INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA3156 Public Disclosure Copy Date ISDS Prepared/Updated: 08-Apr-2013 Date ISDS Approved/Disclosed: 12-Dec-2012, 27-Mar-2013, 08-Apr-2013 I. BASIC INFORMATION 1. Basic Project Data Country: Vietnam Project ID: P121643 Project Name: Vietnam Inclusive Innovation Project (P121643) Task Team Nancy Chen Leader: Estimated 18-Jan-2013 Estimated 13-May-2013 Appraisal Date: Board Date: Managing Unit: EASFP Lending Specific Investment Loan Instrument: Sector(s): SME Finance (100%) Theme(s): Micro, Small and Medium Enterprise support (60%), Technology diffusion (40%) Is this project processed under OP 8.50 (Emergency Recovery) or OP No 8.00 (Rapid Response to Crises and Emergencies)? Financing (In USD Million) Public Disclosure Copy Total Project Cost: 55.63 Total Bank Financing: 55.00 Total Cofinancing: Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 0.63 International Development Association (IDA) 55.00 Total 55.63 Environmental B - Partial Assessment Category: Is this a No Repeater project? 2. Project Objectives The Project Development Objective (PDO) is to adopt, upgrade and develop inclusive innovations for the benefit of the Base of Pyramid population. This will be achieved by strengthening Vietnam's capacity to undertake inclusive innovation, including financing the development, adaptation, adoption, scaling up and commercialization of inclusive technologies, and improving RDIs' and Page 1 of 7 SMEs' technological and innovation capabilities. 3. Project Description Public Disclosure Copy Project Components The IDA Credit for the proposed Project is expected to be US$ 55 million. The Project will consist of the following four components: I. Developing Inclusive Technologies II. Scaling up and Commercialization of Inclusive Technologies III. Capacity Building and Global Knowledge Transfer IV. Project Management, Monitoring and Evaluation Component I: Developing Inclusive Technologies. The project will support the development of inclusive technologies that will help address the problems/needs of the BoP population, through competitive grants, based on public calls for proposals and transparent selection criteria. This component will provide support for: (i) developing technological solutions to address a few National Development Challenges (NDCs) that are specific to Vietnam; (ii) developing, acquiring, adapting and upgrading inclusive technologies by R&D institutions, enterprises and grassroots innovators. The project will focus on key priority themes which could have a quick and significant impact on the BoP population and in which Vietnam has a strong tradition, capacity and strategic interest, as reflected in Vietnam’s 2011-2020 Social and Economic Development Strategy (SEDS). Under Component I (i), the priority themes to be supported under the project have been selected by a National Development Challenges Council in Vietnam as: (i) Traditional Herbal Medicine (THM); (ii) Information and Communications Technologies (ICT) Applications (as a tool for the delivery of services to the BoP); and (iii) Agriculture/Aquaculture applications. Other themes may be considered during project implementation by the Project Steering Committee (PSC). While developing actual solutions, the project will also provide ancillary benefits in the strengthening of the capacity (see Component III) of the key participating institutions Public Disclosure Copy Component II: Scaling up and Commercialization of Inclusive Technologies. This component will provide loans and matching grants to private enterprises for upgrading, scaling up and commercialization of inclusive technologies. This will include: (i) support for scaling up, commercialization and sustainable production of inclusive technologies dealing with manufacturing of products and delivery of services for the BoP; (ii) funding to private sector SMEs* for the acquisition, adoption and use of technology and innovations in priority areas with significant potential for technological upgrading and growth. *SMEs are those defined in Decree 56/2009/ND-CP dated 30 June 2009. The general eligibility criteria for sub-project selection under Component I and II include: a) existing or new technologies applicable to Vietnam; b) readiness for adoption/adaptation and cost reduction potential; c) providing solutions to address the needs of the BoP that are affordable, durable, and environmentally friendly; d) time-bound deliverables with 2-3 years to reach the prototype stage, or having the potential to commercialize in Vietnam within 2 years; e) multi-disciplinary applications of new ideas/technologies; f) collaboration among RDIs, enterprises, local and international partners, researchers/innovators to ensure quality and commercialization potential. Component III: Capacity Building and Global Knowledge Transfer. The project will support Page 2 of 7 capacity building of key Vietnamese national institutions* such as the National Institute of Medicine Materials (NIMM), the National Hospital of Traditional Medicine (NHTM), NAFOSTED, Vietnam Academy of Sciences and Technology (VAST), Hanoi University of Science and Technology Public Disclosure Copy (HUST) for the sustainable development and delivery of inclusive technologies in the priority areas supported under the project: a) enhancing technology, quality and clinical trials of traditional herbal medicine products; b) enhancing innovation grant management capacity; c) enhancing capacity in technology transfer and commercialization, and intellectual property rights protection. *These institutions have the mandate, track record and commitment to developing inclusive technologies and solutions in Vietnam and received substantial capacity building during project preparation. Component IV: Project Management, Monitoring and Evaluation. The project will provide support to EDA PMU and PIUs in NAFOSTED and PFIs for proje ct management, coordination, capacity building, oversight, monitoring and evaluation, reporting and audits to enable them to perform their responsibility for project coordination and management. