Document of The World Bank Report No: 23846-VN PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 101.4 MILLION (US$138.76 MILLION EQUIVALENT) TO THE SOCLALIST REPUBLIC OF VIETNAM FOR A PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT Apnl 3, 2003 Human Development Sector Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective March 2003) Currency Unit = Viet Nam Dong (VND) 1.0 VND = US$0.000066 US$1 = 15.250 VND FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank NGO Non Governmental Organization AusAID Australian Agency for NORAD Norwegian Agency for Development International Development BoET Bureaus of Education and ODA Official Development Aid Training CIDA Canadian International PC People's Committee Development Agency CPRGS Comprehensive Poverty PCU Project Coordination Unit Reduction and Growth Strategy DFID Department for International PEDC Primary Education for Disadvantaged Development Children DoET Departments of Education and PEP Primary Education Project Training EFA Education for All PIP Project Implementation Plan EMIS Education Management PMR Project Management Report Information System EC European Commission PPCU Provincial Project Coordination Unit FMS Financial Management System QCBS Quality- and Cost-Based Selection FSQL Fundamental School Quality SBCQ Selection Based on Consultant Level Qualifications ICB International Competitive SCF Save the Children Fund Bidding IPAP Indigenous People's Action TOR Terms of Reference Plan JICA Japan International Cooperation TVET Technical and Vocational Programs Agency LCS Least-Cost Selection UNICEF United Nations Children's Fund MDG Millennium Development UPE Universal Primary Education Goals MoET Ministry of Education and USAID United States Agency for International Training Development MOH Ministry of Health VLSS Vietnam Living Standards Survey MPI Ministry of Planning and VND Vietnam Dong Investment NCB National Competitive Bidding Vice President: Jemal ud-din Kassum, EAPVP Country Manager/Director: Klaus Rohland, EACVF Sector Manager/Director: Emmanuel Y. Jimenez, EASHD Task Team Leader/Task Manager: Christopher J. Thomas, EASHD VIETNAM PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 6 C. Project Description Summary 1. Project components 7 2. Key policy and institutional reforms supported by the project 8 3. Benefits and target population 9 4. Institutional and implementation arrangements 9 D. Project Rationale 1. Project alternatives considered and reasons for rejection 10 2. Major related projects financed by the Bank and/or other development agencies 11 3. Lessons learned and reflected in the project design 12 4. Indications of borrower commitment and ownership 13 5. Value added of Bank support in this project 14 E. Summary Project Analysis 1. Economic 14 2. Financial 15 3. Technical. 16 4. Institutional 16 5. Environmental 19 6. Social 19 7. Safeguard Policies 24 F. Sustainability and Risks 1. Sustainability 24 2. Critical risks 25 3. Possible controversial aspects 28 G. Main Loan Conditions 1. Effectiveness Condition 28 2. OtherClassify according to covenant types used in the Legal Agreements 28 H. Readiness for Inplementation 28 I. Compliance with Bank Policies 29 Annexes Annex 1: Project Design Summary 30 Annex 2: Detailed Project Description 34 Annex 3: Estimated Project Costs 41 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 42 Annex 5: Financial Summary for Revenue-Earming Project Entities, or Financial Summary 47 Annex 6: Procurement and Disbursement Arrangements 48 Annex 7: Project Processing Schedule 69 Annex 8: Documents in the Project File 71 Annex 9: Statement of Loans and Credits 72 Annex 10: Country at a Glance 74 Annex 11: Project Monitoring and Supervision 76 Annex 12: Fiscal Sustainability Analysis 78 Annex 13: Technical Note on Girls Education 87 VIETNAM PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT Project Appraisal Document East Asia and Pacific Region EASHD Date: April 3, 2003 Team Leader: Chnstopher J. Thomas Sector Manager/Director: Emmanuel Y. Jimenez Sector(s): Primary education (100%) Country Manager/Director: Klaus Rohland Theme(s): Education for all (P) Project ID: P044803 Lending Instrument: Specific Investment Loan (SIL) Project Financing Data : . ,. . - 1 Loan [X] Credit l ] Grant [] Guarantee [ ] Other: For Loans/Credits/Others: Amount (US$m): 138.76 million equivalent; SDR 101.4 million Proposed Terms (IDA): Standard Credit Grace period (years): 10 Years to maturity: 40 Commitment fee: 0 Service charge: 0.75% Financing Plan (USSmn): - Source ' Local' -Foregn 'Total BORROWER 43.37 0.00 43.37 IDA 109.27 29.49 138.76 AUSTRALIA: AUSTRALIAN AGENCY FOR 1.00 0.00 1.00 INTERNATIONAL DEVELOPMENT CANADA: CANADIAN INTERNATIONAL DEVELOPMENT 7.65 0.73 8.38 AGENCY (CIDA) UK: BRITISH DEPARTMENT FOR INTERNATIONAL 33.79 4.90 38.69 DEVELOPMENT (DFID) NORWAY: NORWEGIAN AGENCY FOR DEV. COOP. 10.81 2.66 13.47 (NORAD) Total: 205.89 37.78 243.67 Borrower: SOCIALIST REPUBLIC OF VIETNAM Responsible agency: MINISTRY OF EDUCATION AND TRAINING Address: Lane 30, Ta Quang Buu, Hai Ba Trung District, Hanoi, Vietnam Contact Person: Mr. Dang Tu An, Vice-Director, Primary Education Department, MoET Tel: 844 868 2859 Fax: 844 868 2793 Email: duanthkk@bdvn.vnd.net Estimated Disbursements ( Bank FY/US$m): .00 . -,2FY ; 70W7005 2006: 2007 2008 2009 i '2010 10. Annual 6.00 18.00 25.00 30.00 25.00 25.00 9.76 Cumulative 6.00 24.00 49.00 79.00 104.00 129.00 138.76 Project implementation period: 6 years Expected effectiveness date: 06/30/2003 Expected closing date: 12/31/2009 A. Project Oevelopmsnt Objective 1. Project development objective: (see Annex 1) The objective of the project is to improve access to primary school and the quality of education for disadvantaged girls and boys. Disadvantaged children are broadly defined as school-aged children who are not enrolled or are at risk of not completing their primary education; children who attend schools that do not meet fundamental quality standards; and dhsabled children or children from other highly vulnerable groups, such as street children, migrant children or girls in certain ethnic minority areas. 2. Key performance indicators: (see Annex 1) The majority of project resources are targeted to 189 districts, where approximately 70% of Vietnam's educationally disadvantaged children reside. In those districts, by the end of the project in 2009: o 4,272 core primary school sites and 14,902 satellite sites will have achieved "fundamental school quality level" (FSQL). o primary net enrollment will have improved from 81% in 1999 to 96%. O primary student completion (as measured by the G5/G1 ratio) will have increased from 72% in 1999 to 86%. o primary repetition will have fallen from 8% in 1999 to less than 3%. O primary school dropout will have been reduced from 12% in 1999 to less than 4%. O student achievement, as measured by Grade 5 tests in Mathematics and Vietnamese, will show an upward trend. In addition, also by 2009: o national guidelines will have been developed and applied effectively to provide education to children with disabilities and highly vulnerable children, and for using FSQL as a first step in achieving national standards. o the number of children with disabilities in school will have increased. O children with disabilities, street children, minority girls and other very high risk groups of children throughout the country will have benefited from expanded and innovative approaches to education service delivery. o MoET, and participating DoETs and BoETs, will have regularly demonstrated strengthened capacity to identify, plan for, support, and monitor the needs of educationally disadvantaged children. B. Srategic conteNt I. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 24621 Date of latest CAS discussion: September 3, 2002 The goal of the Government (as expressed in its 2010 Education Strategy) and the program financiers (as expressed in their institutional or country strategy papers) is to provide a high quality basic education for all children. Specific goals in the 2010 strategy are: o "To facilitate children in the age cohort of primary education to have comprehensive development of morality, intellect, physical fitness and aesthetics, fondness for and mastery of initial basic skills for their life long learning"; and o "To consolidate and improve achievements in primary education universalization nationwide. To increase the mobilization ratio of the age cohort from 95% in 2000 to 97% by 2005 and 99% by 2010." -2 - 2. Main sector issues and Government strategy: Main Sector Issues Education, Opportunity, and Development. Vietnam's aspiration to build a prosperous and just society hinges on its ability to provide a high quality basic education for all of its children. But at the present time 70% of children are enrolled in school and only 78% of those who enroll in grade 1 complete grade 5. In addition, a substantial number of children fail to achieve acceptable levels of learming in math and reading. Children who are not provided with opportunities to access a primary education of sufficient quantity and quality will not achieve their own potential as adults and citizens or be able to fully support development of the Vietnamese economy and society. The system of pnmary education in Vietnam is in fact a composite of several sub-systems or levels, at least one of which can be associated with urban areas and areas of economic growth, and another can be associated with rural and remote areas and areas of significant economic disadvantage. This is a major challenge for a country that has a recognized and strong commitment to equity and social justice. Failure to address this problem will almost certainly result in the growth of a class-divide within society based on serious differences in educational opportunity and achievement and in economic well-being. Meeting Vietnam's Education Development Goals. Vietnam has made excellent progress in the development of its education system. Over the last ten years, it has met ambitious targets set through its Education for All program, raising net enrollment rates at the primary level from about 80-86% in 1990/91 to nearly 94% in 1999/2000. In addition, it has also shown good improvement in a number of its intemal efficiency indicators, such as repetition and dropout rates (see table 1 below). These accomplishments place Vietnam at the very forefront of educational development among countnes with similar per capita income. Vietnam is now entenng a new phase of development for its education sector, with objectives that are equally challenging as those of the previous decade. First, although most children attend school in Vietnam, approximately 7% of the primary school age population have never been to school and many more have dropped out before completing pnmary school. Secondly, a substantial minonty of children repeat grades or are unable to pass the entry exam for lower secondary school, reflecting a lower than acceptable level of academic performance for these children. Thirdly, there are major differences between what has been achieved in the urban areas and what has been achieved in rural and remote areas. Indeed, the national critena for achieving universal pnmary education (UPE) are such that only 70% of 14 year-old students are required to have completed primary education in the most disadvantaged areas, compared to the more than 80% required in advantaged areas. In addition, many of the children in the most disadvantaged areas have been provided a shorter primary school curriculum over a five-year period (120 and 100 weeks) compared to the 165- and now 175-week curriculum provided in advantaged areas. This situation is complicated by a financing system that does not fully acknowledge the needs of disadvantaged children. For example, annual per pupil expenditure on education for children in Hanoi is more than twice as high as expenditure for children in the poor province of Soc Trang. Per capita expenditures for children in the wealthiest income quintile are two and one half times the expenditures for children in the poorest income quintile. In addition, a reliance on user charges favors children of richer households. These issues are well documented in a series of reports on the education system, stakeholder analyses, school surveys, and a public expenditure review. Achievements in increasing enrollment in the 1990s were largely the result of the expansion of primary schools through the development of satellite sites. It is these sites, which enroll 30% of all pnmary children, that are the most disadvantaged and therefore the focus of this project. - 3 - TFable I - Progress on Key Rindicators Vietnam 1990 - 2000 Indicators 1990/1 1995/6 1997/8 1999/2000 Primary GER 103% 114% 116% 110% Primary NER 86%(*) 97%(*) 97%(*) 93.7% Primary Dropout Rate 12.35% 7.14% n/a 2.79% Primary Repetition Rate 8.77% 4.79% n/a 4.67% Survival or Retention Rate 47% 70% 75% n/a (G5/ Gl survival proxy) Transition to Lower Secondary 78% 87% 88% n/a (G6/ G5 transition proxy) Completion Rate 49.1% 61.3% n/a 70.2% Percent 6-14 cohort never enrolled in school 14.79% 6.76% Note: This table draws data from a range of sources including MoET, GSO Census Data, Education for All (EFA) reports, WB ACER School Survey and the Vietnam Living Standards Surveys (VLSS). Data (*) does not include remote provinces, so are likely to be an overestimate. GER: Gross Enrolment Rate. NER: Net Enrolment Rate. But, reaching UPE (as defined by the Government) in 2000 was only the basic achievement. A significant proportion of school campuses, especially satellite campuses, will find it extremely difficult even to maintain the level of participation achieved under UPE, let alone attain the higher levels of completion and quality demanded by 2010 Government Strategy for Education, Education for All (EFA) and the Millennium Development Goals (MDG), unless they are provided with a large and sustained increase in resources. International experience shows that gains made through effective UPE strategies can be quickly lost if appropriate follow-up investments are delayed, ignored, or are inefficiently managed. Factors that contribute to educational disadvantage. Educationally disadvantaged children in Vietnam are put at risk by factors in the school, home, and socioeconomic environment in which they live. The most obvious risk factors are the following: o poverty and charges made on parents, resulting in non-enrollment, poor attendance, and dropout; o some children are not well prepared to learn because they have chronic health or nutrition problems or because they enter school with linguistic barrers; o households and communities do not always provide a positive climate for schooling (for example, there is a high demand for children's labor in some communities and there are inter-generational effects of poverty and illiteracy); o some children are particularly susceptible to changes in social conditions and economic downturns; o many schools and teaching sites are incomplete or not organized for success in terms of resources, management, or teaching skills; o the schools, particularly the satellite campuses, do not receive sufficient financial, human and material resources; o the institutional capacity of the local, provincial and national education authonties to lead and manage the system, and to effectively mobilize, allocate, and deliver resources, is limited. The significance of the last factor should not be underestimated, because capacity is needed to deal with all other factors. The Vietnamese education authorities - the National Ministry, the Provincial Departments and the Distnct Bureaus - already have significant capacity. Without it, Vietnam would - 4 - have not made the impressive progress of the last 10 years. But the country's entry into a new phase of development, with different and very challenging objectives, requires additional capacity. The District Bureaus of education, which are at the forefront of service delivery, are the weakest in the system. Yet, they are the ones on whom much of the success of the new phase depends. Their ability to deliver better, higher-level services depends, however, not only on their own capacity, but also on the capacity of the provincial departments which serve, support, manage and monitor the distrct bureaus. Government Strategy Policy framework. The Government of Vietnam has acknowledged and has made a commitment to universal, high quality basic education for all in its education law, poverty alleviation programs, and 2005/2010 strategies. It has also committed internationally to achieving EFA, the "Millennium Development Goals" and the Convention of the Rights of the Child. It has also recently introduced a policy on inclusive education to encourage mainstreaming of disabled children into regular classrooms. In these ways the government has recognized primary education as the means to develop the fundamental skills and competencies necessary for economic growth and social development. Pnmary education is acknowledged as the cornerstone for the broad intellectual development of Vietnam's citizens, enabling each to participate actively, innovatively, and flexibly in an evolving economy and dynamic society. Adjusting targets, developing strategies. In the 2010 Education Strategy the Government says that it intends to consolidate its achievements in universal pnmary education and to approach the goal of universalization of lower secondary education nation-wide by 2010. The goal is expressed in the Education Law, which states that all children, regardless of area of residence, gender, socioeconomic background or ethnicity, are entitled to a full primary education. These goals are echoed in the recently completed Comprehensive Poverty Reduction and Growth Strategy (CPRGS). While the country has met its initial UPE goals of 80% net enrollment in 90% of communes, two large tasks remain. First, the problems of the outstanding communes and the un-reached children need to be addressed. Second, the educational quality of the overall system must be improved to allow it to progressively approach and ultimately meet national and international quality standards. This includes ensunng that all children have the opportunity to attend a school that meets minimum standards in terms of space, curriculum, matenals and personnel qualifications. It also includes, to the extent possible, addressing the out-of-school factors that affect a child's education. At the ten-year review of the Education for All endeavor, Vietnam established other ambitious objectives, including a focus on improving educational quality, expanding access to lower secondary school, and ensunng a greater relevance between the education system and the labor market. At the same time, Vietnam recognized that pnority should be given to "unfinished business" with regards to its initial EFA objectives. In particular, there still are many children left behind by the pnmary system, in effect creating unequal educational, social and economic opportunities for its citizens. Vietnam recognizes that failing to educate all children and failing to educate them to an adequate level of quality puts the government's plans for UPE, economic growth and poverty reduction at risk. Providing resources and building capacity. Government has set, and largely achieved, a target of allocating 20% of the national budget to education. It has also channeled significant funds from the education budget to nationally targeted programs to poor areas to assist in meeting their infrastructure needs, including upgrading teacher training institutions and constructing a limuted number of schools. - 5 - However, it is clear from an inventory of disadvantaged children and school conditions that a senous financing gap exists. In particular, there is a need to meet the physical, instructional material and training needs in more than 4,000 schools and 14,000 teaching sites that are below basic standards and currently receive little or no investment support. This requires enhanced capacity, particularly, though not only, at district level. Such capacity includes the additional funds to upgrade school physical facilites, develop matenals and train teachers. It also includes the human resources, the information systems, the office technology and the communications equipment at district and provincial bureaus of education. Lastly, it includes a modified division of labor between districts and provinces, as well as the skill and incentives to follow effective management practices. It is, indeed, the Government's strategy to build this capacity. 3. Sector issues to be addressed by the project and strategic choices: This project is designed to assist Government to achieve its pnmary level UPE goals in 189 districts with the greatest concentrations of educationally disadvantaged children, and help develop programs and policies that serve the needs of highly vulnerable groups nationwide. The project thus enables Government to accomplish a slice of its broader UPE agenda, i.e., improving access targets and fostering quality improvement in primary education. Targeting resources to educationally disadvantaged chIldnren. The disadvantaged children to be targeted by this program are those who still do not have access to primary education or who are at risk of receiving an inadequate primary education. Specifically included in this group are: o School age children who do not attend pnmary school; o Children at school who are at risk of repeating or dropping out; o Children at school who are not able to achieve the level of learning to ensure a solid foundation of basic skills and to successfully access secondary education. In effect, these categones represent a "hierarchy" of educational disadvantage. Each successively broadens the definition of disadvantage from students who have no access to school to those whose education performance is significantly below an acceptable level. The number of such children included in these categories certainly exceeds 2 million and may even exceed 3 million. The phenomenon of disadvantage is not evenly distributed throughout Vietnam. There are particular regions and populations where un-enrolled and poorly performing groups of children are concentrated. The project preparation team has identified 189 districts (out of a total of 615) where approximately 70% of educationally disadvantaged children live. The districts are overwhelmingly in remote or underdeveloped regions and contain: o a total of 2.7 million students, or 27% of all students in Vietnam, o 1 million ethnic minonty students, o 1.1 million poor students, and o 1.2 million students enrolled in satellite sites or multigrade classes Added to this concentration of educational disadvantage, there are specific groups of children who are distributed throughout Vietnamese society (rather than being concentrated in certain regions) who are also educationally disadvantaged. Although accurate statistics are not currently available, it is estimated there are about 1 million disabled school-aged children in Vietnam and over 70% do not have access to school. Also, certain groups of children who live in difficult social conditions - such as street children, working children, children of migrants, children from fishing communities, girls from certain ethnic - 6 - groups and those who come from broken homes - are less likely to access, participate and perform well in pnmary school. As a matter of economic and social equity, it is vital that the needs of all these disadvantaged children be addressed in the immediate future and the project therefore targets resources toward these groups through support for a nationwide innovations program. Reducing private costs to education. Perhaps the single most important factor in excluding children from primary schooling stems from the imposition of user charges on families. These charges, often unregulated, are a very significant burden on household income and a real disincentive for poorer families to send their children to school. Elimination of these charges would have a significant impact to improve enrolment, attendance and completion. Fundamental School Quality Level. The project introduces and supports the concept of a "fundamental school quality level" (FSQL) (See Annex 2). FSQL essentially defines the minimum institutional capacity, instructional matenals and teacher support, physical infrastructure, and school-community linkages required to maintain a healthy and productive learning environment. It should be seen as a first step in achieving the much more ambitious national school standards, which include additional aspects of teacher and manager qualification, curriculum, space, and infrastructure. Support for the Most Vulnerable Children in Non-target Districts. While the bulk of the project interventions are focused in 189 districts with the greatest concentrations of disadvantaged children, there are vulnerable groups of children throughout Vietnam. In some cases those children live in wealthier provinces or high performing districts and their needs are gradually being met as the current system grows and expands. In other cases, children pose multiple challenges -- such as disability, extreme poverty, homelessness, or migration -- that require much more attention than the system currently provides. The project therefore supports a program of innovation grants, research and evaluation, and development of guidelines aimed at improving educational services for highly vulnerable children. Capacity Building. The project includes two broad types of capacity building interventions: one aimed at ensuring that the Government - at all levels - has the capacity to implement the changes supported by the project, and the other aimed at enhancing the quality of general management in the district bureaus of education and the provincial departments of education. The capacity to implement the project itself needs to be in place when implementation commences. Thus, interventions of this type will be conducted partly between appraisal and project commencement, and partly during early implementation. The general capacity to manage better can be developed dunng project implementation, and all interventions aimed at building this capacity are, therefore, included in one of the project components. All capacity building activities will be camed out in the provinces and distncts selected for this project. A limited number of such activities will be carried out at the national level, where support and direction by the Ministry of Education can contribute much to the necessary change at the province and district levels. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The project consists of four components. First, education stakeholders in targeted distncts will receive technical and financial support to ensure that all school sites in their jurisdiction meet Fundamental School Quality Standards, with first priority in planning investments given to satellite sites. This objective will be achieved through a two-pronged approach: by providing necessary technical support to -7 - districts to improve administrative planning and management, and by enhancing the capacity of schools to provide acceptable quality education and forge close hnkages to their communities. The second component seeks to address the needs of highly vulnerable children. It consists of two streams. The first stream presents interventions that address the educational needs of disabled children. The second stream is designed to address the educational needs of vulnerable groups, such as street and working children, migrant children, orphans, children living in fishing communities and others. Third, the project will help MoET and its line departments at the central and provincial levels develop guidelines for reaching FSQL, as a first step towards achieving national standards; as well as build capacity within MoET, DoETs and BoETs to bring all schools up to acceptable educational levels. Finally, the project will lend support to a Project Coordination Unit, responsible for providing overall coherence to project activities, their coherence with developments beyond the project and momtoring progress towards project objectives. .ndlcat!ve Bank-' % of - Component cosgs % of financing- Bank- . __________________________________________ _ Q . US$M ) Total (US$M) financing 1. Achieving Fundamental School Quality Levels (FSQL) 1.1 FSQL District Management 7.07 2.9 0.02 0.0 1.2. Instructional Improvement and Teacher Support for 44.24 18.2 10.78 7.8 FSQL 1.3 Infrastructure Improvement for FSQL 163.61 67.1 127.44 91.8 1.4 Community Participation and Student Support for 12.81 5.3 0.00 0.0 FSQL and Universal Primary Education 2. Education Initiatives for Highly Vulnerable Children 0.0 0.0 2.1 Inclusive Education for Disabled Children 2.26 0.9 0.50 0.4 2.2 Reaching Street and Working Children and Other HLgh 1.89 0.8 0.02 0.0 Risk Groups 3. National and Provincial Institutional and Technical 0.0 0.0 Support for FSQL 3.1 National Guidelines for FSQL 0.44 0.2 0.00 0.0 3.2 Institutional Strengthening 7.73 3.2 0.00 0.0 4. Project Management 3.62 1.5 0.00 0.0 Total Project Costs 243.67 100.0 138.76 100.0 Total Financing Required 243.67 100.0 138.76 100.0 2. Key policy and institutional reforms supported by the project: The project will focus on four key reforms: o Definition of a irummum standard of educational services, the Fundamental School Quality Level (FSQL), that focuses on access to educational services and the quality of education provided. FSQL is seen as a first step towards achieving national standards. O Establishment of a needs-based allocative mechanism to achieve FSQL service standards. This approach will increase resources allocated to provinces and districts with educationally disadvantaged children. -8 - o Formulation of targeting guidelines to direct resources to educationally disadvantaged school sites in poor distncts. * Lowering the direct costs of education for poor children by helping schools that receive assistance under this program to eliminate unregulated user charges and other levies on parents. The project also provides a framework to address the needs of highly vulnerable children nationally-including the development of national guidelines for inclusive education and an innovations program-that will allow for a more integrated set of principles to ensure that disabled and highly vulnerable children gain access to local education services. 