FOR OFFICIAL USE ONLY Report No: ICR00006046 INTERNATIONAL DEVELOPMENT ASSOCIATION IDA-54760 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A CREDIT IN THE AMOUNT OF SDR 161.80 MILLION (US$250 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR THE RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION PROGRAM-FOR-RESULTS March 9, 2023 Urban, Resilience And Land Global Practice East Asia And Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2022) Vietnamese Dong (VND), Currency Unit = Special Drawing Right (SDR) VND23,219.2 = US$1 US$1.32778 = SDR1 FISCAL YEAR January 1 - December 31 Regional Vice President: Manuela V. Ferro Country Director: Carolyn Turk Regional Director: Benoit Bosquet Practice Manager: Francis Ghesquiere Task Team Leaders: Hoa Thi Hoang, Thong Trung Le ICR Main Contributor: Gyongshim An ABBREVIATIONS AND ACRONYMS CPC City People’s Committee CPF Country Partnership Framework CPS Country Partnership Strategy DLI Disbursement Linked Indicator ECOP Environmental Code of Practice EHS Environment, Health and Safety FY Fiscal year GDP Gross Domestic Product ICR Implementation Completion and Results Report IDA International Development Association IPF Investment Project Financing IRI Intermediate Results Indicator ISR Implementation Status and Results Report M&E Monitoring and Evaluation MIS Management Information System MOC Ministry of Construction MTIP Medium-Term Investment Plan MTR Mid-Term Review NUDP National Urban Development Program O&M Operation and Maintenance ODA Official Development Assistance PAD Program Appraisal Document PAP Program Action Plan PDO Program Development Objective PforR Program-for-Results PI PDO-level Indicator POM Program Operations Manual PPC Provincial People’s Committee SAV State Audit of Vietnam SDR Special Drawing Rights US$ United States Dollar VND Vietnamese Dong TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES.................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION .............................................................. 12 II. OUTCOME .................................................................................................................... 12 A. RELEVANCE .......................................................................................................................... 12 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 15 C. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 20 D. OTHER OUTCOMES AND IMPACTS ........................................................................................ 20 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 22 A. KEY FACTORS DURING PREPARATION ................................................................................... 22 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 23 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 25 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 25 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 27 C. BANK PERFORMANCE ........................................................................................................... 28 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 30 V. LESSONS AND RECOMMENDATIONS ............................................................................. 30 ANNEX 1. RESULTS FRAMEWORK, DISBURSEMENT LINKED INDICATORS, AND PROGRAM ACTION PLAN ...................................................................................................................... 32 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 47 ANNEX 3. PROGRAM EXPENDITURE SUMMARY ................................................................... 50 ANNEX 4. BORROWER’S COMMENTS ................................................................................... 51 ANNEX 5. SUPPORTING DOCUMENTS .................................................................................. 52 ANNEX 6. PROGRAM MAP ................................................................................................... 53 ANNEX 7. PHOTOS OF INFRASTRUCTURE SUPPORTED BY THE PROGRAM ............................. 54 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) DATA SHEET BASIC INFORMATION Product Information Program ID Program Name Financing Instrument RESULTS-BASED NATIONAL URBAN P143596 DEVELOPMENT PROGRAM IN THE Program-for-Results Financing NORTHERN MOUNTAINS REGION Country IPF Component Vietnam No Organizations Borrower Implementing Agency SOCIALIST REPUBLIC OF VIETNAM Ministry of Construction Program Development Objective (PDO) Original PDO The proposed program development objective is to strengthen the capacity of participating Northern Mountains cities to plan, implement and sustain urban infrastructure. Page 1 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Administered Financing 250,000,000 250,000,000 199,299,494 IDA-54760 Total 250,000,000 250,000,000 199,299,494 Non-World Bank Administered Financing Borrower/Recipient 20,000,000 51,856,000 53,538,000 Total 20,000,000 51,856,000 53,538,000 Total Program Cost 270,000,000 301,856,000 252,837,494 KEY DATES Program Approval Effectiveness MTR Review Original Closing Actual Closing P143596 05-Jun-2014 30-Oct-2014 07-May-2018 30-Jun-2021 30-Jun-2022 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 30-Jun-2021 160.27 Change in Program Scope Change in Results Framework Change in Loan Closing Date(s) Reallocation between and/or Change in DLI Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial Page 2 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) RATINGS OF PROGRAM PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 14-Aug-2014 Satisfactory Satisfactory 0 02 29-Dec-2014 Satisfactory Satisfactory 0 03 29-Jun-2015 Moderately Satisfactory Moderately Satisfactory 8.02 04 17-Nov-2015 Moderately Satisfactory Moderately Satisfactory 8.02 05 14-Apr-2016 Moderately Satisfactory Moderately Satisfactory 20.74 06 24-Oct-2016 Moderately Satisfactory Moderately Satisfactory 37.37 07 12-Jun-2017 Moderately Satisfactory Moderately Satisfactory 50.64 08 13-Nov-2017 Moderately Satisfactory Moderately Satisfactory 72.94 09 31-May-2018 Moderately Satisfactory Moderately Satisfactory 88.75 10 07-Dec-2018 Moderately Satisfactory Moderately Satisfactory 100.80 11 03-Jun-2019 Moderately Satisfactory Moderately Satisfactory 103.24 12 12-Dec-2019 Moderately Satisfactory Moderately Satisfactory 112.42 13 26-Jun-2020 Moderately Satisfactory Moderately Satisfactory 138.22 Moderately 14 04-Jan-2021 Moderately Satisfactory 157.69 Unsatisfactory 15 24-Jul-2021 Moderately Satisfactory Moderately Satisfactory 160.27 16 18-Feb-2022 Satisfactory Satisfactory 186.80 SECTORS AND THEMES Sectors Major Sector/Sector (%) Public Administration 20 Sub-National Government 20 Page 3 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Transportation 20 Urban Transport 20 Water, Sanitation and Waste Management 60 Other Water Supply, Sanitation and Waste 60 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Public Sector Management 20 Public Administration 20 Administrative and Civil Service Reform 6 Municipal Institution Building 14 Urban and Rural Development 80 Urban Development 80 Urban Infrastructure and Service Delivery 80 ADM STAFF Role At Approval At ICR Regional Vice President: Axel van Trotsenburg Manuela V. Ferro Country Director: Victoria Kwakwa Carolyn Turk Director: John A. Roome Benoit Bosquet Practice Manager: Jennifer J. Sara Francis Ghesquiere Parameswaran Iyer, Huyen Thi Task Team Leader(s): Hoa Thi Hoang, Thong Trung Le Phuong Phan ICR Contributing Author: Gyongshim An Page 4 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. At appraisal, Vietnam had an impressive record of economic growth following comprehensive economic reforms during the previous 30 years. The poverty headcount fell from 58 percent of the population in the early 1990s to 14.2 percent by 2012. Notwithstanding these achievements, not all regions benefited equally. Rural and mountainous areas remained the poorest, with poverty increasingly concentrated among ethnic minority communities and those living in the northern and central mountainous regions. The population of the Northern Mountains Region accounted for 14 percent of the total population. Since 1999, the Northern Mountains Region had the lowest income per capita in the country. The estimated poverty rates in East Northern and West Northern Mountains regions were 24.2 percent and 39.4 percent, respectively, whereas the average poverty rate in Vietnam was 14.2 percent.1 2. A vigorous process of urbanization contributed to Vietnam’s economic growth. Urbanization rate increased from 20 percent in 1990 to 32 percent in 2012 with increasing industrial manufacturing. Vietnam took a strategic approach to urbanization with strong emphasis on urban transition and cities’ role in integrating the country’s economy into the international economic system, while propelling growth in regions.2 Besides physical urban infrastructure investment, the government underlined the need to build institutional capacity for effective urban management. 3. While the two largest cities, Ho Chi Minh City and Hanoi, benefited from considerable improvements in infrastructure and public service, development in the smaller cities of the Northern Mountains Region was lagging.3 Although there was a clear pattern of urban population growth in the region,4 the provision of urban land and infrastructure failed to keep pace with demand. Connectivity within cities and between urban centers and surrounding peri-urban and rural areas was poor. Many urban areas lacked basic urban and social infrastructure such as roads, sanitation, drainage, flood protection facilities, streetlighting, public green space, and schools. Further, managing growing urban settlements in a mountainous setting often raised geo-technical and land availability challenges. Low-income settlements were often located in flood- or landslide-prone areas and were exposed to climate disasters. Provision of serviced land in safe areas for high density housing and economic activities was limited, and city infrastructure was built without taking into account intensifying climate change risks. 1 World Bank. 2012. Vietnam Poverty Assessment, Table 1. 2 Vietnam developed an urban classification system (Decree No. 42/2009/ND-CP) constituting two special cities - Ho Chi Minh City and Hanoi, and five classes of urban centers defined by different levels of economic activities, physical development, population, population density, and infrastructure provision. In 2009, there were two special cities, five class I cities, 12 class II cities, 40 class III towns, 47 class IV provincial towns, and 625 class V small townships. Ten of 19 cities in the Northern Mountains Region fell under Class IV cities with less than 100,000 residents. Agricultural activities accounted for 76 percent of employment share in the region, compared to the national average of 54 percent. World Bank. 2011. Urbanization Review. 3 See Annex 6 for a map of the Northern Mountains Region’s cities. 4 The annual urban population growth in the Northern Mountains Region between 1999 and 2009 was 3.7 percent, compared to the national average growth rate of 2.4 percent. Page 5 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 4. Cities and provincial administrations tasked with urban development and management functions were weak and under-resourced. Their institutional capacity to plan, implement, operate, and maintain urban infrastructure was insufficient. They needed support for forecasting the future needs of the city, identifying investments that increase economic opportunities to all citizens, in particular to the poor, delivering high quality infrastructure, ensuring social and environmental safeguards, and sustaining the infrastructure with good operational practices and timely and appropriately-budgeted asset management. In addition, there was a widening gap between cities’ expanding need for urban infrastructure investments and their available financial resources. The strategic challenge cities faced was to establish an effective urban management and implementation model, including a sound framework for capital investment planning, delivery of quality urban infrastructure integrating climate risks, and sustainable operation and maintenance (O&M) of infrastructure investments. 5. In 2012, the Government of Vietnam adopted a National Urban Development Program (NUDP, Decision No. 1659/QĐ-TTg of the Prime Minister), setting national targets for efficient, sustainable, and equitable urban services and addressing the insufficient focus on urban development management, particularly at lagging regions. The NUDP was to be implemented incrementally through a series of regional sub-programs that would provide a comprehensive package of performance-based fiscal support, capacity support, and enhanced oversight to participating cities and provinces. Given the unequal urban development and associated gaps in poverty, focusing on the Northern Mountains Region presented an opportunity to address extreme poverty and promote shared prosperity in Vietnam. With growing urban settlements, the small cities in the Northern Mountains Region were seen as playing complementary roles in the regional economy, serving as economic and social hubs. The Results-Based National Urban Development Program in the Northern Mountains Region (‘the Program’) was to become the NUDP’s first regional sub-program to provide this support, with a focus on the Northern Mountains Region. The Ministry of Construction (MOC) had a critical role in creating an enabling environment for the implementation of the NUDP in the cities by developing national urban development strategies, providing sound implementation framework for the NUDP and capacity support to cities, and coordinating, appraising, and supervising cities’ urban development activities. Higher Level Objectives to which the Program Contributed 6. The Program supported the World Bank Group Country Partnership Strategy (CPS) for Vietnam for the Period FY12-16 (Report No. 85986).5 The Program contributed to Outcome 1.2 “Improved quality and efficiency of infrastructure services” under Pillar 1 “Competitiveness” by supporting (a) integrated urban development planning, linked to regional development, (b) effective urban management and implementation model to strengthen cities’ capacity to plan, implement, and sustain urban infrastructure, and (c) implementation of a results-based approach to urban infrastructure and service delivery in support of the government’s urban development pro gram. The Program also contributed to Outcome 2.3 “Enhanced preparedness for natural hazards and climate change” under Pillar 2 “Sustainability” by (a) building and upgrading urban drainage, developing resettlement areas, and upgrading low-income areas and (b) strengthening cities’ capacity to plan and manage climate-resilient urban infrastructure. Further, the Program contributed to the CPS’ “Governance” cross-cutting theme by strengthening cities’ capacity and systems for infrastructure planning, public engagement and disclosure, fiduciary management, and implementation of social and environmental safeguards. The Program was also in response to the CPS’ stated 5 World Bank. 2011. Vietnam - Country partnership strategy for the period FY12-FY16 https://documents.worldbank.org/en/publication/documents-reports/documentdetail/849061468133768943/vietnam-country-partnership- strategy-for-the-period-fy12-fy16. Page 6 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) objective to make increasing use of results-based and programmatic approaches as Vietnam transitioned to middle- income country status. 