Document of The World Bank FOR OFFICIAL USE ONLY Report No: 36582 IMPLEMENTATION COMPLETION REPORT (IDA-28320) ON A CREDIT IN THE AMOUNT OF SDR 14.0 MILLION TO THE LAO PEOPLE'S DEMOCRATIC REPUBLIC FOR THE LAND TITLING PROJECT June 27, 2006 Rural Development and Natural Resources Sector Unit 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 May 10, 2006) Currency Unit = Kip Kip 1 = US$ 0.00001 US$ 1 = Kip 10,408 FISCAL YEAR October 1 - September 30 ABBREVIATIONS AND ACRONYMS AIDAB Australian International Development Assistance Bureau AusAID Australian Agency for International Development CAS Country Assistance Strategy DCA Development Credit Agreement DSA Department of State Assets DOLHM Department of Lands and Housing Management DOL Department of Lands (replaced DOLHM) ICR Implementation Completion Report IEPS Initial Executive Project Summary FEPS Final Executive Project Summary GPS Global Positioning System KPI Key Performance Indicators LPRS Land Parcel Recording System LTP Land Titling Project LWU Lao Women's Union MOF Ministry of Finance MOU Memorandum of Understanding NEM New Economic Mechanism NGD National Geographic Department (of the Prime Minister's Office) PA Project Administrator PHRD Policy and Human Resource Development PLO Provincial Land Office PPSU Provincial Project Support Unit PSC Project Steering Committee PSU Project Support Unit SAR Staff Appraisal Report SAT Systematic Adjudication Team TA Technical Assistance TOR Terms of Reference Vice President: Jeffrey S. Gutman (Acting), EAPVP Country Director Ian Porter, EACTF Sector Manager Mark Wilson, EASRD Task Team Leader/Task Manager: Steven Oliver, EASRD LAO PEOPLE'S DEMOCRATIC REPUBLIC LAND TITLING PROJECT IMPLEMENTATION COMPLETION REPORT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome 18 6. Sustainability 19 7. Bank and Borrower Performance 20 8. Lessons Learned 24 9. Partner Comments 26 10. Additional Information 26 Annex 1. Key Performance Indicators/Log Frame Matrix 27 Annex 2. Project Costs and Financing 29 Annex 3. Economic Costs and Benefits 31 Annex 4. Bank Inputs 33 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 36 Annex 6. Ratings of Bank and Borrower Performance 37 Annex 7. List of Supporting Documents 38 Annex 8. Compliance with DCA Conditions 39 Annex 9. Precis of the Borrower's Completion Report 42 Annex 10. Bilateral Co-financier (AusAID) Comments 51 Project ID: P004208 Project Name: LA-LAND TITLING Team Leader: Steven William Oliver TL Unit: EASRD ICR Type: Core ICR Report Date: June 27, 2006 1. Project Data Name: LA-LAND TITLING L/C/TF Number: IDA-28320 Country/Department: LAO PEOPLE'S DEMOCRATIC REPUBLIC Region: East Asia and Pacific Region Sector/subsector: Law and justice (50%); Central government administration (40%); Sub-national government administration (10%) Theme: Land administration and management (P); Personal and property rights (P); Rural markets (S) KEY DATES Original Revised/Actual PCD: 09/15/1994 Effective: 09/07/1996 02/27/1997 Appraisal: 06/28/1995 MTR: 12/31/1999 10/15/1999 Approval: 03/21/1996 Closing: 09/30/2003 09/30/2005 Borrower/Implementing Agency: The Government of Lao PDR/The Ministry of Finance Other Partners: The Australian Agency for International Development STAFF Current At Appraisal Vice President: Jeffrey S. Gutman (Acting) Russell J. Cheatham Country Director: Ian C. Porter Callisto Madavo Sector Manager: Mark D. Wilson Jeffrey S. Gutman Team Leader at ICR: Steven William Oliver ICR Primary Author: Steven William Oliver 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 The overall goal of the project, as defined in the Staff Appraisal Report (SAR), was to strengthen the basis for the long-term sustainable economic and social development of the Lao People's Democratic Republic (Lao PDR). In order to contribute to the achievement of this goal, the two objectives of the project were: (a) to foster the development of efficient land markets; and (b) to facilitate domestic resource mobilization, by providing a system of clear and enforceable land-use ownership rights and by developing a land valuation capacity. 3.1.2 The Development Credit Agreement (DCA), by contrast, described the project as having one objective: "to assist the Borrower to develop and implement its national land titling program and thereby establish a system of clear and enforceable land transfer, occupancy and use rights supported by an effective land administration and valuation system so as to promote, inter alia, the long-term development of efficient land markets and facilitate domestic resource mobilization throughout its territory". As described below, the "national land titling program" had not actually been defined at the beginning of project implementation and was expected to be prepared ("developed", in the language of the DCA) during the early years of project implementation. 3.1.3 The objectives were expressed in very general terms, and it is unusual to see such a discrepancy between the SAR and the DCA in the formulation of project objectives. Whilst the objectives were realistic and important for the country, they were very qualitative; "to foster", "to facilitate" and "to assist" are not expressions that lend themselves easily to monitoring or ex post measurement, and as a result it is a matter of judgement to define the degree to which the objectives were achieved. 3.1.4 The operative Country Assistance Strategy (CAS) of January, 1996 (Report No. 15284-LA) defined its goal as poverty alleviation and the improvement of the standard of living, and two of the principal mechanisms to achieve this were: (a) the promotion of economic growth; and (b) the creation of social and physical infrastructure to enable the poor to take advantage of the opportunities provided by such growth. The lending program designed to support the strategy was to be focused on expanding public services to the poor and on maintaining a strong framework for economic growth. The project's goal was fully consistent with the goal of the CAS, and the project's objectives were important to the CAS in helping to create the framework for growth. A properly functioning system of land titling and registration, providing the basis for an increase in fiscal revenue and an improvement in land markets and in security of land tenure, is widely recognized as being an essential piece of infrastructure without which Laos cannot become a modern country. The objectives of the project (and of its successor, the Second Land Titling Project - LTP II) were, and remain, fully relevant to the objectives of both subsequent CASs (Report No. 19098 of March 30, 1999 and Report No. 31758 of March 10, 2005). . 3.1.5 The project made significant demands on the implementing agency, the Ministry of Finance (MOF) and on the two principal implementing bodies, its Department of Lands and Housing Management (DOLHM) and the National Geographic Department (NGD - of the Prime Minister's office). It was of moderate complexity; the range of policy and institutional improvements sought and required by the project was modest, the number of institutions involved was small, and the number of project components was not large (although the geographic dispersion of their activities was necessarily high). The competence of the main implementing agency was adequate and had been tested to a degree in the pilot and bridging activities. There was only one co-financier, although its share of financing was high, at 18 percent of total anticipated project costs, and its role was as the provider of technical assistance, a key project requirement. - 2 - 3.1.6 The project was not a risky operation in the sense that its level of success was relatively immune from exogenous factors. The project was extremely responsive to the Borrower's circumstances and development priorities. The SAR described the transition of the Lao economy since 1986 from a centrally-planned command and control model towards a market-based system through the introduction of the New Economic Mechanism (NEM) and the importance of developing efficient markets for factors of production, including land. Efficient land markets and the tenure security on which they depend were recognized in the SAR as being crucial to the allocation of land to its most efficient users and uses, to investment and to sustainable use. 3.1.7 The objectives might have been more clearly expressed if the scope and objectives of the overall Land Titling Program had already been defined. A set of specific objectives for the project might then have been related to the defined provinces, systems development, the number of Systematic Adjudication Teams (SATs), the number of titles, etc. As it was, a somewhat peremptory approach was developed. The Land Titling Program had not been prepared in detail and yet a number of key building-blocks were needed. These were the elements needed for land titling, land valuation, registration and cadaster, and with the opening of the economy to market forces the basic stance adopted by the government, Bank and the Australian Agency for International Development (AusAID) was to get on with doing them as soon as possible. The experience reinforces the strong case for the use of the log-frame analysis (see, for example, the AusAID Implementation Completion Report of September 2003). 3.1.8 The issue of why the project was not part of a clearly defined long-term land titling program was raised before appraisal (at the Final Executive Project Summary review meeting on June 7, 1995). The explanation given was that there was a lack of experience in land titling and a shortage of information that prevented the preparation of a long-term program at the same time that the government felt that land registration was an important (and urgent) part of its economic reform program. Accordingly, the government's intention was: (a) to start in urban and peri-urban areas where there was land market activity and high economic growth, and gradually extend titling and registration into the rural areas; and (b) to use the project to generate experience and information on which to base a long-term program that would include the development of the legal and regulatory frameworks and the human resources necessary to implement it. Although the long-term land titling program has not been defined, the LTP II was prepared by carefully taking in the lessons learned from the project and concentrating on the key issues of insecurity of tenure, lack of resolution in policy and regulatory decisions, and institutional weakness; recognizing the very long-term nature of the titling and registration effort (at least requiring 25 years to accomplish fully); and maintaining its focus on the provinces covered by the first project despite political pressure to expand the area of activities. 3.2 Revised Objective: 3.2.1 The objectives of the project remained unchanged throughout the implementation period. 3.3 Original Components: 3.3.1 The project was designed to support the first seven years of a long-term national land titling program, which would be developed during the implementation of the project, aimed at extending secure land "ownership" and developing land administration and valuation systems including a cadastral mapping system. The project focused on urban and peri-urban areas which, mainly in the provinces, included some agricultural land-holdings, mainly small rice fields, on the periphery of the smaller towns. - 3 - 3.3.2 The project design had six components and nine sub-components. The total project cost was estimated at appraisal at US$28.38 million, which included: (a) taxes and duties (US$1.15 million); and (b) physical and price contingencies (US$3.68 million). 3.3.3 Component A. The Completion of the Policy and Legal Frameworks for Land Management and Administration (cost estimate at appraisal: US$0.4 million). The component was designed to support the activities of the Ministries of Finance (MOF) and Justice (MOJ) in applying existing regulations and preparing new legislation and regulations to improve the legal basis for land management and administration. This process was to be informed by the outcomes of the studies to be carried out under Component F and to continue the work begun under the Pilot Project: (a) to resolve legal constraints to the (proposed) Land Titling Program; (b) to ensure the secure legal status of land titles; and (c) to support the registration of land transactions. 3.3.3 Component B. The Implementation of an Accelerated Land Titling Program (cost estimate at appraisal: US$19.9 million). There were five sub-components: (a) base mapping; (b) systematic adjudication and registration; (c) sporadic adjudication; (d) training in support of systematic and sporadic adjudication; and (e) customer relations and services. Deficiencies in the then-existing base maps for the project areas were to be overcome by contracting out map production (including aerial photography and the production of orthophoto maps and rectified photomosaics) in the early years of the project whilst strengthening the capacity of the NGD to take over this responsibility. New systematic adjudication and registration procedures including the necessary field and record-keeping procedures were to be developed and tested, and "sporadic" (i.e., on-demand)adjudication and registration was to be supported in limited areas. Extensive training was to be provided, especially to the NGD and provincial Land Offices, and an "outreach" program was to be implemented to ensure that landholders and others had sufficient information to participate effectively in land titling. Support under the sub-component included significant levels of investment in buildings, vehicles, information technology, surveying and Global Positioning System (GPS) equipment, and mapping. 3.3.4 Component C. Infrastructure, Facilities and Systems for Land Administration (cost estimate at appraisal: US$2.7 million). The component was intended to support the development of land administration systems including the creation of a computerized land registration system, the building or improvement of provincial land office facilities, training and "customer relations services". In practice, there appears to have been little clear distinction between the contents of Components B and C, and the SAR does not have an annex on detailed project description. 3.3.5 Component D. Land Valuation (cost estimate at appraisal: US$0.8 million). The component was designed to develop improved and more equitable systems of land valuation, emphasizing: (a) human resource and skills development; (b) a sales and rental valuation data base, initially in Vientiane Municipality and subsequently in other major urban areas; and (c) land valuation policy and legislation. - 4 - 3.3.6 Component E. Project Implementation and Capacity Building (cost estimate at appraisal: US$4.0 million). There were four sub-components: (a) project management; (b) institutional strengthening; (c) long-term development of land administration; and (d) education and training. The purpose of the component was to strengthen the capacity of the Department of Lands (DOL) and assist it in planning, management, and monitoring and evaluation of the Land Titling Program. The component was intended to assist project management via the Project Support Unit (PSU) in the DOL, and to strengthen DOL itself and the provincial-level institutions involved in the Land Titling Program. 3.3.7 Component F. Studies (cost estimate at appraisal: US$0.6 million). Eight studies were identified as being important to the development of a properly functioning land information system. These were: (a) a socio-economic base-line survey in the first year of the project; (b) an impact survey in the final year of the project; (c) a community land tenure study; (d) a forest boundary definition study; (e) a study of land transaction fees and cost recovery; (f) a study of efficiency and land-use rights issues of nationalized land; (g) a study of human resources development; and (h) an organizational management and operation study. The draft outline terms of reference for five of these studies [(a), (c), (d), (e) and (f)] were presented in Annex 8 of the SAR. 3.3.8 The government agreed in negotiations that it would: (a) present to the IDA the (refined) terms of reference and a plan to carry out the eight studies; (b) upon completion of each study, present its report to the IDA with a plan and budget to implement the recommendations; and (c) upon "approval" from the IDA, implement the recommendations. Discussion: 3.3.9 There is a confusing presentation of the components and sub-components in the SAR and in the DCA. In the SAR, Component F is referred to as "Studies" in the cost tables and in the Project Objectives and Description, but in the Detailed Project Features Component F is referred to as "Technical Assistance and Overseas Training" and the studies are referred to (twice) in the description of Component E. In Schedule 2 of the DCA, Components E and F are reversed, and the description of the components and sub-components does not coincide with that given in the SAR. This has led to confusion, amongst other things in the project accounting, that persists until the present. 3.3.10 The stated objectives of the project were qualitative and loosely defined. In practice, the real objectives of the project were the outputs themselves, because the outputs were necessary (although not sufficient) for the creation of an economic infrastructure of land parcel measurement and adjudication, issuance and recording of titles and their subsequent transactions, and land taxation. The components were closely related to the specific (output) objectives of the project parsed from the list of Key Performance Indicators (KPI) and to the capacity of the implementing agency. With certain caveats, the components were within the administrative and financial management capacity of the implementing agencies. From the earliest stages of project identification and preparation, the weaknesses of both DOL and NGD were recognized and these were confirmed by the pilot project; specific steps were taken to strengthen these institutions and to train staff, and they were supplemented by project management support and technical assistance (TA). The TA was a crucial element in supporting the implementing agency in its technical development and with respect to administration. In retrospect, the role of the Project Administrator in supporting the administration of the DOL in the early years of the project is considered to have been of only marginal value. - 5 - 3.3.11 The SAR referred to the development of a long-term Land Titling Program to be prepared in the early years of the project. The DCA described the IDA's role in the development and implementation of the Program as the project's objective. However, despite IDA's reminders* to the government concerning the need to prepare such a Program, it does not appear ever to have been prepared in the form of a single, coherent document. [* e.g., following the supervision mission of July/August 1997, the management letter stated that " ... expansion plans for land titling ... should be underpinned by a long term land titling plan for the whole country which should be formulated in the next twelve months ...".] 3.3.12 Lessons learned from other projects. The identification and structuring of the components took into account lessons learned in other projects implemented in Laos and in land titling elsewhere. The SAR candidly stated that while there was no experience with land administration projects in Laos all other projects in agriculture and natural resources, both past and then-existing, were rated as "unsatisfactory". Implementation was felt to have been hampered by inappropriate macroeconomic and sector policies, weak institutions, and a poor human resource and infrastructure base. Similarly, the Bank's experience with land titling projects elsewhere had been only moderately successful, with such successes as had been recorded having been mainly in the land titling projects in Thailand. The factors contributing to poor performance of land projects elsewhere read like a compendium of the all-too-familiar ills. By contrast, the success of the projects in Thailand was felt to be the result of: (a) simplicity of design, with a single objective of land titling and a single agency responsible; (b) strong government commitment; (c) a gradual increase in cost recovery; (d) well formed and trained teams working closely with the communities concerned; and (e) the efficient use of new technologies. The experience gained in the pilot land titling project helped with the design in numerous ways, particularly the revision in land registration procedures to allow consideration of non-documentary evidence of land possession; at that stage, it was estimated that less than ten percent of the 1.6 million parcel-holders had any documentary evidence of their land use rights. 3.3.13 The project can fairly be said to have incorporated in the design of the components the caveats presented by other projects in Laos and elsewhere. A simple project design was followed, with limited project objectives and one lead implementation agency. The institutional and human resource limitations were recognized by the use of grant funding to design the project and then to prepare the ground for its implementation with a pilot project and a bridging operation. The introduction of the private sector, both international and domestic, was designed to help overcome the human resource constraints in implementation while working closely with the national and provincial government entities. The project focused on the formalization of existing rights to land, working closely with communities and their leadership to resolve boundary disputes and involve landholders fully in the process. 