ADB helps Vietnam, Laos upgrade road system

The Asian Development Bank (ADB) will provide US$95 million to help Lao and Vietnam upgrade their road systems in the northeastern transport corridor which will benefit trade and reduce poverty in the two countries and the Mekong region.

The ADB Board of Directors has approved the provision of loans for the second project to upgrade the northern transport network of the Greater Mekong Subregion (GMS).

Under the project, 340 km of road belonging to a section of the northeastern transport corridor which starts in Vietnam’s Thanh Hoa province and runs through to Bangkok, Thailand will be upgraded.

Apart from improving material facilities, the project will help deal with issues including overloaded vehicles, road transport safety and bomb and landmine clearance, and raise public awareness of human trafficking and the prevention and control of HIV/AIDS.

The ADB will provide Vietnam with US$75 million sourced from the Asian Development Fund’s preferential loans, and it will grant Laos US$20 million in non-refundable aid.

The loan has a period of 32 years with a grace period of 8 years and an interest rate of 1 percent/year during the grace period and 1.5 percent after that.

Meanwhile, the Vietnamese and Laos governments will provide a total capital investment of US$32.7 million. The OPEC Fund for International Development (OFID) will consider lending Laos US$12 million in March next year. If it is approved, the ADB will manage OFID’s capital inflow and the project will cost a total of US$139.7 million.

The project is scheduled for completion in June 2016.

The ADB operates its mission of poverty reduction in the Asia-Pacific region through comprehensive sustainable growth, and regional integration.

Established in 1966, the ADB now has 67 members including 48 regional members. In 2009, it approved a total of US$16.1 billion to provide loans and non-refundable aid and conduct programmes on guaranty, financial and trade promotion, capital investment and technical assistance. It also mobilised US$3.2 billion in co-sponsorship funding.