lao people’s democratic republic: education for employment ... · at lower secondary schools,...

Education for Employment Sector Development Program (RRP LAO 50399)

Project Number: 50399-003 Loan Number: LXXXX August 2019

Lao People’s Democratic Republic: Education for

Employment Sector Development Program

Project Administration Manual

http://www.adb.org/Documents/RRPs/?id=50399-003-3

ABBREVIATIONS

ADB – Asian Development Bank BOL – Bank of Lao PDR CPD – continuing professional development DESB – district education sector bureau DGE – Department of General Education DMF – design and monitoring framework ECDM – Engineering and Construction Design Management EMIS Education Management Information System EOI – expressions of interest FMA – financial management assessment GAP – gender action plan ICS – individual consultant selection IEE initial environmental evaluation IFB – invitation for bids Lao PDR – Lao People’s Democratic Republic LSE – lower secondary education MOES – Ministry of Education and Sports MOF – Ministry of Finance NFE – non-formal education OCB – open competitive bidding PBL – Policy-based loan PESS – provincial education sector service PIC – project implementation consulting PMU – project management unit PPE – post-primary education PUCDA – provincial unit for construction and development assistance P3F – post-program partnership framework SOE – statement of expenditure QCBS – quality- and cost-based selection RFQ – request for quotations SDP – sector development program TOR – terms of reference TVET – technical and vocational education and training

CONTENTS

Page

I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 3

A. Project Readiness Activities 3 B. Overall Project Implementation Plan 6

III. PROJECT MANAGEMENT ARRANGEMENTS 7

A. Project Implementation Organizations 7 B. Key Persons Involved in Implementation 9 C. Project Organization Structure 10

IV. COSTS AND FINANCING 10

A. Cost Estimates Preparation and Revisions 11 B. Key Assumptions 12 C. Detailed Cost Estimates by Expenditure Category 12 D. Allocation and Withdrawal of Loan Proceeds 13 E. Detailed Cost Estimates by Financier 14 F. Detailed Cost Estimates by Outputs 15 G. Detailed Cost Estimates by Year 16 H. Contract and Disbursement S-Curve 17 I. Fund Flow Diagram 18

V. FINANCIAL MANAGEMENT 20

A. Financial Management Assessment 20 B. Disbursement 21 C. Accounting 23 D. Auditing and Public Disclosure 23

VI. PROCUREMENT AND CONSULTING SERVICES 24

A. Advance Contracting 24 B. Procurement of Goods, Works, and Consulting Services 24 C. Procurement Plan 25 D. Consultant's Terms of Reference 35

VII. SAFEGUARDS 46

VIII. GENDER AND SOCIAL DIMENSIONS 47

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 48

A. Project Design and Monitoring Framework 48 B. Monitoring 50 C. Evaluation 52 D. Reporting 52 E. Stakeholder Communication Strategy 52

X. ANTICORRUPTION POLICY 53

XI. ACCOUNTABILITY MECHANISM 53

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 53

APPENDIXES 1. Financial Management Analysis 56

2. Terms of Reference of Consultants 116

3. Draft Gender Action Plan 122

4. Communications Strategy 124

5. Strategic Procurement Plan 127

6. Program Investment Project Description 147

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The Ministry of Education and Sports (MOES) and the Department of General Education (DGE) are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by MOES and DGE of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

3. At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan agreements. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreements, the provisions of the loan agreements shall prevail.

4. After ADB Board approval of the project's report and recommendations of the President (RRP),

changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

1. This proposed SDP is part of long-term Asian Development Bank (ADB) support to strengthen human capital development in the Lao PDR. The PBL will help the Ministry of Education and Sports (MOES) undertake reforms to progressively align post-primary education (PPE), comprising secondary education, technical and vocational education and training (TVET), and higher education, with evolving labor demand and skills needs. The project component will support MOES in delivering these reforms effectively, and improving access to and the quality of secondary education. The SDP builds on the ongoing Secondary Education SDP, and will tap synergies with ongoing ADB support for TVET and higher education.1 2. The program aims to achieve inclusive, balanced, and skills-driven economic growth to enhance employability of secondary school youth2 and will have the following outcome: employability of secondary school youth enhanced.3 The program has three outputs: (i) alignment of post-primary education with labor market demand strengthened; (ii) quality and relevance of secondary education to emerging skills demands strengthened; and (iii) equitable secondary education access and completion rates increased.4 The details are as follows: 3. Output 1: Alignment of PPE with labor market demand strengthened. The SDP will provide policy and investment support to align PPE with evolving skills needs of Lao PDR’s economy. Under the PBL component, two policy actions have been achieved. First, to strengthen post-primary education planning and budgeting, MOES issued an instruction requiring relevant education departments to prepare action plans for secondary education, TVET, and higher education, emphasizing gender equity. This will improve coordination and information exchange across departments, facilitate comprehensive planning and data analysis, and progressively align all three with the changing labor demand. Second, the block grants for secondary education has been increased to kip (KN)70,000 per student, and for TVET to KN300,000 per student.5 This will enable secondary schools and TVET institutions to increase spending on non-salary recurrent costs, including quality related inputs such as consumables for teaching and learning, extra-curricular activities to promote all-round learning, and operations and maintenance of school facilities. 4. Under output 1, the project component will (i) strengthen the capacity and systems of MOES departments for monitoring the skills supply from PPE, improve cross-departmental collaboration, and deepen industry engagement; (ii) pilot partnering models linking secondary schools with nearby TVET and nonformal education centers in 20 selected districts (including the 12 disadvantaged districts) (footnote 23); and (iii) improve student counseling on academic and career options. Support will be provided to the National Commission on Human Resource Development to consolidate fragmented data and conduct sex-disaggregated analysis on

education−employment links and evolving skill needs. MOES will pilot partnerships between secondary schools and nearby TVET schools, nonformal education centers, and local industries to allow secondary school students to undertake brief internships during vacations. This will expose students to the world of work and prepare them better for employment. Counseling

1 ADB. 2011. Lao People’s Democratic Republic: Secondary Education Sector Development Program. Manila; ADB.

2016. Lao People’s Democratic Republic: Second Strengthening Technical Education and Vocational Training Project. Manila; and ADB. 2016. Lao People’s Democratic Republic: Second Strengthening Higher Education Project. Manila.

2 MOES. 2015. Education and Sports Sector Development Plan (2016–2020). Vientiane. 3 The Design and Monitoring Framework is in Appendix 1 of the SDP’s report and recommendation of the president. 4 An overview of investment project support under each output is in Appendix 6. 5 Block grants for secondary education and TVET were previously KN50,000 and KN270,000 respectively.

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material will be developed under the SDP to address gender stereotypes and raise the awareness of secondary school students about career and job opportunities. Output 1 will thus support MOES in undertaking the downstream reforms included in the P3F to continue with comprehensive planning and budgeting to target PPE investments in underserved regions. 5. Output 2: Quality and relevance of secondary education to emerging skills demands strengthened. To enhance the employability of youth, it is essential to improve the quality and relevance of secondary education in the priority subjects—sciences, mathematics, English, and Lao language—that are critical for higher education and/or for jobs. Under the PBL component, MOES accomplished five policy actions to support comprehensive reforms. Textbooks for the priority subjects are being aligned to the updated curricula. MOES accredited eight provincial teacher training institutions to ensure that they offer quality teacher training at the bachelor's degree level in these subjects. To encourage active participation by students during classes and to enhance their confidence and creative thinking (as opposed to rote learning), MOES introduced learner-centered pedagogy. It increased support for continuing professional development (CPD) to complement in-service teacher training. This will ensure that teachers regularly refresh their knowledge in these priority subjects and use improved delivery methods. The policy on national student assessment is being aligned with international standards. 6. Under output 2, the project component will further operationalize these policy reforms by (i) strengthening secondary education curriculum, pedagogy, and student assessment focusing on the priority subjects; (ii) supporting nationwide in-service training and upgrading the qualifications of secondary teachers (prioritizing women) who teach these subjects, piloting CPD in 20 districts (including the 12 disadvantaged districts), and expanding the use of education technology to improve the delivery of learner-centered teaching; and (iii) providing print-based and digital learning resources for science laboratories and libraries to 120 secondary school clusters, so that they can deliver the improved curriculum effectively. Support will be provided to update lower and upper secondary curricula in the priority subjects and to revise the teachers’ guides and learning materials, ensuring sensitivity to gender, ethnicity, and disabilities. The approach towards classroom and sample-based assessments of student learning outcomes will be reviewed and aligned with international standards. Output 2 will help MOES deliver the policy reforms and support progress toward the downstream reforms included in the P3F on (i) updating of the curricula in the priority subjects, (ii) reforming CPD further; and (iii) undertaking rigorous assessments of learning outcomes. 7. Output 3: Equitable secondary education access and completion increased. The SDP will support reforms and investments to address supply and demand-side constraints that are keeping secondary school enrollment and completion low. Under the PBL component, MOES approved a list of 47 districts that suffer from an acute shortage of secondary schools, overcrowded schools, and high dropout rates after the primary level. This will enable MOES to target more funding for school facilities, teacher training, and deployment to these underserved areas. The project component will (i) alleviate supply-side constraints in 12 of these 47 districts by constructing additional classroom blocks, sex-segregated dormitories, sanitation facilities, and toilets at 60 primary and secondary school sites (owned by the government); and (ii) reduce demand-side constraints to access and completion by providing stipends based on a combination of need and merit, and prioritizing female and ethnic group students.6 At primary schools, new

6 MOES has designated 47 districts of the Lao PDR as “priority districts” for secondary education investments under

policy action 8 for the PBL. From these 47 districts, it selected 20 districts for the activities proposed under outputs 1 and 2. These 20 districts include 12 “disadvantaged districts,” where 60 secondary schools and related facilities

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lower secondary facilities will be built. At lower secondary schools, facilities will be provided for upper secondary classes. Additional classrooms will be built in overcrowded schools. All these measures will ensure that more girls and boys, including those belonging to ethnic groups, will be able to enroll in secondary schools and complete their education. 8. Vulnerability to Climate Change and Extreme Events. The school facilities will also be vulnerable to the impacts of climate change and variability. Projected changes in temperature, precipitation, and extreme events (e.g. storms) which will increase risks on flooding, landslides/mudslides, erosion, droughts, and heat waves will put at risk the students’ health, school facilities, and the related built infrastructures for water and waste. Thus, appropriate climate proofing measures will be integrated in the facilities design.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities

Indicative Activities

2019 Responsible Individual/Unit/Agency/ Government Jul Aug Sep Oct Nov Dec

Completion of civil works detailed design MOES/DGE

Advance contracting actions MOES/DGE

Establish project implementation arrangements MOES/DGE

ADB Board approval ADB

Loan signing ADB, MOF, MOES

Government legal opinion provided MOF, MOJ

Government budget inclusion MOF

Loan effectiveness ADB, MOF

ADB = Asian Development Bank, DGE = Department of General Education, MOES = Ministry of Education and Sports, MOF = Ministry of Finance, MOJ = Ministry of Justice. Source: ADB staff estimates.

will be built and upgraded under output 3. MOES selected the 12 districts based on (i) the high dropout rates between primary and lower secondary, and lower secondary and upper secondary levels; (ii) overcrowding in secondary schools; and (iii) a large share of ethnic groups where overall school enrollment, especially for girls, is very low.

Table 2: Project Readiness Filters

Key Project Preparation Elements

Stage of Project Preparation

Appraisal/ Fact-finding Negotiations Signing

Effectiveness (with 3 months after

signing)

First Disbursement (within 3 months

after effectiveness)a

1. Project is within Government development priority

Confirmed.

2. Project administration manual, project implementation manual, or project operational manual

Drafted. Completed and agreed with the government

3. Discussion and agreement with Government on application of taxes and duties

Completed.

4. Environment impact assessment, social impact assessment, land acquisition and resettlement plan and ethnic minority development plan

Drafted Action plans prepared and government budget confirmed.

Implementation started

5. Procurement capacity assessment Completed. A strategic procurement planning process and risk assessment has been undertaken (Appendix 5 of the project administration manual).

Confirmed Implementation started





signing)



6. Financial management capacity assessment

Drafted Confirmed

7. Procurement plan for the first 18 months

Drafted Confirmed

8. Auditing arrangements, including TOR

Drafted Confirmed

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signing)



9. Monitoring and evaluation arrangements

Indicators in DMF discussed and agreed

Key result indicators with baseline data and monitoring mechanism confirmed

Validation to confirm baseline data and monitoring mechanism

10. Required staff have been appointed to support project preparation and suitable project offices identified

Project organization chart, job descriptions, staffing and responsibilities agreed

Project organization charts, staffing, and responsibilities confirmed. Key project staff in place.

Key staff on board

11. Recruitment of project implementation consultants

TOR drafted RFP reviewed and commented by ADB and EA.

Consulting services advertised; RFP issued

Proposals received

12. Recruitment of PMU individual consultants

TOR drafted Confirmed Consulting services advertised

EOIs received Contracts awarded

13. First year bidding documents for goods and civil works (where design is available)

Master bidding documents for goods and works under advance actions prepared

Finalized master bidding documents for goods and works for advance actions submitted to ADB

NOL from ADB obtained and bidding initiated

Bidding completed; bid evaluation reports submitted to ADB

Contract awarded

14. Government counterpart funds and in-kind support

Agreed Confirmed Request for first year funds submitted to the Government

First year fund allocated

15. Subsidiary arrangements (where applicable)

Not applicable

16. Legal opinion Draft legal opinion submitted to ADB

Legal opinion submitted to ADB

17. Opening of advance/designated account

Opening of advance account

Advance account established

ADB = Asian Development Bank, EA = executing agency, EOI = expression of interest, NOL = no objection letter, PMU = project management unit, RFP = request for proposals, TOR = terms of reference. a As part of advance contracting, 25% of civil works, 10% of equipment, and 90% of the consulting packages are being readied for tendering.

B. Overall Project Implementation Plan

Table 3: Indicative Project Implementation Plan

CPD = continuing professional development, DMF = design and monitoring framework, EESDP = Education for Employment Sector Development Program, INSET = in-service teacher training, LSE = lower secondary education, M&E = monitoring and evaluation, NFE = nonformal education, PPE = post-primary education, TTI = teacher training institute, TVET = technical and vocational education and training, USE = upper secondary education. Source: Asian Development Bank.

Activities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Output 1: Alignment of Post Primary Education with Labour Market Demand Strengthened

1A. Strengthened MOES capacity to align skill supply from PPE subsectors

1A1. Strengthening MOES’ capacity and systems for monitoring skill supply from PPE

1A2. Strengthening capacity for collaboration and planning to improve skills supply

1A3. Partnering models linking secondary, TVET, and NFE schools/centers

1A4. Models for student guidance on academic and career options piloted

1B. EESDP effectively implemented and monitored

1B1. Program management support

1B2. EESDP-wide monitoring and evaluation (M&E)

Output 2: Secondary education quality and relevance to emerging skill demands improved

2A. Secondary education curriculum, pedagogy and student assessment improved

2A1. Improving subject-level curriculum and developing and distributing teaching and learning materials in priority subjects

2A2. In-service training (INSET) of secondary education teachers to deliver the improved curriculum

2A3. Continuing professional development (CPD) system to support secondary education teachers piloted

2A4. Strengthening the capacity of selected institutions offering teacher pre-service education of secondary teachers

2A5. Strengthening classroom-based student assessment and implementing national sample learning assessments

2B. Selected secondary schools equipped to effectively deliver improved curriculum

2B1. Provision of laboratory equipment for priority subjects

2B2. Provision of additional teaching and learning materials and library resources

2C. Management to promote enhanced seconadry education quality and relevance strengthened

2C1. Capacity development on planning, management, M&E of teaching and learning

2C2. Capacity development for secondary education principals (INSET)

Output 3: Equitable secondary education access and completion increased

3A. Supply-side constraints to secondary education access and completion reduced in targeted districts

3A1. Construction of secondary school facilities at 60 existing school to expand SE access and completion.

3B. Demand-side constraints to secondary education access and completion reduced

3B2. Needs-targeted stipends for LSE and USE students

3C. Analysis and planning to promote increased secondary education access and completion strengthened

3C1. Strengthening analytical and planning capacity to inform effective interventions to expand secondary education completion

Indicative ADB Mission Reviews

Advance action

Consultant selection procedures

Communication strategy key activities

Inception review

Annual review

Midterm review

Project completion report

20252019 2020 2021 2022 2023 2024

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations

Table 4: Roles and Responsibilities Project implementation organizations Management Roles and Responsibilities

Executing Agency • MOES will serve as executing agency for the Education for Employment SDP. It will ensure that staff of the Department of General Education (DGE; implementing agency) and other technical implementing units (see project organization structure under part C below) are fully aware of, and comply with, relevant Government and ADB procedures including, but not limited to, those for implementation, procurement, financial management, safeguards, use of consultants, disbursement, reporting, monitoring, and prevention of fraud and corruption.

Education for Employment SDP Steering Committee

• The Education for Employment SDP Steering Committee will provide overall guidance to relevant departments in terms of policy direction, project implementation, and cross-agency coordination. The MOES Vice-Minister will chair the Steering Committee, which will also liaise with other government agencies at a senior level, as needed on major policy or reform issues. Membership will include Director Generals of relevant departments.

Department of General Education • The Director General of DGE will serve as Program Director, and will facilitate policy dialogue across MOES units (i.e., departments, institutions, etc.) and with other agencies as appropriate; supervise project implementation at the central and sub-national levels; mobilize professional staff to support project implementation; review and endorse any requests and documents within his/her jurisdiction during project implementation (e.g., approval of bidding documents, bid evaluation results and contract awards for contracts procured by PMU; approval of overall and detailed implementation plans and cost estimates) in a timely manner; and submit periodic and ad hoc reports on project performance as required by ADB and concerned agencies.

PMU Head (MOES) Deputy Head (MOES) Procurement and contracts specialist Financial Management Specialist Construction supervision engineersa Gender and social development specialist Environment specialista

Indigenous peoples’ safeguards specialist International procurement specialistb

• The PMU will be established within DGE. It will report to the Program Director. The PMU will guide and manage all aspects of implementation of the Education for Employment SDP, ensuring compliance with loan and grant covenants, relevant ADB policies, activities and processes laid out in the PAM, and ensure alignment with the project design (excepting agreed modifications), the GAP, environmental and social safeguards, and other agreements. Specific areas of responsibility will include: (i) overall planning; (ii) monitoring and evaluation; (iii) social safeguards; (iv) administration, including procurement, disbursement, and financial management and reporting; and (v) ensuring independent auditing. The PMU will supervise and be

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Project implementation organizations Management Roles and Responsibilities

International financial management specialistb Financial Assistant Reporting and Monitoring Assistants (2) Administrative Assistants (2)

supported by project-financed consultants. It will coordinate the work of individual TIUs as noted below. The PMU will also serve as focal point for periodic reporting, submission of annual or periodic work plans and other proposals, and liquidation and provision of other documentation to ADB. Detailed TORs for the PMU will be defined in an MOES decree before effectiveness, and included in agreed revisions of the PAM.

TIUs • TIUs will be responsible for technical leadership and direct supervision of specific project-supported interventions that fall under their mandates. Each TIU will be headed by the Director General or head of the department/institution. The TIUs will propose work plans annually or as needed to the PMU. They will report quarterly or as needed to the PMU. They will also be responsible for submitting to the PMU materials to support liquidation of allowable expenditures and other required documentation.

Provincial TIUs • The Deputy Directors of PESS will oversee implementation of project interventions at the provincial and sub-provincial levels, with PESS staff and/or units taking responsibility for specific project activities: e.g., PUCDA for civil works, PESS focal point for environment and social safeguards issues, etc.

DESB

• Under PESS guidance, a Director or Deputy Director in DESB will oversee overall implementation of project-supported interventions at the district and school levels, with DESB staff and/or units taking responsibility for specific project activities.

ADB • ADB will approve procurement activities and withdrawal applications, disburse funds for allowable expenditures, supervise project implementation and compliance with the Loan Agreements and PAM, and conduct periodic reviews to assess progress towards Program outcome, outputs, and expected deliverables, as well as the GAP and EGDP.

• ADB’s Southeast Asia Human and Social Development Division will directly oversee Education for Employment SDP, in close coordination with the ADB Lao PDR Resident Mission, which will additionally provide front-line support to ongoing policy and donor dialogue, project-specific troubleshooting, etc.

ADB = Asian Development Bank, DESB = District Education and Sports Bureaus, DGE = Department of General Education, EGDP = ethnic group development plan, GAP = gender action plan, Lao PDR = Lao People’s Democratic Republic, MOES = Ministry of Education and Sports, PAM = project administration manual, PESS = Provincial Education and Sports Services , PMU = project management unit, PUCDA = provincial unit for construction and development assistance, SDP = sector development program, TIUs = Technical Implementing Units. a Required up through completion of construction of civil works under Output 3. b Required to support project start-up, the first two years of project implementation, and intermittently throughout project implementation duration. Source: Asian Development Bank.

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B. Key Persons Involved in Implementation

Executing Agency Ministry of Education and Sports Dr. Sisouk Vongvichith

Project Director/Director General Department of General Education Ministry of Education and Sports Telephone: +856-21 219-634 Fax: +856-21 223-262 Email address: [email protected] Vientiane, Lao PDR

Asian Development Bank

Human and Social Development Division Ayako Inagaki Director Human and Social Development Division Asian Development Bank Telephone: +63-2 632-6612 Email address: [email protected]

Mission Leader Shamit Chakravarti

Principal Social Sector Specialist Southeast Asia Department Asian Development Bank Telephone: +63-2 632-1632 Email address: [email protected]

mailto:[email protected]



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C. Project Organization Structure

Figure 1: Project Organization Structure

DGE = Department of General Education, DP = Department of Planning, DNFE = Department of Non-formal Education, DOF = Department of Finance, DOP = Department of Organization and Personnel, DTE = Department of Teacher Education, DTVET = Department of Technical and Vocational Education and Training, ECDM = Engineering and Construction Design Management, EESDP = Education for Employment Sector Development Program, ESSC = Education and Sports Statistics Center, ESQAC = Education and Sports Quality Assurance Centre, HRD = Human Resource Development, IFEAD = Institute for Education Administration, MOES = Ministry of Education and Sports, RIES = Research Institute for Education and Sciences. Note: Technical implementing units (TIUs) will provide technical leadership to specific initiatives based on mandates, while overall project management will be centralized in the PMU. Source: Asian Development Bank.

IV. COSTS AND FINANCING

9. Overall program financing. The overall program is estimated to cost $55 million (Table 5). ADB will provide a policy-based loan of $10 million and a project loan of $40 million. The government will provide counterpart funding of $5 million, principally for in-kind contributions.

Table 5: Summary Financing Plan

Source Amount ($ million)

Share of Total (%)

Asian Development Bank 50.0 90.9 Ordinary capital resources (concessional policy-based loan) 10.0 18.2 Ordinary capital resources (concessional project loan) 40.0 72.7

Government 5.0 9.1 Total 55.0 100.0

Source: Asian Development Bank estimates.

10. Policy-based loan. The government has requested a concessional PBL of $10 million from ADB’s ordinary capital resources to help finance national education reforms. The loan will have a 24-year term, including a grace period of 8 years; an interest rate of 1% per year during the grace period and 1.5% per year thereafter; and such other terms and conditions set forth in

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the draft loan agreement. The PBL will be released upon loan effectiveness. The size of the PBL is based on Lao PDR’s development financing needs, the strength of reforms, and net economic benefits of the government’s reform agenda. 11. Project investment plan. The government has requested a concessional loan of $40 million from ADB’s ordinary capital resources to help finance the project, including taxes and duties. The loan will have a 32-year term, including a grace period of 8 years; an interest rate of 1% per year during the grace period and 1.5% per year thereafter; and such other terms and conditions set forth in the draft loan agreement. ADB will finance expenditures for civil works, goods, consulting services, capacity development, selected recurrent costs, and taxes and duties estimated at $2.8 million. The government’s counterpart contribution is estimated at $5 million equivalent, principally in-kind contributions in the form of (i) provision and basic site preparation of land at civil works school sites; (ii) secondment of selected Program Management Unit (PMU) staff, and provision of services of other MOES staff at central and local levels (e.g., local engineers for site inspection); and (iii) office accommodation (including utilities) for the PMU and the project implementation consultants. Table 6 provides summary cost estimates.

Table 6: Project Investment Plan ($ million)

Item Amounta

A. Base Costb 1. Alignment of post-primary education with labor market strengthened 5.79 2. Quality and relevance of secondary education to emerging skills demands

strengthened 15.60

3. Equitable secondary education access and completion increased 17.27 Subtotal (A) 38.66

B. Contingenciesc Physical 1.68 Price 3.15 Subtotal (B) 4.84

C. Financial charges during implementationd 1.50 Subtotal (C) 38.66

Total (A+B+C) 45.00 a Includes taxes and duties of $2.57 million which will be financed by ADB. Such amount does not represent an

excessive share of the project cost. b In mid-2019 prices as of May 2019. c Physical contingencies computed at 5% of variable cost categories. Price contingencies computed at an average of

1.6% on foreign exchange costs and 3.4% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest charges during construction. Interest during construction for the concessional loan (ordinary capital resources) has been computed at 1%. There are no commitment charges on the undisbursed loan amount.

Source: Asian Development Bank estimates.

A. Cost Estimates Preparation and Revisions

12. The project team prepared the cost estimates based on unit cost information obtained from the project management unit of Grant 0257-Secondary Education Sector Development Program and local and international market costings. 13. The cost estimates will be reviewed, and if necessary, updated by ADB and the PMU during review missions based on unit cost information from local and international markets, and as approved by the project steering committee.

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B. Key Assumptions

14. The following key assumptions underpin the cost estimates and financing plan: (i) Exchange rate: KN8,546 = $1.00 (as of 30 May 2019); and (ii) Price contingencies based on expected cumulative inflation over the

implementation period are as follows:

Table 7: Escalation Rates for Price Contingency Calculation

Item 2019 2020 2021 2022 2023 2024 2025 Average

Foreign rate of price inflation 1.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% Domestic rate of price inflation 2.5% 3.0% 3.5% 3.5% 3.5% 3.5% 3.5% 3.4%

Source: Asian Development Bank.

C. Detailed Cost Estimates by Expenditure Category

Table 8: Detailed Cost Estimates by Expenditure Category ($ million)

Item Foreign Local Total Costs

($ million) % of Total Base Cost

A. Investment Costs

1. Civil worksa 0.00 13.81 13.81 35.7%

2. Furniture and equipment 0.30 1.58 1.88 4.9%

3. Teaching and learning materials 0.00 3.00 3.00 7.8%

4. Training and professional

development 0.00 8.33 8.33 21.5%

5. Consulting services

a. Project implementation 3.38 0.00 3.38 8.7%

b. Project management support 0.10 0.72 0.81 2.1%

c. Construction supervision 0.00 0.35 0.35 0.9%

6. Stipends 0.00 1.15 1.15 3.0%

7. Project management 0.00 0.96 0.96 2.5%

Subtotal (A) 3.77 29.89 33.66 87.1%

B. Recurrent Costs

1. Operational costs (land, office space and staff)

0.00 5.00 5.00 12.9%

Subtotal (B) 0.00 5.00 5.00 12.9%

Total Base Cost 3.77 34.89 38.66 100.0%

C Contingencies

Physical 0.19 1.49 1.68 4.4%

Price 0.13 3.02 3.15 8.2%

Subtotal (C) 0.32 4.51 4.84 12.5%

D. Financial Charges During Implementation

1.50

0.00 1.50 3.9%

Total Project Cost (A+B+C+D) 5.60 39.40 45.00 116.4% a Estimated cost of climate proofing measures is around 5% of the total cost for civil works. Notes: 1. Numbers may not sum precisely because of rounding. 2. Includes project-financed taxes estimated at $2.57 million. 3. Among the National Adaptation Programmes of Action (NAPA) priority action items supported or aligned with in

this program are as follows: Improve systems for the sustainable use of drinking water and sanitation with community participation in flood and drought prone areas; improve knowledge and skills of engineers who design and build water and sanitation systems; raise public awareness on sanitation in flood prone areas.

4. The climate proofing measures integrated in this program are also aligned with the Intended Nationally Determined Contributions (INDC). Enhancing the resilience of public buildings (in this case classrooms) versus flood via the integration of appropriate drainage design for flood protection is one of the major activities supporting the objective.


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D. Allocation and Withdrawal of Loan Proceeds

Table 9: Allocation and Withdrawal of Loan Proceeds

Number Item

Total Amount Allocated for ADB Financing

($)

Basis for Withdrawal from

Loan Account

1 Project Costs 38,500,000 100% of total expenditure claimed

2 Interest charge 1,500,000 100% of amount due

Total 40,000,000


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E. Detailed Cost Estimates by Financier

Table 10: Detailed Cost Estimates by Financier ($ million)

Expenditure Category

ADB Project Loan Government of

Lao PDR Total

Amount % of Cost category


Amount % of Total

cost

A. Investment Costs

Civil works 13.81 100.0% 0.00 0.0% 13.81 30.68

Furniture and equipment 1.88 100.0% 0.00 0.0% 1.88 4.19

Teaching and learning materials 3.00 100.0% 0.00 0.0% 3.00 6.67

Training and professional development 8.33 100.0% 0.00 0.0% 8.33 18.51

Consultant services

Project implementation consultants 3.38 100.0% 0.00 0.0% 3.38 7.50

Project management unit support 0.81 100.0% 0.00 0.0% 0.81 1.80

Construction supervision 0.35 100.0% 0.00 0.0% 0.35 0.78

Stipends 1.15 100.0% 0.00 0.0% 1.15 2.56

Project management 0.96 100.0% 0.00 0.0% 0.96 2.12

Subtotal (A) 33.66 100.0% 0.00 0.0% 33.66 74.81

B. Recurrent costs

Operational costs (land, office space and staff) 0.00 0.0% 5.00 100.0% 5.00 11.11

Subtotal (B) 0.00 0.0% 5.00 100.0% 5.00 11.11

C. Contingencies

Physical 1.68 100.0% 0.00 0.0% 1.68 3.74

Price 3.15 100.0% 0.00 0.0% 3.15 7.01

Subtotal (C) 4.84 100.0% 0.00 0.0% 4.84 10.75


Interest during construction 1.50 100.0% 0.00 0.0% 1.50 3.33

Subtotal (D) 1.50 100.0% 0.00 0.0% 1.50 3.33

Total Project Costs (A+B+C+D) 40.00 88.9% 5.00 11.1% 45.00 100.00

ADB = Asian Development Bank, Lao PDR = Lao People’s Democratic Republic. Source: Asian Development Bank.