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) National scope so activities could take place anywhere in Vietnam. 5. Environmental and Social Safeguards Specialists Silvia Del Pilar Larreamendy Ricardo (EASVS) Thuy Cam Duong (EASVS) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes The project is considered to trigger OP 4.01 on BP 4.01 Environmental Assessment. The project intends Public Disclosure Copy to trigger the development of new technologies and promote them, possibly at large scale. It is impossible to further quantify what kinds of impacts might be generated as the kinds of innovative technologies to be promoted are unknown at this time and could be in almost any conceivable sector. The project will develop an Environmental Management Framework (EMF) to screen all innovation technology proposals for their potential positive and adverse environmental and social impacts, to develop relevant measures to mitigate adverse impacts, and to ensure compliance with applicable national laws and regulations, emission and discharge standards. A Category "B" for safeguards purposes is suggested because the potential adverse environmental impacts, if any, would not be Page 3 of 7 irreversible and will be mitigable by design measures to be incorporated into the design of any given innovation. Public Disclosure Copy Natural Habitats OP/BP 4.04 No Although the exact nature of innovative ideas to be supported is not currently known, it is not considered possible that any proposal would be supported that would have a negative impact on natural habitats. Appropriate screening measures would be included in the project's EMF to avoid impacts on critical natural habitats and mitigate any other impacts on natural habitats. Forests OP/BP 4.36 No No impact on forests or changes in management of forest resources will be contemplated under the project. Pest Management OP 4.09 No No procurement of pesticides will be contemplated or facilitated under the project. No innovation would be supported that would lead to a significant increase in pesticide use for agricultural activity or any other purpose. Physical Cultural Resources OP/ No An appropriate chance finds procedure will be BP 4.11 included in the EMF. Indigenous Peoples OP/BP 4.10 No There is no reason to believe that any innovation supported under the project would involve any ethnic group so the policy is not triggered. Involuntary Resettlement OP/BP No No land acquisition or involuntary resettlement 4.12 will be supported under the project; this will be included as a criterion for eligibility of support. Public Disclosure Copy Safety of Dams OP/BP 4.37 No The project will not support or invovle any dams in any way. Projects on International No The project will not have any impact or effect on Waterways OP/BP 7.50 any international waterway. Projects in Disputed Areas OP/BP No No investment of the project will take place in 7.60 any internationally disputed area. II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential large scale, significant and/or irreversible impacts: OP/BP 4.01.The Project triggers the OP/BP 4.01 Environmental Assessment due to potential negative environmental impacts associated with the Project activities. The Project will support Research, Development and Technology Institutions (RDTIs) and private SMEs to adopt, upgrade and develop new technologies and innovation for a few NDCs to improve the lives of BoP population. The priority themes under NDCs could include: Traditional Herbal Medicine (THM); Information and Communications Technologies (ICT) and Agriculture/Aquaculture Productivity. The project will include a number of innovative sub-projects under grant and /or loan under Page 4 of 7 component 1 and 2. In addition, it includes upgrading activities of laboratories from two RDTIs under component III. Given that the exact nature and location of innovative subprojects under component I and II are not identified prior to appraisal; the relevant impacts associated with these Public Disclosure Copy sub-projects are mostly unknown. The known impacts may include safety issue and disposal of waste from RDTIs and SMEs during sub-project implementation and operation. The impacts relating to upgrading of laboratories under component III may include during construction minor, short term impact relating to generation of noise, dust, and waste and safety concerns; and during operation the issue of waste management and laboratory safety. The sub-projects’ potential impacts, if any, are expected to be localized, minor and can be managed through good design and good management practices during Project implementation and operation. The Project is therefore classified as environmental category B. OP/BP 4.09. The project will provide finance support for RDTIs and SMEs for priority themes under NDCs which include agriculture activities. By design, the project will not trigger the policy on pest management OP/BP4.09 and will not allow: (i) financing and procurement of pesticide and pesticide equipment; and (ii) financing of activity that may affect pest management in a way that harm could be done. As such, the project will screen to exclude subprojects or activities that lead to substantial increased pesticide use, are not in accordance with an integrated pest management (IPM) approach, and/or pose significant health and environmental risk. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: There could be potential long-term impacts relating to waste generation as the SMEs and RDITs sub-projects go into operation. Regarding this, the sub-project owner shall ensure compliance with national requirements on solid waste management and good management practices as described in the Word Bank Group’s Environmental, Health & Safety (EHS) General Guidelines 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A Public Disclosure Copy 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. As part of Project preparation, the Ministry of Planning and Investment (MPI) has prepared an Environmental and Social Management Framework (ESMF) to ensure that the Project implementation and operation shall comply with national environmental legislation and the World Bank safeguard policies. The ESMF is in accordance with the Bank’s safeguard policies and national regulations on environmental assessment and management. The ESMF lays out procedures which include: (i) screening mechanism to exclude environmentally and socially ineligible subprojects, (ii) impact assessment and development of mitigation measures for minor civil work (ECOPs); (iii) preparation and clearance of EA safeguard documents per Government of Vietnam’s (GoV) regulations and Bank safeguard policies and for those subprojects which EA reports are already available – an internal due diligent of EA reports followed by an EMP preparation as necessary; (iv) safeguard implementation, monitoring and reporting, (v) institutional arrangement, capacity building program and cost for safeguard implementation. The project will be implemented in a decentralized manner by relevant agencies (based on the contents of the programs) under the overall coordination and oversight of EDA under MPI. Page 5 of 7 Regarding safeguard, EDA will be responsible for ensuring safeguard compliance relating to upgrading selective laboratories under component III. NAFOSTED will be responsible for ensuring safeguard compliance for the whole grant/loan subprojects under both Components I and Public Disclosure Copy II. Beneficiary RDTIs and SMEs will be responsible for implementation of safeguard requirements as specified in relevant safeguard documents. The MPI/EDA has some previous experience in carry out Bank financed projects e.g., Urban Water Supply and Waste Water (P119077), Second Northern Mountains Poverty Reduction Project (P113493). However, the staff that had experience on safeguard management of the previous projects may not be available to be assigned as Staff Officer for VIIP project. On the other hand, NAFOSTED staff does not have experience on either the World Bank or the GoV safeguard policies. The safeguard capacity of implementing agencies is therefore considered to be limited. The Project will require the allocation of qualified environmental staff to EDA and NAFOSTED to oversee environmental and social safeguard issues and necessary training will be carried out to strengthen capacities of EDA and NAFOSTED in implementing safeguard requirements. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. In addition to the MPI, EDA, NAFOSTED, and beneficiary SMEs and RDITs who are mainly responsible for the safeguard implementation, other key stakeholders are PFIs, people’s committees, local authorities, local communities, and general public. During preparationof ESMF, meaningful consultations have been conducted with key stakeholders of VIIP project including EDA, NAFOSTED, one potential PFI and some institutions i.e. Vietnam Academy of Science and Technology (VAST), National Institute of Medical Materials (NIMM), National Hospital of Traditional Medicine (NHTM). The concerns/feedbacks from the stakeholders have been incorporated into the final ESMF. Public Disclosure Copy The final draft of the ESMF has been disclosed locally at NAFOSTED, EDA and one potential PFI Offices and at Vietnam Development Information Center (VDIC) in Vietnamese language and in the WB InfoShop in Washington DC in English language prior to the appraisal mission. B. Disclosure Requirements Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 04-Dec-2012 Date of submission to InfoShop 05-Dec-2012 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors "In country" Disclosure Vietnam 04-Dec-2012 Comments: If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: Page 6 of 7 C. Compliance Monitoring Indicators at the Corporate Level OP/BP/GP 4.01 - Environment Assessment Public Disclosure Copy Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ] in the credit/loan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost? Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Nancy Chen Public Disclosure Copy Approved By Sector Manager: Name: James Seward (SM) Date: 08-Apr-2013 Page 7 of 7