The World Bank Enhancing Systematic Land Registration Project (P169669) REPORT NO.: RES56291 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ENHANCING SYSTEMATIC LAND REGISTRATION PROJECT APPROVED ON SEPTEMBER 2, 2021 TO LAO PEOPLE'S DEMOCRATIC REPUBLIC URBAN, RESILIENCE AND LAND EAST ASIA AND PACIFIC Regional Vice President: Manuela V. Ferro Country Director: Mariam J. Sherman Regional Director: Anna Wellenstein Practice Manager: Ming Zhang Task Team Leader: Markus Olavi Kukkonen The World Bank Enhancing Systematic Land Registration Project (P169669) ABBREVIATIONS AND ACRONYMS DoL Department of Land EA Economic Analysis ESF Environmental and Social Framework E&S Environmental and Social ESMP Environmental and Social Management Plan FA Financing Agreement FM Financial Management FPIC Free, Prior, and Informed Consent GoL Government of Lao PDR ICT Information and Communication Technology IDA International Development Association IRR Internal Rate of Return MoNRE Ministry of Natural Resources and Environment NPV Net Present Value PAD Project Appraisal Document PMU Project Management Unit PDO Project Development Objective PDR People’s Democratic Republic SLR Systematic Land Registration TOR Terms of Reference The World Bank Enhancing Systematic Land Registration Project (P169669) BASIC DATA Product Information Project ID Financing Instrument P169669 Investment Project Financing Environmental and Social Risk Classification (ESRC) High Approval Date Current Closing Date 02-Sep-2021 30-Sep-2026 Organizations Borrower Responsible Agency Lao People's Democratic Republic Project Development Objective (PDO) Original PDO The objective of the project is to support the Government of Lao PDR in improving tenure security and land administration services in selected areas, and to provide immediate and effective response in case of an eligible crisis or emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-69820 02-Sep-2021 21-Oct-2021 16-Mar-2022 30-Sep-2026 25.00 6.66 16.64 TF-B6525 02-Sep-2021 21-Oct-2021 16-Mar-2022 30-Sep-2026 1.70 1.41 .29 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Enhancing Systematic Land Registration Project (P169669) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Background and Project Status 1. Enhancing Systematic Land Registration Project (ESLRP), financed by an IDA credit in the amount of SDR 17.4 million (US$25 million equivalent) and a grant from the Swiss Agency for Development and Cooperation (SDC) in the amount of US$6.375 million, was approved on September 2, 2021, and became effective on March 16, 2022. The Project Development Objective (PDO) is to support the Government of Lao PDR in improving tenure security and land administration services in selected areas, and to provide immediate and effective response in case of an eligible crisis or emergency. The project has five components: Component 1: Systematic Registration of Land Use Rights (US$20.58 million); Component 2: Modernization of Land Administration and Service Delivery (US$6.18 million); Component 3: Implementation, Policy, and Legal Framework Development (US$1.00 million); Component 4: Project Management (US$3.61 million); and Component 5: Contingent Emergency Response. 2. Project implementation is ongoing with: (i) the Project Management Unit (PMU) largely staffed; (ii) Systematic Land Registration (SLR) activities underway in 130 villages and preparatory Environmental and Social Framework (ESF) activities ongoing in an additional 24 villages; (iii) vehicles, motorbikes, survey and ICT equipment delivered; (iv) the largest procurement, continuously operating reference stations, successfully completed; and (v) multiple sub-legislation, assessments, plans, Terms of Reference (TORs) and bid documents prepared for the issuance of land titles, land survey, ICT, digitization, capacity building, office operations and private sector engagement. Disbursements are on track with US$7.15 million disbursed, i.e., 28.74 percent of the IDA credit and SDC grant combined. Progress towards achievement of the PDO and Overall Implementation Progress are both rated Moderately Satisfactory in the last Implementation Status and Results Report dated November 13, 2023. 3. Environmental and Social (E&S). Environmental and Social performance is Moderately Satisfactory, and the overall E&S risk is rated High (with the social risk being High and environmental risk being Moderate). The existing ESF instruments remain relevant and applicable to manage the risks. These are an Environmental and Social Commitment Plan (ESCP), a Stakeholder Engagement Plan (SEP), an Environmental and Social Management Framework (ESMF), and an Ethnic Group Development Framework (ESMF). Experienced International and National Consultants have been recruited in the PMU to support E&S focal points and junior consultants at District and Province levels to implement the E&S instruments. To simplify and accelerate ESF implementation, a standardized Environmental and Social Management Plan (S-ESMP) has been developed and applied to manage