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By Thanh Trung - The Saigon Times Daily

The World Bank has said it will lend US$350 million to Vietnam to finance a project to boost the effectiveness of local development investment funds to improve city infrastructure and another project for urban upgrade.

Of the amount, US$190 million will go to the Local Development Investment Funds Project to leverage private sector funding for municipal infrastructure, and strengthen the financial, technical, social and environmental safeguards management capability of the funds, the global lender said in a statement issued last week.

In addition to scaling up the capital of the qualified funds, this credit will support the Project Management Unit at the Ministry of Finance.

“The demand for municipal infrastructure in Vietnam has increased rapidly as the country copes with rapid urbanization, decentralization and high rates of economic growth,” Dang Duc Cuong, the project Co-Task Team Leader, said in the statement.

“This project, built on success of the model currently utilized in the HCMC Investment Fund for Urban Development (HIFU) Development Project (HDP), will develop infrastructure finance models that involve local institutions and leverage private capital.”

The WB will provide US$160 million in additional financing for the urban upgrading project to cover the lack of funding for the projects in Can Tho, Haiphong, Nam Dinh and HCMC resulting from the inflation in 2007-08.

The financing in HCMC will help improve the Tan Hoa-Lo Gom Canal, one of the lowest income areas in the city and a source of direct pollution and flooding in the basin.

Homes in this basin are often flooded by mixed floodwaters and sewage which can cause waterborne diseases such as diarrhea and typhoid.
Dean A. Cira, Urban Sector Coordinator for the World Bank in Vietnam, is quoted by the statement as saying, “The urban upgrading project has been improving the living conditions of many cities in Vietnam, such as Can Tho, Haiphong, Nam Dinh and HCMC, benefiting about two million poor people in these cities.

“Through this additional financing, we hope that another one million poor people in Tan Hoa-Lo Gom canal area in HCMC will benefit from better living conditions and environment.”


* Vietnam is in negotiations to borrow US$1-1.5 billion from the WB to facilitate public investment reform in the country.

Representatives from 10 Vietnamese ministries are negotiating with the WB in a session scheduled to end July 6. The loan is expected to help the Government reform 14 policies related to public investment.

The WB refuses to announce information of the negotiations as the two sides have yet to reach an agreement but the loan will have a preferential annual interest rate of Libor interest rate, the global inter-bank rate, plus 0.1% in 25 to 30 years, a source from the WB told the Daily.

The reforms will impact construction, science/technology, environment, transport and infrastructure in Vietnam. The WB expects to disburse the first loan late this year and two more early next year.