15

F. Detailed Cost Estimates by Outputs

Table 11: Detailed Cost Estimates by Outputs ($ million)

Total Output 1 Output 2 Output 3

Amount Amount % of Cost category



A. Investment Costs Civil works 13.81 0.00 0.0% 0.00 0.0% 13.81 100.0% Furniture and equipment 1.88 0.33 17.5% 0.62 33.1% 0.93 49.4% Teaching and learning materials 3.00 0.01 0.2% 2.99 99.8% 0.00 0.0% Training and professional development 8.33 0.57 6.8% 7.73 92.9% 0.03 0.3% Consultant services Project implementation consultants 3.38 1.38 41.0% 1.99 59.0% 0.00 0.0% Project management unit support 0.81 0.81 100.0% 0.00 0.0% 0.00 0.0% Construction supervision 0.35 0.00 0.0% 0.00 0.0% 0.35 100.0% Stipends 1.15 0.00 0.0% 0.00 0.0% 1.15 100.0% Project management 0.96 0.69 72.3% 0.26 27.0% 0.01 0.7%

Subtotal (A) 33.66 3.79 11.3% 13.60 40.4% 16.27 48.3%

B. Recurrent Costs Operational costs (land, office space and staff) 5.00 2.00 40.0% 2.00 40.0% 1.00 20.0%

Subtotal (B) 5.00 2.00 40.0% 2.00 40.0% 1.00 20.0% Total Base Cost 38.66 5.79 15.0% 15.60 40.4% 17.27 44.7%

C. Contingencies Physical 1.68 0.19 11.3% 0.68 40.4% 0.81 48.3% Price 3.15 0.27 8.5% 1.20 38.1% 1.68 53.4% Subtotal (C) 4.84 0.46 9.4% 1.88 38.9% 2.50 51.6%


Interest during construction 1.50 0.15 10.0% 0.38 25.3% 0.97 64.7%

Subtotal (D) 1.50 0.15 10.0% 0.38 25.3% 0.97 64.7%

Total Project Costs (A+B+C+D) 45.00 6.40 14.2% 17.87 39.7% 20.74 46.1%


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G. Detailed Cost Estimates by Year

Table 12: Detailed Cost Estimates by Year ($ million)

Expenditure Category

2020 2021 2022 2023 2024 Total

Amount Amount Amount Amount Amount Amount

A. Investment Costs

Civil works 0.86 2.92 4.07 5.95 0.00 13.81

Furniture and equipment 0.33 0.30 1.25 0.00 0.00 1.88

Teaching and learning materials 0.38 0.89 0.86 0.45 0.41 3.00

Training and professional development 1.70 1.68 1.69 1.67 1.59 8.33

Consultant services

Project implementation consultants 1.37 0.91 0.50 0.36 0.24 3.38

Project management unit support 0.23 0.19 0.16 0.12 0.11 0.81

Construction supervision 0.04 0.16 0.15 0.00 0.00 0.35

Stipends 0.24 0.24 0.23 0.23 0.22 1.15

Project management 0.19 0.20 0.18 0.19 0.19 0.96

Subtotal (A) 5.35 7.48 9.11 8.97 2.75 33.66

B. Recurrent costs

Operational costs (land, office space, and staff) 1.00 1.00 1.00 1.00 1.00 5.00

Subtotal (B) 1.00 1.00 1.00 1.00 1.00 5.00

C. Contingencies

Physical 0.27 0.37 0.46 0.45 0.14 1.68

Price 0.13 0.42 0.89 1.23 0.48 3.15

Subtotal (C) 0.40 0.80 1.34 1.68 0.62 4.84


Interest during construction 0.03 0.10 0.19 0.30 0.88 1.50

Subtotal (D) 0.03 0.10 0.19 0.30 0.88 1.50

Total Project Costs (A+B+C+D) 6.78 9.38 11.64 11.96 5.25 45.00


.

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H. Contract and Disbursement S-Curve

15. Table 13 shows the indicative contract awards and disbursements projections, which will be recorded and reported in the eOperations. Service charges (interest during construction/finance charges) are excluded.

Table 13: Indicative Contract Awards and Disbursements Projections Contract Awards (in USD million) Disbursements (in USD million)

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2020 - 0.5 1.0 2.0 3.5 - 2.0 0.5 1.0 3.5

2021 1.0 3.0 1.2 2.0 7.2 1.0 1.0 1.5 2.0 5.5

2022 1.0 2.0 2.5 2.5 8.0 1.0 2.0 3.2 4.0 10.2

2023 1.3 2.0 3.0 3.0 9.3 1.3 2.5 3.0 4.0 10.8

2024 1.0 1.2 2.5 3.8 8.5 1.0 1.5 2.0 3.0 7.5

2025 1.5 0.5 - - 2.0 1.5 0.5 0.5 2.5

Total Contract Awards 38.5 Total Disbursements 40

Q = quarter, USD = United States dollar.

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I. Fund Flow Diagram

Figure 1: Fund Flow Arrangement for Direct Payments

19

Figure 2: Fund Flow Arrangement for Advance Account/Replenishment (for project management, workshops, payments for stipends, small contracts, etc.)

20

Note 1: Ministry of Finance (MOF) will open an advance account at the Bank of Lao PDR (BOL) in the name of the project. The advance account is to be used exclusively for ADB’s share of eligible expenditures. MOES, through the Department of Finance (under MOES), will administer the advance account, and is accountable and responsible for proper use of advances to the advance account. MOF issues payment instruction to MOES-DOF, MOES-DOF will then transfer fund to PMU and PESS. ADB = Asian Development Bank; BOL = Bank of Lao PDR; DESB = District Education and Sports Bureau; DOF = Department of Finance; IEC - Inclusive Education Center, MOES; MOES = Ministry of Education and Sports; MOF = Ministry of Finance; PESS = Provincial Education and Sports Services; PMU = project management unit.

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

16. The financial management assessment (FMA) was conducted in November 2018 (updated subsequently in April and May 2019) in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA reviewed the capacity of the MOES and DGE, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. Based on the assessment, the key financial management risks identified are long approval processes for key activities; no internal audits of suppliers and workshop expenditures; no computerized accounting software; no timely reconciliation of subsidiary registers; parallel excel based-system for financial reporting; and no comprehensive financial reporting. It is concluded that the overall pre-mitigation financial management risk of

NOTE: Fund flow Document flow

A. Initial advance: 1. PMU drafts withdrawal application for advance covering estimated expenditures for the first 6 months of implementation. 2. MOES-DOF receives from PMU the draft WA and endorses to MOF after checking. 3. Draft WA is submitted to MOF and forwarded to ADB. 4. ADB processes the first WA, approves deposit of initial advance after checking estimated expenditures and authorized signatories. 5. BOL notifies PMU and MOF of the deposit. B. Replenishment/Liquidation Contractor/supplier/consultant submits a request for payment or invoice to PMU, which reviews and if in order, pays through its advance account. 1. Together with other various small expenditures, PMU prepares draft WA and submits to MOES DOF upon endorsement of the project director. 2. MOES DOF reviews and if cleared, endorses the WA to MOF. 3. MOF reviews, clears if submission is complete and satisfactory, signs the WA and submits to ADB. 4. ADB receives and approves payment to the advance account deposited at BOL. 5. BOL advises MOF and PMU of the replenishment transaction and updates statement of account or accounting records. 6. MOF provides LAK8 million for PMU petty cash monthly. C. Fund flow to PESS and Schools 1. Schools submit to DESB receipts and other required supporting documents under the stipend program. DESB checks and sends to PESS, if in order. 2. PESS sends the documents to IEC which collects and verifies the submission and submits to PMU. 3. PMU, upon endorsement of the project director, submits the draft WA to MOES DOF, which reviews and if cleared, endorses the WA to MOF. 4. MOES-DOF, transfer the money to PESS. IEC will notify PESS immediately about the fund release. 5. PESS, which transfers payment directly to the schools’ account.

21

MOES and DGE is substantial. Mitigation measures will work seamlessly together with (i) the experience of DGE, which is the same PIU which oversaw financial management for the Secondary Education Sector Development Program (SDP) without encountering financial issues (other than delays); and (ii) the staff’s overall familiarity with ADB requirements and procedures. MOES and DGE have the capacity to administer the advance account and implement SOE procedures. They have agreed to implement an action plan as key measures to address the deficiencies. The financial management action plan is provided in Table 14 and the financial management assessment is in Appendix 1.

Table 14: Financial Management Time-bound Action Plan

Weakness Mitigation actions Responsibility Timeframe

Lengthy approval processes for activities and process payments.

Submit an annual workplan to ADB to request NOL, replacing the system of NOL requests for individual activities.

PMU 1 December each year

Internal audits of the project are not conducted

The Internal Audit Unit, under the Department of Inspection, will conduct internal audits of Education for Employment SDP, including spot-checks of supplier invoices and workshops.

MOES Department of Inspection, Internal Audit unit

Annually

An excel-based accounting system is used.

Implement a computerized accounting software and make regular back-ups of financial data.

DOF Accounting Division

Within 24 months of effectiveness

Subsidiary registers are not reconciled to the accounting system to validate information.

Reconcile subsidiary registers (including asset register, contracts register, selected school-level activities register) to the accounting system each quarter.

PMU Every quarter

Parallel excel based accounting systems are maintained at the DOF and PMU. Finance reports being produced from parallel systems maintained at the DOF and PMU.

Provide view-only access to the PMU financial management specialist to the accounting system. Produce all finance reports using expenditure information from the accounting system.

PMU and DOF Within 12 months of effectiveness

Lack of capacity to fully implement Ministerial Order No. 529 of 2016 for implementation of IPSAS Cash.

The Ministerial Order requires the adoption of IPSAS for budget entities, administrative entities and government funds effectively as of 2017. It is recommended that project to provide training support to relevant staffs in DOF and PMU for IPSAS cash implementation. Relevant staffs will be required to complete e-learning module on Cash Basis IPSAS.

MOES Within 6 months of effectiveness

ADB = Asian Development Bank, DOF = Department of Finance, IPSAS = International Public Sector Accounting Standards, MOES = Ministry of Education and Sports, NOL = no objection Letter, PMU = Project Management Unit, SDP = sector development program.

B. Disbursement

Disbursement Arrangements for ADB Funds

17. The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement

22

Handbook (2017, as amended from time to time),7 and detailed arrangements agreed upon between the government and ADB. Online training for project staff on disbursement policies and procedures is available.8 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control.

18. The PMU will be responsible for (i) preparing contract awards and disbursement projections; (ii) requesting budgetary allocations for counterpart funds; (iii) collecting and retaining supporting documents; and (iv) preparing and sending withdrawal applications to ADB.

19. Advance fund procedure. After ADB’s declaration of loan effectiveness, the Ministry of Finance (MOF) will open an advance account at the Bank of Lao PDR (BOL) in the name of the project. The advance account will be in US dollar. The advance account is to be used exclusively for ADB’s share of eligible expenditures. MOES, through the Department of Finance (under MOES), will administer the advance account, and is accountable and responsible for proper use of advances to the advance account. 20. The total outstanding advance to the advance account should not exceed the estimate of ADB’s share of expenditures to be paid through the advance account for the forthcoming 6 months. MOES may request for initial and additional advances to the advance account based on an Estimate of Expenditure Sheet9 setting out the estimated expenditures to be financed through the account for the forthcoming 6 months. Supporting documents should be submitted to ADB or retained by MOES in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account. 21. Statement of expenditure (SOE) procedure.10 The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account. Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. The ceiling for SOE procedure is the equivalent of $100,000 per individual payment. Reimbursement and liquidation of individual payments in excess of the SOE ceiling should be supported by full documentation when submitting withdrawal applications to ADB. 22. Before the submission of the first withdrawal application (WA), the borrower should submit to ADB sufficient evidence of the authority of the persons who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per WA will be $200,000 equivalent or 1% of the ADB loan amount whichever is lower, as stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid (i) by the MOES and subsequently claimed to ADB through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for

7 The handbook is available electronically from the ADB website. ADB. Loan Disbursement Handbook. 8 ADB. Disbursement eLearning. 9 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time), 10 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from

time to time).

https://www.adb.org/documents/loan-disbursement-handbook

http://wpqr4.adb.org/disbursement_elearning

23

Disbursements11 system is encouraged for submission of withdrawal applications to ADB. 2. Disbursement Arrangements for Counterpart Fund 23. The Government will provide counterpart funds of $5.0 million equivalent in the form of in-kind contributions to finance land, office space, and counterpart staff. No cashflow is involved. C. Accounting

24. The MOES will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following International Public Sector Accounting Standard for cash-based accounting. The MOES will prepare project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. D. Auditing and Public Disclosure

25. The MOES will cause the detailed project financial statements to be audited in accordance with International Standards on Auditing, by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the MOES. 26. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements give a fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the loan were used only for the purposes of the project; and (iii) whether the borrower or executing agency was in compliance with the financial covenants contained in the legal agreements (where applicable). 27. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 28. The government, MOES, and DGE have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.12 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits 11 The Client Portal for Disbursements system facilitates online submission of withdrawal application to ADB, resulting

in faster disbursement. The forms to be completed by the Borrower are available in the online guide. ADB. Guide to the Portal for Disbursements.

12 ADB’s approach and procedures regarding delayed submission of audited project financial statements: (i) When audited project financial statements are not received by the due date, ADB will write to the executing

agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

https://www.adb.org/documents/client-portal-disbursements-guide

https://www.adb.org/documents/client-portal-disbursements-guide

24

are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 29. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Access to Information Policy.13 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

30. All advance contracting will be undertaken in conformity with ADB’s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017). The issuance of invitations to bid under advance contracting will be subject to ADB approval. The borrower, MOES, and DGE have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project.

31. Advance action and retroactive financing. There will be no retroactive financing for the project. Advance action will be undertaken by the consultants under TRTA 9397: Employment for Education Sector Development for the (i) recruitment of project implementation consultants using quality- and cost-based selection (QCBS); (ii) recruitment of project management unit staff and consultants using individual consultant selection (ICS); (ii) procurement of office equipment and vehicles through request for quotations and OCB for national advertisement, respectively; and (iv) first three civil works packages through OCB for national advertisement. These contracts will not be signed until the financing agreement becomes effective. B. Procurement of Goods, Works, and Consulting Services

32. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017). 33. OCB procedures will be used for the procurement of goods and works valued at $100,000 or higher. Request for quotations (RFQ) will be used for procurement of goods and works for contracts less than $100,000. OCB for national advertisement will be applied to all procurement of goods valued up to $999,999; while OCB for international advertisement will be applied to goods valued more than $1 million. Civil works procurement will use OCB national advertisement for packages valued up to $2.99 million; while international advertisement will be used for those valued more than $3 million. 34. The contract packages of all goods and works procured through OCB procedures will be under prior review by ADB. Recruitment of consulting firms will be using QCBS and least cost selection (LCS) and will be under ADB’s prior review. ICS recruitment will be under prior review. 35. Contracts, if under post review, will be submitted to ADB upon award of the contract or as soon as available. ADB will review and respond not later than 6 months after the receipt of the following documents: (i) bidding documents as issued; (ii) IFB as advertised; (iii) bid evaluation

13 ADB. 2018 Access to Information Policy.

https://www.adb.org/sites/default/files/institutional-document/450636/access-information-policy.pdf

25

reports; (iv) original signed contracts; and (v) recommendation for award. If ADB determines that the goods or works were not procured in accordance with the agreed procedures in the procurement plan, it may declare misprocurement. The PMU will retain all documentation of contracts under post review for the duration of the project, up to at least 1 year from project closing. These documents should be available for ADB or its consultant’s random examination. 36. Before the start of any procurement, ADB and the government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017). A strategic procurement planning process and risk assessment have also been undertaken, and are attached as Appendix 5. 37. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages is in Section C. 38. All consultants will be recruited according to ADB’s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017).14 The terms of reference for all consulting services are detailed in Section D.

39. An estimated 530 person-months (130 international, 400 national) of consulting services through a firm are required to (i) facilitate project management and implementation, and (ii) strengthen the institutional and operational capacity of the executing agency. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality–cost ratio of 80:20.

C. Procurement Plan

Basic Data

Project Name: Employment Sector Development Program

Project Number: 50399-003 Approval Number:

Country: Lao PDR Executing Agency: Ministry of Education and Sports

Project Procurement Classification: B Implementing Agency:

Project management unit/Department of General Education Procurement Risk: Medium

Project Financing Amount: $40 million

ADB Financing: $40 million

Cofinancing (ADB Administered): $0

Non-ADB Financing: $5 million

Project Closing Date: 30 June 2025

Date of First Procurement Plan {loan/grant approval date}:

Date of this Procurement Plan: 16 Aug 2019

Procurement Plan Duration: 18 months Advance contracting: Yes eGP: No

14 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation.

ADB. Handbook on Project Implementation. https://bit.ly/2Wf6zQy.

https://bit.ly/2Wf6zQy

26

1. Methods, Review and Procurement Plan

40. Except as ADB may otherwise agree, the following process thresholds shall apply to procurement of goods, works, nonconsulting services, and consulting services.

Methods, Review and Procurement Plan Procurement of Goods, Works, and Nonconsulting Services

Method Applicability Comments

Request for quotations (RFQ) Goods, works, and non-consulting services with estimated package value of up to $99,999

Prior review.

Open competitive bidding (OCB) with national advertising

Goods with estimated package value between $100,000 to $999,999

Local suppliers are available; Prior review.

OCB with international advertising Goods with estimated package value of more than $1,000,000

Limited number of local suppliers; prior review

OCB with national advertising Works contracts with estimated cost up to $2,999,999

Local contractors available; Prior review

OCB with international advertising Works contracts with estimated cost of more than $3,000,000

Limited number of local contractors; prior review

Consulting Services

Method Comments

Resource Persons/direct selection As identified by the PMU (project management unit)

Quality- and cost-based selection (QBCS) For project implementation consulting firm

Individual consultant selection For all individual consultants

Least Cost Selection (LCS) For audit firm

27

Lists of Active Procurement Packages (Contracts)

41. The following table lists goods, works, nonconsulting, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan’s duration.

Active Procurement Packages—Goods, Works and Non-consulting Services GOODS, WORKS, AND NON-CONSULTING SERVICES

WORKS

Package Number

General Description

Estimated Value ($)

Procurement Method Review

Bidding Procedure

Advertisement Date

(quarter, year) Comments

CW-01 Construction of new schools and associated civil works and furniture – Hoon District

1,030,481 OCB Prior 1S1E Q4 2019

with national advertising, advance action

CW-02 Construction of new schools and associated civil works and furniture – Ta Oi District

881,061 OCB Prior 1S1E Q4 2019 with national advertising, advance action

CW-03 Construction of new schools and associated civil works and furniture - Khamkeuth District

704,849 OCB Prior 1S1E Q1 2020 with national advertising

CW-04 Construction of new schools and associated civil works and furniture – Dakcheung District


CW-05 Construction of new schools and associated civil works and furniture – Pakkading District


GOODS

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


GD-01 Project vehicles 250,000 OCB

Prior 1S1E Q4 2019 National advertising; advance action; 2 Pick-ups and 2 minivans for

28

GOODS

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


MOES; 1 pick-up for MPI; Lot 1 – 3 double cab pickup trucks - $150,000; Lot 2 – 2 mini vans - $150,000

GD-02 Office equipment for PMU and TIUs

80,000 RFQ Prior 1S1E Q4 2019 Advance action; 2 lots: $50,000 for PMU; $30,000 for TIUs

GD-05 Motorbikes

300,000 OCB

Prior 1S1E Q3 2020 National advertising; Procurement in one lot; 120 units

NONCONSULTING SERVICES

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


None

1S1E = single-stage–one-envelope, OCB = open competitive bidding, Q = quarter, RFQ = request for quotation.

Active Procurement Packages—Consulting Services

CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)

Selection Method Review Type of Proposal

Advertisement Date (quarter, year) Comments

CS-01 Project Implementation Consultants

3,377,000 QCBS Prior FTP Q4 2019

Type: Firm Assignment: International 530 person-months (130 international/400 national) Quality-Cost Ratio (if applicable): 80:20 Prequalification of bidders: Yes Domestic preference applicable: No Advance contracting: Yes E-procurement: No

29

CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)



CS-02 (A-F)

Construction Supervision Engineer (7 persons, each 18 pm)

350,000 ICS Prior not applicable Q4 2019

126 person-months (18 months per person) Timing of recruitment to be aligned with construction start. 6 engineers in field, each responsible for 2 districts (10 schools).

CS-03 Environment Specialist

20,000 ICS Prior not applicable Q1 2020 8 person-months intermittent

CS-04 Gender and Social Development Specialist

50,000 ICS Prior not applicable Q1 2020 20 person-months intermittent over 5 years

CS-05 Indigenous Peoples’ Safeguards Specialist

25,000 ICS Prior not applicable Q2 2020 10 person-months intermittent

CS-06 Audit firm 20,000 LCS Prior BTP Q3 2020 Type: Firm Assignment: National Prequalification of bidders: Yes Domestic preference applicable: No Advance contracting: No E-procurement: No - Back up recruitment in case SAO will not be auditing the project

CS-07 International Procurement Specialist

36,000 ICS Prior not applicable Q4 2019

Advance action; 2 person-months intermittent

CS-08 International Financial

60,000 ICS Prior not applicable Q4 2019 Advance action; 3 person-months

30

CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)



Management Specialist

CS-09 to CS-15

Individual staff to be based at PMU: Administrative Assistant Events Coordinator Financial Management Specialist

600,000

ICS

ICS

ICS

Prior

Prior

Prior

not applicable

not applicable

not applicable

Q4 2019

Q4 2019

Q4 2019

For advance action. 60 person-months 60 person-months 60 person-months

Financial Assistant Procurement and Contracts Specialist Reporting and Monitoring Assistants (2 positions)

ICS

ICS

ICS

Prior

Prior

Prior

not applicable

not applicable

not applicable

Q1 2020

Q4 2019

Q1 2020

60 person-months 36 person-months 30 person-months each

FTP = full technical proposal, ICS = individual consultant selection, LCS = least cost selection, PMU = project management unit, Q = quarter, QCBS = quality- and cost-based selection, SAO = State Audit Organization, STP = simplified technical proposal.

List of Indicative Packages (Contracts) Required Under the Project

42. The following table lists goods, works, non-consulting, and consulting services contracts for which procurement activity is expected to commence beyond the procurement plan duration and over the life of the project (i.e., those expected beyond the current procurement plan’s duration).

31

Table 19: Indicative Packages—Goods, Works and Non-consulting Services

GOODS, WORKS AND NON-CONSULTING SERVICES

Works

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


CW-06 to CW-12

Construction of new schools and associated civil works and furniture in 7 districts

9,960,124 OCB Prior 1S1E Q4 2020 onwards

for national advertising; number of contracts to be determined after confirmation of school selection and detailed design; Expected to be one contract per district.

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


GD-03 Teaching and learning materials

3,000,000 OCB Prior 1S1E Q2 2021 For international advertising; number of contracts to be determined once project consultants and PMU finalize scope of teaching and learning materials

GD-04 School laboratory equipment

1,254,000 OCB Prior 1S1E Q2 2021 2 contracts

Nonconsulting Services

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


To be determined

1S1E = single-stage–one-envelope, OCB = open competitive bidding, Q = quarter.

Indicative Packages—Consulting Services CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)

Selection Method Review

Type of Proposal

Advertisement Date (quarter,

year) Comments

None

32

List of Awarded and Completed Contracts

43. The following table lists the awarded and completed contracts for goods, works, non-consulting, and consulting services.

Awarded and Completed Contracts—Goods, Works and Non-consulting Services GOODS, WORKS AND NON-CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)


Bidding Procedure

Advertisement Date


None

Awarded and Completed Contracts—Consulting Services CONSULTING SERVICES

Package Number

General Description

Estimated Value ($)

Selection Method Review

Type of Proposal

Advertisement Date (quarter,

year) Comments

None

35

D. Consultant's Terms of Reference

44. This SDP will finance project implementation consultant services outlined below. The project implementation consulting (PIC) firm will assist the SDP PMU in executing the project in an effective and timely manner. The PIC will report to the PMU established within the MOES of the Lao PDR —the executing agency for the SDP—and in close coordination with ADB. The PMU will comprise officers from the executing agency and professional and administrative level contractual staff supported by the SDP. 45. A PIC firm will be recruited and will mobilize a team of 14 international consultants (totaling 130 person-months) and 21 national consultants (totaling 400 person-months) to perform the tasks outlined below and any others as may be reasonably requested in support of the SDP implementation.

Table 15: Consultants’ Terms of Reference

Position(s) Key Tasks Person-months

OVERALL PROJECT IMPLEMENTATION

Team Leader/ Post-Primary Education Policy and Planning Specialist International

The team leader’s work will span all outputs. Core tasks will include (but not be limited to):

• Focal point for MOES and ADB on project management;

• Support PMU in Education for Employment SDP management, reporting to MOES and ADB;

• Develop detailed work plans for the consultant team and supervise and coordinate inputs to ensure tasks are undertaken effectively within 1 month of mobilization;

• Coordination and advice to MOES and government on PPE reforms;

• Dialogue/coordination with development partners;

• Coordinate across all the technical implementing units to ensure that all project activities are undertaken as planned;

• Prepare and update projections for the contract awards and disbursements;

• Guide and advise the executing agency and implementing units about the progress of the project, potential bottlenecks, and of actions to address them;

• Assist the PMU in preparing quarterly and annual briefings for the PSC;

• Assist the PMU in preparing project progress and project completion reports in accordance with ADB and government requirements;

• Provide technical advice, including written technical inputs, to support implementation of specific technical activities across outputs as required;

• Identify potential synergies with ADB’s ongoing loans—Second Strengthening TVET Project and Second Strengthening Higher Education Support, and guide the PSC and PMU on how these can be tapped (without duplicating similar activities within the Education for Employment SDP);

• During start-up, in close dialogue with DGE and ADB, develop the overall M&E strategy and workplan spanning the Education for Employment SDP’s project component, including quantitative and qualitative aspects; coordinate closely with other experts to ensure M&E systematically captures data to report against the DMF, GAP, EGDP, etc.;

• Collect information on the teachers trained and other capacity building workshops supported under the Secondary Education SDP from the PMU. Based on interviews with a representative sample of the participants, make an assessment of the effectiveness of these training programs - what were they taught, are they using their skills in their

36

36


work, what additional training do they require (and why?), and how can this be delivered more effectively.;

• Based on the above, design a system for collecting information and data on all capacity building workshops and training programs to be funded under the Education for Employment SDP—the purpose of the workshop or training, who is attending (with all background details) and why, how will it be ensured that the participants will use what they learn in improving the quality and effectiveness of their own work, and if someone is attending repeat workshops, then why?;

• Define results indicators (quantitative or qualitative) for every project component as relevant (in addition to the DMF, GAP, and EGDP), and reach an agreement with the PMU. Ensure that MOES and ADB keep track of these during implementation;

• Prepare M&E reports on the various components, summarizing what worked and what did not, and how future implementation can be improved;

• Establish clear responsibilities, with written guidelines, across different TIUs in terms of M&E including data collection, management and reporting requirements; and

• In the final year of implementation, collate M&E results and assist with drafting end of project M&E reports in accordance with ADB and government requirements.

The team leader will preferably have at least a masters’ degree in education or other relevant discipline from a reputed University or Institute, with more than 12 years’ consultancy experience in education sector development, including at least 5 years’ experience of managing and coordinating large development projects. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

Deputy Team Leader/ Secondary Education Quality Improvement Specialist National

The DTL’s work will span all outputs. Core tasks will include (but not be limited to):

• Support the TL in the tasks above;

• Provide overall oversight, guidance, and coordination for national consultant team members;

• Take the lead in dialogue and coordination at the sub-national level;

• Provide specialist technical advice, including written technical inputs, to support implementation of activities under Output 2—quality and relevance of secondary education strengthened;

• Take the lead in planning and coordinating M&E inputs and data collection from the sub-national level (PESS, DESB’s, school clusters); and

• Assist DGE in implementing M&E including preparation of reports in accordance with ADB and government requirements.

The DTL will preferably have at least a masters’ degree in education or other relevant discipline from a reputed University or Institute, with more than 10 years’ experience in the education sector in Lao PDR, including specific experience in education quality improvement. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

50

Monitoring & Evaluation Specialist National

The M&E specialists work will span all outputs. Core tasks will include (but not be limited to):

• Support the international specialists in the M&E related tasks above;

• Take the lead in planning and coordinating M&E inputs and data collection from the sub-national level (PESS, DESB’s, school clusters); and

10

37


• Assist DGE in implementing M&E including preparation of reports in accordance with ADB and government requirements (as indicated in the TORs of the team leader).

The M&E Specialist will preferably have a Masters’ degree in Economics, Business Administration, or a relevant discipline from a reputed university or Institute, with more than 8 years’ experience in the education sector in Lao PDR, preferably including M&E experience. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

ACROSS OUPUTS 1 AND 3

Education Management Information Systems Specialist (EMIS) International

The EMIS specialists work will include activities in outputs 1 and 3. Core tasks will include (but not be limited to):

• Undertake capacity needs assessment of ESSC, and produce capacity development plan;

• Assist ESSC to integrate TVET, higher education and non-formal education data into LESMIS and school network mapping, including development of specific systems/ tools for data collection, data management, integration, dissemination and reporting as required, providing capacity building support;

• Assist ESSC to produce data analysis related to post-primary education and skills supply for decision-makers, providing necessary technical and capacity building support;

• Assist ESSC to gather and analyze external data (e.g. census) to complement analysis of skills supply;

• Assist ESSC to strengthen data analysis related to equitable access and completion to inform strategies for prioritizing investments in secondary education;

• In the context of the above, provide advice to ESSC as required to strengthen EMIS; and

• Tap synergies with ADB’s ongoing loans—Second Strengthening TVET Project and Second Strengthening Higher Education Support.

The EMIS Specialist will preferably have at least a masters’ degree in Economics, Statistics, Education, or a relevant discipline from a reputed University or Institute, with more than 8 years’ experience of working on EMIS or similar MIS for development projects in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

8

Education Management Information Systems Specialist National

The EMIS specialists work will include activities in outputs 1 and 3. Core tasks will include (but not be limited to):

• Support the international specialist in the tasks above, fully taking over tasks as the international specialist completes inputs during year 2;

• Take the lead in coordinating EMIS related work with sub-national levels (PESS, DESB’s);

• Assist ESSC with development/ refinement of specific data collection tools as required; and


The EMIS Specialist will preferably have a masters’ degree in Economics or a relevant discipline from a reputed University or Institute, with more than 8 years’ experience of MIS (preferably EMIS) in Lao PDR. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

26

38


OUTPUT 1: ALIGNMENT OF POST-PRIMARY EDUCATION WITH LABOUR MARKET DEMAND STRENGTHENED

Skills Development Analysis and Planning Specialist International

The Skills Development Analysis and Planning Specialist will build the capacity of HRD Office, Department of Planning, for analyzing skills supply and demand, and strengthening cross-ministerial and government-industry collaboration. Core tasks will include (but not be limited to):

• Design specific analytical, assessment and reporting systems for the HRD Office to better align skills supply and demand;

• Assist the HRD Office to analyze, assess and report on education– employment linkages, and to work with relevant MOES departments for the purpose of developing strategies across secondary, TVET and higher education to better provide relevant skills for the labor market;

• Assist the HRD Office to design and establish mechanisms for multi-stakeholder dialogue between government and the private sector on education – employment and decent job creation;

• Draw on lessons from similar initiatives tried out in other countries, and adapt to the context of Lao PDR; and


The Skills Development Analysis and Planning Specialist will have at least a masters’ degree in Economics, Education, TVET, Business Administration, or a relevant discipline from a reputed University or Institute, with more than 10 years’ experience in skills supply and/or labor market demand analysis, including experience in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

5

Skills Development Analysis and Planning Specialist National

Core tasks will include (but not be limited to):


• Support the HRD Office with on-the-job training and mentoring in the use of analytical, assessment and reporting systems; and

• Assist the HRD Office with planning, organizing, analyzing and reporting on cross-ministerial and government–industry consultations.

