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Preparing the Second Ring Road (Completing the Circle) Project (Financed by the Japan Special Fund)

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Preparing the Second Ring Road (Completing the Circle) Project (Financed by the Japan Special Fund) Technical Assistance Report Project Number: 40254 December 2007 Socialist Republic of Viet Nam: Preparing the Second Ring Road (Completing the Circle) Project (Financed by the Japan Special Fund) The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature. CURRENCY EQUIVALENTS (as of 5 November 2007) Currency Unit – dong (D) D1.00 = $0.0001 $1.00 = D16,074 ABBREVIATIONS ADB – Asian Development Bank DTPW – Department of Transport and Urban Public Works EIA – environmental impact assessment EMDP – ethnic minority development plan HCMC – Ho Chi Minh City O&M – operation and maintenance PC-HCMC – People’s Committee of Ho Chi Minh City PPP – public-private partnership PPTA – project preparatory technical assistance TA – technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification – General intervention Sector – Transport and communications Subsector – Roads and highways Theme – Sustainable economic growth Subtheme – Fostering physical infrastructure development NOTE In this report, “$” refers to US dollars. Vice President C. Lawrence Greenwood, Jr., Operations 2 Director General A. Thapan, Southeast Asia Department (SERD) Director J. Cooney, Infrastructure Division, SERD Team leader P. Vallely, Senior Transport Specialist, SERD Team members Y. Feng, Principal Environment Specialist, SERD S. Kawazu, Counsel, Office of the General Counsel M. Sultana, Social Development/Poverty Reduction Specialist, SERD Y. Tsujiki, Financial Analysis Specialist, SERD L. D. Thang, Programs/Projects Implementation Officer, SERD 105 o 00'E 110 o 00'E PEOPLE'S REPUBLIC OF CHINA HA NOI V I E T N A M Hai Phong o 20 00'N Gulf of 20 o 00'N SECOND RING ROAD (COMPLETING THE CIRCLE) PROJECT Tonkin Vinh LAO PEOPLE'S Extension from DEMOCRATIC QL 1A to QL 13 REPUBLIC Da Nang QL 13 PR 16 QL 1A QL 1A Quy Nhon Go Dua Intersection CAMBODIA ue en QL 1K Av PROJECT AREA oi Nha Trang an Da Lat H Gulf of Go Dua Thailand Ho Chi Minh City 10o 00'N 10 o 00'N Vung Tau Thu Duc District Binh Thai South China Sea Intersection 105 o 00'E 110 o 00'E ighway Loi H t-Binh on Nha Tan S Tan Son Nhat Airport Ho Chi Minh- Long Thanh Dau Giay Expressway Rach Chiec District 9 National Capital Bridge City/Town Ho Chi Minh City PR 25 Ring Road No. 2 (missing sections) r Ring Road No. 2 (existing) e v District 2 Phu My Bridge and Approach Roads i R (Under construction) n o East-West Highway Project ig QL 10 a (Under construction) S Ho Chi Minh City - Long Thanh - r Phu My Bridge e Dau Giay Expressway (Future project) Hung Vuong iv R Huynh Tan Phat i An Phu - Second Ring Road Extension a N (Future project) g n Primary Road o D Flyover (to be constructed) District 7 PR 15 Flyover (existing) Binh Tan h n N Li N QL 50 National Highway District n g a u V PR 34 y PR 34 Provincial Road n e ye n 0 u 0 River V 1 2 3 4 5 7 g a - N 3 n 0 International Boundary 3 L Kilometers 4 QL 50 i n Boundaries are not necessarily authoritative. QL 1A R District 8 h M I. INTRODUCTION 1. During the Country Programming Confirmation Mission for the Asian Development Bank’s (ADB’s) 2007 program for Viet Nam, the Government of Viet Nam requested ADB for technical assistance (TA) for the preparation of the Second Ring Road (Completing the Circle) Project. In the memorandum of understanding for the mission it was agreed that a project preparation technical assistance (PPTA) for the Project would be included in the ADB nonlending program for 2007. A mission visited Viet Nam on 8–17 August 2007 and held initial discussions with the Government on the proposed TA. Agreements were reached on the impact, outcome, outputs, implementation arrangements, cost, financing arrangements, and terms of reference.1 A design and monitoring framework for the TA is in Appendix 1. II. ISSUES 2. The economy of Viet Nam—one of the world’s fastest-growing economies—grew by about 8.0% in 2006. This performance came on top of average annual growth of 7.5% over 2001–2005. Industry and services contributed more than 90% of the growth in gross domestic product in 2006. Industry’s robust 10.4% growth in 2006 was only slightly below the rate a year earlier. This sustained rapid growth has led to an equally rapid increase in the use of motorized vehicles, and to mounting congestion on the highway network. For industry and services to continue to drive economic growth, Viet Nam must keep developing its highway transport system so that goods and people can be moved efficiently. 