VIETNAMINDUSTRIAL POLLUTION MANAGEMENT PROJECT (P113151)

Due Diligence Review of Involuntary Resettlement at An Phuoc Industrial Zone

April 22 to May 2th, 2013, updated 13 Jan 2014

A. PROJECT OBJECTIVES AND PROJECT COMPONENTS

The development objective of the Vietnam Industrial Pollution Management Project (VIPMP) is to improve environmental compliance of industrial zones (IZs) on a pilot basis. This will be achieved through strengthening of the institutional and regulatory environment, improved monitoring and enforcement, improved Centralized Effluent Treatment Plant (CETP) installation and operation for proper wastewater treatment, and information disclosure and public participation in two or three provinces.

The project consists of three components: (1) Component 1: Environmental Monitoring and Enforcement; Component 2: Performance-Based (PBF) CETP Financing; Component 3: Implementation Support.

B. PURPOSE AND OBJECTIVE OF THE DUE DILIGENCE REVIEW

Purpose:

The Bank received a request from the Vietnam Environment Protection Fund (VEPF) to consider financing the installation of an Centralized Effluent Treatment Plant (CETP) for the An Phuoc IZ (Dong Nai province) to improve the environmental pollution management for the IZ. Since the CETP is located inside the IZ and that the land for IZ was acquired from local residents, the Bank needs to conduct a due diligence review for the IZ to evaluate if the compensation /resettlement conducted by the government (to acquire the land for the IZ purpose) meets the Bank’s OP 4.12 objective.

Objective:

First of all, it should be noted that under this project, only Industrial Zones with Overall Compensation Plan being approved by the Provincial Authorities prior to the cut-off date of May 2010 (the date of project identification mission) are eligible for proceeding due diligence review.

Secondly, since the compensation payment, resettlement (associated with the IZ) were fully completed by the time of the IZ’s proposal submission to the Bank, and given the above cut-off date, the objective of the due diligence review for the IZ will be:

a) Review to evaluate if all involuntary resettlement activities associated with the IZ area were carried out in full compliance with Government of Vietnam (GoV) regulations (by the time of commencing resettlement),

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RP1326 V2

b) assess if the resettlement done by local government (including its outcome) meets the objectives of Bank’s OP 4.12,

c) check to know if there are any resettlement related issues that remain pending at the time of Bank’s due diligence to propose follow-action.

The review focuses on involuntary resettlement in the CETP1 and its service area in An Phuoc Industrial Zone (IZ) selected for the second year of project implementation.

This report was written by Bank’s Consultant, under the guidance and additional inputs provided by Bank’s Social Development Specialists.

C. METHODS

This Due Diligence (DD) review was conducted in accordance with the project’s ESMF. The methods employed include: (i) desk review of secondary information (including project documents provided by the GoV for the reviewed IZ (see details in Appendix 1); and (ii) interviews with relevant government officials, including representatives from District Resettlement Committee, IZ representatives, representatives from affected households, including also village leaders (see details in Appendix 2); and c) field observations.

The first field visit was conducted by the Bank’s Social Development Specialist (for field observation and assessing the financing elibility as per project’s ESMF). Follow-up field visit was made by Bank’s consultant to hold interview/consultation with local people, including representatives from affected households, commune’s People’s Committee, and IZ owner.

Since this is the first subproject reviewed by the Project, the Bank’s Social Development Specialists and the Bank’s consultant visited the IZ site in Long Thanh District, Dong Nai Province on 22 April 2013 to carry out the DD review. The methods employed for the due diligence include: (i) desk review of secondary information (including project documents provided by the GoV) (see Appendix 1); and (ii) interviews with relevant government officials, IZ representatives (including Director of the IZ and person in charge of land acquisition and resettlement), representatives from affected households, and other key informants in the IZ (Appendix 2). The due diligence also consist of field observations to validate the secondary data.

Stratified sampling was conducted to collect information form the affected households (as in the table below).