The Skills Development Analysis and Planning Specialist will preferably have at least a masters’ degree in Economics, Education, TVET, Business Administration, or a relevant discipline from a reputed University or Institute, with more than 8 years’ experience in education and training, and/or labor market analysis in Lao PDR. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

22

Vocational and Non-Formal Education Specialist International

The Vocational and Non-Formal Education Specialist will assist DGE, DTVET and DNFE to design a program to pilot partnering models linking secondary schools with TVET and NFE schools in targeted provinces/districts. Core tasks will include (but not be limited to):

• Review programs and curricula in the secondary, TVET and NFE school systems to assess potential design of partnering models;

• Undertake assessments at sample locations (in target districts) of key aspects including demand, capacity and operational issues;

• Draw on lessons from similar initiatives tried out in other countries, and adapt to the context of Lao PDR Advise DGE, DTVET and DNFE on potential partnering models and develop detailed designs for piloting including capacity building, operational arrangements, costs, guidelines and M&E;

8

39


• Lead on the analysis of the pilot implementation and effectiveness, identifying lessons learned and policy implications; and

• Assist DGE, DTVET and DNFE to develop strategies/plans for scale-up/replication of successful interventions.

The Vocational and Non-Formal Education Specialist will have at least a masters’ degree in Education, TVET, or a relevant discipline from a reputed University or Institute, with more than 10 years’ experience in vocational/non-formal education, including experience in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

Vocational and Non-Formal Education Specialist National


• Support the international specialist in the tasks above;

• Assist DGE, DTVET and DNFE to develop specific systems and procedures at the school level, coordinating with PESS, DESB’s, and target school clusters as necessary; and

• Assist DGE, DTVET and DNFE to organize, implement and monitor pilot programs, including coordination with PESS, DESB’s, and target school clusters as necessary.

The Vocational and Non-Formal Education Specialist will preferably have a masters’ degree in Education, TVET, or a relevant discipline, with more than 10 years’ experience in education, preferably including vocational/NFE. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

18

Student Career Counselling Specialist National

The Student Career Counselling Specialist will assist DGE to design and implement a program to pilot student counselling on academic and career options in the 8 provincial secondary school clusters. Core tasks will include (but not be limited to):

• Drawing on good practice, assist DGE to identify specific roles and responsibilities of school guidance counsellor, develop guidelines, materials, and design a capacity building program;

• Assist DGE with trialing the system and capacity building in one provincial secondary school cluster, review and refine the program;

• Assist DGE, working with PESS and DESB’s, to implement and monitor the pilot program;


• Assist DGE to develop strategies/plans for scale-up/replication of successful interventions.

The Student Career Counselling Specialist will preferably have a masters’ degree in Psychology, Social Work, Education, or a relevant discipline from a reputed university or institution, with more than 5 years’ experience in guidance counselling. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

12

OUTPUT 2: QUALITY AND RELEVANCE OF SECONDARY EDUCATION STRENGTHENED

Secondary Curriculum Development Subject Specialists (3): International

Drawing on current international good practice in curriculum development for improving pedagogy and student learning outcomes, the specialists will assist RIES with improving lower and upper secondary curricula in the subjects specified. Core tasks will include (but not be limited to):

• As a curriculum development consultant team, undertake a rapid situation analysis of curriculum development and implementation in Lao PDR under the Secondary Education SDP (with a focus on

18

6 person-months

each

40


1. Math and Physics 2. Chemistry and Biology 3. English and Laos Language

secondary education but also taking into account lessons learned from primary education);

• Draw on lessons from similar initiatives tried out in other countries, and adapt to the context of Lao PDR;

• Assist RIES in planning secondary education curriculum improvement including development of specific scope and methodology, and ensuring alignment with primary curriculum and common approaches across subjects;

• Provide technical advice and capacity building support to RIES in undertaking specific curriculum improvements including developing curriculum materials and new teacher guides for all secondary grades in the subjects specified;

• Advise on design of curriculum materials and teacher guides, and piloting/trialing, assist RIES with review and revisions, and finalization (prior to distribution to schools for teacher INSET);

• Make an assessment of how education technology can be used effectively for training teachers and for improving the quality of teaching within classrooms.

The Curriculum Development Specialists will have at least a masters’ degree in Education or the relevant priority subject area, with more than 10 years’ specialist expertise in curriculum design and pedagogy reform in the subject areas. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

Secondary Curriculum Development Subject Specialists (6): National

1. Math 2. Physics 3. Chemistry 4. Biology 5. English 6. Laos Language

The specialists will assist RIES with improving lower and upper secondary curricula in the subjects specified. Core tasks will include (but not be limited to):

• Support the international specialists in the tasks above, fully taking over tasks as the international specialists complete inputs during year 2;

• Support RIES in organizing and implementing workshops and other materials development processes, and provide on-the-job capacity building and mentoring to RIES curriculum development staff/experts;

• Support RIES and district education offices in implementing pilot tests/trials of new teacher guides; and

• Make an assessment of how education technology can be used effectively for training teachers and for improving the quality of teaching within classrooms.

The Curriculum Development Specialists will have at least a master’s degree in education or the relevant priority subject areas, with experience of curriculum reform. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

72

12 person-months

each

Secondary Teacher Development Strategy Specialist International

Drawing on current international good practice in teacher development for improving pedagogy and student learning outcomes, the specialist will assist DTE with developing clear policy and strategy for secondary teacher development (pre-service, in-service, and continuing professional development), and specific plans for the Education for Employment SDP support. Core tasks will include (but not be limited to):

• Undertake a thorough review of the design and effectiveness of past / ongoing pre- and in-service teacher training and continuing professional development (including pedagogical adviser) policy, systems and approaches, including curriculum/courses/materials, trainer/ lecturer availability/quality, quality assurance mechanisms, resourcing, demand and supply issues;

5

41


• Assess what has worked well and what has not. Provide recommendations to DTE (and other relevant MOES departments) on how the design and execution of these programs can be made more results-oriented and sustainable.;

• Make an assessment of how education technology can be used effectively for training teachers and for improving the quality of teaching within classrooms;

• Review roles, responsibilities and capacity of central MOES, provincial and district education offices for designing, planning, managing and monitoring teacher development, and provide recommendations to DTE (and other relevant MOES departments) to strengthen capacity;

• Assist DTE to design the Education for Employment SDP support to in-service training of teachers and pre-service education lecturers, and teacher CPD, including scope, approach, numbers trained, locations, timing, resourcing; and

• Coordinate with other specialists (principal development, student assessment) and relevant MOES departments (DGE, RIES, IFEAD) to incorporate training for principals and classroom-based assessment in INSET plans.

The Secondary Teacher Development Strategy Specialist will have at least a Masters’ degree in education or a relevant discipline from a reputed university or institute, with more than 10 years’ experience in teacher development including in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

Secondary Teacher Development Subject Specialists (3): International

1. Math and Physics 2. Chemistry and Biology 3. English and Laos Language

Drawing on the approaches and plans for the Education for Employment SDP support to teacher development (above), the teacher development specialists will assist DTE to design specific training programs and training materials in the subjects specified. Core tasks will include (but not be limited to):

• Assist DTE to design INSET courses in the subjects specified, for trainers and teachers, including modules and materials;

• Assist DTE and TTIs to design in-service training for pre-service teacher education lecturers, including modules and materials;

• Assist DTE and DGE to design capacity building for secondary pedagogical advisers, and for teacher continuing professional development, including modules and materials;

• Assist DTE, DGE and TTIs with designing piloting/trialing of training courses, review, revisions and finalization (prior to implementation of training);

• Assist DTE, DGE and TTIs to ensure that all training design is aligned with the improved M1 to M7 curriculum and teacher guides;

• Provide advice on the organization, implementation and monitoring on the Education for Employment SDP support to teacher development training programs, including design of M&E instruments; and

• Assess how education technology can be used effectively for training teachers and for improving the quality of teaching within classrooms.

The Secondary Teacher Development Subject Specialists will preferably have a masters’ degree in Education or a relevant discipline, with more than 10 years’ experience in secondary teacher development in the subject areas, and preferably experience of working in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

27

9 person-months

each

Secondary Teacher Development


• Support the international specialist in the tasks above, fully taking over tasks as the international specialists complete inputs during year 3;

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Subject Specialists (6): National

1. Math 2. Physics 3. Chemistry 4. Biology 5. English 6. Laos Language

• Assist DTE, DGE and TTI’s to develop detailed plans and to organize implementation of trainings, including coordination with PESS, DESB’s as necessary;

• Assist DTE and DGE to organize specific capacity building for piloting CPD in schools clusters including coordination with PESS, DESB’s as necessary; and

• Undertake sample field monitoring of training programs during implementation.

The Secondary Teacher Development Subject Specialists will preferably have a masters’ degree in Education and / or the relevant subject area from a reputed university or institute, with more than 8 years’ teacher training experience. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

22 person-months

each

School Principals Development Specialist International

Drawing on current international good practice in school leadership and school effectiveness, the specialist will assist DTE and IFEAD with developing strategy for secondary school principals’ development including design of specific Education for Employment SDP support for principals INSET. Core tasks will include (but not be limited to):

• Rapid review of policy, systems and approaches for school principals’ development including past in-service training and continuing professional development, including curriculum/ courses/ materials, trainers, quality assurance mechanisms, resourcing, and provide recommendations to DTE and IFEAD to strengthen policy and systems;

• Assess what worked well, and what did not, and plan the training programs under the Education for Employment SDP accordingly;

• Assist DTE and IFEAD to design INSET courses for school principals (alongside teacher INSET), for trainers and principals, including modules and materials;

• Assist DTE and IFEAD with designing piloting/trialing of training courses, review, revisions and finalization (prior to implementation of training); and

• Provide advice on the organization, implementation and monitoring of the Education for Employment SDP support to principals’ development training programs, including design of M&E instruments.

The School Principals Development Specialist will have at least a master’s degree in Education or a relevant discipline from a reputed university or institute, with more than 10 years’ experience in education and training. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

6

School Principals Development Specialist National



• Assist DTE and IFEAD to develop detailed plans and to organize implementation of trainings, including coordination with PESS, DESB’s as necessary; and

• Undertake sample field monitoring of training programs during implementation.

The School Principals’ Development Specialist will preferably have a master’s degree in Education or a relevant discipline, with more than 8 years expertise in education, preferably including professional development programs. Good verbal and written English skills are essential. Prior

18

43


experience of working on international development partner funded projects will be an advantage.

ICT for Educators Specialist International

Drawing on current international good practice in the use of ICT approaches to support educators (teachers and teacher trainers), the specialist will assist DTE, RIES and DGE to develop approaches and materials to improve teacher development, and teaching and learning, at lower and upper secondary levels. Core tasks will include (but not be limited to):

• Undertake a rapid review of current approaches to the use of ICT for educators in Lao PDR, assessing opportunities, constraints and priorities, with a focus on sustainable solutions to challenges in rural areas;

• Advise DTE, RIES and DGE on potential models for using ICT-based materials to support educators in the Lao PDR context;

• Assist DTE, RIEs and DGE to develop plans and capacity building for developing ICT materials;

• Develop detailed designs for piloting ICT approaches, including for CPD (through the school cluster and PA pilot) and for TTIs, including related capacity building, costs, guidelines and M&E;

• Assess how education technology can be used effectively for training teachers and for improving the quality of teaching within classrooms


• Assist DTE, RIES and DGE to develop strategies/plans for scale-up/replication of successful interventions.

The ICT for Educators Specialist will preferably have at least a master’s degree in Education, Training, or a relevant discipline, with more than 10 years’ experience in ICT in education in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

7

ICT for Educators Specialist National


• Support the international specialist in the tasks above;

• Assist DTE, RIES and DGE to develop specific ICT materials, ensuring alignment with improved curriculum, teacher guides and CPD approaches; and

• Assist DTE, RIES and DGE to organize, implement and monitor pilot programs, including coordination with PESS, DESB’s, TTIs and school clusters as necessary.

The ICT for Educators Specialist will preferably have a master’s degree in education or a relevant discipline, with more than 8 years inexperience in teacher development using ICT approaches. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

22

Secondary School Student Assessment Specialist International

Drawing on current international good practices in student assessment for improving student learning outcomes and pedagogy, the specialist will assist RIES and DGE with improving lower and upper secondary school classroom-based assessment, and in implementing national sample-based assessments. Core tasks will include (but not be limited to):

• Undertake a rapid situation analysis of current experience with formative classroom-based assessment in lower and upper secondary schools;

• Assist RIES and DGE to develop specific classroom-based formative assessment methodologies and instruments for teachers, emphasizing authentic assessment, and ensuring that assessment is integrated into

10

44


teaching to promote improved pedagogy and student-centered learning;

• Assist RIES, DGE and DTE to design modules and materials on classroom-based assessment to be delivered through teacher INSET (see above);

• Support RIES and DGE to design national sample student assessments (ASLO) at both lower and upper secondary levels, two rounds each (grades to be determined), drawing on and coordinating with other ASLO implementation to ensure standardization and enabling comparison, and identifying particular measures for administration, reliability and validity; and

• Assist DGE (and other relevant departments) to analyze ASLO results to develop specific strategies to address student learning constraints.

The Secondary School Student Assessment Specialist will preferably have at least a masters’ degree in Education, Impact Evaluation, or a relevant discipline, with more than 10 years’ experience in school level student assessment, including experience in developing countries. Prior experience of working in Lao PDR, and on international development partner funded projects will be an advantage.

Secondary School Student Assessment Specialist National


• Support the international specialist in the tasks;

• Assist RIES, DGE and DTE to develop detailed plans and to organize implementation of classroom-based assessment training for teachers as part of INSET rounds, including coordination with PESS, DESB’s as necessary; and

• Assist RIES, DGE and DTE to develop specific plans for undertaking ASLO, and assist with organization and implementation, including monitoring and coordination with PESS, DESB’s as necessary.

The Secondary School Student Assessment Specialist will preferably have a masters’ degree in a relevant discipline, with more than 8 years’ experience in student assessment. Good verbal and written English skills are essential. Prior experience of working on international development partner funded projects will be an advantage.

18

OUTPUT 3: EQUITABLE SECONDARY EDUCATION ACCESS AND COMPLETION RATES INCREASED

Civil works supervision consultants will be hired separately (through ICS), related to construction of school facilities under Output 3. The international and national Education Management Information Systems Specialists (described in Output 1 above) will support activities under both Outputs 1 and 3.

ADB = Asian Development Bank, ASLO = Assessment of Student Learning Outcomes, CPD = continuing professional development, DESB= District Education Sports Bureau, DGE = Department of General Education, DMF = design and monitoring framework, DNFE = Department of Non-Formal Education, DTE = Department of Teacher Education , DTL = deputy team leader, DTVET = Department of Technical and Vocational Education and Training, EGDP = ethnic group development plan, EMIS = Education Management Information System, ESSC = Education and Sports Statistics Center, GAP = gender action plan, HRD = Human Resource Development, ICT = information communications technology, IFEAD = Institute of Education Administration Development, INSET = in-service education training, Lao PDR = Lao People's Democratic Republic, MOES = Ministry of Education and Sports, M&E = monitoring and evaluation, NFE= non-formal education, PESS = Provincial Education and Sports Service, PMU = project management unit, PPE = post-primary education, PSC = project steering committee, RIES = Research Institution for Education and Sciences, SDP = sector development program, TOR = terms of reference, TIU = technical implementation unit, TVET = technical, vocational education and training.

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Table 16: Indicative Consultant Services Schedule

PM 1 2 3 4 5

2020 2021 2022 2023 2024

International consultants

1 Team Leader/Post-Primary Education Policy and Planning Specialist

36 8 8 8 6 6

2 Education Management Information Systems Specialist

8 6 2 - - -

3 Skills Development Analysis and Planning Specialist

5 3 2 - - -

4 Vocational and Non-Formal Education Specialist 8 4 2 - 2 -

5 Secondary Curriculum Development Specialist – Math and Physics

6 4 2 - - -

6 Secondary Curriculum Development Specialist – Chemistry and Biology

6 4 2 - - -

7 Secondary Curriculum Development Specialist – English and Laos Language

6 4 2 - - -

8 Secondary Teacher Development Strategy Specialist

5 5 - - - -

9 Secondary Teacher Development Specialist - Math and Physics

9 3 3 3 - -

10 Secondary Teacher Development Specialist - Chemistry and Biology

9 3 3 3 - -

11 Secondary Teacher Development Specialist - English and Laos Language

9 3 3 3 - -

12 School Principals Development Specialist 6 4 2 - - -

13 ICT for Teachers Specialist 7 3 2 - 2 -

14 Secondary School Student Assessment Specialist 10 4 2 - 2 2

TOTAL person months 130 58 35 17 12 8

National consultants

1 Deputy Team Leader/Secondary Education Quality Improvement

50 10 10 10 10 10

2 Education Management Information Systems Specialist

26 6 6 6 4 4

3 Skills Development Analysis and Planning Specialist

22 6 6 4 4 2

4 Vocational and Non-Formal Education Specialist 18 6 4 4 2 2

5 Student Career Counselling Specialist 12 6 4 2 - -

6 Secondary Curriculum Development Specialist – Math

12 6 4 2 - -

7 Secondary Curriculum Development Specialist – Physics

12 6 4 2 - -

8 Secondary Curriculum Development Specialist – Chemistry

12 6 4 2 - -

9 Secondary Curriculum Development Specialist – Biology

12 6 4 2 - -

10 Secondary Curriculum Development Specialist – Laos Language

12 6 4 2 - -

11 Secondary Curriculum Development Specialist – English

12 6 4 2 - -

12 Secondary Teacher Development Specialist – Math 22 6 6 4 4 2

13 Secondary Teacher Development Specialist – Physics

22 6 6 4 4 2

14 Secondary Teacher Development Specialist – Chemistry

22 6 6 4 4 2

15 Secondary Teacher Development Specialist – Biology

22 6 6 4 4 2

46

PM 1 2 3 4 5

2020 2021 2022 2023 2024

16 Secondary Teacher Development Specialist – Laos Language

22 6 6 4 4 2

17 Secondary Teacher Development Specialist – English

22 6 6 4 4 2

18 School Principals Development Specialist 18 6 4 4 2 2

19 ICT for Teachers Specialist 22 6 6 6 2 2

20 Secondary School Student Assessment Specialist 18 6 4 4 2 2

21 Monitoring and Evaluation Specialist 10 2 4 2 2

Total person-months 400 126 108 78 52 36

46. The TORs of PMU individual consultants are in Appendix 2.

VII. SAFEGUARDS

47. In compliance with ADB’s Safeguard Policy Statement (2009), the project’s safeguard categories are B for environment, C for involuntary resettlement, and B for indigenous peoples.15 48. Environment (category B). An initial environmental examination has been prepared covering all 60 selected schools and disclosed on ADB’s website.16 Project civil works are minor in scope and limited to existing school sites. Impacts during construction will be localized and short-term, and can be addressed with good construction site management and practice, as set out in the environment management plans. Overall, impacts are expected to be beneficial, improving hygiene, sanitation, and waste management. The project will finance a national environmental safeguard consultant to support the government in meeting the safeguard requirements. The PMU will establish a site-specific grievance redress mechanism to manage complaints and issues during implementation. The PBL component is not anticipated to have any environmental impacts. 49. The IEE outlines the (i) environmental impacts of proposed activities and mitigation measures to be applied in project design and during implementation to address any adverse environmental impacts, (ii) grievance redress mechanism to address any complaint from affected people, (iii) environmental monitoring and reporting requirements, and (iv) the roles of various units in managing environmental risks. At detailed design stage, as the IEEs and EMPs are updated and finalized, the proposed mitigation measures will be reviewed to ensure that environmental receptors are not adversely affected. The final EMPs, cleared by ADB, will form part of the contract bidding documents. In compliance with ADB’s information disclosure and consultation requirements, the safeguard documents will be posted on ADB’s website after the approval/endorsement of the executing agency. 50. Involuntary resettlement (category C). The project will not involve involuntary resettlement. ADB’s due diligence confirms there will be no land acquisition and resettlement impact since all works will be located within the boundaries of existing facilities on state-owned land, are free of encumbrances, and will not restrict access to lands or people’s livelihoods. 51. Indigenous peoples (category B). The indigenous peoples plan (ethnic group development plan) ensures that (i) analysis of education-employment links will be disaggregated by ethnic groups; (ii) new secondary teacher education curriculum and teaching materials are

15 ADB. Safeguard Categories. 16 Initial Environmental Examination (accessible from the list of linked documents in Appendix 2).

https://www.adb.org/site/safeguards/safeguard-categories

47

sensitive to ethnic group concerns; (iii) dormitory conditions are sensitive to ethnic group dimensions; (iv) capacity development programs prioritize participation by ethnic group staff and teachers; and (v) youth from disadvantaged ethnic groups are prioritized for stipend support. 52. Monitoring and Reporting. Implementation will be monitored by the PMU, with assistance from the project implementation consultants, and will be reported through quarterly and annual progress reports. The PMU will share with ADB for review and clearance any issues arising from the special measures referred to in para. 48. All monitoring results, including corrective or preventative actions, will be reported in semi-annual monitoring reports. ADB will review and approve these reports prior to disclosure to the ADB website.

VIII. GENDER AND SOCIAL DIMENSIONS

53. The gender categorization for this SDP is expected to be GEN (gender equity). According to the gender analysis, while at the national level there is now close to gender parity in access at primary and lower secondary education levels, there is a gender gap at upper secondary level with lower participation of females. Disparities across gender, ethnic group, and geographic dimensions are interlinked. Gender equality is a high priority of the Government as indicated by a strong policy and institutional framework, however capacity and resources for implementation is limited, including in education sector management at central and sub-national levels. 54. Endemic poverty and inequalities across wealth, gender, ethnicity, and geographic dimensions in the Lao PDR are interlinked. Among 15–17 year-olds in households in the lowest wealth quintile, only 13% of females and 14% of males complete LSE, compared to 88% and 81% of counterparts in the richest wealth quintile. Inequalities across wealth, gender, ethnic group, and geographic dimensions are interlinked. For example, only 35% of non-Lao-Tai females complete LSE, compared to 44% of non-Lao-Tai males and 66% and 63% for Lao-Tai females and males. Education quality is also weakest in poorer and more remote areas. Inability to complete a good quality education confines many Lao PDR youth to low-paying unskilled labor, creating a vicious cycle of poverty. 55. Under all 3 outputs, policy reforms and the project investments will benefit the poor, females, and ethnic group youth, by focusing on areas with high female and male dropout and weak socioeconomic development. The gender action plan (GAP) will help to mainstream gender concerns into planning and implementation of the SDP. Improved curriculum, materials, and teaching and assessment practices will be sensitive to gender, ethnicity, and promote equitable learning and workforce outcomes. In 12 disadvantaged districts, this SDP will further address supply- and demand-side constraints by constructing 60 schools ((classrooms, wash facilities, laboratories, and libraries). Construction of quality dormitories will improve access for girls, youth from disadvantaged ethnic groups, and the differently-abled. Stipend support will be prioritized for students from disadvantaged backgrounds and females. All outputs will prioritize female and ethnic group participation in capacity development programs, academic and career guidance, and other activities. This SDP will finance national gender and social safeguard officers in the PMU to support implementation and monitoring of the gender action plan and ethnic group plan for the duration of the project. The indicative design and monitoring framework (DMF) in Section IX provides gender disaggregated indicators at the level of outcome and outputs. 56. The GAP is presented in Appendix 3.

48

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

Impact the Program is Aligned with

Inclusive, balanced, and skill-driven economic growth achieved (adapted from the Lao PDR Vision 2030 and Education Vision to 2030)a

Results Chain Performance Indicators with Targets and

Baselines

Data Sources and Reporting

Mechanisms Risks

Outcome of the Reform Employability of secondary school youth enhanced

1. a. In school year 2025/26, at least 120,000 students (at least 60,000 females) complete lower secondary education under improved curricula for priority subjects.b (Baseline: 90,888 students [44,041 females] in 2017/18) b. In school year 2025/26, at least 90,000 students (at least 45,000 females) complete upper secondary education under improved curricula for priority subjects.b (Baseline: 65,575 students [31,016 females] in 2017/18) c. By mid-2025, shares of female and male (i) lower secondary graduates and (ii) upper secondary graduates in education, training and/or nonagricultural wage employment increased by at least 5 percentage points to X% and Y%, respectively (Baseline for graduates in 2019 to be determined through surveys in 2020 and 2021)

a. MOES EMIS statistics and annual reports

b. MOES EMIS

statistics and annual reports

c. MOES tracer

studies for lower secondary and upper secondary graduates in 2024

Fiscal challenges weaken the government’s ability to provide adequate funds for secondary education, TVET, and higher education

Economic shocks affect employment growth

Outputs/Reform Areas 1. Alignment of post-primary education with labor market demand strengthened

Program by 31 July 2019 1a. Relevant education departments directed to prepare action plans for secondary education, TVET, and higher education, emphasizing gender equity (2018 baseline: not applicable) 1b. Secondary school block grants increased to KN70,000 per student and TVET block grants increased to KN300,000 per student (2018 baseline: KN50,000 for secondary schools and KN270,000 for TVET) Project 1c. By 2022, TVET, higher education, and nonformal education subsectors integrated into functioning EMIS and school network mapping systems and reports (2019 baseline: not applicable) 1d. By 2024, partnerships linking secondary schools, TVET, nonformal education centers, and local industries piloted in the secondary school clusters (2019 baseline: not applicable)

1a. MOES

instruction 1b. MOES decree 1c. ESSC (MOES)

statistics reports

1d. Monitoring

reports of Education for Employment Sector Development Program

2. Quality and relevance of secondary education to emerging skills

Program by 31 July 2019 2a. Textbooks, teacher guides, and instructional material standards for general education (including secondary education), mainstreaming

2a–2e. MOES decrees

49

Results Chain Performance Indicators with Targets and Baselines

Data Sources and Reporting Mechanisms Risks

demands strengthened

sensitivity to gender, ethnic group, and disability, improved and issued to schools (2018 baseline: not applicable)

2b. Eight provincial teacher training institutions accredited to provide quality teacher training at the bachelor level in specific subjects, including lower and upper secondary level sciences, mathematics, and Lao language (2018 baseline: not applicable) 2c. Learner-centered pedagogy for general education schools (including secondary education schools) introduced (2018 baseline: not applicable) 2d. Continuous professional development programs for lower and upper secondary education teachers (including teachers of science, mathematics, English, and Lao language) launched (2018 baseline: not applicable) 2e. Revisions to the Assessment Framework for General Education (including secondary education) initiated (2018 baseline: not applicable) Project by 2024 2f. Improved secondary school curriculum for four lower secondary and six upper secondary priority subjectsb introduced, and new teacher guides (sensitive to gender) distributed (2019 baseline: not applicable) 2g. At least 12,000 teachers of priority subjects (at least 5,400 of them women)c received INSET training to deliver the improved curriculum (2019 baseline: 0) 2h. At least 400 teachers of priority subjects (at least 180 of them womend) in secondary school clusters completed CPD programs (2019 baseline: 0) 2i. New science equipment, library materials, and ICT-based learning resources provided to 60 schools to be upgraded and to at least 50 secondary school cluster schools to be supported (2019 baseline: 0)

2f–2i. MOES monitoring reports

Teachers lack motivation because of low salaries and poor school facilities.

3. Equitable secondary education access and completion increased

Program by 31 July 2019 3a. List of 47 priority districts for secondary education investments in new and/or expanded schools approved (2018 baseline: not applicable) Project by 2024 3b. Enrollment in 60 secondary schools increased to at least 42,000 (at least 45% females) (2018 baseline: 33,700 total enrollment; 15,000 females) 3c. 60 schools provided with new classroom blocks (including science laboratories and

3a. MOES priority district list 3b–3d. MOES M&E reports

50

Results Chain Performance Indicators with Targets and Baselines

Data Sources and Reporting Mechanisms Risks

libraries), sex-segregated dormitories, and sanitation facilities (2018 baseline: not applicable) 3d. Stipends provided to at least 2,400 disadvantaged studentse (at least 50% females) in 12 districts (2019 baseline: not applicable)

Key Activities with Milestones

1. Alignment of post-primary education with labor market demand strengthened 1.1 PIC, in collaboration with ESSC and HRD Office, to strengthen capacity for monitoring the skills supply from

PPE, improving cross-ministerial collaboration, and engaging with associated industries (Q3 2020) 1.2 HRD Office to prepare annual reports on evolving skill demand and supply (with sex-disaggregated analysis)

(from 2022 onward) 1.3 Design partnering models linking secondary education, TVET, and nonformal education centers, and prepare

new counseling material (Q3 2020–Q3 2022) 2. Quality and relevance of secondary education to emerging skill demands strengthened 2.1 PIC to review and improve curriculum for priority subjects, and develop teaching and learning materials

(Q3 2020–Q1 2021) 2.2 Conduct INSET and CPD for secondary teachers in priority subjects (from Q2 2021) 2.3 Conduct national sample-based assessments for lower and upper secondary education (from 2022) 2.4 Procure laboratory equipment for science subjects, teaching, and learning materials (from 2021) 3. Equitable secondary education access and completion increased 3.1 Construct and upgrade facilities in 60 selected schools in 12 targeted districts (from Q2 2020–2022) 3.2 Provide needs-targeted stipends to secondary school students (from Q3 2021) 3.3 Advertise civil works and equipment packages for advance contracting (Q1 2020)

Project Management Activities Recruit PIC and individual consultants for the PMU (Q1 2020) PIC to provide program management and M&E support (Q1 2020 until program completion)

Inputs Asian Development Bank $10 million (policy-based loan) $40 million (project loan) Government $5 million

Assumptions for Partner Financing Not applicable

CPD = continuing professional development, EMIS = education management information system, ESSC = Education and Sports Statistics Center, HRD = Human Resource Development, ICT = information and communication technology, INSET = in-service education and training, KN = Lao kip, Lao PDR = Lao People’s Democratic Republic, M&E = monitoring and evaluation, MOES = Ministry of Education and Sports, PIC = project implementation consultant, PMU = project management unit, PPE = post-primary education, Q = quarter, TVET = technical and vocational education and training. a Government of the Lao PDR. Ministry of Planning and Investment. 2016. 8th Five-year National Socio-Economic

Development Plan (2016–2020). Vientiane; Government of the Lao PDR. Ministry of Education and Sports. 2015. Education and Sports Sector Development Plan (2016–2020).Vientiane.

b The priority subjects are integrated science, mathematics, Lao language, and English at lower secondary level; and physics, chemistry, biology, mathematics, Lao language, and English at upper secondary level.

c Under the Secondary Education Sector Development Program, 49.7% of teachers receiving INSET were women. A target of 45% has been set recognizing that a higher proportion of teachers in the six priority subjects may be males.

d The vulnerability of disadvantaged groups is multifaceted. Beyond the economic and social dimensions, demographic and environmental aspects come into play. A thorough analysis that identifies economically and socially vulnerable disadvantaged groups is included in the Indigenous Peoples Plan (Ethnic Group Development Plan).