3. The transport system in Viet Nam is inefficient and expensive. ADB’s strategy, as set out in its country strategy and program for the country,2 is to support the Government in improving transport infrastructure and reducing transport costs. Investments will be made in urban transport and priority expressway and railway facilities to allow the safe and efficient movement of goods and people around, through, and between major centers of economic activity nationwide. 4. Greater Ho Chi Minh City (HCMC) is the largest city in Viet Nam and the country’s economic hub, with a population forecast to grow by 2.1% yearly from the current 7.9 million3 to 10.3 million by 2020. The volume of trade through HCMC’s port grew by more than 15% in value in 2006. With economic growth expected to continue in the medium term, and households earning higher incomes, many more families will be able to buy cars, and the number of journeys undertaken will significantly increase. Already, the roads within and around HCMC are becoming heavily congested, travel speeds are dropping, and transport costs are rising. There is an urgent need to provide relief to the city roads connecting the center of HCMC and the port area with the suburbs to the north and northeast of the city, and, farther out, to the roads leading north from the city to central and northern Viet Nam. As part of development planning for HCMC, several master plans have been prepared to deal with the needs of specific sectors. The city’s needs are huge. For transport alone, $26 billion is required to fund priority investment projects until 2020 to enable the city’s transport systems to cope with the demands of growth. To implement the required improvements in transport infrastructure, HCMC must (i) begin priority projects as soon as possible, and (ii) maximize its funding leverage in raising money from all sources. 1 The TA first appeared in ADB Business Opportunities on 21 September 2007. 2 ADB. 2006. Country Strategy and Program (2007–2010): Socialist Republic of Viet Nam. Manila. 3 Including both the permanent and the transient population. 2 5. A transport master plan was prepared in 2004, with assistance from the Japan International Cooperation Agency.4 This plan was later consolidated with a second master plan prepared by the People’s Committee of Ho Chi Minh City (PC-HCMC) and work done by the Ministry of Transport’s Technical, Engineering, and Design Institute. This consolidated transport master plan, approved by the Government in January 2007, sets out a $26 billion investment program up to 2020. The highest priority is to be given to subway and urban rail projects, as well as to the completion by 2010 of the city’s Second Ring Road. 6. The Second Ring Road is one of four concentric ring roads planned for HCMC. Encircling HCMC at a radius of about 5–10 km from the city center, it will decongest the city center and relieve it of large volumes of heavy truck traffic heading to and from the port area south of the city center. Much of the Second Ring Road has already been built and is in use, but a large part of the eastern section and a segment of the western section still have to be completed. Along the southern section, the Phu My Bridge across the Saigon River is being constructed. The construction of the bridge and the approach roads is being undertaken by a private sector consortium under a build-operate-transfer concession. 7. The Department of Transport and Urban Public Works (DTPW) is responsible for planning, constructing, operating, and maintaining the transport system in HCMC. Maintaining the city’s road network, in its view, requires about $3.6 million a year. Until recently the DTPW received only about 50% of the required funds, but the PC-HCMC has committed itself to providing about 75% from the third quarter of 2007. A funding gap remains, however. To bridge this gap the DTPW is trying to reduce operation and maintenance (O&M) costs and has begun contracting out maintenance works to the private sector. Contracting has so far been single-source, although a pilot project using competitive bidding started in September 2007. The DTPW realizes that further cuts in maintenance costs will require more innovative approaches, such as public-private partnership (PPP) arrangements and long-term O&M concessions. 8. The PC-HCMC has established traffic controls in parts of the city with the help of various donors, principally the Government of France and the World Bank. These controls cover only some areas and are not interconnected. Future transport development plans for HCMC will provide for traffic control systems that can monitor and control the movement of traffic throughout the city. Thus far, however, developments have been piecemeal.
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