.
33 Table 219, page 453, Statistical Yearbook of Vietnam, 2005 34 Section H, page 122, The Economic Impact of Tourism in the Asian Region, Economic and Social Commission For Asia and the Pacific (ESCAP), United Nations, New York, 1996
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723. In the present study, market surveys were undertaken in each country with this information used as the basis for assessing the economic impact of domestic expenditure at the subproject sites. The economic analysis assumes that the incremental benefits are those resulting from incremental tourism expenditure and the application of the income multiplier set out above for each country.
COUNTRY ECONOMIC ANALYSIS
724. The detailed economic analysis for each subproject are set out in Appendix 19. The main results of the analysis at the country and Project level are set out below.
CAMBODIA ECONOMIC ANALYSIS
725. The economic analysis of projects for Cambodia included three Sustainable Tourism Development Subprojects and a Border Facilities Improvement Sub-project. However, the GMS Sustainable Tourism Project will include two further subprojects for Cambodia. These are a Southern Economic Corridors Sub-project and a Pro-Poor Component made up of four subprojects covering four provinces. The capital costs of these are based on the N-S Corridors project evaluated in Lao PDR and the Pro-Poor Project evaluated in A Luoi District, Vietnam. To arrive at an indicative weighted average EIRR for the proposed projects in Cambodia the analysis of these two subprojects was used, and adjusted for the estimated capital costs in Cambodia. These components also attracted a share of the Human Resource Development and Project Implementation Costs allocated to all subprojects.
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Table 58: Summary of Cambodia SubProjects and Base Capital Costs 1/
A Sustainable Tourism Development US$’000 Peam Krasop - Wildlife Sanctuary Coastal Ecosystem 1,250 Sambo Prei Kuk Cultural Tourism Development 1,571 Kratie Urban Tourist Development 1,237 Component Total 4,057 B Pro-poor Tourism Development Component Total 1,880 C Facilitation of Tourism Southern Economic Corridor 2,260 Border Points - Cambodia 1,253 Component Total 3,513 D Human Resource Development Component Total 478 E Project Implementation Component Total 3,362
Country Total 13,291 Note 1. Excluding Taxes, contingencies and financing charges
726. Table 57 sets out the cost benefit analysis for all the projects in Cambodia, while Table 58 summarises the sensitivity analyses for the overall project and the individual Subprojects. The Base Case EIRR for the Cambodian Subprojects is 17.5%. The overall project is most sensitive to a reduction in benefits by 10%, with the EIRR falling to 15.6%. However, where there is a delay in project implementation by two years with a corresponding increase in costs by 10%, then the EIRR falls to 12.4%, but in the Subprojects of Peam Krasop and Sambor Prei Kuk is less than the SOCC of 12.0%. This is particularly relevant as the implementation of the first project in Cambodia has had significant delays, and where these are associated with increasing costs then the EIRR is likely to fall below 12.0%.
Table 59: Cambodia GMS Project,Cost Benefit analysis
Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2008 2334 0 0 -2334 2009 8342 0 0 -8342 2010 4513 0 0 -4513 2011 110 357 2392 1925 2012 110 442 2887 2335 2013 0 637 3432 2795 2014 0 647 4033 3385 2015 0 683 4727 4044 2016 291 665 4727 3771 2017 0 669 4727 4058 2018 0 713 4727 4014 2019 0 679 4727 4048 2020 2490 685 4727 1552 2021 0 685 4727 4042 2022 0 685 4727 4042 2023 0 685 4727 4042 2024 0 685 4727 4042
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Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2025 291 685 4727 3751 2026 0 685 4727 4042 2027 0 685 4727 4042 2028 0 685 4727 4042 2029 0 685 4727 4042 2030 2490 685 4727 1552 2031 0 685 4727 4042 2032 0 685 4727 4042 RV 0 0 0 0 EIRR 17.5%
Table 60: Cambodia GMS Project, Sensitivity Analyses
Sambo Southern Cambodia Peam Krasop Krei Kuk Kratie Borders Pro Poor (4) Corridor Total Capital Weighting 13% 17% 13% 13% 19% 24% 100% 1/ Base Case 16.1% 16.5% 17.9% 18.8% 17.2% 18.4% 17.5% Sensitivity Analyses Capital +10% 14.7% 15.2% 16.5% 17.1% 15.6% 16.9% 16.0% Operating +10% 15.8% 16.0% 17.5% 18.6% 16.9% 18.3% 17.2% Benefits -10% 14.2% 14.5% 16.0% 16.8% 15.2% 16.5% 15.6% All the above 12.4% 12.7% 14.4% 15.1% 13.6% 14.8% 13.9% Two year delay 11.3% 11.5% 12.9% 13.3% 12.1% 13.1% 12.4% Note 1. US$ 15.189 million economic costs