7. The Program supported the government’s development priorities, as articulated in the NUDP . The government was facing unmet demands for urban infrastructure investment, with particularly acute needs from cities in the Northern Mountains Region. The Program was to support the implementation of the NUDP by (a) supporting much needed urban infrastructure investment, (b) strengthening urban management by improving mechanisms for investment planning and works management, increasing public engagement, and building capacity of local officials, and (c) piloting a results-based financing approach to NUDP implementation and developing an implementation framework for a second phase. Theory of Change (Results Chain) 8. A theory of change was not a requirement during Program preparation; however, one was formulated for the Implementation Completion and Results Report (ICR) using the Program description in the Program Appraisal Document (PAD, Report No. 87773-VN). The Program responded to Vietnam’s development challenges where poorly managed urbanization processes in lagging regions led to growing inequality, and low institutional capacity to plan, implement, and sustain urban infrastructure hindered cities from coping with growing urban development needs and leveraging them for regional development. The Program was to support the NUDP's goal of strengthening competitiveness and sustainability and broadening access to social and economic opportunities by strengthening capacities to plan, implement, and sustain urban infrastructure in selected cities in the Northern Mountains Region. 9. The first Program Development Objective (PDO) outcome of strengthened capacity of participating Northern Mountains cities to plan urban infrastructure was to be achieved by maintaining and training professionally-staffed management units on infrastructure development and capital investment planning, screening, and prioritization aligned with cities’ socio-economic development, poverty reduction impact, and climate risk mitigation and adaptation, resulting in Enhanced Annual City Plans. The second outcome of strengthened capacity of participating Northern Mountains cities to implement urban infrastructure was to be achieved by financing local urban infrastructure investments according to the Enhanced Annual City Plans, and ensuring quality of designs and supervision as well as fiduciary and safeguards requirements. The third outcome of strengthened capacity of participating Northern Mountains cities to sustain urban infrastructure was to be achieved by developing guidelines for asset management and revenue enhancement, increasing cities’ own-resource revenue, and adopting asset management plans for sustainable O&M of urban infrastructure. In addition, the Program was to enhance the institutional capacity of the central government for urban development by maintaining a professionally-staffed management unit in MOC to provide capacity support to the cities, and develop an implementation strategy for the NUDP. The underlying assumptions of the theory of change were (i) annual performance assessments by an independent verifying agency are conducted on time, (ii) Program funds and government counterpart funds are transferred in a timely manner, (iii) local contractors and supervision consultants work with sufficient capacity and meet the infrastructure quality standards, and (iv) successful implementation of capacity support activities. Page 7 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Figure 1. Program Theory of Change Note: A = Assumption; DLI = Disbursement Linked Indicator Rationale for PforR Support, and Program Scope and Boundaries 10. The World Bank and the Government of Vietnam had a history of cooperation in urbanization and rural development, involving a large number of infrastructure investment projects and analytical work.6 Following the adoption of the NUDP in 2012, and given the World Bank’s extensive knowledge of, and experience in, urban development in the country, the government requested World Bank support in the introduction of a results-based 6Including Vietnam Urban Upgrading Project (P070197, 2001-2014), Mekong Delta Region Urban Upgrading Project (P113904, 2008-2018), Vietnam Road Asset Management Project (P123961, 2010-2022), and Da Nang Sustainable City Development Project (P123384, 2010-2021). Page 8 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) implementation framework for the NUDP, focusing on strengthening capacities for effective urban management and supervision systems and building institutional capacities at both national and local levels. The Program-for-Results (PforR) instrument provided an opportunity to pilot the first phase of the NUDP through a region-wide, performance- based transfer program while also building capacities for participating cities and improving national urban development oversight systems. The Program operated at two levels: (a) in selected cities within the target region, through performance transfers and capacity support activities, and (b) at the national level by strengthening program management systems, urban policy development, and oversight. These activities would influence both the continuing implementation of the NUDP and the framework for government expenditures on urban development. 11. While the NUDP was national in scope, the Program focused on seven Northern Mountains cities—Bac Kan, Cao Bang, Dien Bien Phu, Hoa Binh, Thai Nguyen, Tuyen Quang and Yen Bai—based on their potential to become economic and administrative hubs that would drive regional development.7 The Program was aligned with the thematic scope of the NUDP of enabling the effective planning and long-term delivery of priority infrastructure services through strengthened systems and capacity. The Program’s four Results Areas (Institutional Strengthening at City Level; Delivery of Infrastructure Services in Participating Cities; Sustainable Infrastructure Investments; and National Policy, Support and Oversight) corresponded to the result focus of the NUDP. The Program’s timeframe of six years (2015-2021) was aligned with the NUDP timeframe, and its US$300 million expenditure framework represented approximately eleven percent of the NUDP’s estimated cost. 12. The Program was to directly benefit 759,300 residents of the seven participating Northern Mountain cities through improved infrastructure services and institutions at the city and national level whose capacity would be enhanced. Indirect benefits were to accrue at a national level over time, as the government would strengthen its urban development capacities nationwide. 13. Technical, environmental and social, and fiduciary assessments and findings of urban analytical work defined the Program’s scope. These assessments at appraisal refined the activities, infrastructure standards, DLI measurement protocols, and Program Action Plan (PAP) details. The use of performance-based transfers using DLIs was expected to incentivize participating cities to achieve the result targets in a way that improved their financial and institutional capacities in the long-term. For example, compliance with eligibility, prioritization, and screening criteria, as well as appropriate standards of fiduciary governance and environmental and social safeguards were embedded in the definitions and verification protocols for DLI 2 (local urban infrastructure investments delivered as per each participating city’s approved Enhanced Annual City Plan). Meeting these requirements would require cities to strengthen their procurement and public expenditure management, public consultation, land acquisition and resettlement practices, and grievance redress mechanism. The Program design was also informed by the findings of urban analytical work on evaluating investment performance on service delivery8 and on assessing the constraints and opportunities for enhancing local government capability to access financing for infrastructure development.9 Further, lessons from World Bank urbanization reviews in China, Colombia, and India10 on the importance of 7 The seven cities had earlier been identified by the national government as target cities for urban upgrading in the Northern Mountains Region before the government adopted the NUDP. The Program identification process confirmed that these seven cities would be included in the Program as the first phase pilot of the NUDP (Aide Memoire of the Program Identification Mission on March 26-28, April 8-12, 2013). 8 World Bank. 2014. Vietnam Urban Wastewater Review. 9 World Bank. 2013. Assessment of the Financing Framework for Municipal Infrastructure in Vietnam. 10 World Bank. 2014. China: Toward a More Efficient, Inclusive, and Sustainable Urbanization; World Bank. 2012. Colombia Urbanization Review: Amplifying the Gains from the Urban Transition; and World Bank. 2013. Urbanization Beyond Municipal Boundaries: Nurturing Metropolitan Economies and Connecting Peri-urban Areas in India. Page 9 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) sustainable urbanization finance, connecting smaller cities to a system of cities, and capacity building for improving urban service delivery were incorporated into the Program DLIs, screening criteria of the Enhanced Annual City Plans, and capacity support activities. 14. The Results Areas were selected to provide a coordinated incentive for participating cities to improve their capacity to plan, implement, and sustain local infrastructure delivery, while ensuring the role of the central government in improving the enabling environment. The Results Areas focused on enhancing cities' institutional capacity for planning given cities’ weaknesses in forecasting future needs and identifying investments that would increase economic opportunities to all citizens, in particular to the poor; on the delivery of infrastructure services given quality gaps in the design and construction of municipal infrastructure, which often demonstrated time- and cost-overrun or non-compliance with social and environmental safeguards; on enhancing the sustainability of infrastructure given weaknesses in cities' O&M systems and limited fiscal capacity to fund O&M; and on national policy, support, and oversight because MOC was not fully equipped to coordinate, monitor, evaluate, and provide capacity support to cities to manage the first performance-based urban program under the NUDP. MOC also needed some capacity support to draw an implementation strategy for the NUDP’s national rollout. Program Development Objectives (PDOs) 15. The objective of the Program, as stated in the Financing Agreement (5476-VN), was to strengthen the capacity of participating Northern Mountains cities to plan, implement and sustain urban infrastructure. Key Expected Outcomes and Outcome Indicators 16. The key expected outcomes were (1) strengthened capacity of participating Northern Mountains cities to plan urban infrastructure; (2) strengthened capacity of participating Northern Mountains cities to implement urban infrastructure; and (3) strengthened capacity of participating Northern Mountains cities to sustain urban infrastructure. Strengthened national institutional capacity for urban development was considered an implicit Program outcome (reflected in the inclusion of activities to achieve it and assignment of a PDO-level Indicator to measure it) even though it was not included in the PDO statement.11 The specific outcome indicators and their targets12 were: (a) Strengthened capacity of participating Northern Mountain cities to plan urban infrastructure o Enhanced Annual City Plans approved and disclosed to the public (target: 7) (b) Strengthened capacity of participating Northern Mountains cities to implement urban infrastructure o Total number of people benefiting from Program (disaggregated by gender) (target: 759,300 in total, 384,431 male, 374,869 female13) 11 The Bank Guidance on the ICR for PforR Operations (December 13, 2021) states that since one of the objectives of PforR operations is to strengthen government’s capacity, the section for achievement of PDOs also assesses the “improved institutional capacity and Program systems” as outlined in one of the outcomes or objectives supported by the PforR (if it is not an explicit objective in the PDO statement). 12 The clarifications in footnotes 13 through 18 reflect the information in PAD Annexes 2 and 3 but due to technical reasons in the Operations Portal during Program preparation the targets had to be reflected in a different manner in the system. 13 While the PAD indicated “disaggregated by gender” without breakdown indicators and targets, these were added to the Operations Portal and are therefore reflected in Annex 1 of the ICR. Page 10 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) (c) Strengthened capacity of participating Northern Mountains cities to sustain urban infrastructure o Asset Management Plan adopted and local urban infrastructure sub-projects in full service after completion (target: Yes14) (d) Strengthened national institutional capacity for urban development o Implementation Strategy for National Urban Development Program adopted with annual milestones (target: Yes15) Program Results Areas and DLIs 17. The following were the four Results Areas of the Program and the associated DLIs: (a) Results Area 1 – Institutional Strengthening at City Level. This Results Area looked to strengthen the capacity of cities to plan infrastructure investments. The associated DLIs and their corresponding target values were: o DLI 1.1 - Enhanced Annual City Plans approved and disclosed to the public (target: 7) o DLI 1.2 - Professionally-staffed management units in place within each Participating City People’s Committee (target: 7) (b) Results Area 2 – Delivery of Infrastructure Services in Participating Cities. This Results Area looked to strengthen the capacity of City People’s Committees (CPCs) to implement high quality urban infrastructure sub-projects. The associated DLI and its corresponding target value was: o DLI 2 - Local urban infrastructure investments delivered as per each Participating City’s approved Enhanced Annual City Plan (target: Yes) (c) Results Area 3 – Sustainable Infrastructure Investments. This Results Area looked to increase the capacity of CPCs to sustain urban infrastructure through the development of improved mechanisms for O&M of infrastructure and enhanced fiscal capacity to fund O&M and sustain ongoing levels of investment in infrastructure creation and replacement. The associated DLIs and their corresponding target values were: o DLI 3.1 - Asset management plan adopted and local urban infrastructure sub-projects in full service after completion (target: Yes16) o DLI 3.2 – Increase in own-sources revenue17 (target: 7) (d) Results Area 4 – National Policy, Support and Oversight. This Results Area looked to enhance the enabling 14 The PAD noted a Yes/No unit of measure while the end target was “Minimum of 80% of local urban infrastructure sub-projects completed are free from physical damage and fully provide the functions for which they were designed”. Annex 1 of the ICR is showing a Yes target as per data entered into the Operations Portal at appraisal. 15 The PAD noted a Yes/No unit of measure while the end target was “NUDP implementation in phase 2 cities commenced”. Annex 1 of the ICR is showing a Yes target as per data entered into the Operations Portal at appraisal. 16 See Footnote 14. 