3.4 Revised Components: 3.4.1 Neither the design nor the relative importance of the components was revised during project implementation. 3.5 Quality at Entry: 3.5.1 The "Quality at Entry" of the project is considered to have been satisfactory. The objectives and goals of the project were fully consistent with the CAS and with government's priorities. The quality of the design was adequate and was well-informed by the pilot and bridging activities that had been undertaken as - 6 - the result of close and energetic cooperation between the IDA and AusAID and by the pragmatic process of reference to the long-term land titling efforts being made in neighboring Thailand. The assumptions and the assessment of risks made were reasonable. With the benefit of hindsight, it is clear that a number of improvements could have been made in project design, and the preparation and implementation of the Second Land Titling Project, currently being implemented, benefitted strongly from the lessons learned. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 4.1.1 The outcome of the project is considered to have been moderately satisfactory. In broad terms, the project has contributed significantly to the achievement of the objectives defined in the SAR and the DCA. The project was fully satisfactory in the development of the legal and regulatory framework (principally the content of Component A); the Land Law was promulgated in 1997 and several Prime Minister's Decrees and both Ministerial and Departmental regulations and instructions were issued to create the framework for systematic land registration and administration. The project was less successful in building institutional capacity, and land titling activities fell short of the original and revised targets. 4.1.2 It was implicitly recognized in the SAR that the Land Titling Program would be a long-term effort requiring commitment from both the government and donors. Frequent references are made in the SAR, and elsewhere, to the Land Titling Program in Thailand as being a model for Laos. The Thai program is widely recognized as having been a success, and its lessons are salutary for Laos. The program in Thailand was identified in 1982 and has been implemented through four consecutive five-year projects which began in 1984 and continues today. In a Background Paper for the World Development Report 2005, it was noted that " ... despite the success of the land titling project in Thailand ... the task is incomplete and a significant number of Thai citizens have not been able to benefit directly from the project". In 2004, after twenty years of progress, a large segment of the population " ... cannot benefit from land titling activity until there are some fundamental changes in the policy and legal framework". No-one should therefore be in any doubt about the long-term and demanding nature of the land titling challenge in Laos. The project has made a good start in establishing the institutional framework for the Program; testing survey, titling and registration methodologies and procedures; and creating awareness among land-holders and communities concerning the importance of formal titles, proper registration of transactions, and taxation obligations. 4.1.3 The SAR emphasized that the project was expected to strengthen the position of women with respect to land holding and registration, given the pronounced emphasis on gender equality expressed in the Constitution and in the legal structure of Laos. Compared to other East Asian countries, women in Laos have good opportunities for access to and control of land, and more than 50 percent of women live in areas with strong matrifocal and matrilocal traditions. Concern was recorded in the SAR that the adjudication process might not fully recognize women's rights with respect to land and specific measures were included in the project design to ensure their proper treatment. This concern was successfully addressed. Women had equal rights under the project in registering their names on land titles; about 28 percent of all the parcel titles registered were in the name of a female only, 41 percent were in joint names, and 21 percent were in the name of males only. The Lao Women's Union (LWU) played a strong role in the implementation of the project with a well-prepared program designed to make women aware of their rights and responsibilities and of the potential benefits to be derived. - 7 - 4.2 Outputs by components: 4.2.1 From its description in the SAR, the project had implicit sector policy, physical, financial (fiscal) and institutional development objectives but did not have macro-economic objectives. In terms of sector policy objectives, the project was intended to apply existing regulations and prepare future legislation concerning land in order to improve the legal framework for land management and administration and to provide the overall policy framework within which such laws would operate. The physical objectives of the project included the establishment of physical infrastructure (e.g., buildings), the supply of vehicles and equipment, the preparation of maps, and the carrying out of land parcel titling and registration activities. The financial/fiscal objectives of the project were to increase the amount of land-related fees and taxes collected by the national and provincial governments. The institutional development objectives of the project were to strengthen the DOL and the authorities of the project provinces to be able to implement the land titling program. The components of the project contributed to the achievement of these objectives as follows: Outcome Objectives: Sector Physical Financial/ Institutional Policies Fiscal Development Components: A. Legal and Policy Framework Satisfactory x x B. Land Titling Program Moderately Satisfactory x x C. Infrastructure, Facilities and Systems Satisfactory x D. Land Valuation Satisfactory x E. Project Implementation and Capacity Building Moderately Satisfactory x F. Studies Moderately Satisfactory x x General Considerations: 4.2.2 It was recognized from the earliest stages of identification and preparation that the institutional capacity to implement the project needed to be strengthened. By definition, the very large amount of work involved in surveying parcels and then adjudicating and awarding titles under the project could not have been undertaken by the DOL without a large injection of resources in terms of manpower, transport, surveying and information technology, etc., and this was the main intervention of the project. The provision of highly-qualified technical assistance (TA) via consultants inevitably introduced an over-lap with project management itself. In the project, not only was TA to be provided by an international consultant but also the need was identified for a Project Administrator (PA), funded from the Credit, to be responsible for project management " ... during the early years of project implementation (Fiscal Years 1996-1999)". AusAID argued forcefully that the PA should not have overall responsibility for project implementation but that this should be shared with the TA provider, especially where the decisions to be made (e.g., in procurement, planning and financial management) directly affected the ability of the latter to carry out its functions satisfactorily. 4.2.3 The terms of reference for the PA were modified several times. Proposals were requested from a short-list of six firms; five proposals were received and the contract was awarded on a quality and cost basis to the consulting company SODETEG of France. In practice, the PA seems to have operated for two years (i.e., FYs 1997 and 1998). In March 1999, the DOLHM assessed the capabilities of the PSU. It was considered to have improved but to be still in need of external support in specific areas (planning and budget, finance and procurement, and training for the PSU and the PPFUs). The MOF proposed the - 8 - contracting of high-level consultants for a period of two years, a short-term extension of the PA contract to achieve continuity, and the provision of an AusAID-financed advisor for two years to support project management. 4.2.4 The AusAID-funded TA team was mobilized in September 1997. Once the project was functioning, in October 1997 a Monthly Report was prepared jointly by the TA, the PA, and the PSU that dealt with major events, issues and progress achieved and was very "results-oriented". 4.2.5 The Pilot Land Titling Project was established to gain experience during the inevitable hiatus between preparation and implementation of the project. The three "bridging projects" (in effect, three supplemental budget additions) that were used to extend the Pilot Project's closing date were the result of the delays in making the Credit effective and the hiring of the PA and the TA consultants and were completed in June 1997; the project itself began implementation in July 1997. The financial assistance provided by the government of Australia and the agility with which it responded to each request for additional support were extremely important in pioneering many activities that were essential to the project but had not been tried or tested before. The achievements of the two-year pilot project were considerable, and included: new methods of land registration and valuation; the development of a policy and legal framework, including the drafting and promulgation of the Land Law and the preparation of draft regulations for systematic land adjudication, land parcel registration, and leasing of state-owned land; and the training and building of a cadre of staff for project implementation. The grant financing also supported the preparation of studies on gender and culture issues, land valuation and human resource development. 4.2.6 For planning, budgeting and accounting purposes, the first year of the project was October 1, 1996 to September 30, 1997, coinciding with the government's fiscal year 1996. The Credit became effective mid-way in PY1, and the TA and PA were installed, in practical terms, at the end of PY1. The original Closing Date of the Credit (September 2003) indicated a project life of seven years, which was later extended by two years. LTP II began implementation in September 2003 and therefore there was a two-year overlap between them. In this period, the LTP Credit continued to be disbursed (against civil works, and equipment). 4.2.7 It is clear from the record that there was an uneasy fit between the PA and the TA from the beginning. In fact, AusAID had raised issues with the draft terms of reference of the PA and had indicated several areas where there was potential for conflict, misunderstanding and confusion of responsibilities. In retrospect, it is disturbing to read in an early supervision report (July/August 1997) the recommendation that the Ministry of Finance should " ... define clearly the role of the PA and TA in project administration, particularly in the procurement stages of bid evaluation; the clarification of roles should take into account the terms of reference of the TA and the PA.". Given that the recognized institutional weaknesses of the DOL were the precise reason for the inclusion of the PA and the TA in the project's design, their respective roles (and those of the Steering Committee and the Project Support Unit) should have been spelled out with the utmost clarity before the project started. This could have been achieved if an Operational Manual had been prepared and agreed to as part of the project's design and the processing of the Credit. Component A. Legal and Policy Framework 4.2.8 The Land Law was promulgated in April 1997 and several Prime Minister's Decrees and both Ministerial and Departmental regulations and instructions have been issued to create the framework for systematic land registration and administration, cadastral surveying and property valuation. The Land Law defines and describes the main institutional responsibilities for land management and administration and - 9 - defines seventeen specific functions of land management to be fulfilled by government. The Land Law establishes that all land is owned by the State which grants rights over its use to citizens and foreigners. A number of key policy issues, mainly involving the clarification of uncertain areas under the Land Law, was identified during the project; some were resolved but others were not and are reported to continue to have an impact in LTP II. Component B. Land Titling Program 4.2.9 The systematic land titling program was originally designed to be undertaken in Vientiane Capital and in the urban and peri-urban areas of four provinces: Luang Prabang, Vientiane, Savannakhet and Champasak. This was later extended to include the provinces of Khammouane, Bolikhamsay, Saravan and Sayaboury). The sporadic titling program to issue titles on a demand basis was designed to take place in three provinces not involved in systematic titling efforts and to be selected annually by the Project Steering Committee. The aim under this component was to survey and adjudicate about 323,100 parcels (302,500 of them through 19 Systematic Adjudication Teams - SATs - and the remainder via sporadic titling) and to register the titles of about 258,480 surveyed and adjudicated parcels. The sporadic method of land titling was abandoned during implementation, the main reason being that it was not cost-effective. 4.2.10 Aerial photography covering an area of 10,600 kmē was carried out by a contractor and all deliverables were finalized by the end of April 1998. 4.2.11 Bidding documents for mapping services were prepared by November 1996 by DOL and the pilot project consultants. The procurement process was delayed slightly by the IDA which commented on the bid evaluation process and caused it to be re-done. The selected contractor started work in Laos in early 1998. 4.2.12 Problems were reported with the technical quality of both aerial photography and photomaps, which were remedied through a careful process of quality control and re-presentation of products by the contractor. 4.2.13 The progress achieved throughout the project in issuing land titles was significantly less than anticipated at appraisal. The SATs established in the four expansion provinces were made up of smaller teams than those operating in the initially-identified five provinces, but by the end of the project all the SATs were at full strength. A total of 190,656 parcels were surveyed and adjudicated, representing 60 percent of the appraisal target and 95 percent of DOL's revised target (of 200,000 parcels). In the early stages of the project, there was a shortage of government staff to establish SATs, problems in technical procedures, low financial incentives to those involved and, between 1997-1999, a lack of counterpart funds. Performance improved strongly from PY 6 onwards (in which year the number of titles issued exceeded the cumulative total for PYs 1-5). The low distribution of titles (65 percent of parcels surveyed and adjudicated) at the end of the project also had an impact on the incremental government revenues that were an important output of the project. 4.2.14 Under the project, the NGD established the Lao National Datum of 1997 with a geodetic network of 82 first-order points. A technical publication concerning the datum and the geodetic grid for all would-be users was issued. It also: (a) improved the accuracy of transformation parameters used with the Global Positioning System (GPS); (b) provided GPS-based control points in those areas where aerial photo maps could not be used; and (c) acquired aerial photography and produced orthophotomaps (at scales of 1:1,000, 1:2,000 and 1:4,000) for a total area of 890,000 ha. - 10 - 4.2.15 The existence of a back-log in delivering titles to landholders is to a degree the result of the "pipeline" effect and sequential process of surveying, data collection and authentication of land use rights, registration of titles, etc. 4.2.16 The out-reach function (the sub-component of Customer Relations and Services) was inadequate in the early years of the project to cover the range of project activities, affected communities and beneficiaries; however, engaging the support of the LWU via a formal relationship enabled a significant improvement in the dissemination of information and a focus on protecting women's rights to land. The LWU assisted with the village meetings and improved information on gender issues; specific "women-only" meetings were held to ensure that they received information in relation to their land rights. 4.2.17 The project has provided secure land-use rights to a large number of eligible land-holders. Women had equal rights under the project in registering their names on land titles; about 37 percent of all the parcel titles registered were in the name of a female only, 41 percent were in joint names, and 21 percent were in the name of males only. Component C. Infrastructure, Facilities and Systems for Land Administration 4.2.18 The LPRS was successfully implemented and Five Land Office buildings were constructed under the project in Vientiane Prefecture (Capital), and in Savannakhet, Luang Prabang, Champassak and Vientiane provinces. The detailed designs were prepared by consultants and reviewed by the TA consultants. Bidding for construction was proceeded by a process of pre-qualification. The terms of reference for consultants to supervise the construction process were prepared by the TA. An extensive training program was prepared, and training provided to a large number of staff in each project province. A technical proposal has been developed to computerize the LPRS. Component D. Land Valuation 4.2.19 The property valuation system is based on "rate tables" and zone maps to simplify it and to make its use more transparent. The system is in use in selected Districts of Vientiane Capital and the provinces of Luang Prabang, Savannkhet and Champassak. Component E. Project Implementation and Capacity Building 4.2.20 The whole project, with the exception of one sub-component, was designed to be implemented by DOL; the sub-component of base mapping was to be implemented by the NGD. A Project Support Unit (PSU) was created in DOL. In addition, the design called for an experienced Project Administrator to be hired to assist with project management during the early years. At the provincial level, the project was designed to be implemented by the Provincial Land Offices (POLs) supported by a Project Facilitation Unit at each PLO. At the national level, overall project supervision and coordination were designed to be the responsibility of the Project Steering Committee (PSC), and at the provincial level this was to be the responsibility of Project Oversight Committees in each province. 4.2.21 A study of organization, management and operations (OMO) was carried out for DOL and the PLOs to develop appropriate organizational structures, identify strengths an weaknesses, and to identify training requirements and other human resource initiatives. The development of the "In-Country Course in Surveying and Land Administration", later transformed into the three-year "Higher Diploma in Surveying and Land Administration", in the Polytechnic School has had a positive impact on the development of human resources under the project. In overseas training, three government staff obtained Master's degrees - 11 - in Land Administration (in Australia) and four DOL staff completed a two-year Property Valuation course (in Thailand). 4.2.22 An early supervision mission (in March, 1998) discussed in detail an incident in Vientiane Prefecture in which the land titling procedures of the project appeared not to have been followed, to the detriment of an individual land-holder, a Lao citizen, whose legal representatives engaged in a lengthy correspondence with the government and the IDA. He was effectively dispossessed of several land parcels in Vientiane within the scope of the project but under highly dubious circumstances. The mission discussed with the DOL the need for a periodic "technical audit" for the project which was referred to as " ... a requirement of the Bank ... necessary for projects such as the LTP". 4.2.23 As a result of the supervision mission, the IDA forcefully insisted that: (a) a system of independent technical audits should be instituted; (b) the requirement should be introduced for the swearing of an oath by adjudication staff to follow procedures and regulations; and (c) the Project Director should issue an Order spelling out the staff rules and procedures for land titling (as well as penalties for non-compliance), all in order to improve strictness and transparency. The technical audits were to be carried out for the systematic adjudication "program" and other selected components, initially at intervals of six months but becoming an annual exercise after two years. The aim of the technical audits was to ensure that " ... laws and procedures are being followed in systematic adjudication and that the rightful landholders are not being dispossessed by the adjudication process". Terms of reference were prepared by the IDA and shared with DOL and AusAID. 