3. Benefits and target population: The target population compnses two groups of disadvantaged children: * pnmary school-aged children from the 189 most educationally disadvantaged districts; * disabled children of primary school age and other highly vulnerable groups, such as street and working children, children living in fishing communities, etc. The project is expected to yield significant long-term benefits, including (i) the adoption of a minimum service standard that, together with periodic evaluations of learming achievement, can serve as a measure of educational progress for all campuses across the nation; and (ii) the development of national guidelines for targeting resources and delivering services to disabled and other vulnerable children. Research shows that investments in primary education have a high rate of return. They have a significant positive impact on agricultural incomes and on nonagricultural incomes within rural areas. This not only will reduce the incidence of rural poverty but also reduce the economic pull of urban and other growth areas, thus reducing the social and economic costs of internal migration. Furthermore, investments in pnmary education help to reduce other public and private costs, including the cost of health care and the costs associated with human disease and environmental degradation. Education is a major avenue in the continuing fight against these problems. Finally, equity in education, both in terms of access and quality, is a fundamental cornerstone for social cohesion. Higher levels of education are also correlated with better health, slower population growth and improved civic participation. 4. Institutional and implementation arrangements: MoET will be the executing agency for the project. A PCU will be created to coordinate initiatives in the various MoET departments and DoETs/BoETs responsible for implementation. The PCU will be pnmarily responsible for overall planning and coordination, administration, and donor and inter-ministenal relations, while DoETs will be responsible for most large scale procurement, training, FSQL proposal review and monitoring, and facilitating relations between districts. BoETs will be responsible for FSQL planning, coordination of activities in schools, and small scale procurement. More details on implementation arrangements are provided in Annex 2, under component 4 "Project Management". 9- Assessment of the adequacy of the financial manaRement svstem of implementing agencies and a timetable for measures proposed to improve capabilities: An assessment of the adequacy of the project financial management systems was carried out by IDA team in May 2002. The scope of the work was set out in the "Assessment of Financial Management Arrangement in World Bank-financed Projects-Guidelines to Staff' issued by the Financial Management Sector Board dated June 30th 2001. The objective of the review was to assess the suitability of the existing project financial management system as required by the Bank under OP/BP 10.02 with a view to implementing the proposed project. In Annex 6 the financial management risks have been analyzed and addressed using the recent Vietnam Country Financial Accountability Assessment. Analysis has been done on implementation units at levels relevant to the project covering inherent risk, control risks as well as mitlgating factors. The results of the assessment and a corresponding remedial actions to address weaknesses have been agreed with the agencies and are included in the Action Plan (see Annex 6). The review has concluded that with the fulfillment of the above Action Plan, this project will meet minimum Bank's financial management requirements. The Project will be producing Financial Monitoring Reports (FMRs). In terms of disbursement technique, the traditional disbursement technique will be used. Status of the borrower and the project implementinR entities compliance with audit covenants in existing Bank-financed proiects: There are no critical issues that arise from the audit of the current projects under the MoET. To date there are no overdue audit reports relating to projects under the MoET. Agreement with the borrower on standard and format for audited financial statements and the timetable for their submission: Project accounts will be kept for all project related expenditures using accounting pnnciples and practices acceptable to IDA. Project accounts will be audited on an annual basis in accordance with international standards on auditing and in compliance with the independent auditing regulations of Vietnam. The auditor's report will be made available to IDA and other donors within six months of the close of the fiscal year. The audit will include a separate opinion on the SOEs other than the Special Accounts and Project Accounts. A management letter addressing internal control weaknesses of implementing agencies will also be provided by the auditor together with the audit report. D. Project Rationale 1. Project alternatives considered and reasons for rejection: The project was originally conceived as a program to provide support to provinces to achieve their EFA strategies. However, during preparation the focus of the project shifted to the district level. There were three reasons for this: o The majority of disadvantaged students are located in approximately 30% of the districts nationwide. Shifting the focus of the project to those districts therefore ensures the better targeting of resources. O The knowledge required to make this project function well and the majority of basic operational decisions that this project supports are taken at the district, rather than at higher levels. These include in-depth knowledge of the stock of infrastructure and teaching resources at individual schools, and management of teacher training and the identification of sites for school rehabilitation. O Districts are better suited to provide direct school support services and reach out to out-of-school children. - 10 - 2. Major related projects fimanced by the Bank and/or other development agencies (completed, ongoing and planned). ._______________________________ .______.__.______________ j L ate it Su p rvisi lon; Sector Issue Project K. (PSR) Ratings , ,__ ___ ___ ___ ___ ___ ___ _ _ _ _._,__ ,(Bank-financed, projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Education planning and coordination Primary Education Project S S within the MoET, school infrastructure, curriculum, assessment capacity. Market relevance of higher education, Higher Education Project S S qualifications of staff, efficiency in the use of human and physical resources, institutional structures. Teacher standards, teacher training, Primary Teachers Development S S quality assurance (accreditation of training programs and certification of teachers), civil service regulations, assessment. Commune and district level planning, Northern Mountains Poverty S S school infrastructure. Reduction Project Other development agencies Primary teacher training Save the Children/Australia Teacher Training Oxfam Teacher Training Belgium Distance Education Belgium Northern Regional Normal Schools Secondary teacher training ADB Lower Secondary Teacher Training DFID English Language Teacher Training Project Secondary education ADB Lower Secondary Schools Development Policy making capacity building EU Strengthening Ministry of Education and Training JICA Primary Education Development Program (anticipated) Non-formal education UNICEF Alternative Basic Education Primary school construction JICA Primary School Construction EU Northern Uplands Project Education in disadvantaged areas Oxfam GB Primary Education -1 1- Project EU Son La-Lai Chau Rural Development Project UNICEF Primary Education Program UNICEF Multi-grade Class UNICEF Project for Ethnic Minority Education Early childhood education UNICEF Early Childhood Education Enfant et Development Pre-School Development Pre-school teacher training UNICEF Pre-school Teacher Training Education for Ethnic Minorities UNICEF Ethnic Minorities Education SCF Multigrade Teaching and Bi-lingual Education Oxfam Basic Education for Ethnic Minonties Education for Vulnerable Children Catholic Relief Services/ USAID Inclusion Education Assistance for Disabled Children USAID/Peasbuck Inclusion Education for Children with Hearing Difficulty Radda Barnen Inclusion Education in Vietnam Save the Children Sweden Inclusive Education for Disabled Children EU Assistance for Street Children (anticipated) Health Care Support UNICEF Health Care and Environmental Education in Primary Schools IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: Like many other countries, Vietnam school standards place a strong emphasis on the creation of elite schools and the provision of hardware and infrastructure. However, the MoET is seeking to broaden its approach about what constitutes a good education into an affordable and achievable framework targeted to all children, and particularly to children from highly vulnerable groups. For this reason, much effort has been placed in the project preparation process to refine fundamental school quality standards, as reflected in FSQL, and lay out some of the pedagogical and administrative changes necessary to raise the quality of education for the most disadvantaged children in the nation. - 12 - The project has drawn on extensive in-country experience related to the pedagogical and language needs of ethnic minority, disadvantaged and disabled children, such as current interventions supported by UNICEF, Save the Children and Oxfam as well as those from the Ethnic Minority Education Component of the World Bank-funded Pnmary Education Project (PEP). This is reflected in the project's focus on (i) strengthening children's readiness for primary schooling, (ii) supporting teachers in acquiring pedagogical skills suitable for instructional environments in isolated areas (such as multi-grade classrooms), (iii) enhancing teachers' abilities to teach Vietnamese as a second language, and (iv) boosting community and parental participation in schooling. School building activities conducted under PEP and the JICA-sponsored Primary School Construction project will guide the civil works included in this project, particularly in relation to the design of appropriate prototype models and the decentralization of management arrangements. The project itself will model a method of targeting resources to schools that serve the most educationally disadvantaged children by supporting interventions that will help those schools achieve very basic FSQL standards. This approach has been developed partially in response to recent studies that demonstrate a high degree of inequity in resources spent on education in Vietnam and as a consequence, variation in student enrollment and achievement. Also, the Community Participation and School Campus Support Funds activities in this project provide resources to school sites and communities to address locally specific problems. This program was developed in response to studies which demonstrated the very wide variety of factors which keep children out of school at the local level and the need for flexibility in resource allocation and a high degree of community participation to tackle these challenges. Ultimately, the overall project design reflects a fundamental shift from a commonly held conceptualization of equity as "equity of inputs" to one that recognizes that disadvantaged children have differential needs that require greater investments in order to achieve "equity in outcomes." 4. Indications of borrower commitment and ownership: Government's commitment to universal basic education is strong. This project fits clearly within stated Government pnorities to improve the coverage of the educational system and to increase the quality of education. Recent actions taken by Government are building a strong foundation for increased investment in basic education: * A new Education Law was adopted in 1999. The law calls for compulsory enrollment of primary school age children. It supports teacher training and improvements in remuneration, and lays out the nghts of learners, including the right to equal treatment. Regulations to guide implementation of the law are currently being drafted. * Government has developed a new, improved pnmary school curriculum and has begun introducing it in schools. * Professional standards for pnmary teachers are being developed, along with training programs to help teachers achieve those standards. Importantly for this project, the draft standards call for teachers to have a good understanding of the context in which children learn, including an understanding of the special challenges of disadvantaged children. * Long term plans and strategy to support education for all are being developed through the 2010 and 2020 Strategies, the CPRGS, 5-year development plans and the EFA Commission. * The Government recently conducted a national assessment of learning achievement in Mathematics and Vietnamese. The assessment provides a basis to increase the focus on learming outcomes and to inform strategies and policies for doing so. - 13- 5. Value added of Bank support in this project: The Bank and project co-financiers are building a cross-sectoral knowledge base that could help the Government achieve its basic education goals: (i) the Bank-Government-Donor work on poverty reduction and development strategies provides a conceptual framework in which to work (see, for instance, Attacking Poverty and Vietnam Development Reports); (ii) the Public Expenditure Review and its associated follow-on activities could help to advance progress on difficult public finance issues in education; (ii) the excellent Bank-Government collaboration in assessment, curriculum, primary education development, and teacher development could create a strong foundation on which to continue to build EFA/basic education strategies; and (iv) the VLSSILSMS and other surveys could assist the MoET to better target resources and monitor progress. Finally, the strong partnership among donors to education has the potential to produce a well coordinated and powerful support package for primary education. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): O Cost benefit NPV=US$137 million; ERR = 13.6% % (see Annex 4) o Cost effectiveness O Other (specify) The economic case for the project rests on the expectation that the improvements brought about, in terms of the teaching environment, the quality of education and other incentives for children to attend school, will lead to a greater number of pupils in the targeted districts entering and completing primary school education than in the project's absence, hence improving their life-time earnings potential. This is expected to happen, despite the projected decline in the 6-10 age-group population, because the decline in the number of children is expected to be more than offset by increasing enrolment rates and decreasing repetition and dropout rates. It is also expected that pupils who would have graduated even without the project will also benefit because their earnings potential will be increased by virtue of the improved education that they will receive as a result of the project. Conventional cost-benefit analysis can be applied in this case, given the existence of research data on the effect of primary education and other relevant variables on earnings. A cost-benefit analysis (CBA) was conducted during pre-appraisal in December 2001, using an estimate of total project costs of $365 million. The project size changed more than once subsequent to that pre-appraisal mission. The CBA was totally re-computed in May 2002, based on a new estimate of total costs of $200 million. The results of the two CBAs were substantially the same. The internal rate of return (calculated on the basis of assumptions detailed below) remained in the 13-15 percent range. The final estimate of total project costs ($243.7 million) was agreed during the short formal appraisal mission in October 2002. This figure was in the middle between the two earlier estimates. The Bank made the judgment during the mission in May that small changes in the project costs would not substantially affect the CBA results, and that an increase in project costs would, if anything, increase the project's internal rate of return - because the management costs of the project in the 189 districts would not be affected, whereas the additional financing would increase the coverage (more school campuses) and increase the number of pupil beneficiaries. For this reason, the Bank believes that the 13.6 percent rate of return presented below is probably a conservative estimate and the actual rate of return is closer to 15 percent. The analysis incorporates a number of conservative assumptions. Benefits are assumed to accrue only to those who complete primary education. Thus, no benefits are attributed to pupils who do not complete pnmary education, even though an improved partial education may enhance their lifetime earnings - 14 - prospects. No allowance is made for the fact that the improvement in pnmary education may further improve the earnings of children who pass through primary and attend secondary education and beyond. In addition, it is assumed that children currently in primary school will not benefit, because they will have completed their primary education (or dropped out) before the impact of the project can be felt. Cost savings associated with the improved dropout and repetition rates, which should result in more efficient use of learning resources in schools, have also been excluded from the analysis, as are possible external benefits such as the effect of one person's education on the productivity and health of family members and neighbors. It is assumed that the number of teachers in the covered schools will not change as a result of the project - even though pupil-teacher ratios in these schools are quite low by comparison with the national average, and could become lower, as school-age cohorts get smaller in the future as a result of declining population growth - unless Government introduces a policy of not replacing all teachers who move or retire. The project will introduce, on a pilot basis at some satellite school campuses, teaching assistants in classrooms. Each teaching assistant will receive an annual salary of about $100. For purposes of the cost-benefit analysis (completed in May 2002, when the project size was assumed to be different), the additional cost of these teaching assistants has been estimated at $1.21 million annually, assuming that the pilot will be expanded to all project schools before the project closes. This cost has been factored into the analysis. As for classroom teachers, while it is assumed that the structure of teachers' salanes will remain the same, about a third of the teachers in the satellite school campuses do not now meet minimum national standards (nine years of basic education plus three years of teacher training). These underqualified teachers will be upgraded as part of the project. This will increase their earnings by about 30 percent. The total of additional costs (assumed, for purposes of the CBA, to be about $1.18 rmllion annually) is also factored into the analysis. For purposes of the CBA, project costs during implementation are estimated at $199.35 mnllion (VND 2,990 billion) at constant (2002) prices. These have been treated as a reasonable proxy for border prices, and conversion factors have not been applied. Post-implementation annual maintenance spending has been assumed at 10 percent on the construction costs. An assumption is made that instructional matenals will need to be replaced on a six-year cycle. Based on a project life of 25 years and a discount rate of 10 percent, the present value of the net benefit stream (incorporating the net earnings benefits of primary completers from 25 successive annual cohorts of enrollees) is estimated at $137.0 million. The internal rate of return is estimated at 13.6 percent. Extending the project life to 40 years (40 cohorts of enrollees) increases the net benefit stream to $182.0 mllion, and the internal rate of return to 14.1 percent. Given the conservative assumptions made, the project is judged to both economically viable and robust. Sensitivity testing indicates that the project remains economically viable with substantial increases in costs or decreases in benefits. 2. Financial (see Annex 4 and Annex 5): NPV=US$ mllion; FRR = % (see Annex 4) Fiscal Impact: Annex 12 provides a detailed analysis of the financial sustainability of this project. The project will generate counterpart funding obligations which the Ministry of Finance has committed to providing. In addition, it is estimated that it will generate up to $14.7 in recurrent costs beginning in 2009. Analysis of - 15 - budget projections show that such costs are feasible provided the government manages new investments and expenditures prudently. 3. Technical: A major concern during project preparation and implementation will be to strengthen local capacity to provide technical assistance to districts and schools. The implementation team will need strong analytical skills, a wide repertoire of educational development strategies and famiharity with facilitative approaches. These skills will be essential to support and prepare educators and district administrators to develop their FSQL action plans and enhance their ability to respond to the needs of disadvantaged children. In order to effect change, districts and schools will require substantial technical support to guide them through a reflective process to identify their challenges and acquire new skills to address them. The implementation team will also need to demonstrate capacity to effectively appraise, control for quality, monitor and evaluate district FSQL plans and innovation fund proposals. During project implementation, particular attention will need to be directed towards the effectiveness of teaching strategies to enhance ethnic minority students' readiness in the use of Vietnamese as the language of instruction. This will require recognition of the varied nature of the challenges in the transition from vernacular languages to Vietnamese and a robust technical analysis of the linguistic and pedagogical demands in this process. Finally, the project will need to reappraise the relevance and appropriateness of FSQL criteria throughout the lifetime of the project. A consultative and dissemination approach will be necessary to secure the understanding, acceptance and institutionalization of this concept within project provinces and beyond. As the practices and findings of the national assessment exercise take root, FSQL ought also to incorporate outcome as well as input measures. 4. Institutional: This assessment is based on a detailed study of capacity at District level, which will be supplemented and extended during implementation. It also brings together relevant points from the Government Feasibility Report, Beneficiary Assessment and other project studies. The main supply side constraints relate to the need to strengthen systems for directing resources and designing solutions to address the needs of disadvantaged children. On the demand side school fees, unregulated charges and opportunity costs (income foregone) undermine the incentives for poor children to attend school. The project will build on current strengths of the education system, by providing extra resources to partially fill gaps left by current planning and allocation systems. The December 2000 Public Expenditure Review drew attention to a complex system of planning norms which did not channel adequate resources to disadvantaged areas. The project will provide some of the missing resources for five years and strengthen the capacity to plan and manage them. The introduction of FSQL will provide the management a framework to identify and address the needs of schools that do not meet minimum standards. Introducing FSQL will create a management focus on ensuring that minimum standards are universally met including in marginal and satellite schools where the project will provide substantial resources for implementation. FSQL will thus reinforce the demand and build capacity to respond to PER issues on resource allocation, though by itself the project will not be sufficient to bring lasting change to resource allocation systems. The project team will need to establish strong links with the PER work by MPI and MOF in those areas. - 16 - FSQL will present a comprehensive framework for addressing the needs of educationally disadvantaged children. It builds on current national standards. Its application by districts nevertheless will require some important improvements in capacity and practice, and creates a need for sustained support and facilitation at all levels. The Government's feasibility study identifies MoET's role in explaining the need for the changes and in facilitating the response from Provinces; Provinces will play a similar role with Districts. It will be a departure from MoET's current practice of investing heavily in a small number of schools (10 per cent of which now meet the National Standards) and will require resources to be spread more widely. Implementation will be coordinated by Component 4, with supporting inputs from Components 1,2 and 3. By using the district as the key unit of intervention the project will reinforce current management arrangements and practices. The districts have traditionally been responsible for many education decisions as well as the management of resources allocated for schools within theirjunsdictions. The FSQL framework will be introduced as an extension to current annual plans and the project will provide the necessary additional resources for implementation. The focus on satellite schools will however be a new departure. Many have in the past attained low standards but were traditionally subsumed under the broader unit of the "school" (including a core school and up to 15 satellite campuses) for planning purposes. The project will provide resources for strengthening distnct capacity to take on the additional work, in planning, use of information, community relations and other areas. Changes in procedure, practice and performance will be embedded through a process "learning by doing" through five successive annual planning cycles. Project support will be based on assessment of need, which vanes from distnct to district. Districts will require additional staff to take on the extra work, particularly on planning and financial management. The project will provide support for DoETs and BoETS to employ consultant personnel on financial management and procurement, community participation, and EMIS and planning. The two former are seen as temporary needs during the life of the project, while the latter category, EMIS and planning, is a permanent need that the project will meet on a declining basis. Implementation will also require a well-managed change process with emphasis on the introduction of FSQL and adoption of a facilitating role especially in the provision of professional support. The PCU will play a key role in ensuring the process is well designed and managed, particularly in the early stages when there will be lessons to learn from experience. The current lack of functional specialization within the Vietnamese education system is a constraint. The project targets improvements in capacity to deal with education for disabled children, planning, and pedagogical support. The Task Force on Disability will recommend an organizational home for special education within the Ministry and developing guidelines and strategy. The Institutional Strengthening team will manage a program of support for planning at BoET and DoET levels, through help with procedures, staff, equipment, training and facilitation. Gaps in the provision of pedagogical support are to be addressed through training of trainers and head teachers to support improved pedagogical practices. The addition of FSQL to planning processes should create demand for a better education management information system and project resources are allocated to introduce improvements in response to that demand. In the provinces and districts management responsibility is shared. A professional network headed by MoET takes responsibility for professional matters including design of cumculum, delivery of - 17 - instruction and training of teachers. A technical network headed by the People's Comnuttees at each level is responsible for the management of human and financial resources and infrastructure. This division of labor operates via a complex set of matrix management practices requiring high levels of consultation and coordination. Project management will need to ensure that both systems play their part, endorse the end product in the annual plan and support implementation. Capacity may be limited by gaps in the provision of materials such as furniture, equipment, office space and more especially in communications and transport. The Government proposes to address these gaps by funding office equipment for all district offices as well as providing additional travel and per diem allowances to carry out key activities such as district audits, facilitation of community participation, training, monitoring, supervision and professional support. On the demand side the project will support work to encourage closer contact between schools and the communities they serve. There is already a policy to exempt poor families from paying formal school fees and compliance will be monitored in project districts. Project resources should remove the need for informal unregulated charges for the running and equipping of schools. (Further analysis is in Section 6: Social). These measures should enhance the incentives for poor families to send their children to school. The impact of the measures on school attendance will be monitored carefully at all levels (Schools, Districts, Provinces and Ministry). The Project Coordination Unit, headed by a MoET-appointed senior educator and administrator will be responsible for overall direction, management, administration and coordination of the project. It will provide leadership and supervision, including in the key area of change management. The PCU will also have oversight responsibility for the Institutional Strengthening Team staff and consultants provided under Component 3. (details in Annex 2). Completing the design and launching implementation of systems for monitoring and evaluation will be among the key imtial tasks. 