17 As noted in the Operations Portal data and Annex 1 of the ICR. The PAD noted this DLI as “Increase in annual own -sources revenue by at least 12% over previous year”; however, this was not reflected in the Operations Portal at appraisal. Page 11 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) policy environment, technical capacity, and oversight systems of the national government in support of cities’ urban development efforts. The associated DLIs and their corresponding target values were: o DLI 4.1 - Implementation Strategy for National Urban Development Program adopted with annual milestones (target: Yes18) o DLI 4.2 - Professionally-staffed unit in place in MOC, preparation of Annual Capacity Development Plans, and capacity building support provided to cities in accordance with such plans (target: 100 percent) o DLI 4.3 - Completed Program Report (target: Yes) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs Outcome Targets, Result Areas, and DLIs N/A Other Changes 18. A Level 2 Restructuring took place in June 2021 to extend the Credit’s closing date by 12 months, from June 30, 2021 to June 30, 2022, and make associated adjustments to the end target dates of the indicators and the Program’s implementation schedule.19 Rationale for Changes and their Implication for the Original Theory of Change 19. The extension of the Credit’s closing date was necessary: (i) to complete ongoing and planned infrastructure works approved under the Enhanced Annual City Plans to achieve the beneficiary target; and (ii) to complete pending resettlement activities and improve the livelihoods of the affected households. It did not affect the Program’s theory of change. II. OUTCOME A. RELEVANCE Rating: High Relevance of PDO Rating: High 18See Footnote 15. 19The ICR Datasheet notes changes in Program scope and reallocation between and/or change in DLIs; these were triggered during the June 2021 restructuring to reconcile data in the Operations Portal with those stated in the PAD, as noted in the Restructuring Paper (Report No. RES47072). Page 12 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 20. The PDO remains highly relevant to the current World Bank Group Country Partnership Framework (CPF) for Vietnam for the Period FY18-22 (Report No. 111771-VN), particularly Objective 4 “Improve planning, management, and delivery of infrastructure and land in cities” and Objective 5 “Improve the welfare and development of ethnic minorities, women, and vulnerable groups” under Focus Area 1 “Enable inclusive growth and private sector participation”; and Objective 10 “Increase climate resilience and strengthen disaster risk management” under Focus Area 3 “Ensure environmental sustainability and resilience”. The Program financed investments in basic urban infrastructure and helped improve institutional capacity for planning, management, and service delivery at the city and national government levels, which directly supported Objective 4; improved cities’ capacity for inclusive Program implementation processes for ethnic minorities, women, and vulnerable groups and monitoring of their benefits from the Program in support of Objective 5; and financed the construction of drainage systems, embankment, channel rehabilitation, and retaining walls to enhance communities’ resilience to the impacts of climate change and natural disasters, particularly in low-income areas that are more affected by such disasters, in direct linkage to Objective 10. The Program activities also complemented the World Bank’s ongoing policy engagement strategy in Vietnam on decentralization and city engagement strategy for second-tier cities by increasing cities’ access to basic urban infrastructure services in a climate-resilient manner.20 21. The PDO remains highly relevant to current development priorities of the government, particularly its vision and framework for the country’s long-term development as laid out in Vietnam 203521, a joint government- World Bank report describing the country’s development constraints and directions. The Program helped the government implement three of six transformations identified as key to help Vietnam reach its 2035 goals, namely: (a) Reshape urban policies and investments for more dynamic cities and urban centers, by ensuring preparation of quality city plans and strengthening cities’ capacity to plan; (b) Chart an environmentally sustainable development path with increasing adaptation and resilience to changing climate patterns, by supporting climate-resilient urban infrastructure, such as drainage systems, embankment, channel rehabilitation, and retaining walls and strengthening cities’ capacity to implement; and (c) Promote equality and inclusion among marginalized groups for the support of a harmonious middle-class society, by prioritizing infrastructure investments in low-income areas, adopting inclusive Program implementation processes for ethnic minorities and women, and monitoring their results. The Program also directly supported the government’s priorities for urban sector development as articulated in its National Urban Development Strategy, which is part of the NUDP, and launched its national roll-out, with particular emphasis on strengthening urban management systems for investment planning, works management, operational and financial sustainability, and public consultation. The Program also directly supported the government’s Resolution 6 on planning, construction, management, and sustainable urban development in Vietnam to 2030; vision to 204522; and Decisions 438 on climate-smart cities23 and 950 on sustainable and smart cities24, by supporting effective investment planning that takes into account cities’ growth needs, economic impacts, and poverty reduction; infrastructure development that integrates climate change risks; and institutional capacity to sustain urban infrastructure. 20 World Bank. 2022. Urban, Land and Resilience Multi-sectoral Coordination in Vietnam. 21 World Bank and Ministry of Planning and Investment of Vietnam. 2016. Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy. http://hdl.handle.net/10986/23724. 22 Resolution No. 06-NQ/TW on planning, construction, management, and sustainable development of urban areas in Vietnam till 2030, with a vision toward 2045, Politburo, signed and became effective on January 24, 2022. 23 Decision 438 No. 438/QD-TTg on approving scheme for the development of climate-smart cities in Vietnam for 2021 – 2030, the Prime Minister, signed and became effective on March 25, 2021. 24 Decision 950 No. 950/QD-TTg on approving the scheme for the development of smart sustainable cities in Vietnam in the 2018 – 2025 period with orientations by 2030, the Prime Minister, August 01, 2018, effective on the date of its signing. Page 13 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Relevance of DLIs Rating: High 22. The DLIs were highly relevant to the achievement of the PDO and provided adequate incentives for the cities and implementing agency’s performance. 23. Definition of DLIs. All eight DLIs were clearly defined and measurable, with clear protocols and methodologies for internal monitoring as well as third-party verification as prescribed in the PAD and prescribed in the Program Operations Manual (POM). The DLIs were well structured to support the delivery of the Program’s intended outcomes with generally achievable targets, except DLI 3.2 (Increase in own-sources revenue), whose 12 percent annual increase target was set in response to high inflation rates during Program preparation25 and to the prevailing government’s policy direction of retaining revenues from corporate income taxes on medium and large enterprises in cities’ budgets. During implementation, inflation rates declined dramatically26 and the government’s budget policies changed, requiring local governments to transfer selected revenue items to provinces.27 These made the 12 percent target difficult to achieve, exacerbated by an economic downturn caused by the COVID-19 pandemic and restriction measures imposed as a result (see Section III for more details). 24. Integration between the DLIs and the results framework. The DLIs were well integrated in the results framework, with a DLI assigned to each Program outcome, serving also as PDO-level Indicators in most cases (except DLI 2 and DLI 4.2) to both measure and incentivize the achievement of the Program’s outcomes; and to key intermediate results, serving also as Intermediate Result Indicators to measure and incentivize the achievement of these results, as illustrated in Figure 1 and Table 1. Given the results chain logic, the PDO would not have been achieved without achieving the targets of DLIs 1.1, 3.1, 4.1, and 4.2; while DLIs 1.2, 2, 3.2, and 4.3 facilitated the achievement of the Results Areas’ targets by strengthening institutional capacity, infrastructure delivery, sustainability, and national policy and support, respectively. Table 1. Alignment of Results Framework and DLIs Results Framework DLI PDO-level Enhanced Annual City Plans approved and disclosed to the public DLI 1.1 Indicators Asset Management Plan adopted and local urban infrastructure sub-projects in full DLI 3.1 service after completion Implementation Strategy for National Urban Development Program adopted with annual DLI 4.1 milestones Total number of people benefiting from the Program (disaggregated by gender) Intermediate Professionally-staffed management units in place within each Participating City People’s DLI 1.2 Results Committee Indicators People benefiting from city primary/secondary infrastructure services People benefiting from improved tertiary/social infrastructure services (disaggregated by gender) Ethnic Minority beneficiaries (disaggregated by gender) Linked to DLI 2 New and upgraded roads completed Linked to DLI 2 25 Inflation rates of 18.7 to 4.1 percent between 2011 and 2014. 26 Inflation rates of 0.6 to 3.5 percent between 2015 and 2021. 27 Law on State Budget, No. 83/2015/QH13, the National Assembly, June 25, 2015, effective on January 1, 2017. Cities are required to transfer collected taxes on the companies whose registered capital is more than VND10 billion to provincial revenues. Page 14 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Resettlement areas completed Linked to DLI 2 LIAs upgraded Linked to DLI 2 Increase in own-sources revenue DLI 3.2 Professionally-staffed unit in place in MOC; and capacity support for cities provided as DLI 4.2 per Annual Capacity Development Plan Completed Program Report DLI 4.3 25. Incentives for improving institutional performance and results. The DLIs were designed such that cities received disbursements in direct relation to their performance in infrastructure and institutional capacity development, providing a strong incentive for improving institutional performance in planning, implementing, and sustaining urban infrastructure, achieving the desired results, and promoting competition in good faith among participating cities. This differed from the prevailing approach of the government and previous World Bank-financed urban development projects of building urban infrastructure when funds became available for cities. At the Program level, DLIs complemented each other. For example, DLIs measuring institutional strengthening were critical requirements for both infrastructure delivery and sustainability as they supported an enabling policy environment; dedicated local management capacity was essential for effective local planning and sub-project execution; and national oversight was essential to strengthening results monitoring and evaluation (M&E). 26. The disbursement amounts associated with the DLIs were weighted to reflect these mutually reinforcing relationships, providing adequate incentives for the participating cities to achieve institutional performance targets as well as infrastructure delivery. The amounts allocated to each city for DLIs 1, 2, and 3 were proportional to their population size, subject to a basic minimum allocation to ensure that all the cities were able to finance at least a basic level of infrastructure investments.28 Further, because the DLIs were linked to fixed Credit amounts (see Annex 1B for more information), not subject to change in actual construction cost of infrastructure sub-projects, the participating cities were incentivized to become more efficient in the use of Credit funds and use cost savings to finance additional urban or social infrastructure. Consequently, in Bac Kan, Thai Nguyen, and Tuyen Quang, for example, Credit funds financed more infrastructure than initially envisaged using cost savings.29 DLI 4.3 (Program report), which was prepared by MOC and consolidated the CPCs’ financial statements for Program -related expenditures, incentivized central government’s close monitoring of the Program’s activities, results, expenditures, and performance-based disbursements. Rating of Overall Relevance 27. The Program PDO and DLIs remained highly relevant to and aligned with the government and World Bank strategic objectives for the urban sector development in Vietnam, and the PforR approach served to incentivize the achievement of the PDO and Program implementation efficiency. B. ACHIEVEMENT OF PDOs (EFFICACY) Rating: Substantial 28 Performance-based transfers were allocated to the participating cities subject to the maximum allocations over the life of the Program. These allocations provided an average annual allocation of US$5.5 million per city, or US$47 per capita. 29 One additional school was built in addition to the planned 12 infrastructure sub-projects in Bac Kan; one additional road intersection was upgraded in addition to the planned 12 infrastructure sub-projects in Thai Nguyen; and two additional link roads were upgraded in addition to the planned 16 infrastructure sub-projects in Tuyen Quang. Page 15 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Assessment of Achievement of Each Objective or Outcome 28. As noted, the Program had three PDO outcome statements and a fourth outcome which was not included in the PDO. This section provides an analysis of the level of achievement of all four outcomes using the DLIs, other results framework indicators, and results which are attributable to the Program but were not measured by the results framework. Outcome 1. Strengthened capacity of participating Northern Mountains cities to plan urban infrastructure Table 2. Outcome 1 Indicators and Level of Achievement Indicator Unit Baseline End Target Actual Enhanced Annual City Plans approved and disclosed to the public Number 0 7 7 (100%) (PI 1; DLI 1.1) Professionally-staffed management units in place within each Number 0 7 7 (100%) Participating City People’s Committee (IRI 1; DLI 1.2) Note: IRI = Intermediate Results Indicator; PI = PDO-level Indicator 29. Outcome 1 was achieved. All seven participating cities approved Enhanced Annual City Plans and disclosed them to the public, and all seven cities had professionally-staffed management units in place within each CPC as planned. Before the Program began, the seven cities (as all cities in Vietnam) were required to prepare two planning documents on an annual basis - an annual update to their Social-Economic Development Plan (SEDP), which set annual targets and budget allocation towards meeting municipal sectors’ five-year goals, and a construction investment plan, describing the infrastructure investments of the following year. These plans were prepared as data tables without a justification and details for their budget allocations. Further, the seven cities lacked capacity to predict their future needs, to identify investments that would increase economic opportunities to all citizens, in particular to the poor, and to integrate climate risks into capital investment planning. 30. The Program supported the participating cities in developing Enhanced Annual City Plans that consolidated the two planning documents and presented improved investment selection and prioritization processes. The Enhanced Annual City Plans included (a) a statement of anticipated revenues and expenditures of the CPC for the following financial year; (b) a detailed list of all infrastructure sub-projects that would be implemented in the following year, with a rationale for each sub-project; and (c) the status of ongoing and completed infrastructure investments and budget allocations for their O&M, which allowed for closer monitoring of expenditures and progress. All infrastructure sub-projects proposed for implementation in the following year were reviewed, screened, and prioritized through a weighted criteria-based system using the following criteria: (a) provision of positive economic impacts, including a significant impact on poverty reduction and local economic development; (b) facilitation of access to markets and economic development opportunities for poor households in peri-urban areas; (c) positive environmental impacts and increased community resilience to climate change and natural disasters; (d) benefits to a high proportion of poor and low-income households, addressing women and ethnic minority community members, and promoting gender equality; and (e) minimal negative social impacts on communities. The plans were approved by the CPCs and disclosed to the public through the CPCs’ websites. 