4.2.24 The MOF discussed the Bank/AusAID requirement and the proposal that the technical audits should be funded from the Credit. In October, 1998, the DOLHM presented to the IDA a plan to enhance quality of the adjudication works which included the oath, a declaration of "no interest" to exclude staff where they had a direct interest in a given parcel, and a Technical Review (Quality Assurance) function in adjudication. In view of these measures, the IDA agreed to the government's proposal that the technical audits be carried out by an "inter-agency committee" rather than the private entity originally envisaged. The TORs and work plan for the first technical audit were to be presented to the IDA by November 30, 1998 and the first audit carried out by March 31, 1999, with the report being shared by the PSC, the IDA and AusAID. The TORs of the technical audits appear to have been considerably weakened from the original intent, and this may have contributed to the issue discussed in Section 5.2. Component F. Studies 4.2.25 The implementation of this component appears to have been given a reduced level of priority compared to the rest of the project, and there is also some confusion in the SAR, and thus between the SAR and the DCA, as to what precisely was included in the component. The SAR stated that, during negotiations, it had been agreed that the government would prepare and submit to IDA the TORs for eight studies and a time-bound plan to implement them. The eight studies were identified in the SAR (paragraph 2.15 (b)) and in the DCA (Schedule 2), and the means of proceeding with the studies (i.e., preparation of TORs and a time-bound action plan, carrying out of the studies, sharing of the findings with IDA, preparation of work plans and related budgets to implement each study's recommendations, approval of the recommendations by IDA, and their implementation) was defined in the same SAR paragraph and in the DCA (Schedule 4). 4.2.26 However, elsewhere in the SAR (paragraph 2.4 (f)) only five studies were identified and it was the draft Terms of Reference for these five studies that were presented in the SAR Annex 8. - 12 - 4.2.27 Between the approval of the Credit (in March 1996) and the actual start-up of project implementation (in mid/late 1997) emphasis, perhaps understandably, was not placed on the studies component. However, in April 1998, the expanded draft TORs for the five studies were presented to a supervision mission, and both the mission and AusAID provided comments to the DOL and the TA. At that time, the supervision mission stated that "It appears that the studies will be narrowed to just three studies - down from five overall - " and at the end of the mission a new version of the TORs had been prepared by the TA. Changes in the TORs (and implicitly in the relative importance of individual studies) took into account " ... the developments that have taken place since the project was appraised, the identification of more state land during the pilot projects and the elevated importance of the socio-economic impact study and the study of land titling in rural community and forest lands.". 4.2.28 This sequence is summarized in the following table: Eight studies defined in the SAR Five studies: Three studies: and DCA: (a) socio-economic base-line survey · · (b) survey of the socio-economic impact of land titling (c) community land tenure study · · (d) forest boundary definition study · [(c) and (d) were combined into the "rural/forestry land titling study"] (e) land fees and cost recovery study · · (f) efficiency and land rights issues of · nationalized land (g) human resource development study (h) organizational management and operation study 4.2.29 In December 1997, the DOL informed the IDA that the need for study (f) had been effectively obviated by the preparation of the draft Ministerial Direction on the leasing of state land prepared under the land titling pilot project and submitted to the Department of State Assets (DSA) in July 1997. The IDA proposed instead that support be provided for drafting, discussion and finalization of regulations for leasing state land and for the preparation of a plan to implement the regulations over the life of the project. The TA and the DSA recommended modifications to this proposal to place more emphasis on regulations and operational procedures, and the preparation of a Prime Minister's Decree to accompany the Ministerial Direction. 4.2.30 The socio-economic base-line study was carried out only in the last year of the project. It was apparently delayed by at least two years when the entity to which the study contract was awarded delayed signing the contract because it did not agree to the general conditions of the IBRD standard contract. As a result, the study in effect became a base-line study for LTP II. The survey of the socio-economic impact of land titling to be carried out in the final year of the project was not done. - 13 - Technical Assistance under AusAID 4.2.31 The objective of the TA was to assist the DOL in the implementation of the project, and specifically in the areas of technical and institutional capacity-building. A total of 66 National and International advisers were deployed over the six years of the contract to achieve the agreed mile-stones. The activities, outputs, and conclusions and lessons of the TA are spelt out in details in the AusAID Project Completion Report of September 2003. 4.2.32 The TA activities focused primarily on the policy and legal framework, technical aspects of land survey and land registration, institutional capacity building and training. TA to support the project management activities in the PSU and PFUs were separately funded by the Credit. Based on the IDA/AusAID supervision reports and AusAID's independent audits, the TA can be judged as positively meeting the objective of assisting DOL implement the project. However, during the process, deficiencies have also been identified: (a) in the early years, the international TA were predominantly short-term advisers and this proved to be less effective than longer-term inputs; (b) output indicators were mainly the production of reports, and thus diverted resources from the real knowledge transfer to counterparts; and (c) advice given by the TA was less effectively absorbed by the counterpart because of its relatively low capacity and quick rotation of staff. Monitoring and Evaluation 4.2.33 An early Monthly Report (April 1998) prepared by the TA, PA and PSU stated that " ... monitoring and evaluation efforts are recognized by all partners to the project as insufficient ... " and proposed that the DOL should mobilize more staff for the PSU and use an internationally-recruited adviser to develop a suitable monitoring system and to provide training (N.B. This was three years after the project had been prepared). 4.2.34 Key Performance Indicators The SAR classified the key performance indicators (KPI) into three categories: (a) output indicators; (b) efficiency indicators; and (c) impact indictors. While the output indicators were defined in detail, the efficiency and the impact indicators were proposed to be defined during years two and three of the project. Unfortunately, these indicators have never been defined. The Socio-economic Baseline Study was only completed towards the end of the project. 4.2.35 To assess the project's achievements relative to the objectives, outcome/impact indicators have been reconstructed in line with the project's development objectives and presented in Annex 1. The ICR mission also recognized significant social impacts, and additional indicators have been formulated to reflect the social aspect. In line with the project objectives, the outcome/impact indicators are classified in three headings: (a) land market/tenure security; (b) resource mobilization; and (c) social/gender. It is recommended that these indicators should be used to facilitate the monitoring and evaluation of LTP II. During the ICR mission, discussions were held with the project's management concerning these indicators. Some data are already available to the project's management. It is important to establish the framework and define the indicators, and follow this by data collection and analysis. 4.2.36 Land market and tenure security Indicators under this category were not defined in the SAR. Five indicators have been defined and assessed (Annex 1). These show that the land market has gradually been developed and tenure has been secured, as people make registrations to buy and sell land, to obtain mortgage loans, to inherit land and to carry out other transactions. For 2004/2005, the total number of transactions was 7 percent of the total number of titles distributed. Systematic data collection has taken - 14 - place only for two years since 2003/2004, and the two-year comparison is summarized in the table below. Although two years is too short to validate the result, the table shows that the number of transactions has increased. The annual increase of transactions recorded between 2003/2004 ­ 2004/2005 was 29 percent. Without the project, there were no recorded land transactions. This shows that, gradually, a land market is being developed and that beneficiaries are using their land titles as collateral for loans. 2003/2004 2004/2005 % change Sale transactions 4,779 6,147 +29 registered Mortgages registered 3,271 3,937 +20 Inheritances registered 212 285 +34 Other transactions 8,747 10,058 +15 registered Total transactions as a 10.0 7.0 percentage of total titles 4.2.37 Resource mobilization The resource mobilization indicators can be classified into two parts: (a) annual taxes/fees collected by the government; and (b) credit disbursed to beneficiaries from banks using land titles as collateral. While data for the first of these indicators is broadly available, data for the second is not. It is recommended that the LTP II project management should make a follow-up on this credit aspect for the monitoring and evaluation of the LTP II project. The table below shows good performance in revenue collection. In 2004/2005, the annual revenue collected by the government is about 80 percent higher than that projected in the SAR. The main components of this increase in land taxes are as follows. SAR Projection * Collection 2004/2005 change ( %) (US$ million) (US$ million) Land tax 1.28 2.60 +103 Subsequent registration 0.69 0.75 +9 fees Other fees - 0.18 - Total 1.97 3.53 +79 * for Project Year 9 (2004/2005) 4.2.38 The table below shows the evolution of government revenue collected from the whole country between 1995-2005. It is estimated with the project management that the project areas account for about 90 percent of the total. As the project started in 1996-1997, the year 1995-1996 can be assumed as the last "without-project" year. The table clearly indicates that the project has had a good fiscal impact as government revenue has increased more than ten-fold compared with the revenue collected in the "without-project" period. Land tax and subsequent registration fees contributed about 74 percent and 21 percent, respectively, of the total. The project was instrumental in facilitating domestic resource mobilization. - 15 - Fiscal Year Land Tax Subsequent Others Total Incremental* % change* Registration Amount (million Kip) 1995/1996 2,216 749 182 3,147 - - 1996/1997 2,412 979 125 3,516 369 12 1997/1998 2,887 852 143 3,882 735 23 1998/1999 4809 1,865 343 7,017 3,870 123 1999/2000 7,390 2,158 546 10,094 6,947 221 2000/2001 16,744 3,153 856 20,753 17,606 559 2001/2002 21,500 3,200 1,000 25,700 22,553 717 2002/2003 24,023 4,273 1,625 29,921 26,774 851 2003/2004 25,151 6,215 1,548 32,914 29,767 946 2004/2005 27,624 7,845 1,881 37,350 34,203 1,087 * increment over the base year 1995/1996 In addition to the above revenue, the project has generated revenue to the Department of State Assets (DSA). During the process of land adjudication, it became clear that some lands belong to the state and therefore require the payment of rent or lease. In 2004/2005, the total revenue collected by DSA was estimated at about 41 billion kips, of which about 20 percent (about 8.2 billion kip - US$780,000) was reported to be generated as a result of the project. 4.2.39 Social and gender It has been frequently reported that social conflicts caused by unclear parcel boundaries have been reduced substantially. However, there is no hard fact to substantiate this claim. As an indicator, one possibility would be to collect and analyze the trend of the number of court cases concerning land disputes. The land titling project as such could be seen as a process to exercise pressure on owners to resolve their long-standing disputes on land. As the incentive to resolve their differences, they will receive land title which can be used to generate additional financial benefits. Efforts by the project to promote the involvement of and awareness among women through the Customer Relations and Services (CRS) appear to have had a good impact. As a result, about 37 percent of distributed titles have been registered under the names of women alone, compared to 21 percent registered under the names of men alone. 4.3 Net Present Value/Economic rate of return: 4.3.1 At appraisal, no economic analysis was made of the project. The benefits of the project were expected to flow from the issuance of land titles and other "outputs" of the project (e.g., aerial photomaps and cadastral maps), the improved systems of land valuation and land information, and a land administration service more accessible to the public and more efficient in its operations. These benefits do not lend themselves to a conventional economic analysis; accordingly, no economic analysis has been made for the ICR. The SAR stated that some benefits, for example the value of title as collateral for borrowing and the value of the land itself, have been quantified through ex post socio-economic impact studies for land titling projects in other countries (e.g., Thailand). The SAR for the LTP II included a cost:benefit analysis that estimated benefits in terms of increased land values in the urban areas but excluded land values in the peri-urban and rural areas. The SAR also drew attention to the socio-economic impact study that was to have been carried out under the LTP and emphasized that the results of this study would provide the data for econometric analysis to yield: (a) an ex post cost:benefit analysis for the LTP; and (b) - 16 - a consolidation of the ex ante cost:benefit analysis of the LTP II. However, as described above, no socio-economic impact study has been carried out under the LTP. This is regrettable, and it is recommended that attention should be given to this issue by the project management and IDA as soon as possible. It would be a relatively simple task to design a representative sample frame to collect data on project benefits, especially the value of land, and urban, peri-urban and rural areas should all be included 4.4 Financial rate of return: 4.4.1 At appraisal, emphasis was placed on the potential increase in government revenues that could be expected to result from the project. These incremental revenues would accrue from: (a) the transfer fees from a higher number of recorded transactions and higher land values; (b) higher land tax collection as a result of higher collection rates and more realistic assessments of land values; and (c) taxes on capital gains from increased land values. In order to estimate potential revenue increases, a simple model was prepared based on: the number of titles to be delivered, the cadastral fees and costs of title certificate to be levied, a range of land values, a land tax rate, a collection rate for land taxes, a land transfer fee and an estimated number of titled land parcel transactions. 4.4.2 By the last year, Year 9 (2004/2005), of the project, the model had estimated that the project total annual gross revenue would be US$1.97 million, made up of land taxes (US$1.28 million) and subsequent registration fees (US$0.69 million). The actual collection of revenue was comfortably higher than the projection at US$3.53 million of which land taxes comprised US$2.6 million and subsequent registration fees US$0.75 million. 4.5 Institutional development impact: 4.5.1 Overall, the project has had a modest impact on institutional development. The project received strong support aimed at remedying the weaknesses identified in the course of preparation, including several constraints that were considered to be common factors in other land titling projects in the Region and elsewhere. At the beginning of the project, the DOLHM had a staff of less than 20, of whom few had skills relevant to the project; up to that point, the main purpose of the DOLHM had been the assessment and collection of taxes. The pilot and bridging activities, the establishment of the Project Support Unit, the appointment of an internationally-hired PA to support procurement, financial management, planning, and monitoring and evaluation, and the use of long-term technical assistance, have all had an impact but have not led quite to the institutional development and level of sustainability of DOL or of the PLOs that might have been expected. By contrast, the institutional capability of the Lao Women's Union, the National Geographic Department and the Polytechnic School have been measurably and significantly improved. 4.5.2 The limited institutional development achieved had multiple causes. The lack of a human resource development strategy was associated with inadequate training, a modest level of education for many staff, a shortage of qualified staff, and frequent transfers of staff. However, the DOL did establish a systematic land parcel registration system and created the pool of skilled staff necessary to sustain it. The Valuation Information System (VIS) was established in eleven Districts in five Provinces. The out-reach function (the sub-component of Customer Relations and Services) was inadequate in the early years of the project to cover the range of project activities, affected communities and beneficiaries; however, engaging the formal support of the Lao Women's Union enabled a significant improvement in the dissemination of information and a focus on protecting women's rights to land. - 17 - 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: 5.1.1 The most important factor was the Asian economic crisis which contributed to the government's difficulties in providing counterpart funds especially in the period 1997-1999. The DCA was amended in April 1998 to check the escalation of government budgetary contributions to the project resulting from the large depreciation of the domestic currency. [N.B. The currency crisis in Thailand in 1997 and the ensuing negative economic effect on the region affected Laos, but its problems were also in large part caused by domestic monetary and fiscal policies. The loss of fiscal discipline that resulted from the government's financing of ambitious growth and investment projects, particularly the construction of large irrigation projects in 1997-1998 to increase rice production, provoked a steep inflation/depreciation spiral; inflation on a twelve-month basis peaked at 167 percent in early 1999 and by mid-1999 the domestic currency had lost 90 percent of its value over the previous two-year period.] 5.1.2 The entry into effectiveness of the Credit was slightly delayed (it was signed on June 7, 1996, the target effectiveness date was September 7, 1996 and the actual effectiveness date was February 27, 1997), as a result of the revision of budgets implemented by the government of Australia following the federal elections of March 2, 1966. The final approval by the government of Australia to cofinance the project was given in November 1996. The consequent delay in signing the Memorandum of Subsidiary Arrangements (MSA) between the governments of Laos and Australia delayed the effectiveness of the Credit, the dead-line for which was extended twice by the IDA. The MSA was finally signed on February 6, 1997. 5.2 Factors generally subject to government control: 5.2.1 The project encountered several implementation problems in this category. There was an inadequate supply of counterpart funds throughout the life of the project, and the timing of availability of counterpart funds was frequently ill-matched to the requirements of expenditure patterns. There was a shortage of suitably-qualified government staff to allow the formation of the PSU and the number of SATs required according to the plans for expansion. In many areas, staff skills were inadequate and the issue of sufficient training was continually debated with the government. The financial incentives to the members of the SATs to undertake the necessary field work were originally low and impeded efforts to improve "productivity" in land surveying and adjudication; this was resolved via the provision of adequate daily allowances and other incentives. The complex procedures for approval and signing of land-use titles are now being addressed under the LTP II with the expanded use of the LPRS. Early supervision reports commented on the need of the PSU for more staff both to manage the project and to absorb the training made available by the PA but stated that the budgetary resources were limited and that there was a hiring freeze for government staff. 