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LAO PDR ECONOMIC ANALYSIS
727. The economic analysis of projects for Lao PDR included two Sustainable Tourism Development Subprojects and the North-South Economic Corridor Sub-project. However, the GMS Sustainable Tourism Project will include one further Component for Lao PDR. This is the Pro- Poor Component made up of four subprojects covering four provinces as shown in Table 59. The capital costs of these are based on the Pro-Poor subproject evaluated in A Luoi District, Vietnam. To arrive at an indicative weighted average EIRR for the proposed projects in Lao PDR the analysis of this subproject was used, and adjusted for the estimated capital costs in Lao PDR. This component also attracted a share of the Human Resource Development and Project Implementation Costs allocated to all subprojects.
Table 61: Summary of Laos PDR SubProjects and Base Capital Costs
A Sustainable Tourism Development US$’000 1/ Siphandone Wetlands Natural Project 1,652 Vang Vieng Urban Development 1,167 Component Total 2,820 B Pro-poor Tourism Development Component Total 3,290 C Facilitation of Tourism North South Corridor Total 1,415 D Human Resource Development Component Total 655 E Project Implementation Component Total 3,035
Country Total 11,215 Note 1. Excluding Taxes, contingencies and financing charges
728. Table 60 sets out the cost benefit analysis for all the projects in Lao PDR, while Table 61 summarises the sensitivity analyses for the overall project and the individual Subprojects. The Base Case EIRR for the Laos Subprojects is 17.5%. The overall project is most sensitive to a reduction in benefits by 10%, with the EIRR falling to 15.9%. However, where there is a delay in project implementation by two years with a corresponding increase in costs by 10%, then the EIRR falls to 13.3%, so that all senstivities exceed the SOCC of 12.0%.
Table 62: Lao PDR, GMS Project, Cost Benefit analysis
Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2008 2428 0 0 -2428 2009 6842 0 0 -6842 2010 4153 0 0 -4153 2011 94 236 2234 1904 2012 94 304 2612 2213 2013 0 397 3022 2626 2014 0 401 3494 3093 2015 0 434 3924 3489 2016 127 409 3924 3388 2017 0 410 3924 3513 2018 0 456 3924 3467 2019 0 414 3924 3509
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Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2020 2212 417 3924 1295 2021 0 417 3924 3507 2022 0 417 3924 3507 2023 0 417 3924 3507 2024 0 417 3924 3507 2025 127 417 3924 3380 2026 0 417 3924 3507 2027 0 417 3924 3507 2028 0 417 3924 3507 2029 0 417 3924 3507 2030 2212 417 3924 1295 2031 0 417 3924 3507 2032 0 417 3924 3507 RV 0 0 0 0 EIRR 17.5%
Table 63: Lao PDR GMS Project, Sensitivity Analyses
Siphandone Vang Vieng N-S Corridor Pro-Poor (7) Total Capital Weighting 22% 18% 19% 41% 100% 1/ Base Case 17.5% 18.4% 18.4% 17.2% 17.8% Sensitivity Analayses Capital +10% 16.0% 16.9% 16.9% 15.6% 16.2% Operating +10% 17.3% 18.2% 18.3% 16.9% 17.5% Benefits -10% 15.6% 16.6% 16.5% 15.2% 15.9% All the above 13.9% 15.0% 14.8% 13.6% 14.2% Two year delay 12.4% 13.4% 13.1% 12.1% 13.3% Note 1. US$ 12.322 million economic costs
VIETNAM ECONOMIC ANALYSIS
729. The economic analysis of projects for Vietnam included two Sustainable Tourism Development Subprojects and the model Pro-poor project for A Luoi District. However, the GMS Sustainable Tourism Project will include two further subprojects for Vietnam, plus additional Pro-poor subprojects to cover a further six provinces, that is seven provinces in all. These are the East - West Economic Corridor Subproject and a Border Points upgrading SubProject. The capital costs of these are based on the N-S Corridors project evaluated in Lao PDR and the Borders Project evaluated in Cambodia. To arrive at an indicative weighted average EIRR for the proposed projects in Cambodia the analysis of these two subprojects was used, and adjusted for the estimated capital costs in Cambodia. These components also attracted a share of the Human Resource Development and Project Implementation Costs allocated to all subprojects.
