Untitled Document

December 20, 2002

HEADLINE: ADB
Pioneer financing for Lao Road reflects Greater Mekong Subregional
cooperation
DATELINE: Manila, Philippines

The Asian Development Bank today approved a US$ 30 million loan to
improve the section of a road in Lao People's Democratic Republic
(PDR) that links People's Republic of China (PRC) and Thailand.
This is part of the North-South Corridor planned under the Greater
Mekong Subregion (GMS) Economic Cooperation Program.
"The road link will help to reduce poverty in the two provinces of the
northern Lao PDR by providing access to markets, extension services,
income and employment opportunities," says ADB project officer Rita
Nangia. The governments of Thailand and PRC are co-financing the
project with loans of US$ 30 million each on a bilateral basis to Lao
PDR. Lao PDR will provide part of the local costs.
This is the first example where two members of the GMS partnership
have collaborated with ADB to invest in a project in a third country
to promote regional cooperation.
The 228-kilometer road, known as national route 3 in the northern
province of Lao PDR, goes from Houayxay on the Mekong River bordering
with Thailand to Boten on the border with PRC.
At present, domestic trade that flows between the towns is constricted
by a narrow, unsealed road that is closed for four months of the year
during the wet season.
The ADB assistance will finance civil works to upgrade a 74-kilometer
section to international standards. The loan will also cover project
coordination and supervision, a social action plan, and environmental
monitoring.
The project will complete the all-weather road link between Kunming in
the Yunnan Province of PRC and Bangkok, Thailand.
Given the good road network from Bangkok to Singapore and Kunming to
Beijing, the North-South Economic Corridor will reduce transport costs
from the PRC capital to the tip of the Malay Peninsula; increase the
efficiency of movements of people, vehicles, and goods; and expand
investment and trade between the PRC and Southeast Asia, and within
Southeast Asia.
The improved route 3 will help develop Lao PDR by linking its economy
to two rapidly growing economies.
In addition, the project includes:
* A resettlement plan to ensure that the road construction will not
have an adverse impact on communities living by the road
* A social action plan to help communities, especially the ethnic
minorities, build village water and sanitation facilities, and provide
a preventive education program to mitigate risks of HIV/AIDS, sexually
transmitted diseases, and trafficking in women and children
* Construction of feeder roads to give communities better access to
the main road
* International third-party monitoring of the environmental impact of
the road and relevant capacity building
The North-South Corridor is one of the major projects of the GMS
countries, which include Cambodia, PRC, Lao PDR, Myanmar, Thailand and
Viet Nam. ADB has assisted the program since its inception in 1992.
ADB's loan is from its concessional Asian Development Fund and is
repayable over 32 years, including a grace period of 8 years. The
interest charge is 1% per annum during the grace period and 1.5% per
annum thereafter.
CONTACT: Tsukasa Maekawa
Tel: +632 632 5840
e-mail: tmaekawa@adb.org
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