pre-identified E&S risks associated with the SLR activities in the villages. The S-ESMP supersedes individual Village ESMPs. A Site-specific ESMP (SS-ESMP) for the planned small-scale civil works mainly to construct and rehabilitate SLR facilities and offices has been also prepared and implemented to The World Bank Enhancing Systematic Land Registration Project (P169669) mitigate E&S risks anticipated from the civil works. Training has been provided to the E&S focal points and the 32 SLR teams to enable them to implement the S-ESMP and SS-ESMP. The trained teams have carried out SLR related E&S management activities in 223 out of total 641 selected villages with (i) the meaningful consultation conducted, and Free, Prior and Informed Consent (FPIC) established (only in ethnic villages) as per the ESS71/ Ethnic Group Development Framework (EGDF) requirements, (ii) Grievance Redress Mechanism (GRM) established, (iii) E&S risk screening conducted in these villages. No major issues have been reported and no grievances have been filed. ESF implementation is closely supervised and supported by the Bank’s task team consisting of two Accredited Environmental and Social Specialists (AESSs) based in the country office and two international STCs under oversight and support from the Social and Environmental Risk Manage Coordinators based in Phnom Penh and Bangkok office. The task team is also provided with guidance from the Lead Social Risk Management Specialist based in Sydney. 4. Fiduciary. The Fiduciary risk of the project is rated Substantial. The project’s Financial Management (FM) is rated Moderately Satisfactory and the project is compliant with its financial reporting requirements, including timely submission of interim unaudited financial reports and the external audit report. The audit opinion was unmodified. Procurement performance is rated Moderately Unsatisfactory due to multiple pending and delayed procurement actions, such as delayed implementation and lengthy internal approval process, inexperienced procurement staff, weak contract management, and failure to upload documentation of the awarded contracts to the Bank’s Systematic Tracking of Exchanges in Procurement (STEP) system. The Department of Land (DoL) is currently addressing these issues. Rationale for Restructuring 5. The Bank received a letter from Ministry of Finance dated December 6, 2023 requesting for the following changes : (i) modification of the definition of “Operating Costs” in the Financing Agreement (FA) to allow payment of parcel-based allowances to government and contract staff; (ii) modification of the PDO level and Intermediate Indicators related to Component 1: Systematic Land Registration of Land Use Rights to measure only land titles or certificates issued by the Project, instead of all titles or certificates issued in Lao PDR; (iii) reducing the target of PDO Indicator 1: Land titles or use certificates issued by the project from 985,169 to 650,000, and reducing the target of PDO Indicator 2: Coverage of cadastral index maps showing all land holdings, including communal lands, from 2,250,000 ha to 1,527,500 ha; (iv) removing reference to ‘service centers’ from the Financing Agreement and Results Framework; and (v) other minor updates to the Results Framework. 6. The rationale for the proposed changes is given below: a. Definition of operating costs. The Ministry of Natural Resources and Environment (MoNRE) and DoL aim to accelerate the production of land titles and certificates through land parcel-based incentive 1 ESS7: Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities The World Bank Enhancing Systematic Land Registration Project (P169669) payments to government and project contract staff. The Ministry of Finance has issued Notice 4612 to allow the use of such payments. Such incentive payments are common in the World Bank’s land administration projects regionally2, and they are needed in Lao PDR to create favourable incentives for the accelerated production of land titles. It is therefore proposed to amend the definition of “Operating Costs” in the Financing Agreements to include such payments. b. Component 1 related indicators in the Results Framework. Component 1 indicators currently measure titles and certificates issued “in Lao PDR”, while the FA, the PDO and the Project Appraisal Document (PAD) refer to land registration in “Selected areas”. The proposed modification of Component 1 indicators will better align the Results Framework with the FA, the PDO and the PAD. In a similar vein, the targets of PDO Indicators 1 and 2 are proposed to be reduced to measure only project achievements. c. Reducing the targets for PDO Indicators 1 and 2. The latest assessments indicate that there are only about 690,000 land plots to be titled by the Project, after subtracting from the total number of land plots in the country (i) ineligible land plots located inside state forestlands, (ii) land plots titled or expected to be titled using GoL budget funds between 2021 and 2026, and (iii) land plots to be