5.2.2 Information received by the ICR mission indicates that practices which were not in line with the project procedures may have taken place during project implementation, especially in Vientiane municipality. The motive force for these practices lies in the value of the titled land which exceeds by a huge margin the fees that are paid by the land-owner to the DOL for the title and registration. Some SATs reportedly demand and receive a share of this "economic rent" received by the newly-titled land owner. - 18 - 5.2.3 The first indications of practices not in line with project procedures appear first to have arisen in the record of the supervision mission of March/April 1998. The Aide Memoire and the subsequent management letter refer obliquely to the fact that land titling " ... procedures may not have been followed ... " and to the need for systems to be developed " ... to ensure that occupiers of land are not unjustly dispossessed ...". The recommendation was that " ... to improve strictness and transparency in the implementation of land titling procedures, it is critical that: (i) internal project monitoring procedures be strengthened and remedial action taken promptly when problems are identified; (ii) independent technical audits be conducted ...; and (iii) in addition to administering an oath for members of adjudication teams, the Project Director should issue an Order laying out staff rules and procedures for land titling as well as penalties in cases of non-compliance ... ". [see paragraphs 4.2.2 - 24] 5.3 Factors generally subject to implementing agency control: 5.3.1 The DOL faced a particular challenge at the beginning of project implementation. It had a staff of under twenty people, and few had the skills necessary for the new project, the main function of the Department being the assessment and collection of land taxes. The DOL has grown and developed under the project 5.4 Costs and financing: 5.4.1 A comparative analysis of project costs at SAR and ICR is shown in Annex 2a, and the salient features are summarized in the table below. The total project costs at ICR are estimated at US$ 20.51 million, or about 72 percent of the costs estimated at SAR (US$ 28.38 million). Analysis of the cost structure reveals the following: (a) the cost of component "Land Titling" was less than 50 percent of the SAR estimate; and (b) the cost of component "Institution Building" is more that 2.6 times that of the estimate of the SAR. Component Cost estimate at Actual Actual cost as appraisal cost percentage US$000 US$000 of appraisal estimate A. Legal Framework 440 48 10.9 B. Land Titling 16,520 7,600 46.0 C. Land Administration 2,468 2,483 100.6 D. Land and Property Valuation 790 74 9.4 E. Project Implementation and Capacity 3,932 10,306 262.1 Building F. Studies 550 - - Contingency provision 3,680 - - Total 28,380 20,511 72.3 6. Sustainability 6.1 Rationale for sustainability rating: 6.1.1 The sustainability of the project, defined as the probability of its achievements being maintained in relation to the objectives, is rated as likely. The project was defined in preparation as the first phase of a long-term national land titling project. Its implementation over-lapped with the LTP II by two years; LTP II was brought forward in order to take advantage of IDA funding that would no longer have been available to Laos after the end of the (IDA) Fiscal Year 2003. Changes were introduced into the project during - 19 - implementation and other changes were introduced into the design of LPT II as pragmatic responses to the evolution of the institutional structure and the experience gained in mapping, surveying and titling. 6.1.2 Before the project, the "first registration" of rights to land was undertaken sporadically, at the request of the land-holder, and the ability to obtain registration was not uniformly available throughout the country. It was a slow system and the cost precluded the participation of all but the wealthier land-holders. The introduction of systematic registration has generated great interest in all of the communities in which it has been introduced, and has raised the level of awareness of the need to participate in the formal system mainly through "enlightened self-interest". 6.1.3 A strong basis for a sustainable LPRS has been introduced, and the legal and policy framework (beginning with the Land Law) is fully supportive. Continuity of project activities is being provided by LTP II and the support it is receiving from IDA and AusAID. However, the sustainability of a long-term land titling program is critically dependent on the maintenance of strong project management and a commitment to the development of human capital in what is essentially a "knowledge-based" piece of economic infrastructure. This requires both an increased awareness and improved implementation of human resource development, including staff selection and training. 6.2 Transition arrangement to regular operations: 6.2.1 A restructuring plan for DOL was prepared and implemented in the last two project years (overlapping with LTP II). The borrower finished the integration of the Project Support Unit in DOL at the central level and the integration of Project Facilitation Units in the LPOs at provincial level. The activities initiated under the project will become a part of the regular operations of the Planning and Finance Division of DOL, which ensures the sustainability of the achievements of the project to a great extent. The project, and its successor the LTP II, created and continue to create information data-bases in the form of mapping and surveying products and the details of land holdings and land holders. To achieve this, significant physical and human resources are applied to specific geographical areas for a limited period of time. The subsequent use and maintenance of these data-bases becomes the responsibility of the implementing agencies, the DOL and the NGD at the national level and the PLOs at the provincial level. The transition arrangement to regular operations consists of these institutions being provided with the necessary budgetary and human resources to carry out their tasks and to make instrumental the significant revenue-raising capability of the systems. 7. Bank and Borrower Performance Bank 7.1 Lending: 7.1.1 The performance of the IDA in ensuring quality at entry is considered to have been satisfactory; there were minor shortcomings in identification, preparation and appraisal. 7.1.2 The project was identified in early 1993, with the government making initiatives to the IDA. The Initial Executive Project Summary appeared in September 1994. Both the IDA and Australian Development Assistance played an important role in preparing the Land Titling Project and in supporting start-up activities in the period immediately before it was launched. The initial preparation of the project began with an IDA-executed Japan PHRD grant that was signed in June 1994. The consulting firm BHP Engineering Pty. Ltd. of Australia was selected to prepare the project in mid-1994; it began work in - 20 - November 1994 and presented the draft preparation report at the end of March 1995. The preparation report was considered by IDA to be of very good quality, and the consulting firm responded quickly to IDA requests for certain clarifications and changes. 7.1.3 In order to initiate certain activities in anticipation of the IDA credit, a Pilot Land Titling Project was designed, and BHP was awarded a contract to assist the government to implement it. A trust fund financed by the Australian International Development Assistance Bureau (AIDAB) in the amount of A$1.0 million was created to provide technical assistance for the Pilot Project. During the course of the Pilot Project, the consultant provided concise and practical bi-weekly technical reports (a total of 42 reports) on its progress that greatly assisted the IDA in monitoring the progress. Under the Pilot Project, a contract was awarded to Kevron Lao Co. Ltd. to produce aerial photographs at a scale of 1:12,500 over an area of 360 kmē between October and December of 1995 in the provinces of Pakxe, Savannakhet, Vientiane and Luang Prabang. The first draft of the proposed new Land Law was produced in November 1995 by BHP legal consultants and the Draft Land Law itself was issued on January 27, 1996. In addition, the legal framework for systematic adjudication was prepared, the draft land registration decree was prepared, the Land Valuation and the Human Resource Development reports were produced, and bidding documents for major procurement activities were prepared. 7.1.4 In early 1996, the Australian Agency for International Development (AusAID, the successor to AIDAB), provided a further A$290,000 of "bridging finance" to maintain the momentum gained by the Pilot Project and to provide institutional support until the Land Titling Project itself could commence operation with the Effectiveness of the Credit. This bridging project operated from February to August 1996. Following the federal elections in Australia in March 1996, a series of budget reviews meant that the final decision concerning AusAID's participation in the Land Titling Project could not be taken until August of that year; in order to maintain the momentum achieved by the pilot project, a second "bridging project" was conceived to operate from August 1996 until March 1997 at a cost of US$409,500 contributed by AusAID. BHP consultants continued with this work under an amended contract through the established trust fund. Major tasks at that point were the provision of legal assistance to review the draft Land Law, continued support for systematic adjudication, the production of photomaps to support the first year of the Land Titling Project and the provision of support to prepare for implementation of the mapping component, support for the review of the Lao geodetic network, and further support on training and on the land policy framework. Because of the delay in declaring the Credit effective, it was anticipated that the key Technical Assistance under the project to be co-financed by AusAID could not be expected to be mobilized and functioning before July, 1997. Accordingly, a third "bridging project" was funded by the government of Australia for A$260,000 (to cover the expenditures anticipated by the consultant of $201,570) and fulfill the requirements for continued technical support between April and June, 1997. The consultants responsible for the implementation of the pilot project and its three extensions prepared a total of 52 fortnightly reports. 7.1.5 In June, 1996 the consultants presented the draft final report on the Pilot Land Titling Project which was considered by IDA to have been a success. The IDA made extensive comments on the report. The DCA and the SAR included the commitment by the government to submit to the IDA a time-bound Action Plan to implement the recommendations of the report on the basis of the lessons learned from the pilot project. 7.1.6 Pilot project reports on training and on mapping and land adjudication plan. Geodetic network report that commented on the multiple datums in existence for Laos and the need to unify them into a single datum for the whole country to support the mapping component of the Land Titling Project. - 21 - 7.1.7 The Final Executive Project Summary was reviewed in June 1995, and appraisal of the project was approved. The main concerns at that time were that permanent institutional capacity should result from the project and that there should be participation of stakeholders in the consideration of the design of the project and its implementation arrangements. The low rate of parcel registration already being experienced in the pilot phase of the project raised concerns about the need to make less onerous the documentary evidence in deciding on land-use rights and the apparent high levels of back-taxes owed by many land-holders that prevented them from registering (with its then-requirement of being up-to-date). The ability of the main implementing agency to manage the project and to obtain and train the required number of staff were recognized as constraints, and the use of a project management agent and staff seconded from other public sector institutions and supplemented from the private sector were proposed. 7.1.8 In negotiating the credit, and in the light of experience with the pilot project, the IDA agreed to extend the project implementation from five to seven years in order to achieve the target number of parcels to be adjudicated and titled. Similarly, the concept contracting of systematic adjudication in the provinces to the private sector was abandoned. The pilot project had also revealed that the NGD was unable in practice to produce the required quality of photomaps that had been anticipated as a result of lack of experience and inadequate equipment. The use of a private sector entity was agreed upon to work with the NGD and produce maps during the first three years of the project, with the understanding that if NGD was able to demonstrate after that period that it had acquired the capability, it would be provided with the necessary equipment to do so. 7.2 Supervision: 7.2.1 The performance of the IDA is considered to have been satisfactory; there were minor shortcomings in the identification of problems that presented themselves during implementation. 7.2.2 The DCA was dated June 7, 1996 and became effective on February 27, 1997. It was amended three times. The first, on April 1, 1998 (in response to a supervision mission and Country Portfolio Performance Review (CPPR) finding that pointed to the urgency of restructuring to deal with the financial crisis and to introduce a change in project implementation method) introduced changes in the disbursement percentages for Categories 4 and 5 and raised the aggregate procurement ceilings for goods purchased via national competitive bidding, international shopping, and UN agencies, direct contracting and local shopping. The second, on December 12, 2001, expanded the definition of the project area to include four additional provinces (Khammouane, Bolikhamshay, Saravan and Sayaboury). The third, on September 9, 2002, reallocated the proceeds of the Credit between Categories, adjusted the financing percentages for Categories 4 (land adjudication) and 7 (local training), and increased the procurement thresholds to allow for more procurement by NCB, international shopping and local shopping. 7.2.3 The Closing Date of the Credit was extended in September 2003 for one year to allow completion of civil works on six buildings and on land policy development work. Land titling activities continued to be financed only until December 2003 in order to ensure a smooth transition to LTP II. The Closing Date was again extended by one year in September 2004 to allow the continued work on land policy (that had suffered a hiatus during the creation of the single National Land Management Authority, completed in May 2004) and training facilities considered necessary after the re-organization of the DOL. 7.2.4 The Second Land Titling Project (LTP II) was brought forward in the lending program in order to utilize available IDA funds that would otherwise not have been available to Laos after FY2003. Several changes were introduced into LTP II to reflect lessons learned in the implementation of the project. - 22 - 7.2.5 The Technical Assistance provided to the project was satisfactory, particularly in the development of the legal and policy frameworks and the establishment of the LPRS. In retrospect, more emphasis could have been placed on: (a) seeking an improvement in the whole operation of the Land Offices, particularly in the area of delivery of services; and (b) human resource development, especially training, to support the long-term development of the land titling system. In addition, helping to build capacity in planning and monitoring was neglected during the project, with the result that both DOL and the PLOs have significant difficulties in preparing their work plans and budgets and in monitoring results. 7.2.6 The Mid-term Review (MTR) in October 1999 focused on two issues; the low levels of productivity in terms of the number of titles produced by the individual SATs and the overall component, and the inadequate and late contributions of counterpart funds by the government. IDA management showed great concern at the outcome of the MTR, recording that "... the project had reached a break point and required swift action to save it.". Immediate missions were sent to make clear to the government the actions that were necessary for the project not to slide into "unsatisfactory" status. Since the project was clearly at risk, in early 2000 the contingency of restructuring the project was proposed in the event that the government failed to provide the adequate counterpart funds. Subsequently, it was considered that the government had shown its commitment to the project by providing counterpart funds and making funds available to the project provinces to meet their responsibilities. Implementation subsequently accelerated and the number of titles issued increased significantly. 7.2.7 The IDA showed flexibility in helping to implement the project. The project was originally designed with a five-year implementation period that was extended during negotiations for the credit to seven years; two Closing Date extensions subsequently took the overall implementation period to eight years and three months. 7.3 Overall Bank performance: 7.3.1 The overall performance of the IDA is rated as having been satisfactory. Borrower 7.4 Preparation: 7.4.1 The Borrower's performance in project identification and preparation is considered to have been satisfactory. The government identified the need for a land titling program in the early 1990s to address key land-related issues that were seen as constraints to its efforts to open and reform the economy; these included the need for systematic land administration, security of tenure, resolution of disputes and increasing occupation of land. The Constitution of 1991 confirmed the rights of individuals to use land. Assistance was sought to formalize and register land-use rights and to resolve conflicts over land occupation as an important step in the development of fiscal revenues and land markets and to encourage investment and economic growth. The preparation process actively involved the participation of the principal implementing agency, DOLHM, and two workshops were held to discuss the project concept and draft designs with representatives of national, provincial and district-level government agencies involved in land management and administration. 7.4.2 Before negotiations for the Credit, the Foreign Aid Management Committee (of the Committee for Planning and Cooperation) raised issues concerning the (apparently large) size of the proposed credit, the - 23 - over-emphasis that it felt was placed on technical assistance and on the proposed Project Management Agent (subsequently the Project Administrator), and the possibility of waiting until the pilot project was complete in order to incorporate its conclusions into project design. 7.5 Government implementation performance: 7.5.1 The performance of the Borrower in implementing the project is considered to have been moderately satisfactory. The government failed to provide adequate and timely counterpart funding, and this was a major issue in the (government's) Fiscal Years 2003 and 2004. This directly affected the achievement of targets, especially the number of land titles registered and the level of institutional development achieved. There were inadequate numbers of government staff made available in the early years for the formation of the SATs, but this limitation was later overcome through the use of contract staff. 7.6 Implementing Agency: 7.6.1 The performance of the DOL in implementing the project is considered to have been moderately satisfactory. 7.6.2 The performance of the NGD in implementing the project is considered to have been moderately satisfactory. 7.7 Overall Borrower performance: 7.7.1 The overall performance of the Borrower is rated as having been moderately satisfactory. 