31. All seven cities maintained professionally-staffed management units, including a director and two vice directors, a chief accountant, three technical engineers, a procurement expert, an environmental safeguards expert, Page 16 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) a social safeguards expert, an M&E expert, and two administrative staff, as prescribed in the POM. MOC provided annual planning support and technical assistance to cities’ management unit staff to build their capacity for capital investment planning, feasibility analysis, asset management, and investment M&E. All seven cities retained the majority of their management units’ staff after Program closing given their strong planning, implementation, and monitoring capacities built during Program implementation. Outcome 2. Strengthened capacity of participating Northern Mountains cities to implement urban infrastructure Table 3. Outcome 2 Indicators and Level of Achievement Indicator Unit Baseline End Target Actual Local urban infrastructure investments delivered as per each Yes/No No Yes Yes (100%) Participating City’s approved Enhanced Annual City Plan (DLI 2) Total number of people benefiting from Program 912,508 Number 0 759,300 (disaggregated by gender) (PI 4) (120%) 478,168 - Number of male beneficiaries from the Program Number 0 384,431 (124%) 434,340 - Number of female beneficiaries from the Program Number 0 374,869 (116%) People benefiting from city primary/secondary infrastructure 739,125 Number 0 651,500 services (IRI 2) (113%) People benefiting from improved tertiary/social infrastructure 151,481 Number 0 107,800 services (disaggregated by gender) (IRI 3) (141%) - Number of women benefiting from improved Number 0 53,275 62,822 (118%) tertiary/social infrastructure services - Number of men benefiting from improved tertiary/social Number 0 54,525 88,659 (163%) infrastructure services Ethnic Minority beneficiaries (IRI 4) Percentage 0 1430 16 (114%) - Male ethnic minority beneficiaries Percentage 0 14 15 (107%) - Female ethnic minority beneficiaries Percentage 0 14 17 (121%) New and upgraded roads completed (IRI 5) Kilometer 0 101.9 128.67 (126%) Resettlement areas completed (IRI 6) Hectare 0 236 291.3 (123%) LIA upgraded (IRI 7) Hectare 0 333 592.9 (178%) Note: LIA = Low-Income Area 32. Outcome 2 was exceeded. The Program financed basic urban and social infrastructure such as urban roads, bridges, drainage, embankments, rehabilitated channels, retaining walls, upgraded low-income areas, resettlement areas, schools, kindergartens, and community centers. Building or upgrading of roads, bridges, drainage, embankments, channels, and retaining walls were supported under the category of “primary/secondary infrastructure services“, whereas building or upgrading of small-scale streets, water supply, drainage, and streetlighting within low-income areas, as well as schools, kindergartens, and community centers were supported under the category of “tertiary/social infrastructure services”. All infrastructure investments were selected according 30This rate reflects the proportion of ethnic minorities, male and female, benefitting from the Program out of the total ethnic minority population, male and female, in the seven provinces. Page 17 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) to an eligible investment menu and screening and prioritization criteria agreed in the POM and aligned with each city’s approved Enhanced Annual City Plan. The results of infrastructure investments were measured by a set of conditions under DLI 2, including: (a) alignment with the Enhanced City Annual Plans; (b) compliance with eligibility criteria; (c) compliance with the PAP actions prescribing social, environmental, and fiduciary requirements; and (d) verification by the annual financial audit report. The Program provided supplementary measures to support cities in meeting these conditions, such as guidelines for effective participation and consultation with local people; a complaints redress mechanism; and capacity support for procurement, contract management, quality control, and social and environmental risk management. 33. A larger than planned number of people, including female and ethnic minority beneficiaries, benefited from the infrastructure because a larger than envisioned volume of infrastructure works was delivered, including roads (126 percent of the target), resettlement areas (123 percent of the target), and low-income areas (178 percent of the target). 34. The construction of all the urban infrastructure was completed at closing. A total of 128 infrastructure sub- projects (total cost of VND6,597 billion, US$284 million equivalent, of which construction cost of VND4,765 billion, US$205 million equivalent) delivered the following urban infrastructure services: 128.67 kilometers of urban roads newly built (8.2 kilometers) and upgraded (120.47 kilometers) for road resurfacing or repair, roadside drainage, streetlighting, or pedestrian pathways; 291.3 hectares of resettlement area developed, serviced with roads, drainage, and utility lines; and 592.9 hectares of low-income areas upgraded for road resurfacing or repair, water supply, drainage, or streetlighting. In addition, ten bridges were constructed and two bridges were rehabilitated, seven embankment works were completed, three channels and four reservoirs were rehabilitated, and two high schools, ten kindergartens, and three community centers were upgraded or newly built. 35. Roads. The roads varied from 5 meters to 24 meters in width. In most of the 63 sub-projects, roads were upgraded in all seven cities, through resurfacing, repair, or provision of adequate drainage, streetlighting, or pedestrian paths. Their locations and types of upgrading were screened and justified according to the Enhanced Annual City Plans’ criteria. Five sub-projects built new roads in five cities (Bac Kan, Dien Bien Phu, Hoa Binh, Thai Nguyen, and Tuyen Quang), connecting existing roads or providing access to peri-urban areas. Informal interviews conducted with beneficiaries by the ICR author in June 2022 indicated that resurfaced roads reduced travel time, dust, and traffic accidents; road-side drains made roads passable and allowed students not to skip classes during the rainy season; and new roads increased access to markets and public services. 36. Resettlement area development. Five sub-projects developed resettlement areas in five cities (Bac Kan, Dien Bien Phu, Thai Nguyen, Tuyen Quang, and Yen Bai) with roads, drainage, and utility service lines for households relocated due to Program infrastructure development or other government-financed projects (in the case of Dien Bien Phu). The noted informal interviews indicated that relocated households were satisfied with their well-serviced land, clean environment, and accessibility to markets and public services. 37. Low-income area upgrading. Seventeen sub-projects upgraded low-income areas in four cities (Cao Bang, Dien Bien Phu, Tuyen Quang, and Yen Bai) with various interventions, such as road resurfacing or repair, road-side drains, water supply pipes, or streetlighting. The noted informal interviews indicated that resurfaced roads helped residents save time and physical effort when bringing their agricultural produce or livestock to markets; road-side drains helped their hygiene condition by protecting them from flooding and resultant exposure to infiltrated pollutants of septage or agricultural chemicals; new streetlights helped them extend their productive or social Page 18 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) activities; and upgraded areas increased the value of their properties and offered new business opportunities to sell food or agricultural produce to an increasing number of visitors to their neighborhoods. Outcome 3. Strengthened capacity of participating Northern Mountains cities to sustain urban infrastructure Table 4. Outcome 3 Indicators and Level of Achievement Indicator Unit Baseline End Target Actual Asset Management Plan adopted and local urban infrastructure Yes/No No Yes Yes (100%) sub-projects in full service after completion (PI 2; DLI 3.1) Increase in own-sources revenue (IRI 8; DLI 3.2) Number 0 7 3 (43%) 38. Outcome 3 was partially achieved. Developing improved mechanisms for infrastructure O&M and enhancing cities’ fiscal capacity to fund O&M and sustain capital investments in infrastructure were considered the two key elements of urban infrastructure sustainability. The results were therefore measured by: (a) the adoption of an asset management plan by each city, featuring the quantity of identified assets per asset class (roads, bridges, drainage, embankments, retaining walls, water supply system, streetlights, buildings, etc.), their use-life, age, condition, estimated annual maintenance cost, responsibilities, and procedures for planning and carrying out maintenance tasks; and the operation of completed sub-projects as designed and (b) a minimum 12 percent year- on-year increase in own-sources revenue raised by the seven cities, excluding revenues from land transactions and rentals. To support the achievement of these results, the Program provided technical support to cities on asset management and revenue enhancement. 39. At closing, all seven cities adopted asset management plans as intended and their respective completed sub-projects were in full service as per their design, as confirmed by the independent verifying agency. In terms of own-sources revenue increases, results varied between years: in 2015, all cities except Yen Bai raised a minimum 12 percent increase in own-sources revenue compared to the previous year; in 2016, only two cities (Hoa Binh and Tuyen Quang) met the target; in 2017, only Thai Nguyen met the target; in 2018, four cities (Bac Kan, Cao Bang, Thai Nguyen, and Tuyen Quang) achieved the target; in 2019, when COVID-19 broke out, none of the seven cities achieved the target; and in 2020, three cities (Bac Kan, Cao Bang, and Hoa Binh) achieved the target. Outcome 4. Strengthened national institutional capacity for urban development Table 5. Outcome 4 Indicators and Level of Achievement Indicator Unit Baseline End Target Actual Implementation Strategy for National Urban Development Program adopted with annual Yes/No No Yes Yes (100%) milestones (PI 3; DLI 4.1) Professionally- staffed unit in place in MOC; and capacity support for cities provided as per Annual Percentage 0 100 100 (100%) Capacity Development Plan (IRI 9; DLI 4.2) Completed Program report (IRI 10; DLI 4.3) Yes/No No Yes Yes (100%) 40. Outcome 4 was achieved. MOC approved a Policy Note on Vietnam Urban Infrastructure Investment Needs for 2016-2035 in 2015, the NUDP implementation framework in 2016, and the NUDP expenditure framework in 2017 according to the agreed timeline and as planned. It prepared the NUDP implementation strategy for phase 2 cities in Page 19 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) the Mekong Delta Region in 2019, and adopted the strategy and commenced its implementation in 2020. MOC’s Project Management Unit was professionally-staffed, including a director, two vice directors, a finance management and internal auditor, an institutional development and capacity building expert, two technical engineers, a procurement expert, an environmental safeguards expert, a social safeguards expert, an M&E expert, and two administrative staff, as prescribed in the POM. 41. Capacity development plans were developed by MOC annually to support the participating cities in infrastructure investment prioritization and planning, asset condition assessment and management, feasibility analysis, infrastructure works design and supervision, procurement planning and process, contract management, infrastructure quality management, O&M, social and environmental safeguards, livelihood recovery mechanisms, financial management and audit, revenue management strategy, and M&E. The capacity development plans were implemented as planned in various modalities of group classes, technical assistance, certificate programs, and retreats. MOC prepared annual Program reports, summarizing key implementation aspects, results, and status of PAP actions, as planned. Rating of Overall Efficacy 42. Of the four Program outcomes, one exceeded its targets, two met their targets, and one partially met its target at varying levels during implementation. Therefore, Overall Efficacy is rated Substantial. C. JUSTIFICATION OF OVERALL OUTCOME RATING 43. The Overall outcome rating is Satisfactory. The Program PDO and DLIs remained highly relevant to and aligned with the government priorities and World Bank strategic objectives for the development of the urban sector in Vietnam, resulting in a High relevance rating. The Program almost fully achieved its objectives with three of the four Program outcomes fully achieved or exceeded and one partially achieved to varying degrees, resulting in a Substantial efficacy rating. D. OTHER OUTCOMES AND IMPACTS Institutional Strengthening 44. At local level, cities’ capacity to predict their future needs, identify investments that would increase economic opportunities to the poor, and integrate climate risks into capital investment planning increased through Enhanced Annual City Plans. Cities’ capacity to implement urban infrastructure was also enhanced through rigorous design and construction practices built into the Program performance indicators. At national level, MOC’s capacity to implement the NUDP and support the cities was strengthened. The built capacity and systems are expected to serve as a backbone for future urban development in Vietnam. The Program also strengthened the government’s technical, fiduciary, and environmental and social capacities and systems with eight dedicated actions listed in the PAP fully executed as confirmed by the independent verifying agency. These actions ensured: (a) proper mainenance of city databases on grievance redress and beneficiary feedback to implementing agencies; (b) comprehensive evaluation of civil works’ detailed designs, construction supervision, and bids; (c) high rate of competition for detailed designs and supervision consultancies as well as civil works contracts; (d) participation of only eligible entities in public bidding; (e) effective internal audit functions in MOC; (f) proper compensation of PAPs; and (g) meaningful consultation with local commnities, including ethnic minorities and vulnerable groups, through free, prior, and Page 20 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) informed consultations. Mobilizing Private Sector Financing N/A Gender 45. The Program was not gender-tagged but its design ensured women participation in public consultations through gender-specific sessions adapted to women’s availability, and its results framework included gender- disaggregated indicators to measure its impact on males and females, including within ethnic minority communities. At closing, 434,340 females benefited from the Program-financed urban infrastructure, accounting for 48 percent of the total beneficiary population (close to the planned 49 percent female rate) and exceeding the target of 374,869 by 16 percent because of the larger than planned scale of the works as noted. Ethnic minority women benefited more than men from improved access to urban and social infrastructure under the Program, with 17 percent of the total ethnic minority being women and 15 percent of the total ethnic minority being men within the seven provinces, both exceeding the target of 14 percent. Women also participated in all consultative meetings organized by the cities to discuss the planning and implementation of the infrastructure. 