1. Prepared for the EASSD Transport Sector Retreat
Lao PDR
Transport Sector
Prepared for the EASSD Transport Sector Retreat
Washington DC
January 25, 2010

2. Geography and Economy Population 6 million, land area 250,000 km2;
GDP growth at 7% a year (5% in 2009), GDP per capita $500, 75% of population rural;
Land-locked country  but also land-linked to 250 million population in the Great Mekong Subregion;
Very low population density (24 persons/Km2), scattered settlements, mountainous geography, and monsoon  costly to provide transport infrastructure and services to all parts of the country, and important to prioritize;
Economic development at the early stage  thin markets, low but growing traffic volumes, accessibility crucial

3. Transport Systems
Roads are dominant mode carrying 98% of passengers and 86% of freight;
44% of the national roads (6,900 km) unpaved; Over 20% of the rural population without year-round access by road;
Frequent occurrences of landslides, floods, and embankment erosion;
Potential of inland waterways is limited due to rocks and locations;
Railway link 3.5 km extending from Thailand;
Air transport market is small but growing fast;
Urban traffic congestion has emerged in Vientiane (w. pop 700,000)

4. Government’s Changing Priorities: A Retrospect
Late 1970s to 2000: Mainly rehabilitation of primary national road network
Since 2000: New attention to road maintenance
Since 2005: New policy emphasis on rural basic access improvement
Active participant and primary beneficiary of GMS transport development, and starting to think big in rail, air, logistics, and multi-modalism
Increasing concerns on urban transport as traffic congestion and air pollution started to emerge in major cities

5. Bank Operations and Achievements
Rehabilitation of crucial national roads (NR13 S);
Provincial Infrastructure Project (PIP, closed in 2008) in Phongsali and Oudomxay;
Road Maintenance Program Phase 1 & 2;
Lao Road Sector Project (Negotiations on Feb 8, 2010)
Achievements
Delivery of real benefits to people;
Established a provincial infrastructure delivery model
Mini-SWAPs for Road Maintenance Program (PIU no more, using same SBD, joint supervision)
Road Maintenance Fund

6. Institutional Capacity Development Vientiane Declaration
Government ownership—Government exercises effective leadership and the development policies, strategies, and coordinates development actions;
Alignment—Partners align with the Government’s strategies and use strengthened Government regulations and procedures;
Harmonization and Simplification—Partners’ actions are more harmonized, transparent and collectively effective;
Managing for Results—Government and partners work together to manage resources and improve decision making for results; and
Mutual Accountability—Both government and partners are accountable for results.

7. Government-Donor Coordination
Small IDA country with many donors (ADB, AusAID, China, Japan, Germany, Korea, Sweden, Thailand, WB);
Formal coordination through Infrastructure Sector Working Group (ISWG) chaired by the Minister;
Aid harmonization: key effort of ISWG
ADB: GMS transport links;
China: road rehabilitation, urban roads, airport
Japan: bridges and technical assistance;
KfW: province-based multi-sectoral comprehensive approach;
Sida: maintenance & rural roads, but phasing out
Thailand: railway and roads

8. Ministry of Public Works and Transport: A Leader in Institutional Development
MPWT Secretariat for Aid Harmonization
Action Plan for Aid Harmonization
Strengthening MPWT Functions (Country Systems)
Strategic Planning and Management
Safeguard (pilot use of country system with Environmental and Social Operations Manual adopted)
Financial Management System
Internal Control and Internal Audit
Disaster response and mitigation system
Performance-based maintenance contracts
NT-2 revenue supported rural road program

9. Bank Operations: Way Forward
New CPS process just started;
Key question: How to use limited IDA to achieve best outcomes?
Two-pronged approach:
Continuing effort in aid harmonization and building foundations for sector-wide approaches
Maintaining comparative advantage in strategic and policy advice and capacity development and delivering real benefits to people through lending
Business areas would be determined by National Transport Strategic Plan
Moving to SWAPs……???

10. Thank You