8. Lessons Learned 8.1 From the preparation of the project, the initial Pilot Project stage and the implementation of the project itself, a number of lessons can be drawn. Some of these had a direct bearing on the preparation of the LTP II and are of wider interest for other projects and programs in Laos: (a) The design and implementation of the project before the preparation of a long-term land titling program means that both the government and the IDA were thinking and acting tactically but not strategically. The preparation of a long-term program, providing a framework for the design of projects and other interventions, would also provide the opportunity for stake-holders to discuss the broader issues concerning land in Laos, including communal and traditional land-use rights (particularly in the upland areas) and the policy of long-term leasing of state-owned land to private sector investors. A land titling program can be expected to encompass a succession of projects. In this case, the project effectively made a start on a number of key activities in anticipation of the preparation of a Land Titling Program which was not, in fact, ever prepared. The Program should at the very least have been prepared in parallel with the project, in such a way that the role of the project and its objectives could be understood in the wider context. (b) The use of a preparation grant and a pilot project with bridging finance helped to develop continuity and the early accumulation of practical experience in new techniques and practices where the legal, policy and practical frameworks were at best ill-defined and at worst nonexistent. (c) Wherever possible, the objectives of a project should be made as specific as possible and should be - 24 - defined in discrete and quantifiable terms. In this project, the stated objectives had more the characteristics of "program goals" and were very qualitative. When a project is funded from two or more sources, it is important to set the objectives and establish the implementation structure and policies clearly from the start to avoid operational difficulties during implementation. (d) It is essential to prepare a base-line study either as part of project preparation or as soon thereafter as possible. Without such a study and its results, the definition of quantitative targets is made difficult and the preparation of a monitoring and evaluation system impossible. (e) The provision of counterpart funds in an adequate amount and a timely fashion is essential to effective project implementation. The ramifications of inadequate counterpart funding extended to all aspects of implementation and carried over from one project year to another. The standard language of legal agreements concerning the provision of counterpart funds is clearly inadequate as a useful tool. (f) Where significant change and growth is required in public sector institutions as a necessary condition for project or program success, a careful and pragmatic strategy of institutional development is required including the requirements for development and training of human resources. The capacity of DOL to plan and to manage resources to meet the project timetable was consistently over-estimated. In general terms, the skills of staff under the project remained relatively low because of inadequate training. Institutional development faces many obstacles, including internal resistance to change and inertia; in the project, the DOL and the DSA (within the same Ministry) did not integrate their registration systems (for individually-held land and state-held land, respectively) which remain separate to this day. (g) The use of modern technology (for example, digital orthophoto maps, GPS and advanced information technology) in projects of this kind is clearly superior to, and more efficient than, older techniques. The introduction of such technology in the project required greater attention than anticipated. The use of relatively sophisticated survey equipment and information technology requires that special attention be budgeted for maintenance and for the rotation of damaged equipment. (h) The indications of malpractices in the implementation of the project lead to the conclusion that other projects under implementation, and particularly the LTP II, should be subjected to an in-depth review. The LTP II should also be "retrofitted" with a mechanism to address these practices, which could include (among other measures) information on how concerned stakeholders may make confidential complaints to the Department of Institutional Integrity of the World Bank Group and the establishment of a formal complaint mechanism, third party monitoring of the project and independent technical audits. (i) Eight studies were identified in appraisal as being necessary to the efficient implementation of the project or the preparation of the (proposed) underlying land titling program. The studies were either delayed in their start-up or, in some cases, never begun. If studies are considered at appraisal to be important, their preparation should be pursued energetically during project implementation. (j) The experience of the project demonstrates the importance of out-reach activities (in this case, the CRS sub-component) where significant changes in "culture" or traditional practices are concerned. The participation of communities, their individual members and their leadership in making land-holders aware of the benefits of participation in the project, as well as their rights and obligations with respect to land management and taxation, became of increasingly obvious importance after the early stages of implementation. (k) The creation of a complete land administration system is an enormous undertaking that must be - 25 - expected to take decades to achieve. It requires strong government commitment and a gradual shift in the social and cultural awareness of diverse groups concerning the importance of rules, regulations and laws as they affect titling, registration, the resolution of disputes and tax obligations. (l) In addition to the AusAID-funded TA, which focused primarily on the technical and institutional aspects, other TAs were also required and were funded by the IDA Credit to assist the project management in the PSU and PFUs. The resulting two groups of TA, with different mandates and funded from separate sources, were somewhat counter-productive. It is considered appropriate to design the TA as one coherent group to support the project management. (m) Surveying equipment was procured early in the project from one manufacturer, and a large training effort was carried out to enable staff to use it properly. Later, a second procurement exercise led to a different manufacturer; this caused significant delay in project implementation and some frustration among staff, because the two systems were not compatible and staff require training and re-training with the new equipment. The effort involved in bringing a second type of equipment and its supporting soft-ware into use, and the inefficiencies inherent in using two systems in parallel, probably far out-weighed the difference in acquisition costs. In this project, a strong case could have been made for standardizing on one manufacturer when additional equipment was required to be purchased. 9. Partner Comments (a) Borrower/implementing agency: 9.1 A summary of the Completion Report prepared by the Borrower is presented in Additional Annex 9. 9.2 The DOL confirmed its accordance with the issues, findings and lessons learned in this ICR. (b) Cofinanciers: 9.2 The comments on this ICR provided by the project's co-financier, AusAID, are shown in Annex 10. AusAID also prepared a Completion Report on its involvement in the project in September 2003 at the time of the original Closing Date of the Credit and at the commencement of LTP II (the "second phase" of the project), a copy of which is in the project files. (c) Other partners (NGOs/private sector): 9.3 There were no other partners involved in the implementation of the project. 10. Additional Information - 26 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Projected at Appraisal A. Land Market and Tenure Security: Number of sale transactions registered, not specified 6,147 2004-5 Number of mortgages registered, 2004-5 not specified 3,937 Number of inheritances registered, 2004-5 not specified 285 Other transactions registered, 2004-5 not specified 10,058 Total transactions as % of total titles not specified 7 distributed B. Resource Mobilization: Annual tax and fees collected, 2004-5 [1] 1.97 3.53 (US$ million), of which: - land taxes 1.28 2.60 - subsequent registration fees 0.69 0.75 - others - 0.18 Annual bank credit disbursed using title [2]: not specified US$36.5 million - agriculture US$1.2 million - services US$31.00 million - other US$4.3 million C. Social and Gender: - conflict reduction not specified data not available - titles registered in women's names as a not specified 37 percentage of the total titles awarded D. Income from Land Rental and other [3] - land rental not specified US$22.4 million - surveying fees and other income not specified US$6.30 million 1. for the whole country: project provinces are estimated to account for 90 percent of the total. 2. data from 1988-2005; annual data are unavailable 3. Department of State Assets: data for 1994-2005 - 27 - Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Projected at Appraisal/Revised A. Land Titling: number of parcels surveyed 323,100/200,000 190,656 number of parcels registered 323,100/200,000 151,777 number of titles distributed 258,480/144,000 122,934 B. Buildings: NGD building renovation 1/2 2 NGD building extension 1/0 0 DOL office building not specified 1 Provincial Land Office building 5/9 9 C. Base Mapping: aerial photography - 1:5,500 51,000 ha data not available - 1:12,500 415,000 ha data not available map production - 1:1,000 43,400 ha 20,600 - 1:2,000 - 13,700 - 1:4,000 184,000 ha 855,600 D. Institutional and Staffing Systematic Adjudication Teams 19/22 22 total SAT staff 456 660 DOL staff ot specified 66 (34 government/32 contractors) PSU staff 13 19 (9 government/10 contractors) Provincial Facilitation Unit staff 20 47 valuation staff 18 20 E. Local Training: adjudication 496 person-months 56 person-months training of trainers 24 person-months 99 person-months local officials 64 person-months F. Technical Assistance and Overseas Training foreign advisors 216 person-months 224 person-months national advisors 296 person-months 428 person-months fellowships 306 person-months 257 person-months short-term training 107 person-months data not available G. Studies fees and cost recovery 6 person-months not carried out community land tenure 6 person-months not carried out forest boundary definition 6 person-months completed nationalized lands 6 person-months not carried out socio-economic base-line 15 person-months completed 1End of project - 28 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million A. Legal and Policy Framework 0.44 0.05 10.91 B. Land Titling: 1. Base Mapping 5.56 1.97 35.4 2. Systematic Adjudication 9.53 4.82 50.56 3. Sporadic Adjudication 0.58 0.48 83.45 4. Training for Accelerated Land Titling 0.19 0.15 80.53 5. Customer Relations Services 0.66 0.18 26.82 C. Land Administration 2.47 2.48 100.6 D. Land and Property Valuation 0.79 0.07 9.37 E. Project Implementation and Capacity Building 3.93 10.31 262.11 F. Studies 0.55 Total Baseline Cost 24.70 20.51 Physical Contingencies 0.15 Price Contingencies 3.53 Total Project Costs 28.38 20.51 Total Financing Required 28.38 20.51 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 0.45 0.41 0.00 0.00 0.86 (0.39) (0.35) (0.00) (0.00) (0.74) 2. Goods 2.77 0.57 0.31 0.00 3.65 (2.26) (0.51) (0.28) (0.00) (3.05) 3. Services 5.02 0.00 2.55 5.06 12.63 (4.65) (0.00) (2.55) (0.00) (7.20) 4. Miscellaneous 0.00 0.00 0.32 0.00 0.32 Recurrent Costs (0.00) (0.00) (0.22) (0.00) (0.22) 5. Miscellaneous 0.00 0.00 10.60 0.00 10.60 Land Adjudication (0.00) (0.00) (9.24) (0.00) (9.24) 6. Miscellaneous 0.00 0.00 0.32 0.00 0.32 Local Training (0.00) (0.00) (0.28) (0.00) (0.28) Total 8.24 0.98 14.10 5.06 28.38 (7.30) (0.86) (12.57) (0.00) (20.73) - 29 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 0.00 2.48 0.24 0.00 2.72 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 1.56 0.22 1.99 0.00 3.77 (0.00) (0.00) (0.00) (0.00) (0.00) 3. Services 1.55 0.00 2.28 5.99 9.82 (0.00) (0.00) (0.00) (0.00) (0.00) 4. Miscellaneous 0.00 0.00 0.16 0.00 0.16 Recurrent Costs (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 3.63 0.00 3.63 Land Adjudication (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.41 0.00 0.41 Local Training (0.00) (0.00) (0.00) (0.00) (0.00) Total 3.11 2.70 8.71 5.99 20.51 (0.00) (0.00) (0.00) (0.00) (0.00) 1/Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to managing the project. - 30 - Annex 3. Economic Costs and Benefits At appraisal, no economic analysis of the project was carried out. Emphasis was placed on the potential increase in government revenues that could be expected to result from the project. These incremental revenues would accrue from: (a) the transfer fees from a higher number of recorded transactions and higher land values; (b) higher land tax collection as a result of higher collection rates and more realistic assessments of land values; and (c) taxes on capital gains from increased land values. In order to estimate potential revenue increases, a simple model was prepared based on: the number of titles to be delivered, the cadastral fees and costs of title certificate to be levied, a range of land values, a land tax rate, a collection rate for land taxes, a land transfer fee and an estimated number of titled land parcel transactions. By the last year, Year 9 (2004/2005), of the project, the model had estimated that the project total annual gross revenue would be US$1.97 million, made up of land taxes (US$1.28 million) and subsequent registration fees (US$0.69 million). The actual collection of revenue was comfortably higher than the projection at US$3.53 million of which land taxes comprised US$2.6 million and subsequent registarion fees US$0.75 million. SAR Projection * Collection 2004/2005 change ( %) (US$ million) (US$ million) Land tax 1.28 2.60 +103 Subsequent registration 0.69 0.75 +9 fees Other fees - 0.18 - Total 1.97 3.53 +79 * for Project Year 9 (2004/2005) The table below shows the evolution of government revenue collected from the whole country between 1995-2005. It is estimated with the project management that the project areas account for about 90 percent of the total. As the project started in 1996-1997, the year 1995-1996 can be assumed as the last "without-project" year. The table clearly indicates that the project has had a good fiscal impact as government revenue has increased more than ten-fold compared with the revenue collected in the "without-project" period. Land tax and subsequent registration fees contributed about 74 percent and 21 percent, respectively, of the total. The project was instrumental in facilitating domestic resource mobilization. - 31 - Fiscal Year Land Tax Subsequent Others Total Incremental* % change* Registration Amount (million Kip) 1995/1996 2,216 749 182 3,147 - - 1996/1997 2,412 979 125 3,516 369 12 1997/1998 2,887 852 143 3,882 735 23 1998/1999 4,809 1,865 343 7,017 3,870 123 1999/2000 7,390 2,158 546 10,094 6,947 221 2000/2001 16,744 3,153 856 20,753 17,606 559 2001/2002 21,500 3,200 1,000 25,700 22,553 717 2002/2003 24,023 4,273 1,625 29,921 26,774 851 2003/2004 25,151 6,215 1,548 32,914 29,767 946 2004/2005 27,624 7,845 1,881 37,350 34,203 1,087 * increment over the base year 1995/1996 In addition to the above revenue, the project has generated revenue to the Department of State Assets (DSA). During the process of land adjudication, it became clear that some lands belong to the state and therefore require the payment of rent or lease. In 2004/2005, the total revenue collected by DSA was estimated at about 41 billion kips, of which about 20 percent (about 8.2 billion kip - US$780,000) was reported to be generated as a result of the project. - 32 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation April 30, 1993 1 Senior Economist July 18, 1993 1 Senior Economist January 4 Preparation mission: 31-February 9, Senior Economist (TM), Civil 1995 Engineer, Economist, and Land Administration Specialist Appraisal/Negotiation May 3-13, 1995 5 Pre-appraisal mission: Senior Economist (TM), Civil Engineer, Procurement Specialist, Economist, and Land Administration Specialist June 28-July 9, 8 Appraisal mission: 1995 Senior Economist (TM), Economists (2), Civil Engineer, Procurement Specialist, Land Administration Specialist, Land Valuation Specialist, and AusAID Representative January 8-18,1996 Negotiations (in Vientiane): Senior Economist (Head), Senior Legal Counsel, Liaison Officer, and Economist (FAO/CP) Supervision May 16, 1996 4 Senior Economist, Civil Engineer, Economist, and Land Administration Specilaist. October 19, 1996 5 Economist, Senior Economist, S S Land Administration Specialist, Land Valuation Specialist, and Civil Engineer. July 24-August 2, 4 Senior Economist, Land S S 1997 Valuation Specialist, Land Administration Specialist, and Economist. March 21-April 1, 4 Senior Economist, Property S S 1998 Valuation Specialist, Land Administration Specialist, and Economist. There were also three participants from AusAID. October 5-13, 1998 4 Civil Engineer, Economist, Land S S Administration Specialist, and - 33 - Land Tenure Specialist. April 1-8, 1999 6 Environmental Engineer, S S Economist, Land Administration Specialist, Property Valuation Specialist, Land Tenure Specialist, and Operations Officer October 1-15, 1999 5 Mid-Term Review: S S Task Team Leader, Finance Sector Specialist, Economist, Land Administration Specialist, Land Tenure Specialist May 27-June 6, 4 Task Team Leader, Financial S S 2000 Management Specialist, Land Administration Specialist, and Land Registration Specialist April 29-May 8, 10 Task Team Leader, Participation S S 2001 Officer, Financial Management Specialist, Consultant Economist FAO/CP, Consultant Land Administration FAO/CP, Consultant Institutional Development AUSAID, Consultant Land Tenure AUSAID, Consultant Australian Embassy, Program Officer AusAID, and Chief of Resident Mission October 11-19, 9 Task Team Leader, S S 2001 Anthropologist, Procurement Assistant, Economist FAO/CP, Country Program Officer AusAID, Institutional Development Officer AusAID, Land Tenure Specialist AusAID, Program Officer AusAID, and representaitive of the Australian Embassy May 2-10, 2002 11 Task Team Leader, S S Anthropologist, Financial Management Specialist, Procurement Assistant, Land Policy Consultant, Land Information Consultant, Economist Consultant, Country Program Manager, Institutional Development Advisor, Community Development Advisor, and Program Officer October 14-21, 9 Task Team Leader, Legal S S 2002 Counsel, Agricultural Economist, Land Administration Consultant, Financial Management - 34 - Specialist, Procurement Assistant, Land Policy Consultant, Institutional Development Advisor, and Program Officer AusAID April 28-May 5, 14 Task Team Leader, Sector S S 2003 Leader, Agricultural Economist, Gender Specialist, Legal Counsel, Consultants (2), Financial Management Specialist, Procurement Specialist, Procurement Assistant, and Representatives of AusAID (4) February 18-25, 7 Task Team Leader, Land S S 2004 Specialist, Gender Specialist, Land Administration Specialist, Financial Management Specialist, Procurement Specialist, and Operations Officer July 13-20, 2004 6 Task Team Leader, Land S S Administration Specialist, Procurement Specialist, Financial Management Specialist, Operations Officer, and Procurement Officer October 25-26, 4 Task Team Leader , Operations S S 2004 Officer, and Representative of AusAID ICR November 10-25, 4 Agricultural Economist, S S 2005 Economist (FAO/CP), Agricultural Economist, and Rural Development Officer (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 126.581 Appraisal/Negotiation Supervision 321.283 ICR 48.589 Total 496.453 - 35 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 36 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 37 - Annex 7. List of Supporting Documents 1. Final Report of the Social Assessment for the six served provinces and two unserved provinces of the Lao PDR Land Titling Project, March 2003 2. Financial Monthly Reports, DOL Finance Section 3. Report on Land Valuation, BHP, January 31, 1996 4. Land Titling Project (Cr. No. 2832-LA) Implementation Completion Report (Borrower's Perspective), October 2005 5. Project Completion Report: Land Administration Project in Lao PDR, AusAID, September 2003 6. Initial and Final Executive Project Summaries 7. Supervision Reports 8. Fortnightly Reports of the Consultants (BHP) under the Pilot Land Titling Project - 38 - Additional Annex 8. Compliance with DCA Conditions DCA Reference Condition Action Taken Section 3.01 (a) The Borrower shall carry out Part B 1 (a) of the Complied with Project through the National Geographic Implementation of the Department (NGD) and the remainder of the Project Project through the Department of Lands and Housing Management (DOLHM). Section 3.01(b) The Borrower shall carry out the project in Partially complied with accordance with the Project Implementation Plan in Project Implementation Schedule 4. Plan Section 3.02 (a) The Borrower shall ensure that the MOF and the The "no objection" of IDA was given in NGD enter into a Memorandum of Understanding to December 1996 after a series of drafts was Memorandum of carry out Part B (1) (a) of the Project. reviewed, and the MOU was signed on Understanding February 13, 1997. Section 3.03 The Borrower shall, not later than September 30, The PA was hired and present in Vientiane 1996, employ a Project Administrator (PA) for the in June 1997 (last quarter of FY1996). The Project Administrator Fiscal Years 1996-1999. PA contract concluded in July 1999. Section 3.05 The Borrower shall, not later than January 31, 1997, Complied with. On June 22, 1998, three issue the regulations to the Decrees that set forth the main Regulations were signed by the Regulations specific requirements and procedures for the Minister of Finance on (a) systematic land issuance, registration, adjudication and adjudication; (b) sporadic land enforceability of land transfer, occupancy and use adjudication; and (c) the Land Parcel rights. Registration System. Section 3.06 (a) The Borrower shall, not later than December 31, The mid-term review was carried out in 1999 and on the basis of acceptable terms of October 1999. The National Land Titling Mid-Term Review reference, carry out a comprehensive mid-term Program was not prepared. review of the progress achieved in carrying out the Project and in developing and implementing its national land titling program. Section 