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PROJECT INFORMATION DOCUMENT (PID) 
CONCEPT STAGE 
Report No.:  AB1259 
Project Name 
VN-Priority Infrastructure Development Project 
Region 
EAST ASIA AND PACIFIC 
Sector 
Roads and highways (30%);Housing construction (20%);General 
water, sanitation and flood protection sector (20%);Sewerage 
(20%);Agricultural extension and research (10%) 
Project ID 
P086508 
Borrower(s) 
SOCIALIST REPUBLIC OF VIETNAM 
Implementing Agency 
Danang City People’s Committee 
Environment Category 
[X] A   [ ] B   [ ] C   [ ] FI   [ ] TBD (to be determined) 
Safeguard Classification 
[X] S
1
[
]
S
2
[
]
S
3
[
]
S
F
[
]
TBD (to be determined)
 
Date PID Prepared 
January 18, 2005 
Estimated Date of 
Appraisal Authorization 
February 28, 2006 
Estimated Date of Board 
Approval 
October 31, 2006 
1.  Key development issues and rationale for Bank involvement 
 
1.1 
With population of  750,000 in a 1,255 km
2
area located in the middle of the country on 
the North- South transportation axis, Danang is one of the important gateways to the sea for the 
central highland area including Laos, Cambodia, and Thailand and is identified by the 
Government as the base of one of the three urban growth clusters.  In August 2004, Government 
of Vietnam requested the IDA for a project on priority infrastructure development focusing on 
Danang.   
 
1.2 
Danang city has achieved rapid economic growth in the past several years with  13 % 
average GDP growth rate for the 2001-2003 period, higher than the national average of 7.5% in 
the same period.  The next five-year development plan (2006-2010) currently under preparation 
sets a target of an average annual GDP growth rate of 14-15%.   This rapid economic growth 
relies largely on the active construction and service industries.  Substantial increase in the 
percentage of the city’s revenue from land use from 0.45% in 2000 to 34.5% in 2003 symbolizes 
this trend.  The City has two development thrusts: (a) industrial development, including  foreign 
direct investments (FDI) through development of industrial zones; and, (b)  promotion of 
tourism industry. 
 
1.3 
In contrast to the rapid economic growth, current poor environmental sanitation has 
negative impacts on the sustainability of growth. “Viet Nam Environment Monitor 2003” 
identifies Danang as an environmental hotspot.  Danang faces following challenges: (a) ensuring 
productive employment and basic services for new residents (both migrants and internal 
population growth); (b) dealing with the legacy of under-investment in the 70s, 80s and 90s; (c) 
mitigating risk to environmental degradation and traffic congestion; and, (d) better 
operationalization of industrial zones and improvement in FDI. Overarching these challenges is 
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the critical need to ensure sustainable economic growth and socially-responsive development of 
the city, by assisting the city departments in diversifying sources of revenue, better management 
of investments and ensuring active participation of its citizens in planning and maintaining these 
investments. 
 
1.4  
In 2002, Vietnam adopted a Comprehensive Poverty Reduction and Growth Strategy 
(CPRGS), which defines the role of infrastructure development for growth and poverty 
reduction.  The proposed project will be designed to translate and implement CPRGS’s goals at 
the local level. The Bank has established a solid relationship with Danang, which is successfully 
implementing the Three Cities Environmental Sanitation Project (Cr.32110).  The success of the 
proposed project gives the Bank an opportunity to help in subsequent phases of environmental 
sanitation and to move from a single sector intervention to an approach that provides assistance 
to broader issues of urban development.  It also provides an opportunity to help ensure that the 
urban poor participate fully in development. 
 
2. Proposed objective(s) 
 
The proposed project focuses on Danang, capital of the central region, and one of the fast-
growing cities of the country with following development objectives:  
 
·
To improve the living conditions and productivity of low income residents, through better 
access to basic services and increased employment opportunities; 
·
To help the city better manage its rapid population and economic growth by provision of 
supporting environmental sanitation infrastructure;  
·
To promote economic growth, through strategic investments that enhance mobility and 
increase private sector participation in the city’s economic development; and, 
·
To improve city and district level management, through institutional development, human 
resource development and capacity building.   
 
