INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA6696 Public Disclosure Copy Date ISDS Prepared/Updated: 14-Mar-2014 Date ISDS Approved/Disclosed: 25-Mar-2014 I. BASIC INFORMATION 1. Basic Project Data Country: Armenia Project ID: P146994 Project Name: Trade Promotion and Quality Infrastructure (P146994) Task Team Feyi Boroffice Leader: Estimated 31-Mar-2014 Estimated 10-Jun-2014 Appraisal Date: Board Date: Managing Unit: ECSPF Lending Investment Project Financing Instrument: Sector(s): Other domestic and international trade (40%), General industry and trade sector (40%), SME Finance (20%) Theme(s): Export development and competitiveness (50%), Micro, Small and Medium Enterprise support (25%), Other Private Sector Development (25 %) Is this project processed under OP 8.50 (Emergency Recovery) or OP No 8.00 (Rapid Response to Crises and Emergencies)? Public Disclosure Copy Financing (In USD Million) Total Project Cost: 62.50 Total Bank Financing: 50.00 Financing Gap: 0.00 Financing Source Amount Borrower 12.50 International Bank for Reconstruction and Development 50.00 Total 62.50 Environmental B - Partial Assessment Category: Is this a No Repeater project? 2. Project Development Objective(s) The project’s objective is to strengthen the enabling environment and firm capacity to increase private investments and exports. The Project’s direct beneficiaries include both existing and potential exporters, who will benefit from an improved quality of programs and services provided under a more efficient trade promotion and quality system. Page 1 of 8 3. Project Description The project will consist of four components. Public Disclosure Copy Component 1 will promote reforms aimed at improving the Trade Promotion and Quality Infrastructure system, which will play an important role in developing a foundation for providing effective services to increase the competitiveness of firms. This component will include three sets of activities: (i) Investment Policy Development; (ii) Institutional Restructuring of the Enterprise Support Agencies; (iii) Strengthening the capacity of the National Quality Infrastructure system. This component is results-based and will therefore reimburse loan funds to the government for agreed-upon actions, outputs and outcomes (“Disbursement-Linked Indicators” or DLIs) that result in improvements to the trade promotion and quality system. Component 2 will strengthen government’s capacity to actively increase the export competitiveness of local firms and attract efficiency seeking FDI. This component will finance the creation of new investment and export promotion programs that will build the foundation to promote both inward FDI and export through three sub-components: • Sub-component 2.1: Services to Investors and Exporters (US$6.3 million) which will support the development of world-class services and programs that will encourage new investment from existing and potential FDI and improve the capacity of local exporters to compete in global markets. • Sub-component 2.2: Exporter Development Grants ($3.65 million) which will fund the development and implementation of comprehensive export development plans which address a range of quality improvement and marketing needs of firms. • Sub-component 2.3: Public Private Partnerships (PPPs) for Increasing Investment and Export (US$19.41 million) which will accelerate the upgrading of industries with export potential and strengthen relationships with existing and potential new FDI through two sub-components: (i) Cluster development PPPs to strengthen industry clusters by financing the development of industry- wide facilities that benefit from economies of scale such as design centers, quality and testing laboratories, training centers and common logistics infrastructure; and (ii) R&D PPPs, which will Public Disclosure Copy encourage efficiency-seeking FDI (primarily in high tech) by funding joint projects between multinationals and academia to develop enabling infrastructure, such as joint laboratories, Innovation centers and R&D centers. This sub-component will fund civil works including renovation of existing infrastructure and could potentially include new construction. Component 3 will modernize metrological, accreditation and standards services in order to provide relevant quality assurance services to industry. This component will have three main sets of activities: (i) Renovation of the industrial metrology building and laboratories, purchase of equipment and capacity building for National Institute of Metrology (NIM) staff; (ii) Refurbishment of National Accreditation Body (NAB) offices and capacity building of NAB staff; and (iii) Development of a database for the catalogue of standards for the National Institute of Standards (SARM). Component 4 will finance the operations and monitoring of the project, including PIU consultants and operations, fiduciary functions, M&E and audits. This component will also finance incremental operating costs for the Ministry of Economy's (MoE) Project Implementation Unit (PIU) and stakeholders including the new Investment Agency (from the merger of ADA and IDF), Enterprise Incubator Foundation (EIF), NIM, NAB and SARM. Page 2 of 8 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) The NIM and NAB buildings are located in the capital city of Yerevan. Civil works for their Public Disclosure Copy refurbishment are expected to be located within the existing footprint of these buildings. The exact location and types of construction and/or reconstruction works that may be undertaken as part of the PPPs under Component 2 of the Project are not known upfront and sites may be located anywhere in the country. 