No Type of ImpactsProject Impacts Survey Sampling

CETP CETP Service Area CETP CETP

Service AreaHH losing agricultural land/structures

2 14 2 5

In which, number of HHs losing 30% or more of their total land holding.

0 0

1In this project, the “CETP service area” is defined as being: i) the land area within the IZ physically occupied by the CETP which will be financed by the project, or the area already occupied by an CETP if the project is upgrading it; and ii) the entire land area within the IZ that will be occupied by industries that are or will be serviced by the CETP.

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HH relocating 0 0Vulnerable 0 0Including pending HHs 0 0

TOTAL 2 14 7

D. FINDINGS

Land acquisition Process

The An Phuoc IZ (Long Thanh District, Dong Nai Province) was formerly established in October 2003 owned by Minh Hiep Company2. The Long Thanh District Resettlement Committee (RC)prepared and submitted to Dong Nai PC the An Phuoc IZ general compensation plan for approval in December 20053with total area of 200.85ha. The land acquisition was partly implemented, for about 30ha out of total 200.85 ha. Due to Minh Hiep Company’s financial inability to provide the required compensation payment, the Dong Nai PC stopped the project (including the compensation) in November 2006.

In 2009, the Tin Nghia Company asked Dong Nai PC to continue the project. Then the updated general compensation plan for the whole 200.85ha was prepared and approved in July 20104.The An Phuoc IZ was re-established in September 2012.The construction of An Phuoc IZ project is divided into three (03) phases; and the proposed World Bank funded CETP and its service area is under phase 1, with total area of 44.3ha.

Among the 44.3ha in Phase 1, the proposed CETP area uses about one (01) ha and service area covers approximately 43.3 ha. The review confirmed that the resettlement and compensation started in October 2003(by formerly Minh Hiep Company) and was fully completed for the IZ area in phase one, in early January 2013. Within 44.3ha, 16 households affected primarily with agricultural land, were compensated firstly in mode of voluntary resettlement5, through negotiations between the IZ representatives and local people following the approved general compensation plan for speeding up the IZ’s land acquisition progress; then the Long Thanh district RC completed the compensation procedure by issuance and approval of detail compensation plans (for each affected households)in accordance with the local government laws/regulation in November 2012. The below table presents the summary of project impacts on land acquisition.

No Type of Impacts

Project Impacts of Land

CETPCETP

Service Area

CETPCETP

Service Area

(AHs) (AHs) (ha) (ha)

2 Decision 4070/QDDCT.UBT dated 27 October 2003 issued by Dong Nai PPC on establishment of An Phuoc IZ owned by Minh Hiep Company3 Decision 4862/QD.UBND dated 13December 2005 issued by Dong Nai PPC on approval of general compensation plan for An Phuoc IZ, (for Minh Hiep Company).4 Through Document 954/CV-HDDBT dated July 6 2010 issued by Long Thanh District People's Committee on approval of updated general compensation plan, for An Phuoc IZ, owned by Tin Nghia Company.5 Voluntary Resettlement in this case refers to resettlement not attributable to form of land acquisition backed by powers of the state (GoV), that the IZ authority directly negotiated with local people for acquiring land.

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1 Household losing agricultural land 02 14 1.0 43.3In which, number of HHs losing 30% or more of their total land holding6.

2 Household losing residential landImpacted with House/Building and in need of relocation 0 0 0 0

3 Public LandTOTAL 02 14 1.0 43.3

After completion of compensation land acquisition procedure, the Dong Nai PPC issued Decision 339/QD-UBND dated January 24th 2013 on leasing land of 44.3ha of Phase 1, for 50 years period to Tin Nghia Company for purpose of An Phuoc IZ construction in An Phuoc commune, Long Thanh district.

According to the information provided from An Phuoc IZ Director and Long Thanh District RC, to date no further land acquisition is required for An Phuoc IZ, phase 1.

Evaluative Review of Criteria related to Compensation/Resettlement.

