Lao People’s Republic and Viet Nam: Greater Mekong Subregion Sustainable Tourism Development Project

Horizontal Tabs

Lessons

Focusing on larger investments will maximize the impact of Asian Development Bank (ADB) regional sovereign assistance to the tourism sector

The project’s design, while relevant and based on a careful sector assessment and lessons from previous operations, included too many small and scattered supply-driven subprojects, particularly in Lao People’s Democratic Republic (PDR). This stretched executing agency (EA) capacity to adequately supervise civil works construction and build capacity for sustainable operation and maintenance, undermining the efficacy and sustainability of some subprojects. To maximize impacts, future ADB regional sovereign assistance to tourism should focus on larger investments in public goods such as transport infrastructure; solid waste and wastewater management improvements and other utilities; and human resource development. Operations should seek to develop synergies between multiple sectors and catalyze downstream private investment. ADB should also mitigate the risks posed by asynchronous country processes to the success implementation of joint subregional activities.

Project preparatory technical assistance (PPTA) should dedicate adequate resources toward ensuring project readiness.

While the project’s actual 5−year implementation schedule was generally as envisaged, Viet Nam was negatively affected by slower-than-expected consultant recruitment. For future projects, ADB can consider including in the PPTA adequate resources to assist EAs in recruiting project implementation consultants and preparing first-year bidding documents. ADB, government, or cofinancing resources should be explored to support the preparation of detailed engineering designs before project approval. Project readiness filters jointly prepared by ADB and developing member countries should also be reviewed annually and applied rigorously.

Appropriate procurement packaging is crucial to the success of projects with multiple infrastructure components.

At appraisal, 6 national competitive bidding (NCB) works contracts were envisaged, but during implementation the EAs requested and received ADB approval to break the packages into 16 smaller NCB and shopping contracts. This increased transaction costs and may have discouraged bid submission from more qualified contractors. Future projects with multiple infrastructure packages should consider engaging multiple design and supervision teams using the lowest number of consulting contracts possible. Similarly, works should be packaged into fewer, higher value contracts to minimize transaction costs and attract better qualified contractors.

Detailed analysis of tourism demand should guide subproject selection and design.

Many subprojects, including the ethnic minority center in Viet Nam, about a third of the community−managed tours, and several facilities in the tourism corridors were generating only modest incomes due to lower-than-expected tourist demand. This underscores the need for subproject selection and design to be anchored on a detailed analysis of tourism demand. Early engagement with the private sector can also enable community–public–private partnerships and other innovative practices that will increase public investment efficiency and sustainability.

Targeted support for women-led enterprises can boost women empowerment.

Female participation rates in training activities and tourism enterprise activities generally exceeded targets. While these had resulted in changes in household gender relations, more work is needed to make women more visible in governance bodies. Targeted support for women-led enterprises should complement efforts to support women’s advancement to higher-level management and leadership positions. Project managers should also be gender-sensitized and provided adequate resources to implement gender action plans.

Background

Tourism is one of the most dynamic sectors of the world. With total global demand reaching $7 trillion in 2007, it accounted for around 10% of the global gross domestic product and employed 240 million people. International tourist arrivals exceeded 880 million, with total receipts estimated at $700 billion. The Asia and Pacific region, then second only to Europe as a tourist destination, was forecasted by the United Nations World Tourism Organization to account for 25% of 2020 global arrivals, receipts, and employment.

To harness the sector’s potential in stimulating economic growth and reducing poverty in the Greater Mekong Subregion (GMS), the Asian Development Bank (ADB) and the governments of Lao People’s Democratic Republic (Lao PDR) and Viet Nam agreed to work together on the GMS Sustainable Tourism Project. Approved by ADB in October 2008 for a grant of $10 million to Lao PDR and a loan of $10 million to Viet Nam, the project’s expected impact was the development of a sustainable and culturally and environmentally sound pro-poor tourism and preservation of natural and cultural heritage. Its intended outcome was sustainable tourism development that creates livelihood opportunities for the poor.

The project had 5 planned outputs: (i) development of a sustainable tourism model that protects the environment and cultural heritage, (ii) operationalization of pro-poor, community-based supply chain tourism projects, (iii) development of GMS tourism corridors, (iv) human resource development, and (v) project implementation services. 9 provinces in Lao PDR and 5 in Viet Nam, selected because of their good tourism potential and up to 38.6% poverty rates, comprised the project sites.

Over 5 years, the project achieved more than 90% of its output targets. 3 natural and cultural heritage sites, 2 in Lao PDR and 1 in Viet Nam, were upgraded. A Vietnamese ethnic minority information center was constructed. 32 community−based tours, 23 community−managed tour sites, and 78 community supply chain subprojects were developed. 2 transnational tourism corridors were piloted along the GMS north−south and east−west economic corridors. Tourism master plans and management and operation manuals were prepared. Gender, ethnic development, and cultural practices were documented. Capacity development of public and private stakeholders, community awareness programs, and private investment facilitation were also undertaken.

Successful delivery of most outputs enabled the project to achieve its intended outcome, with early positive impacts on local employment and poverty reduction. By 2014, tourism had employed about 9,800 people in the project areas and generated $87 million in annual destination spending. Increasing tourist arrivals and spending helped eliminate poverty in some project areas and reduce it to 22% or less in others. Overall, about 72,000 people directly benefitted and 288,000 indirectly benefitted from the jobs and economic opportunities created, improved transport services, and cleaner environment and better recreation services, among others. Ethnic groups comprised 47% of the beneficiaries in Lao PDR and 85% of those in Viet Nam.

ADB’s Southeast Asia Department rated the project successful. Lao PDR’s Ministry of Information, Culture and Tourism and Viet Nam’s Ministry of Culture, Sports and Tourism were the executing agencies.

Project Information

Project Name:

Greater Mekong Subregion: Sustainable Tourism Development Project

Report Date:

February, 2016

Main Sector:

Industry and Trade

Country:

Lao, People's Democratic Republic

Viet Nam

Project Number:

38015-013