3.06 (b) Promptly after the review, and taking into account The mid-term review identified a number the IDA's recommendations, the Borrower shall take of serious issues that threatened the Post-Review Actions all actions necessary to achieve the objectives of the project's successful outcome. The Project and further develop and implement its government took action to increase the national land titling program. productivity of SATs and to increase counterpart funding, but both remained issues throughout most of the project's life. Section 3.07 Not later than six months after the Closing Date of The plan is an appendix to the Borrower's the Credit, the Borrower shall prepare and send to ICR dated October 2005. Plan for the Future the IDA a plan for the future operation of the Operation of the Project. Project Section 4.01 The Borrower shall maintain records and accounts to Complied with. reflect the expenditures of the Project, have the Financial Covenants records properly audited and send a copy of the audit report to the IDA within six months of the end of each fiscal year. Schedule 4, Part A 1 The Borrower shall establish and maintain a Project Complied with. Support Unit (PSU) to be responsible for the general - 39 - Project Support Unit oversight of the Project and its supervision, management and coordination, and the Unit shall at all times be headed by a qualified project manager Schedule 4, Part A 2 The Borrower shall at all times maintain the Partially complied with. The DOHLM with satisfactory staffing, resources and macroeconomic crisis in 1997 and 1998 Department of Lands funds, and ensure that it has policies and procedures caused problems with the provision of and Housing to monitor evaluate progress achieved in counterpart funding and adequate staffing. Management implementing the project and achieving its objectives. Schedule 4, Part A 3 The Borrower shall take actions necessary to ensure Complied with. that the National Geographic Department carries out National Geographic the aerial photography and mapping activities in Department accordance with the Memorandum of Understanding. Schedule 4, Part A 4 The Borrower shall, not later than September 1, The PSC was established and held its first 1966, establish and maintain until project meeting in October 1997. Project Steering completion a Project Steering Committee (PSC): (i) Committee to provide policy guidance to the PSU; (ii) to review work plans and progress reports; (iii) to liaise between the PSU and the Land Re-Management Committee (LRMC) and recommend necessary changes in land management policies; and (iv) to coordinate between central and provincial government agencies involved in Project implementation. Schedule 4, Part A 5 The Borrower shall, not later than October 15, 1996, Complied with. establish and maintain until project completion a Project Oversight Project Oversight Committee in each Project Committee province, to be responsible for: (i) reviewing annual provincial work plans, budgets, and progress reports prior to their submission to the PSU and approval by the PSC; (ii) coordinating provincial government agencies involved in Project implementation; and (iii) reporting through the PSC on any issues which might affect Project implementation or the achievement of the Project's objectives. Schedule 4, Part A 6 The Borrower shall, not later than October 15, 1996, The PPFUs were established in step with establish and thereafter maintain in Vientiane and in the actual expansion of the project to the Provincial Project each Project Province a Provincial Project provinces. Facilitation Units Facilitation Unit (PPFU) to be responsible for assisting the PSU in managing the Project at the provincial level. Schedule 4, Part A 7 The Borrower shall ensure that the Department of Complied with. State Assets shall assist in the implementation of the Department of State Project activities related to land valuation and state Assets land management. Schedule 4, Part B 1 The Borrower through the PSU shall: (i) submit to Complied with. IDA by May 31 and November 30 of each year a Project Progress semi-annual Progress Report on Project Reports and Reviews implementation; (ii) organize and carry out joint annual project review meetings, and prepare an annual Progress Report on implementation; and (iii) prepare and implement a follow-up time-based - 40 - action plan designed to remedy any deficiencies in the Project identified during the review. Schedule 4, Part C 1 The Borrower shall, not later than November 30, Partially complied with. TORs were 1996, send to the IDA the Terms of Reference presented by the government to IDA Studies (TORs) and a time-bound action plan for carrying in final draft for approval in June out each of the studies referred to in Part E of 1998 and the "no objection" Schedule 2 (Description of the Project)*. provided. The originally defined Once approved, the Borrower shall promptly carry eight studies were reduced to five out each study and send to the IDA the draft report and then to three, which were and a work plan and budget for implementing its carried out. recommendations. Once approved by the IDA, the Borrower shall implement the recommendations. [*N.B. This is Component F as shown in the SAR.] Schedule 4, Part C 2 The Borrower shall, not later than August 31 each Complied with year, beginning in Fiscal Year 1996, send to the IDA Studies and Training the proposed programs and related budgets for training for the immediately following Fiscal Year and, once approval is received, implement the training activities. Schedule 4, Part D 1 The Borrower shall, not later than September 30, Not complied with. 1996: (i) send to the IDA for its approval the Operational Trials proposed time-bound action plan for implementing the lessons learned and recommendations derived from the results of the project preparation operational trials* undertaken prior to Credit effectiveness; and (ii) with IDA approval, immediately implement the ecommendations. * i.e., the Pilot Project and its three extensions. - 41 - Additional Annex 9 Precis of the Borrower's Completion Report 9.1 Introduction 9.1.1 The government initiated the concept of a Land Titling Program in the early 1990s to address issues related to land administration, land security, land disputes and increasing land occupation. Assistance was sought to formalize and register land ownership as a means of also encouraging investment and encouraging economic growth. The Land Titling Project (LTP) was intended to resolve the chaos and conflict of multiple claims to parcels, to rationalize the land market, and to develop a base for increasing government revenue. 9.1.2 Following an identification mission in 1994, the World Bank and AusAID worked with the Lao Government in a pilot project to change the standards of evidence to fit the Lao situation and to develop the legal framework that would enable the commencement of systematic land titling in urban areas. A second pilot project commenced in 1995 for two years to test the proposed new titling requirements and was able to title about 80 percent of the parcels, which was commensurate with systematic titling rates in Thailand. 9.1.3 The overall goal of the project was to strengthen the basis for long term sustainable economic and social development. In conformity with this goal, the objectives of the LTP were to foster the development of efficient land markets and to facilitate domestic resource mobilization by providing a system of clear and enforceable land use ownership rights, and by developing a land valuation capacity. 9.2 Project Components and Description 9.2.1 The project was to support the first seven years of a longer term national land titling program aimed at extending secure land ownership rights and developing land administration and valuation systems, including compiling cadastral mapping system. The components of the project were: (a) Completion of the policy and legal framework for land management and administration; (b) Implementation of an acceleration land titling program, including base mapping, systematic registration and sporadic registration; (c) Improvements in the infrastructure, facilities and systems for land administration; (d) Improvement in land valuation; (e) Support for project management and implementation, and institutional strengthening; and (f) Studies on community land tenure and registration, definition of forest boundaries, cost recovery, land rights issues on nationalized lands and socio-economic impact of the land titling. 9.2.2 The project aimed at surveying and adjudicating about 322,900 parcels, including 300,000 parcels through 19 Systematic Adjudication Teams (SATs) and 22,900 parcels through sporadic adjudication, and registering of about 258,320 titles (80 percent of those surveyed and adjudicated). 9.2.3 To support the land titling program, land policy and legal framework were to be developed and modified, aerial photography, base maps, training in support of systematic and sporadic adjudication and customer relations and services (CRS) were to be provided under the project. CRS was to be undertaken to ensure that land occupiers and other people involved in the project had the necessary information to effectively participate in the land titling program. In addition, the project was to develop a land administration system to improve efficiency and services delivery, ensure security of land records and sustain the land titling program after project completion. An internationally accepted valuation standards - 42 - was to be developed along with the development of land registration system. 9.2.4 The systematic titling program was to be undertaken in Vientiane Capital City, and in the urban and peri-urban areas of four provinces of Luangprabang, Vientiane, Savannakhet and Champasack. The sporadic titling program, which involved issuance of titles on a demand basis, was to start initially in three provinces, where there was potential high demand. Specific provinces to be covered by sporadic titling were to be selected annually by the Project Steering Committee (PSC) as part of the approval process for the annual work plan and budget. 9.3 Project Staffing and Institutional Arrangements 9.3.1 The project was to be implemented by DOL except the production of base maps which was to be carried out by the National Geographic Department (NGD). The Director General of DOL was to be the Project Director (PD) with a Project Support Unit (PSU). In addition, the PD would contract the services of a Project Administrator (PA) to assist in managing the project during its initial years. 9.3.2 At the provincial level, the project was to be implemented through Provincial Land Offices (PLO), in the Division of Finance, supported by a Project Facilitation Unit (PFU) in each PLO. At the national level, overall project supervision and coordination, including approval of annual work plan and budget and review of semi-annual progress reports, was to be responsible by PSC. At the provincial level, a Project Oversight Committee was to be appointed in each project province with the responsibilities of project supervision and coordination, including approval of annual work plan and budget and review of semi-annual progress reports in the province. 9.4 Achievements of Project Development Objectives 9.4.1 Project objectives were clear and fitted well within the Government's overall national policy of sustaining economic growth, which was a necessary condition for poverty alleviation. The pilot project was considered essential and instrumental to the Lao PDR, where land administration activities and the necessary legal framework were not well established in the country and there was also the need to develop confidence and skills in commencing the LTP. Therefore, the design and scope of the LTP were adequate and implementation of five years was considered realistic to enable the Government gradually to gain experience in implementing the project. The project was extended by an additional two years mainly to enable the completion of the office building of DOL, the construction of provincial land office buildings and the procurement of survey equipment. 9.4.2 LTP was signed in June 1996. However, the Credit did not became effective until around mid-1997. Delay in effectiveness was due to a delay of nine months in the approval and mobilization of the required technical assistance. While the objectives of the development of a legal framework was fully achieved the objectives of long-term sustainable land administration systems (systematic adjudication and land registration systems), building institutional capacity and accelerating land titling were only partially achieved. 9.5 Achievements of Project Outputs 9.5.1 The government considered the project very successful in the development of the legal and regulatory framework. The Land Law was promulgated in 1997 and several Prime Minister's Decrees, Ministerial and Departmental regulations and instructions were issued; these laid down solid legal and - 43 - systematic land adjudication and registration framework for land administration in Lao PDR. 9.5.2 The project was, however, less successful in building institutional capacity of the DOL and the PLOs for sustainable land administration, while the land titling achievements fell short of expectations. The former was due to lack of adequate training and low educational base of staff, weak project management at both the DOL and PLOs, particularly in land registration, land valuation, financial management, procurement, and planning and monitoring. Shortage of qualified staff and frequent transfers were additional reasons. In addition, there was neither a Human Resource Development (HRD) strategy nor a long-term training program. 9.5.3 The outputs of land titling fell short of the targets. However, DOL has successfully established a systematic land adjudication and registration, built skills of about 660 adjudication staff to sustain the long-term Land Titling Program. The productivity of adjudication was still low at 3 parcels per sub-team per day, considering low compared with international standards. 9.5.4 The implementation of the land registration system was still limited due to its cumbersome procedures and un-transparency and inadequate CRS. Similarly, the Valuation Information System (VIS) was developed to support only 11 districts in five provinces (Vientiane Capital City, Luangprabang, Savannakhet, Champasack Province and Khammuane) due to inadequate experienced and severe shortage of valuation staff at DOL headquarters. 9.5.5 A total of 190,465 land parcels were surveyed and adjudicated, 59 percent of the appraisal targets of 322,900 parcels but 95 percent of DOL's revised targets of 200,000 parcels. This was due to lack of counterpart funds from 1997-1999; unavailability of Government staff to join the adjudication teams in the earlier project years, and low financial incentives as well as bottlenecks in technical procedures. However, performance of the project significantly improved from PY6 on; the number of titles issued in PY6 exceeded the total number of titles issued from PY1-5. Another serious problem was low distribution of titles, 50 percent of total parcels adjudicated. DOL should have imposed and implemented measures to accelerate titles distribution otherwise these investments will become sunk cost and the expected Government's revenues lost. 9.5.6 Other project outputs were: (a) aerial photography; (b) construction of DOL and nine provincial land offices; (c) incremental DOL, PSU and PFUs staff; (d) technical and management trainings; and (e) studies including project mid-term review including social assessment, land tenure study and socio-economic baseline surveys. 9.5.7 Staff increased by 92% to 771 at the end of the project from 401 at project appraisal. Incremental staff included 33 in PSU, 51 in PFUs, 660 in 22 SATs and 27 in DOL and district valuation units. 9.5.8 Customer relations and services (CRS) was initially inadequate and did not cover the whole range of project activities, communities and beneficiaries. However, engaging the support of the Lao Women's Union enabled information dissemination to be improved and for the project to provide a clear focus on protecting women's rights to land. Initial deficiencies in Customer Relations and Services effectiveness and protecting women's rights to land were identified early in the project. To assist in addressing these deficiencies a formal relationship was developed with the Lao Women's Union (LWU) to assist with the conducting of village meetings and in providing better information on gender issues. Specific women only meetings were also developed so as to ensure they received appropriate information in relation to their land use rights. - 44 - 9.5.10 The National Geographic Department (NGD) upgraded the national geodetic datum and improved transformation parameters for sue with the satellite Global Positioning System (GPS). NGD also provided GPS control points in areas where aerial photo maps could not be used. Aerial photography was acquired over identified project areas and orthophotography produced by NGD for use by the SATs. The orthophotography maps were produced at scales of 1:1,000, 1:2,000 and 1:4,000 with a total of 890,000 hectares being covered. 9.5.10 The Land Parcel Registration System (LPRS) was successfully implemented in all project provinces to support derivative registration activities. An extensive training program was developed and training in the LPRS provided to a large number of staff in each project province. A proposal for the computerisation of the LPRS has been developed and will be implemented at a time when there is appropriate capacity within the project to support computer based applications. New land offices were constructed in all project provinces. 9.5.11 The property valuation system was developed and extensive training provided to valuation staff. The valuation system included the development of rate tables and zone maps which enabled the implementation of valuation to be simplified. The valuation system is operation in selected districts in four provinces; Vientiane Capital City, Luang Prabang, Savannakhet and Champassack. Valuation Information System software was developed to support the implementation of the property valuation system. 9.5.12 An Organisation Management and Operations (OMO) study was undertaken of DOL and land offices to develop appropriate organisational structures, identify strengths and weakness, identify training requirements and propose HR initiatives that needed to be developed and adopted. 9.5.13 The development of the In-Country Course in Surveying and Land Administration had a positive impact on the development of human resource capacity for the project. A total of 26 project related staff from DOL, NGD, provincial offices and the Polytechnic School graduated from the course. The Course was developed into a three-year High Diploma in Surveying and Land Administration under the control of the Polytechnic School. Three government officials obtained masters degree in land administration from the University of New South Wales in Australia, and four DOL officials completed a two-year valuation course in Bangkok. 9.5.14 Total project expenditure, including two years extension for financing the completion of buildings, adjudication costs, training and project management of LTP II, equipment and vehicle and consultants services for LTP II, are estimated at US$20.13 million, including US$13.73 million of IDA credit, US$9.98 million of AusAID Grant fund, and US$0.6 million of Government's contribution. Cumulative IDA disbursements at credit closing date (30 September 2007) are estimated at SDR10.26 million, leaving the un-disbursed balance of SDR3.74 million (US$4.2 million). 9.6 Project Impact 9.6.1 The following impacts have been identified: (a) Legal Impact: The project has successfully developed and promulgated the Land Laws, decrees and working instruction as a foundation for sustaining the long-term Land Titling and land administration in Lao PDR. - 45 - (b) Social Impact: The project has provided secure land-use rights to elegible land occupiers, reducing land disputes and inducing confidence for investments in land. Women have equal rights in participating and obtaining the benefits from the project, and registering their names on land titles. Moreover, as many as 500 women worked in the systematic adjudication teams. Gender disaggregated data collected shows that 28 percent of all land parcels are registered in the name of a female only, 41 percent in joint names and 20 percent in the name of a male only. Moreover, more than 325 women worked in the systematic adjudication teams and on other project teams. (c) Institutional Impact: An internationally accepted standard for systematic land adjudication and registration systems have been established in Lao PDR. In addition, more than 1,000 government and contract staff were built with land adjudication and registration skills. (d) Fiscal Impact: Government revenues resulting from the project increased significantly. The revenues from land taxes due to better land records increased by double to Kip 7 billion in FY98/99 against the amount collected in the pre-project FY97/98, and 10 times to Kip 33 billion in FY2003/04. (e) Revenues from land registration fees increased by 4 times from Kip 850 million in 1998 to Kip 3.2 billion in 2002. The benefit: cost ratio of the registration revenues and the cost of issue a land title stood at 1.25:1, and this ratio is expected to rise in future when formal registration is widely accepted and the volume of registration increased. (f) Economic Impact: Based on data collected by DOL and the PLOs, and on the mid-term review and the socio-economic baseline surveys, the actual land values in urban areas resulted from the project increased by 11 percent over four years between 1999 and 2002 and it could reach 15 percent or higher over ten years, while agricultural productivity in peri-urban areas increased more or less at the same rate due to more investments on land and use of farm inputs and labor. 