3. Preliminary description 
 
A
multi-sectoral municipal investment program is proposed with an initial estimate of US$150 
million with following components.  Investments proposed by the city authorities are in line with 
the overall development priorities of the next Five-Year Socio-Economic Development Plan 
(2006-2010) currently under preparation. Geographical location of investments will be limited to 
the five urban districts, where the majority of the population lives and which are developing very 
rapidly:     
 
Component 1 on Poverty-Focused Infrastructure
,
to improve the health, quality of life and 
productivity of low-income residents by improved access to basic services in alignment with the 
targets set in the CPRGS.  Preliminary estimates indicate about 
20-25 percent
 
of
the total credit 
to be allocated for this component.  Following three sub-components are proposed: 
 
A: On-site upgrading of tertiary infrastructure in slum areas: 
this would include improving 
tertiary infrastructure.  A similar approach to that adopted in the Bank-financed Vietnam 
Urban Upgrading Project would be applied.  Preliminary estimates by the city authorities 
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indicate the needs to improve 40 urban low-income areas (about 34,000 households in 530 
hectares) spread in the entire city.  
 
B:  Low-income housing
:
This sub-component finances site development and low-income 
housing units to be used both as resettlement housing and to accommodate workers for the 
industrial zones migrating from rural areas
1
.
A
socially more sensitive approach to design of  
low-income housing units will be piloted.  In addition, the Project seeks to support the City in 
establishing a more financially sustainable and participatory Operation and Maintenance 
(O&M)  mechanism, as no clear-cut O&M mechanism currently exists for apartments units 
constructed by the City Government as part of its resettlement scheme.   
 
C:  Micro-credit for housing improvements
:
Building on the successful experience of the 
Household Sanitation Revolving Fund in Three Cities Sanitation Project and the pilot project 
by the City Government for house improvements, a micro-credit program for house 
improvements could be supported.  This would complement sub-component A, but could 
cover other areas of the city, subject to demonstration of demand and affordability. 
 
Component 2 on Infrastructure for Environmental Improvements
,
to assist the city better 
manage the environmental deterioration that is beginning to occur as a result of its rapid 
population growth and spatial expansion.  The component could include investments in drainage, 
wastewater collection and wastewater treatment.  In particular, investments should respond to the 
priority environmental protection needs of the new development areas to the northwest and 
southeast, including the five industrial zones where pollution is becoming a serious problem.  
Consideration could be given also to ensuring planned tourist zones are connected to the city’s 
wastewater system.  Preliminary estimates indicate about 
35
to 45 percent
 
of
the total credit to 
be allocated for this component.   
 
Component 3 on Infrastructure to Promote Sustainable Economic Growth
,
to assist the city 
in ensuring sustainable economic growth in alignment with the city’s development orientations.  
Preliminary estimates indicate about 
35
to 45 percent
 
of
the total credit to be allocated for this 
component.  Following sub-components are proposed:  
 
A. 
Investments addressing current and future infrastructure deficiencies in growth areas
,
such as rehabilitation and expansion of the water supply distribution system, including the 
installation of house connections (the main water treatment plant is currently being expanded 
to meet medium term demand;  
B. 
Strategic investments to improve access and mobility
,
such as key roads connecting the 
inner city and new residential areas to places of employment (industrial zones and tourist 
areas) and which open up new development areas. Support could also be provided to 
developing a public transport system in Danang and preparation of a city transport strategy; 
and, 
C. 
Technical assistance to enhance investment climate
 such as: consulting services to 
enhance efficiency in  the current initiatives of the City Government to attract investors 
1
According to the City Government, about  3500 housing units are currently needed, including about approximately 800 households who may 
have to be resettled due to investments through the proposed project.   However, projections on future supply and demand need to be analyzed 
more in detail, if this sub-component is included.   
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(domestic and foreign) through administrative modernization, automation of business 
transactions, and information and communications technology.  Better coordination between 
the City’s vocational schools and the investors will be also sought.  
 
Component 4 on Capacity Building on Urban Management,
 to improve city and district level 
management, through institutional development, human resource development activities.  This 
Component could address areas such as: urban planning, municipal finance (resource 
mobilization and expenditure management), project management, monitoring and evaluation. 
Preliminary estimates indicate about 
5
%
of
the total credit to be allocated for this component.  If 
grant funds can be mobilized the percentage could be increased. 
 
4.  Safeguard policies that might apply 
The EASES Review concluded that this is a Category A project and therefore will require 
EASES Decision Review clearance prior to appraisal. OP/BP 4.01 Environmental Assessment 
and OP/BP 4.12 Involuntary Resettlement will be applicable to this project.
 
5. Tentative financing 
Source: ($m.) 
BORROWER/RECIPIENT 50 
INTERNATIONAL DEVELOPMENT ASSOCIATION 
150 
 Total 
200 
 
6. Contact point 
Contact: Mayumi Kato 
Title: Sr. Urban Mgmt. Spec. 
Tel: (202) 473-2214 
Fax: (202) 614-1114 
Email: mkato@worldbank.org