Compliance with GoV regulations. According to the DD review of the compensation plan(s) (provided by Tin Nghia Company), the resettlement policy and the definition of entitlements applied for the An Phuoc IZ followed the Vietnamese regulations (Land Law 2003 and Decree 197/2004).

Process of land acquisition. Since 2003, the IZ representatives negotiated with local people witnessed by Long Thanh district RC, communal authorities and village leaders for land acquisition and compensation through many rounds of consultation meeting and discussion following the approved general compensation plan (see footnote 3&4).

The local people agreed and handed over the land to the company, each of affected household signed in Negotiation Minute for receiving compensation payment and handing over the captioned land to the company (see Appendix 2). The Long Thanh District Resettlement Committee (DRC) was in charge of the preparation of detailed compensation plan(s) by each of affected household, for completion of land acquisition procedure and for purpose of land leasing procedure, as required by GoV. As results, the Dong Nai PPC issued Decision 339/QD-UBND dated 24 January 2013 on leasing land with area of 44.3ha to Tin Nghia Company for construction and implementation of An Phuoc IZ, Phase 1 in An Phuoc Commune, Long Thanh District, Dong Nai province.

Entitlements provided to Affected Households (AHs). Because all 16 households were primarily affected with their agricultural land, they all agreed to receive compensation payment in cash. The compensation rates applied for these households reflect market rates, according to the households who were interviewed. . The operative principles in this involuntary resettlement are based on the informed consent and power of choice by the affected households. Informed consent means the affected households were fully knowledgeable about the project and its implications and consequences and support the project implementation. Power of choice means 6 Because, the land acquired was perennial land using for crop like cashew, cassava, not paddy (rice), so the criteria of losing 30% or more of affected household's total land holding is not applied.

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the affected households had the options to agree or disagree with the proposed acquisition of land, which is indicated in the Minute of Negotiation, with no adverse consequences imposed (formally or informally) by the GoV. As the review indicated, compensation payment has been made appropriately and fully in accordance with the Government’s regulations.

Compensation source and payment. The budget for compensation payment were provided by the Tin Nghia Company who provide the payments directly to affected people following results of negotiations and compensation regulations which were approved by the provincial government.

Consultations. the project included many rounds of consultative dialogues and the final one was recorded in the negotiation minutes signed by IZ representatives and affected people, witnessed by commune leader which sample of minutes are presented in Appendix 2. The affected people expressed their informed consent and power of choice by means of their options to agree and sign into the negotiation minutes on land acquisition. As the review indicated, consultation was appropriately organized as per Government’s regulations.

Grievances Redress Mechanism (GRM). According to the information provided, there was a grievance handling mechanism in place, which followed the local government’s regulations. A grievance system was also established in the Tin Nghia company to resolve all queries raised by AHs regarding all issues related to land acquisition, compensation payment, and resettlement issues during negotiation period. As the DD review found, all questioned raised by the affected people were resolved during the negotiation time so that there is no further complaint after the signing of negotiation minutes. The GRM was appropriately established and functioned as per Government’s regulations.

Livelihood Restoration. Affected households have been provided with support, assistance and allowances as part of the agreed negotiation (which is in accordance with the provincial regulations). According to the information gathered from affected households during the DD, the affected agricultural land was of poor quality and suitable only for growing low-value crops like cashew, and cassava (not paddy).

The team interviewed 07 affected households who live near the IZ (including not only affected HHs, but also the village representatives), to confirm the appropriateness of the compensation paid to affected households. Interviewees confirmed that compensation payments provided them with the opportunity to acquire improved land quality for their farming or/ and to pursue other sources of income from non-farm activities. In other words, prices paid for compensation, improved their farming income and offered other effective income-generation sources. For seven households visited, their livelihoods, as well as those who settled near the IZ were fully restored.