9.7 Factors Affecting Project Implementation 9.7.1 The project encountered several implementation problems including: (a) inadequate and untimely allocation of counterpart funds; (b) shortage of Government staff to form the SATs, inadequate skills and low financial incentives; (c) complex procedures for approval and signing the land titles; (iv) a large backlogs in signing and distribution of land titles. 9.7.2 The shortage of counterpart funds was the most serious issues, an uncontrolled factor of DOL, and greatly affected project implementation. This issue continues to remain unresolved to date, particularly in the tight financial year of 2003/04. Other option, e.g. direct contribution from the participating provinces, could have been adopted to resolve or minimize the problem. 9.7.3 Shortage of Government staff for mobilization of SATs due to Government's restriction on staff increases was eased and resolved through employment of the contract staff and training provided. The lack of financial incentives for field adjudication staff was also resolved through provision of adequate daily allowance and parcels incentives. 9.7.4 The complex procedures for approval and signing the land titles are currently being addressed in LTP II under the development of a transparent and effective land registration system. However, the backlogs in signing titles and distribution, though improved significantly, still remain relatively large. The backlog in signing is expected to be resolved through the above simplified procedures, while the backlog in - 46 - distribution is expected to be reduced when DOL, PLOs and beneficiaries recognize the fiscal and economic benefits in distributing and utilizing the land titles and DOL and PLOs place high priority to accelerate the title distribution. 9.8 Sustainability 9.8.1 LTP has been sustained through the Second Land Titling Project. 9.8.2 Prior to the project, the first registration of rights to land was undertaken sporadically (that is, at the request of the landholder) although the facility to register was not uniformly available throughout the country. While this is demand driven it has traditionally been a slow bureaucratic process and so expensive as to preclude all but the wealthiest landholders from registration of their rights. With the highly successful systematic registration program, all members of the community can potentially achieve registration within four to six months and at subsidised cost. The supply-driven approach of systematic registration, supported by the project, will be needed for some time into the future if the critical mass of titles necessary to sustain a land market is to be achieved. 9.8.3 A strong basis for a sustainable land registration system has been developed for Laos. It has a modern Land Law and this law is supported by a number of Ministerial Decrees that support the various project activities including, land registration, cadastral surveying and valuation. There are numerous work instructions prepared through the project that provide clear instructions and support the processes that have been developed. 9.8.4 Nevertheless, the overall sustainability of the project remains fragile. There is a need for a stronger commitment to project management and an increased awareness and improved implementation of HR activities such as staff selection and training if an acceptable level of sustainability is to be achieved. 9.9 Performance of the Borrower, World Bank and the Co-financier. 9.9.1 Borrower and Implementing Agency. The Borrower did not provide adequate and timely counterpart funds, which greatly affected project implementation in achieving project objectives, particularly the institutional development and the land titling targets, The issue remains to date unresolved, particularly in tight financial years of FY2003/04 due mainly to the limited country's revenues. The Borrower also failed to provide adequate Government staff to form the SATs during initial years of the project but subsequently the shortage was replaced by hiring incremental contract staff. In addition, the Borrower attached priority to the low adjudication productivity, and subsequently provided financial incentives, parcel incentives, to SATs in order to increase its productivity. 9.9.2 Complex procedures for approval and signing the land titles led to cumulative large backlogs in signing and distribution of land titles. The backlog in signing title has been further addressed in LTP II under the development of a transparent and effective land registration system, while the backlog in title distribution continues to remain relatively large unless the simplified procedures are developed and implemented and DOL and PLO recognize the fiscal and economic benefits in distributing the land titles and place high priority to accelerate the title signing and distribution. 9.9.3 Bank. The Bank's performance at the project design and throughout project implementation was generally satisfactory. Although the project was designed for 5-year implementation period, the Bank was flexible at negotiations to extend project implementation to seven years, plus one year extension after the original closing date to allow DOL to complete the construction of buildings. Counterpart funds was a - 47 - major issues affecting project implementation, and the Bank was neither strong enough to put conditions for the Borrower to allocate the required counterpart funds nor to identify other option, e.g. direct contribution from the participating province, to provide the needed funds. The backlog in titles distribution was equally important in term of generating project benefits. The Bank have detected the large backlog only at the end of project implementation, too late to remedy within project implementation period. The findings should have been discovered in earlier years and measures identified to eliminate or minimize the backlog. Failure in doing this meant that both Government and the Bank have lost the opportunity in generating fiscal revenues and other economic investments. 9.9.4 In the World Bank's Project Appraisal, a decision was made to have a separate contract, using Credit loan funds, to support the project management activities in the PSU and PFUs. The separation of project management from the mainstream of TA proved to be unsatisfactory and at the conclusion of the initial loan funded contract AusAID provided additional TA support for project management for a period of 13 months. Although more TA time would have been beneficial, it was sufficient to develop the basic skills that were needed. The model in which project management is treated as a homogeneous component of TA has been acknowledged as more effective. 9.9.5 Technical Assistance. Technical assistance provided under the project was adequate and its performance was satisfactory, particularly in the development and establishment of a legal framework and a systematic land adjudication and registration system in Lao PDR. However, equal emphases should have been placed on community education services, land office improved services delivery in parallel to development and implementation of land adjudication, and human resource development, which is currently threatening project implementation of LTP II, to enable DOL to sustain the long term Land Titling Program. In addition, building capacity for planning and monitoring was entirely neglected throughout the project period, and to date DOL and PLO remain unable to prepare annual work plan and budget and project monitoring. 9.9.6 Consultants. A number of consultants (individual and firms)were engaged to conduct studies and assist in project implementation. The performance of consultants, who conducted studies, were satisfactory and produced useful findings and recommendations for future land policy, improvements in land management and implementation of land titling program, and the socio-economic baseline data of the land titling project. In addition, a consulting firm was hired as the Project Administrator (PA) to assist in project management and implementation. Its performance was, however, considered only marginally satisfactory. Its main task were on procurement and financial management. The consultant introduced a rather outdated MS Money Program for project accounting, which was simple and easy for operations of daily financial transactions but difficult for production of monthly semi-annual and annual financial statements. The latter has to be done manually, which was slow and tedious. The major tasks of annual work planning and budgeting was neither undertaken nor the development of monitoring system. In addition, technology transfer to counterpart staff was minimal and it threatened the sustainability of the PSU in project implementation and management. 9.10 Implementation Experience and Lessons Learned 9.10.1 Major implementation experience and lessons learned from the project are: (a) The pilot projects are essential and instrumental to Lao PDR, where land administration background and legal framework were not well established in the country, particularly in gaining confidence and skills in starting the Land Titling Project (LTP); - 48 - (b) A well-designed project with clear objectives realistic implementation period is crucial in enabling the Government and the implementing agencies to gradually gain experience and in fulfilling project objectives. LTP implementation was extended for 7 years at the project negotiations, to enable DOL to gradually gain experience in implementing the project. However, due to several other problems (e.g., shortage of counterpart funds, shortage of government staff and their low education base, and the lack of adequate financial incentives) the objectives of the project were only partially achieved; (c) Inadequate and untimely allocation of counterpart funds prevent the project to achieve its objectives. Under the project, shortage of counterpart funds greatly affected project implementation. Other option (e.g., direct contribution from the participating provinces) could have been adopted to resolve or minimize the problem; (d) Successful project implementation and sustainability would require an intensive training program and a well managed HRD strategy. skills of staff under the project remain relatively low due to inadequate training and a lack of HRD strategy; (e) Distribution of land titles is highly important in proving land tenure security to land occupiers and in generating government revenues and economic development activities. The backlog in titles distribution under LTP remained as high as 50 percent at the closing date, and these investments have become sunk costs and the expected Government's revenues lost. (f) The commencement of all studies were either delayed or where not undertaken. Delays in undertaking studies made preparation activities for phase II of the project difficult. (g) The project represented a major and rapid injection of resources into a small and very inexperienced agency. The capacity of the implementing agency to manage and mobilise these resources to meet the project timetable was invariably over-estimated. This lesson can be observed from the low level of budget (loan) disbursement in the early stages of the project and the extension of the project loan period. In practice the capacity of the DoL to implement the project was impacted by the relatively low level of management skills in such areas as: (a) project planning, especially forward planning of land registration activities; (b) general management in a situation where activities have increased in size and complexity over the duration of the project; (c) policy development and implementation; and (d) community development and awareness programs. (h) In the early years of the project, there was reluctance by DoL to implement CRS activities as part of the systematic registration process. This probably reflected the general absence of any culture of customer service within the public sector in general and DoL in particular. There was also some confusion in the combination of the terms CRS and GAD and it must be noted that the AMC had some difficulty mobilising individual TA with the breadth of experience and skills required by the comprehensive TOR. (i) Failure to integrate DOL and Department of State Assets registration activities has resulted in there being two land registration systems in the one government ministry. One system for individually owned land and one system for state land. (j) Lao PDR is coming from a resource base, in terms of institutional size, staff numbers and skills, which is acknowledged to be comparatively low for the region. The ability to adapt to new techniques and procedures was commensurately low and the introduction of new technology required greater attention than - 49 - anticipated. (k) The introduction of relatively sophisticated survey and computer equipment presented some management problems in itself. Operational delays were exacerbated by the failure to budget, both time and money, for regular maintenance and the rotation of damaged equipment. Although the introduction of technology created problems, it is necessary to continue to move the project forward in a controlled manner once the manual systems have been developed and institutionalized. - 50 - Additional Annex 10. Bilateral Co-financier (AusAID) Comments Introduction This report focuses on areas where implementation could have been improved. At the same time, it is also important, however, to keep these in perspective as set against the enormity of the task undertaken at the beginning of Phase 1. From a minimal baseline, with scant institutional or human resource capacity, the Department of Lands has succeeded in building an operational land registration system, which despite its shortcomings, is able to maintain a systematic adjudication process, to issue and re-register land titles with due respect for protection of women's rights to land, in nine provinces in what is categorised as a Least Developed Country (LDC). While there is still far to go, much has been achieved, and, as a foundation stone of the development of a modern market economy, essential for growth and poverty eradication, the ongoing development of the land titling system will continue to have a pivotal role to play over the medium and longer term. For the anticipated benefits to accrue, however, it will be essential to build on the lessons learned from the first phase as documented in this report. A. Background A.1 Preparation LTP I was the first 5 year phase of a national land titling program. Following completion of the World Bank Project Preparation Report in May 1995, AusAID funded a two year pilot program from mid 1995 until mid 1997 in Vientiane Prefecture. The World Bank Staff Appraisal Report was completed in February 1996 and loan effectiveness granted in February 1997. AusAID conducted an independent appraisal and following Ministerial approval, signature of a Subsidiary Memorandum of Understanding with the GOL and tender assessment, technical assistance was mobilised and formally commenced in September 1997. A.2 Funding At project commencement, AusAID funding accounted for about 20% of total project costs. Subsequently, the provision of additional technical assistance, combined with under expenditure of the loan and reduced GOL contributions, resulted in AusAID's share of project expenditure being almost 40% of total LTP costs at the time of the initially extended loan closure date of September 2003 Cost share comparisons are complicated by changes in exchange rates and further extensions of LTP I overlapping with LTP II.. A. 3 Technical Assistance AusAID funding primarily covered international and national technical assistance and international training (part of which was subsequently transferred to in country training). International technical assistance comprised a fulltime team leader and short term specialists in systematic adjudication; survey and mapping; land registration; land valuation; land law/policy; and community development. Subsequently, further international technical assistance was provided in education and project administration. Fulltime national advisers included systematic adjudication; survey; land valuation; community development and human resource development. Additional international and national technical assistance was provided by AusAID up until the initially revised project closure in September - 51 - 2003. Bridging technical assistance was then provided until the commencement of Phase II in early 2004. B. Assessment of project performance At commencement of the project the Department of Lands had a staff establishment of less than twenty; few of these staff had skills relevant to the new project. The main operational focus of the department was the assessment and collection of land taxes. Measured against this background, by project completion, there has been substantial change in the operations and staffing profile of the Department. However, in AusAID's view, notwithstanding some notable successes, the project has only been marginally satisfactory and only partially achieved its objectives as specified in the Staff Appraisal Report. While not wishing to understate project achievements, particularly given the low skills base at commencement, the comments below focus on areas where improvements could have been made. B.1 Achievement of objectives Targets for issuance of land titles were revised down and the draw-down and use of loan funds for agreed project activities was slow. These broad level indicators of slower than anticipated progress are, in AusAID's view, symptomatic of deeper management and operational problems that reach to the core of successful land titling projects. In particular, the agreed high-level support for much needed policy, strategic direction and institutional reform has not eventuated. Counterpart obligations for the operation of the Project Steering Committee, management direction, counterpart funding, counterpart staffing (especially the suitability of counterpart staff), attention to social issues and release of loan funds to other agency implementing partners were not met to the level required by the project design. Further training and capacity building needs remain high. B.2 Project Design AusAID and the World Bank have been partners in land titling projects in a number of countries as well as partners in a previous parallel financed project in the agricultural sector in Laos. But in retrospect, despite some forewarning, clearly the donor partners and project stakeholders underestimated the implementation challenges: · The LTP Staff Appraisal Report (SAR) notes all previous Bank projects in Laos had been rated unsatisfactory. Whilst there had been some changes in Laos, notably the introduction of the New Economic Mechanism (NEM) ­ indeed the project rationale included supporting Laos in the transition from a centrally planned to a market economy - major constraints remained relatively unchanged, particularly in regard to institutional structures and capacity covering both technical and management skills. · Both AusAID and World Bank experience of land titling in other countries highlighted factors that contribute to poor performance including lack of political support, lack of institutional capacity, lack of counterpart funding and weakness in central/provincial linkages. Although recognised, the impact of these constraints was underestimated, and perhaps insufficient attention accorded to them. · Pre-project activities were in part undertaken to address some of the capacity constraints and structural relationships. These pilot activities tended to confirm constraints, rather than establishing a firmer base for project implementation. · Project design incorporating a Project Support Unit (PSU) to manage implementation proved more of a constraint than advantage in developing sustainable institutional capacity within DOL. This - 52 - became increasingly the case when GOL decided to effectively separate the PSU (`the project') from the Department of Lands, ostensibly to respond to the slow progress in title issuance. Addressing this structural institutional issue, that had ramifications also at provincial level, became a major diversion affecting project performance. The importance of harmonisation of partner government and donor systems is a central issue recognised and taken up in the Paris Declaration on Aid Effectiveness of 2005. · Similarly, the separation of project management from other technical assistance and the failure by the borrower to access competent procurement and financial management support offered under the loan created difficulties. This was temporarily addressed through access to additional bilateral donor assistance but never fully resolved up until project