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Table 64: Summary of Vietnam SubProjects and Base Capital Costs 1/
A Sustainable Tourism Development US$’000 Phuong Nha Khe Bang National Park 1,456 Gia Lai Ethnic Heritage Support 1,798 Component Total 3,254 B Pro-poor Tourism Development Component Total 4,230 C Facilitation of Tourism East West Corridor 1,551 Border Points - Vietnam 1,344 Component Total 2,896 D Human Resource Development Component Total 520 E Project Implementation Component Total 3,266
Country Total 14,164 Note 1. Excluding Taxes, contingencies and financing charges
730. Table 63 sets out the cost benefit analysis for all the projects in Vietnam, while Table 64 summarises the sensitivity analyses for the overall project and the individual Subprojects. The Base Case EIRR for the Vietnam Subprojects is 18.9%. The overall project is most sensitive to a reduction in benefits by 10%, with the EIRR falling to 16.8%. However, where there is a delay in project implementation by two years with a corresponding increase in costs by 10%, then the EIRR falls to 13.2%, but exceeds the SOCC of 12.0%. However, the quantum of the decline in the EIRR with delays coupled with cost increases is particularly relevant, as the implementation of the first project in Vietnam has had significant delays, and where these are associated with increasing costs then the EIRR is likely to fall.
Table 65: Vietnam GMS Project, Cost Benefit analysis
Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2008 2614 0 0 -2614 2009 7398 0 0 -7398 2010 4732 0 0 -4732 2011 109 301 3146 2735 2012 109 392 3443 2942 2013 0 558 3754 3196 2014 0 569 4106 3538 2015 0 609 4474 3864 2016 315 582 4474 3577 2017 0 584 4474 3890 2018 0 633 4474 3841 2019 0 588 4474 3885 2020 2426 591 4474 1457 2021 0 591 4474 3883 2022 0 591 4474 3883 2023 0 591 4474 3883 2024 0 591 4474 3883 2025 315 591 4474 3568
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Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2026 0 591 4474 3883 2027 0 591 4474 3883 2028 0 591 4474 3883 2029 0 591 4474 3883 2030 2426 591 4474 1457 2031 0 591 4474 3883 2032 0 591 4474 3883 RV 0 0 0 0 EIRR 18.9%
Table 66: Vietnam GMS Project, Sensitivity Analyses
A Luoi Pro Poor E-W Phuong NKB Gia Lai Pro Poor Borders (+6) Corridor Total Capital Weighting 15% 19% 5% 14% 30% 17% 100% 1/ Base Case 22.8% 19.4% 17.2% 18.8% 17.2% 18.4% 18.9% Sensitivity Analyses Capital +10% 20.9% 17.7% 15.6% 17.1% 15.6% 16.9% 17.3% Operating +10% 22.3% 19.2% 16.9% 18.6% 16.9% 18.3% 18.6% Benefits -10% 20.2% 17.3% 15.2% 16.8% 15.2% 16.5% 16.8% All the above 17.9% 15.4% 13.6% 15.1% 13.6% 14.8% 15.0% Two year delay 15.0% 13.4% 12.1% 13.3% 12.1% 13.1% 13.2% Note:1. US$ 14.744 million economic costs
OVERALL PROJECT EIRR
731. The EIRR for the overall project was calculated by combining the costs and benefits of the expected projects in the three countries. Table 65 sets out the cost benefit analysis for the overall project, while Table 66 summarises the sensitivity analyses for the overall project. The Base Case EIRR for the Overall Project is 18.0%. The overall project is most sensitive to a reduction in benefits by 10%, with the EIRR falling to 16.1%. However, where there is a delay in project implementation by two years with a corresponding increase in costs by 10%, then the EIRR falls to 13.2%, but exceeds the SOCC of 12.0%. However, the quantum of the decline in the EIRR with delays coupled with cost increases is particularly relevant, as the implementation of the first project in Cambodia and Vietnam has had significant delays, and where these are associated with increasing costs then the EIRR is likely to fall.