Source: Asian Development Bank. B. Monitoring

http://www.la.one.un.org/images/publications/8th_NSEDP_2016-2020.pdf

http://www.la.one.un.org/images/publications/8th_NSEDP_2016-2020.pdf

https://www.globalpartnership.org/sites/default/files/education-sector-development-plan-2016-2020-lao-pdr_0.pdf

51

57. Project performance monitoring. The PMU will be responsible for the smooth management and coordination of project activities. It will be established, and all staff identified, prior to loan effectiveness. The PMU will be headed by a project director and a deputy project director, as well as staff responsible for administration, finance, and procurement. Project progress, inputs, outputs outcome and impact will be monitored based on the DMF. The PMU and the project implementation consultants (particularly the team and deputy team leader) will be responsible for monitoring and reporting project performance, and all aspects of project implementation, including planning and budgeting, maintenance of all project documents, maintenance of the advance account, submitting required progress reports, annual audit reports, and financial statements as per agreed frequency and in the proper format. 58. All quarterly progress and annual reports will include an assessment of the overall implementation progress, including physical progress of each activity. Quarterly progress reports will also include progress achieved at the output level as measured through the DMF output indicator’s performance targets. It will also attach an updated gender monitoring table. Prior to midterm review and project’s physical completion, data will be collected on progress toward achieving the project outcome, which should feed into the midterm report and in the project completion report. 59. ADB will be responsible for the overall guidance to the PMU on technical, management, and implementation aspects. ADB will oversee project implementation, ensure compliance with the loan agreement and the project administration manual, observance of policies for safeguards and anticorruption and fraud prevention, and the timely approval of procurement activities and submission of withdrawal applications. ADB will conduct an inception mission and undertake regular reviews, including a review of the project at midterm for a thorough assessment of status of all activities and introduce adjustments as may be required. 60. Compliance monitoring. Compliance with policy, legal, financial, economic, environmental, social, and other covenants as indicated in the loan agreement will be monitored by the PMU, which will also be reflected in the quarterly progress reports to ADB. Compliance with project covenants will also be reviewed during each ADB review missions. Any non-compliance issues will be specifically covered in these reports, with proposed remedial actions for consideration of ADB missions. ADB will monitor compliance through a review of the progress reports and through selective follow-up discussions or more detailed reviews during supervisory missions. 61. Environmental Safeguards monitoring. Monthly progress reports should be submitted by the PMU to the Education Construction and Design Management (ECDM) to report the status of works, including any environmental safeguards activities. Site inspections will be conducted by the district education sector bureaus (DESB) on a monthly basis or as often as possible. ECDM, through the PMU, will also conduct site inspections to check the status of civil works and mitigation measures every quarter and the provincial unit for construction and development assistance (PUCDA) every two months, or as often as possible.

62. The contractors will complete monthly environmental monitoring checklists for submission to the ECDM through the PMU. The PMU will consolidate the results of environmental monitoring from the contractors, as well as monitoring reports from PUCDA and DESB. Semi-annual environmental monitoring reports and annual progress reports will be submitted to ADB, which will be disclosed to the project and ADB websites. 63. The environmental monitoring report will contain information about the following:

52

(i) Status of implementation of contract packages; (ii) Status of preparation of safeguards documents such as updated IEE/EMP and

site-specific environmental management plan (EMP) of contractor, environmental approvals and clearances from the district environment office;

(iii) Status of implementation of the EMP; (iv) Record of any complaints/grievance received about project implementation and

any corrective actions done by the contractor to resolve the complaint; (v) Trainings conducted on environment safeguards; and (vi) Follow-up actions needed for the next semi-annual monitoring report.

64. Gender and social dimensions monitoring. The Project Director and PMU will assume overall responsibility for implementation and reporting on the GAP. One national consultant on gender and social development will provide technical support for GAP implementation. The national consultant will work closely with the PMU throughout the project duration. The PMU and consultants will coordinate with implementation units responsible for specific activity areas and GAP actions noted above. All PMU quarterly reports submitted to the ADB will report progress against the GAP. 65. Financial Monitoring. By the start of every first quarter each year, the PMU will prepare quarterly contract awards and disbursements projections. The projections will be based on the s-curve quarterly projections but with specific packages and amounts to be awards; and identifying the withdrawal application numbers and indicative disbursements to support disbursement quarterly targets. C. Evaluation

66. ADB will conduct an inception mission within three months of loan effectiveness, and field review missions every six months thereafter to assess the progress of project implementation and the achievement of outputs. A midterm review mission will indicatively be scheduled in 2023. Within 6 months after the physical completion of the project, the Project Director will submit a project completion report to ADB, analyzing implementation, project performance and achievements against the targets, and expected project impact. D. Reporting

67. MOES will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure that projects will continue to be both viable and sustainable, project accounts and the executing agency audited financial statement together with the associated auditor's report, should be adequately reviewed.

E. Stakeholder Communication Strategy

68. Following ADB’s Access to Information Policy (2018), ADB will disclose on its website the final IEE, environmental safeguards monitoring reports, invitation for bids for OCB with international advertising, procurement plan updates, and the audited project financial statements. In addition, there will be activities to raise awareness of secondary school age children in the targeted geographical areas on the importance of secondary education, assist them in enrolling in upgraded secondary schools under the project, and provide counselling services, to gain the

53

skills required, and have access to information and make a smooth transition to further education and training and decent employment. Cooperation among MOES, other government agencies and employers to improve planning will improve alignment of skills supply with skills demand. 69. The Program’s communication strategy is in Appendix 4.

X. ANTICORRUPTION POLICY

70. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.17 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.18 71. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the project.

XI. ACCOUNTABILITY MECHANISM

72. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.19

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

73. All revisions and/or updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM, including revision to contract awards and disbursement s-curves.

17 ADB. Anticorruption Policy. 18 ADB. Anticorruption and Integrity. 19 ADB. Accountability Mechanism..

https://www.adb.org/documents/anticorruption-policy

https://www.adb.org/site/integrity/main

https://www.adb.org/site/accountability-mechanism/main

Appendix 1 55

FINANCIAL MANAGEMENT ASSESSMENT REPORT 1. A Financial Management Assessment (FMA) of the proposed Education for Employment Sector Development Program (SDP) was conducted following the most recent guidelines1 to assess the capacity of the executing agency to assume responsibility for the project in areas of planning and budgeting, management and financial accounting, reporting, auditing, internal controls. The initial FMA was conducted by the Asian Development Bank (ADB) transactional technical assistance (TA) team in November 2018, and then updated subsequently in April and May of 2019 through further consultations with relevant departments within the Ministry of Education and Sports (MOES) and the project management unit (PMU) of the ongoing Secondary Education SDP.2 The same PMU will also function as the PMU for the SDP. The fact that it has had substantial experience of nearly 10 years of handling financial management and reporting, procurement, and is familiar with ADB’s fiduciary policies and processes, helps to mitigate potential risks. 2. The MOES will be the executing agency for the program (as it was for the Secondary Education SDP). The FMA accordingly, undertook a detailed review of the MOES funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. This assessment also reviewed and updated the FMA undertaken during the preparation of the Secondary Education SDP. 3. The assessment involved a review of documents relating to public financial management in the country and education sector, previous financial assessments conducted in the preparation of ADB projects within MOES for the Secondary Education SDP, the Second Strengthening Higher Education Project and the Second Strengthening Technical and Vocational Education and Training Project. Project documents for two current World Bank education sector projects, the Early Childhood Education Project and the Second Global Partnership for Education Project were also reviewed. Detailed interviews and discussions were also held with staff from the MOES’ Department of Finance (DOF), the Secondary Education SDP PMU, the Ministry of Finance, and ADB.

I. BRIEF PROGRAM DESCRIPTION

4. The program will align with the following impacts: inclusive, balanced, and skill-driven economic growth achieved. The intended project outcome is enhanced employability of secondary school youth. 5. The program will build on the Secondary Education SDP and will complement the ongoing Second Strengthening Technical and Vocational Education and Training Project and the Second Strengthening Higher Education Project. It will consist of three outputs:

(i) Output 1: Alignment of Post-primary education with labor market demand strengthened;

(ii) Output 2: Quality and relevance of secondary education to emerging skill demands strengthened; and

(iii) Output 3: Equitable secondary education access and completion rates enhanced.

6. The total program cost is estimated at $55 million. ADB will finance $50 million, including a $10 million concessional policy-based loan, and a $40 million concessional project loan. The

1 ADB. 2015. Financial Management Technical Guidance Note – Financial Management Assessment. Manila 2 ADB. Lao People’s Democratic Republic: Secondary Education Sector Development Program.

https://www.adb.org/projects/40368-022/main

56 Appendix 1

Government of Lao People’s Democratic Republic (Lao PDR) will finance $5 million from in-kind contributions. 7. The policy-based loan funds will be released to the Government of Lao PDR on loan effectiveness, contingent on the achievement of agreed policy actions. primarily on policy actions. This Finance Management Assessment does not consider the arrangements for the policy-based loan. 8. The project loan funds will support activities under the three project outputs. The project is expected to become effective in December 2019 and be implemented over 6 years.

II. COUNTRY AND SECTOR LEVEL FINANCIAL MANAGEMENT ISSUES

9. Country Level Financial Management Issues. Country and sector level issues were identified from the ADB Laos Country Partnership Strategy 2017-2020 (August 2017), and from the last available Public Expenditure and Financial Accountability Public Financial Management Assessment (January 2019).3 10. In the last decades, the country has shown high growth rate. Despite this growth, there are sizeable development gaps as compared to other Association of Southeast Asian Nations member countries.4 Progress has been taken to enhance legal frameworks in Lao public financial management and in strengthening government authority over budget planning and execution. 11. These reports identified an inefficient public sector management and weak public financial management, with some challenges that could impact project performance including (i). unrealistic fiscal forecasts; (ii) a lack of reliable and timely financial reports; (iii) lack of transparency in public finances; (iv) weak internal control framework; and (v) lack of integration and consolidation of information systems and of central monitoring and reporting of procurement operations.5 12. Education Sector Financial Management Issues. Education sector issues were identified from reviewing the financial assessments prepared for three ongoing ADB education projects covering secondary education, higher education, and technical and vocational education and training (TVET),6 together with the financial management appraisals for two World Bank education projects – the Early Childhood Education Project (2014) and the Second Global Partnership for Education Project (2015).7 MOES has experience of implementing several ADB, World Bank and other donor projects. It has a good track record of implementing ADB projects and has adequate financial management capacity at central levels. 13. Some common weaknesses were identified. These included (i). low financial management capacity at school and community level; (ii). excel-based accounting systems are used instead of

3 World Bank. 2019. Lao People’s Democratic Republic Public Expenditure and Financial Accountability (PEFA)

Assessment. Washington, DC. 4 OECD. 2019. Corporate Governance Frameworks in Cambodia, Lao PDR, Myanmar and Viet Nam.

https://bit.ly/2XrQngd. 5 Transparency International. Corruption Perceptions Index. https://www.transparency.org/cpi2018 6 ADB. Lao People’s Democratic Republic: Secondary Education Sector Development Program; ADB. Lao People’s

Democratic Republic: Second Strengthening Technical Education and Vocational Training Project; and ADB. Lao People’s Democratic Republic: Second Strengthening Higher Education Project.

7 World Bank. 2014. Early Childhood Education Project. Washington, DC; World Bank. 2015. Second Global Partnership for Education Project. Washington, DC.

https://bit.ly/2XrQngd

https://www.transparency.org/cpi2018






Appendix 1 57

a more secured financial management information systems; and (iii). internal audits of the project are not conducted.

III. PROJECT FINANCIAL MANAGEMENT SYSTEMS

A. Overview

14. MOES will be the executing agency of the program and will have overall responsibility for overseeing the project preparation and management. The FMA aims to determine whether the financial management arrangements of the executing agency are capable and adequate for recording all transactions and balances, supporting the preparation of regular and reliable financial statements, safeguarding the assets, and are readily available for audit. The guidelines describe the approach prescribed by ADB in undertaking a financial management assessment which involves the following steps: (i) use a standard questionnaire to assess the financial management of the relevant agency; (ii) based on the results of the questionnaire, identify issues for future review; and (iii) identify appropriate financial covenants to monitor financial conditions of the project for which the executing agency would be responsible. The FMA also includes the review of the accounting and reporting system, internal and external auditing, fund disbursement, and information system of the proposed executing of the Project. The completed FMAQ refer to Annex 1 at the end of this assessment. 15. The financial arrangements will broadly follow the current arrangements for Secondary Education SDP. Some changes are recommended to address the weaknesses identified above. The strengths and weaknesses are identified from assessments of the Secondary Education SDP PMU and the MOES’s DOF.

B. Strengths

16. MOES has experience of implementing several ADB projects (footnote 1). Its track record is good, and its staff have good knowledge of ADB’s fiduciary procedures. Secondary Education SDP received recognition for 3 successive years as the best performing ADB-financed project in Lao PDR. 17. The staffing within the DOF, who will have responsibility for this SDP, already have several years’ experience of working with ADB projects. They have attended ADB trainings on Financial Management, and have good understanding of ADB procedures. Staffing has been stable, with low turnover. Responsibilities for financial management are divided between the Accounting and Financial Control Divisions at the MOES’s DOF, the PMU, and the Ministry of Finance (MOF). 18. Projects in Lao PDR follow a set of national financial management procedures, including Standard Operating Procedures for Externally Funded Projects, and MOF Decree No. 2066 which sets standard rates for travel and trainings. The DOF prepares an individual finance manual for each project, based on the project structure and activities. 19. School grant and stipends have clear processes that are documented in operations manuals. MOES has implemented these activities in several projects, including the Secondary Education SDP. Institutional capacity has been built and there have been no major issues identified from the Secondary Education SDP implementation. 20. External audits of ADB projects are conducted by the State Audit Organisation (SAO). This has been acceptable to the ADB. The annual financial statements for the Secondary Education SDP have received unqualified reports. Audited financial statements and management

58 Appendix 1

letters have been submitted to the ADB on time. The deadline for the Secondary Education SDP was set at 9 months to allow enough time for audit field work to be conducted in provinces.

C. Weaknesses

21. Accounting information systems have several weaknesses. (i) The DOF uses excel to record accounting transactions for ADB projects. Under this system, transactions data is less secure than under an accounting software package; transactions can be amended or deleted without user controls; (ii) backups of the accounting software are made monthly; (iii) the PMU financial management specialist maintains a parallel excel accounting system to record expenditure and which is not reconciled to the DOF accounting system; and (iv) registers (including contracts register, asset register, selected school-level activities database) are not reconciled to the accounting system. 22. Reporting and monitoring. (i). Quarterly progress reports for the Secondary Education SDP include a summary of expenditure from the ADB’s Grant Financial Information System; they do contain a more up-to-date detailed set of financial schedules produced from the project’s accounting system that would allow the project’s financial performance to be analyzed in more depth. No variance analysis is included; (ii). the PMU prepares a monthly finance report for the Project Manager, produced from the PMU’s accounting system and therefore not consistent with the official accounting system maintained by the DOF; (iii). finance reports are not prepared for Implementation Units.8 The PMU will be the sole “implementing agency”. The draft Education for Employment SDP project administrational manual (PAM) provides a clear delineation of roles. 23. Inefficient processes. There are several steps involved in getting approval for activities and releasing payments. Although this does ensure that many checks are performed, the process is lengthy and inefficient. The project submits requests for no objection for each individual activity, rather than for the complete annual budget and activity plan. Payments are processed through the PMU, the DOF Financial Control Division, DOF Accounts Division, and the MOF. If mistakes are found in the supporting documents that require corrections, they are returned, then re-submitted and work through the process again from the beginning. 24. Internal audit. The MOES Internal Audit unit, within the Department of Inspection, does not conduct internal audits of projects. The Inspection Division/Financial Control Division within the DOF checks all transactions and supporting documents before payments are made. Although this does provide some assurance, this does not test other important controls. For example, it does not visit suppliers or workshops to conduct spot checks of supplier invoices or workshop attendance.

D. Personnel, Accounting Procedures, Internal Control, Internal and External Audit

25. Personnel at PMU: Under this SDP, two individual consultants to be recruited and embedded in the PMU to support financial management (with similar arrangements for procurement). A national financial management officer will be mobilized in early stages of the project, to support project start-up and put in place robust systems early in the project. The terms of reference (TOR) for this post will include (i). financial planning (supporting the preparation of the annual workplan and budget); (ii). financial reporting (preparing monthly and quarterly finance

8 The Secondary Education SDP used the term “implementation unit” or “IU”. The Education for Employment SDP will

instead use the term “technical implementation unit” or “TIU” to more explicitly indicate that they provide principally technical roles for initiatives in areas under their mandate (e.g., RIES will be the “TIU” providing technical leadership to curriculum revision and development of new teacher guides and supplementary materials).

Appendix 1 59

reports); (iii). financial monitoring (reviewing budget utilization and variances, expenditure against allocation by category, cash flows, levels of advances); (iv) document processing (review documents before they are submitted to the DOF, support the technical implementation units (TIUs) to clear advances, support the DOF to prepare withdrawal applications); (v). maintaining integrity of finance data (reconciling registers to the accounting system); and (vi). maintaining internal controls (promoting awareness of financial procedures, supporting external audit, implementing audit recommendations). An outline TOR is included as an appendix. 26. MOES’ DOF. The Director General will oversee the work of the DOF and provide advice and guidance to project staff. Two Divisions will have responsibilities under the project:

(i) Accounting Division: The Division will maintain the accounting software, review all payments and transactions, prepare withdrawal applications and annual financial statements. Managed by the Head of the Accounting Division, one of the Deputy Heads is responsible for donor projects. One technical staff will be allocated to work full-time for this SDP.

(ii) Financial Control Division: The Division will check all payment requests and supporting documents and conduct spot checks of supplier invoices and workshops.

27. MOF. The MOF will approve and sign withdrawal applications before these are submitted to the ADB. 28. Provincial Education and Sports Services (PESSs), District Education and Sports Bureaus (DESBs) and Schools:

(i) PESSs will maintain bank accounts, receive funds for selected school-level activities and stipends and transfer to schools, and manage funds for workshops and monitoring activities in the provinces. The PESSs will also receive financial reports on selected school-level activities and stipends from DESBs, review and consolidate these and submit to the PMU.

(ii) DESBs will receive finance reports from schools for selected school-level activities and payments, will review these and submit to the PESS.

(iii) Schools will manage funds for selected school-level activities and stipends and will maintain bank accounts. One teacher at each school will be assigned to be the accountant.

29. Procedures: The project will follow the ADB’s Loan Disbursement Handbook9 (2017, as amended from time to time) for disbursing loan proceeds. The project will also follow the following Government procedures: (i). Standard operating procedures for externally financed projects, 1998; (ii). MOF Decree 2066, which sets rules on certain types of expenditure, including travel and workshops (note: this is being revised by the MOF and will be superseded in 2019); MOF Regulation No.2695/MOF on Financial Management of ODA, 2010 (note: this will be superseded by a new document “Accounting System for Projects”, currently being prepared by the MOF Department of Accounting). In addition, DOF will prepare a project finance manual for the SDP, that will explain the specific procedures for the project, based on the project activities and organization structure. 30. External audit: The SAO will conduct an annual external audit of the project financial statements. The auditor will provide an opinion on the annual financial statements and will prepare a management letter to show findings identified during the audit, together with recommendations.

9 ADB. Loan Disbursement Handbook.

https://bit.ly/2WMH1hU

60 Appendix 1

The project will provide management comments to these recommendations and will implement the agreed actions. E. Financial Reporting Systems, Including Use of Information Technology

31. Annual budget: The PMU will prepare an annual workplan and budget based on the January-December financial year. The annual workplan and budget will show details of all planned activities, including the cost category, the output, the responsible units, and the budgeted amount by quarter. The annual workplan and budget will be submitted to the ADB for no objection one month before the start of the new financial year i.e. by 1 December. 32. Accounting systems: The PMU will maintain separate books and records for all expenditures incurred on the project. The project will maintain accounting records under the cash basis of accounting, using a licensed accounting software. Subsidiary registers, including an advances register, fixed assets register, contracts register, and selected school-level activities register, will be kept in excel and will be reconciled to the accounting software. Regular back-ups will be made of all financial data. 33. Quarterly reporting: The PMU will submit quarterly progress reports to the ADB. These will include a set of financial schedules including a source and application of funds, balance sheet, expenditure against budget by cost category and component, together with an analysis of any material budget variances. 34. Annual financial statements: Ministerial Order No. 529 of 2016 provides the legal framework for the implementation of IPSAS. The Ministerial Order requires the adoption of IPSAS for budget entities, administrative entities and government funds effectively as of 2017. The PMU, in collaboration with the DOF, will prepare annual project financial statements in accordance with International Public Sector Accounting Standards-Cash Basis. The financial statements will be audited and submitted to the ADB within 6 months of the end of the fiscal year, i.e. by 30 June. F. Disbursement Arrangements and Funds Flow Mechanism

35. The loan funds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements agreed upon between the Government and ADB. Online training for project staff on disbursement policies and procedures is available.10 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 36. Disbursements will be made using direct payment, liquidation, and replenishment. The PMU will be responsible for (i) collecting and retaining supporting documents; and (ii) preparing and sending withdrawal applications to ADB. 37. Advance fund procedure. MOF will open an advance account in US dollars at the Bank of Laos in the name of the project. The advance account is to be used exclusively for ADB’s share of eligible expenditures. MOES, who administers the advance account, is accountable and responsible for proper use of advances to the advance account. 38. The total outstanding advance should not exceed the estimate of ADB’s share of expenditures to be paid through the advance account for the forthcoming 6 months. The PMU

10 ADB. Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning.

http://wpqr4.adb.org/disbursement_elearning

Appendix 1 61

may request for initial and additional advances to the advance account based on an estimate of expenditure sheet11 setting out the estimated expenditures to be financed through the account for the forthcoming 6 months. Supporting documents should be submitted to ADB or retained by MOES in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) (footnote 9) when liquidating or replenishing the advance account. 39. Statement of expenditure (SOE) procedure. The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account. Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB’s disbursement and review missions, upon ADB’s request for submission of supporting documents on a sampling basis, and for independent audit. 40. Before the submission of the first withdrawal application, the PMU should submit to ADB sufficient evidence of the authority of the person who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is stipulated in the Loan Disbursement Handbook (footnote 9) (2017, as amended from time to time). Individual payments below such amount such be paid (i) by the PMU and subsequently claimed to ADB through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The PMU should ensure sufficient category and contract balances before requesting disbursements. 41. PESSs will maintain bank accounts. The bank accounts will be used (i) to receive funds for selected school-level activities and stipends that will be transferred to schools, and (ii) to receive advances for workshops and monitoring activities at province level. 42. Schools will maintain bank accounts. The bank accounts will be used for selected school-level activities and stipends. 43. The proposed funds flow arrangements are illustrated in the diagrams below.

11 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time) (See footnote 9).

62 Appendix 1

Figure A1.1: Fund Flow Arrangement for Direct Payments

Appendix 1 63

Figure A1.2: Fund Flow Arrangement for Advance Account/Replenishment (for project management, workshops, payments for stipends, small contracts, etc.)

64 Appendix 1

ADB = Asian Development Bank; BOL = Bank of Lao PDR; DESB = District Education and Sports Bureau; DOF = Department of Finance; IEC - Inclusive Education Center, MOES; MOES = Ministry of Education and Sports; MOF = Ministry of Finance; PESS = Provincial Education and Sports Services; PMU = project management unit. Note: 1. Ministry of Finance (MOF) will open an advance account at the Bank of Lao PDR (BOL) in the name of the project.

The advance account is to be used exclusively for ADB’s share of eligible expenditures. MOES, through the Department of Finance (under MOES), will administer and control the advance account, and is accountable and responsible for proper use of advances to the advance account. MOF issues payment instruction to MOES-DOF, MOES-DOF will then transfer fund to PMU and PESS.

NOTE: Fund flow Document flow

A. Initial advance: 1. PMU drafts withdrawal application for advance covering estimated expenditures for the first 6 months of implementation. 2. MOES-DOF receives from PMU the draft WA, and endorses to MOF after checking. 3. Draft WA is submitted to MOF and forwarded to ADB. 4. ADB processes the first WA, approves deposit of initial advance after checking estimated expenditures and authorized signatories. 5. BOL notifies PMU and MOF of the deposit. B. Replenishment/Liquidation Contractor/supplier/consultant submits a request for payment or invoice to PMU, which reviews and if in order, pays through its advance account. 1. Together with other various small expenditures, PMU prepares draft WA and submits to MOES DOF upon endorsement of the project director. 2. MOES DOF reviews and if cleared, endorses the WA to MOF. 3. MOF reviews, clears if submission is complete and satisfactory, signs the WA and submits to ADB. 4. ADB receives and approves payment to the advance account deposited at BOL. 5. BOL advises MOF and PMU of the replenishment transaction and updates statement of account or accounting records. 6. MOF provides LAK8 million for PMU petty cash monthly. C. Fund flow to PESS and Schools 1. Schools submit to DESB receipts and other required supporting documents under the stipend program. DESB checks and sends to PESS, if in order. 2. PESS sends the documents to IEC which collects and verifies the submission and submits to PMU. 3. PMU, upon endorsement of the project director, submits the draft WA to MOES DOF, which reviews and if cleared, endorses the WA to MOF. 4. MOES-DOF, transfer the money to PESS. IEC will notify PESS immediately about the fund release. 5. PESS, which transfers payment directly to the schools’ account.

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44. The project structure is appended below:

Table A1.1: Project Implementation Organizations—Roles and Responsibilities Project implementation organizations Management Roles and Responsibilities

Executing Agency • MOES will serve as executing agency for the Education for Employment SDP, in coordination with other agencies as needed. As executing agency, MOES shall ensure that relevant staff involved in implementation are fully aware of, and comply with, relevant Government and ADB procedures including, but not limited to, those for implementation, procurement, use of consultants, disbursement, reporting, monitoring, and prevention of fraud and corruption.

• MOES will (maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience, and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of loan proceeds and compliance with the financial covenants of the Loan Agreement, all in the English language; and (iv) furnish to ADB such information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

Education for Employment SDP Steering Committee

• The Education for Employment SDP Steering Committee will provide senior-most supervision, guidance, and cross-agency coordination to the Secondary Education SDP, particularly on policy program issues. The MOES Vice- Minister will chair the Steering Committee, which will also liaise with other government agencies at a senior level, as needed on major policy or reform issues. Membership will include Director Generals of relevant departments.

Department of General Education

• The Director General of DGE will serve as Program Director, and will facilitate policy dialogue across MOES units (i.e., departments, institutions, etc.) and with other agencies as appropriate; supervise and oversee project implementation at the central and sub-national levels; mobilize professional staff to support project implementation; review and endorse any requests and documents within his\her jurisdiction during project implementation (e.g. approval of bidding documents, bid evaluation results and contract awards for contracts procured by PMU; approval of overall and detailed implementation plans and cost estimates); and submit periodic and ad hoc reports on project performance as required by ADB and concerned agencies.

PMU Head (MOES) Deputy Head (MOES) Procurement and Contracts Specialist Financial Management Specialist

• Established within DGE and reporting to the Program Director, the PMU will provide overall management of all aspects of implementation of the Education for Employment SDP, ensuring compliance with loan and grant covenants, relevant ADB policies, and PAM, as well as alignment with the project design (excepting agreed modifications), the GAP, environmental and social safeguards, and other agreements. Specific areas of responsibility will include: (i) overall planning; (ii) monitoring and evaluation; (iii) social safeguards; (iv) administration, including procurement,

66 Appendix 1

Project implementation organizations Management Roles and Responsibilities

Construction supervision engineers Reporting and Monitoring Specialist Gender and Social Development Specialist Environment Specialista

Indigenous Peoples’ Safeguards Specialist International Procurement Specialistb

International Financial Management Specialistb Finance Assistant Reporting and Monitoring Assistant Administrative Assistants (2)

disbursement, and accounting; and (v) ensuring independent auditing. The PMU will supervise and be supported by project-financed consultants and will coordinate the work of individual TIUs, noted below. The PMU will also serve as focal point for periodic reporting, submission of annual or periodic work plans and other proposals, and liquidation and provision of other documentation to ADB. Detailed TOR for the PMU will be defined in an MOES decree before effectiveness, and included in agreed revisions of the PAM.

TIUs • TIUs will be responsible for technical leadership and direct supervision of specific project-supported interventions that fall under their mandates. Each TIU will be headed by the Director General or head of the department/institution. TIUs will propose work plans annually or as needed to the PMU and will report quarterly or as needed to the PMU. They will also be responsible for submitting to the PMU materials to support liquidation of allowable expenditures and other required documentation.

Provincial TIUs • A Deputy Director in PESS will oversee implementation of project-supported interventions at the provincial and sub-provincial levels, with PESS staff and/or units taking responsibility for specific project activities: e.g., PUCDA for civil works, PESS gender focal point for gender issues, etc.

DESB • Under PESS guidance, a Director or Deputy Director in DESB will oversee overall implementation of project-supported interventions at the district and school levels, with DESB staff and/or units taking responsibility for specific project activities.

ADB • ADB will approve procurement activities and withdrawal applications, disburse funds for allowable expenditures, supervise project implementation and compliance with the Loan Agreements and PAM, and conduct periodic reviews to assess progress towards Program outcome, outputs, and expected deliverables, as well as the GAP and EGDP.

• ADB’s Southeast Asia Human and Social Development Division will directly oversee the Education for Employment SDP, in close coordination with the ADB Lao PDR Resident Mission, which will additionally provide front-line support to ongoing policy and donor dialogue, project-specific troubleshooting, etc.

ADB = Asian Development Bank, DESB = District Education and Sports Bureaus, DGE = Department of General Education, EGDP = ethnic group development plan, GAP = gender action plan, Lao PDR = Lao People’s Democratic Republic, MOES = Ministry of Education and Sports, PAM = project administration manual, PESS = Provincial Education and Sports Services , PMU = project management unit, PUCDA = provincial unit for construction and development assistance, SDP = sector development program, TIUs = Technical Implementing Units a Required up through completion of construction of civil works under output 3.

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b Required to support project start-up and put in place robust systems early in the project. Source: Asian Development Bank.

45. The PMU will provide overall management of all aspects of implementation. It will supervise and be supported by project-financed consultants and will coordinate inputs by TIUs, which may take technical leadership of specific interventions. The PMU will also serve as focal point for periodic reporting (including project-wide progress reports, safeguard-related documentation, etc.), submission of annual or periodic work plans and other proposals, and liquidation and provision of other documentation to Asian Development Bank. Detailed terms of reference of the PMU will be defined in a Ministry of Education and Sports decree before effectiveness. A provincial TIU will be established in each PESS headed by a PESS deputy director and with delegated members of technical sections: e.g., provincial unit for construction and development assistance for civil works, finance, teacher development, secondary education section, etc. DESB roles and responsibilities related to the SDP will include liaison with village authorities and school principals, distribution of teaching and learning materials to schools, selecting teachers for in-service teacher training, site monitoring visits.