titled with KfW funding. It is therefore proposed to revise the PDO Indicator 1 target to 650,000. Although PDO 1 target is reduced, the project titles plus those completed with funds from the government and KfW will surpass the original target set for PDO 1, reaching 1.3 million titled parcels compared to 1 million titled parcels. As the target for PDO Indicator 2, “Coverage of cadastral index maps showing all land holdings, including communal lands” is based on the number of land plots titled in the project, it is proposed to reduce the target for PDO Indicator 2 in line with the reduction of the target for PDO Indicator 1. a. Removing reference to ‘service centers’ from the Financing Agreement and the Results Framework. The service centers were envisioned to be established between Provincial Offices of Natural Resources and Environment (PONREs) and to the District Offices of Natural Resources and Environment (DONREs) to enable easier access of the public to land administration services. The 2020 Land Law transferred service delivery responsibilities from the PONREs to DONREs that are already close to the public. Therefore, DoL is no longer considering the establishment of additional ‘service centers’. d. Other minor updates to the Results Framework are needed to: (i) change one intermediate indicator measuring transaction time that currently relies on Doing Business reports, which are no longer produced; (ii) update the baselines and targets for those indicators with more recent data; iii) adjust the indicator measuring DOL land transaction revenue to Lao Kip (LAK) instead of the US dollar to allow comparability amid the drastic LAK depreciation against the US dollar; and (iv) replace the intermediate indicator measuring the establishment of service centers with one measuring the renovation and construction of PONRE and DONRE offices. II. DESCRIPTION OF PROPOSED CHANGES 2For example, Thailand Land Titling Project, Thailand Second Land Titling Project (3254-TH), Lao PDR Land Titling Project (P004208), and Lao PDR Second Land Titling Project (P132897) have financed similar incentive payments. The World Bank Enhancing Systematic Land Registration Project (P169669) 7. Definition of “Operating Costs” in the Financing Agreement will be modified by adding following bolded phrases: “Operating Costs” means Project-related incremental expenses incurred on account of Project implementation and management, including the rental of office space; operation, maintenance, rental and insurance of vehicles; fuel; communications supplies and charges; advertisements; office administration and maintenance costs; bank transaction charges; utility charges; travel and per diem or parcel-based allowances for Project staff of MONRE and relevant government agencies at all levels for undertaking field visits and the cost of contractual staff (including salaries, travel costs and per diem or parcel-based allowances) directly supporting the Project, but excluding salaries for the Recipient’s civil servants. 8. Removing reference to ‘service centers’ a. Description under Part 2.1 Enhanced Service Delivery of Schedule 1 to the Financing Agreement is proposed to be amended to: “Improving service delivery through: (i) business process reengineering assessment and customer satisfaction surveys; (ii) construction and renovation of PONREs and DONREs; (iv) procurement of goods such as office equipment, furniture, stationary and ICT equipment; and (v) recruitment and training of staff.” b. Description under Part 2.3 Lao LandReg Development and Rollout of Schedule 1 to the Financing Agreement is proposed to be amended from “…(ii) renovating offices to enhance the server room facilities of DOL, PONREs and land administration service centers…” to ”…(ii) renovating offices to enhance the server room facilities of DOL, PONREs and DONREs…”. c. Intermediate Indicator 9: Number of pilot service centers established, staffed and operational will be replaced with indicator measuring “Number of PONRE and DONRE offices renovated and constructed”. The baseline will be 0 and the target will be 32 offices. 9. Changes to PDO Indicators 1 and 2. a. PDO Indicator 1 will be changed from “Land titles or use certificates issued in Lao PDR” to “Land titles or use certificates issued by the project in selected areas”. The end target will be reduced from 985,169 to 650,000 titles or certificates. b. PDO Indicator 2 will be changed from “Coverage of cadastral index maps showing all land holdings, including communal lands” to “Coverage of cadastral index maps showing all land holdings, including communal lands, prepared by the project in selected areas”. The end target will be reduced from 2,250,000 hectares to 1,484,517 hectares. 