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

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

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)

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

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

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.

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

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

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……???

Thank You