IV. RISK DESCRIPTION AND RATING

46. A Financial Management, Internal Control and Risk Assessment was conducted to identify fiduciary risks that may negatively affect project outcomes or hinder project implementation. The process included analyzing the risks arising from weaknesses in the project’s financial management systems. The identified risks are given a rating according using the following levels:

(i) High: likely to occur, will have a high impact if occurs; (ii) Substantial: unlikely to occur, will have a high impact if occurs; (iii) Moderate: likely to occur, will have a low impact if occurs; and (iv) Low: not likely to occur, will have a low impact if occurs

47. This risk assessment considers two broad categories of risk:

(i) Inherent risks: these arise from the overall environment in which the executing and implementing agencies operate, before considering the impact of the project’s financial management systems and controls; and

(ii) Project risks: these are the risks that the project’s financial management and internal control arrangements are inadequate to ensure that project funds are used economically, efficiently and for the intended purpose.

48. The assessment identifies potential mitigation measures, which seek to reduce the likelihood of the risk event occurring, or to reduce its impact. 49. From an assessment of the current risks, the risk levels before mitigation measures are rated as substantial for inherent risk and moderate for project risk, with a combined risk rating of moderate. The table of risks and mitigation measures is shown in the table below. The residual risk after the mitigation measures are implemented is rated as low.

68 Appendix 1

Table A1.2: Financial Management, Internal Control and Risk Assessment Summary

Risk Description Risk Rating

Mitigation Measures (substantial/high risks)

Monitoring (moderate/low risks)

Inherent risk

1. Country specific Unrealistic forecasts, a lack of reliable and timely financial reports, and vulnerability to corruption

Substantial ADB, World Bank and other development partners continue to support on-going efforts to strengthen PFM arrangements, through technical assistance.

2. Entity specific (MOES) Low financial management capacity, use of excel-based accounting systems, late reporting and advance clearances from TIUs.

Substantial Mitigation measures for these risks are included in the project specific measures.

Overall Inherent Risk Substantial

Project risk

1. Implementing entity Risk of some finance tasks being overlooked because of unclear division of responsibilities between the PMU and the DOF.

Low Monitoring: Monitor whether the responsibilities for the DOF and PMU are clearly explained in the project finance manual.

2. Funds flow Risk of delayed implementation of selected school-level activities and stipends because of late transfers of funds to schools.

Moderate Monitoring: Monitor the time taken for selected school-level activities and stipend transfers to be processed and to reach school levels.

3. Staffing Inadequate staffing time allocated to ensure that advances are cleared.

Moderate Monitor the level of outstanding advances from each TIU and PESS.

4. Accounting policies and procedures

• Risk of delays in implementation because of long processes with many steps to request approvals for activities and process payments.

• Risks of incorrect information being reported, and wrong decisions being made because subsidiary registers are not reconciled to the accounting system to validate information. Risks of under-reporting of expenditure, incurring ineligible costs, and slowing cash-flows from delays in clearing advances and holding large outstanding advance balances.

Substantial Mitigation measures:

• Submit an annual workplan to ADB to request NOL, replacing the system of NOL requests for individual activities.

• Reconcile subsidiary registers (including asset register, contracts register, selected school-level activities register) to the accounting system each quarter.

• Implement a rule that a TIU or PESS with an outstanding advance may not receive further advance. Include a list of outstanding advances in the quarterly report.

5. Internal audit

• Risks of irregularities and control weaknesses not being identified if comprehensive internal audits of the project are not conducted.

Substantial Mitigation measures:

• The Internal Audit Unit, under the Department of Inspection, will conduct annual internal audits of the Education for Employment SDP, including spot-checks of supplier invoices and workshops.

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ADB = Asian Development Bank, DOF = Department of Finance, MOES = Ministry of Education and Sports, PESS = Provincial Education and Sports Services, PMU = project management unit, SDP = sector development program, TIUs = technical implementation units.

Risk Description Risk Rating

Mitigation Measures (substantial/high risks)

Monitoring (moderate/low risks)

6. External audit Risk that audited annual financial statements are not submitted on time.

Moderate Monitoring: PMU to monitor the dates that financial statements are prepared, audit work conducted, and audit reports submitted to ADB.

7. Reporting and monitoring

• Risk that there is inadequate level of financial reporting to monitor the project if there are no comprehensive monthly or quarterly finance reports.

• Risk of incorrect and inconsistent financial information being used due to finance reports being produced from parallel excel-based accounting are maintained at the DOF and PMU.

Substantial Mitigating measures:

• Prepare and submit a set of financial reports with quarterly progress report (including sources and application of funds, balance sheet, spend against budget by category and component, variance analysis, outstanding advances).

• Produce monthly finance reports that show spend against annual budget.

• Produce all finance reports using expenditure information from the accounting system.

8. Information systems

• Risk that financial data may become corrupted or lost because an excel based accounting system is used, with infrequent back-ups.

• Risks of inefficiencies from maintaining parallel excel records at the DOF and PMU.

Substantial Mitigating measures:

• Implement a computerized accounting software and make regular back-ups of financial data within 24 months from loan effectiveness.

• Provide view-only access to the PMU financial management specialist to the accounting system.

Overall Project Risk Substantial

Overall (combined) risk Substantial

70 Appendix 1

50. The time-bound action plan lays out the proposed responsibilities and timeframes to implement the mitigation measures identified in the risk assessment.

Table A1.3: Proposed Time-Bound Action Plan

Weakness Mitigation actions Responsibility Timeframe

Lengthy approval processes for activities and process payments.

Submit an annual workplan to ADB to request NOL, replacing the system of NOL requests for individual activities.

PMU 1 December each year

Internal audits of the project are not conducted

The Internal Audit Unit, under the Department of Inspection, will conduct internal audits of the Education for Employment SDP, including spot-checks of supplier invoices and workshops.

MOES Department of Inspection, Internal Audit unit

Annually

An excel-based accounting system is used.

Implement a computerized accounting software and make regular back-ups of financial data.

DOF Accounting Division

Within 24 months of effectiveness

Subsidiary registers are not reconciled to the accounting system to validate information.

Reconcile subsidiary registers (including asset register, contracts register, selected school-level activities register) to the accounting system each quarter.

PMU Every quarter

Parallel excel based accounting records are maintained at the DOF and PMU. Finance reports being produced from parallel excel based records maintained at the DOF and PMU.

Provide view-only access to the PMU financial management specialist to the accounting system. Produce all finance reports using expenditure information from the accounting system.

PMU and DOF Within 24 months of effectiveness


The Ministerial Order requires the adoption of IPSAS for budget entities, administrative entities and government funds effectively as of 2017. It is recommended that project to provide training support to relevant staffs in DOF and PMU for IPSAS cash implementation. Relevant staffs will be required to complete e-learning module on Cash Basis IPSAS.

MOES Within 6 months of effectiveness

ADB = Asian Development Bank, DOF = Department of Finance, IPSAS = international Public Sector Accounting Standards, MOES = Ministry of Education and Sports, NOL = No Objection Letter, PMU = Project Management Unit, SDP = sector development program.

Appendix 1 71

V. SUGGESTED FINANCIAL MANAGEMENT COVENANTS

51. First. The PMU should (i) maintain separate accounts and records for the Project; (ii) prepare annual financial statements for the Project in accordance with financial reporting standards acceptable to ADB; (iii) have such annual financial statements audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iv) as part of each such audit, have the auditors prepare a report, which includes the auditors’ opinion(s) on the financial statements and the use of the Loan proceeds, and a management letter (which sets out the deficiencies in the internal control of the project that were identified in the course of the audit, if any); and (v) furnish to ADB, no later than six months after the end of each related fiscal year, certified copies of such audited financial statements, audit report and management letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request. 52. Second. ADB shall disclose the audited financial statements for the Project and the opinion of the auditors on the financial statements within 14 days of the date of ADB’s confirmation of their acceptability by posting them on ADB’s website. 53. Third. The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower’s financial statements for the Project and its financial affairs, where they relate to the Project with the auditors appointed pursuant to Section (a) (iii) herein above and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. This is provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. 54. The Borrower shall enable ADB's representatives to inspect the Project, the Goods and Works, and any relevant records and documents.

VI. CONCLUSION

55. The project financial management arrangements, with the recommended mitigation measures in place, are considered satisfactory, with a residual risk rating of moderate.

VII. ANNEXES

1. Financial Management Questionnaire 2. Financial Management Assessment: PBL Portion 3. List of People Met 4. Ministry of Education and Sports Department of Finance Structure 5. Ministry of Education and Sports Department of Finance Structure Accounting Division

structure and list of staff 6. Proposed Terms of References for Project Management Unit Finance Consultant 7. Notes and recommendations on Taxes and Duties

72 Appendix 1

ANNEX 1: FINANCIAL MANAGEMENT ASSESSMENT QUESTIONNAIRE

Topic Response Potential Risk Event

1. Executing/Implementing Agency

1.1. What is the entity’s legal status / registration?

MOES will be the Executing Agency.

1.2. Has the entity implemented an externally-financed project in the past? If yes, please provide details.

MOES has implemented many donor projects. It is currently implementing 3 ADB Projects (the Secondary Education SDP, TVET, Higher Education) and 2 World Bank Projects (ECE and GPE2)

1.3. What is the governing body for the project? Is the governing body for the project independent?

Expect that the Education for Employment SDP will have a Steering Committee chaired by the MOES Minister, as per the Secondary Education SDP.

1.4. Obtain current organizational structure and describe key management personnel. Is the organizational structure and governance appropriate for the needs of the project?

The Education for Employment SDP organizational structure is expected to be similar to that of the Secondary Education SDP, with a PMU within MOES.

1.5. What is the organizational structure for accounting and funds management?

In the Laos system, financial management responsibilities are spread across several entities. These consist of: Ministry of Finance (MOF). The MOF approves Withdrawal Applications. The MOES Department of Finance (DOF) Accounting Division maintains the accounts system, reviews all payments and transactions, prepares financial reports and Withdrawal Applications, and manages the Sub-Account. The DOF Financial Control Division checks all payment requests before they can be processed. The PMU prepares and submits proposals and payment requests. It manages the petty

Risk that some tasks are not completed because of unclear responsibilities.

Appendix 1 73


cash fund. It supports the preparation of financial reports and monitors project spend. The split of responsibilities is generally clear, but there are some areas where the responsibility is unclear between the DOF and PMU to at least some staff (e.g. financial reporting responsibilities)

1.6. Describe (if any) any historical issues reports of ethics violations involving the entity and management. How were they addressed?

No violations reported by the people met or mentioned in audit reports and other reports read during the assessment.

2. Funds Flow Arrangements

2.1. Describe the (proposed) project funds flow arrangements in detail, including a funds flow diagram and explanation of the flow of funds from ADB, government and other financiers, to the government, EA, IA, suppliers, contractors, ultimate beneficiaries, etc. as applicable.

See the funds flow diagram in the Finance Assessment Report. ADB Funds flow to an Advance account under the MOF. A sub-account is held by the MOES DOF for operating costs (max payment $1,000). Provinces (PESSs) have bank accounts (for project use only) for (i) receiving funds for school grants and stipends which are transferred ton schools, and (ii) for receiving advances for workshops and monitoring activities at province level. Schools maintain bank accounts (for project use only) for receiving funds for school grants and stipends. The initial idea in the Secondary Education SDP PAM was for funding to schools to be transferred directly from the Advance Account to school accounts. This was later changed, to transfer through PESSs (it was explained that Provinces insisted on this, to maintain their roles to oversee schools).

Transferring school funds through the PESS risks delays in the funding process. It is less efficient and adds at least 2 weeks to the process.

74 Appendix 1


2.2. Are the (proposed) arrangements to transfer the proceeds of the loan (from the government / Finance Ministry) to the entity and to the end-recipients satisfactory?

Most payments are made from the Advance Account under the MOF. See the payments section for discussion about payment processing timelines.

2.3. Are the disbursement methods appropriate?

In general, yes.

2.4. What have been the major problems in the past involving the receipt, accounting and/or administration of funds by the entity?

The Secondary Education SDP reports that it has not met problems of shortage of cash.

2.5. In which bank will the Advance Account (if applicable) be established?

The Advance Account will be opened at the Bank of Laos (BOL).

2.6. Is the bank in which the advance account is established capable of Executing foreign and local currency transactions, Issuing and administering letters of credit (LC), Handling a large volume of transaction and Issuing detailed monthly bank statements promptly?

Yes. The BOL is used for all ADB (and WB) projects and has adequate capability.

2.7. Is the ceiling for disbursements from the Advance account and SOE appropriate/required?

See 2.4

2.8. Does the (proposed) project management unit (PMU) have experience in the management of disbursements from ADB?

The MOF and the MOES DOF both have significant experience. A PMU will be established; key staff are expected to have experience in management of ADB projects.

2.9. Does the PMU have adequate administrative and accounting capacity to manage the advance fund and statement of expenditure (SOE) procedures in accordance with ADB’s Loan Disbursement Handbook (LDH)? Identify any concern or uncertainty about the

The MOE DOF and the MOF have adequate capacity and experience. The Education for Employment SDP PMU will recruit a suitably skilled and experienced financial management specialist.

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PMU’s administrative and accounting capability which would support the establishment of a ceiling on the use of the SOE procedure.

2.10. Is the entity exposed to foreign exchange risk? If yes, describe the entity’s policy and arrangements for managing foreign exchange risk.

For the Secondary Education SDP, the Grant Agreement is in the reporting currency (USD). Many project expenses are incurred in Lao Kip and are converted to USD using official exchange rates; this does give some exchange risk. However, the USD-Kip exchange rate has been relatively stable over the past 5-10 years. And as the accounting system and reporting system is maintained in USD, the risks are reduced.

2.11. How are the counterpart funds accessed?

Counterpart funding for the Secondary Education SDP is in-kind (land for school construction, staff, office space, utilities). We expect that this will be the same for the Education for Employment SDP.

3. Staffing

3.1. What is the current and/or proposed organizational structure of the accounting department? Attach an organization chart.

For the PMU: Under the Secondary Education SDP, there is one finance officer (national consultant) who reports to the Project Manager. For the DOF. The Director manages six divisions, including the Accounting Division and the Financial Control Division. Within the Accounting Division, the Head of the Division has two Deputies. One Deputy is responsible for ADB projects and leads a team of technical staff. One technical staff is assigned to each project.

76 Appendix 1


3.2. Will existing staff be assigned to the project, or will new staff be recruited?

The technical officer within the DOF Accounting Division will be assigned to the Education for Employment SDP project. The PMU will need to conduct a procurement to select a financial management specialist.

3.3. Describe the existing or proposed project accounting staff, including job title, responsibilities, educational background and professional experience. Are the project finance and accounting staff adequately qualified and experienced?

The PMU financial management specialist has worked on ADB projects for more than 10 years; has a bachelor’s degree in finance. The DOF technical staff responsible for the project has a bachelor’s degree in business management and also approx. 10 years’ experience in ADB projects. Other staff in the DOF also have several years’ experience in ADB and other donor projects.

3.4. Is the project finance and accounting function staffed adequately?

In general, yes. Although it may be useful to have an additional staff in the PMU to follow up on advance clearing (see section 4 for outstanding advances issue)

Insufficient focus on clearing advances may lead to a build of large outstanding advance balances, as in the Secondary Education SDP.

3.5. Are the project finance and accounting staff trained in ADB procedures, including the disbursement guidelines (i.e., LDH)?

Yes, they have received training on ADB procedures from the ADB (training conducted every 1-2 years) and have lots of experience.

3.6. What is the duration of the contract with the project finance and accounting staff?

Staff in the DOF are permanent government staff. The PMU financial management specialist has renewable 1-year contracts.

3.7. For new staff, describe the proposed project finance and accounting staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions.

PMU will be established for the new project, and a financial management specialist recruited. An outline TOR for the Education for Employment SDP financial management

Appendix 1 77


specialist (based on the Secondary Education SDP, with some changes proposed) is attached as an annex.

3.8. Does the project have written position descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff?

PMU staff have job descriptions. Responsibilities for DOF staff are included in the finance manuals.

3.9. What is the turnover rate for finance and accounting personnel (including terminations, resignations, transfers, etc.)?

Staffing has been stable – there has been no turnover of the PMU financial management specialist or the main DOF staff.

3.10. What is training policy for the finance and accounting staff?

There is no documented policy. Finance staff receive training on ADB procedures every 1-2 years. DOF staff expressed for further training, especially in IPSAS.

3.11. Describe the list of training programs attended by finance and accounting staff in the last 3 years.

The financial management specialist and DOF accounting staff have attended training conducted by ADB on ADB procedures, including the updated LDH.

4. Accounting Policies and Procedures

4.1. Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds (in particular, the legal agreements with ADB)?

For accounting software – see Information Systems, Section 8. The project follows the system laid out in: The Government’s Standard Operating Procedures for externally financed projects (1998), together with a project-specific finance manual.

4.2. Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are

Yes, there are many checks and steps in the process.

78 Appendix 1


correctly made and adequately explained?

4.3. Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? Obtain a copy of the chart of accounts.

Yes, the chart of accounts is set up for the project, including disbursement categories.

4.4. Are cost allocations to the various funding sources made accurately and in accordance with established agreements?

The MOD Accounting Division code all transactions. There is only 1 funding source. The DOF understand the cost categories and the correct codes to use.

4.5. Are the General Ledger and subsidiary ledgers reconciled monthly? Are actions taken to resolve reconciliation differences?

Subsidiary registers (such as contracts register, school grants register, asset register) are not reconciled to the general ledger.

Lack of reconciliations increases the risk of mistakes and inaccurate information being reported.

4.6. Describe the EA’s policy for retention of accounting records including supporting documents (e.g, ADB’s policy requires that all documents should be retained for at least 1 year after ADB receives the audited project financial statements for the final accounting period of implementation, or 2 years after the loan closing date, whichever is later). Are all accounting and supporting documents retained in a defined system that allows authorized users easy access?

The DOF keep all transaction documents, for longer than the minimum time period.

4.7. Describe any previous audit findings that have not been addressed.

Audit reports for the last 3 years show that many findings have been addressed in the subsequent year. The main recurring issue that has not been fully addressed concerns the level of outstanding advances.

Insufficient management action to clear the outstanding advances issue – late clearing of advances has several risks (see section below)

Segregation of Duties

4.8. Are the following functional responsibilities performed by different units or persons: (i) authorization to

Yes, the separation of responsibilities between PMU, DOF and MOF supports this.

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execute a transaction; (ii) recording of the transaction; (iii) custody of assets involved in the transaction; (iv) reconciliation of bank accounts and subsidiary ledgers?

4.9. Are the functions of ordering, receiving, accounting for, and paying for goods and services appropriately segregated?

Yes, these are segregated across the procurement unit, IUs, DOF and MOF.

Budgeting System

4.10. Describe the budget process. Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets?

IUs submit budget proposals. The PMU reviews and consolidates into an annual budget. The annual budget is grouped by cost category, with each item detailed by quarter, with description and the IU name, and amount.

4.11. Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals?

Yes, IUs are involved and PMU reviews and consolidates.

4.12. Do budgets include physical and financial targets?

Descriptions in the budget do include some physical targets.

4.13. Are budgets prepared for all significant activities in sufficient detail to allow meaningful monitoring of subsequent performance?

Yes, in theory. The budget contains details for activities, cost category, IU, quarterly amounts.

4.14. Who is responsible for approval of budgets?

The annual budget is used for internal planning purposes, and is approved by the Project Steering Committee. The budget is not submitted to the ADB for No Objection Letter (NOL). An NOL is required from ADB for each individual activity. The request for NOL is approved by the Minister before being submitted to the ADB.

Time taken to request individual NOL for each activity risks delays in implementation.

80 Appendix 1


4.15. Who is responsible for oversight/monitoring of budgets? Are actual expenditures compared to the budget with reasonable frequency? Are explanations required for significant variations against the budget?

It is unclear who reviews performance against budget, and how this happens. The DOF Accounting Division prepares expenditure reports, but these don’t include budget information. They believe that the PMU monitors the spend against budget. The PMU financial management specialist, however, thinks that the DOF are responsible for monitoring this. Quarterly progress reports don’t contain comparisons of expenditure against budget. The last Aide Memoire shows the need for a re-allocation of budget across cost categories was raised by the ADB, rather than identified and requested first by the project.

Lack of review of financial performance.

4.16. Are approvals for variations from the budget required (i) in advance, or (ii) after the fact?

All proposals and activity requests require pre-approval.

Payments

4.17. Do invoice-processing procedures require: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports? (iv) Checking the accuracy of calculations? (v) Checking authenticity of invoices and supporting documents?

Yes, payments procedures include a number of checks, by different entities, including:

• Review by the PMU financial management specialist

• Checking by the DOF Financial Control Division (for full supporting documentation, calculations)

• Checking by the DOF Accounting Division

• Checking by the MOF Treasury Department before making payment

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4.18. Are payments processed efficiently and in a timely manner?

There are many steps that payments have to pass through before being paid. There are concerns that this may delay payments and activities. Although the project reports that most payments can be processed in 2 weeks, if there are no errors, there can be delays if (i) the checking process finds mistakes in the documents, which mean that the documents are returned for correction and then have to go through the process again, (ii) key staff are away.

Risk of delayed activities because of a long payment process.

4.19. Are all invoices stamped PAID, dated, reviewed and approved, recorded/entered into the system correctly, and clearly marked for account code assignment?

No issues raised or reported.

Policies And Procedures

4.20. What is the basis of accounting (e.g., cash, accrual) followed (i) by the entity? (ii) By the project?

The cash basis of accounting is used by the project.

4.21. What accounting standards are followed (International Financial Reporting Standards, International Public Sector Accounting Standards – cash or accrual, or National Accounting Standards (specify) or other?

Specific accounting standards are not followed when preparing financial statements. The DOF explained that IPSAS (cash basis) may be followed at some point in the future; but they don’t have sufficient understanding of these currently.


4.22. Does the project have adequate policies and procedures manual(s) to guide activities and ensure staff accountability?

Yes. Policies and procedure manuals to guide projects include:

• The Government’s Standard Operating Procedures for externally financed projects (1998)

• MOF Decree 2066, which sets rules on certain types of expenditure, including travel and workshops (note: this is being

82 Appendix 1


revised by the MOF and will be superseded in 2019)

• Ministry of Finance Regulation No.2695/MOF on Financial Management of ODA, 2010 (note: this will be superseded by a new document “Accounting System for Projects”, currently being prepared by the MOF Department of Accounting).

• A project finance manual is prepared by the DOF for each donor project (including one for the Secondary Education SDP), to lay out the specific rules for the project activities

• These are supplemented by operational manuals for some project activities (including school grants and stipends)

4.23. Do procedures exist to ensure that only authorized persons can alter or establish a new accounting policy or procedure to be used by the entity?

Yes, new accounting policies will be issued only by MOF.

4.24. Are there written policies and procedures covering all routine financial management and related administrative activities?

Yes, these are covered in the manuals and procedures listed above.

4.25. Are manuals distributed to appropriate personnel?

The project finance manual is available at the PMU and at the DOF.

4.26. Describe how compliance with policies and procedures are verified and monitored.

Compliance is checked:

• By review of documents related to each transaction (by PMU, DOF Financial Control Division and Accounting Division)

• By external audit

Cash and Bank

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4.27. Indicate names and positions of authorized signatories for bank accounts. Include those persons who have custody over bank passwords, USB keys, or equivalent for online transactions.

Cheque signatories are under the MOF for the Imprest/Advance account, and under the MOES for the Sub-Account. USB keys and online banking is not used.

4.28. Does the organization maintain an adequate and up-to-date cashbook recording receipts and payments?

The excel system maintained by the Accounting Division includes a cashbook.

4.29. Are bank accounts reconciled on a monthly basis? Or more often?

There are monthly reconciliations.

4.30. Is cash on hand physically verified, and reconciled with the cash books? With what frequency is this done?

These are verified monthly.

4.31. Are all reconciling items approved and recorded?

Reconciling items are identified. The reconciliation forms are approved.

4.32. Are there any persistent/non-moving reconciling items?

No

4.33. Are any large cash balances maintained at the head office or field offices? If so, for what purpose?

No. There is a petty cash ceiling of 8 million kip, and maximum payment level of 1 million kip

Safeguard over Assets

4.34. What policies and procedures are in place to adequately safeguard or protect assets from fraud, waste and abuse?

An asset register is maintained. Assets labelled with ID number. Assets are checked. Losses must be reported.

4.35. Does the entity maintain a Fixed Assets Register? Is the register updated monthly? Does the register record ownership of assets, any assets under lien or encumbered, or have been pledged?

A fixed asset register is maintained by the PMU financial management specialist, in excel. This contains 2 files – 1 for the PMU ad IUs and 1 for assets in the province. The register is updated every 6 months.

4.36. Are subsidiary records of fixed assets, inventories and stocks kept up to date and reconciled with control accounts?

The fixed asset register is not reconciled with the accounting system. The external audit report management letters for 2014 and 2015 reported that some

Without a reconciliation, there is a greater risk that the asset register will be incomplete or contain errors.

84 Appendix 1


assets had been included in the consolidated asset register.

4.37. Are there periodic physical inventories of fixed assets, inventories and stocks? Are fixed assets, inventories and stocks appropriately labeled?

Assets are labelled. Physical checks should be conducted every year. At central level, this is conducted by the PMU. At province level, the provincial construction units check and submit.

4.38. Are the physical inventory of fixed assets and stocks reconciled with the respective fixed assets and stock registers, and discrepancies analyzed and resolved?

If loss or damaged, have to write a report. Make a certificate of less/damage.

4.39. Are assets sufficiently covered by insurance policies?

Vehicles are insured.

4.40. Describe the policies and procedures in identifying and maintaining fully depreciated assets from active assets.

All assets remain on the asset register for the lifetime of the project.

Other Offices and Implementing Entities

4.41. Describe any other regional offices or executing entities participating in implementation. Describe the staff, their roles and responsibilities in performing accounting and financial management functions of such offices as they relate to the project.

Schools receive funds for school grants and stipends, maintain bank accounts and submit reports. District Education Bureaus (DEBs) receive reports from schools, consolidate and submit to PESs, and monitor schools. Provincial Education Services (PESs) (i) receive funds for school grants and stipends and transfer to schools (ii) receive consolidated reports from DEBs on school grants and stipends (iii). Manage funds for workshops at province level (iv) receive funds for conducting monitoring of school construction.

4.42. Has the project established segregation of duties, controls and procedures for flow of funds and financial information,

Procedures are included, in project finance manuals, and in project operation manuals for the stipends and school grants.

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accountability, and reporting and audits in relation to the other offices or entities?

4.43. Does information among the different offices/implementing agencies flow in an accurate and timely fashion? In particular, do the offices other than the head office use the same accounting and reporting system?

Reports flow from schools to DEBs, to PESs, to the PMU, and then to the DOF. Reports have been submitted in a timely manner, in general.

4.44. Are periodic reconciliations performed among the different offices/implementing agencies? Describe the project reporting and auditing arrangements between these offices and the main executing/implementing agencies.

The PMU maintains a register for school grants and stipends. The Accounting Division maintains an advance register for advances to PESS. The external audit covers a sample of provinces each year. No major issues have been reported for the school grants and stipend activities.

4.45. If any sub-accounts (under the Advance Account) will be maintained, describe the results of the assessment of the financial management capacity of the administrator of such sub-accounts.

There is only an official project sub-account under the MOE DOF, for operations costs. PESs and schools maintain bank accounts specifically for project funds, but these are not classed as sub-accounts. The capacity of PESS, DEBS and schools was not covered by this assessment.

Contract Management and Accounting

4.46. Does the agency maintain contract-wise accounting records to indicate gross value of contract, and any amendments, variations and escalations, payments made, and undisbursed balances? Are the records consistent with physical outputs/deliverables of the contract?

The procurement unit in the PMU maintains a contract register.

4.47. Are the contract registers reconciled with the accounting system or with the supplier?

The contracts register is not reconciled, either with the official accounting system maintained by the DOF or the unofficial

There is a risk that the contract register will contain incorrect information, and that wrong decisions may be taken based as

86 Appendix 1


accounting file maintained by the PMU financial management specialist.

a result. This could lead to overpayments against contracts.

Other – advances and taxes

4.48. Are advances cleared on time? How are outstanding advances monitored.

The DOF Accounting Division maintains an advances register, which shows the level of outstanding advances. These are also reported on the balance sheet. The level of outstanding advances has been extremely high – close to $1 million over the last 3 years. At 31 October 2018, the outstanding amount remained at over $1 million, with some advances outstanding for several years (one since 2012). The responsibility for monitoring and following up on outstanding advances is with the PMU, under the deputy project manager. The reason for the high level of advances is unclear (they are mainly at province level, and include both advances for workshops, and for monitoring activities).

There are risks from late advance clearances that:

• Expenditure is under-reported (expenditure is only recognized once advances are cleared)

• Documents will be lost, and staff will turnover, thus increasing risk that advances will not be able to be cleared and costs will be ineligible

• Cash is tied up in advances, affecting cashflow.

4.49. Are the arrangements for paying tax clear for projects?

Two factors:

• Funding in Laos has been changing from grants to loans. The MOF is less likely to want ADB funds to pay for taxes for loans.

• Tax laws/regulations in Laos are gradually being more strictly applied.

The ADB Higher Education project is reportedly facing problems because of unclear tax arrangements.

See the separate section below this table “Notes and Recommendations for Tax”

5. Internal Audit

5.1. Is there an internal audit (IA) department in the entity?

MOES has an Internal Audit unit, within the Department of Inspection.

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The MOES Department of Finance does have a Financial Control Division which conducts checks of transactions.

5.2. What are the qualifications and experience of the IA staff?

For the Internal Audit unit - not known

5.3. Will the internal audit department include the project in its annual work program?

The Internal Audit unit does not conduct internal audits of projects. The MOES Department of Finance does have a Financial Control Division; this division checks all transactions and supporting documents for donor projects before payment can be made.

No internal audits are conducted. Although the risk is reduced from the 100% transaction checking work of the Financial control Division, there are some tests of internal controls that are not being conducted, such as:

• Spot checks of supplier invoices (to check the validity of the invoice, and the price)

• Spot checks of workshops (to confirm attendance and allowance payments)

6. External Audit – project level

6.1. Who will audit the project financial statements?

External audits of ADB projects in Lao PDR are conducted by the State Audit Organisation.

6.2. Are there any delays in audits of the project?

The deadline for the Secondary Education SDP to submit audited financial statements is 9 months after the end of the fiscal year (ADB usually set 6 months; 9 months is stated in the grant agreement for the Secondary Education SDP). The audited financial statements for 2017 were submitted on time (28th September). (Note: the Laos fiscal year changed from October-September to January-December in 2017)

88 Appendix 1


6.3. Were there any major accountability issues noted in the audit report for the past three years?

The most significant issue probably relates to the level of outstanding advances. However, the auditor doesn’t flag this issue as a high risk item.

6.4. Are there any recommendations made by the auditors in prior project audit reports or management letters that have not yet been implemented?

Many issues clear in subsequent years. The main recurring issue relates to outstanding advances.

6.5. Has the project prepared acceptable terms of reference for an annual project audit? Have these been agreed and discussed with the EA and the auditor?

The TOR is not set by the project. The auditing arrangement is agreed with the ADB for all projects in Lao PDR; the ADB accepts the TOR.