4.1 Executing agencies: The Ministry of Education and Training will be the agency responsible for project execution. However most implementation activities will be carried out through the Provincial and District education authorities, which have primary responsibility for the provision of primary education, and within schools themselves. See Annex 2, Component 4 and the Project Implementation Plan (available in the project files) for more detail. 4.2 Project management: See Annex 2, Component 4: Project Management. 4.3 Procurement issues: There are no major issues except the involvement of dependent SOEs, such as teachers training colleges and specialized research institutions with unique expertise; and the continuation of the same textbooks provision and delivery arrangement used under the Primary Education Project, namely, direct contracting with the provincial Books and Equipment Companies. The rationale is in Annex 6. 4.4 Financial management issues: During the preparation of this project, a financial management assessment was conducted by IDA team. The assessment concluded that the concerned agencies have the basic framework to handle the accounting and disbursement aspects of the project. However, the managers and staff of these agencies have limited experience in meeting IDA-financed project management information needs. Weaknesses that need to be addressed are: (i) lack of sufficient accounting staff at all levels of the project; (ii) lack of comprehensive guidance in the area of accounting and financial reporting; and (iii) lack of capable - 18 - computerized accounting system for recording accounting transactions and for management purposes. The action plan that will be implemented (see Annex 6) will serve to address these weaknesses and ensure that capacity is adequate to address current financial management deficiencies. Independent auditors acceptable to IDA will be selected to audit project accounts. 5. Environmental: Environmental Category: C (Not Required) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. 5.2 What are the main features of the EMP and are they adequate? 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The project bases its approach on a host of existing material, summarized in the Vietnam Development Report 2000. This builds on Participatory Poverty Assessments, a range of other consultations with stakeholders, and a broad consensus between government, donors and NGOs of the development challenges that Vietnam faces. At present, nearly 94% of the Vietnamese population of 15 years of age or over is literate. Aggregate levels of enrollment in education in Vietnam are as high as in other much wealthier countries, and gender dispanties are generally low at primary level. The Vietnamese people place a high value on education, and government is committed to providing universal access to basic education. However, there are striking regional differences, and specific groups within society are not attaining Vietnam's average pnmary educational levels. The educational disadvantages that these groups face hinder progress towards Education For All (EFA) targets. The policies that delivered high levels of aggregate performance served most of the people in most of the country well. User charges (or "socialization") of education have brought new challenges. The Vietnam Development Report 2000 identifies three key and related challenges in education -- access, quality and relevance, and financing. A Participatory Beneficiary Assessment, as part of the design phase, strongly confirms these findings. Access: Despite high overall enrolments and relatively small differences between males and females, many disadvantaged areas and groups do not have equality of access to basic education. Of the children - 19- that are currently not in school, 50 percent are from ethnic minorities. In Lai Chau, a poor mountainous province, only 49 percent of adult women are literate. Quality and relevance: Access cannot be considered separately from quality. Although overall enrollments are high, there are large differences in the amount and quality of education that children receive. Several factors are important. In poor and remote areas the school day tends to be shorter, teachers harder to find and motivate, and pupils less likely to attend. Pupil achievement is lower and dropout and repetition rates are higher. In ethnic minority areas language is a further barrier, with very few teachers being able to speak the native language of their pupils. This further reduces teacher and pupil performance. More broadly, the current curriculum does not equip children with the skills necessary to succeed in the growing market based economy of Vietnam. A new curriculum has been developed, but few teachers are yet capable of meeting the new, higher standards it sets out for subject matter knowledge and teaching methods. Financing, and poverty focus: The socialization of education has placed an increasing burden on poorer families. The net effect is a highly regressive financing system. An over-reliance on household financing of basic education places a disproportionate burden on poor families with children at primary school. Fee exemptions for poor districts and families have only limited impact, as they do not offset other education costs that are not well targeted. Combined with the other quality-enhancing inputs that richer parents can afford, the net effect is poorer areas having to put up with poor schools, and having little opportunity to improve them. The challenge for the Government is to reform the financing system so as to give all children equal access to an adequate quality of basic education. The regressive financing system directly affects poor people because of the disproportionate burden they bear, as well as reducing the quality of the education their children get. Reform of the financing system would have a dual impact on poverty. Reducing hard-to-afford pnvate expenditures would make an immediate impact by increasing the disposable incomes for poor people. A delayed and more durable impact would be achieved by improving the ability of their children to compete in Vietnam's emerging market economy. Vietnam was a very early signatory of the UN Convention on the Rights of the Child. This project focuses on those children, who through being disadvantaged, are most at risk. As in other countries and despite impressive progress, problems including child trafficking, unacceptable forms of child labor, and physical, mental or sexual abuse prevail most frequently amongst more disadvantaged children. Increased opportunity to attend school and improve literacy should improve children's capacity to assert their rights. In addition, the participatory mechanisms that the project attempts to develop (such as enhanced Parents' Associations in satellite schools), and child-centered approaches to learning, should help increase accountability over time. Some social categones stand out as particularly disadvantaged: Ethnic Minorities and Gender issues: The government of Vietnam has a variety of programs to address the specific needs of minority groups who total some 13% of the population. However, a series of factors act to perpetuate isolation and social exclusion. Education is central to tackling these factors; yet efforts to provide quality education suffer from the same challenges of isolation and weak capacity that poor minority people themselves face. This project aims to tackle these challenges by targeting the poorest and most isolated schools. It also aims to address cultural and linguistic barners to improving education provision for minorities. There is considerable variation between and within different minority groups. Some minorities have particularly low rates of literacy and net enrolment, and a wide disparity between girls' and boys' - 20 - enrolment and retainment rates. In areas where this is a critical factor, district plans will be expected to prioritize ways of improving girls' attainment (See Annex 13: Technical Note on Girls' Education). The indigenous people's action plan (available in the project files) explains in greater detail the mechanisms for ensuring that language strategy, resource allocations, and other factors assist particularly disadvantaged minonty groups. Disability: As Vietnam approaches UPE, "disabled" children comprise an increasing proportion of those not in school. ("Disabled" is the accepted term in Vietnam to describe a range of children with mental, physical or other difficulties that has isolated them from the main school system.) At least 1% of children are affected; this figure may be higher in very poor districts, and in areas suffenng from long-term effects of war (i.e. land mines and defoliants), but concentrations are not sufficiently dense to warrant a spatially targeted as opposed to a national approach. Traditionally, disabled children have been officially educated in separate schools. However, only some 6000 such places exist and the majority of disabled children do not attend school. The program will work towards internationally accepted models of integration, whereby disabled children are encouraged, where possible, to join the mainstream education system. It will learn from existing pilots, and develop government capacity to devise and implement realistic strategy. Given the aim of integrating disabled children into education, the project will include training components and information dissemination on new strategies across all districts. Migrant, street and working children: These categories frequently have low rates of school attainment. The project will support nationwide strategy development to build on pilots and find sustainable answers to provision of schooling and enabling legislation for these categories. Project social development outcomes: The project aims to tackle the supply and demand constraints on access to education described above. Measures to achieve Fundamental School Quality levels ensure that quality is improved across all schools. More specific measures, including teaching assistants, work to smooth the transition to Vietnamese language, locally defined Campus Support Funds, integration of children with disability into mainstream education, and measures to reach street and working children, all tackle blockages to attendance and performance. The project will aim to stop unregulated charges in target districts, as well as continuing the waiver on formal fees in poor areas. This will be a key indicator of project success, given the financial barriers to enrolment that otherwise exist. Project identification work isolated specific groups, although recommended focusing investments through geographic targeting on the poorest 189 districts. This approach covers most of the educationally disadvantaged children in the country. In addition, specific social groups ("disabled" children, street and working children, mrgrant children) will be targeted through further interventions. The targeting mechanisms are also pro-poor below the district level: the most remote "satellite" school campuses are prioritized, and auditing according to the FSQL should ensure investment is skewed towards the most disadvantaged groups. There are additional social development outcomes beyond the direct impacts of project interventions: an emphasis on FSQL encourages pro-poor expenditure across government; ending unregulated charges will improve the economic status of families in poor distncts, with positive implications for socialization policy more broadly; community involvement and information availability will strengthen grassroots participation and involvement in decision-making; an emphasis on girls, and on ethnic minorities, in - 21 - education will have positive implications for gender and ethnic equality beyond the life of the project. 6.2 Participatory Approach: How are key stakeholders participating in the project? Project design: In 1998 the Government of Vietnam, DFID and the World Bank conducted a stakeholder analysis for the Primary Teacher Development Project. The analysis incorporates the views of primary teachers, head teachers, government officials, pupils, parents, out-of-school children, PTAs, mass organizations, and donors. This document, along with others referred to elsewhere, provided a solid initial diagnosis for the early design phases. Preparation for PEDC included the work of a sociologist who conducted a participatory beneficiary assessment designed to seek input into the design of the project, choice of specific project interventions and implementation arrangements. More broadly, her task was to ensure that social understanding and a pro-poor approach were mainstreamed across the work of the project identification team. This work complements a separate analysis of the incentives and capacity of primary education officials at the district and other levels of govemment. The design of key components, especially the annual Campus Support Fund, builds on this participatory research. Implementation: Community training will strengthen the parents' associations at satellite campuses. District community development specialists employed under the project will oversee this. Head teachers will also receive and pass on training to strengthen parents associations and to ensure that parents understand the FSQL approach. The Campus Support Fund will strengthen ties between the satellite campus and the local community, and stimulate parental and community involvement. The fund will be managed by school management in liaison with parents' associations, and supervised by the commune people's commuttee and district education authorities. Priorities to be supported will be locally identified, thereby resulting not only in appropriate local interventions but also in strengthened community involvement in progress towards FSQL. Emphasis will also be placed on ensuring that stakeholders are kept informed of the planning process, and the benefits that the project is aiming to provide, as a key means of assurng upward accountability. This will be a responsibility of the district community development specialist. These steps are designed to improve local involvement and accountability, for all of the project inputs and for the FSQL concept. They also aim to improve people's participation in education (and other service provision) beyond the project lifetime. The participatory beneficiary analysis, as well as many other information sources, attest to the demand and scope for such changes in Vietnam. It fits with government policy, and best practice from other major projects. The components for disabled children, street children and other high risk groups involve community bodies, teachers and local government officials in raising awareness of govemment strategy over integration of disabled children into the mainstream education system. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Consultations with donors, NGOs, and civil society organizations are ongoing in the preparation of the Comprehensive Development Framework, the Vietnam Development Report, and the Vietnam Poverty Reduction and Growth Strategy. This project figures prominently in those consultations because it - 22 - provides a unique opportunity to define a core set of common strategies to support disadvantaged children and to develop a framework for improved government coordination of donor and NGO support. The process of developing Provincial EFA/basic education plans will create many opportunities for collaboration in the design of programs, and the plans should provide a powerful framework for coordinating donor resources at the local level. Project preparation has included consultation with the major NGOs in the education sector. The main provision for 189 distncts will engage civil society through the mass organizations that have grassroots representation, including the Women's Union, Commune Education Council, and Commune People's Committee. It will also encourage the strengthening of parents' associations at the village level for satellite schools. Additional provision for disabled children, street and working children, and other groups will work with NGOs and research institutes that offer pilot models. These will form a key part of strategy development in the mainstream education system. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The project mainstreams social development outcomes. The FSQL concept, and institutional strengthening surrounding it, aims to achieve pro-poor resource allocation. Additional components (such as the Campus Support Fund) aim to involve communities in decision-making, or target specific vulnerable groups including disabled children and street children. Strengthening Government capacity, including shaping national strategy and devising incentives so that project components are implemented, is a key aspect of PEDC. Devolution of Campus Support Funds, open auditing and monitoring, and a range of institutional measures covered elsewhere aim to ensure funds reach schools, especially satellite campuses. Several institutional measures to support community involvement and participation are proposed: a national team of two national and one international experts in the Community Participation and Highly Vulnerable Children Institutional Strengthening team who will ensure the participatory and community aspects of the project are implemented, and improved over time; community development specialists in each BoET, to ensure project delivery; and training for head teachers in addition to the above staff. The employment of national level staff to cover community participation issues will ensure that specific details of the planned interactions between actors below the district level can be finalized over the initial implementation period. 6.5 How will the project monitor performance in terms of social development outcomes? The project plans extensive capacity building in monitoring and evaluation. The specialists in community related aspects will need to ensure that monitoring includes analysis of community involvement. Participatory research will be essential to find out what problems are arising, and amend the project approach accordingly. In addition to broad quantitative survey data on project performance, the specialists will devise ongoing in-depth qualitative and quantitative research methodology in a number of sample distncts to monitor progress at the grassroots. Monitorable indicators have been extracted directly from Government's strategy. These not only show the focus and emphasis of the Government's program, but they provide quantitative targets that can be used to assess the magnitude of the program and the resource requirements. They are disaggregated by income, ethnic, and gender groups. They include a range of indicators to assess impact on specific groups, and community involvement. - 23 - 7. Safeguard Policies: 7.1 Are any of the following safeguard policies triggered by the pro ect? Policy Triggered, Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes (3 No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) (9 Yes (9 No Forestry (OP 4.36, GP 4.36) 9 Yes (5 No Pest Management (OP 4.09) U Yes (9No Cultural Property (OPN 11.03) (9 Yes e No Indigenous Peoples (01D 4.20) (9Yes ( No Involuntary Resettlement (OP/1BP 4.12) ( Yes U,- No Safety of Danis (OP 4.37, BP 4.37) U Yes U9No Projects in International Waters (OP 7.50,13P 7.50, GP 7.50) ( Yes U3 No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* J Yes 0 No 7.2 Descnbe provisions made by the project to ensure compliance with applicable safeguard policies. An IPAP and beneficiary assessment were completed for the project. They concluded that the project is very well aligned with local aspirations and capacities. These analyses shaped the targeting of the project (to satellite schools where most disadvantaged children are likely to live), the implementation procedures (to include a participatory process in the development of FSQL proposals), the interventions to be supported (including options for textbooks and bilingual instruction) and the specific design of interventions (e.g. themes to be supported in the program of innovations for highly vulnerable children). More information is available in the IPAP and the "Report on Beneficiary Participation". F. Sustainability and Risks 1. Sustainability: The Government's current commitment to education and training (E&T) is demonstrably strong. Government and Party goals for the sector call for increases in the amount of public spending allocated to the sector. In 1999, public spending on E&T reached 17.5 percent of the budget. The proportion is currently about 18 percent, and the Ministry's Education Development Strategy for 2010 envisions a gradual increase, to reach 20 percent within ten years. To see whether projected budget allocations for E&T will be adequate to cover future "needs," the simplest starting point is to assume that "unit costs" for E&T (i.e., fiscal expenditure per student per year for every level and type of E&T) will not change but, rather, will remain the same in the future, increasing only by the rate of inflation. Given the "constant unit cost" assumption, the only variables that dnve the growth of expenditures in E&T are student enrollment projections. Vietnam's recent population census led to downward adjustments in estimated population figures, especially for the youngest cohorts. These new figures, in turn, lead to lower enrollment projections - especially for pnmary education, where close to universal enrolment now pertains. Combining the constant unit cost information with the new student enrollment data yields a projection of recurrent expenditures on E&T in the future. Comparing these figures with recurrent budget projections for the same years suggests whether or not enough government spending will be available in the future to cover all recurrent costs -- given the base-case assumption that unit costs will remain the same. This scenario is graphed as follows: - 24 - Figure 6. Projected Recurrent Government Spending and Projected Available Budget for E&T - Base-Case Scenario % 30 ' 25 >e O > 20 1998 2000 2002 2004 2006 2008 2010 | Projected Spending -_-- Projected Budget This scenano suggests, at first blush, that there will be enough budgetary resources to cover recurrent costs in the future. Caveats are in order, however. The assumption of constant unit costs is likely to prove wrong - for several reasons. First, the projected decline in pupil enrollments (owing to shnnking age cohorts) will place upward pressure on unit costs. Second, strategies to address quality issues in education (such as those raised by Vietnam's recent national assessment of pupil learnng achievement) will cost more money to implement, and third, new programs for increased poverty targeting of education spending and the elimination of "socialization" charges for the children of families living in poverty will almost certainly increase total spending, especially if the burden on parents is reduced or eliminated. If any (or all) of these three factors in fact materializes, the assumption of constant unit costs (the base-case assumption) could prove false. Moreover, the "budget cushion" seen in the base-case scenario and graphed above must be big enough to cover any recurrent costs associated with the PEDC Project (as well as all other ODA-financed projects in education). The capacity of this "budget cushion" to finance all such claims will require careful management of the education budget. The fiscal analysis carried out as part of project appraisal suggests that a real (constant VND) annual increase of 5 percent just about uses up the "budget cushion" seen in the base-case scenario. An increase in unit costs greater than 5 percent annually will not be affordable - unless either the growth of the economy or government revenue generation turns out to be greater than now predicted, or unless E&T's share of the State Budget continues to grow and surpasses the 20 percent now predicted, or unless significantly more ODA is forthcoming or unless user charges are increased further, although the latter is likely to result in lower enrolment and higher dropout. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating " Risk Mitigation Measure From Outputs to Objective The concept of equity in education N FSQL standards are consistent with existing cannot be successfully changed from one national standards. There is widespread support based on equity of inputs to one based on for the FSQL at the project preparation stage equity in terms of outcomes of teaching and Government has already indicated that it and learming, thus providing the basis for would like to make it a national standard. The recognizing the need for compensatory project will support a FSQL task force, whose funding for schools that serve role it is to periodically review FSQL standards - 25 - educationally disadvantaged children. and guidelines, and promote their integration with Ministry procedures. Unregulated charges are not eliminated, M Government policy is supportive of the and hence continue to operate as a barrier elimination of levies in poor districts. Further, to school access for poor children. elimination of charges is a condition for eligibility for project-supported funding. The implemented package of FSQL N Project implementation will be closely interventions is not effective at monitored for impact appraisals of intervention improving educational quality. effectiveness. Capacity to implement the FSQL N Specialized technical assistance and training program is inadequate at the national, will be provided on a continuous basis to the provincial, district and school levels. district, province and central levels. Financial management and procurement M A Financial Management Analysis and Action controls do not ensure that project Plan will be implemented pnor to project resources are used as intended. (Note that effectiveness. Project funds will disburse financial management capacity exists in through dedicated special accounts held by the central and provincial levels, but staff MoET rather than the People's Committee's need training on the computerized FMS (which has many more demands on its accounting system and FMR reporting resources). Project accounts will be audited procedures. Financial management annually, and supervised semi-annually. capacity is weaker at the district level Procurement of goods and services will be and staff will need training to help them competitive. Civil works will be independently to implement the grant contracts' monitored. Communities will be encouraged to financial and procurement supervise the implementation of FSQL responsibilities, even though these are interventions in schools, in collaboration with relatively simple.) Community Development specialists at the district level. ICB goods procurement and hiring of major consultant services will be done centrally under close supervision of the International Procurement Advisor, with assistance from resource persons from the Primary Education Project as well as the guidance from the Bank Team. In provinces, the PPCUs already have civil works and procurement of textbooks experiences using Bank's procurement procedures from the Primary Education Project. Grant activities will be governed by Grants Operations Manuals, to be agreed with IDA and co-financiers. Professional development does not lead M The training strategy for the project involves to positive changes in classroom training headmasters as well as head teachers, practices. whose job it is to provide support and reinforcement to teachers on a continuous basis. Professional development programs should be reviewed from time to time by the technical support teams and adjusted if required to make them more effective. Inability to recruit suitable teacher N PTAs and local school leaders, with knowledge -26 - assistants and/or they are not effective in of qualified candidates locally available, will improving student learning. be responsible for recruitment. Reports on the effectiveness of teaching assistants, as with other interventions, will be monitored. Adjustments may be made to the component design if any intervention is not successful. Lessons from grant activities are not N Monitoring and evaluation systems for grant incorporated into better policies and activities will be put into place and carefully improved practice. tracked. Reflective exercises and dissemination activities will be conducted. Government does not provide sufficient N The Government is looking for ways to refine human and financial resources to sustain the targeting of their own national programs. FSQL investments after project end. This project tests a new model of resource allocation. The Bank and donors will review the benefits associated with this new model as implementation experience accumulates and discuss findings with Government. There is not effective communication and M An inter-ministenal project steenng committee information sharing within MoET and will help to improve communication and buwld other Government agencies, Party bodies trust for broad information exchanges between and other partners. agencies. Within MoET the PCU will play a coordinating role. The PCU, PPCUs and BoETs will not be N Terms of reference and short lists for key staffed by qualified employees or positions will be reviewed by project financiers provided with support and training required to carry out the job effectively. From Components to Outputs Financial management capacity exists in M A Financial Management Action Plan to central and provincial levels, but need improve the weakness areas has been agreed training on the computerized FMS with the Government. accounting system and FMR reporting procedures. Weaker financial The project will primarily procure goods using management capacity in distnct levels ICB and hiring of major consultant services and will need training to help them to centrally under close supervision of the implement the less complicated grant International Procurement Advisor and contracts' financial and procurement resource persons from the Primary Education responsibilities aiming at building local Project as well as the guidance from the Bank capacity at the district and school levels Team. In provinces, the PPCUs already have civil works and procurement of textbooks expenences using Bank's procurement procedures from the Primary Education Project. The Grant activities at district level and at the central level will be governed by two different Operational Manuals acceptable to IDA. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) -27 - 3. Possible Controversial Aspects: The project is aligned well with Government strategies for education and poverty alleviation, and with local aspirations. The FSQL standards are seen as a "stepping stone" to established national standards for schools, and the focus on satellite sites is widely perceived as addressing a very needy constituent part of the education system. However, implementation of the FSQL standards will require a high degree of cooperation and collaboration among various bodies, including the MoET, MPI, MOF, National Assembly, and the Prime Minister's Office. G. M'Rain Loan Conditions 1. Effectiveness Condition o the Multi-donor Trust Fund Grant Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Borrower to make withdrawals thereunder have been fulfilled, except the effectiveness of the Development Credit Agreement; o the Borrower has established the Project Coordination Unit and appointed thereto a Project director, a finance officer, an accountant, an administrative officer and a procurement officer; o the Borrower has appointed accounting staff acceptable to the Association and under terms of reference satisfactory to the Association, for all the PPCUs and DMUs; o the Borrower has: (i) adopted and put into effect a financial management manual acceptable to the Association; and (ii) provided training to the accounting staff of the PCU and the accounting staff selected for all PPCUs and DMUs, on the application of said financial management manual and of the financial management system software; and o the Borrower has adopted an FSQL Grants Operational Manual satisfactory to the Association. 2. Other [classify according to covenant types used in the Legal Agreements.] H=1. IReadiness for IMplementation C 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 1. b) Not applicable. D 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory qualhty. D 4. The following items are lacking and are discussed under loan conditions (Section G): - 28 - 1. Compliance with Bank Policies 0 1. This project complies with all applicable Bank policies. O 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Christopher J. Thomas I Y. Jime Klaus Rohland Team Leader Sector Manager/Director Country Manager/Director - 29 - Annex 1: Project Daslgn Summary VOETNAM: PRIMARY EDUCATION FOR I5SADVANTAGED CHILDREN PROJECT ' Key Performance Data Collection'Strategy Hierarchy of Objectives | -Indicators' Criticai Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) The goal of the Government Improvements in student Grade 5 student assessments in Improving the quality of (as expressed in its 2010 achievement in Mathematics Mathematics and Vietnamese, education leads to increased Strategy) and the program and Vietnamese, measured with data disaggregated by productivity, and therefore financiers is to provide a high every 4-5 years beginning in gender and region. increased income, and quality basic education for all 2001. ultimately to a reduction in children poverty. Improving the quality of education also leads to improvements in health, fertility, and income distribution, which in turn contnbute to poverty reduction. Improvements in student MoET statistics, with data enrollment, completion, disaggregated by gender and repetition, and dropout rates. province/district/ school. Project Development Outcome / Impact Project reports: (from Objectlve to Goal) Objective: Indicators: Improve access to primary Participating schools and their Annual district FSQL audits The concept of equity in school and the quality of satellite campuses in 189 education can be successfully education for disadvantaged districts will achieve a changed from one based on girls and boys. "fundamental school quality equity of inputs to one based level" (FSQL) by end of on equity in terms of outcomes project. of teaching and learning, thus providing the basis for recognizing the need for compensatory funding for schools that serve educationally disadvantaged children. For participating project EMIS data, including ethnic districts as a whole: and gender disaggregation. Net enrollment rate will rise Unregulated charges are from 81% (1999) to at least successfully elimnated, and 96%, with gender parity. hence do not operate as a barrier to school access for poor children. Student completion will rise from 72% (1999) to at least 86%, with gender parity. Repetition rate will reduce from 8% (1999) to less than 3%, with gender panty. Dropout rate will reduce from 12% (1999) to less than 6%, with gender parity. - 30 - Number of eligible disabled MOLISA, MoET, NGO and children in school will other agency data. increase. Disabled children, street Innovations grant program children, minority girls, and reports. other very high risk groups of children throughout the Project surveys country benefit from expanded and innovative approaches to education service delivery. Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: Component I: Achieving By the end of the project: Annual FSQL audits and The implemented package of Fundamental School Quality distnct action plans. FSQL interventions is Levels (FSQL) 189 of the most educationally effective at improving disadvantaged districts plan Annual project reports, with educational quality. Schools serving the most for and achieve FSQL in all data disaggregated by gender educationally disadvantaged schools and their satellite and province/ distnct. Capacity to implement the children in the country are campuses. FSQL program is adequate at better prepared for success. the national, provincial, The inputs required to achieve district and school levels. these goals are: Financial management and Professional development procurement controls ensure provided for approximately that project resources are used 59,000 teachers and head as intended. teachers in over 4,200 core school sites and almost 15,000 Professional development satellite sites (including leads to positive changes in Vietnamese language teaching practices. preparedness). 25% of unqualified teachers will advance their certification to 9+ 3. Approximately 15,000 teacher assistants hired and trained for satellite campuses (pending results of a 2-year pilot test of this intervention) Suitable candidates are available to perform teacher At least 9,240 satellite assistant duties and they prove campuses are rehabilitated effective in improving student with permanent classrooms Construction Manager learming. and upgraded facilities, progress reports. particularly in ways that will make schools more attractive to girls. School-community linkages are strengthened in about 15,000 school campuses. Quarterly and annual project reports - 31 - Nearly 40,000 satellite teachers will have a full set of teaching materials and 1,390,000 students math and Vietnamese textbooks at the start of each school year. Component 1: Education National guidelines for National guidelines document Initiatives for Highly inclusive education children Vulnerable Children adopted and applied effectively New partnerships and Annual project reports. innovative approaches for 40,000 educators trained to improving access and work with disabled children delivering education to the and put these new skills into highest risk groups of children practice are developed and implemented. National guidelines for highly National guidelines document vulnerable children adopted and applied effectively Grants for DoETs, BoETs, Project surveys and impact schools (and their satellites) or evaluation study Lessons from grant activities NGOs succeed in expanding are incorporated into better or developing innovative strategies and reflected in programs that address the improved practice. educational needs of very high-risk children, including ethnic minority girls. Component III: National and FSQL approach and MoET documents Government provides Provincial Institutional and procedures become sufficient human and financial Technical Support for FSQL mainstreamed into MoET and Annual project reports. resources to sustain FSQL its line agencies, with support investments after project end. Capacity is strengthened from Government and Party within MoET, DoETs and bodies. Effective communication and BoETs to identify, plan for, informnation sharing within support, and monitor the needs District and provincial BoETs annual district plans. MoET, and between MoET of educationally disadvantaged planning is attentive to the and other Government children. needs of disadvantaged agencies, Party bodies and children and is based on sound EMIS data. other partners. data analysis. Effective monitoring and Monitoring and evaluation evaluation process, including reports. EMIS, is developed and applied by MoET, DoETs and BoETs by Year 2. Component IV: Project PCU and PPCUs provide Annual project reports. The PCU, PPCUs and BoETs Management intellectual leadership and will be staffed by qualified project management. Quarterly and annual Project employees and provided with Project implementation is Management Reports. support and training required efficient, effective, and timely Financial and procurement to carry out their jobs management procedures are Audit reports. effectively. operational throughout the project. - 32 - 3 :7 -. < - o .< Key Performance Data Collection Strategy - , S Fierarchy of Objectives-. Indicators i - 4 - Critical Ass umptions. Project Components Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) same as above same as above 1. Achieving Fundamental School Quality Levels US$227.72 million 1.1 FSQL District Management US$7.07 million 1.2 Instructional Improvement and Teacher Support for FSQL US$44.24 million 1.3 Infrastructure Improvement for FSQL US$163.61 million 1.4 Community Participation and Student Support for FSQL and Universal Primary US$12.81 million Education 2. Education Initiatives for Highly Vulnerable US$4.15 million Children 2.1. Inclusive Education for Disabled Children US$2.26 mllion 2.2. Reaching Street and Working Children and Other High Risk Groups US$1.89 million 3. National and Provincial Institutional and Technical Support for FSQL US$8.17 million 3.1. National Guwdelines for FSQL US$0.44 million 3.2 Institutional Strengthening US$7.73 million 4. Project Management US$3.62 million - 33 - Annen: 2: DetaIled Project Description VIETNAM: PRIMW3AIRY EDUCATION FOR DISADVANTAGiED CHILDR?EN PROJECT The project has four components: By Component: Project Component 1 - US$227.73 mililon Component 1: Achieving Fundamental School Quality Levels (FSQIL) Schools that serve educationally disadvantaged children do not meet the pedagogical needs of this population because these schools and their satellites are under-equipped and their teachers under-qualified. Furthermore, appropriate pedagogical strategies are not adequately formulated or implemented. The objective of this component is to raise all schools in the 189 most disadvantaged targeted districts to afundamental school quality level through a two-pronged approach: 1.1 by providing necessary support to district adnministration to improve planning, management and monitoring capabilities, in order to develop and implement plans to meet FSQL standards, and 1.2 by enhancing school capacity to provide effective instruction at poorly resourced satellite campuses, meeting the specific needs of educationally disadvantaged children and supporting other efforts to meet FSQL standards in these classrooms. The FSQL standards are: 1. Physical Infrastructure: o Schools and campuses have solid construction (walls, floors and roofs) for classrooms and with adequate natural lighting o Schools and campuses have 1 blackboard per classroom, sufficient tables and benches for students, 1 teacher desk/chair per classroom, and sufficient durable and transportable storage boxes or lockers for instructional materials. 2. Teaching Staff: o Teachers are minimally qualified at 9+3 level o Teachers receive annual professional training on relevant classroom management and pedagogical topics (e.g., crafting teaching aids, multi-grade teaching, remediation support, Vietnamese language instruction, inclusive education, etc.) 3. School Organization and Management: o a school ensures that each satellite campus offers the same quality of instruction, services and resources as the main school site o schools and campuses offer grades based on full 175 week curriculum o head teachers are trained in satellite campus management and support -34 - 4. Education Socialization: * schools and campuses have individual parent conmmittees * parent committees at all schools and satellite campuses are trained in school and student support strategies 5. Educational Activities and Quality: * 1 set of teaching aids/instructional matenals per grade is available to each school and campus * 1 set of teacher supplies is available to each teacher (e.g. ruler, scissors, chalk, paper, pen) in all schools and campuses * 1 full set of textbooks, a teaching manual, and other guides as required per grade taught is available to each teacher * 1 set of supplementary reading materials appropriate to all grades taught is available to each school and campus * all students have Maths and Vietnamese textbooks * all students are equipped with a sufficient (minimum) number of notebooks and pencils * all teachers in ethnic minority areas are trained in teaching Vietnamese to children whose native language is not Vietnamese * Special Vietnamese language matenals are available in all schools and campuses with ethnic minonty populations 6. Expected Outcomes * all school age children are enrolled in school * 96% of 14-year olds complete primary education * gender equity is achieved in primary school enrollments Sub-Component 1.1: FSOL District Manauement (US$7.07 million): The project will buttress the institutional capacity of targeted districts (BoET) to plan and manage educational services and support schools and their satellites to reach fundamental quality standards. More specifically, the project will: * Strengthen district school data collection systems (including an initial physical inventory of all schools and satellite campuses to guide planning for civil works and requirements for classroom inputs) and implement a monitoring and evaluation system to assess progress towards FSQL goals and educational outcomes. Appropnate instruments and methodology for the physical inventory have been developed and piloted in a small number of districts during project preparation. * Support the development of a consultative annual district-wide FSQL action plan that outlines the requirements for all schools in the distnct to reach fundamental quality levels and serves as a tool for planning and school-support purposes. Sub-Component 1.2: Instructional Improvement and Teacher Support for FSOL (US$44.24 million): Targeted districts will receive FSQL grants to implement their district-wide FSQL action plan. Grants to distncts will be made by provinces on a contract basis, and managed according to guidelines to be specified in the Operations Manual. Within the district, resources will be only be provided to teaching - 35 - sites that are below FSQL standards, most of which are satellite campuses. These interventions strive to address and meet the pedagogical needs of disadvantaged children. Funds may be allocated to support a variety of interventions, according to the specifications laid out in their district-wide FSQL plan, including: o Procurement (and, only if strictly necessary, design) of teacher guide, materials and training modules that will encourage and support instructional methods adapted to the needs of educationally disadvantaged children, such as Vietnamese language strengthening, multi-grade education or mainstreaming of disabled children. O Provision of professional development workshops to teachers and head teachers (except for where otherwise provided by other projects such as the Primary Teacher Development Project) to support their acquisition of new methodologies to address the pedagogical needs of educationally disadvantaged children, with special attention to the needs of girls and minorities. A limited amount of funds will also be available for satellite teacher certification upgrading to the minimum 9+3 FSQL standard for classroom instruction. o Procurement of a basic package of teaching-learning materials (classroom consumables, instructional aids student supplies, textbooks and supplementary reading/library materials). O Establishment of community-based pre-primary school readiness language development programs to strengthen children's Vietnamese competency levels in locations with a significant proportion of ethnic minorities. o Placement of local community lower-secondary graduates as teacher assistants to support classroom instructors in satellite sites to provide more individualized attention to children with special needs. This activity will be piloted in approximately 800 schools and satellite campuses in the worst off districts for 2 years and then expanded in the remaining districts if successful. Sub-Component 1.3: Infrastructure Improvement for FSOL (US$163.61 million): This intervention seeks to improve the physical environment for learning in school satellites serving disadvantaged children. The project will upgrade the infrastructure in an estimated 8,500 existing school sites, providing for construction of classrooms plus an office, water points (rain water collection and above ground tank) and latrines. Standard building designs should accommodate the needs of handicapped children. Sub-Component 1.4: Community Participation and Student Support for FSOL and Universal Primary Education (UPE) (US$12.81 million): This intervention seeks to strengthen parents' associations at satellite campus locations to advocate for universal primary education goals as well as to support and monitor FQSL standards. With the assistance of a Community Development specialist, parents will be mobilized and trained to manage a campus support fund that they can allocate to a variety of activities, such as school feeding programs, extracurricular activities that promote participation of under-represented groups (girls, ethnic minorities), or remedial education classes. The campus support fund will be budgeted and accounted for through the District FSQL grant outlined in sub-component 1.1. above, but managed at the school level. This activity will be piloted in the 800 schools and satellite campuses in the worst off districts for 2 years and then expanded in the remaining districts if successful. Schools participating in the project should exempt students from all unregulated charges, such as school construction levies. - 36 - Project Component 2 - US$4.15 million Component 2: Education Initiatives for Highly Vulnerable Children This component seeks to address the needs of children at high risk. It consists of two streams. The first stream presents interventions that address the educational needs of disabled children. The second stream is designed to address the educational needs of vulnerable groups, such as street and working children, children living in fishing communities, and others. Sub-Component 2.1: Inclusive Education for Disabled Children (US$2.26 million): The project will support a national Task Force to develop an integrated set of national guidelines for inclusive education that ensure disabled children can gain access to education services. In addition, the project will improve teachers' pedagogical capacity to meet the needs of children with disabilities in the classroom. The activities to be included under this component are: * Development of a comprehensive set of national guidelines addressing the needs and constraints faced by primary schools attempting to adopt an inclusive education policy. This will include recommendations of an organizational structure to support the needs of disabled students. * Implementation of a survey and research that scopes the dimension and variation of the educational issues faced by disabled children, profiles their educational needs, identifies the barriers they face in completing primary education and recommends appropriate strategies and approaches for the provision of inclusive primary educational services to them. * Development of teacher guides and modules and provision of training workshops (see Component 1) for educators that can assist in the mainstreaming of children with disabilities. * Development of public awareness materials to mobilize parents to enroll disabled children in their local primary school, if appropnate, and assist head teachers and district officers to mobilize communities to provide a supportive environment for them. * Procurement of materials and equipment to support disabled children, e.g. brail books, wheelchairs, hearing aids, etc. Procurement of these items will be deferred until the later years of the project, and taking into account recommendations of the Task Force on the organizational structure and the result of the needs analyses. Sub-Component 2.2: Reaching Street and Working Children and Other H12h Risk Groups (US$1.89 million): The project will support a national Task Force to develop an enabling environment for the education of vulnerable groups, such as street and working children. Furthermore, the project will finance the implementation of innovative approaches to the education of vulnerable groups. * Provision of innovation grants for vulnerable groups to government agencies and NGOs who serve at-risk children. Grants will be provided on a competitive basis to implement inventive approaches for meeting the educational needs of vulnerable groups. For example: o Enrolling ethnic minority girls in school o Encouraging cross-sectoral work to address the educational and social needs of working children o Development of innovative delivery systems for 6hildren living in very isolated communities (children in fishing communities or remote mountainous areas) o Assisting new migrants to access education. - 37 - o Based on lessons from the above grants and other ongoing initiatives, develop recommendations and guidelines to improve educational services for highly vulnerable children. Project Component 3 - US$ 8.17 million Component 3: National and Provincial Institutional and Techical Support for FSQL The MoET is committed to provide high quality educational services to all children. This vision is embodied in the national school standards. This component will assist the MoET to lay down a pathway for reaching national school standards by using FSQL as a first step. It will propose FSQL criteria and raise awareness at all levels of the education system about how to bring every school up to FSQL levels. Sub-Component 3.1: National Guidelines for FSOL (US$0.44 rmillion): A National Quality Standards Task Force will develop and disseminate FSQL standards and guidelines for implementation. The Task Force will periodically review and revise FSQL standards according to evolving plans of the Government and actual progress in schools toward meeting current FSQL standards. As most schools achieve FSQL, the Task Force may recommend to incrementally raise FSQL standards until they gradually approach national standards, several years from now. Each revision of the FSQL standard should be accompanied by a revision of the district audit instrument and implementation guidelines. Sub-Component 3.2: Institutional Strengthening (US$7.73 million): Technical Assistants will support MoET and DoETs. TA will help develop instruments and processes to achieve FSQL. A limited amount of international and national TA will be provided to MoET, to bolster the five institutional strengthening teams responsible for: o Strengthening planning and monitoring of educational quality-including harmonizing district-level school data collection efforts with the national Education Management Information System (EMIS) and undertaking analytical studies to increase sector wide effectiveness and efficiency. o Supporting teacher development activities and back-stopping of Vietnamese language strengthening programs for non-Vietnamese speakers. o Procuring and distributing educational goods and materials that will address the needs of educationally disadvantaged children. o Monitoring and supervision of all civil works o Mobilizing and supporting community participation in education for highly vulnerable children Additional national TA will be provided to the DoETs to strengthen capacity for procurement and financial management at that level. The institutional strengthening teams are expected to play a coordinating role, generate new knowledge, and provide overall leadership and direction in project implementation. However, most project activities will be carried out by existing departments in the MoET, DoETs and BoETs. The team's role will include maintaining a focus on the innovations introduced in the project, including those related to gender, targeting resources to satellite schools, VSL instruction, addressing the educational needs of minonties, and community participation. - 38 - Project Component 4 - US$3.62 million Component 4: Project Management MoET will be the executing agency for the project. Following the model of other World Bank-supported education projects, a Project Coordination Unit (PCU) will be created inside the MoET, attached to the Pnrmary Education Department. The PCU will be staffed with members from vanous departments of MoET, domestic and international consultants. The PCU will support MoET line agencies, the institutional strengthening teams (see Component 3) as well as the national task forces for Quality Standards, Disabled Children and Highly Vulnerable Children. The PCU will coordinate its work with the EFA Commission. The PCU will take guidance from an inter-ministerial steering committee made up of members from other related government organizations, named by the Government in accordance with established rules and procedures. The Steering Committee's role is to ensure that the Project is coordinated with other government initiatives. The PCU will be responsible for overall direction, management, administration, and coordination of the Project. It will provide leadership and project supervision. Specifically, the PCU will undertake: * planning for project implementation and overall coordination of project activities, including monitoring and evaluation of progress; * administration, including personnel management, accounting and monitonng and reporting needs for both government and donors; and * procunng goods and hiring of consultants services and all international competitive biddings (ICB). The DoETs in the participating provinces will be responsible for: * organizing and supervising the construction programs prepared by the districts; * undertaking large-scale procurement of texts and other instructional materials, except those subject to ICB; * supporting training programs in the areas of planning, teacher professional development (including Vietnamese language strengthening and mainstreaming of disabled children), and community participation; a monitonng and evaluation of FSQL implementation and quality improvement at district level; and * facilitating liaison between districts, PCU and the Institutional Strengthening Teams at MoET. The BoETs in participating provinces will be respoisible for FSQL grant activities including the following: * undertaking FSQL audits; * developing district FSQL plans; a organizing training programs; * undertaking small scale procurement; a mobilizing and supporting parents' associations