46. Informal interviews carried out by the ICR author in June 202231 found that women benefited from temporary jobs created by the Program, such as road maintenance works; spent less time in cleaning their houses from dirt carried from unpaved roads or floods, and instead spent more time in more productive activities, such as farming or livestock activities; had a stronger sense of security thanks to new streetlighting and better drainage systems; and earned additional income from increased business opportunities spurred by increased traffic of cars and people into their living areas thanks to the new roads and bridges. Poverty Reduction and Shared Prosperity 47. The Program supported seven cities in the Northern Mountain Region - the most lagging region with the highest concentration of extreme poverty in Vietnam, and with a rapid growth of urban centers, these cities encountered significant development challenges. The Program invested in basic urban and social infrastructure to help the cities cope with the rapidly increasing demand and enhanced their accessibility to markets to boost their economies. To ensure that the Program reached communities in low-income neighborhoods, infrastructure investments were screened for impact by looking at their geographic location, value in creating access to markets in peri-urban areas, and potential to generate economic opportunities for poor households. The Program also provided poor communities with more low-skill job opportunities in construction and maintenance works for roads, drainage, and embankments and with business opportunities for shops or restaurants to serve the increased number of visitors and by-passers thanks to the upgraded infrastructure. 48. While these positive poverty reduction impacts were not quantified, informal surveys by the ICR author in June 2022 indicated that the average per capita income in Bac Kan increased from VND33 million in 2016 to VND50 million in 2020; and the rate of poor households decreased by over 50 percent in Cao Bang, by 80 percent in Dien Bien Phu, and by over 90 percent in Thai Nguyen and Tuyen Quang between 2016 and 2020 compared to an average 31The ICR author carried out informal interviews with beneficiary groups from different wards in which new or upgraded infrastructure services were provided under the Program, in Bac Kan, Cao Bang, and Dien Bien Phu between June 20-23, 2022. Page 21 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) national decrease of 45 percent.32 The surveys also found that with better access to improved urban infrastructure services, Program beneficiaries earned more income from increased business opportunities or yields from agricultural produce as a result of improved road connectivity thanks to the Program-supported new or upgraded roads and bridges. Other Unintended Outcomes and Impacts 49. The informal 2022 interviews also found that beneficiaries enjoyed better health conditions due to decreased dust and improved hygiene facilities as a result of improved drainage and embankment as well as paved roads. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 50. Well timed and well targeted operation. The NUDP was launched in 2012 to address incoherence in urbanization management through a programmatic approach. While recognizing the importance of developing effective planning, financing, implementation, and monitoring systems, the NUDP lacked detailed implementation modalities. The World Bank began to prepare the Program in 2013 to articulate these implementation modalities and pilot a scalable regional approach to urban development that supported the NUDP objectives. The Program targeted the poorest region in Vietnam, which presented considerable disparities in terms of development compared to Vietnam’s larger cities, and within this region it targeted cities which had been identified by the national government as strong candidates for urban upgrading. Within cities, the design prescribed prioritization of investments with high socio-economic impacts to maximize its development impact. At the national level, MOC was the main entity responsible for urban development with a clear mandate to coordinate the Program’s activities, including performance-based transfers, provision of capacity support for and oversight of participating cities, and development of national policies and programs for urban development. 51. Adequate selection of financing instrument. The PforR instrument’s result-based financing and DLIs were appropriate to incentivize MOC and the cities to achieve results and outcomes and the Results Areas included activities which were in direct support of outcomes. It helped the government’s efforts in articulating the implementation modalities of the NUDP by aligning the provision of finance for strategic urban infrastructure with incentives for better planning and timely delivery and maintenance of infrastructure. However, the PforR instrument had its disadvantage in the context of this operation because budget-stretched cities were required to pre-finance their Year 1 infrastructure investments while the disbursement of Credit funds was made after the verification of such infrastructure investments, resulting in some delays as explained below. 52. Realism of the PDO and design. The PDO of strengthening the capacity of participating Northern Mountains cities to plan, implement, and sustain urban infrastructure supported the NUDP objectives of promoting an efficient, sustainable, and equitable process of urban development through strengthening urban management system for investment planning, works management, operational and financial sustainability, and public consultation. The PDO reflected the prioritized areas of planning, infrastructure delivery, and sustainability for urban 32 Data on other non-Program cities in the Northern Mountains Region for the same period are not available. Page 22 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) management and the Results Areas supported its outcome statements. However, the PDO was missing a national level capacity strengthening outcome even though it was supported by the Program and measured at the PDO and intermediate result levels. 53. High inflation rates and government policies on city revenue. As noted, the years prior to the Program recorded very high inflation rates in Vietnam and the central government looked to increase cities’ own-sources revenues to improve their fiscal condition. These factors informed the Program’s 12 percent target for annual own- sources revenue increase, which turned out to be overly ambitious as inflation slowed down, the government budget policies changed, and in the context of COVID-19 impact on the economy. 54. Assessment of risks and mitigation measures. A comprehensive set of risks and mitigation measures were identified through the technical, fiduciary, and environmental and social systems assessments. Mitigation measures were embedded into the Program design; for example, identified fiduciary, environmental and social risks were mitigated by including their mitigation actions in the PAP. While the land acquisition and resettlement risk was identified and mitigated by implementing PAP actions 1, 4, and 5, the Program experienced delays in site clearance and compensation. Additional mitigation measures, such as an introduction of escrow accounts for land acquisition and sharing of best practices in market valuation and grievance handling, could have been considered. Other risks, such as a change in tax policy, a change in the inflation rate, an introduction of the Medium-Term Investment Plan (MTIP, a five-year fixed investment and budget plan of the national government) and its insufficient allocation of project resources, and cities’ ability to pre-finance infrastructure investments, were not identified during appraisal but proved pertinent during implementation. Mitigation measures, such as a modest target for annual own-sources revenue increase, larger DLI advances, and close engagement with the government to ensure allocations of adequate project resources, could have been introduced to mitigate such risks. 55. Readiness for implementation. At Program approval, all required design elements, including Program definition, assessments, a PAP, and DLIs were elaborated as needed in the PAD. The Project Management Units at city and MOC levels were established and functioning, initial sets of infrastructure investments were identified and their feasibility studies were completed, and the POM was prepared and ready for use by the cities and MOC. Considering the novelty of the PforR instrument to the cities and MOC, training programs for result-based implementation modality were prepared and delivered by the World Bank during appraisal. The Program did not have effectiveness conditions. B. KEY FACTORS DURING IMPLEMENTATION Factors subject to the control of the government 56. Good supervisory and coordination arrangements. The coordination between MOC and the Program cities was smooth with institutionalized coordination mechanisms, namely a clear monitoring and reporting protocol, monthly coordination meetings among MOC and the participating cities’ Project Management Units, daily communication among responsible staff in MOC and cities, as well as regular monitoring and technical support meetings and field visits. This allowed both MOC and the cities to keep abreast of Program progress and challenges, which in turn ensured timely technical support to the cities. At the city level, each participating city established a Program Steering Committee, comprising the CPCs’ leaders and representatives of local departments, for prompt decision-making, implementation support, and guidance. The independent verification agency, State Audit of Vietnam (SAV), played a critical role in verifying results prior to disbursement and in improving the overall quality of Page 23 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) infrastructure by rigorously applying standards for infrastructure design, construction, and supervision in its evaluation.33 Planning and supervision of Program activities were undertaken with active engagement of communities, which helped secure their buy-in and facilitated the construction of the infrastructure. 57. Strong commitment and leadership. Strong commitment and leadership were demonstrated by both the central and local governments, by MOC’s continuous and timely guidance and support to the Program cities and the cities’ mobilization of counterpart funds at larger amounts than committed for the Program. Cities prioritized Program activities in their overall work plans, made timely decisions at CPC level, and secured stakeholder support, all helping Program implementation and results delivery. 58. Change in tax policy and legal constraints. As noted, a change in government policy on tax revenue 34 systems led to a decrease in the amount of cities’ own-sources revenue, affecting their ability to fully achieve one of the sustainability targets. There was also a legal constraint prohibiting cities from determining the tax rates and utility service charges, further affecting cities’ ability to raise own-sources revenue. 59. Stricter fiscal disciplines and rigid financial management policies. Starting in 2015, the government issued a series of new regulations on public financial management to control public debt more strictly.35 While these measures helped reduce public debt,36 they also restricted the use of Official Development Assistance (ODA) to physical investments and associated consulting services only, and discontinued its use to finance tax, capacity building activities, and institutional reform activities. As a result, some capacity building activities were consolidated or shortened but the budget shortfall was resolved by the allocation of additional counterpart funds by the cities to finance such items. The new regulations also shortened the timeframe during which agencies could receive, spend, and report budgets for works, goods, services, and operating costs, and capped provinces’ budget allocations to cities based on their annual ceilings for borrowing and public investment (these restrictions were not in place before). These new conditions resulted in insufficient amounts budgeted by PPCs for cities’ planned activities for a given year, thereby delaying some of the infrastructure works. The MTIP was introduced in 2015 for 2016-2020 to better manage public investments and debts; however, it did not include sufficient annual resources to complete ongoing and planned sub-projects, resulting in delays in Program implementation in 2016 through 2019. 60. Lengthy land acquisition and resettlement. Throughout Program implementation there were delays in site clearance, land acquisition, and resettlement due to (a) lack of sufficient funds to undertake site clearance and land acquisition, as explained in the above paragraph, (b) lengthy appraisal and approval of design and land acquisition plans by CPCs, and (c) delays in obtaining affected households’ consent to resettle. This delayed some of the construction works, in particular resettlement site development in Dien Bien Phu. 61. Expenditure framework and payment mechanism for infrastructure works. Since disbursement of Credit funds was conditional in part on the completion of previous years’ works, verified through DLI 2, these works had 33 Informal interviews carried out by the ICR author with cities’ representatives in June 2022 revealed a high degree of consensus among all seven cities and MOC that SAV’s inspection was very rigorous, and cities paid more attention to the quality of infrastructure during design, construction, and supervision so that they could pass SAV’s inspection and receive DLI 2 allocated resources. 34 See footnote 27. 35 Law on State Budget, No. 83/2015/QH13, the National Assembly, June 25, 2015, effective January 1, 2017 and associated by-laws; Law on Public Debt Management, No. 20/2017/QH14 the National Assembly, November 23, 2017, effective July 1, 2018 and associated by-laws; and Law on Public Investment, No. 39/2019/QH14, the National Assembly, June 13, 2019, effective January 1, 2020 and associated by-laws. 36 From 63.7 percent of Gross Domestic Product (GDP) in December 2016 to less than 50 percent of GDP in 2021. Page 24 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) to be pre-financed by the cities using the DLI advance and cities’ counterpart funds. However, these could only cover about 35-45 percent of the construction costs because DLI advances were limited to 25 percent of annual DLI allocations and cities’ counterpart funds accounted for about 10-20 percent of infrastructure development costs. The balance had to be mobilized by contractors through commercial loans, at times with a repayment guarantee by cities. This financing mechanism resulted in delayed payment to contractors and delayed delivery of the infrastructure. Factors subject to the control of the World Bank 62. Implementation support. Key World Bank team members were based in Hanoi, which facilitated continuous implementation support and field missions and allowed the World Bank to be responsive to requests by MOC and the Program cities. The proximity to the Program cities allowed the World Bank team to conduct additional technical visits in between missions to clarify emerging issues or assist the cities without delay. 