6.6. Has the project auditor identified any issues with the availability and completeness of records and supporting documents?

No. The audit report states that there is a complete set of supporting documents available.

6.7. Does the external auditor have sufficient knowledge and understanding of ADB’s guidelines and procedures, including the disbursement guidelines and procedures (i.e., LDH)?

We didn’t meet the State Audit Organisation to test this but assume that this is the case as the auditing arrangement is accepted by ADB.

7. Reporting and Monitoring

7.1. Are financial statements and reports prepared for the entity?

A set of annual financial statements is prepared for the project. These are prepared by the DOF Accounting Division.

7.2. What is the frequency of preparation of financial statements and reports? Are the reports prepared in a timely fashion so as to be useful to management for decision making?

Reports prepared include: Annual financial statements The Accounting Division prepares quarterly expenditure reports. The quarterly progress report is submitted to the ADB. The financial report included is a screen shot of the project expenditure from the ADB LFIS system – not from the project accounting system. We looked at the last 2 quarterly progress reports; in one, the

Reporting risks include:

• Reports produced from different systems with inconsistent data

• Lack of standard quarterly reports

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financial data was 1 year old, in the other the table could not be clearly read. However, there is no evidence that standard format reports (sources and uses of funds, balance sheet, spend by component and cost category) are prepared. The PMU financial management specialist prepares a monthly financial report for the Project Manager. However, this is produced from his “unofficial” excel system, not the accounts system under the DOF Accounting Division.

7.3. Are financial statements and reports prepared for the implementing unit(s)?

No, separate reports are not prepared for individual IUs.

7.4. Has the project established financial management reporting responsibilities that specify the types of reports to be prepared, the report content, and purpose of the reports?

It is not clear whether this is established, and whether this is being followed.

7.5. Are financial management reports used by management?

It is unclear how financial reports are used by management.

7.6. Do the financial reports compare actual expenditures with budgeted and programmed allocations?

The reports from the Accounting Division only expenditure and budget. The monthly report prepared by the PMU financial management specialist shows budget vs cumulative expenditure.

7.7. How are financial reports prepared? Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means?

The Accounting Division prepares financial reports from their excel accounts system.

7.8. Does the financial system have the capacity to link the financial information with the project's physical progress? If

It is unclear how the project does this.

90 Appendix 1


separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data?

7.9. Does the entity have experience in implementing projects of any other donors, co-financiers, or development partners?

Yes, MOES has significant experience in implementing donor projects. See question 1.2

8. Information Systems

8.1. Is the financial accounting and reporting system computerized?

The DOF Accounting Division maintain the accounts in excel. MOES explained that they use Sage 200/ ACCPAC for World Bank Projects, but use excel for ADB projects. They believe there is some barrier to using accounting software for ADB projects in Laos. However, we noted that some other ADB projects in Laos (e.g. Tourism) use accounting software. Both the MOF and the ADB confirmed that there is no barrier to the project using accounting software. The ADB officer expressed concern over whether the DOF have the capacity to use accounting software (but the DOF already uses ACCPAC for World Bank projects).

Risk from not using accounting software: less security features, less integrity over data.

8.2. If computerized, is the software off-the-shelf, or customized?

Excel is used for the Secondary Education SDP and other ADB projects.

8.3. Is the computerized software standalone, or integrated and used by all departments in the headquarters and field units using modules?

The account system in excel is only used by the Accounting Division; it is not shared with the PMU. The PMU financial management specialist maintains a separate (“unofficial”) excel file to record payments.

Using parallel systems is inefficient and creates double work. More importantly, reports will be produced with inconsistent financial information. This causes

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The two systems are not reconciled and have different accounting treatments (e.g. the PMU system expenses advances when they are issued, the Accounting Division system when the advances are cleared). The PMU system is used for monthly reports to the Project Manager.

confusion and may result in wrong decisions being made.

8.4. How are the project financial data integrated with the entity financial data? Is it done through a module in the enterprise financial system with automatic data transfer, or does it entail manual entry?

The project expenditure is not integrated with MOES financial data.

8.5. Can the system automatically produce the necessary project financial reports?

The Accounting Division excel system has been set up to allow reports to be created easily.

8.6. Is the staff adequately trained to maintain the computerized system?

Yes, the finance staff in the Accounting Division has been using the excel system for several years.

8.7. Are there back-up procedures in place? The Accounting Division make back-ups of the excel accounting system every month or every quarter, to an external hard drive.

Back-ups are not made frequently enough. Risk of data being lost or corrupted.

92 Appendix 1

ANNEX 2: FINANCIAL MANAGEMENT ASSESSMENT REPORT

Lao People’s Democratic Republic: Education for Employment Sector Development Program (PBL component)

A. Project Description

1. 76.Background. Since 1992, the Asian Development Bank (ADB) has provided sustained support to the Lao People’s Democratic Republic (Lao PDR) for supporting reforms in post-primary education (PPE) including secondary education, technical and vocational education training (TVET), and higher education.1 The proposed Education for Employment Sector Development Program (SDP) will build on the ongoing Secondary Education SDP, which will be completed by the end of 2019, and reinforce synergies with the ongoing ADB support for TVET and higher education.2 As agreed with the Government of Lao PDR, the program will follow an SDP modality and continue to strengthen the country’s efforts towards human resource development. The policy-based loan (PBL) component will help the Ministry of Education and Sports (MOES) to undertake reforms to progressively align PPE with evolving workforce skill needs and labor market needs. The project loan component will build MOES’s capacity to deliver these reforms effectively, and improve the coverage, quality, and relevance of secondary education.

B. Background and Development Constraints 2. The Lao PDR is currently one of the fastest-growing economies in Southeast Asia. It has made substantial progress towards graduating from least-developed country (LDC) status by 2020. A resource boom and strong foreign direct investment in resource sectors resulted in robust growth in gross domestic product (GDP), which averaged 7.5% during 2010–2018. Gross national income per capita reached $2,330 in 2017. Strong growth has alleviated poverty, and the Lao PDR’s poverty rate declined from 27.6% in 2007/8 to 23.2% in 2013/14. The Lao PDR met the criteria for graduation from LDC status for the first time in 2018.3 3. Despite strong economic performance, the Lao PDR’s social development indicators fall well behind regional averages. Income inequality widened between 1992/93 and 2012/13, and the Gini coefficient increased from 34.3 to 36.4. The Lao PDR is also increasingly vulnerable to revenue volatility resulting from its dependence on natural resources with fluctuating commodity prices and exacerbated by weak tax administration. This has led to a growing fiscal deficit and high public debt levels, which have increased the Lao PDR’s exposure to macroeconomic shocks. This could undermine sustainable financing of services and derail the country’s poverty reduction

1 ADB’s focus on post-primary levels of education complements support from other development partners, which focus

mainly on primary and pre-primary education. 2 ADB. 2011. Lao People’s Democratic Republic: Secondary Education Sector Development Program. Manila; ADB.


3 The Lao PDR met the thresholds for gross national income per capita and Human Assets Index for the first time during the March 2018 review. If progress continues until the subsequent 2021 review, the Lao PDR will graduate from LDC status in 2024, following a 3-year implementation period. Further information can be found at: https://bit.ly/2XyTymp.

https://bit.ly/2XyTymp

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and development goals under the Vision to 2030.4 In addition, the Lao PDR’s susceptibility to

natural disasters, such as drought and landslides, can have a devastating impact on an agrarian economy and hinder long-term growth prospects.5 To reduce the Lao PDR’s vulnerability to economic shocks, and to maintain growth and improve social outcomes, more must be done to strengthen public finance management (PFM). The government has identified three primary development constraints: (i) lack of comprehensive debt management and tax reform strategies; (ii) absence of medium-term fiscal planning and budgeting; and (iii) weak governance and budget oversight.6

4. Lack of comprehensive debt management and tax reform strategies. Government debt has increased because of rising government expenditures and investments in large public projects, amplified by declining tax and nontax revenues. The tax base is narrow, compliance is low, tax administration is inefficient, and revenues are reliant on natural resources. Ineffective tax administration has resulted in the Lao PDR ranking 155th out of 190 economies for paying taxes in the 2019 Doing Business Indicators.7 Tax and nontax revenues declined from an average of 16.1% in 2010–2016 and 16.2% in 2017 to 15.7% of GDP in 2018 (Figure 1).8 These factors

4 International Monetary Fund. 2018. Lao People’s Democratic Republic: Staff Report for the 2017 Article IV

Consultation. Washington, DC; and Sector Assessment (Summary): Public Sector Management (accessible from the list of linked documents in Appendix 2).

5 In 2018, floods caused by heavy monsoon rain affected 15 provinces and Vientiane (the capital). 6 Government of the Lao PDR. 2018. Vision to 2030 and Public Finance Development Strategy to 2025. Vientiane.

These three development constraints are consolidated from the eight challenges of PFM reforms recognized in the Vision to 2030 and Public Finance Development Strategy to 2025.

7 World Bank. Doing Business 2019: Training for Reform. Washington, DC. 8 The low tax revenue-to-GDP ratio of about 13.2% during 2010–2018 exposes the Lao LDR’s tax and nontax revenues

to global mining and hydropower market price volatility.

94 Appendix 1

increased the fiscal deficit to 4.6% of GDP in 2018 from 3.0% in 2010–2016 (Figure 2), which is one of the highest levels among the Lao PDR’s regional and structural peers.9 The absence of a comprehensive legal framework for effective debt management leaves the government lacking the necessary tools to systematically address its deteriorating debt situation. Outdated debt reporting systems and the absence of an integrated external and domestic debt framework contribute to a fragmented approach to debt management practices, and public and publicly guaranteed (PPG) debt is expected to increase further to 65% of GDP by in 2018 (Figure 3)―a high level by frontier market standards.10 The external PPG debt is increasingly contracted on nonconcessional terms and from bilateral creditors.11 As a result, the Lao PDR has been assessed at high risk for external debt distress following the debt sustainability analysis of the International Monetary Fund (IMF) in 2018, up from its 2014 rating of moderate risk.12 5. Absence of medium-term fiscal planning and budgeting. The weak strategic link between policy, planning, and budgeting undermines overall fiscal discipline in the budget process. This contributes to large budget deficits and ineffective financing of development priorities, placing the achievement of the NSEDP priorities at risk.13

The Ministry of Finance (MOF) does not provide indicative budget ceilings to line ministries to guide their budget preparation process. The absence of a medium-term framework weakens the link between budget allocation and estimated funding needs at the line ministry level, causing budget unpredictability and weak budget preparation and execution, and ultimately hampering public service delivery and poverty reduction objectives. Finally, the Lao PDR also attained low scores in the 2018 Public Expenditure and Financial Accountability Assessment for key PFM indicators, such as a multiyear perspective in expenditure budgeting (rated D), and orderliness in the budget preparation process (rated C+).14 6. Weak governance and oversight of budget. This constraint relates to the government’s efforts to effectively implement its PFM reform strategy and improve oversight. The State Budget Law, revised in 2015, provides the legal and institutional framework for a budget preparation process and gives the MOF a strengthened mandate for negotiating budget allocations with line ministries. However, much of the existing legislation has yet to be fully implemented because of the lack of relevant regulations and the limited oversight of implementing agencies. In addition, there are currently no regulations to mandate the timely disclosure of budget documents for budget oversight. Coupled with weak capacity at the National Assembly, there is little meaningful oversight of the annual budget. The core budget documents, such as the annual approved budget, quarterly fiscal reports, and public finance annual reports, are not accessible to the public. B. Strengths 7. Government reform program. In June 2016, the government launched the Eighth NSEDP 2016–2020,15 which aims to pursue continued economic growth and macroeconomic

9 ADB. 2019. Asian Development Outlook 2019. Manila. 10 World Bank. 2018. Lao People’s Democratic Republic Economic Monitor. Washington, DC. 11 Bilateral creditors accounted for 63.7% of total external PPG debt in 2016, up from 50% in 2011. Interest payments

increased to 6% of total fiscal revenues in 2013–2017 and are expected to rise further to 9.5% in 2018–2022. 12 IMF. 2018. Lao People’s Democratic Republic: Staff Report for the 2017 Article IV Consultation―Debt Sustainability

Analysis. Washington, DC. Official foreign exchange reserves reached $1.2 billion in 2017, equivalent to only 1.9 months of import cover for goods and services, significantly lower than IMF’s minimum requirement of 3 months.

13 ADB. 2016. Lao People’s Democratic Republic: Governance Risk Assessment. Manila. 14 World Bank. 2018. The Lao People’s Democratic Republic Public Expenditure and Financial Accountability: Public

Financial Management Assessment. Washington, DC. 15 Government of the Lao PDR. 2016. The Eighth National Socio-Economic Development Plan (NSEDP) 2016–2020.

Vientiane.

Appendix 1 95

stability, while reducing the poverty rate and economic vulnerability, and improving service delivery in health and education. The NSEDP focuses on the need for a macroeconomic framework to provide information in a responsive, timely, and accurate manner. The NSEDP also aims to improve revenue and expenditure management by strengthening revenue collection and ensuring that expenditure management is in line with a financial plan approved by the National Assembly. Strategy 2025 (footnote 6) further articulates the need for a strong, transparent, and modern public finance system in line with international standards. The strategy includes goals and priorities in four areas: (i) maintaining macroeconomic stability, including control of the budget deficit; (ii) maximizing revenue collection; (iii) developing a sound expenditure policy in line with rationalizing spending; and (iv) prudent debt management. To implement this, the government has developed the Implementation Plan for Public Finance Management Reform, Step 1 (2018–2020) of Phase II (2018–2025) (PFM implementation plan) under direct responsibility of the MOF and relevant line ministries.16

The government’s fiscal consolidation efforts are expected to gradually lower fiscal deficit from 4.6% of GDP in 2018 to 4.3% of GDP in 2019, and 3.7% in 2020 (footnote 9). 8. Strengthening public debt management and tax reform. MOF adopted the 2018 Public Debt Management Law to rationalize the use of debt instruments and to cap the rise in public debts. The law, which became effective from August 2018, establishes a statutory public debt ceiling at 65% of GDP and requires the National Assembly to approve all investment projects that exceed $50 million. It also sets out provisions on the public debt management strategic plan, establishes direct borrowing procedures, defines criteria for government borrowing, and provides the guidelines for government bond issuance. Moreover, the law aims to optimize debt management and gradually reduce the debt burden to 60% of GDP by 2025, and guide prudent spending decisions in the medium term. The law also better defines the criteria and approval procedures for infrastructure investments to ensure that future investments have high social returns and are closely aligned to NSEDP objectives.17

Debt reporting and consolidation of domestic and external debt have been further strengthened through an integrated approach. 9. The tax system has been strengthened and modernized through both tax policy and administrative measures. The government has finalized the drafts of new laws on tax administration, income tax, and excise tax. Together, they will considerably strengthen tax policy and administration by addressing the need for a broader tax base and modernized tax system. An organizational restructuring has placed local tax authorities under the MOF’s Tax Department to improve revenue collection coordination and oversight between central and provincial levels and ensure that all revenues collected at the local level are returned to the consolidated fund. The Tax Department has also established a Revenue Collection Division (responsible for large taxpayers, who account for 40% of total tax revenues) to improve large businesses tax compliance. Third, the government has completed the Tax Sector Development Plan for 2018– 2020 to reform the tax system by strengthening the legislative framework, improving revenue collection, and enhancing institutional capacity. It has also incorporated a gender action plan to address priorities under its strategic goal to build staff and institutional capacity in the Tax Department.18

The MOF will also conduct a social impact assessment of the new laws with an

16 Government of the Lao PDR. 2018. Implementation Plan for Public Finance Management Reform, Step 1 (2018–

2020) of Phase II (2018–2025). Vientiane. 17 The new projects need to have clear links to poverty reduction and/or disaster risk reduction. Infrastructure projects

that exceed $50 million will need to be presented to and approved by the National Assembly. A project approval manual has been developed to streamline project submissions by line ministries.

18 Government of the Lao PDR. Ministry of Finance, Tax Department. 2019. Gender Action Plan for Staff and Institutional Capacity Building. Vientiane.

96 Appendix 1

emphasis on impacts on small and medium-sized enterprises (including those headed by women), and low-income families. 10. Improving medium-term fiscal planning and budgeting. With support from the Domestic Resource Mobilization Trust Fund administered by ADB, the government implemented medium-term fiscal planning, which determines the overall envelopes for expenditures in line with a fiscally sustainable budget and greater predictability and transparency. This policy action has improved the budget process and development outcomes through greater clarity of policy objectives, predictability in budget allocations, and transparency in the use of resources. Second, the MOF strengthened its guidance to line ministries in the budget process by providing a budget ceiling to ensure that overall fiscal deficit targets are met. A series of capacity building programs on gender-responsive budgeting have been provided to high-level and technical government officials in the MOF and relevant line ministries to foster gender considerations in budget planning. The MOF implemented tax and nontax revenue planning to establish clear revenue targets and improve tax and nontax revenue administration. The revenue planning was also integrated into the medium-term fiscal planning. 11. Enhancing governance and budget credibility. In March 2018, the government operationalized its Strategy 2025 through the PFM implementation plan (footnote 16) to implement the six priority programs.19

This includes priority areas for (i) improving fiscal policy, (ii) developing a legal framework for the finance sector, (iii) reforming revenue management, (iv) strengthening expenditure management, (v) modernizing PFM, and (vi) improving the organizational structure and human resource development. A national steering committee was appointed to ensure continuity and oversight of the PFM reform agenda in line with Strategy 2025, with representatives from the Lao Women’s Union and the National Committee for Advancement of Women included in the implementation committee. To improve transparency, the MOF adopted standards in line with the International Budget Partnership and published core budget documents,20 particularly the Government Finance Statistics Annual Reports for Fiscal Years 2015, 2016, 2017, and mid 2018 on revenues, expenditures, and revenue collection. C. Conclusion 12. ADB experience. ADB has been a key long-term reform partner in the Lao PDR, providing loans, grants, and technical assistance (TA) to support PFM reforms since the Public Finance Management Strengthening Program was approved in 2005 (Figure 4). In 2005–2014, ADB focused on selected areas of public expenditure management, including efficiency, planning and budgeting, and accountability, to enable the government to successfully integrate national poverty reduction strategies into budgetary priorities and implementation.21 This support helped the government improve PFM in terms of governance, transparency, and capacity of the MOF and relevant agencies under the Governance and Capacity Development in Public Sector

19 The government in July 2017 approved the Vision to 2030 and Public Finance Development Strategy to 2025

(footnote 6), which assigns the MOF to coordinate with line agencies for implementation of the comprehensive PFM reform. It also provides the road map for the second generation of PFM reforms and defines the government’s priorities for strengthening its PFM systems.

20 International Budget Partnership. 2010. Guide to Transparency in Government Budget Report. Washington, DC. 21 ADB. 2005. Technical Assistance to the Lao People’s Democratic Republic for Public Expenditure Planning for

National Growth and Poverty Eradication Strategy. Manila; ADB. 2008. Technical Assistance to the Lao People’s Democratic Republic for Strengthening Public Financial Management. Manila; and ADB. 2011. Technical Assistance to the Lao People’s Democratic Republic for Strengthening the Capacity of the State Audit Organization. Manila.

Appendix 1 97

Management Program.22 The progress enabled ADB to support PFM reform in the health sector

in 2013–2018 under the health sector governance programs.23 ADB’s experience has provided

three key lessons that have been incorporated into the program design. First, long-term engagement is essential to push through complex public finance reforms in a weak capacity environment. The crosscutting nature of PFM reform programs requires a programmatic approach and policy sequencing to enable flexibility and responsiveness to the government’s PFM reform agenda. Second, the leading role of the MOF in driving the PFM reform agenda and embedding key planning processes as part of the core budget process is key. Previous ADB support developed the necessary tools for the reforms, but may have underestimated the need for strong leadership and ownership by MOF of these reforms. This will be important for the Lao PDR to achieve fiscal consolidation. Finally, the program will benefit from strong coordination with ADB sector teams, such as health and education, to ensure that efficiency gains in PFM strengthen implementation at the sector level.

13. ADB experience underlines that successful PFM reforms in the Lao PDR require a long-term, multipronged approach to developing sequenced and demand-driven reform agendas in

22 ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Programmatic

Approach, Policy-Based Loan and Grant, and Grant Assistance for Subprogram 1 to the Lao People’s Democratic Republic for the Governance and Capacity Development in Public Sector Management Program. Manila; and ADB. 2014. Report and Recommendation of the President to the Board of Directors: Proposed Policy-Based Loan for Subprogram 2 to the Lao People’s Democratic Republic for the Governance and Capacity Development in Public Sector Management Program. Manila.

23 ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Programmatic Approach, Policy-Based Loan, and Technical Assistance Loan for Subprogram 1 to the Lao People’s Democratic Republic: Health Sector Governance Program. Manila; and ADB. 2018. Report and Recommendation of the President to the Board of Directors: Proposed Policy-Based Grant for Subprogram 2 to the Lao People’s Democratic Republic: Health Sector Development Program. Manila.

Figure 2: ADB Engagement with Public Finance Management Reform Agenda in the Lao People’s Democratic Republic

98 Appendix 1

line with government priorities. ADB engagement in the sector has prepared the way for reforms and generated important lessons. The recent TA has strengthened planning by establishing a comprehensive revenue and fiscal planning tool to generate overall budget ceilings and better use limited fiscal resources, consistent with a sustainable macroeconomic framework.24

14. Development partner coordination. The development partner coordination mechanism is well institutionalized and led by the government. It is embedded in the government-owned reform program, as articulated in Strategy 2025. The government leads development partner coordination through the recently established PFM steering committee group. Development partners in the sector also meet on a quarterly basis to share progress in ongoing PFM reform areas. Close policy coordination and dialogue with the government and development partners will continue through participation in government-led coordination platforms. ADB has coordinated with key development partners active in PFM reforms in the Lao PDR throughout the program design, including the European Union, the Japan International Cooperation Agency, the IMF, and the World Bank (Appendix 1). ADB has also closely coordinated with the IMF, and the policy actions in the program are consistent with IMF’s assessment and recommendations for the Lao PDR. IMF support focuses on medium-term revenue strategy, customs reforms, and the development of a unified chart of accounts for improved expenditure tracking.

24 ADB. 2015. Technical Assistance to the Lao People’s Democratic Republic for Support for Governance and Capacity

Development. Manila.

Appendix 1 99

100 Appendix 1

Appendix 1 101

102 Appendix 1

Appendix 1 103

ANNEX 3: LIST OF PEOPLE MET

Name Organisation Job title

Ms. Dara Phrakonaekham MOES Department of Finance Acting Director General

Ms. Phetsourine Norasingh MOES DOF Accounting Division Deputy Head

Ms. Viengsouk Namlammoun MOES Accounting Division Technical Staff

Mr. Viengkham Chanthavong Secondary Education SDP PMU Finance Officer

Ms. Thipphaivanh Samesavanh MOES DGE Technical Staff (stipends)

Mr. Sunti Vongphothong MOES DGE Deputy Head of Division /Secondary Education SDP

Mr. Khamla Sae-eung Secondary Education SDP Monitoring & Reporting Officer

Ms. Khampheng Lorvanh MOES/Secondary Education SDP

Technical staff (school grants)

Mr. Angkhansada Moungkham MOF Department of External Finance

Deputy Director General

Ms. Khantanh Chanthy ADB Lao PDR Resident Mission Senior Project Officer (Social Sector),

Ms. Xeunchit Selinokham MOES Accounting Division Head of Division

Mr. Thiphakong Vansilalom MOES Financial Control Division Head of Division

Ms. Kheomanivanh Phimmahasay Secondary Education SDP PMU Project Director

104 Appendix 1

ANNEX 4: MINISTRY OF EDUCATION AND SPORTS DEPARTMENT OF FINANCE STRUCTURE

Appendix 1 105

106 Appendix 1

ANNEX 5: MOES-DEPARTMENT OF FINANCE ACCOUNTING DIVISION STRUCTURE AND LIST OF STAFF

Appendix 1 107

Accounting Division, DOF, MOES

No. Names Position Major Degree

1 Ms. Xeunchit Selinokham Head of Division English Bachelor

2 Mr. Bounpheng Phommanivong Deputy Head Finance Bachelor

3 Ms. Phetsourine Norasingh Deputy Head Maths/Physics Bachelor

4 Ms. Phonemany Bounmany Technical staff Business Management Diploma

5 Mr. Souphab Saenglath Technical staff Finance Diploma

6 Ms. Aengchai Phommysay Technical staff Business Management Bachelor

7 Ms. Viengsouk Namlammoun Technical staff Business Management Bachelor

8 Ms. Boudsaba Soukhatho Technical staff Information Technology Bachelor

9 Ms. Phonesavanh Hommaniphet Technical staff Business Management Bachelor

10 Ms. Phonethepha Vongsitthi Technical staff Business Management Bachelor

11 Mr. Sengthong Davong Technical staff Business Management Bachelor

12 Mr. Ninxay Vongphachan Technical staff Business Management Bachelor

13 Ms. Sengmany Keolakotphosy Technical staff Economic Master

14 Ms. Villaysone Laungapay Technical staff Accounting Bachelor

15 Ms. Mookhalinna Somsanit Technical staff Business Management Bachelor

108 Appendix 1

ANNEX 6: PROPOSED TERMS OF REFERENCE FOR PROJECT MANAGEMENT UNIT FINANCE CONSULTANT

Minimum Required Qualifications and Experience Terms of Reference

Financial management specialist (national consultant)

Required:

• At least Bachelor’s degree in accounting or finance;

• At least 8 years of accounting or auditing experience and 4 years of experience with donor funded projects;

• Experience with ADB or World Bank funded projects;

• Practical skills in using computerized accounting software;

• Good skills in Microsoft excel and Microsoft word;

• Fluent in written and spoken English and Lao.

Desirable:

• Professional accounting qualification such as ACCA or CPA

The financial management specialist will support the PMU with all aspects of financial management and will work closely with the MOES Department of Finance (DOF). S/he will be responsible for: 1. Financial planning 1.1. Support the preparation of the annual workplan and

budget 1.2. Prepare cashflow forecasts 2. Financial reporting 2.1. Prepare monthly finance reports for project

management and IUs, showing expenditure against annual budget.

2.2. Prepare quarterly finance reports for the ADB, including sources and uses of funds, balance sheet, expenditure against budget, outstanding advances and a variance analysis.

2.3. Assist DOF to prepare annual project financial statements.

3. Financial Monitoring 3.1. Review annual budget utilization and variances 3.2. Monitor expenditure and commitments against funding

allocation by category, and identify the need for any re-allocations

3.3. Monitor cash flows, bank balances and the level of outstanding advances

4. Document processing 4.1. Prepare and review payment requests, activity

proposals and supporting documents before they are submitted to the DOF

4.2. Support the IUs to clear advances, 4.3. Support the DOF to prepare withdrawal applications 5. Maintaining integrity of financial data 5.1. Support DOF to implement an accounting software

package 5.2. Reconcile registers to the accounting system, including

the asset register, contracts register, and school grants register.

6. Maintaining internal controls 6.1. Support DOF to prepare a project finance manual 6.2. Train project staff on financial procedures and promote

an awareness of financial controls 6.3. Support the annual external audit and support the

project to implement the agreed actions in the management letter.

Appendix 1 109

6.4. Maintain the project fixed asset register. 7. Other 7.1. Be available to travel to provinces and districts

occasionally to provide training and capacity building support.

7.2. Perform other duties as may be reasonable requested by the Project Director.

110 Appendix 1

ANNEX 7: NOTES AND RECOMMENDATIONS ON TAXES A. Introduction

1. Projects in Laos are progressively being funded from ADB Loans instead of ADB Grants. Under grant-funded projects, taxes were usually funded from the ADB grant funds. The Ministry of Finance is less keen to use loan funds to cover tax costs and may use counterpart funds to cover some of the taxes. 2. Where the tax arrangements are not clearly agreed and explained in the project documents, this risks uncertainty during implementation, which may lead to delays in payments being made and activities implemented. 3. There are 4 possible treatments of taxes. Different treatments may be applied to separate cost categories within the same Loan. The treatment will be agreed between the ADB and the Ministry of Finance.

Table A1.7.1: Possible Treatments of Tax for Education for Employment Sector Development Program

Treatment of tax Costings

Funds Flow Notes

1. Tax paid from ADB loan funds

Include taxes in the costs and allocate to ADB loan funds.

Included in the standard funds flow for ADB funds.

Recommend that this method could be used for VAT for operating costs for the Education for Employment SDP.

2. Tax exempted by Government

Include taxes in the costs and allocate to government counterpart funds. In the Funds Allocation table, the % funded by the ADB is shown as 100% (excludes the tax exempted in the calculation)

As an in-kind contribution, this is not included in cash flows.

Recommend that this method could be used for VAT and duties on goods, works and services for the Education for Employment SDP (subject to MOF agreement).

3. Tax paid in cash by the Government from counterpart funds

Include taxes in the costs and allocate to government counterpart funds. In the Funds Allocation table, the % funded by the ADB is shown as less than 100% (includes the tax paid by the government in the calculation)

Need to add cash-flows for the counterpart funds.

Treatment No. 2 is recommended as a better alternative. We cannot find an example of a project in Laos using this treatment. Although it does work in other countries, there are no clearly defined fund flows for this in Laos yet.

4. Tax reimbursed

Not clear Need to add cash-flows for the counterpart funds.

This method is not recommended (see

Appendix 1 111

Treatment of tax Costings

Funds Flow Notes

by Government

experience of HE project below).

A. Tax Arrangements for Other ADB Laos Projects

Table A1.7.2: Tax Arrangements for Other ADB Laos Projects

Project Tax treatment Notes

Fourth Greater Mekong Subregion Corridor Towns Development Project, Project Number 5099, August 2018, Grant

The government will finance value-added taxes and duties through exemption.

The taxes are allocated against Government Funds in the Detailed Cost Estimates by Financier (DCEF) table, against each relevant cost category.

Water Supply and Sanitation Sector Project, Project Number 45301, August 2018, Loan

Government will finance taxes and duties through exemption. ADB may finance VAT on recurrent costs.

The DCEF shows the VAT allocated to the Government Funds, against each relevant cost category. Calculated using 10% VAT rate.

Climate-Friendly Agribusiness Value Chains Sector Project, Project Number 48409, July 2018, Grant

ADB will finance taxes and duties.

Taxes are included within each cost category and allocated to ADB grant funds.

Second Strengthening Higher Education Project, Project Number 48127, September 2016, Grant and Loan

Government's counterpart financing will be used to finance taxes and duties, through 2 methods:

• Refund to the project in cash for VAT.

• Exemption for import duties on imported goods as an in-kind contribution

Taxes and duties are shown as a separate cost category in the cost tables and allocated against government funding. The fund flow diagram doesn’t show the cash refund for VAT. The Disbursement section in the FM chapter in the PAM doesn’t explain the counterpart funding process. The lack of clarity about this process is reportedly leading to project delays.

Second Strengthening Technical and Vocational Education and Training Project, Project Number 42278, September 2016, Grant

ADB will finance taxes and duties.


Secondary Education Sector Development Project, Project Number 40368, August 2011, Grant

Taxes and duties will be funded by the ADB Grant.