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Table 67: Overall GMS Project, Cost Benefit analysis
Base Case (US$ ‘000) Year Capital Operating Benefits N.C.F. 2008 7375 0 0 -7375 2009 22581 0 0 -22581 2010 13398 0 0 -13398 2011 314 894 7771 6564 2012 314 1138 8942 7490 2013 0 1592 10209 8617 2014 0 1617 11633 10016 2015 0 1727 13124 11398 2016 733 1655 13124 10736 2017 0 1663 13124 11461 2018 0 1802 13124 11322 2019 0 1682 13124 11442 2020 7128 1692 13124 4304 2021 0 1692 13124 11432 2022 0 1692 13124 11432 2023 0 1692 13124 11432 2024 0 1692 13124 11432 2025 733 1692 13124 10699 2026 0 1692 13124 11432 2027 0 1692 13124 11432 2028 0 1692 13124 11432 2029 0 1692 13124 11432 2030 7128 1692 13124 4304 2031 0 1692 13124 11432 2032 0 1692 13124 11432 RV 0 0 0 0 EIRR 18.0%
Table 68: Overall GMS Project, Sensitivity Analyses
Total GMS Project Total Base Case 18.0% Sensitivity Analyses Capital +10% 16.5% Operating +10% 17.8% Benefits -10% 16.1% All the above 14.4% Two year delay 13.2%
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E. RISKS
732. During the process of Project design, the following areas were identified as carrying potential risks to its successful implementation and operation: (i) policy and institutional risks, (ii) technical and market demand risks, and (iii) project implementation risks.
Policy and Institutional Risks
733. Policy and institutional risks include policies that demand remittances of set percentages of the gross revenue prior to O&M recovery in the case of natural and cultural heritage sites while providing insufficient annual budget to undertake the necessary O&M works; and weak technical and management capacities of the IAs. As far as possible, the Project has been designed to mitigate policy and institutional risks through policy reform proposals and institutional strengthening during the implementation stage.
Technical and Market Risks
Technical Risks
734. Technical risks generally relate to the level of technology being used and the capacity of IAs to manage these. In general, the level of technology involved in the Project (especially in the area of solid waste treatment, transportation equipment, visitor interpretation and buildings is not unusual being based on use of proven technologies that are already extant in the Project area.
Market Demand Risks
735. The Project is subject to market risk since it relies on user fees to generate the revenue required to recover O&M costs. As noted in the financial analysis, the Project is particularly sensitive to the level of user demand and willingness to pay and less sensitive to O&M cost overruns. To mitigate market risk, relatively conservative market demand levels were set based upon experience in regard to market demand and willingness to pay at existing sites in the subproject area; and surveys of potential users to establish the level of interest in use and willingness to pay especially where the subproject is entirely new as in the case of Peam Krasaop Wildlife Sanctuary in Cambodia or along the economic corridors in the participating countries. In addition to ensuring that market penetration rates were relatively conservative, it has also been conservatively assumed that except for the two urban environment improvement subprojects, market demand would stabilize at the year 5 level in all other subprojects.
736. To further strengthen the ability to generate the required market demand, the Project will require that each O&M management unit will need to prepare a business plan that will focus upon risk management issues, especially market demand. Provision has also been made in the design of all the subprojects for marketing and promotion activities directed at meeting the forecast market demand targets.
737. As noted in the economic analysis of the subprojects, the EIRR is sensitive to reductions I benefits arising from reduced demand. However, in all cases, the EIRR remains above the SOCC of 12%. In the case of the financial analysis, it was noted that if the overall volume of demand is less than 10% of that forecasted, then in some cases, O&M cost recovery becomes problematic especially in the case of the two urban subprojects. In the case of the non-urban subprojects, scope exists within the design if necessary, to relax the conservative assumption of stabilized market demand after year 5 and through application of flexible fiscal policy measures designed to allow the O&M management units to retain all that is required to meet O&M costs prior to remittance of any balances.