In sum, as information provided by the An Phuoc IZ Director and the Long Thanh District RC, the DD review for An Phuoc IZ phase 1 confirmed that there are not land legacy issues of land related to acquisition and resettlement. The compensation was implemented in accordance with the government’s laws and regulations. The livelihoods of affected households were fully restored and for affected households interviewed the compensation was an opportunity for them to diversify and improve their income sources. It was also confirmed that there were no households who were physically resettled as a result of the CETP installation area and CETP service area.

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E. CONCLUSIONS AND RECOMMENDATIONS

Based on the information provided by the local governments and the IZ owner, and the interview/consultation with the representative of affected households and other stakeholders, it is concluded that all the sixteen affected households were compensated and supported in accordance with government’s laws/regulation, and that all have received fully their compensation entitlements, and the implementation of compensation payment and support, including grievance redressing, was done in a manner that ensured affected households were not worsen off as result of the project. By the time of due diligence, all the affected households associated with the An Phuoc IZ (Phase 1) who lose agricultural land have fully restored their livelihoods. This meets the objective of Bank’s OP 4.12. There are no legacy issues remaining pending.

It is also noted that Tin Nghia Company, who is the moment the operator of the An Phuoc IZ has been provided (by the government) with the Land Leasing Contract and becomes eligible to use the IZ land for the IZ purpose. A Land Use Right Certificate for the IZ which is going to be issued by Dong Nai provincial government by the end of 2013 for the IZ phase 1. The site is now ready for installation of the proposed CETP.

Given that compensation payment and support provided by the government was in full compliance with the government’s compensation regulation then, and that all affected households fully restored their livelihoods, which meets the objective of Bank’s OP 4.12, and there are no legacies issues remaining pending with the An Phuoc IZ (Phase 1), the proposed CETP could be considered for financing for social safeguards perspective. No follow up action is required from the Bank’s side.

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F. APPENDICES

APPENDIX 1: LIST OF THE DOCUMENTS REVIEWED DURING THE MISSION

APPENDIX 2: LIST OF THE PEOPLE MET DURING THE MISSION

APPENDIX 3: LOCATION MAP OF PROPOSED CETPS,

APPENDIX 4: LAND LEASING AGREEMENT

APPENDIX 5: SEMI-STRUCTURE QUESTIONNAIRE

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APPENDIX 1: LIST OF THE DOCUMENTS REVIEWED DURING THE MISSION

1. Decision 4862/QD.UBND dated 13 December 2005 issued by Dong Nai PPC on approval of general compensation plan for An Phuoc IZ, (for Minh Hiep Company), and Document 954/CV-HDDBT dated July 6 2010 issued by Long Thanh District People's Committee on approval of updated general compensation plan, for An Phuoc IZ, owned by Tin Nghia Company.

2. Decision 339/QD-UBND issued by Dong Nai PPC dated Jan 24 2013 on approval of land assignment of 44,3 ha in An Phuoc Commune, Long Thanh District, Dong Nai Province to Tin Nghia Corp, for purpose of constructing An Phuoc IZ;

3. Documents on approval of detailed compensation plan (s) on acquisition of land and assets from affected households for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, DongNai Province; including:

o Decision 10347/QD-UBND issued by Long Thanh District People's Committee dated November 20 2012detailed compensation plan (s) on acquisition of land and assets from affected households of Pham An, for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, Dong Nai Province

o Decision 10344/QD-UBND issued by Long Thanh District People's Committee dated November 20 2012detailed compensation plan (s) on acquisition of land and assets from affected households of Le Van Hoi, for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, Dong Nai Province

o Decision 10849/QD-UBND issued by Long Thanh District People's Committee dated December19 2012detailed compensation plan (s) on acquisition of land and assets from affected households of Nguyen Thanh An, for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, Dong Nai Province.

o Decision 288/QD-UBND issued by Long Thanh District People's Committee dated January15 2013detailed compensation plan (s) on acquisition of land and assets from affected households of Cu HuyLonh, for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, Dong Nai Province

o Decision 29/QD-UBND issued by Long Thanh District People's Committee dated January15 2013detailed compensation plan (s) on acquisition of land and assets from affected households of Tran Viet Trong, for construction of An Phuoc IZ in An Phuoc Commune, Long Thanh District, Dong Nai Province

4. Documents on Negotiation Agreement between affected households and the An Phuoc IZ Authority for Receipt of Compensation Payment and Handing over of the Land, for purpose of constructing An Phuoc IZ.