completion. · Contextually, following the reverberating effects of the Asian economic crisis, an already cautious government became even more cautious in its approach to embracing reform. By early 2000 project implementation reached a nadir as a significant depreciation of the Kip limited the availability of counterpart funding and combined with a stalling reform agenda. Project implementation did subsequently improve from this low point as the economic crisis eased · The Project Steering Committee responsible for high level coordination and strategic direction of the project, although scheduled to meet twice a year, met only three times prior to 2000 and then only once after, in 2005, at which only delegated representatives of departments other than DoL attended. In summary, whilst both the donors and the GOL acted in good faith in the development of the project, it is probably fair to say that on the donor side the limitations imposed by capacity and structural constraints and on the recipient side the scale of the project (counterparts, resources and reform requirements) were underestimated and the pace of expansion too fast. Once the issues and lessons learned were identified, more attention could have been paid to ongoing monitoring and dialogue. B.3 Policy and Social Analysis Ultimately the success and sustainability of land titling depends on registration of subsequent transactions. This is essential for the development of efficient land markets as well as for legal purposes, the resolution of disputes and revenue collection. To ensure the integrity of land registers, land-owners need to understand the implications and value the benefits of first titling and the subsequent registration of the transfer of titles. Equally, landowners need to understand the legal and financial implications of using titles for collateral. A number of project activities were designed to facilitate social assessments in support of the provision of information to communities, the adjudication of land parcels and planning for the implementation of sustainable land titling. These included baseline surveys, M&E and Customer Relations and Services (CRS). None of these have been undertaken in a timely manner by the project. Only towards the end of the Phase I project did any social data become available. · The longitudinal baseline survey scheduled for commencement of the project to provide a basis for later impact assessment did not occur ­ firstly the Lao Government may not have perceived its value and secondly the procurement process was protracted. A Socio-Economic Baseline Survey (so-called) was not conducted until September 2003, with the result that it was firstly of reduced value for revising activities in Phase I and secondly of limited input to the design of Phase II · The cross sectional surveys were also slow in happening, with the same results as above · Other policy/research studies (eg customary tenure) were similarly delayed, again mainly due to procurement constraints, and a perceived lack of counterpart understanding of their relevance. - 53 - The issue of the importance and conduct of timely research studies to inform decision making remains a concern that had still not been adequately addressed at the conclusion of Phase I. In terms of sustainability, while there is some information available from the project on land transactions involving registered titles, what was not available in Phase I ­ and is more difficult to determine ­ is data on unregistered transactions involving registered titles. Availability of accurate and reliable information, including monitoring and evaluation data continues to be an issue for the project. B.4 Community Participation A target number of titles issued is not a sufficient project objective. In assigning legal ownership communities need to be aware of the implication of decisions taken, especially in a society where matrilineal inheritance is the norm. Throughout Phase I, the community participation section, Customer Relations and Services (CRS) Unit, struggled to make an impact against the achievement of production targets. In addition, the concept of `participation' more broadly is differently nuanced in the Lao context, and the community participation dimension of the first phase was constrained by limited understanding of key officials in both management and the CRS Unit, low capacity, and lack of a systematic approach to mainstreaming CRS into every stage of the registration process (before, during and after adjudication). Given that the sustainability of the land registration system is reliant upon community buy-in, weak CRS represented a significant project risk. It would be fair to say that, of the donors, AusAID placed a stronger emphasis on the importance of the CRS dimension than the World Bank. This may have resulted in a dilution of the strength of the community participation message, as perceived by GOL at that stage. The CRS process was also unable to identify communities or families who might be made more vulnerable through land titling, such as ethnic minority communities practising customary tenure, and families living on state land, raising social safeguard concerns. Towards the end of LTP1, during preparation for the second phase of the project, CRS shortcomings were increasingly taken up by both donors as a common concern, and the effectiveness of the CRS approach was thoroughly reviewed in September 2003. Recommendations made for extensive revisions, resulting in a new Community Education and Services Strategy, were incorporated into Phase 2 design, which in a simplified, scaled-down form is currently being implemented in Phase 2. Capacity to provide services and advice related to use of the title post-registration would be an important focus for development in subsequent phases. Promoting understanding of, and advocacy for community participation as an issue of quality and sustainability remained a donor-driven and challenging agenda throughout Phase 1. B.5 Gender Strategy An early study undertaken by the Lao Women's Union Gender Resource Information and Development (GRID) Centre in October 1998 Gender and Land Documents: How do Society's Perceptions of Gender Affect Women?, published by GRID July 1999, summarised by GRID in 2000 as `How Social Perceptions of Gender Roles Affect the Land Registration Process? The study reports that in 58% of the cases, land documents of the various types then in circulation were incorrectly registered in only the name of the husband, even though only 18% of the land belonged to them. It also found that for the women's land, only 16% of the land documents were correctly registered in the name of the woman owner, although 30% of the land belonged to women. For common property, amounting to 52% of the - 54 - land, 87% was registered in the name of the man only. had indicated that poor land certification practices were resulting in erosion of women's' rights to their land, and called for greater public awareness, particularly for the just-starting Land Titling Pilot Project to focus on dissemination of information to highlight these gender issues. A Customer Relations and Services (CRS) Unit in DOL was assigned responsibility for this, but social data, as it became available, indicated some weaknesses in CRS effectiveness, notably in relation to participation of women and the risk of land rights and tenure security for women. Engaging the Lao Women's Union (LWU) to work with the CRS Unit to facilitate village level meetings and promote community participation proved positive in addressing these gender issues, and by project completion most concerns about the gender aspects of title registration had abated. The LWU showed admirable commitment to their role in protecting women's rights to land, and achieved very positive results. According to the Socio-Economic Baseline Survey (p.52) undertaken in September 2003, about 28% of land titles in project areas were issued in women's names only, about 20% in men's names only and a further 40.5% in joint names. These figures would appear to more accurately reflect actual ownership patterns, though further study is needed to confirm this. The study also indicated that the power over resources accessed through the use of the title as collateral ­ even where in a woman's name - typically remained with males, the implication being that the need for CRS/CES activities extends beyond initial title registration, and that monitoring indicators need to be adjusted to capture the real impacts on women. B.6 Institutional issues The change required to re-structure DOL from essentially a tax collection agency with a staff of around 20 within the Ministry of Finance to a modern land administration agency is substantial. Movement on institutional reform has been cautious and many staff ill-equipped to adapt to new roles; there is also a lack of mobility within the public sector and merit is only one of a number of factors impacting on staff appointments. The landline to provinces remains through the Ministry of Finance. The institutional context is further complicated by the separation of land policy under the Prime Minister's Office; the need to coordinate a range of other government agencies; and development of national/provincial linkages. Yet, within a few years, at the peak of Phase I there were in excess of 800 permanent and contract staff employed on the project. This has been a significant development, though probably focussed more on production than sustainability. Management and technical capacity remains a major hindrance to sustainability. Staff selection processes could be improved to ensure that staff employed possess the specific skills required. In this regard the lack of attention given to training including the lack of willingness to use loan funds for outsourcing of training is detrimental to sustainability. While the Central Training Unit has now been established, and is operating to some effect, only a limited capacity exists for conducting training in-house. As the quantity and quality of local training providers in Laos increases, opportunities for expanding training at reasonable cost should be explored. The key training/education success has been the two year surveying and land administration course at the Polytechnic School and the subsequent introduction of a Higher Diploma in Surveying and Land Administration funded by the re-direction of AusAID support from international studies (resulting from the lack of suitable candidates). The creation of an in-country capacity for educating surveyors was a significant achievement for enhancing the sustainability of the project benefits, and provides a suitable model for similar developments in Phase 2, in particular the development of an in-country course for valuers. - 55 - B.7 M&E Monitoring of production and expenditure improved over time but was affected by the lack of recruitment and support for project management. This also affected planning. Effectively the project did not have the systems or capacity to compare planned and actual outputs. Equally important the project did not have the internal capacity to provide quality assurance and assessment of process performance. This may have been perceived as a low priority by the borrower, but notwithstanding the constraints, the donors could perhaps have attempted to do more to support and develop capacity in this area, particularly as this impacts on issues of quality in project implementation, as well as quantity. B.8 Technical assistance International technical assistance, aside from the team leader, comprised mainly short term inputs. In several areas of the project this proved less effective than what might have been expected from longer term inputs, due to the lack of counterpart capacity to sustain momentum between visits. The working environment, particularly in relation to counterpart resources, management commitment and technical skills was a major constraint. Similarly, the initial unavailability of space for co-location of advisers and counterparts and subsequent reluctance on the Lao side to co-locate proved less than satisfactory. The "milestone" contracting approach for technical assistance adopted by AusAID in Phase I proved problematic. A high percentage of outputs required the submission of reports to trigger payment. This tended to move the focus away from on-the-job training and skills transfer, particularly towards the end of adviser assignments. This deficiency was recognised and addressed by AusAID and the adviser team in the latter stages of Phase I, resulting in a revised approach to contract structure in Phase II. The use of long-term national technical assistance has been a major success. B.9 Donor coordination Donor coordination and bilateral donor-Bank relations improved over the course of the project. · The preparation of a separate `design' document (for technical assistance) and separate appraisal by AusAID created unnecessary multiple reporting requirements. AusAID adopted the PAD for contracting purposes in Phase II. · Joint participation in supervision missions was very positive and over time initial communication problems between the donors (consultation on mission dates, key issues, etc) improved. · The initial slow rate of project progress gave rise to somewhat different perceptions of priorities. As mentioned earlier, AusAID's view was that whilst productivity was important, the process ­ particularly CRS - should also be a major focus. C. Lessons learnt · Donors should better utilise the leverage available through the loan o There is a need to ensure that pre-requisites are in place, such as baseline surveys, institutional reforms, and so on. o An asset register is essential for monitoring utilisation of project assets, such as vehicles, to ensure they are used in accordance with project requirements and priorities, and not diverted for private use o Perhaps a more `hands on' role in managing outcomes is required; a number of - 56 - administrative/management difficulties could and should have been foreseen · A good understanding is required of the social/cultural/political constraints which form the context of the project o limited delegation: the political system allows little scope for delegation of decision making, which places a burden and a reluctance on senior officials to take risks, hence the bureaucracy can be unresponsive o there are different perceptions with regard to the importance of social issues, community participation, CRS activities o project needs to find ways to adapt to changing socio-economic situation, and engage in emerging social issues and policy developments in peri-urban and rural areas to ensure that it remains relevant and responsive to needs · Governance issues need to be effectively monitored o The services offered by land offices must be clear, consistent, and transparent and open to all citizens. Otherwise public confidence will be undermined. o The use of land titling revenue to reduce poverty among the people of Lao is an important objective of the project. This places responsibility on the government for the transparent collection and use of the revenue, especially in making sure that only legitimate fees are collected from land users. · There can be tension between short-term objectives and long-term sustainability o Emphasis on disbursement targets can lead to a focus on quantity of outputs over quality, and send contradictory messages to partner government o Ultimately success is measured in terms of subsequent registrations (the integrity of the register). For governments, immediate increases in tax revenue are often the driving objective. Growing increases in revenue for registration fees, which in Vientiane Capital are now exceeding revenue from land taxation, should help garner more high level advocacy for this dimension of the project. · Training and capacity building are essential for project sustainability o strategic responses need to be developed to address bottlenecks in the implementation of training o tech Technical assistance is essential to make the loan 'work', but slow loan disbursement constrains effectiveness of TA and causes TA cost overruns o the utilisation of national advisers for long-term on-the-job mentoring is an important resource o There is a need to be realistic about what can be achieved o mentoring and skills transfer is essential · Factors that were underestimated and impacted adversely on the project include o A low level of Lao absorptive capacity, technical and managerial constraints, inadequate high level understanding and support o Low priority given to process issues o GOL constraints in responding to staffing needs, low salaries and incentives, counterpart funds o Limited delegation of responsibilities and political conservatism o Inability of non-DOL stakeholders to access loan money even where MOUs are in place D. Implications for Phase 2 D.1 GOL ownership · It will be important to promote the profile of the project and lobby high-level support in MoF and the Prime Minister's Office. Senior engagement has been particularly absent in the Prime Minister's Office, the agency overseeing the land policy component in the later stages of Phase 1, and responsible for chairing the National Land Policy Committee. The project lacks a `champion' in GOL. The Project Steering Committee (PSC) could, if reconvened on a regular basis, be a vehicle for building higher - 57 - level interest, policy direction and support, through advocacy and joint decision-making. Donors should also participate in the PSC, which could perhaps be timetabled to coincide with joint supervision missions. · Increased commitment is needed to providing project-relevant information to senior levels of government, in order to build an understanding of the project's aims and progress, and also to facilitate inputs from government stakeholders. This will ensure that land-related initiatives of other agencies are in line with the government's objectives for the land sector as implemented through its land titling project. D.2 Community participation · The project should continue to work with LWU to strengthen CES to ensure that: · vulnerabilities are identified and addressed, particularly of ethnic minorities, resettled communities, and families living on state land who may be made more vulnerable from the land titling process · communities are aware of their rights and obligations of holding a land title under the amended Land law · the integrity of the land registration system is maintained through re-registration of subsequent transactions · emphasis on the protection of women's rights to land is maintained through LWU focus on gender aspects of CES, and collection of disaggregated data to monitor progress D.3 Sustainability · further professionalisation and sustainability in the land administration sector could be promoted by continuing the higher education program in land surveying and administration, and perhaps expanding to valuation · limiting rate of expansion could enhance sustainability/quality of implementation by · culture of training should be promoted in DOL · TA mandate should continue to be focused on capacity building/technology transfer through on-the-job training and mentoring · roles of national TA should be built upon and expanded. D.4 M&E · it is important to ensure that the impact of the project can be assessed by strengthening M&E system to measure progress on higher levels of log frame (achievement of goal/purpose) as well as technical implementation · the project should ensure availability of quality information for strategic decision-making by timely implementation of studies, including impact study following up on SEBS 2003. · project should ensure quality as well as quantity issues are adequately monitored · M&E system needs to be strengthened to provide timely, accurate, reliable data · Desegregation of data is a priority to ensure that impacts on women's rights to land are captured over the longer term · Development of instruments for monitoring of utilisation of revenue gains should be encouraged D.5 Institutional arrangements · Building of appropriate institutional arrangements to promote greater cohesion in the land sector - 58 - (policy/management/administration) is essential · decentralistion of decision-making to provinces should be promoted to unblock bottlenecks at central level; increase rate of draw down of loan by avoiding micromanagement at central project management level · collaborative approach/partnerships with other agencies should be strengthened through adequate/timely funding flows to partner agencies and enhanced communication mechanisms D.6 Donor coordination · enhanced donor coordination would ensure unified messages sent to GOL · it would be useful to leverage the impact of the project through increased coordination with other development initiatives, e.g. banking sector; land forest allocation program; infrastructure development; extractive industries; Governance and Public Administration Reform Project (GPAR) · it is important to have realistic expectations based on actual capacities, and take a long term view E Conclusion The first phase of the Land Titling Project in Laos saw GOL establish a functioning land registration system to a level of technical capacity which was satisfactory within the timeframe. As the project matures in the second phase, increased efforts at the level of policy, strategic direction and institutional reform will be the urgent priorities. - 59 - - 60 -