at satellite campuses; * supervising implementation of FSQL activities in schools; and - 39 - o working with PCU technical teams to field test materials and initiatives. A general picture of project-funded positions within the management structure-from Steering Comniittee to schools and communities-is provided in the figure below. INTERMINISTERIAL STEERING COMMITTEE MOET PROJECT COORDINATION UNIT (PCU) Vulnerable FSQL I Vulnrabl Task Force Project Director Children & r _ I i Secretariat Finance/Acet Int'l Project Advisor Adm/Personnel Disabled I I I D Children 3+ Assistants I Interpreter/Asst 2 Assistants Task Force INSTITUTIONAL STRENGTHENING TEAMS TO COORDINATE WITH MOET LINE DEPARTMENTS PLANNING INSTRUCTIONAL MATERIALS CONSTRUCTION COMMUNITY IMPROVEMENT PROCUREMENT PARTICIPATION & VULNERABLE CHILDREN 2 MOET 2 MOET I MOET I MOET I MOET 2 Nat'l 3 Nat'Ub I Nat'l I Nat'l 5 Nat'l/d 2 Int'U/a I Int'tUa I Int'Uc I Int'U/c I Int'l/a _ I Ass't _j I Graphic/Editor _I Ass't _] I Ass't _I Ass-t 2 Interpntrsh _ I Interpreter _ I Interpreter/c _ I Interpreter/c _IIlzpee PROVINCIAL PCUs (x 38 Provinces) 38 x I DOET Procurement Staff 38 x I Provincial Procurement Coordinator DISTRICT MANAGEMENT (X 189 Districts) 189 x Planning Coordinator 189 x I Community Development Specialist SCHOOLS Notes a/ posts eliminated after Project Year 3 b/ 2 posts eliminated after Project Year 3 and assumed by MOET counterparts c/ posts eliminated after Project Year I d/ I post eliminated after Project Year 3 and assumed by MOET counterpart -40 - Annex 3: Estimated Project Costs VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT Project Cost by Component US$ US$ Total .mullion million US$ million 1 Achieving Fundamental School Quality Levels (FSQL) 31.58 6.15 227.73 1.1 FSQL District Management 1.57 5.50 7.07 1.2 Instructional Improvement and Teacher Support for FSQL 0.45 43.79 44.24 1.3 Infrastructure Improvement 29.50 134.11 163.61 1.4 Community Participation and Student Support 0.06 12.75 12.81 2 Education Initiatives for Highly Vulnerable Children 1.23 2.92 4.15 2.1 Inclusive Education for Disabled Children 1.06 1.20 2.26 2.2 Reaching Street Children and Other High Risk Groups 0.17 1.72 1.89 3 National and Provincial Institutional and Technical 3.42 4.75 8.17 Support for FSQL and Vulnerable Children 3.1 National FSQL Planning 0.18 0.26 0.44 3.2 Institutional Strengthening 3.24 4.49 7.73 4 Project Management 1.55 2.07 3.62 Total Project Costi 37.78 205.89 243.67 Total Financing Required 37.78 205.89 243.67 'Identifiable taxes and duties are US$21.12m and the total project cost, net of taxes is US$222.55 m. Therefore, the project cost shanng ratio is 60% of total project cost net of taxes. Project cost by Category US$ US$ Total rmillion million US$ million Campus Infrastructure: 29.49 134.03 163.52 Civil Works 28.06 127.54 155.60 Architectural, Engineering, Adaption, and Supervision Fees 0.50 2.24 2.74 School Furniture 0.93 4.25 5.18 Goods 2.57 1.03 3.60 Instructional Matenals - 12.44 12.44 Grants - 48.65 48.65 Consultants Services 4.98 5.22 10.20 Training 0.52 2.35 2.87 Incremental Operating Costs 0.22 2.17 2.39 Total Project Costs 37.78 205.89 243.67 Total Financing Required 37.78 205.89 243.67 - 41 - Annex 4: Cost Benefit Analysis Summary VIETNAM: PRiMARY EDUCATION FOR UDSADVANTAGED CNOLDREN PROJECT ECONOMEC ANALYSIIS The following analysis uses the conventional techniques of cost-benefit analysis to estimate the net economic benefits and the internal rate of return of the PEDC project. The project will improve the quality of education offered in pnmary schools in the targeted districts. It is assumed that this will result in increased enrollment rates, as well as increased efficiency in the form of lower dropout and repetition rates and, hence, a reduction in the average time it takes a child to completion primary school. As a result, more children will enter the primary school system, those who enter will receive a better education, and more will "graduate," i.e., complete Grade 5. Two sets of children will therefore benefit from the project: (1) those who would have attended and completed pnmary school, even in the absence of the project, but who now will receive a better education, and (2) those who would never have attended or (had they attended) not have completed primary school, but will do so now. A cost-benefit analysis (CBA) was conducted during pre-appraisal in December 2001, using an estimate of total project costs of $365 million. The project size changed numerous times subsequent to that pre-appraisal mission to accommodate changing and sometimes conflicting positions of different departments and individuals in Government. The CBA was totally re-computed in May 2002, based on a new estimate of total costs of $200 million. The results of the two CBAs were not substantially different. The internal rate of return (calculated on the basis of assumptions detailed below) remained in the 13-15 percent range. The final estimate of total project costs depended on the amount of grant co-financing that could be mobilized from the bilateral donors, and on the Government's final decision on project size and scope. The final figure ($243.7 mnillion) was agreed during the short formal appraisal mission in October 2002. This figure was in the middle between the two earlier estimates. The Bank made the judgment during the mission in May that small changes in the project costs would not substantially affect the CBA results, and that an increase in project costs would, if anything, increase the project's internal rate of return - because the management costs of the project in the 189 districts would not be affected, whereas the additional financing would increase the coverage (more school campuses) and increase the number of pupil beneficiaries. For this reason, the Bank believes that the 13.6 percent rate of return presented in table I below is probably a conservative estimate and the actual rate of return is closer to 15 percent. The benefits of the project are based on the projected increase in net earnings that will accrue to each child who completes Grade 5, over his or her 40-year working life. The stream of increased earnings is applied to 20 annual cohorts of individuals who graduate in successive years, beginning in 2007. However, because each successive cohort will start working one year later than the cohort before, the discounted present value of the earnings streams becomes smaller and smaller for later cohorts. A discount rate of 10 percent is used for this analysis. The present value of the increased additional lifetime earmings falls from $528 for an individual in the first cohort to $86 for an individual in the 20th cohort. The analysis incorporates a number of conservative assumptions. Benefits are assumed to accrue only to those who actually complete primary education. Thus, no benefits are attributed to pupils who do not complete, even though an improved partial education may enhance their lifetime earnings prospects. Neither is any allowance made for the fact that the improvements in primary education may further improve the earnings of children who pass through primary school and attend secondary school and beyond. In addition, it is assumed that children now enrolled in primary school will not benefit, because they will have completed their primary education (or dropped out) before the impact of the project is felt. -42 - Cost savings associated with the improved dropout and repetition rates, which should result in more efficient use of learning resources in schools, have also been excluded from the analysis, as are possible external benefits such as the effect of one person's education on the productivity and health of family members and neighbors. Benefits are calculated on the basis of existing research, using a multivariate earnings function (a la Jacob Mincer - "Labor Supply, Family Income and Consumption," American Economic Review, May 1960, and Schooling, Experience and Earnings, New York, National Bureau of Economic Research and Columbia University Press, 1974), in which the independent variable is the natural logarithm of income [ln(Y)]. Using data from the 1998 Vietnam Living Standards Survey (VLSS), this research ("Vietnam: Trends in the Education Sector during 1993-98," by Nguyen Nguyet Nga, World Bank, Hanoi, 2000) estimated the coefficient on primary education to be 0.104, which can be interpreted as the proportionate increase in earnings of an individual who has completed primary school, as compared with an individual who has not. The effect of "expenence" (number of years in the labor force -- measured by an individual's age, minus years of schooling, minus six years) enters the earnings function in quadratic form. The coefficients on experience and experience-squared were estimated to be 0.027 and minus 0.001, respectively. As a proxy for the benefits accruing from the improvement in primary education quality brought about by the project, we have taken the difference between the estimated earnings of an average Vietnamese worker and a worker living in the North of the country in 1998. The coefficient on the "northern area dummy variable" in the regression equation was estimated to be minus 0.271. The assumption here is that the quality improvements in education brought about by the project will eliminate this earnings deficit for the beneficianes of the project. All earnings estimates are expressed in constant 2002 prices. To reflect the impact of the project on pupil flow-through efficiency, it is assumed that repetition and dropout rates will both decrease over the penod of project implementation, from the current average in the project distncts to the average in Vietnam as a whole. It is assumed that the proportion of each group of newly enrolled pupils who complete the five-year cycle and who do so on time (that is, in just five years) will increase from 48 percent to 69 percent. It is assumed, moreover, that the overall completion rate (including in the numerator, that is, anyone who ever completes primary school, whether on time or in more than five years) will also increase, from 63 percent (the current average in the targeted districts) to 80 percent (the national average). The number of pupils benefiting from the project is based on the projected numbers in each cohort who enter primary school and ever complete Grade 5. Given the current demographic transition in Vietnam, the size of successive primary school-age cohorts will decline in the project districts. For purposes of the cost-benefit analysis (completed in May 2002, when the project size was assumed to be different), it is estimated that the school-age population in the targeted areas in 2003 (the first year of project implementation) will be about 252,000 - about 15 percent lower than it was in 2001. In addition, it is assumed that the number of school-age children will stabilize by 2006 at about 240,000. As a result, however, of an assumed 18 percent increase in enrollment rates brought about by the project (from 60 percent to 71 percent), the annual enrollment in Grade 1 is projected actually to increase slightly and to reach a stable level of 170,400 in 2008. The number of pupils completing Grade 5 reflects the combined effect of increased enrollment and increased efficiency. Based on the assumptions referred to above, the number of pupils who complete Grade 5 in 2008 (the final year of project implementation) is projected to be about 101,000, reaching a stable level in 2016 of 136,000 - which we estimate to be about 50 percent above the "without-project" situation. The net increase in completers is projected to stabilize at an annual level of about 45,600. -43 - It is assumed that the number of teachers in the covered schools will not change as a result of the project - even though the pupil-teacher ratio in these schools is quite low as compared with the national average, and it could become even lower as school-age cohorts get smaller in the future (as a result of declining population growth), unless Government were to introduce a policy of not replacing all teachers who move or retire. The project will introduce, on a pilot basis at some satellite school campuses, teaching assistants in classrooms. Each teaching assistant will receive an annual salary of about $100. For purposes of the cost-benefit analysis (completed in May 2002, when the project size was assumed to be different), the additional cost of these teaching assistants has been estimated at $1.21 million annually, beginning in the first year of the project and continuing after the project ends, assuming that the initial pilot will be expanded to all project schools. This cost has been factored into the analysis. As for classroom teachers, while it is assumed that the structure of teachers' salaries will remain the same, about a third of the teachers in the satellite school campuses do not now meet minimum national standards (twelve years of basic education plus two years of teacher training). These underqualified teachers will be upgraded as part of the project. This will increase their earnings by about 30 percent. The total of additional costs (assumed, for purposes of the CBA, to be about $1.18 million annually) is also factored into the analysis. The results of the cost-benefit analysis are summarized in table 1. Based on a project life of 25 years and a discount rate of 10 percent, the net present value (NPV) of the benefit stream (incorporating the net earnings benefits of primary completers from 25 successive annual cohorts of enrollees) is estimated at $137.0 million. The internal rate of return (IRR) is estimated at 13.6 percent. Extending the project life to 40 years (40 cohorts of enrollees) increases the NPV to $182.0 million, and increases the IRR, but only marginally, to 14.1 percent. Given the conservative assumptions made, the project is judged to economically viable. Sensitivity testing, which is detailed below, suggests that this conclusion is quite robust, and that the project would remain economically viable even when costs are assumed to be substantially greater or benefits assumed to substantially less. Table X. Piresent VaRues of Project, Assunmning 25-Year Piroject Life and lDiscounting at 10 Percent VND US2 (billions) (millions) Beneficiaries increased lifetime earnings 5,491.3 366.1 less: Construction 2,260.1 150.7 Instruction materials 320.5 21.4 Other 596.3 39.8 Incremental teachers' salaries 260.1 17.3 Total incremental costs 3,437.0 229.1 Net Present Value (NPV) 2,054.3 137.0 lmnternal Rate of Retuirn (IRR) 13.6% The first sensitivity analysis consists of changing the assumptions about the project's effects on enrollments and/or graduation rates. Three alternative scenarios are presented in table 2. In the first, - 44 - enrollments in the "without-project" and "with-project" situations are assumed to be the same, but the rate at which enrolled pupils graduate is assumed to increase as a result of the project, reaching 80 percent, as compared with 63 percent in the without-project situation. The project remains just economically viable under this scenario (IRR = 11.1). Under the last two scenarios, however, in which the graduation rate remains at 63 percent despite the project, the IRR falls beneath 10 percent - 9.6 percent and 6.4 percent for alternatives 2 and 3, respectively. This reflects the conservative assumption that an individual who enrolls in pnmary education but does not graduate will not benefit at all from the education but, rather, will earn the same in the future as another individual who has never attended school. If the analysis attributed some benefit to a partial primary education (if we had research results showing that dropouts earn more than those who have never attended school), all four scenarios would show higher IRRs and alternatives 2 and 3 might be pushed above the 10 percent level. Table 2. Sensitivity Analysis -- Changing the Enrollment and/or Graduation Rate Assumptions 25-Year A 25-Year A Net present value, Internal rate Enrollments Graduate rate in pupils in nunL of discounting at 10% of return Scenario increase? increases? enrolled graduates ($ millions) (percent) Base-Case* Yes Yes 584,625 798,978 137 13.6 Alternative 1 No Yes 0 443,395 38.4 11.1 Alternative 2 Yes No 584,625 280,202 -11.1 9.6 Alternative 3 No No 0 0 -89.3 6.4 * See table 1. In the second sensitivity analysis, which is presented in table 3, each of the four scenarios is further changed to reflect either an increase in the cost of one of the major project cost categories (construction or incremental teachers' salaries) or a decrease in the benefits of the project, as compared with the values underlying the results in table 2. The effect of a 50-percent change in each of these parameters for each of the scenanos on the NPV of the project is shown in column (1), and on the IRR of the project in column (2). Column (3) presents the "switching value" for each of the parameters - the change (positive or negative) needed to produce a "break-even" IRR of 10 percent. - 45 - Table 3. Sensitivity Analysis -- Increasing the Cost of Construction or the Cost of Teachers or Decreasing the Benefits of Primary School Graduates (1) (2) (3) Net present value, Internal rate Switching Scenario discounting at 10% of return value* Change in Cost or Benefit ($ millions) (percent) (percent) Base-Case Scenario No change (as in table 2) 137 13.6 Construction costs increase by 50% 31.1 10.6 +64 Teacher costs increase by 50% 128.3 13.3 +780 Benefits decrease by 50% 40.1 11.1 -70 Alternative Scenario 1 No change (as in table 2) 38.4 11.1 Construction costs increase by 50% -67.5 8.4 +18 Teacher costs increase by 50% 29.7 10.8 +220 Benefits decrease by 50% -47 8.4 -23 Alternative Scenario 2 No change (as in table 2) -11.1 9.6 Construction costs increase by 50% -117 7.1 -5 Teacher costs increase by 50% -19.8 9.3 -65 Benefits decrease by 50% -90.2 6.6 +7 Alternative Scenario 3 No change (as in table 2) -89.3 6.4 Construction costs increase by 50% -195.2 4.9 -42 Teacher costs increase by 50% -98 6.2 n/a Benefits decrease by 50% -159.2 2.5 +64 * The switching value indicates the percentage increase (decrease) in the cost of the cost item or the percent; decrease (increase) in benefits that makes the project IRR just equal to 10 percent. Summary of Benefilts and Costs: Main Assumptions: Sensitivity analysis / Switching values of critical items: - 46 - Annex 5: Financial Summary VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT Y Year 1 Year 2 Year 3 Year 4 I Year 5 I Year 6 Year 7 Year 8 Total Financing Required Project Costs Investment Costs 11.0 32.0 43.5 50.0 43.5 43.5 20.17 0.00 Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Costs 11.0 32.0 43.5 50.0 43.5 43.5 20.17 0.00 Total Financing 11.0 32.0 43.5 50.0 43.5 43.5 20.17 0.00 Financing IBRD/IDA 6.0 18.0 25.0 30.0 25.0 25.0 9.76 0.00 Government 1.0 4.50 8.5 9.0 8.5 8.5 3.37 0.00 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers: AusAID, 4.0 9.50 10.0 11.0 10.0 10.0 7.04 0.00 CIDA, DflD and NORAD User FeeslBeneficlarles 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 11.0 32.0 43.5 50.0 43.5 43.5 20.17 0.00 - 47 - Annex 6: Procurement and Disbursament Arrangements VIETNAM: PRIMARY EDUCATOON FOR DISADVANTAGED CHOLDREN PROJECT Procurement Countrv Procurement Assessment Review (CPAR) and Legal Framework The preparation of the CPAR started in late 1998 by the IDA and Government teams. Since then, several follow-up activities were carried out by IDA team, including the CPAR review meeting in March, 2002. The CPAR was finalized in October 2002 by IDA and the Government's Public Procurement Office (PPO). The conclusions of the CPAR are generally positive. Over the last decade, the government has made great progress in the developing a comprehensive set of laws and procedures. There is as yet no law on public procurement in the country, but guidelines are provided by a few decrees and ordinances and knowledge about public procurement has substantially improved since development projects were funded by external donor organizations, such as the World Bank and Asia Development Bank, etc. The government is in the process of establishing a comprehensive legal framework to govern public procurement. Some of the challenges identified by the CPAR match the conclusion of the procurement assessment done for this project, such as short of qualified national procurement staff and lack of delegated authonty for approval of procurement actions and decisions. These problems were discussed with the MoET and appropnate measures to address these weaknesses were agreed upon during preparation, among which the most important are: (a) the hiring of an international procurement advisor to provide procurement guidance and to develop a procurement training plan for the PCU and PPCU procurement staff, (b) provisions for national procurement officers and provincial procurement coordinators dunng the life of the project, and (c) a requirement of the international procurement advisor to prepare a procurement manual to streamline and document procurement processes for the project staff. There are some inconsistencies between the Vietnamese government NCB procurement practices and IDA's procurement policies and procedures. IDA had already raised the issues with Government and Government has agreed that the procedures to be followed for national competitive bidding (NCB) shall be those set forth in its Decree No. 88/CP dated September 4, 1999, as amended and supplemented by Decree No. 14/CP dated May 5, 2000 with the necessary detailed clarifications required to comply with the provisions of the Guidelines for Procurement under IBRD Loans and IDA Credits. In addition, establishing ceilings for the rates of local consultants is inconsistent with the Guidelines on Selection and Employment of Consultants by World Bank Borrowers. IDA has reached agreement with the implementation agency that the local consultants' umt rates are not negotiable if cost is a selector factor in a competitive process. Specific remedies for the remaining inconsistencies will be included in the Development Credit Agreement and to be agreed upon during negotiations. The eligibility of state-owned enterprises to participate in IDA-financed procurement was discussed with the Government according to the findings and agreed actions of the November 5-8, 2000 IDA mission on state-owned enterprises in Vietnam. With the exceptional cases that MoET dependent public university, teachers training colleges and research institutions will be allowed to participate due the reasons mentioned in the Consultant Services paragraph below, the applicability of paragraph 1.8 (c) of the IDA Procurement Guidelines for Goods and Works and paragraph 1.10 of the Guidelines for Selection of Consultants was emphasized. - 48 - Procurement Responsibility The project will be implemented and managed using the structure outlined in Annex 2, component 4 of the PAD. The Ministry of Education and Training (MoET) will assume overall responsibility for coordination and implementation of the project, including procurement, disbursement and financial management. The Project Coordination Unit (PCU) will be headed by a full time Project Director, who will be assisted by an international Project Advisor, a Finance Officer, an Administrative Officer and administrative assistants. A Procurement Officer and an international Procurement Advisor are provided under the Institutional Strengthening sub-component. They will be responsible for the procurement done by the PCU as well as the provision of procurement guidance and training to the 38 Provincial PCUs (PPCU) under the project. Each PPCU will be staffed by existing personnel in the Department of Education and Training (DoET) Office, with the addition of a procurement coordinator to handle the provincial procurement activities. The 189 District Management Units (DMU) will only handle FSQL grants activities (see Grant paragraph below) and will be assisted in this task by existing government accounting staff and two additional local consultants, i.e. Community Development Specialist and Data Analyst/Processor. The grant activities represent a very modest increase to the budgets already administered by Districts. Most of the procurement including all ICBs for goods, international shopping, hiring of international consultants, and the selection and monitorng of competitive innovations grants will be handled by the PCU thereby reducing the procurement burden on the PPCUs whose capacity is weaker. The PPCUs will procure works for the regional civil works, textbooks subject to direct contracting procedures, and small quantities of goods such as office consumables using NCB and national shopping procedures. They will also hire local consultants and organize local training and workshops and handle their respective project operational activities. Procurement methods under the FSQL grant will allow shopping procedures for the purchase of small quantities of school consumables, price quotation and/or community participation for small school renovations and hiring of national individual consultants. An Operational Manual, to be agreed with IDA, with specify the grant activities, eligible expenditures, flow of funds and financial reporting requirements for the district grants. Assessment of the Capacity of Implementation Agencies The MoET has developed project management capacity --including procurement-- under the three I)A financed education projects. The overall procurement performance of the MoET is satisfactory, but the present staff assigned to the project PCU have limited experience with Bank procurement procedures for goods and services, except for procurement conducted while implementing the US$637,000 PHRD grant for the preparation of the project. Under the PHRD, staff have managed the hring of international and national consultant services using the individual selection method and single source selection method, as well as some goods procurement using the shopping procedure. MoET will assign procurement resource persons who have Bank-financed experiences under the on-going education projects to provide ad-hoc advise to the PCU. Approximately 67% of the total project costs will finance the renovation or rehabilitation of schools, which consist of numerous small contract amounts, due to the wide geographical spread of construction sites and the phasing of construction activities. Most of the provincial units have Bank-financed civil works procurement experience using NCB procedure as well as textbooks procurement using the direct contracting procedure under the Primary Education Project. But they would need help in the areas of goods procurement using NCB and shopping procedures and hiring of consultants. District offices will require simple procurement training from the provincial procurement coordinators to carry out the grant -49 - activities in accordance to simple procurement methods stipulated in the Operational Manual. In short, improved procurement capacity will be needed and some procurement difficulties are likely to be encountered during implementation, particularly in the first year of operation. Procurement capacity assessments of the PCU and randomly selected PPCUs and District offices were carried out during pre-appraisal and appraisal missions. Some assessments of the capacity of the PPCUs were also conducted jointly with a Financial Management Officer of the World Bank Office in Hanoi. The overall nsk associated with this project is rated as "high" taling into consideration the procurement issues identified by the CPAR as well as the complexity of this decentralization project design and the limited experience of the PCU. Therefore prior review thresholds have been set accordingly. Nevertheless, the procurement capacity of PCU and PPCUs needs to be strengthened especially in the areas of handling procurement of goods using national competitive bidding as well as hiring of qualified national consultants by the PPCUs. It was agreed that the government will take the following actions: (i) the national procurement officers from the PCU and PPCUs will take procurement training in the country (to be provided by IDA Procurement Officers or experienced procurement staff of MoET) and the PCU procurement officers will have additional training abroad (likely at a regional procurement training seminar or at ILO, Turin, Italy); (ii) the services of a full-time qualified and experienced procurement consultant will be retained to strengthen the capacity of the PCU and PPCUs for at least one year; and (iii) the PCU will assign qualified counterpart staff to work with the procurement consultant, and these staff will assume the procurement function after necessary training, on-the-job or abroad, prnor to the end of the assignment of the procurement consultant. The procurement consultant will be selected and mobilized prior to disbursement of the Credit. The selection mechanism and terms and conditions of the contract will be subject to prior review by the IDA. The action plan (below) to strengthen the procurement capacity of the PCU and PPCUs has agreed and finalized during negotiations. The procurement capacity of the PCU and PPCUs will be re-assessed at the mid-term review, if needed. Procurement Capacity Building Action Plan Action: Tine-IFrame: Carried Out by: Conduct Basic Procurement After Appraisal DA Procurement Accredited Officer Workshop Attend Regional Procurement Training After Appraisal Procurement Officer(s) of the PCU Sign contract for International Before Disbursement MoET and PCU Procurement Advisor Conduct Project Launch Workshop to In parallel with IDA Task Team and Field reinforce procurement procedures in Effectiveness Procurement Officers the DCA and disbursement letter Conduct Goods