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738. In the case of the two urban environment improvement subprojects, these prove to be particularly sensitive to lower than forecast levels of users and user fee rates. To mitigate the inability to recover O&M costs in the face of reduced demand and fee levels, provision has been made for user awareness and education programs as part of the O&M costs that are designed to strengthen user participation and willingness to pay. In addition, should it be necessary, the design proposes the introduction of an environmental fee on tourists using the facilities and services at Kracheh and Vang Vieng. The introduction of an environmental fee on tourists is supported by surveys of tourists undertaken in all the countries that found that in general most were willing to pay such a fee.
Project Implementation Risks
739. The main Project implementation risks comprise delays in implementation (including front-end delays) and cost overruns. Delays in implementation can result from delayed approval of the Project and its elements, from weak project planning, management and administration capabilities, and as indicated from the lessons learnt in the previous Project, inadequate procedures to ensure the flow of funds necessary for work to be undertaken on schedule. These risks have been mitigated in the project design through the provision of extensive technical support in the implementation stage and development early in the implementation process of clearly defined and standardized financial flow procedures between the related country MOFs, the EAs and IAs. Cost overruns resulting from unexpected situations such as the need for additional civil works in flood prone areas or higher then expected equipment procurement costs have been mitigated through careful and detailed cost estimation on which the Bank’s normal physical and price contingencies have been calculated. As noted in the economic analysis of the subprojects, the EIRR is relatively insensitive to delays, demand and cost increases on their own, but more sensitive to a combination of delay in project start and cost overruns. However, in only a few cases does the EIRR fall just below the SOCC of 12%.
F. CONCLUSIONS AND RECOMMENDATIONS
Conclusions
740. The findings of this design study of the Project in the participating countries indicate that overall, it is feasible from an environmental, poverty and social; O&M cost recovery and economic impact point of view. Cost recovery of O&M is generally secured except in the case of the two urban environment improvement subprojects where provision for working capital will be required to offset some years when cash flow is forecast to be negative. Also, unless the border subprojects can be undertaken within the precincts of the border zones, as is currently assumed, then these would be problematic.
741. Although the Project is particularly sensitive to demand/price factors, these have been mitigated through provision for marketing and promotions activities as part of the O&M cost structure, the requirement that one-year rolling business plans be prepared designed to address demand/price risk factors, and in the case of the urban environmental improvement subprojects, provision for user awareness and education to underpin participation and willingness to pay.
742. In the case of the border subprojects, where it has been assumed that the improvements will be undertaken on publicly owned land within the border precincts, there is a concern that there will be insufficient land while regulatory constraints may make it difficult to operate commercial activities in tourist information centers located there. It should be noted that to date, not one of the border interventions in the MTDP have been implemented. If the tourist facilities to service
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arrivals across the nominated borders have to be located outside the border precincts, necessitating significant land acquisition, then this would make them infeasible.
743. Finally, it is noted that the Investment cost with contingencies and finance charges during construction is well above the level that would be expected while overall counterpart contributions are higher than expected. This means that the scope of the Project will need to be reduced either through reductions on component by component basis or through removal of a weaker component or subcomponent. Given the issues raised above in regard to the borders subcomponent of the Project, the removal of this subcomponent would bring the investment cost and country counterpart ratios more or less back into line.
Recommendations
744. Recommendations to ensure that the Project is implemented according to design, on-time and to budget, and that O&M cost recovery is achieved are provided below.
745. On the Project, its Components and Subprojects:
o That a single consulting firm be appointed to provide technical support in the implementation of the Project to the participating countries.
o That the borders subcomponent of the facilitation component be dropped from the Project.
o In Viet Nam, where its provinces have greater autonomy and where most of the Project components are located in Central Viet Nam, project coordination should be decentralized to Hue and arrangements for funds flow should be made directly between MOF and the provincial people’s committee governments.