63. Mid-term Review (MTR). The World Bank conducted an MTR mission in May 2018 where it assessed the Program’s relevance, achievement of PDO and DLIs, and issues faced by the Program. The MTR identified the insufficient budget allocation in the MTIP and subsequent delays in the annual budget allocation to the cities as a main risk to the achievement of the PDO. In addition, it identified delays in land clearance and resettlement and the difficulty of the cities to meet DLI 3.2 on increase in own-sources revenue. The mission discussed ways to overcome these issues, including close engagement of MOC and PPCs with the Ministry of Finance and Ministry of Planning and Investment for additional MTIP allocations, closer monitoring of land clearance and resettlement actions, and detailed assessments of the cities’ own-sources revenue. The MTIP bottlenecks persisted until early 2020 when annual budgets began to increase, while land clearance and resettlement actions were slightly improved after the MTR. Potential changes to DLI 3.2 were discussed but not made because the government did not consider this an issue that justified a restructuring. The 2021 restructuring did not include this change because the remaining implementation period was considered too short for it to make a difference in the Program’s performance. Factors outside the control of the government 64. COVID-19 Pandemic. The outbreak of the COVID-19 pandemic in early 2020 and the government’s stringent regulations to control its spread delayed consultations with communities on infrastructure investment planning, mobilization of contractors to construction sites, and steering and monitoring meetings and field visits in 2020 through early 2022. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) Rating: Substantial M&E Design 65. The M&E design relied on the results framework, which included clear indicators, baselines, targets, data sources, and data collection methodologies. The indicators, including the DLIs, were appropriate to measure the achievement of the PDO and intermediate results, and the DLIs had clear protocols and methodologies for their Page 25 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) monitoring and verification. The DLIs provided adequate incentives for achieving the PDO and their targets were reasonable except the cities’ own-sources revenue target as noted. A theory of change was not prepared at the Program appraisal (since it was not required) but the logic and methodologies to track and monitor the results chain were clear concerning inputs, outputs, intermediate results, and the PDO. M&E institutional arrangements were well designed and included the cities’ monitoring of local activities’ progress with annual reporting to MOC and the cities’ Steering Committees; MOC’s compilation of data from the cities and production of consolidated annual progress reports; and an independent verification agent, SAV, verifying the reported results through annual performance assessments. The M&E design had a weakness in that the PDO did not include a national level capacity strengthening outcome. Despite this, indicators were assigned to measure it at the PDO and intermediate result levels. M&E Implementation 66. The Program was monitored and evaluated as planned by the cities, MOC, and SAV. Progress was evaluated and verified using the methodologies and protocols by the cities’ M&E experts, MOC’s management information system (MIS) and internal audit system, and SAV’s experienced staff, supplemented by community monitoring activities conducted by a community monitoring group formed in each city. The cities’ reports’ quality and timeliness varied but were generally adequate. Informal surveys were carried out by the ICR author to assess Program impacts on job creation, increase in beneficiaries’ income, and increased business opportunities. SAV’s verification of Program results consisted of: (a) review of the results report submitted by each city; (b) review and auditing of the cities’ financial records to verify revenue data and capital and O&M costs of infrastructure investments; (c) technical audit of investment items completed during the previous year; and (d) procedural audit of the preparation and implementation of investments to verify compliance with the PAP and government laws, regulations, and procedures. MOC and the cities prepared mid-term reports and completion reports as planned. Notably, given the demonstrated overachievement of Outcome 2 (strengthened capacity of participating Northern Mountains cities to implement urban infrastructure), the targets of the relevant result indicators could have been upscaled. M&E Utilization 67. M&E data were used to inform Program management and corrective actions as issues were identified. The results verification reports determined the disbursed Credit amounts using the DLIs and guided MOC’s support to the cities in areas needing improvement during the following year, for example, the quality of infrastructure delivery in Bac Kan, Cao Bang, Hoa Binh, and Tuyen Quang in the first two years of Program implementation, which progressively improved thereafter. The M&E reports were used by the World Bank and MOC to inform missions and assess progress towards the PDO and the performance of each city on DLIs. The reports also helped to determine the need for the extension of the Credit closing date. Justification of Overall Rating of M&E Quality 68. The M&E system was overall well designed, except the omission of the national capacity outcome from the PDO, which did not prevent the cities and MOC from measuring all Program outcomes, and the overestimation of the cities’ own-sources revenue increase, which was informed by prevalent conditions at Program appraisal. It was implemented effectively by the cities, MOC, and SAV to measure and verify results and broader Program impacts and used to strengthen the quality of infrastructure in the cities and problem-solving. Page 26 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental and Social 69. The environmental and social systems assessment carried out during Program preparation concluded that the consolidated social and environmental risk was substantial but that typical physical investments were small to medium-scale civil works with moderate environmental impacts.37 As this was a PforR, the Program’s social and environmental risk management followed national requirements but some risk mitigation measures were introduced through a combination of (a) Program DLIs—making sure that professionally-staffed management units were in place within each participating CPC (DLI 1.2), that infrastructure was delivered in compliance with the PAP actions (condition of DLI 2), and that MOC had a professionally-staffed unit, prepared Annual Capacity Development Plans and provided capacity building support to the cities in accordance with such plans (DLI 4.2); (b) PAP actions— maintenance of a complaint and beneficiary feedback database (Action 1), avoiding/minimizing adverse impacts of land acquisition to affected people, restoring their livelihoods, and developing an independent mechanism to asses market values (Action 4), and enforcing guidelines on community participation and consultation, including ethnic minorities and vulnerable groups (Action 5); (c) POM guidance to the cities on procedures and measures, such as environmental codes of practice (ECOPs) and worker’s code of conducts, to avoid, minimize, and mitigate environmental and social impacts; and (d) building of risk management capacity within each city through capacity support by MOC. 70. Environmental risk management. Environmental Protection Plans and Environment Impact Assessment were prepared for infrastructure sub-projects depending on the scale of works and their environmental impacts and such instruments were publicly disclosed in the CPC offices, relevant community offices, and sub-project sites, in accordance with national requirements and the POM.38 MOC and each city assigned staff to be responsible for environmental, health and safety (EHS) aspects of the Program and construction supervisors were assigned to monitor contractors’ compliance with EHS aspects. The Program was in compliance with EHS requirements, and when the World Bank identified shortfalls (such as inconsistent disposal of topsoil, use of personal protection equipment, and signage of construction works), corrective measures were taken timely by the contractors. The PAP actions related to environmental risk management, including actions 1 and 5, and ECOPs were complied with throughout Program implementation. 71. Social risk management. Detailed Plans for Compensation, Support and Resettlement was prepared for each sub-project involving land acquisition or physical displacement of people or properties and publicly disclosed in the CPC offices, relevant community offices, and sub-project sites, in accordance with national requirements and the POM.39 MOC and each city assigned staff to coordinate land acquisition and resettlement activities and all social risk requirements were complied with and the PAP actions 1, 4, and 5 were carried out, albeit with delays as noted. Under Action 1, the cities maintained functioning grievance databases and with support from MOC inspectors, all cases were collected, archived, and analyzed for proper settlement. There were some cases of long-standing grievances relating to delayed resettlement, which were ultimately resolved, and there were no pending cases at Program closing. Under Action 4, there were delays in land acquisition and resettlement as noted, and under Action 37 Such as generation of dust, noise, solid waste, and wastewater, sedimentation and erosion risks, disturbance to existing infrastructures and related services, and health and safety risks to the workers and local communities. 38 Its compliance was confirmed by the World Bank environment specialist. 39 Its compliance was confirmed by the World Bank social development specialist. Page 27 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 5, all cities carried out community participation and consultations as planned. 72. As noted, the Program delivered positive socio-environmental impacts, including active community engagement in infrastructure planning and monitoring, improved services in low-income neighborhoods, increased productivity of communities by saving travel time, reduced traffic congestion and air pollution, and improved local hygiene conditions through improved drainage and reduced infiltration of pollutants into streams, etc. These benefits were clearly expressed by the Program beneficiaries during informal surveys and interviews. Fiduciary 73. The fiduciary assessment carried out during Program preparation concluded that the Program would have substantial fiduciary risks because of the large volume of infrastructure investment and financial transactions. A set of actions was included in the PAP, including enhancing procurement practices through competitive bidding, excluding dependent state-owned enterprises, ensuring valid bids, and excluding debarred firms (Action 2) and effective internal audit function (Action 3). The POM included guidance to MOC and the cities on fiduciary requirements and procedures, with specific guidance on the performance-based transfer system and funds flow arrangements. 74. Procurement. The results verification reports confirmed that the cities had satisfactorily complied with the national procurement law, regulations, and procurement-related PAP actions in conducting procurement activities, with nonmaterial shortcomings and deviations in the areas of cost estimation, contract amendment, price adjustment, and contract documentation. Despite delays in funds’ allocation, once allocated, procurement activities were carried out in an expeditious manner and most selected contractors were qualified. 75. Financial management. All required financial audit reports were submitted in a timely manner with unqualified opinions and issues raised in the management letters, such as recategorization on certain expenditures and arithmetic errors, were rectified. MOC recruited an independent consulting firm to carry out internal audits in all participating provinces, whose recommendations were addressed by the provinces and cities. The delayed annual budget allocations by the PPCs affected the Program’s disbursement rate in 2016-2019. 76. Procurement and financial management arrangements were compliant with the World Bank policy for PforR financing. The capacity of MOC and the cities was strengthened throughout Program implementation through implementation of the PAP actions and capacity building training provided according to DLI 4.2. 77. Compliance with legal covenants. The three covenants, relating to institutional arrangements and Program implementation in compliance with the PAP and the POM, verification of DLIs by SAV, and a mid-term review, were complied with in a timely manner. C. BANK PERFORMANCE Rating: Satisfactory Quality at Entry 78. The World Bank designed a Program that was well aligned with the government’s urban development Page 28 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) priorities as articulated in the NUDP, using a financial instrument and DLIs appropriate to incentivize MOC and the cities to achieve results and outcomes, and Results Areas in direct support of desired outcomes. The technical, fiduciary, and environmental and social systems assessments provided important inputs to the design of the Program, including its scope, indicators, expenditure framework, and PAP. The World Bank sought to achieve a strong development impact by intervening in the poorest region of Vietnam with special focus on low-income neighborhoods, and it made sure to include grievance redress systems and community participation and consultation in key implementation phases to ensure buy-in and alignment of investments with needs. The results framework was well designed to monitor impact on women, men, and ethnic minority beneficiaries and the M&E arrangements were adequately designed to ensure close coordination and data flow between city and national governments, with the support of a capable evaluation agency (SAV). The World Bank team’s composition was adequate to design the Program, with specialists in relevant technical and operational fields (See Annex 2). Quality of Supervision 79. Implementation support was proactive and responsive to emerging opportunities and needs. The World Bank conducted 16 implementation support missions during Program implementation, twice a year on average, and their findings and ratings were candid and well-documented in Aide Memoires and Implementation Status and Results Reports (ISRs) with implementation challenges flagged and remedial actions proposed. As evidenced by the Aide Memoires and ISRs, implementation support was carried out with systematic analysis of the status of DLIs, other indicators, and the PAP actions in addition to quality assurance review of the annual performance assessments’ results (including verification of cost estimates, compliance of design with technical regulations, compliance of procurement with the PAP and regulations and procedures, assessment of construction quality against design requirements and regulations, and operationalization of completed infrastructure), providing added due diligence and trustworthiness to reported findings. The closing date extension was instrumental in the completion of infrastructure investments. The World Bank provided training to MOC and the cities on the PforR instrument, environmental and social safeguards, procurement, and financial management as per the Program’s Implementation Support Plan and as additional needs were identified. 