112 Appendix 1

B. ADB Guidelines

ADB Loan Disbursement Handbook (2017)

4. Taxes and Duties. Local taxes and duties imposed within the territory of the Borrower are categorized below:

(i) Value‐added tax (VAT), gross sales tax (GST), and other similar types of taxes and duties that are identifiable and determinable as the final tax amount at the time of transaction. These types of taxes and duties are levied in borrowing countries on specific goods, works, and services, by adding the relevant taxes to the project costs. When ADB and/or ADB‐administered co-financier cannot finance local taxes and duties, these types of taxes are excluded from its financing.

(ii) Income tax and other similar types of taxes and duties that are not identifiable and determinable as a final tax amount at the time of transaction. These types of the taxes and duties are levied by tax authorities of the borrowing countries on the total income of all business activities of the contractor during a fiscal year, including ADB‐financed activities. Income tax withheld by the executing agency from a contractor’s invoice is temporary, subject to adjustments at the time of declaring annual income tax returns. Actual income tax cannot be determined at the time of payment of individual invoices. When ADB and/or ADB‐administered co-financier cannot finance local taxes and duties, these types of taxes are not excluded from its financing.

5. If a country has a particular type of tax that requires clarification on its nature and treatment under an ADB‐financed project, the Report and Recommendation of the President (or other loan proposal) and the Project Administration Manual should describe that tax and indicate the financier of the tax.

ADB Country Partnership Strategy, Lao People’s Democratic Republic, 2017–2020

6. Cost-sharing arrangements. Given the continued fiscal constraints and low public financial management capacity, ADB and the government have agreed that the country cost-sharing ceiling for the portfolio of loans, grants, and TA will be set at 99%. For individual projects, financing will be up to 99% of the total project cost, including taxes and duties.

Types of tax in Laos

7. Taxes will need to be calculated and included in cost estimates, regardless of the funding source of the taxes. The table below is a summary of the main taxes that are believed to be relevant to the project. 8. Please note that taxes are subject to change, and that the Laos tax laws should be referred to for full details.1

Table A1.7.3: Types of Taxes

Type of tax Notes

Value Added Tax (VAT)

The standard VAT rate is 10%. VAT is imposed on the final consumer of goods and services. Domestic goods and services used for production, trading, and consumption in Lao

1 Government of Lao PDR. Tax Department.

http://www.tax.gov.la/Eng_WebPAges/About.aspx

Appendix 1 113

Type of tax Notes

PDR, goods imported into Lao PDR, and services rendered by foreigners to Lao PDR customers are subject to VAT. Certain goods and services are exempt from VAT. Exempted items include education services.

Excise tax Excise tax applies to the import and sale of certain luxury products, including motor vehicles and many types of electrical equipment. Excise tax rates range from 5% to 90%. Under the new Tax Law No. 70/NA dated 15 December 2015, the excise tax rates on vehicles range from 25% to 90%.

Import duties All goods imported into Lao PDR are subject to import duty. Exemptions are available to enterprises operating promoted investment activities. Duty rates range between 0% and 40%, depending on whether the goods are ASEAN or other source.

Personal Income Tax

It is applied to all income earned in Lao PDR from salary, benefits in kind and other remunerations, both for Lao people and expatriate receiving revenues from Lao PDR or abroad regardless of the length of their employment and stay in Laos. The Lao personal income tax rates is progressive from 0% to 24% of yearly income as follows:

• KN 0 – 1,000,000: 0%

• KN 1,000,001 – 3,000,000: 5%

• KN 3,000,001 – 6,000,000: 10%

• KN 6,000,001 – 12,000,000: 12%

• KN 12,000,001 – 24,000,000: 15%

• KN 24,000,001 – 40,000,000: 20%

• Above KN 40,000,001: 24%

114 Appendix 2

TERMS OF REFERENCE OF INDIVIDUAL CONSULTANTS

Minimum Requirements Terms of Reference

International procurement specialist (1 international expert; 2 person-months, intermittent over 12 months duration)

(i) Postgraduate qualifications, preferably with a degree in engineering, procurement, or related fields;

(ii) Extensive procurement experience (minimum 10-year general working experience, including 7 years of relevant procurement experience) on similar development projects in social sector projects preferably in ADB or World Bank financed projects

(iii) Full familiarity with ADB procurement and consulting procedures, particularly under the new Procurement Reform

(iv) Excellent interpersonal and strong communication skills in advising government and other offices

(v) Experience working in Lao PDR/Southeast Asia will be an advantage

• Finalize master bidding documents for civil works, goods, and consulting services, if not fully completed in advance action

• Support bid process and bid evaluation as well as preparation of bid evaluation reports and contracts.

• Provide technical guidance to the PMU in all stages of recruitment for consulting services and procurement of goods, works and non-consulting services

• Ensure quality of submission by checking/ improving to be consistent with ADB’s procurement regulations

• Ensure timely submissions of project reporting deliverables

• Assist in the update the procurement plan

• Develop templates for standard submissions to ADB or create template depository

International financial management specialist (1 international expert; 3 person-months)

(i) Postgraduate qualifications, preferably with a degree in financial management or accounting;

(ii) At least 10-year working experience in auditing and accounting;

(iii) 5-year working experience/familiarity with procedures under internationally-funded projects, preferably ADB or World Bank;

(iv) Significant experience and knowledge of IPSAS cash basis accounting

(v) Excellent interpersonal and strong communication skills, combined with ability to deal with senior level staff within MOES and Ministry of Finance

• Training support to MOES on IPSAS cash basis adoption and implementation for the project (using ADB’s an e-learning module on Cash Basis IPSAS, available on the ADB website).

• Support for the full adoption and implementation of cash-based IPSAS for the Education for Employment SDP implementation

Procurement and contracts specialist (1 national expert; 36 person-months)

(i) Graduate qualifications in civil engineering, finance, law, or related field, advanced degree in related field would be preferred;

(ii) 5 years’ experience in the use of procurement systems for international organizations, preferably ADB or World Bank;

(iii) Working knowledge of procurement of works, goods, and consulting services;

(iv) Working knowledge of Lao government procurement guidelines and regulations;

(v) Proficient in English language (vi) Excellent interpersonal and communication

skills

• Support the preparation of procurement packages according to the procurement plan, and in compliance with ADB and government’s procurement policies and procedures

• Provide quarterly and annual contract awards targets

• Manage procurement process: draft and finalize bidding documents

• Manage consulting process: draft and finalize consulting services submissions

• Support project procurement review committee in bidding and consulting evaluation process and associated report preparation. Provide guidance and advice to project director on any procurement-related issues

Appendix 2 115


• Facilitate annual update the procurement plan

• Coordinate with construction supervision team to ensure steady progress of civil works

• Work closely with the national financial management specialist in ensuring timely payments to contracts

• Provide quarterly and annual reporting on contract awards targets and achievements

Finance management specialist (1 national expert; 60 person-months)

(i) Postgraduate qualifications, preferably with a degree in financial management or accounting;

(ii) 7-year working experience in finance or accounting;

(iii) Proficiency in office and financial management software applications

(iv) 5-year working experience/familiarity with procedures under internationally-funded projects, preferably ADB or World Bank;

(v) Excellent interpersonal and strong communication skills, combined with ability to deal with senior level staff within MOES and Ministry of Finance

The Financial management specialist will support the PMU with all aspects of financial management and will work closely with the MOES Department of Finance. S/he will be responsible for: Financial planning

• Support the preparation of the annual workplan and budget

• Prepare cashflow forecasts Financial reporting

• Prepare monthly finance reports for project management and IUs, showing expenditure against annual budget.

• Prepare quarterly finance reports for the ADB, including sources and uses of funds, balance sheet, expenditure against budget, outstanding advances and a variance analysis.

• Assist the Department of Finance to prepare annual project financial statements.

Financial Monitoring

• Review annual budget utilization and variances

• Monitor expenditure and commitments against funding allocation by category, and identify the need for any reallocations

• Monitor cash flows, bank balances and the level of outstanding advances

Document processing

• Prepare and review payment requests, activity proposals and supporting documents before they are submitted to the DOF

• Support the IUs to clear advances,

• Support the DOF to prepare withdrawal applications

Maintaining integrity of financial data

• Support the Department of Finance to implement an accounting software package

• Reconcile registers to the accounting system, including the asset register, contracts register, and school grants register.

Maintaining internal controls

• Support the Department of Finance to prepare a project finance manual

• Train project staff on financial procedures and promote an awareness of financial controls

116 Appendix 2


• Support the annual external audit and support the project to implement the agreed actions in the management letter.

• Maintain the project fixed asset register. Other

• Be available to travel to provinces and districts occasionally to provide training and capacity building support.

• Perform other duties as may be reasonable requested by the Project Director.

Construction supervision engineer (7 national experts, each 18 person-months)

(i) Graduate qualifications in civil engineering, would be preferred;

(ii) 5–7 years’ experience in construction site supervision/technical quality assurance/construction contract administration of buildings and related land development infrastructure (including utility) preferably in projects financed by international organization. Experience in construction of education-related buildings an advantage

(iii) Experience in ensuring work is constructed safely and in accordance to construction environmental management plan.

(iv) Previous work experience in provinces/districts

(v) Exposure to water supply, sanitation, solar energy, rainwater harvesting installation an advantage

(vi) Excellent interpersonal and communication skills

• Ability to understand designs, read construction drawings and specifications and apply them in field.

• Exposure to campus water supply, sanitation, solar energy, rainwater harvesting installation

• Willingness to stay at or near work location and travel to various construction sites in the districts

• Anticipate construction and work scheduling problems and work with contractors and PMU to resolve them expeditiously

• Regular reporting to PMU

• Manage construction contract; undertake regular site progress and compliance monitoring; and support the Employer in reviewing and processing monthly claims by the contractors

• Resolve on-site issues and provide response and guidance on technical query to the contractor

• •Perform other duties as may be reasonable requested by the Project Director

Monitoring and reporting assistants (2 national experts; 30 person-months each)

(i) Postgraduate qualifications, preferably in administration or related field

(ii) Minimum 5 years of professional experience in monitoring and reporting/evaluation and project administration

(iii) Excellent communication and interpersonal skills

(iv) Proficiency in office applications

• Monitor project implementation progress according to the design and monitoring framework

• Prepare minutes of various meetings;

• Contribute to the development of quarterly and annual progress reports for submission to ADB

• Support data collection and provide analysis and report to project director

• Assist the PIU team and ADB in the conduct of periodic review missions; take charge of logistics arrangement for meetings, workshops and ADB missions

Gender and social development specialist (1 national expert; 20 person-months, intermittent over 5 years duration)

(i) Preferably at least a master’s degree or higher (ii) Minimum 7 years professional experience (iii) Minimum 5 years’ experience working on

gender in ADB or World Bank projects (iv) Demonstrated familiarity with ADB’s Gender

and Development

• Assist in collecting gender and ethnicity-disaggregated information and data on gender and ethnicity relevant to aspects of secondary, higher, and technical and vocational education at both central and provincial levels (for baseline and periodically during implementation)

Appendix 2 117


(v) Strong written and spoken English • Expand the Gender Action Plan (GAP) of the project to include additional implementation steps, as necessary, for ease of project implementation

• Assist MOES in the implementation of the GAP

• Assist in delivering gender awareness/mainstreaming training to project staff and consultants at national and provincial levels. Develop a training of trainers manual, if necessary, to facilitate delivery of gender training

• Assist in developing a gender checklist for each project output, which can be used by national and provincial project staff during project implementation

• Assist in a monitoring and reporting form, including training of key project personnel, to facilitate overall monitoring of GAP implementation and its reporting in quarterly and annual progress reports to ADB and the Government

• Ensure project’s compliance with requirements of ADB’s Safeguards Policy Statement (SPS) for IP during implementation

• Conduct comprehensive review, analysis, and monitoring of project’s compliance with IP and ethnic minority development plans

• Prepare social due diligence/compliance reports prior to disclosure to the ADB website

• Report any issues of non-compliance to project director and suggest mitigation measures

• Contribute to quarterly and annual progress reporting to ADB

• Develop and maintain a database on IP safeguards monitoring

• Conduct seminars, focus group discussions, and workshops, as necessary

Environment specialist (1 national expert; 8 person-months intermittent)

(i) Post-graduate degree in environmental engineering, environmental sciences or equivalent discipline with a minimum of 7 years in environmental management and monitoring and in oversight of project implementation and compliance

(ii) A strong knowledge of environmental regulations and requirements in Lao PDR as well as experience implementing international financed projects, experience implementing ADB-funded projects is desirable.

(iii) The candidate should have good communication skills (oral and written) and problem-solving skills.

• Assist MOES in the screening and survey of schools using the environmental and social checklist;

• Provide technical support to ensure that all environmental requirements of the Lao PDR and ADB are properly incorporated in the design and construction of new school buildings, dormitories and other related facilities under the Education for Employment SDP;

• Update the Initial Environmental Evaluation (IEE) and environmental management plan (EMP) of the project in accordance with the Environmental Assessment and Review Framework;

• Ensure that the EMP is included in the bid documents and civil works contracts;

• Ensure that copies of the IEE and EMP are submitted to the district environment office and

118 Appendix 2


any necessary national approvals are obtained prior to start of construction work;

• Review the site-specific EMP prepared by the contractor and ensure it is responsive to Borrower EMP and cover all key requirements;

• Conduct regular site visits at construction sites to monitor compliance with EMP and national environmental regulations including adherence to occupational health and safety provisions and core labor standards;

• Conduct consultations and interviews with residents living close to the school sites to determine if there is any concern during construction;

• Organize an orientation workshop for relevant MOES staff from ECDM, PUCDA, and DUCDA and school authorities on ADB Safeguards Policy Statement 2009, Lao PDR environmental laws and regulations, EMP implementation, grievance redress mechanism (GRM) and environmental monitoring and reporting. Relevant staff at ECDM, PUCDA, and DUCDA will be trained on how to prepare and submit the environmental monitoring report to ADB;

• Prepare the monitoring and reporting templates and assist in the orientation of contractors on EMP implementation and environmental monitoring requirements;

• Conduct monitoring of implementation of EMP during construction and recommend immediate corrective action in the event of unexpected adverse impacts during implementation;

• Coordinate with the PMU and contractor on mitigation measures involving the community and affected persons;

• Assist the PMU in reviewing compliance reports by contractors;

• Review any reports of grievances and check if the grievance redress mechanism is applied in a timely manner. Prepare record of such grievances for inclusion in the quarterly progress reports;

• Prepare the semi-annual environmental monitoring reports to be submitted to ADB; and

• Undertake any other relevant works that may be assigned by PMU.

Indigenous peoples’ safeguards officer (1 national expert; 10 person-months intermittent)

(i) Post graduate degree in sociology, anthropology, development economics, engineering, or other relevant fields

(ii) Minimum 7 years of experience in social development and indigenous people’s analysis within the context of education sector development

• In coordination with the environment specialist, provide inputs on IPP monitoring and implementation for quarterly, annual, and semiannual monitoring reports.

• Oversee finalization of semiannual monitoring reports, together with the environment specialist, by incorporating ADB’s comments and ensuring clearance and disclosure

• Monitor implementation of the ethnic group plan

Appendix 2 119


(iii) A strong knowledge of indigenous peoples regulations and requirements in Lao PDR as well as experience implementing international financed projects; experience implementing ADB-funded projects is desirable.

• Review any reports of grievances and check if the grievance redress mechanism is applied in a timely manner. Prepare record of such grievances for inclusion in the progress reports;

• Undertake any other relevant works that may be assigned by PMU.

Administrative Assistant/Events Coordinator (2 national experts; 60 person-months each)

(i) Graduate qualifications in office management or related field;

(ii) Minimum 3 years’ experience in project administration or office management

(iii) Proficiency in office software applications (iv) Excellent interpersonal and communication

skills

• Provide overall administrative support to PMU and take charge of day-to-day general office management

• In collaboration with the procurement and finance specialists, update, prepare, and maintain project assets register, and help conduct regular asset inventory reconciliation

• Maintain filing systems and records

• Assist in organizing events, workshops, conferences and in drafting correspondence, reports, and materials for meetings and presentations

• Coordinate field visits, meetings, and logistics

120 Appendix 3

GENDER ACTION PLAN Outcome/Effect of the Reform

Activities/Actions Performance Indicators/Targets Responsible Agency

Employability of secondary school youth enhanced

a. By 2021, a survey/tracer studies for lower secondary, and upper secondary 2024 graduates conducted and baselines for targets determined

a. In school year 2025/26, 120,000 students (60,000 females) complete lower secondary education under improved curricula for priority subjects.a (Baseline: 90,888 students (44,041 females) in 2017/18)

a. b. In school year 2025/26, 90,000 students (45,000 females) complete upper secondary education under improved curricula for priority subjectsa (Baseline: 65,575 students (31,016 females) in 2017/18) c.1. By mid-2025, shares of female and male lower secondary graduates in education and training increased by at least 5% c.2. By mid-2025, shares of female and male upper secondary graduates in education and training increased by at least 5% c.3. By mid-2025, shares of female and male lower secondary graduates in non-agricultural wage employment increased by at least 5% c.4. By mid-2025, shares of female and male upper secondary graduates in non-agricultural wage employment increased by at least 5% (Baseline for indicators c1, c2, c3, and c4: 2019 graduates to be determined from the surveys in 2020 and 2021)

a Priority subjects are integrated science, mathematics, Lao language and English at lower secondary; and physics, chemistry, biology, mathematics, Lao language and English at upper secondary levels.

Project Outputs Activities/Actions Performance Indicators/Targets Responsible

Agency

Output 1: Alignment of post-primary education with labor market demand strengthened

Gender Objective: National secondary education, TVET, and higher education actions plans mainstream gender.

1.1. Based on the mid-term review of the Education and Sports Sector Development Plan, 2016–2020, an instruction to prepare action plans for secondary education, TVET, and higher education, emphasizing gender equity issued by MOES to relevant departments and provincial education offices (Baseline 2018: not applicable) 1.2. Improved guidance on academic and career options are available for female students. 1.3. Assessments of evolving skill demand and supply include data disaggregated by sex, geographic area, age, and ethnicity. 1.4. Consolidated education management system tracks data

1.1 MOES issues instruction to relevant departments and provincial education offices to prepare action plans for secondary education, TVET, and higher education to mainstream gender. 1.2 Gender responsive counselling guidance material developed and at least 60 school principals/senior teachers trained as guidance counsellors

MOES - Department of Planning and Department of General Education MOES - Human Resource Development Office MOES - Education and Sports Statistics Centre MOES - Education and Sports Statistics Centre

Appendix 3 121

disaggregated by sex, ethnicity, age, and geographic area

Output 2: Quality and relevance of secondary education to emerging skills demands strengthened

Gender objective: Curriculum material is free from gender bias, and promotes gender equality, and trainings target female teacher.

2.1. Improved secondary curricula for priority subjects (sciences, mathematics, English, and Lao language), teacher guides, supplementary materials, and other learning and library resources are gender sensitive and display positive images and role models of women and girls. 2.2. Multi-stakeholder committee established to review and validate curricula from a gender perspective. 2.3. The revised INSET programs for priority subjects have been finalized and implemented. 2.4. Target and support female teachers to participate in in-service teacher training (INSET) programs.

2.1 At least 45% of teachers (i.e. at least 5,400 of 12,000 teachers) of the priority subjects) attending INSET are female. 2.2 At least 400 (at least 180 females) teachers of priority subjects in secondary school clusters completed CPD programs

MOES - Research Institute for Education and Sciences MOES - Department of Teacher Education MOES - Department of Teacher Education

Output 3: Equitable secondary education access and completion rates increased

Gender objective: Female students have equitable access to education in a gender friendly environment.

3.1. Increase enrollment by at least 18,900 female students (45% of total 42,000) in 60 secondary schools (Baseline: 2018 – 33,700 total enrolment, 15,000 females) 3.2. Additional facilities (classroom blocks, dormitories, and wash facilities) in 12 target districts at a total of 60 existing primary and secondary school sites include sex-segregated toilets (2:1 ratio) and WASH facilities including for menstrual hygiene management. 3.3. At least 45% of the seats in the dormitories built under the SDP reserved for female students and female teachers 3.4. Stipends provided to at least 1,200 female students (of a total of 2,400 disadvantaged students) in the selected 12 districts, 60 schools. (Baseline: 2019 – not applicable) 3.5. 12 district wide campaigns on prevention of gender-based bullying, sexual harassment, sex discrimination in schools, and sexual violence have been implemented

MOES - DPDG Engineering and Construction Design Management, Department of Finance Engineering and Construction Design Management, Department of Finance MOES - DPDG MOES - DPDG

DPDG = Department of Planning and Department of General Education, INSET =in-service education training, MOES = Ministry of Education and Sports, TVET = technical and vocational education and training.

122 Appendix 4

COMMUNICATION STRATEGY

1. Communications Context: Raise the awareness of secondary school age children in the targeted geographical areas on the importance of secondary education, assist them in enrolling in upgraded secondary schools under the project, and provide counselling services, so that they gain the skills required, and have access to information, to make the transition to further education and training and decent employment. Facilitate cooperation between MOES, other government agencies and employers to improve planning to better align skills supply with skills demand.

3. Project Outcome: Employability of secondary school youth enhanced.

Strategic Elements Work plan elements

Expected Outcomes Objectives

Risks/ challenges

Audience/ stakeholders

Messages / Information

Activities / Channels

Timing

Responsibility

Resources required

Outreach on the benefits of secondary education to stakeholders in the catchment areas for secondary school construction under the project

1. Lack of awareness about the importance of secondary education

2. Financial and opportunity costs of secondary education

3. Skepticism about the quality and usefulness of secondary education programs in view of the perceived poor quality

4. Related to the above, risk of students dropping out

In the catchment areas for secondary school construction under the project. 1. Primary, and

lower secondary school leaving age children

2. Children/ youth who have dropped out of secondary schools

3. Parents and guardians of the above

4. Principals and teachers in secondary schools

5. VEDC 6. DESB’s

1. Information on rights to secondary education, location of schools and how to enrol

2. Information on opportunities for dormitory places

3. Information on opportunities for stipends

4. Information on improved job prospects as a result of completing secondary education

1. Project information leaflets and brochures

2. Posters, fliers in a pictorial format

3. Sensitization workshops and meetings with community members, VEDC, women’s groups, and NGOs

1. In the first 1 year: (i) content development for leaflets, brochures and posters, and (ii) sensitization workshops/ meetings

2. Semi-annual meetings/ workshops throughout implementation period

DGE with support from PIC firm to be engaged under the loan, and PMU staff

1. Content development and printing costs of leaflets, brochures, posters

2. Community mobilization outreach workers in PMU/ PIUs

3. Workshop organizing costs

Awareness amongst youth, parents/ guardians, and communities on the importance of secondary education Enrolment targets specified for secondary school construction under the project met

Appendix 4 123



Risks/ challenges




Timing

Responsibility

Resources required

Improved access to information on further education and training, and career opportunities, for students in the provincial cluster schools (48)

5. Lack of appreciation about the improvement in education and training, and employment opportunities as a result of completing secondary education

6. Lack of further education and training, and career and job opportunities

7. Poor quality and reach of information and counselling services

In the secondary school clusters. 7. Secondary

school students

8. Parents and guardians of the above

9. Principals and teachers in secondary schools

10. VEDC 11. DESB’s 12. Local

employers

5. Information on further education and training options

6. Information on improved job prospects as a result of completing secondary education

7. Information on specific career and job opportunities

4. Student guidance counselling materials

5. Project information leaflets and brochures

6. Visits from local employers to schools, presentations/ information

7. Student visits to local industry/ business employers

3. In the first 1 year training of counsellors and development of materials

4. From the second year pilot implementation of counselling, including engagement with local employers

DGE with support from consultant specialist under the PIC firm to be engaged under the loan

4. Content development and printing costs of materials

5. Workshop and visits organizing costs

Awareness amongst youth, parents/ guardians, and communities on further education and training, and employment opportunities Student graduates from provincial cluster schools access further education and training, or secure decent employment

Outreach to industry and business on aligning skills supply and demand

Limited institutional processes for continued engagement between MOES and other government agencies and industry/ business to facilitate joint

HRD Office, Department of Planning, and other government ministries/ agencies, e.g. MLSW Industry associations and Chambers of Commerce

Importance of cooperation between government and industry/ business on relevance of education and training to employment and economic development

Periodic meetings between MOES and industry associations, Chambers of Commerce and specific employers

Ongoing basis to improve the design and relevance of education and training programs

HRD Office, Department of Planning, with the support of the PIC firm to be engaged under the loan

Workshop organizing costs

MOES assessments and plans to align skills supply with skills demand

124 Appendix 4



Risks/ challenges




Timing

Responsibility

Resources required

analysis and planning Lack of data on skills demand, and limited capacity for analysis

Specific industry/ business employers

Specific information on labor market skill needs

Exchange of specific data, e.g. surveys

Appendix 5 125

STRATEGIC PROCUREMENT PLANNING

I. SECTION 1: PROJECT CONCEPT

Project Title Education for Employment Sector Development Program

Country Lao People’s Democratic Republic (Lao PDR)

Executing Agency Ministry of Education and Sports (MOES)

Implementing Agency Department of General Education (DGE), Department of Teacher Education, Research Institute for Education and Sciences (RIES), Education and Sports Quality Assurance Centre (ESQAC) and Department Planning

Project Development Objectives

The policy-based loan (PBL) will help Ministry of Education and Sports (MOES) to undertake reforms to align secondary education and other post-primary education subsectors, i.e. technical and vocational education and training (TVET) and higher education, with evolving workforce skill needs. The project component will build MOES capacity to deliver these reforms effectively, improve the quality and relevance of secondary education in preparing youth for employment, and increase completion rates.

Project Description The Education for Employment Sector Development Program (SDP) will build on the Secondary Education SDP and will complement the ongoing Second Strengthening Technical and Vocational Education and Training Project and the Second Strengthening Higher Education Project.a Since Education for Employment SDP’s policy-based loan component does not entail procurement, the strategic procurement capacity assessment focuses only on the investment component, which will support three outputs:

• Output 1: Alignment of post-primary education with labor market demand strengthened

• Output 2: Quality and relevance of secondary education to emerging skills demands strengthened

• Output 3: Equitable secondary education access and completion rates increased.

Education for Employment SDP is expected to become effective in December 2019 and be implemented over 5 years.

Description of Indicative Contract Packages

Consultancy: Project management consultants (firm - international); Project Audit (firm - national); individual consultants for specialized support (e.g. civil works, financial management, procurement, social safeguards); and locally contracted administrative and support staff Recruitment of national individual consultants to provide support in financial management, procurement, and monitoring and evaluation and other administrative staff, has proven effective in facilitating day-to-day project operations in the project management unit (PMU). This has been the operational arrangement under the Secondary Education SDP and other ADB-funded education projects in Lao PDR. Goods: Laboratory equipment, library material, textbooks, teaching aids, school furniture, training manual/kits, sports equipment; office furniture, office equipment, office supplies/stationery, and project vehicles Works: Construction and outfitting of schools

126 Appendix 5

Summary of the Financing Agreement

The total program cost is estimated at $55 million. The Asian Development Bank (ADB) will finance $50 million: $10 million concessional policy-based loan and a$40 million concessional project loan. The Government of Lao PDR will finance $5 million, principally comprising in-kind contributions. Taxes and duties will be covered by the ADB loan.

a ADB. Lao People’s Democratic Republic: Secondary Education Sector Development Program; ADB. Lao People’s Democratic Republic: Second Strengthening Technical Education and Vocational Training Project; and ADB. Lao People’s Democratic Republic: Second Strengthening Higher Education Project.

II. SECTION 2: OPERATING ENVIRONMENT

A. Capacity and Capability Assessment of the Borrower

Strengths Weaknesses

• The Ministry of Education and Sports (MOES) has the experience of implementing several projects funded by the Asian Development Bank (ADB), World Bank, the European Union, Japan International Cooperation Agency, and the Department of Foreign Affairs and Trade, Government of Australia. It is currently the executing agency for three ongoing ADB projects (footnote 1). It was also the executing agency for three earlier ADB education sector projects which are now closed.a The donor coordination note lists some projects funded by other donors which are also being implemented by MOES.

• Capacity of the project management unit (PMU) within MOES has been built up during implementation of the Basic Education Sector Development Program (SDP) and Secondary Education SDP. It is familiar with ADB’s policies and processes pertaining to procurement, financial management and project monitoring.

• Decree 03/PM dated 9 January 2004 on procurement provides that the procurement policies and processes of the donor agency will take precedence in case of any conflict with the provisions of this Decree. The current version harmonized standard bidding documents (SBDs) has been endorsed by ADB and World Bank for use for open competitive bidding (OCB)—Nationally Advertised work

• Since the Lao People’s Democratic Republic is a member of Association of Southeast Asian Nations, it is able to take advantage of the regional trade linkages and harmonized economic and trade requirements.

• Decision-making within MOES is multi-layered and can cause delays.

• Capacity of the executing agency technical departments is limited.

• Capacity of national consulting firms and individual consultants continues to be limited, especially in specialized areas such as teacher training, curriculum design, and student assessment. Dependence on international consultants adds to project costs, and may not, necessarily lead to sustained capacity building.

• High turnover of PMU procurement staff (thrice in the Secondary Education SDP). Procurement staff rotates between projects.

• Local market still developing, high dependence on imports, being a land-locked country makes trade costlier

• Media, civil society, nongovernment organization sector nascent leading to inadequate public disclosure and communication of procurement actions.

• Absence of independent local arbitration/ dispute redress/complaints resolution mechanism






Appendix 5 127

• The private sector (contractors and suppliers) is small but competition is adequate for small contracts.

Opportunities Threats

• Local labor young (skilled and unskilled) and low cost.

• Long-term ongoing partnership with several multilateral and bilateral development partners

• Political and social stability

• Education sector is high national priority

• High economic growth rate during the past decade

• New procurement law promulgated on 2 Nov 2017, Guidelines under preparation.

• Several donors have been active in the education sector (primary education) for the past few decades. Regular donor coordination meetings help in sharing of experience and best practice. Some national consultants who have gained experience while working in other donor projects have been engaged by ADB as well.

• Capacity building opportunity for executing agency engineers who would be involved in schools construction.

• Debt-stressed country, limited fiscal space for scaling up investment in the social sector

• Complex and protracted procedures for private firms (both local and foreign, local firms mostly of small size) to start business.

• Commercial law and the judicial system related to commercial aspects in Lao PDR is still developing. Sanctity of contracts is not well understood.

• Human resources and skills are underdeveloped.

• Weak communication skills in English—requires extensive translation.

• Reactive instead of proactive decision making.

a ADB. Lao People’s Democratic Republic: Basic Education Sector Development Program; ADB. Lao People’s Democratic Republic: Strengthening Technical and Vocational Education and Training Project; and ADB. Lao People’s Democratic Republic: Strengthening Higher Education Project. MOES acted as the executing agency of these projects.

B. Support Requirements

Procurement Capability and Capacity Average, due to multi-layered procurement decision making procedures and insufficient communication skills in English at working level

Experience in Implementing Similar Projects

Very good. As noted in section A above, the Ministry of Education and Sports has been involved in the design and implementation of several the Asian Development Bank (ADB) and other donor-funded projects over the past decade. However, successful delivery of the project will require significant consultant inputs and support.