Procurement Before the first ICB IDA Field Procurement Officer Workshop and NCB Conduct Hiring of Consultants Before the first QCBS IDA Field Procurement Officer Workshop or SBCQ hiring Supervision Missions Every 6 months IDA Task Team and Field Procurement Officer Post Reviews, including NCBs, As frequently as IDA Task Team and Field Procurement direct contracting and hiring of needed Officer consultants The project launch workshop will be conducted immediately after the effectiveness of the credit. - 50 - Procurement All procurement financed by IDA, DFID, CIDA, NORAD, and AusAID will follow Bank's Guidelines as stipulated below: Procurement of goods and works will be carried out in accordance with the Bank's Guidelines for Procurement under IBRD Loans and IDA Credits dated January 1995, revised in January and August 1996, September 1997 and January 1999 (the Guidelines). Bank's standard bidding documents and preference for domestic manufactured goods including instructional materials will apply in accordance with the World Bank Guidelines for ICB procurement. Model NCB bidding documents in local language, acceptable to IDA, will be used for all goods and civil works contracts. Procurement of consulting services will follow procedures prescribed in the Guidelines on Selection and Employment of Consultant by World Bank Borrowers dated January 1997, revised in September 1997 and January 1999 and May 2002 (the Consultant Guidelines). Procurement of consultant services will use the World Bank Standard Request for Proposal Selection of Consultants, dated July 1997 and revised April 1998 and July 1999 and March 2002 and all consultant contracts will use the Bank's standard Forms of Contract for Consultant Services. Large-value consultant contracts costing more than US$200,000 each shall be advertised in both international and national newspapers and in Development Business (UNDB). A general procurement notice will be published in the UNDB as soon as possible but no later than effectiveness and will be updated annually thereafter, if needed. Procurement Methods Tables A and A.1 summarize the procurement arrangements under the project by IDA Credit and by Donors' Grant Funds, and Table A.2 shows selection methods for Consultant Services. Campus Infrastructure: Civil works (US$155.60 million equivalent) Most of the civil works will be for the construction of district satellite classrooms for achieving the fundamental school quality level (FSQL) of education. Approximately 9,240 existing school campus sites in 189 districts of 38 provinces will be built or renovated during the five years of the six project implementation years. Due to the small contract amounts ranging from US$12,000 to US$250,000 per contract, and the scattered locations throughout the 38 project provinces as well as the different phasing of the construction, calls for bidding are unlikely to attract any international contractors, but they would not be excluded if choose to participate. Therefore, only price quotation and national competitive bidding (NCB) procedures will be followed subject to the thresholds below: For civil works contracts valued less than US$70,000 each, up to an aggregate amount of US$15,560,000, price quotation procedures will be used with the comparison of price quotations from at least three qualified contractors. For civil works contracts valued less than US$1.0 million each, up to an aggregate amount of US$140,040,000, NCB procedures acceptable to IDA will be used. Civil works related consultant services (US$2.74 million equivalent) There are two consultant services line items under the campus infrastructure component which total US$2,740,000.00 equivalent. The Quality- and Cost-Based Selection (QCBS) method will be used for the architectural and engineering and supervision services totaling US$2,720,000 equivalent, and the Selection Based on Consultant's Qualifications (SBCQ) method will be used for the prototype construction, selection and adaptation services totaling US$20,000 equivalent. - 51 - Classroom Furniture (US$5.18 million equivalent) Classroom furniture under the campus infrastructure component which totals US$6,230,000. For furniture contracts valued less than US$50,000 each, up to an aggregate amount of US$520,000, national shopping procedures will be used with the comparison of at least three price quotations. For fumiture contracts valued less than US$100,000 each, up to an aggregate amount of US$3,110,000, NCB procedures acceptable to IDA will be used. For furniture contracts valued at greater than and equal to US$100,000 each, up to an aggregate amount of US$1,550,000, ICB procedures will be used. IDA's SBDs and domestic preference will apply in accordance with IDA's Guidelines for all ICB procedures. Other Goods (US$3.60 million equivalent) Goods excluding classroom furniture will be financed by the bilateral Donors' Grant Funds (including DFlD, CIDA, NORAD and AusAID. The total amount is under the N.B.F. column in Table A.) Goods needed for the project consist of equipment and consumables for the district and provincial Educational Management Information System (EMIS), two vehicles , wheelchairs, hearng aids, brail books, and other basic aids equipment for disabled children, small office equipment including computers and printers, and furniture for PCU and PPCUs. For goods contracts valued less than US$50,000 each, up to an aggregate amount of US$720,000, international shopping procedures will be used. Comparison of three price quotations from at least two countries will be required, or national shopping procedures will apply where the desired goods are ordinarily available from more than one source in the country at competitive prices. Requests for price quotations will indicate the descnption and quantity of the goods as well as the desired delivery time and place. Some of off-the-shelf standard items, such as office equipment, vehicles, information and educational equipment, which are permitted under the shopping procedures mentioned above, may also be procured directly through UN agencies, for example, IAPSO or UNICEF, as appropriate. For goods contracts valued less than US$100,000 each, up to an aggregate amount of US$1,080,000 million, NCB procedures acceptable to IDA will be used. For goods contracts valued at greater than and equal to US$100,000 each, up to an aggregate amount of US$1,800,000, ICB procedures will be used. IDA's SBDs and domestic preference will apply in accordance with IDA's Guidelines for all ICB procedures. Instructional Materials including Textbooks (US$12.44 million equivalent) Most of the instructional materials including their delivery fees needed for the project will be textbooks, teaching aids, library books, student workbooks, classroom student and teacher's guides, school and student consumables, assessment/survey and field test materials, EMIS guidelines and manuals, workshops and training manuals, and campaign poster and leaflets. Experience from the previous Primary Education Project shows that timely delivery of instructional materials, especially textbooks and classroom student and teacher guidelines, is crucial and will therefore be eligible for IDA financing. The textbook lending-for-free scheme in poor communities begun by the Primary Education Project will be continued in this project. The textbooks will be replenished, and kept in libraries during the project implementation period. For those poor communities in the 38 provinces covered by this project, which were not covered by the Primary Education Project, textbook lending-for-free scheme will be set up and an initial set of textbooks will be provided and replenished as needed thereafter. - 52 - A total amount of approximately US$8,200,000 of lending-for-free textbooks for the poor communities will be procured under this project. The direct contracting procedure was allowed under the Primary Education Project because primary education textbooks and related workbooks are only available from one source, i.e. the provincial Books and School Equipment Companies (BSECs). These are the only enterprises designated by the Government to sell and distnbute textbooks and related workbooks. The textbooks are produced and distributed to each responsible provincial BSECs by a state monopoly printing company, Education Publishing House (EPH) under the MoET. Dunng Appraisal, MoET and EPH agreed to use Bank's ICB procedures for the printing primary education textbooks. The bidding process will subject to Bank's review. The average selling price of a set of primary education textbooks (about 6 subjects) including delivery to schools is about VND37,600 (US$2.45). The distribution system is well developed covenng the whole country and textbooks are delivered to districts and schools on schedule by the provincial BSECs. This system ensures that books are delivered to the poorest and most remote parts of Vietnam at a reasonable cost and on a reliable schedule. Under these circumstances, there is no reason for the project to select other procurement and delivery methods. It should continue the direct contracting with the BSECs for providing project textbooks for the poor students since the textbook printing contracts will be awarded through a competitive process by EPH which is in line with Bank's Guidelines. The BSECs are not SOEs that have a formal relationship with the MoET. However, their directors are nominated by the MoET. The BSECs are SOEs under the direction of Provincial People's Comrruttee. The textbooks contracts between the BSECs and the PPCUs under the 38 project provinces will range about US$70,000 to US$500,000 and direct contracting with be allowed, up to an aggregate amount of US$8,200,000. Competitive bidding procedures are compulsory for other instructional matenals. Therefore, for contracts other than textbooks valued less than US$50,000 per contract, up to an aggregate amount of US$500,000, will follow international or national shopping procedures as descnbed under the goods paragraph above, will be used. For contracts valued less than US$100,000 per contract, up to an aggregate amount of US$2,000,000, NCB procedures acceptable to IDA will be used. All other contracts valued at greater than and equal to $100,000, up to an aggregate amount of US$1,740,000 million equivalent, will follow ICB procedures. IDA's SBDs including the trial edition of textbook SBD, as appropriate, and domestic preference will apply, in accordance with IDA's Guidelines for all ICB procedures. Grants (US$48.65 million equivalent) There will be two kinds of grants: (a) Distnct FSQL Grants (ranging from US$20,000 - US$60,000 per district per year) including FSQL audits, training programs community participation, small amounts of instructional materials, school consumables, as well as the Campus Support Fund ($175 per satellite school) and (b) Innovative Grants for Vulnerable Groups ranging from $500 to $50,000 per grant. Grants will be awarded using agreed selection and implementation procedures documented in respective Operational Manuals including draft grant contract models. Eligible expenditures and related procurement methods will also be agreed and documented in the Operational Manuals acceptable to the IDA. Grants will be financed by Donors' Grant funds. Consultant Services (US$10.20 million equivalent) All consultant services under the project will be financed by Donors' Grant funds except civil works supervision consultant services. All consultants will be hired in accordance to Bank's Consultant Guidelines. Most of the consultants needed for the project will be for institutional strengthening and capacity building, development of national guidelines, research studies and field surveys, and assistance in project management. - 53 - The consultant firm for the Vietnamese language strengthening for primary education will be selected using the QCBS method up to an aggregate amount of US$313,000. Audit Services will be selected using the least cost selection (LCS) method up to an aggregate amount of US$182,000. Several consultant firms for: (i) the classroom student and teacher guides, materials and training modules, (ii) the national survey of disabled children and high nsk groups in pnmary education, and (iii) the dimension of disability EMIS profiling will be selected using the SBCQ method up to an aggregate amount of US$150,000. Both international and national individual consultants will be needed for project management, institutional strengthening and capacity building, development of national policy and guidelines, instructional improvement and teacher support as well as community participation and household support up to an aggregate amount of US$9,555,000. Individual consultants will be selected on the basis of consultant qualifications consistent with Section V of the Consultant Guidelines. Dependent institutions such as public universities, teachers training colleges, planning and research institutes and their professional staff under the MoET are needed for providing consultant services for the development of national policy and guidelines, school assessment and surveys, and providing training to primary teachers. The participation of these institutions are crucial to the success of project implementation, because of their unique knowledge and specialty areas that the private consultant services in Vietnam are not available. Private consultant services in Vietnam are currently in a nascent state. Therefore it was agreed during preparation, that the public universities that are dependent entities of the MoET such as teachers training colleges and planning and research institutions and their professional staff will be hired either directly or as sub-consultants to provide some critical local knowledge-linked services. They would be selected through single-source selection (SSS) method or based on their qualifications as national firms and national individual consultants. Training (US$2.87 million equivalent) All training expenditures will be financed by Donor's funds. Most training activities are local training including workshops and seminars for school policy makers and administrators, primary education teachers, teacher assistants, parents and communities, and project management personnel. Subject areas included in the training programs are national policy framework and guidelines, teacher material and classroom guidelines, monitoring and evaluation, EMIS, and traimng of trainers, parent and community awareness campaign, etc. As mentioned in the above paragraph, Teachers training colleges and institutions under the MoET, because of their unique and exceptional nature and no suitable alternative from private sector are available in Vietnam, may be hired to provide training contractual services. A few overseas study tours and national conferences will also be included under this category. Destinations for overseas study tours and national conferences will be selected on the basis of relevance and quality of programs, cost and prior experience, following applicable government and shortlisting procedures as described in the Project Implementation Plan (PIP). Training activities for each year will be approved in the annual work plan for the project. Incremental Operating Costs (US$2.39 million equivalent) Incremental operating costs include travel and subsistence allowances for project management, supervision, monitoring and evaluation, operations and maintenance, media and communication costs, utilities, meeting rooms' rentals, small office consumables, and Special Accounts bank charges. All will be availed of in accordance with government administrative procedures acceptable to IDA. For the purpose of project sustainability and to cushion the effects on the national budget, Donors' Grant fund will finance 50% of the incremental operating costs and the Government will finance the rest. - 54 - Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements and Financed by IDA Credit (US$ million equivalent) , - ................... - ~. , - ^.;- * Procurement Method ; * 3r 2 ~ -3 - Expenditure,Category ICB- ' -JryNCB Other KN.B-F. TotalCost 1. Campus Infrastructure Civil Works 140.04 15.56 155.60 (109.23) (12.14) (121.37) Architecture, Engineering, 2.74 2.74 Adaptation & Supervision (2.14) (2.14) Consultant Services . Furniture 1.55 3.11 0.52 5.18 (1.18) (2.36) (0.40) (3.94) 2. Goods/" 3.60 3.60 (0.00) (0.00) b 3. Instructional Materials/ 1.74 2.00 8.70 12.44 (1.58) (1.81) (7.92) (11.31) 4. Grants/ 48.65 48.65 (0.00) (0.00) 5. Consultant Services 10.20 10.20 __________________________ (0.00) (0.00) 6. Training 2.87 2.87 (0.00) (0.00) 7. Incremental Operating 2.39 2.39 Costs (0.00) (0.00) Total 3.29 145.15 27.52 67.71 243.67 (2.76) (113.40) (22.60) (0.00) (138.76) " Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies. 2 The procurement arrangement for the items "other" are: (i) international and national shopping; (ii) pnce quotation; (ill) UN agencies purchasing; and (iv) direct contracting. 31 N.B.F.: A total of US$ 61.54 million (see Table Al) including other goods contracts and incremental operating costs will be co-financed by DFID, CIDA, NORAD and AusAID and the rest US$6.17 by the Government. Equipment, office furniture and consumables, vehicles, and aids equipment for disabled children. b/ Manual, guidebooks, reports, textbooks, student materials, teaching aids, classroom consumables, etc. hi Campus funds US$175 each, other grants ranging from US$500 to US$60,000 each. - 55 - Table Al: Project Costs by Procurement Arrangements and Financed by Donors Grant Funds (US$ million equivalent) t 9 4ei*ZXtMotOodll Expenditure -, --. lIO[ NOR OtIr2 IDA3 Total Cost 1. Campus Infrastructure Civil Works 155.60 155.60 (0.00) (0.00) Architecture, Engineering, 2.74 2.74 Adaptation & Supervision (0.00) (0.00) Consultant Services Furniture 5.18 5.18 (0.00) (0.00) 2. Goods/ a 1.80 1.08 0.72 3.60 (1.60) (0.97) (0.65) (3.22) 3. Instructional Materials/ b 12.44 12.44 (0.00) (0.00) 4. Grants/ c 48.65 48.65 (45.30) (45.30) 5. Consultant Services 10.20 10.20 (9.27) (9.27) 6. Training 2.87 2.87 (2.61) (2.61) 7. Incremental Operating 2.39 2.39 Costs (1.14) (1.14) Total 1.80 1.08 64.83 175.96 243.67 (1.60) (0.97) (58.97) (0.00) (61.54) 1/ Figures in parenthesis are the amounts to be financed by the Donors Grant Ftplds. All costs include contingencies. 2/ The procurement arrangement for the items "other" are: (i) intemational and national shopping; (ii) UN agencies purchasing; and (iii) government procedures acceptable to the Bank. 3/ IDA financing see Table A. /a Equipment, office furniture and consumables, vehicles, and aids equipment for disabled children. /b Manual, guidebooks, reports, textbooks, student materials, teaching aids, classroom consumables, etc. /c Campus funds US$175 each, other grants ranging from US$500 to US$60,000 each. -56 - Table A2: Consultant Selection Arrangements (optional) (US$ million equivalent) J_ r-:- _.' i Selectlob, Method' . ConsudJant iSerlces4. _ 1" -' ; LCSg ' - - - ' . . :-; . Expendllure CategoI-- OBSf - Iq?SŽ ; , - - c Other- - N.B.F. Tolal Cos A. Firms 3.03 0.00 0.00 0.18 0.17 0.00 0.00 3.38 (2.40) (0.00) (0.00) (0.16) (0.15) (0.00) (0.00) (2.71) B. Individuals 0.00 0.00 0.00 0.00 0.00 9.56 0.00 9.56 (0.00) (0.00) (0.00) (0.00) (0.00) (8.70) (0.00) (8.70) Total 3.03 0.00 0.00 0.18 0.17 9.56 0.00 12.94 (2.40) (0.00) (0.00) (0.16) (0.15) (8.70) (0.00) (11.41) 1\ Including contingencies 2\ Figures in parenthesis are the amounts to be financed by either the IDA Credit or the Donors' Grant Funds. Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CO = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines) Above table includes civil works related consultant services. All consultancy services contracts excluding civil works related consultancy services will be financed by Donors' Grant funds. N.B.F. = Not Bank-financed Prior review thresholds (Table B) Civil works, goods, instructional materials and textbooks. Contract valued greater than and equal to US$200,000 per contract will be subject to prior review. All other contract below the pnor review threshold will be subject to random post review. Prior review thresholds could be adjusted dunng Mid-term review, if needed. Grants. Contract valued greater than and equal to US$50,000 per contract will be subject to prior review. All other contract below the prior review threshold will be subject to random post review. Consultant Services. Firm contracts valued greater than and equal to US$100,000 per contract and individual contracts valued greater than and equal to US$50,000 and their terms-of-reference (TORs) will be subject to prior review. All other consultant contracts below the pnor review threshold will be subject to random post review. In addition, all single-source selection (SSS) contracts, if any, will be subject to prior review regardless of value. -57- Table B: Thresholds for Procurevnent MIethods and Prior Review ,. a k i;>- - C/,. , ta * 0ntact Value, .--; i; ,-Contract-Subje to' Expenditure Category * - Threshold-I,i Procurement ' Prior Review/Total ' (US$)- Method Amount Subject to Prior Reu,lew I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .( .S $ ) 1. Works Less than US$70,000 Pnce quotations >US$200,000/contract Less than US$1.0m NCB US$70.0m 2. Goods including Less than US$50,000 International and national school furniture shopping, UN agencies' purchases Less than US$100,000 NCB Greater than and equal to US$100,000 ICB >US$200,000/contract US$3.Om 3. Instructional Materials Less than US$50,000 International and national shopping, UN agencies' purchases Less than US$100,000 NCB Greater than and equal to US$100,000 ICB >US$200,000/contract US$1.Om 4. Textbooks Less than US$500,000 (no Direct Contracting >US$200,000/contract larger contract amount is US$4.Om expected) 5. Grants Less than US$50,000 In accordance with the Greater than and equal to Operational Manuals >US$50,000/contract US$50,000 US$20.Om 6. Servlces(Consultant) Less than US$100,000 SBCQ/LCS Firm Greater than and equal to >US$100,000/contract and US$100,000 QCBS SSS, if any, regardless of value US$3.03m Individual All individual consultants Individual >US$50,000/contract and regardless of value SSS, if any, regardless of value US$8.00m 7. Training Overseas and local training Other Annual training programs regardless of value US$2.87 Total value of contracts subject to prior review: US$111.90 mnillion Overall Procurement Rltis Assessment: High IFrequency of procurement supervision missions proposed: One every six months (includes special procurement supervision for post-review/audits) One in four contracts will be reviewed by the post review procurement supervision mission. - 58 - Disbursement Allocation of credit proceeds (Table C) The proposed Credit of US$138.76 million equivalent would be disbursed over a period of six years. The project will be completed on and about June 30, 2009, and the closing date is December 31, 2009. The allocation of Credit proceeds by IDA and Donors' Grant funds by DFID, CIDA, NORAD and AusAID according to each expenditure category is shown in Tables C and C. 1 respectively. The estimated taxes and duties are US$21.12 million, which will be financed by the Government. Retroactive financing from the Multi-donors' Grant Funds will be allowed for eligible expenditures excluding grants incurred after May 15, 2003 of all the disbursement categories specified under the Multi-donors' Grant funds. Table C: Allocation of IDA Credit Proceeds . ' Ex,nditureiategory. .. -| Ariount i>US$Aluinont_h j'. tFInancig Percesntage..n Campus Infrastructure: Civil Works 115.30 78% Architectural, engineering and Supervision 2.00 100% for international individuals, and 93% Fees for international firms and national consultants Furniture 3.70 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 90% of other local expenditures for other items procured locally Instructional Matenals 10.76 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 90% of other local expenditures for other iters procured locally Unallocated 7.00 Total Credit Proceeds 138.76 _ Total 138.76 Table C. 1: Allocation of Donors' Grant Funds Expenditure Category Amount in US$million Financing Percentage 3.00 100% of foreign expenditures, 100% of local Goods expenditures (ex-factory cost) and 90% of other local expenditures for other items procured locally Grants: Distnct FSQL Grants excluding Campus Funds 31.76 100% Campus Funds 10.03 100% Innovation Grants 1.43 100% Consultant Services 8.83 100% for intemational individuals, and 93% for international firms and national consultants Training 2.47 100% Incremental Operating Costs 1.00 50% Unallocated 3.02 Total Donors' Grant Funds 61.54 Total 61.54* - 59 - * Estimated equivalent in USD as of March 2003 of the aggregated amount committed by the donors for the entire project period. The donors' contributions for the project will be deposited with the Bank Trust Fund Office in annual installments. Use of statements of eupenditures (SOEs): Disbursement from the IDA Credit, and Donors' Grant Funds from DFLD, CIDA, NORAD and AusAID will be supported by full documentation and signed contracts for: (i) contracts valued greater than and equal to US$200,000 per contracts for both works, goods, instructional materials and textbooks; (ii) grant contract valued greater than and equal to US$50,000 per contract; (iii) firm consultant contracts valued greater than and equal to US$100,000 per contract; and (iv) individual consultant contracts valued greater than and equal to US$50,000 per contract. Disbursement for all other expenditures including training and incremental operating costs will be disbursed against SOEs with supporting documentation retained in the PCU and responsible PPCUs, and will be made available for IDA, DFID, CIDA, NORAD and AusAID review upon request. Special account: To facilitate disbursement of the Credit, the PCU will open two Special Accounts (SA) for IDA Credit and for the co-financer Grants (Donors' Grant funds) in a commercial bank specifically designed for the purpose of this project by the Borrower's Central Bank and on terms and conditions satisfactory to EDA. The SAs should include appropnate protection against set-off, seizure and attachment. IDA's SA, which will cover its share of eligible expenditures in all disbursement categories as hsted in Table C, would have an authorized maximum allocation of US$7,000,000. The initial amount of US$4,000,000. will be withdrawn from the Credit amount and deposited into the SA. The full US$7,000,000 allocation shall be withdrawn when the amounts disbursed total SDR36,000,000. Donors' Grant Funds SA, which will cover its share of eligible expenditures in all disbursement categones as listed in Table C. 1, would have an authorized maximum allocation of US$2,800,000. The initial amount of US$1,400,000 will be withdrawn from the Grant amount and deposited into the SA. The full US$2,800,000 allocation shall be withdrawn when the amounts disbursed total US$30,000,000. Applications to replenish the SAs, supported by appropriate documentation, would be submitted regularly (preferably monthly, but no less than quarterly) or when the amounts of withdrawals are equal to 20% of each of the initial deposits. The SAs shall be audited annually by independent auditors acceptable ]DA within six months of the end of each fiscal year. Financial Management Summary Project Description The total project amount is US$243.67 rmllion, which will be co-financed with DFID, CIDA, NORAD and AusAID on all basis. The Ministry of Education and Training (MoET) will have the overall implementation responsibility of this project. The proposed credit of US$138.76 million will be disbursed over a penod of six years. Additional grant funds could be added in later years. The project focus is on pnrmary education for disadvantaged children. Activities are to be carried out at central, provincial, district and school levels. Project implementation will be camed out as described in Annex 2, component 4 of the PAD with procurement responsibilities described in the above. The project will cover 189 districts in 38 provinces. The two major project activities (campus infrastructure and district FSQL grants, 67% and 19% of the total project costs respectively, will be carried out by the provincial and district levels, while responsibility for the Special Accounts, FMS, and audit reporting will remain at the - 60 - central level. Country Issues IDA recently conducted a Country Financial Accountability Assessment (CFAA) of Vietnam, which provides a diagnosis of the country's financial management environment. The CFAA helps the Government and IDA to, among others, assess and manage the nsk that public funds may be used for non-intended purposes and identify the key risks, capacity gaps and constraints to progress in this area. An action plan to address the key findings of the CFAA has been agreed by the Government. Among the key findings of the CFAA that are relevant to financial management aspects of the project are the following: (a) reports from the public expenditure accounting system attempt to capture too much detailed data and management reports for effective decision-making are not widely used; b) as the requirements of public expenditure accounting are very comprehensive and detailed, compliance with the requirements is challenging for all units particularly at lower levels; and (c) as accounting staff focus on more easily accomplished requirements like mechanical verification of payments and receipts, the regular and efficient monitoring of State budget information for effective use of public funds at times is not camed out in a timely manner. The CFAA also reports that the need to improve transparency in the current budget arrangement in Vietnam. The conclusion of the assessment is