80. The World Bank team was overall appropriately staffed with a good mix of technical and operational expertise (See Annex 2) with key staff based in Hanoi, which facilitated close dialogue with MOC and the cities as noted. Since the Program was the first regional pilot of the NUDP using a PforR instrument, mobilizing an additional expert on performance-based financing could have facilitated the issue of delayed payment to contractors. Hand- over procedures were appropriately carried out at closing, making sure that infrastructure and systems were fully and properly owned by the cities. Justification of Overall Rating of Bank Performance 81. Quality at entry was adequate to design a Program that was relevant and technically sound with strong focus on development impact, Results Areas and PAP actions that supported the achievement of the PDO, and DLIs that provided strong incentives to MOC and the cities to achieve set targets. Minor shortcomings, such as the omission of the national capacity outcome from the PDO, an overestimated target in own-sources revenue, omitted risks, and some small inconsistencies between the PAD and Operations Portal, did not affect the ability of the client to achieve most set targets. During supervision, the World Bank provided close technical support to the cities and MOC and extended the Credit’s closing date to facilitate the completion of delayed activities. Page 29 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) D. RISK TO DEVELOPMENT OUTCOME 82. As noted, the Program strengthened institutional capacities at both local and national level and put in place systems that are expected to serve as a backbone for future urban development in Vietnam. Nonetheless, some risks remain to cities’ ability to sustain existing and future urban infrastructure in the long-term, particularly in view of the rapidly increasing urban population and corresponding increase in demand. While all seven cities have allocated O&M budgets for the completed infrastructure as required under DLI 2 and have committed to continuing to allocate budgets and staff to do so in the future, urban infrastructure is not a revenue-generating service and its rate-setting authority lies at a higher-tier government. As these two constraining factors will unlikely change in the near future, it would be crucial for cities to maintain their commitment to allocate O&M budgets for completed assets as practiced during Program implementation and to manage public assets in accordance with their asset management plans. Further, as demonstrated during the COVID-19 pandemic, cities’ revenue could be affected by external shocks, which further reduce their ability to meet the needs of urban infrastructure in a continuous manner. While coping with growing demands for urban infrastructure, cities would be required to continue to apply the screening and prioritization criteria of their Enhanced Annual City Plans to prioritize infrastructure investments with poverty reduction impacts and regional development potential. V. LESSONS AND RECOMMENDATIONS 83. A PforR instrument well aligned with government priorities can drive policy reforms. The choice of the PforR instrument was perceived by the government as a signal of trust in country systems and capacity. The PforR’s performance-based incentive mechanism increased ownership, commitment, and achievement of results. The PforR allowed critical urban sector reform items, such as Enhanced Annual City Plans, rationalized and cost-effective urban infrastructure investments, and asset management actions, to be embedded into the Program design as part of the performance-based incentive mechanism. 84. Well-defined results assessment protocols and a credible and comprehensive verification system are key drivers for high-quality result achievement. The Program introduced a clear and credible M&E system at both national and city level, linking it with the MIS and independent verification. The verification-based disbursement process was an important learning-by-doing tool that provided a genuine incentive for results achievement. Robust verification protocols that included the engagement of a credible independent verification agent with clear responsibilities and capacity as well as World Bank quality assurance improved the credibility of the performance assessment. Because SAV audited investments’ technical requirements, it motivated the cities to improve the quality of their infrastructure works. 85. DLIs and PAPs are effective tools to support inclusive and poverty-targeted foundational urban management systems and institutional capacity. Program DLIs were effective in spurring the strengthening of cities’ capacity and systems for urban management and national capacity to support cities’ urban development while the PAP actions ensured the delivery of quality infrastructure with positive impacts on females and males alike, ethnic minorities, and vulnerable groups. DLIs and the PAP actions were linked for maximum impact; for example, DLI 2 required infrastructure investment sub-projects to be appraised and implemented in compliance with the relevant PAP actions. 86. PforRs’ expenditure framework and payment mechanisms need to consider the client’s ability to pre- Page 30 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) finance infrastructure works. The Program experienced delays in payment to contractors because the cities were not able to pre-finance infrastructure works and counterpart funds and the DLI advances were insufficient. This was exacerbated by the inadequate fund allocations in the MTIP for both IDA and counterpart funds. Going forward, more effective expenditure framework and payment mechanism for infrastructure works should be put in place, taking into account cities’ ability to pre-finance infrastructure works, or options of increasing a DLI advance to pay for the entire first year of investments, allocating a larger amount of counterpart funds in the first year, commencing infrastructure investments in the third year of implementation using funds released based on the first year’s performance on non-infrastructural DLIs, or introducing minimum conditions on non-infrastructural parts of urban management in the first year against which performance is assessed and funds are released. 87. Increasing cities’ own-sources revenue is critical to sustain urban infrastructure but targets should be realistic and achievable with stable policy support. Under the global trend of decentralization and devolution, cities assume more responsibilities to deliver urban infrastructure and services to citizens but are often not fiscally ready to finance needed capital and operational expenditures. Increasing cities’ own-sources revenue is an important measure to strengthen cities’ fiscal condition, hence it was included as one of the performance indicators of the Program. However, the 12 percent annual increase target, set at appraisal in response to high inflation rates, proved overambitious, particularly when the government budget policies changed, requiring cities to transfer revenues from corporate income taxes on medium and large enterprises to provinces. Stable policy support would be essential to enable cities to achieve critical urban finance reforms. 88. PforRs can effectively improve the performance of both national and sub-national governments. Unlike most urban sector PforRs having a set of result indicators focused on sub-national governments only, the Program introduced DLIs targeting to enhance the national government’s capacity and systems for urban policy and implementation support to cities. Despite its weakness of not capturing such national targets in the PDO, the Program demonstrated the importance and effectiveness of targeting the national government’s performance results in forming an enabling policy environment, technical capacity, and oversight systems in support of cities’ . urban development efforts. . Page 31 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 1. RESULTS FRAMEWORK, DISBURSEMENT LINKED INDICATORS, AND PROGRAM ACTION PLAN Annex 1A. RESULTS FRAMEWORK (i) PDO Indicators Objective/Outcome: Strengthened capacity of participating Northern Mountains cities to plan urban infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Enhanced Annual City Plans Number 0.00 7.00 7.00 7.00 approved and disclosed to the public 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (100%). The 7 participating cities prepared Enhanced Annual City Plans, consolidating the previous two plans—annual update to the SEDP and construction investment plan—with stronger rationale for service delivery to poor households and tighter monitoring mechanism of the plans. All Enhanced Annual City Plans (7 plans for 7 participating cities) were approved by their respective CPC and PPC, then disclosed to the public at each CPC website. All these plans were verified by SAV. Information source: MOC progress reports, ISRs, and SAV verification reports. Objective/Outcome: Strengthened capacity of participating Northern Mountains cities to implement urban infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Total number of people Number 0.00 759,300.00 759,300.00 912,508.00 Page 32 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) benefiting from Program 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 (disagregated by gender) Number of male Number 0.00 384,431.00 384,431.00 478,168.00 beneficiaries from the Program 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Number of female Number 0.00 374,869.00 374,869.00 434,340.00 beneficiaries from the Program 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (120%). People benefitted from the improved planning, implementation, and maintenance of various urban infrastructure, such as roads, bridges, drainage, embankment, channel rehabilitation, streetlighting, water supply, schools, kindergartens, and community centers under the Program. The number of beneficiaries amounts to 41,531 in Bac Kan, 67,633 in Cao Bang, 73,024 in Dien Bien Phu, 126,478 in Hoa Binh, 331,966 in Thai Nguyen, 174,817 in Tuyen Quang, and 97,059 in Yen Bai. Information source: MOC progress reports and ISRs. Objective/Outcome: Strengthened capacity of participating Northern Mountains cities to sustain urban infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Asset Management Plan Yes/No No Yes Yes Yes adopted and local urban infrastructure sub-projects in 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 full service after completion Comments (achievements against targets): Page 33 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Target achieved (100%). All 7 cities developed asset condition assessments and asset management plans and adopted them after CPCs’ approval. In all cities, as defined for this indicators’ target, at least 80% of the completed local urban infrastructure sub-projects remained without physical damage and fully provided the functions for which they were designed after their completion, as verified by SAV. Information source: MOC progress reports, ISRs, and SAV verification reports. Objective/Outcome: Strengthened national institutional capacity for urban development Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Implementation Strategy for Yes/No No Yes Yes Yes National Urban Development Program adopted with annual 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 milestones Comments (achievements against targets): Target achieved (100%). MOC approved a Policy Note on Vietnam Urban Infrastructure Investment Needs for 2016-2035, the NUDP implementation framework, and the NUDP expenditure framework according to the agreed timeline and as planned. MOC prepared the implementation strategy for the NUDP in 2019, adopted it with annual milestones, and commenced its implementation in phase 2 cities in the Mekong Delta Region in 2020. Information source: MOC progress reports, ISRs, and SAV verification reports. (ii) Intermediate Results Indicators Results Area: 1. Institutional Strengthening at City Level Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at Page 34 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Target Completion Professionally-staffed Number 0.00 7.00 7.00 7.00 management units in place within each Participating City 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 People's Committee Comments (achievements against targets): Target achieved (100%). All 7 cities’ CPCs maintained professionally-staffed management units as detailed in the POM, including 1 director and 2 vice directors, 1 chief accountant, 3 technical engineers, 1 procurement expert, 1 environmental safeguards expert, 1 social safeguards expert, 1 M&E expert, and 2 administrative staff, as verified by SAV. Information source: MOC progress reports, ISRs, and SAV verification reports. Results Area: 2. Delivery of Infrastructure Services in Participating Cities Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People benefiting from city Number 0.00 651,500.00 651,500.00 739,125.00 primary/secondary infrastructure services 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (113%). People benefited from new or renovated roads, bridges, urban drainage, embankment, channel rehabilitation, and retaining walls, as measured by the total population of wards in which such infrastructure services were provided under the Program. Information source: MOC progress reports and ISRs. Page 35 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People benefiting from Number 0.00 107,800.00 107,800.00 151,481.00 improved tertiary/social infrastructure services 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 (disaggregated by gender) Number of women Number 0.00 53,275.00 53,275.00 62,822.00 benefiting from improved tertiary/social 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 infrastructure services Number of men benefiting Number 0.00 54,525.00 54,525.00 88,659.00 from improved tertiary/social 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 infrastructure services Comments (achievements against targets): Target achieved (141%). People benefited from tertiary infrastructure such as streets, water supply, drainage, and streetlighting in low-income areas, as well as social infrastructure such as schools, kindergartens, and community centers, as measured by the total population of wards in which such infrastructure services were provided under the Program. Information source: MOC progress reports and ISRs. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Ethnic Minority beneficiaries Percentage 0.00 14.00 14.00 16.00 Page 36 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Male ethnic minority Percentage 0.00 14.00 14.00 15.00 beneficiaries 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Female ethnic minority Percentage 0.00 14.00 14.00 17.00 beneficiaries 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (114%). Ethnic minorities such as Muong, Thai, Tay, Dao, and Mong benefitted from the improved planning, implementation, and maintenance of various urban infrastructure such as roads, bridges, drainage, water supply, embankment, channel rehabilitation, and schools newly built or renovated under the Program. The rates reported reflect the proportion of ethnic minorities, male and female, benefitting from the Program out of the total ethnic minority population, male and female, in the seven provinces. Information source: MOC progress reports, ISRs, and completion reports of participating cities. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New and upgraded roads Kilometers 0.00 101.90 101.90 128.67 completed 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (126%). The result reflects the total length of new and upgraded roads (including new bridges) connecting peri-urban areas to markets and existing main arterial roads, all justified in the Enhanced Annual City Plans of the 7 participating cities. Upgrading included resurfacing or installment of Page 37 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) adequate drainage in existing paved roads or refurbishment of pedestrian pathways, as planned. Information source: MOC progress reports, ISRs, and SAV verification reports. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Resettlement areas Hectare(Ha) 0.00 236.00 236.00 291.30 completed 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (123%). A total of 291.3 ha of land was serviced for resettlement areas with roads, water supply, sewerage, drainage, electricity, and streetlighting infrastructure for households relocated due to infrastructure development under the Program or other government-financed projects. Information source: MOC progress reports, ISRs, and SAV verification reports. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion LIAs upgraded Hectare(Ha) 0.00 333.00 333.00 592.90 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (178%). A total of 592.9 ha of low-income areas were upgraded with improved residential roads, water supply, drainage, and streetlighting. Information source: MOC progress reports, ISRs, and SAV verification reports. Page 38 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Results Area: 3. Sustainable Infrastructure Investments Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in own-sources Number 0.00 7.00 7.00 3.00 revenue 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target partially achieved (43%). The result reflects the cities that showed an increase in annual own-sources revenue by at least 12% over the previous year in 2020 (the last year this indicator was measured), namely Bac Kan, Cao Bang, and Hoa Binh. Information source: MOC progress reports, ISRs, and SAV verification reports. Results Area: 4. National Policy, Support and Oversight Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Professionally-staffed unit in Percentage 0.00 100.00 100.00 100.00 place in MOC; and capacity support for cities provided as 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 per Annual Capacity Development Plan Comments (achievements against targets): Page 39 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Target achieved (100%). MOC project management unit was professionally-staffed as per the POM, including 1 director, 2 vice directors, 1 finance management and internal auditor, 1 institutional development and capacity building expert, 2 technical engineers, 1 procurement expert, 1 environment safeguards expert, 1 social safeguards expert, 1 M&E expert, and 2 administrative staff. Capacity Development Plans were developed annually and such plans were implemented as planned. Information source: MOC progress reports, ISRs, and SAV verification reports. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Completed Program report Yes/No No Yes Yes Yes 01-May-2014 30-Jun-2021 30-Jun-2022 30-Jun-2022 Comments (achievements against targets): Target achieved (100%). MOC prepared a Program report annually, summarizing key implementation aspects, results, and fulfillment of PAP actions as planned and as verified by SAV. Information source: MOC progress reports, ISRs, and SAV verification reports. ANNEX 1B. DISBURSEMENT LINKED INDICATORS DLI IN01180039 TABLE DLI 1: DLI 1: Enhanced Annual City Plans approved and disclosed to the public (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes Yes Page 40 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 7,766,400. 5,384,700. 3,469,000. 2,433,500. 1,708,500. 595,500.00 0.00 Allocated amount ($) 21,357,600.00 00 00 00 00 00 7,766,487. 5,384,695. 3,469,031. 2,433,472. 1,708,608. 595,307.00 0.00 Disbursed amount ($) 21,357,600.00 00 00 00 00 00 DLI IN01180040 TABLE DLI 2: DLI 1.2: Professionally-staffed management units in place within each Participating City People’s Committee (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes 5,177,600. 3,592,000. 2,310,500. 1,624,500. 1,139,100. 394,700.00 0.00 Allocated amount ($) 14,238,400.00 00 00 00 00 00 5,177,658. 3,591,954. 2,310,530. 1,624,472. 1,139,072. 394,714.00 0.00 Disbursed amount ($) 14,238,400.00 00 00 00 00 00 DLI IN01180041 TABLE DLI 3: DLI 2: Local urban infrastructure investments delivered as per each Participating City’s approved Enhanced Annual City Plan (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes Yes 4,530,500. 21,131,000 12,879,300 10,646,400 9,708,000. 19,416,000 22,004,800 Allocated amount ($) 100,316,000.00 00 .00 .00 .00 00 .00 .00 Page 41 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) 4,530,422. 20,992,700 12,758,768 17,571,177 22,388,266 2,859,600. 8,142,962. Disbursed amount ($) 89,243,895.00 00 .00 .00 .00 .00 00 00 DLI IN01180042 TABLE DLI 4: DLI 3.1: Asset management plan adopted and local urban infrastructure sub-projects in full service after completion (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes 712,000.00 1,184,200. 1,275,000. 1,275,000. 1,313,800. 0.00 Allocated amount ($) 712,000.00 6,472,000.00 00 00 00 00 489,171.00 921,632.00 1,012,227. 1,012,227. 1,011,028. 0.00 Disbursed amount ($) 711,928.00 5,158,213.00 00 00 00 DLI IN01180043 TABLE DLI 5: DLI 3.2: Increased annual own-sources revenue in Participating Cities (Number) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values 0.00 7.00 7.00 7.00 7.00 7.00 7.00 0.00 Actual values 6.00 2.00 1.00 4.00 0.00 3.00 0.00 1,145,600. 1,145,500. 1,158,500. 1,145,500. 1,145,500. 731,400.00 0.00 Allocated amount ($) 6,472,000.00 00 00 00 00 00 Disbursed amount ($) 990,227.00 323,600.00 165,500.00 654,571.00 0.00 189,564.00 0.00 2,323,462.00 DLI IN01180044 TABLE Page 42 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) DLI 6: DLI 4.1: Implementation Strategy for National Urban Development Program adopted with annual milestones (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes 647,200.00 647,200.00 647,200.00 647,200.00 1,294,400. 0.00 Allocated amount ($) 647,200.00 4,530,400.00 00 Disbursed amount ($) 647,207.00 431,477.00 431,477.00 431,477.00 431,477.00 862,906.00 0.00 3,236,021.00 DLI IN01180045 TABLE DLI 7: DLI 4.2: Professionally-staffed unit in place in MOC, preparation of Annual Capacity Development Plans, and capacity building support provided to cities in accordance with such plans (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Original values No Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes 1,294,400. 1,294,400. 1,294,400. 1,294,400. 647,200.00 647,200.00 0.00 Allocated amount ($) 6,472,000.00 00 00 00 00 1,294,414. 1,132,625. 1,132,625. 1,132,625. 566,312.00 566,242.00 0.00 Disbursed amount ($) 5,824,843.00 00 00 00 00 DLI IN01180046 TABLE DLI 8: DLI 4.3: Completed Program Report (Yes/No) Baseline 2015 2016 2017 2018 2019 2020 2021 Total Page 43 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Original values Yes Yes Yes Yes Yes Yes Yes Actual values Yes Yes Yes Yes Yes Yes Allocated amount ($) 323,600.00 323,600.00 323,600.00 323,600.00 323,600.00 323,600.00 0.00 1,941,600.00 Disbursed amount ($) 323,603.00 258,885.00 258,885.00 258,885.00 258,885.00 258,867.00 0.00 1,618,010.00 ANNEX 1C. PROGRAM ACTION PLAN PAP_TBL Achieved Action Timing Completion Measurement (Yes/No) 1. Participating cities will maintain Recurrent Yearly Yes Databases maintained and report submitted. databases on (i) public consultation/corruption/fiduciary/procure ment/ Program implementation complaints and responses to those complaints and (ii) beneficiary feedback to implementing agencies. Comments: Participating cities provided report annually on maintaining databases and public consultation on program implementation complaints and responses. 2(a). All proposals for detailed designs, Recurrent Continuous Yes Progress reported upon in Program Report. construction supervision and bids for civil Supervision and audits to establish actual works, whether below or above cost performance. estimates, shall be evaluated; proposals and bids shall not be rejected only on the basis of minor, non-substantive Page 44 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) deviations. Comments: Program reported 2(b). At least 30 % of city consulting Recurrent Yearly Yes Progress reported upon in Program Report. contracts for detailed designs, CSC Supervision and audits to establish actual competitively bid - to 80 % by the end of performance. the Prog period. At least 90 % of city civil works contracts competitively bid - to 100 % by the end of the Prog period. Comments: Program report submitted 2(c). State-Owned Enterprises Recurrent Continuous Yes Progress reported upon in Program Report. dependent on Program Supervision and audits to establish actual provinces/cities/departments will be performance. excluded from participating. Comments: Program and verification reported submitted as planned. 2(d). Firms and individuals on the local, Recurrent Continuous Yes Progress reported upon in Program Report. national or Bank debarment/suspension Supervision and audits to establish actual lists will not be allowed to participate. performance. Comments: program reports submitted 3. MOC will build and implement an Recurrent Yearly Yes Internal audit report sent annually to the Bank effective internal audit function for the Supervision will review quality of the internal audit Program. process. Comments: Program report and internal audit report submitted 4. Part cities will ensure that adverse Recurrent Continuous Yes Progress reported upon in Program Report. Page 45 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) impacts are avoided/minimized and PAPs Supervision will review implementation quality. compensated so that they are no worse off. An independently verifiable mechanism will be developed to assess the market values to restore PAPs’ livelihoods. Comments: all required report submitted. 5. MOC and cities develop guidelines to Recurrent Continuous Yes Progress reported upon in Program Report. ensure the meaningful local consultation, Supervision will review implementation quality. including EMs and vulnerable groups. The guidelines fully operationalize existing VNese Legislation with respect to EMs through free, prior, and informed consultations. Comments: report and implementation support mission Page 46 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Parameswaran Iyer Task Team Leader Huyen Thi Phuong Phan Co-TTL, Urban Judy L. Baker Capacity Building Anjali Acharya, Ly Thi Dieu Vu Environment Kien Trung Tran, Yuling Zhou Procurement Nina Eejima, Huong Thi Mai Nong Legal Mai Thi Phuong Tran Financial Management Linh Thi Thuy Tran Team Assistant Linh X. Le Urban Institutions and Governance Nghi Quy Nguyen Social Development Hung Sy Pham Engineering Victor Vazquez Alvarez Engineering and DLIs Miguel Santiago Oliveira Disbursement Catherine Lynch M&E Hoa Thi Mong Pham, Roxanne Hakim Social Development David Bernstein Governance Glenn Morgan Environmental and Social David Savage Institutional Development Julian Abrahams Project Management Ed Ramsay Water and Sanitation Supervision/ICR Hoa Thi Hoang Task Team Leader Thong Trong Le Co-TTL, Social Page 47 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) Madhu Raghunath Former TTL, Urban Zhiyu Jerry Chen Former TTL, Urban Huyen Thi Phuong Phan, Mansha Chen Urban Kien Trung Tran Procurement Mai Thi Phuong Tran Financial Management Thao Thi Do Finance Giang Thi Huong Nguyen Program Assistant Xin Ren, Ly Thi Dieu Vu Environment Quang Nhat Nguyen, David Jorge Baringo Ezquerra, Minh Social Development Quang Dao Phuong Tien Nguyen Transport Minkyung Kim Data Research Gyongshim An ICR Author Page 48 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY13 25.775 148,795.60 FY14 98.406 503,184.97 Total 124.18 651,980.57 Supervision/ICR FY14 0 55.49 FY15 43.970 181,709.20 FY16 49.850 200,239.90 FY17 24.660 107,256.80 FY18 29.026 146,274.31 FY19 27.649 147,212.32 FY20 24.000 125,347.92 FY21 14.650 84,532.08 FY22 32.725 184,547.20 FY23 28.225 155,407.62 Total 274.76 1,332,582.84 Page 49 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 3. PROGRAM EXPENDITURE SUMMARY Source of Actual Expenditures (Disbursement) Type of Co- Estimates at Program Percentage of Percentage of Financing Appraisal Actual Financing (US$) Appraisal Actual World Bank 250,000,000 199,299,494 83.3 78.8 Borrower 50,000,000* 53,538,000 16.7 21.2 Total 300,000,000 252,837,494 100.0 100.0 Note: The estimates at appraisal and actual expenditures presented in this table are in US$ terms, indicating 79.6% disbursement. However, in SDR terms (effective currency for the Program) the estimates at appraisal were SDR161.8 million and the actual expenditures were SDR143 million, indicating 88.4% disbursement. The gap between the estimates and actual expenditures is larger in US$ than in SDR due to the appreciation of US$ against SDR during Program implementation. The undisbursed amount could be explained by underachievement of DLI 3.2 (increase in own-sources revenue) and the government’s policy change in 2019 prohibiting ODA funds from financing tax and capacity development activities (see para 59 of the ICR). * This amount is informed by the PAD and the POM. An incorrect amount (US$20 million) was recorded in the Operations Portal (see datasheet). Page 50 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 4. BORROWER’S COMMENTS The government did not have any comments on the draft ICR shared by the World Bank on January 16, 2023. Page 51 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 5. SUPPORTING DOCUMENTS 1. World Bank, Country Partnership Strategy for the Socialist Republic of Vietnam for the period FY12-FY16, November 7, 2011, Report No. 85986 2. World Bank, Country Partnership Framework for the Socialist Republic of Vietnam for the period FY18-FY22, May 4, 2017, Report No. 111771-VN 3. World Bank, Project Appraisal Document for the Results-Based National Urban Development Program in the Northern Mountains Region, May 1, 2014, Report No. 87773-VN 4. World Bank, Financing Agreement for the Results-Based National Urban Development Program in the Northern Mountains Region, July 17, 2014, Credit No. 5476-VN 5. World Bank, Restructuring Paper of the Results-Based National Urban Development Program in the Northern Mountains Region, June 2021, Report No. ES47072 6. World Bank, Aide Memoires for the Results-Based National Urban Development Program in the Northern Mountains Region, from 2013 to 2022 7. World Bank, Implementation Status and Results Reports for the Results-Based National Urban Development Program in the Northern Mountains Region, from 2014 to 2022 (sequences 1-16) 8. World Bank, Socialist Republic of Vietnam, and Ministry of Planning and Investment, Vietnam 2035 – Toward Prosperity, Creativity, Equity, and Democracy, 2016 9. Socialist Republic of Vietnam, Five-year Socio-Economic Development Plan of 2016-2020, 2016 10. Socialist Republic of Vietnam and Ministry of Construction, Program Operations Manual, January 28, 2022 11. Ministry of Construction, Program progress reports, from 2014 to 2022 12. State Audit of Vietnam, Verification Reports of Results for the Results-Based National Urban Development Program in the Northern Mountains Region, from 2016 to 2022 Page 52 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 6. PROGRAM MAP Map cleared by the World Bank Map Unit on February 9, 2023. Page 53 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) ANNEX 7. PHOTOS OF INFRASTRUCTURE SUPPORTED BY THE PROGRAM The following are before (left) and after (right) photos of Program sites in the seven cities. BAC KAN Page 54 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) CAO BANG Page 55 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) DIEN BIEN PHU Page 56 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) HOA BINH Page 57 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) THAI NGUYEN Page 58 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) TUYEN QUANG Page 59 of 60 The World Bank RESULTS-BASED NATIONAL URBAN DEVELOPMENT PROGRAM IN THE NORTHERN MOUNTAINS REGION (P143596) YEN BAI Page 60 of 60