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APPENDIX 2: LIST OF THE PEOPLE MET DURING THE MISSION

1. Mr. Vu Van LuyenDirector of AnPhuoc IZ

2. Ms. Phung Thi NhungAnPhuoc IZ Staff

3. Tran Viet Trong - Affected HouseholdsAnPhuoc Commune, Long Thanh DistrictDong Nai Province

4. Nguyen Thai Loc - Affected HouseholdsAnPhuoc Commune, Long Thanh DistrictDong Nai Province

5. Pham Van Chu - Affected HouseholdsAnPhuoc Commune, Long Thanh DistrictDong Nai Province

6. Pham An - Affected HouseholdsAnPhuoc Commune, Long Thanh DistrictDong Nai Province

7. Ngo XuGhin - Affected HouseholdsAnPhuoc Commune, Long Thanh DistrictDong Nai Province

Picture 1: Household Survey During DD Preparation in An Phuoc IZ

Picture 2: Basic Infrastructure Construction is undergone in the An Phuoc IZ

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APPENDIX 3: LOCATION MAP OF PROPOSED CETPS,

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APPENDIX 4: LAND LEASING AGREEMENT

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APPENDIX 5: SEMI-STRUCTURE QUESTIONNAIRE

No Category Specific Indicators

1 Compensation payment:

o Adequacy of payment to replace the affected assets; the compensation to the replacement cost and no deduction should be made for depreciation or salvageable materials for houses and other structures;

o Sufficiency and timeliness of payments to be made to all affected persons;

o Adequate and timely payment of compensation for public facilities and restoration of public facilities (if required);

2 Consultation with affected people

o to monitor public consultation procedures, problems and issues that arise during the meetings, and proposed recommendations to address any resolved outstanding problems;

o to check the availability of DMS, compensation plan(s) in the related local institutions and dissemination of Public Information Booklet (if any) to PAPs.

3 Provision of resettlement sites

o To check with the affected people who are entitled to be relocated to a resettlement site and who opt for relocation to a resettlement site, if they are being or have been consulted on the location of the site, resettlement apartments and site and services allocation site;

o To check the site location, site design infrastructure and plot allocation (should enable affected people to restore or improve living standards);

o To check if the affected persons are receiving or have received all their entitlements and in a timely manner; and

o Linkage of resettlement and resettlement site preparation: The completion of land acquisition and resettlement activities preparation (should be completed at least one month before the start of actual resettlement);

o to check if any relocation assistances (for example, house renting allowance) had been provided to PAPs

o Restoration of civil infrastructure: All necessary infrastructures (water supply, drainage system, roads, sanitation, etc.) Should be developed at the resettlement sites or at the site of relocation up to a standard at least equal to the standard at the original location;

o to monitor the resettlement compensation rates, various

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No Category Specific Indicators

allowances and the actual resettlement expenditures versus the resettlement budget, covering resettlement financing as well, including timing and sufficiency of financial allocations for resettlement.

4 Income Restoration program:

o to check if any provision of credit assistance to households (or any of income restoration programs) that meet the PAP's conditions for housing improvement and/or for increasing incomes;

5 Level of satisfaction:

o The level of satisfaction of affected persons with various aspects of the compensation is monitored and record; and

o Monitoring the operations of grievance procedures and the timeframe of redress of grievances will be monitored;

o Standards of living: Throughout the implementation process, the trends in living standards of households displaced is observed and the potential problems in the restoration of living standards will be identified and reported;

6 Other project specific issues

o To check if any pending issues or legacies remaining

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