that there is a certain degree of fiduciary risk in the use of public resources, although overall, the fiduciary risk for this project is manageable for on-budget items considenng the steps that will be taken as part of the financial management plan. Risk Analysis For this project, there are inherent risks due to the magnitude of the project scope with the involvement of different implementing units from central level to provincial and to distnct levels. However, mitigating factors exist, for instance: MoET has expenence in managing three Bank-financed project and other projects financed by multilateral and bilateral agencies. Some expenenced personnel involved in the Primary Education project will participate actively in the implementation of this project. The responsibilities of PCU and PPCUs of this project are rather similar to the ones under the Primary Education (PE) Project with some modifications. This will facilitate the project implementation, especially at provincial level, because experienced people in provincial DoETs could still be mobilized and camed forward their experiences gained from the Primary Education Project. At district level, an Operational Manual, acceptable to IDA, will be developed to monitor district FSQL grant activities (please see above procurement section under the Grants paragraph). There is also a certain degree of control risk for PEDC project at all levels of the project. However, with the completion of the Action Plan (covering the project financial management manual, accounting software, staffing, training and financial reporting), the governance of the two grants operational manuals, and close supervision and monitoring by IDA supervision team, the controls for project will be significantly improved. For nsk rating relating to project financial management, please refer to section F of the PAD. Strengths and Weaknesses As mentioned in the risk analysis, the strengths are the experiences derived from the on-going Bank-financed project and the continuity of project staff in the MoET and provincial DoETs for this - 61 - project. However, potential areas of weaknesses still exist (see table below). For more details of the resolution of these weaknesses, please refer to the Action Plan at the end of this analysis. Significant Weaknesses Resolution Lack of comprehensive guidance in the area of A Financial Management Manual will be accounting and financial reporting. developed and accepted by IDA. Lack of sufficient accounting staff at all levels Decision to appoint adequate accounting staff of the project. for this project. Lack of capable computerized accounting A financial management software will be system for recording accounting transactions installed with capacity of accounting, financial and for management purposes. reporting and producing FMRs as required by IDA. Implementation Arrangement Project Coordination Unit (PCU) A Project Coordination Unit (PCU) will be set up within the MoET. PCU will arrange for payments from the SAs to PPCUs after checking supporting documents submitted from PPCUs. Sub-project Distnct FSQL Grants will be signed between PPCUs and DMUs. Therefore grant funds will be channeled through PPCUs. The accounting transaction will therefore be recorded centrally in the system of PCU, who has the overall responsibilities for project management, coordination of project activities and consolidation of financial and monitoring reports. Provincial Project Coordination Unit (PPCU) Each province would set up a Provincial Project Coordination Unit (PPCU) under Department of Education and Training (DoET). Other than procurement responsibilities and project implementation responsibilities as described in the above Procurement Responsibility paragraphs as well as in Annex 2, Component 4, PPCU will check the Payment Request from DMUs based on signed grant contracts and adjust their underspent, if any. PPCUs could pre-finance some expenditures then asking for reimbursement from PCU or could forward the Payment Request from contractor/suppliers to PCU asking for payment from PCU to contractors/suppliers. PCU could transfer directly from SAs to contractors/suppliers or could first transfer the money to project account in PPCUs, then PPCUs will arrange payment accordingly to contractors/suppliers within 30 days. District Management Unit (DMU) A DMU will be formed in each distnct Bureau of Education and Training (BoET). Each DMU will handle their annual district FSQL grant activities including procurement according to the signed FSQL grant contracts, including the Campus Support Funds, and will be held accountable for the quahty of their outputs (see Grants paragraph under the above Procurement Methods. The DMU will submit the Payment Request, supported by the signed contract, according to the payment terms under their contract (likely 33-50% of the total contract value) to receive project funds from PCU via PPCU. Subsequent disbursement tranches will be based on presentation of proper documentation by the District to the PPCU. The PPCU must demonstrate to the PCU that it has made payment to the districts within 30 days of withdrawing funds from the SAs. The arrangements for payments from their project account in district for FSQL Grant activities are described in Annex 2, Component 4. - 62 - An Operational Manual, acceptable to IDA, will be developed with detailed instructions on acceptable grant activities, eligible expenditures, flows of funds and financial reporting requirements for the district FSQL grant. Funds Flow IDA proceeds and grant funds from DFID, CIDA, NORAD and AusAID will be deposited into two SAs responsible by PCU with related authonzed allocations (see the above Special Account section for details). The PPCU w.ll have one project account opened in a commercial bank acceptable to IDA to receive IDA and other Donors' Grant fund from the SAs for payments of provincial transactions as well as the District FSQL Grant. One of the PPCU's responsibilities is to sign District FSQL Grant contracts with each distnct and pay DMUs for their responsible project activities in accordance with the contract payment terms. The PPCU submits the Payment Request to the Provincial Treasury Office (PTO) ( if there is counterpart sharing). After PTO approved and paid counter-part fund, PPCU will send whole pack to PCU asking for donors' shanng. The PCU checks again and could make payment either to PPCU's project account or directly to suppliers/contractors. The DMU will have one project account opened in a commercial bank acceptable to IDA to receive all project funds other than IDA from PPCU for payments of distnct transactions as well as the Campus Support Funds. One of the DMU's responsibilities is to sign Campus Support Funds contracts with local schools and pay schools for their responsible campus activities in accordance with the payment terms in the school contract. The distnct will submit Payment Request 2 or 3 times a year. Each time the Payment Request will include total amount of new signed contracts and also the adjustment (if any) for the underspent (between amount transferred last time and final amount actually spent at district) incurred at district level during finalization. The PPCU will check in details the new signed contracts and the adjustments for previous time then will order the PCU for fund transfer to provincial project account. The payment from distnct project account for District FSQL Grant activities (including Campus Support Funds for schools) will follow the detailed procedures in the District FSQL Grant Operational Manual. That Operational Manual will strengthen the control of payment made from distnct project account for Distnct FSQL Grant activities and will also specify the reporting arrangement at district. To strengthen the internal control, the PPCU together with the Finance Office in district will perform periodic checking using a sampling method to ensure that grant funds are spent for their intended purposes. The annual independent audit will also check compliance with the OM at distnct and school levels. Districts and schools will be selected randomly for audit. - 63 - F]- NOTE: - 1 o Fund flow not relating to Distnct FSQL Grant ------- Fund flow relating to District FSQL Grant (1) Contractors/suppliers request PPCU for payments. (2) PPCU approves and submit to PTO for checking (3) PTO approves and disburse directly to supplier/contractor the counter-part share (4) PTO return approved document to PPCU (5) PPCU submits that pack to PCU for donors'share (6) PCU checks and orders central commercial bank to transfer money to PPCU (7a) Central commercial bank transfer payment to project account in PPCU (7b) PPCU makes payment to suppliers/contractors (8) DMU submits Payment Request to PPCU for checking (9) PPCU checks then submits to PCU for fund tranfer (10) PCU order central commercial bank pay to PPCU (11) Central commercial transfers money to PPCU's account (12) PPCU transfers money to DMU's project account (13) DMU pays to school.supplier from project account in district. (*) Instead of 7(a) and 7(b), payment could be made directly to contractors/suppliers nor via project bank account in PPCU. (**) Funds from PCU & PPCUs are for payments incurred and not t6'advances" Staffing The PCU will have a full time Finance Officer with support from an Accountant, a Cashier, and an Assistant (see Project Management Structure Chart or Annex 2, component 4). The Finance Officer and Accountant in PCU must have adequate skills, experiences and professional qualifications to handle all transactions at the PCU and reporting requirements from IDA. Each PPCU will have an Accountant and a Cashier taken from the existing personnel in the Department of Education and Training (DoET). The Accountant will perform the checking of Payment Request submitted from DMU, and also will do the reconciliation of project account at province with records in PCU and DM1U. The Accountant must have adequate skills and expenences to deal with activities at distnct level. The DMU will have an Accountant and a Cashier taken from the existing personnel in the District Bureau of Education and Training (BoET). The Accountant must have basic skill and experiences to handle project account at DMU and follow the Operational Manual for District FSQL Grant activities. Accounting Policies and Procedures Currently, projects under the MoET using the accounting system of Public Admunistration promulgated under Decision #999 dated November 2, 1996. With that accounting system the projects under MoET can open sub-accounts flexibly to record project expenditures by expenditure category or by project component. This will apply for this project. The chart of accounts will be developed to capture the expenditure data classified by project components and expenditure categories. Physical progress reports, which are linked to financial costs, will be available in the project management information system. The system will facilitate reporting of financial transactions and enable the Accountant to maintain accounting records, including receipt and disbursement of funds and commitments and accruals, in a - 65 - timely manner. The project will maintain a centralized financial management at PCU. The payment system will be decentralized to PPCUs for certain expenditure including school construction and provision of textbooks and to DMUs for one type of Grant expenditure, i.e. the District FSQL Grant. The accounting unit of the PCU keep accounting books and control the overall aspects of the project financial management. The accounting unit in PPCU will maintain accounting records to facilitate the checking of Payment Requests submitted from the DMU to the PPCU. The accounting book in the PPCU will also be used for reconciliation of transactions in provincial project account with the PCU and DMU. Although payments to districts against contracts signed will be recorded in the PCU accounting book, the Accounting unit in DMU still needs to maintain basic accounting books and reporting system to keep track of District FSQL Grant funds received and spent. DMUs will have to follow the Operational Manual developed to control District FSQL Grant activities at district level in terms of accounting and financial reporting. This could also be useful to facilitate the reconciliation and checking with record maintained at the PPCU. Internal Audit As mentioned in the CFAA, with the current control environment in Vietnam, the country is not yet ready for the establishment of an internal audit function in the public sector due to 3 factors: (i) weak capacity of staff; (ii) a very low salary structure resulting in a lack of motivation of staff; and (iii) difficulty in recruiting staff of a high caliber. Recently, several projects in public sector have strengthened its internal control system by getting more involvement from financial agencies under the MoF such as the Department of Finance at the provincial level and the Finance Office at the district level. For this project, the financial agencies will be involved to make regular checking of expenditure at PPCU and especially at DMU level. External Audit There are no critical issues that arise from the audit of the current projects under the MoET. To date there are no overdue audit reports relating to projects under the MoET. The PCU will appoint an independent auditor acceptable to IDA. Project accounts will be audited on an annual basis in accordance with international auditing standards and in compliance with the independent auditing regulations of Vietnam. The auditor's report will be made available to IDA, DFID, CIDA, NORAD and AusAID within six months of the close of the fiscal year. The audits will include a separate opinion on the SOEs other than the Special Accounts and Project Accounts. A management letter addressing internal control weaknesses of implementing agencies will also be provided by the auditor together with the audit report. A Project Accounting Manual will be developed for the project. Internal controls and division of labors for accounting tasks as well as different levels of authorization and approval procedures will be stipulated in the Project Accounting Manual. The first audit would include a review and commentary on the adequacy of internal controls and a post-review of financial statements. The costs of annual audits will be financed by the proceeds of the Credit. -66 - Reporting and Monitoring Annual financial statements will be prepared following accounting system under Decision 999 from the MoF with suitable modifications to meet IDA reporting requirements. For periodic project monitoring purposes, the project will use the Financial Monitonng Reports (FMRs) developed by the World Bank and will be tailored to meet practical monitoring requirement of the project. A set of FMR formats has agreed with the Government during negotiations. The PCU will submit quarterly FMRs to the Association not later than 60 days after each calendar quarter. The FMRs will compnses of the following reports: * Sources and Uses of Funds; Uses of Funds by Project Components; Implementation Progress; Procurement Process Monitonng; Contract Monitoring Report. Information Systems Under the MoET, the accounting software varies from project to project. Normally a new project has to establish a new accounting software to fit its own purpose, especially when there are multiple financiers involved. For this project, an appropnate financial management software capable of producing financial statements as well as the periodic Financial Monitoring Reports (FMRs) in accordance with IDA requirements have already be contracted to a software company using the PHRD Grant for project preparation. The software development together with the training will be completed before negotiation. Some of the basic accounting records included in the computenzed accounting system are the cash journal, bill register, contractors/consultants ledger, etc. The availability of data from the computerized accounting system will help the PCU focus on meeting project management information needs. And internal control system will be built into the system to clearly define and document the accounting methodology to be followed for recording individual project related transactions. Impact of Procurement Arrangements The procurement arrangement mentioned in the procurement assessments was taken into consideration when designing the project's financial management system. It is inter-related between procurement and financial management, therefore the fund flow and accounting system have been designed to accommodate procurement responsibilities. Disbursement Arrangements The project will use traditional disbursement methods. For more details on Special Accounts Allocations, SOE limits and disbursement mechanism, please refer to the Special Account section and the above Fund Flow paragraph. - 67 - Action Plan and related Conditions Action Responsibility To be completed by 1- Accounting Staff Appoint Finance Officer and Accountant at PCU with TORs and selection criteria acceptable PCU Effectiveness to IDA. Appoint Accountant at each PPCU. PPCU Effectiveness Appoint Accountant at each DMU. DMU Effectiveness 2- Accounting Software for preparation of financial statements and FMR reporting PCU Negotiation Procure the software * Install the software and complete training of PCU Effectiveness relevant staff 3- Financial Management Manual Submit to IDA for review PCU Negotiation * Finalize the FM manual PCU Effectiveness 4- Training on financial management, disbursement for accountant, especially in district PCU Effectiveness * Training for PCU, PPCUs, DMUs. Financial Covenants The following will be listed in the dated financial covenants in the DCA to be completed by Effectiveness: * Complete FMS software training * Finalize the FM manual * Complete training on FM manual for accounting staff of PCU, PPCUs, DMUs. Supervision Plan The supervision will be carried out every six months covering PCU, and randomly selected PPCUs and DMUs. -68 - Annex 7: Project Processing Schedule VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT Nr6jectScheduIt- .;=. .-* .. t.W , Planned-- d - L Actiai Y Time taken to prepare the project (months) First Bank mission (identification) 11/30/2000 11/30/2000 Appraisal mission departure 10/24/2002 Negotiations 03/28/2003 Planned Date of Effectiveness 06/30/2003 Prepared by: Ministry of Education and Training Preparation assistance: Government-executed PHRD Grant of US$637,000 Bank staff who worked on the project Included: Name ., Speciality Christopher J. Thomas Sr. General Educator Chnstopher Shaw Pnncipal Education Specialist Peter Moock Principal Economist Luis Benveniste Education Specialist Carol Hau-Lai Chen Ball Procurement Accredited Sr. Operations Officer Binh Thanh Vu Education Officer Hoi-Chan Nguyen Senior Counsel Hung Kim Phung Sr. Disbursement Officer Behdad Nowroozi Sr. Financial Management Specialist Hung Viet Le Financial Management Officer Kathy Li Tow Ngow Program Assistant Hoai Linh Nguyen Team Assistant Nga Quynh Nguyen Team Assistant Sabrina G. Terry Program Assistant Chandra Chakravarthi Program Assistant DFID staff and others who worked on the project included: Name Speciality Steve Passingham Senior Education Advisor Lindy Cameron Governance Advisor Peter Owen Senior Governance Advisor Peter Balacs Senior Economic Advisor Adam Burke Social Development Advisor - 69 - CIDA staff and others who worked on the project included: Name Speciality Marvin Lamoureux Educational Planning, Policy and Administration Camille R. Baudot First Secretary of Canadian Embassy in Vietnam Linda Cameron Language Specialist Bruce Howell Development Officer AusAID staff and others who worked on the project included: lName Speciality John Scheding Education Advisor Fiona Tarpey Program Officer Consultants who worked on the project included: Name Specfality Brian J. Spicer Project Advisor Michel Welmond Research Educational Analyst Karen Tietjen Education Economist/Planner Kiri Evans Poverty Economist Adam Rorris Education Economist Ian Attfield Pedagogical Intervention Specialist Geoff Howse Education Planner/Researcher - 70 - Annex 8: Documents In the Project File* VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT A. Project Implementation Plan * Primary Education for Disadvantaged Children Project, Project Implementation Plan * Operational Manual for the Implementation of the District Fundamental School Quality Level Grants (DFSQL) * Operational Manual for the Implementation of the Innovation Grants for Vulnerable Groups * Financial Management Manual B. Bank Staff Assessments * Bank Mission Aide Memoires and related Back-to-Office Reports: * Identification Mission - Apnl, 2001 * Preparation Assistance Mission - July/August, 2001 * Preparation Assistance Mission - December, 2001 * Pre-appraisal - May/June, 2002 * Appraisal Mission - October, 2002 * Procurement Capacity Assessment * Financial Management Assessment * Detailed Project Costs Tables C. Other * Indigenous People's Action Plan * MoET Feasibility Report * Statistical Annex to the Feasibility Report * Distnct Audit Questionnaires * School Architecture and Construction * Organizational Capacity Assessment of the MoET and Provincial and District Offices * Beneficiary Participation and Beneficiary Assessment * Review of Education Management Information System (EMIS) * Technical Notes on Girls' Education * Inclusive Education for Disabled Children * Education Development Strategy to 2010 * Improving the Budget-Norm System for Recurrent Expenditures * Primary School National Standards *Including electronic files -71 - Annex 9: Statement of Loans and Credlts VIETNAM: PRIMARY EDUCATION FOR DlSADVANTAGED CHILDREN PROJECT 02-May-2002 Difference between expected and actual Original Amount in USS Millions disbursements Pronct ID FY Purpose IBRD IDA Cancel Undisb Orig Fmm Revd P051838 2002 VN-PRIMARY TEACHER DEVELOPMENT 000 1984 000 1979 033 000 P059936 2002 Northem Mountains Poverty Reducbon 0 00 110 00 000 110 22 0 00 0 00 P073305 2002 VN-Regional Blood Transuslon Centem 0 00 3820 000 38 57 067 0 00 P004850 2001 VI ETNAM - POVERTY REDUC SUPPORT CREDIT 000 250 00 000 14966 -0 64 0 00 P042927 2001 VN-Mekong Transport/Rood ProtectIon 000 11000 000 10341 2569 000 P052037 2001 VN-HCMCENVMTLSAN1T 000 16834 000 15963 071 -1 12 P082748 2001 COMMUNITY BASED RURAL INFRASTRUCTURE 0 00 102 78 000 102 80 0 00 0 00 P059864 2000 VN-RuralTransportfl 000 10390 000 7970 2564 000 P042568 2000 COASTAL Weti/Prot Dev 000 3180 000 2753 1220 000 P056452 2000 RURALENERGY 000 15000 000 12050 8047 000 P004828 1999 VN-HIGHEREDUC 000 8330 000 8610 3137 000 P004833 1999 VN-Urban Transport Improvement 000 4270 000 3271 3312 000 P004845 1999 MEKONG DELTA WATER 000 10180 000 8657 5341 000 P051553 1999 VN-3CrITESSANtTATIONPROJECT 000 8050 000 7053 1550 000 P045628 1996 TRANSMISSION&DISTR 000 19900 000 15919 16617 11313 P004639 1998 FORESTPROT&RULDE 000 2150 000 1714 1128 042 P004844 1998 AGRI DIVERSIFICATION 000 66 90 000 3987 8 99 -4 68 P004843 1998 VN-Irland Waterways 000 7300 000 5535 4514 -221 P004830 1997 VN-WATERSUPPLYPROJECT 000 9661 2685 3103 6175 516 P004842 1997 VN-Hwy RehabII 000 19560 000 4930 6790 000 P004641 1996 VN-POPULATION & FAMILY HEALTH 0 00 5000 0 00 14 68 15 08 0 00 P036042 1996 BANKINGSYSTEMMODERNIZATION 000 4900 000 2936 3665 3504 P004838 1998 VN-NATIONAL HEALTH SUPPORT 000 101 20 000 48 72 5722 000 P004834 1995 IRRIGATION REHABIUT 000 10000 000 1881 2730 -424 P004835 1994 VN-PRIMARYEDUCATION 000 7000 000 525 796 728 Total 000 241597 2685 163821 78368 14678 -72 - VIETNAM STATEMENT OF IFC's Held and Disbursed Portfolio Jan - 2002 In Millions US Dollars Commfitted Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equwty Quasi Paric 2002 F-V Hospital 8.00 0 00 0.00 0.00 0.00 0.00 0.00 0.00 1998 MFL Vinh Phat 0 30 0.00 0.00 0.00 0.15 0.00 0.00 0.00 1996 Mom.Star Cement 22 60 0.00 0.00 44.94 22.60 0.00 0.00 44.94 1997 NATL 16 80 0.00 0 00 16.80 16.80 0 00 0.00 16.80 1995/97 Nghi Son Cement 20.18 0.00 0.00 1642 20.18 0.00 0.00 16.42 1996 SMH Glass Co. 7.78 0.00 0.00 2 25 7.78 0.00 0.00 2.25 2002 VEIL 0.00 0.00 12.00 0.00 0.00 0.00 0 00 0.00 1996 VILC 0.00 0 75 000 0 00 0.00 0.75 0.00 0.00 1996 Vimaflour 3.08 0.00 0.00 0.54 3 08 0 00 0.00 0.54 Total Portfolio: 78.74 0.75 12.00 80 95 70.59 0.75 0.00 80.95 Approvals Pending Comrnmitment FY Approval Company Loan Equity Quasi Partic 1998 BARIA 24.20 000 4.00 49.00 2002 Dragon Capital 0.00 2.00 0.00 0.00 2002 F-V Hospital 1.50 0 50 0.00 0.00 2000 Interflour 8.00 0.00 0.00 5.00 2001 RMIT Vietnam 7.50 0.00 0.00 0.00 Total Pending Commitment: 41.20 2.50 4.00 54.00 - 73 - Annens 10: Counhy at a Glance VOETNAM: PRIMARY EDUCATION FOR DOSADVANTAGED CHIILDREN PROJECT East POVERTY and SOCIAL Atb & Lr1` VItnam Pacitic Inconm OaMoi5mnt dimond' 2000 Populaiion, mid-year (olflOns) 78 5 1,853 2459 LHie expectancy GNI per capita (Ats method, US$) 390 1.060 420 GNI (Alias nrelhod, US$ bifioms) 30.4 1.964 1,030 Average annual growth. 1994-00 Population (7%) 15 11 1 9 Labor torce %) 1.7 1 4 24 GNI GIOsa per pnmary Moot recent estimate (latest year ovaIlable, 1994-M0) capita enrollment Poverty (% of'populatlon beblw national poveny fIn) 37 Urban population (% oftotalpopulalon) 20 35 32 L"eexpectancyatbirh (years) 69 69 59 Infant mortalty (per 1,000 flve bfths) 37 35 77 Child malnutntion (% of chtlden undear5) 37 13 Access to improved water source Access to an improved water source (S6 opopulation) 56 75 76 Uliteary (% ofpopulatlon age 1.5+) 7 14 38 Grossprimaryenrollment (%ofsChool-agepopulation) 114 119 96 Vl t5,rr Male 116 121 102 - Lno-mcorm gmup Female 111 121 86 KEY ECONOMIC RATIOS and LONG-TEPNi TRENDS 1980 1990 1999 2000 Econorrc mUoio' GDP (US$ bliEons) 6 5 28 7 31 3 Gross domesic mrvestment/GDP 13 0 254 27 4 Trade Expons of goods and services/GDP 26.4 Gross domestic savings/GDP 6 0 Gross national savings/GDP Current account balance/GDP -54 4 0 1.6 Dom wc Interest payments/GDP 0 7 11 15 savings Investment Total debtGDP . 359 6 811 498 svn Total debt seMce/exports . 8 9 10 0 7 0 Present value of debt/GDP 75 6 Present value of debt/exports 153.1 Indebtedness 198D00 1990.00 1999 200 2000.04 (average annual Łgrwth) GDP 46 79 48 55 68 Vbtnarn GDP per capita 2.2 60 35 41 54 Low-income group Exports of goods and services 234 22 6 14.8 STRUCTURE of the ECONOMY 1980 19S0 1999 2000 Grmcth of inntr cnd GDP (%) (96 of GDP) eo Agncufture . 37 5 25 4 24 3 Industry 22 7 34.5 36 6 40 ManufactuHng 188 176 . Zo Services 39 9 401 391 '_ Prnvate consumption 86 5 68 8 66 6 40 r so 07 m cs co General govemment consumption 7.5 71 6 4 - GDI =5GDP Imports of goods end servces 33 4 1980.90 1990-00 1999 200 Grosl ot oxpoto and Inparto (%) (average annual growh) AgncuLture 4 3 4 8 5.2 4 0 Invdustry 12 1 7 7 101 I O Manutfactunng . o ' Services . 7 8 22 5 6 20 Private consumplion 102 . a General govemment consumption 10 9 2 5 w5 ea w 7 so U9 no Gross domestic investment 20 2 -3 0 10.9 - BWM inpDrts Imports of goods and services 294 25 5 15 3 Note 2000 data are preliminary estimates The diamonds show tour key indicators in the country (in bold) compared with ItS income-group average It data are missing, the dnamond will be incomplete - 74 - Vietnam PRiCES and GOVERNMENT FINANCE 1980 1990 1999 2000 Insnetion(# Domestic plces s (% dutnge) Consumer pnces 36 4 4 3 -1.8 20 Implicit GDP deflator 42 1 56 53 10 Governnment finance o (% of GDP. includes cunint grants) Current revenue 14 7 19 6 19 6 o Current budget talance 0 0 5 9 4 8 -G DP deflator iCPI Overall surplus/deficit -0 8 -1 8 TRfADE 1980 1990 1999 2000 Exportand Inport levelsit (US$ ridl.) (USS nillions) Totel exports (fob) 1,731 11,540 14,448 20.o Rice 272 969 667 Fuel 390 2,092 3,548 15.000 Manufactures * .0t0 Total imports (cif) 1,901 13,480 14,259 a * I I Food 86 . 00 Fuel and energy 356 Capital goods 561I u ' 94 95 go 97 uso r9a0 Expon pnce index (1995- 1f00) Import price Index (1995=100) irpera *lnpol Temts of trade (1995=100) BALANCE of PAYMENTS 1980 1990 1999 2000 Curent account baance to GDP(%) (US$ iWllions) Exportsofgoodsandservices 1,913 14,010 17,107 . Imports of goods and services 1,901 13,480 17,344 Resource balance 12 530 -237 Net Income -412 -427 -597 Net current transfers 49 1,050 1,341 4I Current account balance -351 1,154 507 .. Financing items (net) 510 130 -412 Changes in net feserves -159 -1,284 -95 Memro: Reserves incluuding goid (US$ millions) Convension rate (DEC, locsa,US) 6,4828 13,944 0 14,170 0 EXTERNAL DEBT and RESOURCE FLOWS 1980 1990 1999 2000 (USS milions) Corposion rd 2000 det ( eVil.) Total debt outstanding and disbursed 23,270 23,260 15.600 IBRD 0 0 0 0G 70 8113 IDA 2 59 989 1,113 01,700 113 Tota det service 174 1,410 1,218 /, o 1,141 IBRD 0 0 0 0 IDA 0 1 8 9 F 3,110 - Compostion of net resource flows Oficial grants 96 257 . Offcial creditors -86 839 973 Private creditors 0 -781 -717 Foreign direct Investment 16 1,609 Portfolio equity . 