746. On Environmental Impact Mitigation and Management:
o Seek to achieve a more integrated approach to environmental responsibility and management by reducing the overlapping jurisdiction between different ministries and agencies in each of the three countries. This will involve reviewing and revising environmental responsibilities and processes across the various sectors of government including mining, forestry, agriculture, tourism, wildlife, fisheries, marine environment, energy, oil and gas exploration etc. that may have a bearing upon the development of tourism at the subproject sites.
o Improve the criteria and guidelines for preparing IEE, EIA and EMP for development within each of the countries. This will involve preparing and adopting best practice guidelines that are based on the capacity of the tourism development to create environmental impacts and are more custom–designed to the environmental situation within each country.
o Upgrade the core management tools that are essential to achieving effective environmental management of tourism development on natural and cultural values. This requires that adequate resources be provided to ensure baseline surveys, management plans and master plans become management tools in guiding future tourism development and minimizing impacts in all significant natural sites and cultural areas.
o Adequately resource the provincial offices that are responsible for carrying out environmental management allowing more effective efforts in defining illegal activities, inspection and monitoring of pollution sources, environmental education programs, assessment of IEE and EIA, enforcement and data management.
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747. On Poverty and Social Safeguards:
o Identify the poor and vulnerable in specific communities through facilitating community planning and mobilization of the local village and commune populations.
o Give particular attention to enabling various categories within the poor and vulnerable to have a say in tourism and related decisions affecting them; recognize that various sub- groups may need different approaches to reducing their poverty and vulnerability.
o Mount strong advocacy and information programs on social risks requiring vigilance in the community in the course of welcoming tourists; complement these with action plans aimed at preventing as well as protecting victims; clear tasking of responsibilities is crucial.
o Draw on the strengths of NGOs and neighboring countries with experience in community planning and empowerment, and include them in the subproject planning, implementing and monitoring-evaluation activities.
o Strengthen the capacity of district, provincial, and national tourism organizations and related Ministries to be facilitative rather than authoritarian in dealing with local communities, and genuinely supportive of good governance and prioritizing tourism that embodies poverty reduction.
o Document progress and problems en route through participatory monitoring and evaluation approaches that build in the key objectives at the people and government levels, and thereby generate meaningful assessments of outcomes and impacts over time.
o Learn from successful community-based development efforts that can enrich tourism operations, drawing on a wide range of local initiatives operating in GMS and Southeast Asian countries.
748. On Financial Management of the Project:
o That each O&M management unit be required to prepare an annual business plan that focuses upon ensuring that demand side risks affecting O&M cost recovery are minimized. These risks to become part of the annual monitoring of key indicators. Training in business planning will be provided as part of technical support in implementation.
o In the pro-poor tourism component, more resources need to be provided by the IAs to build up local capacity in developing tourism business plans and managing sustained cash flows with strong emphasis on PPP partnership and volunteer mentoring to develop entrepreneurship and managerial skills.
o That the current policy restrictions on the proportion of gross income that public sector- based O&M management units can retain be relaxed in order to improve the financial sustainability of the Project. A percentage of surplus funds after meeting O&M requirements should be placed into a community development fund and the balance remitted to the provincial treasury unless otherwise directed.
o Standard manuals of project financial management procedures and practices covering financial management, disbursements from ADB, procurement and sub-contracting, accounting and reporting, as well as internal and external control and financial monitoring and auditing should be prepared at the outset and relevant project staff trained in their use.
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1. The financial management systems with special emphasis on financial governance of accountability and transparency at central executing and management level of the EAs and IAs need to be strengthened.
2. Support the establishment and enhancement of computerized financial management and reporting system to assure efficient financial recording system reflecting and consistent with the project’s physical progress. Provide training on the use of the system including project annual and periodic budgeting, applications for ADB’s advances and replenishments according to the Action Plan of the Project (APP).
3. Provide additional training programs early in the implementation phase to EA-based PCUs’ financial controllers, chief accountants and all other accounting staff at IA- based PMUs and PIUs in key areas.
4. Strengthen the financial sustainability of the urban environmental improvement subprojects by introducing an environmental management fee charged to tourists visiting the urban centers with collection based on restaurant and accommodation establishments.
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