5. Environmental and Social Safeguards Specialists Darejan Kapanadze (ECSEN) Sarah G. Michael (ECSSO) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes The project will support rehabilitation of premises BP 4.01 for the NAB and the NIM, including its laboratory facilities. Small new construction and possibly rehabilitation of other existing buildings is expected as part of the PPPs aimed at attracting DFI into high-tech businesses supported by the Government through the provision of public premises and infrastructure. Based on the information available, the NIM laboratories will not handle explosive, radioactive, and toxic substances. PPPs will not be established in support of businesses that are related to the production of arms, spirits, tobacco, and hazardous substances. The negative list of activities ineligible for financing as PPP Public Disclosure Copy initiatives will be included into the Project Operations Manual. Overall, environmental risks associated with the Project are modest, because construction and rehabilitation works are expected to be of a modest scale and to be undertaken in highly transformed urban areas. Therefore, the Project is classified as environmental Category B. Because the designs of the majority of site-specific investments are not available at this stage, an Environmental and Social Management Framework (ESMF) is prepared to guide environmental and social screening, classification, review, management planning, and monitoring of civil works under the Project. These works are already known to be pretty similar and to carry a common set of environmental and social risks. The site-specific Page 3 of 8 Environmental Management Plan for works in the NIM building is prepared and disclosed. It will be included into the tender package and will be Public Disclosure Copy attached to the civil works contract, so that implementation of EMP is made mandatory for the works provider. The same procedures will be applied to all EMPs to arrive at later stages of the project cycle. Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Pest Management OP 4.09 No Physical Cultural Resources OP/ No BP 4.11 Indigenous Peoples OP/BP 4.10 No Involuntary Resettlement OP/BP Yes PPP sub-projects under Component 2 could 4.12 include civil works. The nature of the specific grants (including grant recipients, grant activities and grant locations) is not yet known. The possibility of land use, acquisition or resettlement cannot therefore be excluded. As such, this policy has been triggered and a Resettlement Policy Framework (RPF) has been prepared. The RPF provides detailed guidance and criteria for the Public Disclosure Copy development of investment-specific Resettlement Action Plans (RAPs), which would be prepared and implemented prior to commencement of any civil works under the PPP grants at any site where resettlement or land use or acquisition was required. The RPF will be included as an annex to the Project Operations Manual. However, PPP activities with significant potential social risks or which require physical resettlement will be excluded. Safety of Dams OP/BP 4.37 No Projects on International No Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP No 7.60 II. Key Safeguard Policy Issues and Their Management Page 4 of 8 A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify Public Disclosure Copy and describe any potential large scale, significant and/or irreversible impacts: The Project will finance rehabilitation of buildings allocated as office space for the NIM and NAB. These buildings are located within a residential district of the city of Yerevan. No schools, kindergartens, hospitals, or other facilities of high sensitivity to the construction noise and dust are located in the vicinity of these buildings. Traffic around the building sites is not intense. Connections to water, power, and to the waste water collection systems operated by the municipality are in place. The construction of new buildings and/or reconstruction of existing facilities are expected to be financed for PPPs under component 2 of the Project. Approximately seven such PPPs are expected to be financed. Other social and environmental impacts of the anticipated works are expected to be modest, confined to the construction sites, and easy to mitigate by ensuring that works providers adhere to the conventional good construction and environmental practices. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Operation of the constructed/rehabilitated small to medium size buildings within the highly transformed urban areas will not cause measurable long term impacts on the urban environment and social strata. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Several existing public buildings were considered for rehabilitation to house NIM and NAB. The selection was made based on these institutions' real needs for office and laboratory space, technical condition of the suggested buildings, and costs of their rehabilitation and maintenance. Site Public Disclosure Copy selection for new construction under the Component 2 of the Project will be made with consideration of the associated environmental and social impacts, and will aspire to minimize them. Moreover, the project will not finance any PPP activities with significant potential social or environmental risks or those that require physical resettlement. Specific criteria and procedures for PPP sub-projects will be finalized in the Project Operations Manual. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Given the uncertainty of the scale, scope and location of construction activities under the project, OP/BP 4.12 were triggered. A Resettlement Policy Framework was prepared during project preparation to provide guidance on the process of consultations with affected communities, the establishment of grievance and redress mechanisms, and the process of preparing RAPs, should any impact on formal or informal assets occur during the project. The Borrower developed a site-specific Environmental Management Plan for rehabilitation works in the building of the NIM. It carries a set of mitigation measures that are sufficient to avoid pollution from the works site and nuisance to the residents and to a small private business located in the vicinity of the NIM building. No civil works will be allowed to commence under Component 2 on PPPs until the respective Page 5 of 8 EMP (and RAP, if required) is disclosed and consulted with local stakeholders. Site-specific Resettlement Action Plans will be prepared for any cases where restriction of access to productive resources will take place, including temporary land acquisition. Public Disclosure Copy The MoE is an implementing entity for TPQI project. The Ministry will create a PIU comprised of the Ministry's core staff and hired consultants, which will be responsible for all the day-to-day management of the project activities including safeguards oversight, while financial management will be provided by the Foreign Financing Projects Management Center (FFPMC), which is customary for the projects implemented with the World Bank support in Armenia. FFPMC is well experienced handling fiduciary aspects, while the MoE had no previous exposure to the Word Bank safeguard policies. Therefore, the PIU will supplement its in-house capacity with a consultant with adequate background and skills for safeguards management. Also, the PIU will hire a consultant company for the provision of general technical supervision of works, and will include environmental and social monitoring functions into the terms of reference of the supervision company. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Administration and staff of the NIM and NAB, as well as the businesses participating in the PPP initiatives are the direct beneficiaries of the Project, while the MoE is the key stakeholder. Residents of the city districts within which the NIM and NAB buildings are located are the people potentially affected by the Project. So will be the residents and small businesses that may be located in the vicinity of construction/rehabilitation sites of PPP investments. Draft ESMF and the EMP prepared for works in the NIM building were disclosed in Armenian and English languages through the web sites of the Ministry of Economy and the NIM. The documents were discussed with relevant stakeholders in a public consultation meeting held on X in the city of Yerevan. They were finalized and re-disclosed afterwards. Once the works provider is mobilized to the NIM building site, he/she will be required to post brief information on the Public Disclosure Copy designed works and his/her contact information on the board, so that the project affected people can put through their inquiries and grievances. All other site-specific investments will be handled in a way similar to the safeguard procedures applied to the preparation of the pilot sub-project for the rehabilitation of NIM premises. B. Disclosure Requirements Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 19-Feb-2014 Date of submission to InfoShop 31-Mar-2014 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors "In country" Disclosure Armenia 25-Mar-2014 Comments: To be conducted by Appraisal Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank 11-Mar-2014 Date of submission to InfoShop 31-Mar-2014 Page 6 of 8 "In country" Disclosure Comments: Public Disclosure Copy If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ] report? If yes, then did the Regional Environment Unit or Sector Yes [ ] No [ ] NA [ ] Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ] in the credit/loan? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ] process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ] Sector Manager review the plan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? Public Disclosure Copy Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost? Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Name: Feyi Boroffice Page 7 of 8 Approved By Sector Manager: Name: Aurora Ferrari (SM) Date: 25-Mar-2014 Public Disclosure Copy Public Disclosure Copy Page 8 of 8