0 0 E 8,220 World Bank program Commitmerits 0 0 318 260 A - IBRD E - Bilateral Dlsbursements 1 0 158 175 S - IDA D - Orter rtrlsatera F - Prtvsae Pnncipal repayments 0 1 2 2 C - IMF G - Shot-termn Net flows 1 -1 156 173 Interest paynments 0 0 7 7 Nettransiers 1 -1 156 166 EASPR 9/6/01 -75 - Additional Annex I 1: Project Miuonftoring and Supervision VIETNAM: PRIMSARY EDUCATION FOR DIOSADVANTAGED CHILDREN PROJECT Project Monitoring Practical guidance will be provided in the Project Implementation Plan (PIP), in the form of a framework for monitoring and evaluation, with clearly identified responsibilities, tasks tasks, methods and timeliness. This will include: o refined project framework indicators for inputs, processes and outputs. These will need to be measurable and time-bound and to provide a means of assessing quality; o clear and practical explanations of what is required, who will have responsibility for monitoring what, when and how they will do so, and with what support. As well as monitoring against project framework indicators, this will need to include the monitoring of specific interventions and aspects of the project. These include i) Instructional Improvement and Teacher Support for FSQL (including Teacher Professional Training and Development, Vietnamese Language Strengthening and School Readiness, and Teacher Assistants); ii) Infrastructure Improvement for FSQL (ie civil works); iii) Community Participation and Student Support for FSQL and UPE (including the Campus Support Fund); iv) Inclusive Education for Disabled Children (including Classroom Support for Disabled Children and Community Mobilization and Support); v) Reaching Street Children and Other High Risks Groups (including Innovation Grants for Vulnerable Groups); vi) procurement management and vii) financial management. o clear and practical specification of reporting arrangements. This will include the scope and format of i) project performance reports against project framework indicators and localized indicators that reflect differences in particular situations; and ii) reports on specific interventions and aspects of the project. The Project Implementation team will be responsible for producing quarterly and annual progress reports, and other reports on specific aspects of the project, and making these available to supervision team members before supervision missions. Supervision Supervision will check and validate information in quarterly and annual reports (on project progress and financial issues) prepared by the project implementation team, as well as that available from other sources. In addition to ongoing support in country, formal project supervision will be conducted at least twice a year, usually in December and June. Supervision will: o review annual progress reports and work plans for the coming year o ascertain whether the Government is carrying out the project with due diligence to achieve its development objectives in conformity with the legal agreements; o identify problems promptly as they arise during implementation and recommend to the Government ways to resolve them; o recommend changes in project concept or design, as appropriate, as the project evolves or circumstances change; o identify the key risks to project sustainability and recommend appropriate risk management strategies and actions to the Government; o prepare a project supervision report and aide memoire for each mission; and o prepare an Implementation Completion Report to account for the Government's use of resources, to make a judgement of the degree of achievement of development objectives and to draw lessons to improve the design and future projects, sector and country strategies and policies. - 76 - All funding agencies have committed to the principle of joint supervision, in order to maximize coherence of supervision and lesson learning and to miinimze the burden on Government. Joint supervision will require one supervision team working to requirements based on the Bank's operation policies for project supervision. The team will produce one core report for each mission i.e., a project supervision report and an aide-memoire. This report may be supplemented by other documentation needed to meet any additional, internal requirements of individual agencies. The supervision team will be led by the Bank task manager and will consist of other Bank staff as required (including operations, finance and procurement specialists) and others funded by grant financiers, as required. Core team members supported by grant financiers will complement expertise provided by the Bank. All agencies recognize the need for consistency of team membership. Grant financiers will manage their own funds for supervision. These may be used to fund occasional specialist consultants with skills in areas such as language and education; community participation; teaching and learning; education disadvantage; gender; school construction; monitoring and evaluation; EMIS; and the management of organizational and institutional change. All funding agencies will consult and agree on (i) mission dates and TORs, including those for mid-term review (on and about June 2006); (ii) TORs for grant financier-funded occasional specialist consultants; and (iii) TORs for other supervision related activities and tasks. - 77 - Additional Annex 12: Fiscal SusRainablihty Analysis VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CDHILDREN PROJECT Background. The Government's current commitment to education and training (E&T) is demonstrably strong. Government and Party goals for the sector call for increases in the amount of public spending allocated to the sector, and the Ministry's strategy for E&T stipulates continued actions necessary to achieve and sustain universal primary education (UPE) and other "education for all" (EFA) goals. The strategy includes measures, supported by the Primary Education for Disadvantaged Children (PEDC) Project, to address issues of access and learning outcomes for the 5-6 percent of pnmary school age children not now in school. In the joint World Bank/Government of Vietnam study of education financing carried out in the mid-1990s (note 1), it was discovered that State Budget for education had fallen very much over the period since the mid-1980s, when Doi Moi marked the liberalization of the economy and the opening up of Vietnam to market forces. By 1994, only 11.1 percent of total State Budget was allocated to the sector, and public spending on E&T amounted to just 2.8 percent of national income - a low figure both by East Asian and by world standards (note 2). The Vietnam Living Standards Surveys demonstrated the large financial contnbutions that private households make in support of E&T, and they helped to show that public education subsidies benefit rich families in Vietnam more than poor families (note 3). In response to these surprising findings, Vietnam's Party Congress of 1996 set new targets for both (1) the level of public spending on E&T, and (2) how such spending should be allocated within the sector. Specifically, a target of 15 percent of total State Budget was set, this target to be achieved by 2000. The target was achieved well ahead of schedule, by 1997, and the 15 percent minimum has been surpassed ever since. In 1999, public spending on E&T reached 17.5 percent of the budget. The proportion is currently about 18 percent, and the Ministry's strategy envisions a gradual increase, to reach 20 percent within ten years (note 4). Public spending on E&T now accounts for more than 3.5 percent of GDP. It will surpass 4 percent by 2004 according to current projections. A major challenge ahead is to ensure that the increases in spending are used wisely and that a higher proportion of spending is targeted for the benefit of poor families and for "children at risk" - thereby addressing the equity concerns articulated by the Party Congress of 1996. The Government's education strategy, which is supported by the Bank's CAS and by this project in particular, includes measures to meet this challenge. Budget Projections. Figure I shows recent and projected budget figures for E&T in relation to GDP and to the total, current and capital budgets of Government. State Budget figures for future years are based on official assumptions about the growth of the economy, about government revenue generation (net of debt service payments and other obligatory expenditures), and about E&T's share of the total budget (note 5). - 78 - Figure 1. Education and Training Budget as Percent of GDP and as Share of Total Government Budget 25% 20% 20%- Share of Total Budget 15%- - ---Share of Current Budget 10% - 7 Share of Capital Budget _E&Tas % of GDP 5% - 0% 0 aa eD X 0 0 o o o o o o 0 0 0 o o - Sources: PER, IMF. V_ _ _ . _ _r _I N-e N- CN N3 II N NCO N N N Actual Est. Projected Figure 2 shows the actual and projected State Budget figures for E&T from 1995 to 2010, at constant 2000 prices in VND. Training's share of the budget fell from 28 percent in 1995 to 24 percent in 1998. It is assumed that this share will now remain at or around 24 percent until 2010. Given that "training" (i.e., TVET and tertiary education) enrollments will continue to grow in relation to primary and secondary enrollments, this implies either increased cost sharing or improved efficiency in training, as compared with prnmary and secondary education. Expenditure Projections. To see whether projected budget allocations for E&T will be adequate to cover future "needs," the simplest starting point is to assume that "unit costs" for E&T (i.e., fiscal expenditure per student per year for every level and type of E&T) will not change but, rather, will remain the same in the future, increasing only by the rate of inflation. Figure 3 shows estimated unit costs (recurrent costs only - capital costs are not included here, since investment in any given year affects future students as well as current students), by level and type of E&T -- based on actual information from 1999, and expressed in pnces for the year 2000. - 79 - 35 30 25 ,,~~ Id} r-i 0 Actual Es;t. Projected Sources: Univers!ty/college 8 Technical - rIi Vocational ] 9 . : - ~ - . lEufion Upper secondary § 9 4 Lower sacondary 0 8 8 Primary 5 y 8 Pre-primary > 9rX - 1 ,000,000 2,000,000 3,000,000 4,00,000 5,000,000 Sources: PER, IMF. V.rojete 2000 PriSue Enrollment PErojections. Given the "constant unit cost" assumption, the only variables driving the growth of expenditures in E&T are student enrollment projections. Vietnam's recent population census led to downward adjustments in estimated population figures, especially for the youngest cohorts. These new fFgures, in turn, lead to lower enrollment projections - especially for primary education, where close to universal participation now pe,tains. Figures 4 and 5 compare enrollment projections fromearly 2000 (those used at the time of the World Bank's appraisal of the Pnmary Teacher Development Project (note 6)) with revised enrollment projections that take into account the new population census figures as well - 80- as MoET's updated strategy for the growth of different education sub-sectors (note 7). Figure 4, which focuses on education enrollments, shows a sharp decline in pnmary numbers, especially after 2000. This results eventually in a reduction in the numbers of children leaving primary education, which leads, in turn, to falling lower and upper secondary enrollments from about 2006 onwards. Figure 4. Education Enrollment Projections, 1994-2010, Teacher Development PAD vs. MOET's 2010 Strategy Paper 12 1 0 'a. TchirDev MOEr 2010 Tchr Dev M OEr 201O Tchr Dev M OEr 201O Tchr Dev M OEr 201O Project PAD Strategy Project PAD Strategy Project PAD Strategy Project PAD Strategy . Pre-primary Primary Lower Secondary Llpper Secondary _ The numbers infigure 5, which deals with training, are driven less by changing population figures than by the policy of MoET and Government, which seems to be a dramatic increase in the numbers of young people enrolling in technical and vocational (TVET) programs. Simular projections were given to the World Bank/Govemment team that conducted the joint education finance study in 1995-96. The Ministry's expectations for growth in TVET enrollments never matenalized in the second half of the 1990s, perhaps because of lukewarm enthusiasm for such programs on the part of the families of children who complete pnmary and lower secondary education. It may be that, once again, the Ministry's projections will exceed actual growth over the next ten years, but the PEDC appraisal team has been consistent and used MoET's enrollment projections for all levels and types of E&T. Since the number of TVET students is relatively small, no more than about two mnllion by the end of the ten-year period (even using the Ministry's bullish projections), as compared with ten million in primary, and eight million in secondary education, an overstatement of TVET numbers will not distort the picture unduly. -81 - Figure 5. Treining EnrolO nt Pvcjcons, 194=201O, Teacher Developmunt PAD vs. NOET's 2010 Strategy Pspsir 1.8 1.6 : 1.2 o 10 - ___ 0 0.8 - _ _ ____ ___ ^-- b, gi .................'__| ___ - 0.6l 5 5 0 , 1998 2000 2002 2004 2006 2008 2010 | a+ Projected Spending - Projected Budget Notes: 1. World Bank, Vietnam Education Financing. World Bank Country Study, Washington, DC, 1997 (ISSN: 0253-2123). 2. In 1997, in East Asia as a whole, education spending was 3.5 percent of GNP; in all low-income countries, 3.7 percent; and in OECD countries, 5.0 percent. In Vietnam, as in many other transition economies, pre-schooling and primary and secondary schooling are counted as "education," whereas tertiary education is put with technical and vocational education and training (TVET) and referred to as "training." In Vietnam, "State Budget" refers to the sum of all spending by central and local governments (central ministries, provinces, districts and communes). 3. Government of Vietnam, Government Statistics Office, Vietnam Living Standards Survey, 1992-93, and Vietnam Living Standards Survey, 1997-98, Hanoi, Vietnam. 4. Government of Vietnam, Ministry of Education and Training, Education Development Strategy for 2010, Hanoi, Vietnam, May 2001. 5. The assumptions in table 1 come from the public expenditure review (Government of Vietnam and Donor Working Group on Public Expenditure Review, Vietnam: Managing Public Resources Better, Public Expenditure Review 2000, Volumes 1 and 2, Hanoi, Vietnam, December 2000), with some assumptions updated on the basis of more recent projections from the Ministry of Finance (MOF) and the International Monetary Fund (IMW). - 85 - 6. World Bank, Project Appraisal Document, Vietnam Primary Teacher Development Project, Project Number P051838, Washington, D.C., April 2000. 7. Ministry of Education and Training, Education Development Strategy for 2010, op cit. 8. The proportion was a bit lower than this (about 70 percent) before 2000, when teachers were given a substantial pay increase. 9. Menno Pradhan, "How much does it cost to relieve the poor from private contributions for basic education and health?" Hanoi, Vietnam, The World Bank, July 2002. - 86 - Additional Annex 13: Technical Note on Girls Education VIETNAM: PRIMARY EDUCATION FOR DISADVANTAGED CHILDREN PROJECT On balance, there is a high degree of gender equality in Vietnam at the primary school level. Evidence of gender disparnty in primary school participation emerges only in the most educationally disadvantaged districts, and there it is most apparent among the smaller ethnic minorities. The PEDC project addresses factors that constrain girls' educational participation, supports interventions that will benefit girls, and weights some of its interventions more strongly in favor of girls in the geographic areas where there is disparity. It also incorporates gender dimensions in its district, school director, teacher and community training and support program. In short, the PEDC Project "mainstreams" girls' education into a comprehensive primary education program that also supports boys. 1. Gender equality issues in primary education in Vietnam Vietnam offers a marked contrast to many developing countries with similar levels of GDP in that it has a relatively high proportion of girls enrolled in primary school (see Note 1). The ACER census of 1999 revealed that more than 47% of Grade 5 students were female. This picture was reinforced by the population census of 1999 through which it was shown that 89.5% of females aged 6 - 10 were in primary school as compared to 90.1 % of boys. In the more than 400 districts not selected as initial targets by the PEDC program there was no difference in the enrolment rates of boys and girls, and in the most educationally advantaged districts the participation of both boys and girls was 95.0% and above. This picture changes somewhat when the focus is shifted to the 189 most educationally disadvantaged districts selected as the PEDC initial target group of districts. In these districts female enrolment slips to about 80% (compared to about 87% for boys). Furthermore, in those districts characterized by a very high proportion of the poorest communes and by a high percentage of the smaller ethnic minonty groups, the gender gap is more pronounced, with enrolment barely exceeding 60% for girls (compared to about 70% for boys). The proportion of 11 - 15 year olds out of school is much higher among females from the poorest or most disadvantaged communes than for boys and for children from the non-disadvantaged communes. In the case of ethnic minorities other than Hoa, Tay and Muong, female enrolment drops as low as 48.1% in some districts (compared to boys at about 62%). For the Hoa, Tay and Muong, on the other hand, girl child enrolment rate is above 90% nationwide, including the most disadvantaged districts. Prelimunary statistical evidence, strongly supported by field observation and other research studies, indicates that in the most disadvantaged districts girls-especially those from these ethnic minority groups-- commence primary schooling a year or so later than boys and are more likely to drop out after only two or three years of schooling before they reach the upper primary grades. This lower level of school participation is reflected in the significantly lower rates of literacy for girls from the ethnic minority groups (other than Hoa, Tay and Muong) residing within the targeted disadvantaged districts (see note 2). The literacy rate, especially in the most disadvantaged districts for girls of 10 years of age or more, is about 71% as compared to about 80% for boys from the same ethnic groups and the 90%+ rates recorded for other groups nationwide. -87 - Nevertheless, the initial analysis of the World Bank/MoET Student Assessment Program indicates that while children in disadvantaged districts perform at levels below the national average, there is little difference between boys' and girls' academic performance in either the most advantaged or disadvantaged districts (including ethnic minorities). In combination with student flow data, this suggests that access and persistence (i.e. fewer years of schooling) are greater problems for girls than boys in the poorest and ethnic minority groups other than Hoa, Tay and Muong. Once in school, on a grade-by -grade basis, girls appear to achieve at the same level as boys. The factors that disproportionately (see note 3) constrain girls' educational participation in Vietnam are comparatively few and straightforward. The local research literature on education, gender and ethnic minorities-strongly supported by the PEDC preparation team field observations--identifies three main causes that interact to negatively affect girls' access, attainment and achievement in primary school. They are (i) poverty, (ii) distance from school, and (iii) early marriage. Poverty: Extremely poor families are generally unable to afford the costs associated with primary schooling without assistance. Government policy emphasizing cost recovery, user fees or 'voluntary" contributions for primary education can place primary school beyond the reach of vulnerable groups. When households must ration their resources in order to cover the direct costs of schooling (e.g. books, supplies, etc.), boys are given preference over girls as their enhanced economic productivity is more likely to benefit the family. The opportunity costs of schooling for girls is higher, as they bear a greater burden of domestic labor, including child-care. Among the ethnic minorities, particularly the Hmong, girls' labor is more valued than boys. Distance from school: Children in remote and rural areas frequently must travel long and/or arduous distances (more than one hour) to school, along dangerous pathways. Parents, concerned for their safety, often enroll them in school late when they are stronger and better able to cope. Parents are even more reluctant for their daughters to undertake the walk, and delay their age of entry into primary school even further. Additionally, the longer travel time reduces the amount of time for domestic labor. Early marriage: Among many ethnic minorities, girls are expected to marry as young as age thirteen, and become uncomfortable in male company thereafter, causing them to truncate their schooling. This, coupled with a late start in primary school, narrows the "window of opportunity" that girls have to advance through and complete their primary education. The problem of female dropout is exacerbated by the need to transfer from a nearby satellite campus to a more distant main school at upper prnmary grades. In such cases, the increased direct and opportunity costs of schooling, as well as concern for safety, work more strongly against girls than boys for continuing their primary education. 2. PEDC Project and measures to address gender equality issues On balance, there is a high degree of gender equality in Vietnam at the primary school level. Evidence of gender disparity in primary school participation emerges only in the most educationally disadvantaged districts, and there it is most apparent among the smaller ethnic minorities. In that respect, girls of primary school age group in disadvantaged districts, and especially those belonging to the ethnic minority groups other than Hoa, Tay and Muong, constitute a distinct sub-group of the more general "disadvantaged" category. It is critical that these disadvantaged girls enroll in and complete primary schooling both to meet government goals but more importantly, to realize the social and economic benefits so strongly associated with girls' schooling and female literacy. - 88 - The PEDC Project addresses gender equality issues in education through four measures: First, it has selected for inclusion in the project those distncts where there is evidence of gender disparity. The targeting methodology used measures of gross enrollment, repetition, completion and overage enrollment to identify educational disadvantage, capturng low educational participation of girls. Moreover, the PEDC Project focus on satellite schools ensures that not only do the poorest and most remote communities receive assistance, but also the schools-namely the satellites--that are closest to non-participating girls are strengthened, and made more attractive and accessible. Secon(isocial analysis shows that even in areas where girls' educational outcomes are less than that of boys, factors that negatively affect educational participation are the same for boys and girls. Boys and girls both suffer from inadequate school environment, poor quality instruction, lack of matenals, language barriers, and high direct and opportunity costs. The relatively high participation rate of girls in the targeted districts (47% of total primary student enrollment in the targeted districts) ensures that a substantial-although not sufficient-number of girls will benefit from project interventions in these areas. Third, many of the project interventions address constraints that generally tend to affect girls disproportionately, exerting a stronger negative influence on their chances of enrolling, remaining and succeeding in school. Consequently, the overall FSQL strategy addresses these issues-such as costs, correct age of school entry, and access to upper primary grades-but weights some of its interventions more strongly in favor of girls in the geographic areas where girls are most disadvantaged. Some of the project interventions that should especially benefit girls are: * Reduction of direct costs of schooling through the elimination of voluntary fee/contnbutions and the provision of textbooks and school supplies for all children in satellite schools. * Provision of a clean and safe ("girl-friendly') physical environment at the satellite schools through the replacement of unsound or temporary classrooms, construction of latrines and provision of water points (i.e. storage containers) at these sites. * Creation of an effective and child-friendly learming environment through school director and teacher training, provision of teaching aids and instructional materials, and hiring teacher aides to strengthen classroom management and support. * Creation of Vietnamese Language Strengthening pre-schools at satellite schools in ethnic minority areas to improve school readiness and correct-age entry. This will also help lighten the sibling care burden. * School Support Funds, that parents around satellite schools will direct at priority education needs, including those of girls, depending on context. * Support to children in satellite schools in the poorest communes to make the transition from Grade 2 or 3 to the higher grades, either through the hinng of an additional teacher to allow completion at the satellite campus or scholarships to the main school (with a greater number given to girls than boys). Fourth, the PEDC Project will specifically and directly address girls' education by incorporating gender equality into its support and training programs (including manuals and guwdes) for distnct personnel, school directors, teachers and satellite school parents/communities. Specifically: * District Education Offices (BoETs) will be encouraged to give preference to qualified female candidates for any additional BoET staff financed by the Project (currently two positions are - 89 - envisaged). o BoETs, schools and communities will be encouraged to give preference to qualified female candidates for satellite school teacher aide positions (approximately 15,000 posts). O BoET training in planning for and supporting FSQL will include the collection of gender-disaggregated data, training for gender-disaggregated data analysis and incorporating gender equality considerations into development plans. o School director training will include elaborating supporting methodologies for schools and campuses on how (i) to identify girls who run the risk of not completing schooling, (ii) to support these girls and their parents, thereby reducing girls' drop out from school, and (iii) to raise awareness on gender equality issues in education through activities organized by the school and campus, the Parents' Association and other representatives for the local community. o Teacher training will include measures to create a favorable school environment for girls by identification of problems, techniques/practices for meeting girls' specific needs, and measures to address pedagogical and cultural disparities. O Community training and support will include raising awareness and sensitizing the community and parents about the importance of girls' education, helping them identify barriers and prioritize solutions, including the strategic use of the School Support Fund. The PEDC Project will aim to ensure that: o Both girls and boys benefit form project interventions, o Girls get priority consideration where resources may be limited, o Gender equality issues are incorporated into planning, training and materials In short, the PEDC Project will use a "gender mainstreaming" approach for a comprehensive primary education program that will benefit girls and boys. Tables 1 and 2 on the following page summarize PEDC Project intervention and compare them with other interventions that address girls' education. Table l: Popular interventions to su poirt girls' education Intervention Status Latnnes PEDC provides Clean, safe environment PEDC Fee waviers PEDC Free students books PEDC Free student supplies PEDC Free uniforms Not required at satellite schools Health, sanitary supplies PEDC School Support Fund, if required (not reported to be a problem) Labor-saving devices (wells, mills) NO (beyond Project scope and budget) Household income supplements NO (see books/supplies as transfer payments, additional supplements too costly) Proximity of school to home PEDC improve satellites, School Completion Fund Flexible schedule PEDC improve satellites (all half-day) Female teachers Predominate (not an issue) Non-punitive pregnancy policy Primary school girls too young (not reported to be an issue) No-harassment policies enforced Exist already - 90 - Publicity campaigns PEDC School Director, Teacher and Community training Girl-friendly classrooms PEDC School Director and Teacher training and matenals Remediation/tutoring PEDC School Support Fund, Teacher Aide Stereotype free textbooks Addressed by MoET (not reported to be an issue) Negative view or low expectation of girls PEDC School Director and Teacher training and materials Table 2: Girls' Education and PEDC Interventions Girls' Education Problem PEDC Project Intervention ACCESS * Not Enrolled District, School Director, Community Training Free Books and Supplies; Fee Waivers * Enrolled Late School Director, Community Training Free Books and Supplies; Fee Waivers * Distance to School FSQL Quality Improvement at Satellite Schools PERSISTENCE * Incomplete Schools/Campuses Primary School Completion Fund * Schools are too costly Alleviate Direct Costs (books, supplies, fee waivers) * Girl friendly environment (Physical) Latrines, Water Points, Better Infrastructure . Sibling care in ethnic minority areas Language Pre-schools * Non-supportive HH environment Community Training PERFORMANCE * Non-supportive instructional environment Teacher Guides, Teacher Training, School Director Training, Teacher Aides * Lack of instructional materials Free Student Books/Supplies, Teacher Books/Supplies, Instructional Materials Notes: 1. Lower secondary school enrollment is lower, with girls at 59% and boys at 60%. 2. Population Census 1999. 3. While many factors negatively impact both girls' and boys' educational participation, these factors emerge as having a stronger negative impact on girls than boys. - 91 -