10. Other minor changes to the Results Framework: a. PDO Indicator 4: Customer satisfaction with land administration services in selected offices – The measuring format will be modified from [text] to [percentage] and will measure both customer satisfaction with first time registration and secondary transactions. The baseline is set to 62 percent based on the baseline survey and the target is set to 74.4 percent. The World Bank Enhancing Systematic Land Registration Project (P169669) b. Intermediate Indicator 1: Land titles or use certificates issued in name of women or jointly in Lao PDR – Based on new data, the baseline will be updated from 38.43 percent to 79 percent and the target from 42.50 percent to 79 percent. The previously used data only included land titles issued in rural areas during 2018-2019, while the new data utilizes all digital land records in the Lao LandReg. Lao PDR already has a very high percentage of female land ownership, and as the land registration is advancing from urban areas to more rural areas, it is likely that this percentage would reduce due to more conservative cultural practices and higher presence of Mon-Khmer, Hmong-Iumien and Sino-Tibetan ethnic groups that have patrilineal inheritance systems opposite to largely matrilineal Lao-Tai ethnic groups. As such, the Project aims to maintain same percentage as the final target. Disaggregation by ethnicity is proposed to be removed, as this is already measured as part of PDO Indicator 1. c. Intermediate Indicator 2: Number of Continuously Operating Reference Stations – The final target is proposed to be changed from 77 to 73, as this was identified as the final number of stations required to cover the entire country. d. Intermediate Indicator 3: Beneficiaries who participate in public awareness campaigns – This indicator will be modified to measure public awareness participants against total beneficiary households instead of against total village population. The baseline is set to 0% and target to 33.3%. The baseline and target are based on following assumptions: i. There are 2.68 land parcels owned by households on average based on previous rural land registration projects funded by BMZ. ii. The data from ten first provinces indicates that currently 27.2% of households participate in public awareness campaigns. iii. As extended families of multiple households will send only one representative to the public awareness events, the Project aims to achieve one-third (33.3%) of the potential beneficiaries. e. Sub-Intermediate Indicator 3.1: Female beneficiaries who participate in public awareness campaigns – This sub-indicator will be modified to measure female public awareness participants against total number of participants instead of against total village population. The baseline will be set to 0% and the final target to 50%. The baseline and target are based on data from ten first provinces showing that currently 43.5% of public awareness participants are women. f. Intermediate Indicator 6: Number of old paper land records scanned, linked to Lao Land Reg and archived (Number) – The baseline will be updated from 59,000 to 0, as no records have yet been linked to Lao Land Reg. The target will be updated from 500,000 to 441,000 following the deduction of the baseline. g. Intermediate Indicator 10: Time taken to register a simple land transaction – This indicator is proposed to be reformulated to “Time taken to register a land transaction”. The baseline is proposed to be changed from 28 days to 55 days and the target from 15 days to 40 days, as the original baseline data of the discontinued Doing Business report is replaced with data from Lao LandReg. The annual reduction of transaction times is proposed to be kept proportionally unchanged. h. Intermediate indicator 12: Income generation to government through DOL (excluding first registration fees) – This indicator will be changed from US dollars to LAK due to large changes in the US dollar to LAK exchange rate. The baseline will be revised by removing capital gains income (LAK 747,362,000) that the The World Bank Enhancing Systematic Land Registration Project (P169669) Ministry of Finance incorrectly included in the original baseline; however, the original percentage increase between the baseline (LAK 32,131,000) and final target (LAK 60,481,000) will remain the same. If Ministry of Finance and MONRE decides to increase fee rates due to inflation later on, the indicator target values will be adjusted to LAK equivalent of the baseline year 2020 using the Bank of Lao PDR Consumer Price Index. 11. Economic Analysis (EA). The updated EA incorporates the new arrangement with MoNRE by differentiating between titles generated by the Government and those produced by the project. In addition, due to budget constraints, MoNRE can only register 350,000 parcels through systematic registration, while the remaining parcels are assumed to be registered gradually. All other assumptions remain the same as in the original EA. As shown in the table below, the Net Present Value (NPV) of the restructured ESLRP is estimated at US$1.28 million and the Internal Rate of Return (IRR) is estimated at 11 percent. As such, the Project continues to be economically viable. Present Value Expected financial savings from access to lower interest rates loans $17.8 million Expected cost savings from improved systematic registration process $6.9 million Total Project Costs (in present values) $23.5 million Net Benefits $1.28 million Internal Rate of Return (IRR, percent) 11 12. The proposed restructuring will not affect the PDO, institutional and implementation arrangements. It will not also change to the project’s Environment and Social risk or the project’s environmental and social impacts. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ The World Bank Enhancing Systematic Land Registration Project (P169669) Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) . The World Bank Enhancing Systematic Land Registration Project (P169669) . Results framework COUNTRY: Lao People's Democratic Republic Enhancing Systematic Land Registration Project Project Development Objectives(s) The objective of the project is to support the Government of Lao PDR in improving tenure security and land administration services in selected areas, and to provide immediate and effective response in case of an eligible crisis or emergency. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Improving tenure security Land titles or use certificates issued by the project in selected areas (disaggregated 0.00 1,000.00 50,000.00 200,000.00 400,000.00 650,000.00 by titles/certificates, gender and ethnicity) (Number) Action: This indicator has been Revised Coverage of cadastral index maps showing all land holdings, including communal 0.00 2,284.00 114,194.00 456,774.00 913,549.00 1,484,517.00 lands, prepared by the project in selected areas. (Hectare(Ha)) Action: This indicator has been Revised Improving land administration services Number of annual land 36,780.00 37,000.00 38,000.00 41,000.00 44,000.00 48,000.00 transactions registered, The World Bank Enhancing Systematic Land Registration Project (P169669) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 excluding first time registration (disaggregated by transfers, mortgages, leases and inheritance; disaggregated by gender) (Number) Customer satisfaction with land administration services in 62.00 74.40 selected offices (disaggregated by gender) (Percentage) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Systematic Registration of Land Use Rights Land titles or use certificates issued in name of women or jointly in Lao PDR 79.00 79.00 79.00 79.00 79.00 79.00 (disaggregated by titles/certificates) (Percentage) Action: This indicator has been Revised The World Bank Enhancing Systematic Land Registration Project (P169669) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Number of Continuously Operating Reference Stations 22.00 22.00 38.00 38.00 73.00 73.00 (Number) Action: This indicator has been Revised Beneficiaries who participate in public awareness campaigns 0.00 0.00 0.00 27.20 30.30 33.30 (disaggregated by ethnicity) (Percentage) Action: This indicator has been Revised Female beneficiaries who participate in public 0.00 0.00 0.00 43.50 46.80 50.00 awareness campaigns (Percentage) Action: This indicator has been Revised Average cost of issuance of 25.00 25.00 25.00 20.00 20.00 17.00 new land title (Amount(USD)) Individuals within SLR teams 0.00 300.00 600.00 700.00 750.00 780.00 trained (Number) Modernization of Land Administration and Service Delivery Titles or use rights in digital land information system (Lao 482,233.00 630,000.00 930,000.00 1,240,000.00 1,550,000.00 1,920,000.00 LandReg) (Number) Districts with digital land 26.00 30.00 45.00 60.00 80.00 100.00 information system (Lao The World Bank Enhancing Systematic Land Registration Project (P169669) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 LandReg) operational and in systematic use (Number) Number of old paper land records scanned, linked to Lao 0.00 0.00 101,000.00 211,000.00 321,000.00 441,000.00 LandReg and archived. (Number) Action: This indicator has been Revised Number of PONREs and DONREs renovated or 0.00 0.00 0.00 0.00 9.00 32.00 constructed (Number) Action: This indicator has been Revised Time taken to register a land 55.00 55.00 55.00 50.00 45.00 40.00 transaction (Days) Action: This indicator has been Revised Number of institutions with online link to LaoLandReg 0.00 0.00 1.00 2.00 3.00 4.00 (Number) Income generation to government through DOL 32,131,000.00 35,911,000.00 41,581,000.00 47,251,000.00 52,921,000.00 60,481,000.00 (excluding first registration fees) in Lao Kip (Number) Action: This indicator has been Revised Implementation, Policy and Legal Framework Development The World Bank Enhancing Systematic Land Registration Project (P169669) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 Regulations or studies amended or produced 0.00 1.00 2.00 3.00 4.00 5.00 (Number) Normative documents (sub- legislation, decrees, instructions or regulations) on i) customary tenure 0.00 1.00 2.00 2.00 2.00 2.00 registration; and ii) land registration in state forestlands issued (Number) Project Management Project Management rated as No Yes Yes Yes Yes Yes Satisfactory (Yes/No) IO Table SPACE The World Bank Enhancing Systematic Land Registration Project (P169669)