128 Appendix 5

The Secondary Education Sector Development Program (SDP) received recognition for 3 successive years as the best performing ADB-financed project in the Lao People’s Democratic Republic. No misprocurement declared by ADB in any of previous MOES projects to date. ADB also commended the Secondary Education SDP project management unit (PMU) (which will become the Education for Employment SDP PMU) for vigilance in discovering fraudulent signatures in 1 civil works non-competitive bidding .

Contract Management Capability and Experience

Good. The Education for Employment SDP’s precursor (Secondary Education SDP), which involves similar procurement, was substantively completed on time (December 2018), though extended to June 2019 to allow time for some minor activities.

Level of Reliance on External Consultants High

Existence and Description of Complaints Management System

Decree 03/PM dated 9 January 2004 describes the existing system which is partly satisfactory (since complaints management system is not independent of the executing agency/government)

C. Key Procurement Conclusions

1. The key procurement conclusions are the following: (i) Moderate procurement capacity; (ii) All documents have to be translated into Lao and then re-translated back into

English. This takes time; (iii) There are multiple steps in decision making. While this does ensure multiple

checks, the overall process is lengthy and inefficient. Procurement decisions move up through the project management unit (PMU), the relevant Director of Ministry of Education and Sports (MOES), to the Minister. The procurement evaluation committees have representatives of the Ministry of Finance, Ministry of Planning, in addition to MOES staff. It is often difficult to schedule meetings based on everyone’s convenience. Multiple clearances and signatures are required. If mistakes are found in the supporting documents, they are returned for correction, re-submitted, and then reviewed all over again;

(iv) There is need to simplify decision making and bid evaluation procedures. Ensure MOES has both, authority and responsibility for decisions at least up to some threshold amounts;

(v) Simplified decision making and bid evaluation procedures to be detailed in the project administration manual (PAM); and

(vi) Competition ranges between adequate to good (2 to 10 bidders) for small contracts (all contracts identified under this sector development program [SDP] are small).

D. External Influences Analysis

Governance Governance is satisfactory and there is overall political stability. The multi layered, bureaucratic decision-making process can result in delays. Instances of policy and regulatory ambiguity, and the uneven application of law can cause uncertainty for the private sector (both, domestic and foreign)

Appendix 5 129

Economic

Since the 1980s, the Lao People’s Democratic Republic (Lao PDR) has made considerable progress in moving from a command and control economy to one which is more market-based. The economy has been growing fast in the past decade, spurred by exports of power, mining, commercial agriculture, and tourism. Economic growth has surged by an average of 8% per annum since 2005, albeit from a low base. There are some goods for which local preference is applicable. Lao PDR currency Kip is stable, inflation and unemployment are low, FDI accelerating. Trade has been broadly integrated into regional and world markets. Lao PDR has made significant progress toward achieving the Millennium Development Goals.

Sustainability

Despite progress, amidst broader fiscal challenges, the education sector remains under-resourced, undermining education access and quality. A planned Asian Development Bank policy-based loan for Strengthening Public Sector Management will help expand education budgeting in the medium term, while the Education for Employment Sector Development Program policy and investment support for evidence-based planning will help the Ministry of Education and Sports more effectively target budgetary resources.

Technology

Internet speed is good in cities, but mobile and internet penetration is low in rural areas. Use of e-procurement has not started as yet. Lao PDR is currently an “analogue economy”.

E. Key Procurement Conclusions

2. The key procurement conclusions are: (i) Simplified decision making required, measures to be in place to fix accountability; (ii) Construction in the flood plains of Mekong River to follow flood resistant

specifications, earthquake prone areas in Northern Lao People’s Democratic Republic (Lao PDR) need to be designed for seismic and multi-hazard resistance. Construction in these areas would cost a bit more than construction in other areas;

(iii) Internet penetration being low except in major cities. E-procurement is not advised at present;

(iv) Since the nature of works is simple and small scale, local labor would be able to do them. Goods are mostly imported. Strong consulting services support would be necessary; and

(v) As a first step, all procurement can be advertised (including option to download bid documents) on PMU/MOES website in addition to print/media advertising.

F. Stakeholder Analysis and Communication Plan

3. Project relevant stakeholders are: (i) government agencies; (ii) project beneficiaries; (iii) individuals or groups who will be affected by the project; (iv) civil society and nongovernment organizations; (v) other Asian Development Bank (ADB) functions and task teams; (vi) prospective suppliers of goods, works, and services for the project. (vii) Government of Lao PDR; and (viii) ADB.

130 Appendix 5

4. Figure A5.1 positions all the internal and external stakeholders who would be involved in the project. It categorizes each stakeholder by their level of interest in the project and their power and influence over the project.

Appendix 5 131

Figure A5.1: Stakeholder Mapping High

Keep Satisfied

- Project beneficiaries - Ministry of Education and Sports

(MOES) - Following departments of MOES; • Department of Planning

• Department of General Education and Sports Quality Assurance Centre

• Inclusive Education Center Department of Technical and Vocational Education

• Department of Non-Formal Education

• Department of Finance

• Research Institute for Education and Sciences

• Institute for Education Administration Development

• Education and Sports Statistic Center

• Department of Organization and Personnel

• Department of Higher Education, Human Resource Development Office

• Department of Planning

• Department of Teacher Education

- ADB teams related to preparation and implementation of the project.

Key Stakeholders

- Ministry of Finance - Ministry of Planning - Prospective suppliers of

goods, works, and services for the project.

- Individuals and groups affected by social and environmental aspects

Minimal Role

- Civil society and nongovernment organizations

- Media organizations - Other development partners

Keep Informed

- Prospective suppliers of goods, works and services for the Project

- Other development partners

Low High Interest in the Project

Power & Influence Over Project

132 Appendix 5

G. Stakeholder Communication Plan

5. Quarterly progress reports will be posted on the project website. Involving and consulting stakeholders during project planning and implementation would be undertaken.

Stakeholder Name and Role Ministry of Finance

Interest in the Project - Funding of the Project. Legal representation in relationship with financiers. Monitoring of the Project

Support and Influence Level - High. Supporter.

Objections, Drivers, Needs, and Levers - Need for expeditious processing of loan agreement and timely solution of financing issues and funding during implementation.

Action - Maintain timely involvement, be informed and follow up.

Responsible, Accountable, Consulted, or Informed

- Consulted and informed

Communicate What, When, and How? - Communicate by all essential means and keep constantly informed according to its periodic reporting requirements.

Stakeholder Name and Role Ministry of Education and Sports

Interest in the Project - Executing agency


Objections, Drivers, Needs, and Levers - Timely contracting and disbursement, smooth project implementation, monitoring and evaluation.

Action - Maintain project control, be fully involved and informed and follow project instructions.


- Responsible and Accountable

Communicate What, When, and How? - Communicate extensively both ways and keep itself constantly and periodically informed according to its periodic reporting requirements.

Stakeholder Name and Role Asian Development Bank (ADB) teams

related to preparation and implementation of the project.

Interest in the Project - Assists and supervises the project based on legal agreements between ADB and the Lao People’s Democratic Republic.


Objections, Drivers, Needs, and Levers - Need for expeditious processing of loan agreement, funding, assistance, supervision, no-objection to prior review procurement activities

Action - Maintain timeliness involved and informed and follow agreed policies, procedures and decisions.

Appendix 5 133


- Consulted and informed.

Communicate What, When, and How? - Communicate by all means and keep constantly informed according to agreed periodic and adhoc reporting requirements.

H. Key Procurement Conclusions

6. The key procurement conclusions are: (i) With polity having a command structure, civil society and media at nascent stage,

it is important that the project website has a grievance redress section where any issues related to procurement can be raised and responded to by PMU; and

(ii) MOES will inform stakeholders about the Education for Employment SDP implementation through radio, TV, and print media (including Saksamai educational channel), with project progress and procurement information also on MOES’ this SDP’s website.

III. SECTION 3: MARKET ANALYSIS

A. Porter’s Five Forces

Competitive Rivalry 7. Market is small, competition is adequate for the small civil works planned under the SDP (as assessed from adequate number of bids received in previous ADB /WB projects). Competition is less for local consultants due to narrow skill base within country. Most goods to be procured are imported, many entities in the import business, would ensure adequate competition. Bargaining Power of Buyers 8. MOES bargaining power is average since procurement volumes are low, contract sizes are small and not many alternative sources of supply. Market intelligence and understanding of MOES is average. Bargaining Power of Suppliers 9. The supply market is dominated by a few, global potential bidders. The power of local construction contractors is low, as there is greater competition and many potential sources. There are constraints on availability of some construction materials due to Lao PDR being a landlocked country, and transport costs and import duties increase material costs. Risk of New Entrants 10. Barriers to entry are high due to smaller economies of scale and cost of market entry (registration, taxes etc.). 11. Making right connections is important in Lao PDR which limits new entrants. Legislation and financing are not very conducive for starting new businesses. A few suppliers dominate the market. Risk of Substitutes

134 Appendix 5

12. This risk is not much relevant for the SDP and MOES due to most goods being imported and for small works local contractors are aplenty. B. Key Procurement Conclusions

13. The key procurement conclusions are as follows: (i) Market is small, competition is adequate for the small civil works planned under

the SDP (as assessed from adequate number of bids, up to 10 per package, received in previous ADB/World Bank projects). Competition is less for local consultants and large works due to narrow skill base and lesser opportunities within country. Most goods to be procured are imported, many entities in the import business, would ensure adequate competition; and

(ii) MOES bargaining power is average since procurement volumes are low, contract sizes are small. Bargaining power of goods suppliers is high, that of local construction contractors is low. Barriers to entry are high due to economies of scale and cost of market entry. Risk of substitutes is not relevant for the SDP and MOES due to most goods being imported and for small works local contractors are aplenty.

C. Supply Positioning

14. The supply positioning tool (Figure A5.2) is used to differentiate the procurement approaches for the proposed contract packages within the SDP. Works contracts would be of small size, scattered countrywide. Procurement of goods would be clubbed together and in lots to make them more attractive to suppliers.

S Figure A5.2: Supply Positioning Tool

High Low High

Strategic Security

Individual national consultants, including projection management unit (PMU) contractual staff

Strategic Critical International consulting firm( Goods: Books, training material

Tactical Acquisition Vehicles Office equipment Individual international consultants embedded in PMU PMU costs and communication

Tactical Advantage School construction School laboratory / workshop equipment, materials, etc. Open competitive bidding works

Risk

Appendix 5 135

D. Key Procurement Conclusions 15. The key procurement conclusions are as follows:

(i) About 20 % of total procurement is in high risk (strategic critical and strategic security) category; and

(ii) Supply constraints of serious nature for the SDP not likely. E. Supplier Preferencing

16. It is not a major issue for the SDP since MOES has the experience of implementing several donor-funded projects satisfactorily. Hence, detailed analysis of supplier preferencing not required. 17. Potential bidders view MOES ADB financed projects favorably since payments are assured, timelines are kept.

F. Key Procurement Conclusions

18. The key procurement conclusions are the following: (i) Supplier preferencing not a major issue for the SDP (this inference is based on the

3 earlier similar completed projects of MOES supported by ADB and other WB/JICA/EU projects);

(ii) Potential bidders view MOES ADB financed projects favorably, in previous projects, 2-10 bidders have participated in MOES bidding; and

(iii) Adequate bidder participation and competitiveness likely. Very few cases of no bids/rebid. No contractual disputes / termination in previous projects.

IV. SECTION 4: RISK MANAGEMENT

A. Project Procurement Risk Assessment Risk Register

19. To make the PPRA process manageable, the assessment is structured around the following key areas:

(i) borrower experience, including capability and capacity; (ii) business and operating environment; (iii) supplier relationship management; (iv) sustainability issues; and (v) supply chain issues.

20. The following factors have been considered during this process:

(i) previous experience and judgment of the borrower; (ii) information from ADB /WB and discussion during market analysis with PMU’s of

earlier MOES projects; (iii) understanding of key decision drivers from the borrower and the supply market;

and (iv) assessment of the capacity of local contractors and suppliers who could potentially

bid for packages under the project and analysis of assumptions made during project conceptualization

21. Based on above considerations, the Risk Register has been prepared and presented in Table A5.1.

136 Appendix 5

Table A5.1: Education for Employment Sector Development Program Procurement Risk Assessment Risk Register

Risk Description

Likelihood (L) (1–5)

Impact (I) (1–5)

Risk Score (L x I)

Proposed Mitigation Risk Owner

Construction workmanship affecting final quality of built product.

3 5 15 Mitigation: Clear specifications, good design of structures, robust monitoring, quality assurance through experienced construction supervision consultants

PMU of the Education for Employment SDP, MOES, ADB

Ghost bidders (i.e. bidders who win and resort to back to back subcontracting)

3 4 12 Individual provinces-based package to increase attractiveness of bidding for the legitimate local contractors with the adequate resources. Bid security level to be adjusted accordingly. Enforcing contract provisions for contractor’s quality, workmanship and supervision.

PMU of Education for Employment SDP, MOES

High turnover of project management team

3 4 12 Discuss with MOES management. Consider including correctives in PAM / loan covenant.


Gaps in MOES/PMU procurement expertise

4 3 12 Project to recruit in PMU individual (i) international expert to support initial procurements and capacity building; and (ii) national specialist with long contract/good terms to attract and retain qualified specialist


Decision making within MOES/MOF is multi layered, consumes large time and effort

4 3 12 Simplify decision chain and ensure all decisions are made within MOES

MOF, MOES

Perception of pervasive corruption and nepotism

2 3 6 Adopt procurement check in tandem with external audit. Use media to disclose project information. Advertise bids on project website

PMU of Education for Employment SDP, ADB and MOES

High dependence on imports leading to higher costs

3 2 6 Track imports, PMU to liaise with customs authorities and suppliers

MOF, MOES

Appendix 5 137

Being a land locked country makes trade costlier

4 2 8 Accept and include the additional costs in estimates

Ministry of Finance, MOES

Media, civil society, NGO sector nascent leading to inadequate public disclosure and discontent

2 3 6 Use print, visual and electronic media to disclose information periodically

ADB and MOES

Absence of independent local arbitration/dispute redressal mechanism

2 4 8 Accept and provide for dispute adjudication board in contract conditions

MOF, MOES

Ineffective complaints resolution mechanism causing reputational risk

3 2 6 Have a complaints section in project website, resolve complaints cleanly and quickly

PMU of the Education for Employment SDP and MOES

Commercial law and commercial court system in Lao PDR still developing. Sanctity of contracts not well understood, may lead to claims

4 3 12 Adhere to contract provisions, settle claims proactively and quickly

MOF, MOES

Communication skills in English inadequate, may delay decisions

2 3 6 Hire skilled translators. Use project consultants to communicate better.

PMU of Education for Employment SDP, ADB

Bid/proposal evaluation takes too long, is prone to errors

3 3 9 Have smaller (3-5) bid evaluation committees, use project consultants effectively.

PMU of Education for Employment SDP and ADB

Limited oversight of procurement and expenditure practices

4 4 16 Include sample procurement check in work scope of External Auditor

MOF, MOES, ADB

ADB = Asian Development Bank, I = impact, L = likelihood, MOES = Ministry of Education and Sports, NGO – non-government organization, PMU = project management unit, SDP = sector development program.

138 Appendix 5

V. SECTION 5: OPTIONS ANALYSIS

22. The following key options have been considered for procurement under the SDP: (i) Contract Packaging and Scheduling; (ii) Procurement Method and Bidding Procedures; (iii) Specifications; (iv) Review Requirements; (v) Contract Form, Pricing Method, and Bidding Documents; (vi) Evaluation and Qualification Criteria; and (vii) Contract Management Approach.

23. The following criteria have been used for analysis of options:

(i) Suitability. Will the option meet the project’s overall development objectives? (ii) Feasibility. Will the option work? Can it be achieved in an acceptable cost and time

frame? Does the market have the capacity? Are the required resources available? (iii) Acceptability. Will the identified stakeholders support and buy-in to the option?

24. Strategic options and their rating for procurement under the SDP are presented in Table A5.2.

Table A5.2: Strategic options for procurement under the Education for Employment

Sector Development Program

Strategic Options Description

Feasibility (1–10)

Suitability (1–10)

Acceptability (1–10)

Overall (3–30)

S1. Contract Packaging and Scheduling O1. Works packages of multiple lots per province, one lot per district and goods multiple lots. Consulting 1 PIC firm using full technical proposals, and some individual consultants for civil works, safeguards, procurement, and project monitoring and reporting. The PIC and the individual consultants will be recruited through advance contracting. In parallel, civil works contracts will also be awarded to progressively cover the construction and upgrading of 60 schools. As the construction of the schools is completed, equipment will be procured for the schools. Equipment for the cluster schools can be procured once the list of schools is finalized and the needs assessment is completed.

7

5

4

16

O2. District wide works package, multiple lots in one package per district. The construction sites are within the distance a contractor can utilize resources and supervise works, and it will also attract contractors to

8 8 9 25

Appendix 5 139





Overall (3–30)

participate in the bidding as the bidding amount is higher than splitting into multiple packages per district. The advance action for the first round bidding is suggested as when the loan is effective, the school can be constructed and completed earliest, which will achieve the best value for money.

O3. Province wide works package, multiple lots per one package per province. Due to long distance between districts and poor road conditions, one package per province will be difficult for a contractor to handle the contracted works

3 2 2 7

O4. Goods package for (a) school furniture (multiple lots) and (b) equipment (multiple lots). Procurement in one lot with different delivery dates as the school construction will be bid in multiple lot and the construction will not be finished the same time, so the furniture and equipment will be required once the construction completes. This approach will align the supply with the demand.

9 9 9 27

O5. Goods package for school furniture and equipment. Procurement in multiple lots with different delivery dates as the school construction will be bid in multiple lot and the construction will not be finished the same time, so the furniture and equipment will be required once the construction completes. This approach will align the supply with the demand. However, the contract value will significantly reduce which will disinterest suppliers, and the number of suppliers attend the bidding is foreseen to be lower than procurement in one lot.

9 7 7 23

O6. PIC Package. The Project Implementation Consultant is suggested to be recruited as a consulting firm rather than a team of individual consultants. Individual consultants working in a team may not be as effective as firm because a sense of belonging to an organization is believed not to be deep, replacing

9 9 10 28

140 Appendix 5





Overall (3–30)

individuals is easier for the firm than PMU

O8. All civil works in 3 packages (northern, central and southern districts), goods single package, consulting all individual experts.

5 2 1 6

S2. Procurement Method and Bidding Procedures O1. OCB national for goods and works; OCB international for consulting services. Single-stage, one-envelope submissions of technical and financial proposals. International advertisement for works > US$3million, goods > 1 million. No prequalification.

8 9 8 25

O2. OCB for goods, works, or non-consulting services; single-stage two-envelope submissions of technical and financial proposals. National advertisement only. No prequalification.

6 5 6 17

O3. Recruitment of individual consultants through submission of application over Executing agency email address. This method is most likely to render nontransparent selection as the most qualified application might be discarded in order to favor any applicants.

9 3 3 15

O4. Recruitment of individual consultants through submission of application both over CMS and Executing agency email address This method can ensure transparency in the selection process as all applications submitted are kept in the ADB database, and the ADB can conduct audit of the past consultant recruitment with complete records.

9 8 8 25

S3. Specifications O1. Conformance specifications for works and goods, time-based contract for consultants.

8

9

8

25

O2. Performance specifications for works and goods, lumpsum contract for consultants

3 4 5 12

Appendix 5 141





Overall (3–30)

S4. Review Requirements O1. Prior review of only first each of works, goods and non-consulting services packages, all consultant selection

8

8

8

24

O2. Prior review of all procurement

4 3 5 12

O3. Post review (sampling) of all procurement

6 7 6 19

S5. Contract Form, Pricing Method, and Bidding Documents O1. Harmonized MDB Lao PDR works bid documents for small contracts (<US$3 million for works, < US$1 million for goods), rest ADB SBDs and contract forms, unit prices

8

9

8

25

O2. ADB standard bidding documents and contract forms, unit prices

8 6 8 22

O3. Lao PDR bidding documents and contract forms, lumpsum prices

7 2 2 11

S6. Evaluation and Qualification Criteria O1. Include in bid documents, minimum but essential evaluation and qualification criteria. No qualification criteria for subcontractors.

9

8

8

25

O2. Include in bid documents, median level of evaluation and qualification criteria. Include qualification criteria for subcontractors. Reject abnormally low bids.

8 5 6 19

S7. Contract Management Approach O1. Optimize inputs of experts, rely on consultants for quality and contract management. Adopt collaborative and transactional relationship with contractors, suppliers and consultants.

7

9

8

24

O2. Minimize international expert inputs. PMU takes responsibility for contract management

4 5 3 12

ADB = Asian Development Bank, CMS = contract management system, Lao PDR = Lao People’s Democratic Republic, MDB = multi-lateral development banks, OCB = open competitive bidding, PIC = project implementation consulting, PMU = project management unit, SBD = standard bidding documents.

142 Appendix 5

Notes: 1. S1, S2 are main strategic options. 2. O1, O2 are sub options. 3. Criteria rating score range (1 to 10), 1 denotes lowest score, 10 highest.

25. Based on the analysis carried out in Table A5.2, recommended options are those with highest overall scores among sub-options, i.e., S1-O2, S1-04, S1-06, S1-07, S2-01, S2-04, S3-O1, S4-O1, S5-O1, S6-O1, and S7-O1.

VI. SECTION 6: PROCUREMENT STRATEGY SUMMARY

A. Procurement Packaging and Scheduling

26. The SDP will be implemented over a 5-year period. A similar project (the project component of the Secondary Education SDP) was substantively completed on-time in December in 2018, with extension to June 2019 to allow for minor activities. The same procurement arrangements are expected to continue except some measures to simplify and speed up. MOES remains the executing agency, under which the PMU (largely continuous from the Secondary Education SDP PMU) would be responsible for overall project management.

27. It is expected that procurement will be of small value works contracts, and goods (school lab and workshop equipment, textbooks, training material). Consulting procurement would include selection of 1 firm (PIC) based on QCBS method, and several individual consultants. A large number of training/workshops would be organized by the PMU (which would be a subset of project administrative expenses) and is not to be shown in procurement plan. Procurement of following is envisaged.

(i) Consultants: Project management consulting firm (PIC; international firm), individual consultants (international and national), and locally contracted administrative and general staff;

(ii) Goods: Library material, textbooks, laboratory/classroom equipment, office equipment, sports equipment, teaching aids, office supplies/stationery, training manual/kits, project vehicles, instruction material, school and office furniture. Procurement in multiple lot bid packages; and

(iii) Works: Works bid packages 12 with multiple lots, one in each district.

28. Recommended procurement scheduling: Consultant recruitment (individuals for PMU and firm-based PIC) and initial civil works first; goods procurement for initial school sites and other early-stage items; second batch of civil works; goods procurement for second batch of civil works sites and other items (e.g., printing of the SDP-developed teacher guides, etc.) as project progresses. B. Procurement Method

(i) OCB national for goods, works and non-consulting services. (ii) Single-stage, one-envelope for goods and works. (iii) Submissions of technical and financial proposals for consultant firms. (iv) International advertisement for works > US$3million, goods > US$1 million. (v) National advertising below these thresholds. (vi) QCBS (80:20) for the project implementation consulting (PIC) firm

C. Prequalification

29. No prequalification envisaged under the project since the size and type of contracts do not warrant it.

Appendix 5 143

D. Bidding Procedures

(i) Single-stage one-envelope bidding procedure for goods and works. (ii) Submissions of technical and financial proposals for consultant firms.

E. Specifications

30. Conformance specifications will be used for works and goods, and time-based contracts for consultants. This is due to the simple nature of the project with goods packages distributed broadly (e.g., nationwide for new teacher guides and supplementary materials), and small works in 12 districts in different parts of the whole country. F. Review Requirements

31. Prior review of only first package each of works, goods and non-consulting services, and for all consultancy packages. 32. MOES has been successful in substantively completing (excepting final wrap-up activities) Secondary Education SDP, a similar project which followed prior review. its predecessor (Basic Education SDP) was rated highly successful. MOES knows the processes and can shoulder higher responsibility. The SDP’s PMU will benefit from a strong degree of continuity from the Secondary Education SDP and Basic Education SDP PMUs. First package prior reviews are needed since it would follow ADB’s new procurement framework 2017. G. Standstill Period

33. None proposed. In Lao PDR, there is no alternative complaints resolution mechanism except judicial recourse. Therefore, a standstill period will not be of any value. H. Standard Bidding Documents and Contract Forms

34. Harmonized multilateral development banks’ (MDB) works bid documents for Lao PDR will be used for small contracts (i.e. <US$3 million for works, < US$1 million for goods).1 35. ADB’s standard bidding documents and contract forms will be used for large contracts exceeding these thresholds. 36. ADB’s general conditions of contract and standard forms of contracts will be used for consulting services (firms and individuals). I. Pricing and Costing Method

37. For works, unit price or admeasurement or lumpsum contract with pre-defined stage wise will be used. 38. For goods, lumpsum or unit prices or a combination of both (when scope of supply involves installation, training etc.) will be used. 39. For consulting services: milestone progress payments for time-based contracts or lumpsum payments

1 ADB. 2017. ADB Procurement Policy – Goods, Works, Nonconsulting and Consulting Services. Manila.

144 Appendix 5

J. Key Performance Indicators

(i) Contract awards and disbursement - planned versus actual. (ii) Construction progress and classroom readiness progress targets versus actual (iii) Time taken to select and mobilize the project management consulting (PIC) firm,

and individual consultants benchmarked to ADB’s CRAM. K. Evaluation Method

40. Include in bid document minimum but essential evaluation and qualification criteria. No qualification criteria for subcontractors. Accept abnormally low bids with higher performance guarantee. Contracts to be awarded to qualified, lowest evaluated price bid. L. Contract Management Approach

(i) Optimize inputs of experts, rely on national consultants for quality and contract management.

(ii) Capacity building of local engineers with area engineer structure (iii) Learn and adopt best practices from the experience of the recently completed

AusAid project which strengthened 166 existing schools. (iv) Develop detailed contract management plan and key tasks work plan at kick-off

period of the project and hold regular project review meetings to monitor progress and resolve issues.

Appendix 6 145

INVESTMENT PROJECT DESCRIPTION1

Introduction

1. Since 1992, the Asian Development Bank (ADB) has supported the Lao People’s Democratic Republic (Lao PDR) in advancing national reforms in secondary education, technical and vocational education and training (TVET), and higher education.2 This includes the Secondary Education Sector Development Program (SDP), which will be completed in 2019, as well as the ongoing projects for TVET and higher education.3 Building on such support, the Lao PDR government—including the Ministry of Education and Sports (MOES), Ministry of Finance (MOF), and Ministry of Planning and Investment (MPI)—and ADB agreed to include in the 2019 pipeline, the Education for Employment Sector Development Program (SDP). 2. This SDP will be the principal international support to secondary education reforms. Complementing ADB’s ongoing TVET and higher education projects, it will principally focus on secondary education, assisting MOES to effectively operationalize recent reforms and promote follow-on reforms to enhance the contribution of secondary education to flexible/foundational “soft skills” (e.g., critical, logical, and analytical thinking; creativity; communication). These soft skills will be critical to support Lao PDR’s socioeconomic transformation, since secondary education accounts for the largest share (roughly 50%) of young entrants into non-agricultural work (i.e., industry and service sectors), versus just below 30% for TVET and higher education combined. At the same time, this SDP will promote reforms to more strategically align post-primary education, i.e. secondary education, TVET, and higher education, to collectively meet an increasing range of skills needed as Lao PDR’s economy diversifies. 3. The SDP will provide policy and investment-level support to (i) cross-cutting reforms to better align secondary education, TVET, and higher education to collectively meet evolving skill demands; (ii) enhance secondary quality and relevance to evolving “soft skill” needs as the economy modernizes; and (iii) increase secondary education access and completion rates. This SDP is closely aligned with the government’s National Socioeconomic Development Plan (NSEDP), 2016–2020 and Education (SDP), 2016–2020. 4. The Education SDP recognizes that strengthening secondary education is critical to the Lao PDR’s goals of graduating from least-developed country (LDC) status and improving the skills of its workforce. The Education SDP Midterm Review (MTR) emphasizes that the low primary to lower secondary education transition rates, and the high dropout rate within lower secondary education (LSE) is a major challenge. More generally, the Education SDP MTR calls for realignment of secondary education, TVET, and higher education as being vital to advance national socioeconomic objectives. The MTR’s follow-up draft action plans call for engagement with the private sector and utilization of existing data sources to periodically assess labor market skill demands.

1 Subject to further revisions based on feedback from MOES and ADB’s internal review. 2 ADB’s focus on post-primary levels of education complements support from other development partner organizations

(DPOs), which remains focused largely on primary and pre-primary education. 3 ADB. 2011. Lao People’s Democratic Republic: Secondary Education Sector Development Program. Manila; ADB.


146 Appendix 6

Education for Employment Sector Development Program Objectives

5. Impact. Reflecting alignment to MOES’ Vision for 2030, this SDP will contribute to the longer-term goal of “Inclusive, balanced, and skill-driven economic growth achieved.”4 6. Outcome. The Education for Employment SDP’s outcome (the more direct objective to be achieved by program completion) will be “Employability of secondary school youth enhanced”. Consistent with the Education SDP, NSEDP, and directives at the 2018 Government Meeting, the SDP will focus on both increasing and equitizing the flow of skills into the labor force to support inclusive growth and increased opportunities for youth. 7. Outputs. The SDP will support three outputs, as follows:

(i) Output 1: Alignment of post-primary education (PPE5) with labor market demand strengthened will provide a cohesive strategic framework for reforms and planning to align PPE to evolving demands for soft and hard skills in the labor force. It will help strengthen alignment and complementary across secondary education, TVET, higher education subsector (HES), and nonformal education (NFE) at post-primary levels;

(ii) Output 2: Quality and relevance of secondary education to emerging skills demands strengthened will improve the capacity of secondary education to equip youth with flexible “soft skills” (e.g., critical, logical, and analytical thinking; problem-solving, creativity, communication), math and science skills, needed to enter the labor force or pursue TVET or higher education; and

(iii) Output 3: Equitable secondary education access and completion rates increased will improve LSE and upper secondary education (USE) access and completion rates. This will contribute to efforts to universalize compulsory LSE, escape from LDC status, and achieve other national socio-economic objectives.

8. Output 1 support for PPE will also complement ongoing ADB projects supporting TVET and higher education. Outputs 2 and 3 will build on and adapt lessons from Secondary Education SDP.

Sector Development Program Modality

9. SDP modality. Under all 3 outputs, the Education for Employment SDP will provide complementary policy and investment support to advance national reforms.6 The policy-based loan (PBL) (to be released as a single tranche at loan effectiveness) will finance an initial set of policy actions to support MOES’ medium-term PPE reform agenda. PBL policy actions will also provide a firmer base for project investments. In turn, the project component will help MOES effectively deliver these foundational reforms. It will also help MOES prepare follow-on reforms, including specific reform actions targeted by 2022 and identified in the P3F. These P3F reform actions are not linked to tranche release under this SDP. ADB may later consider additional PBL, project, and/or technical assistance (TA) support for these downstream reforms.

4 Lao PDR National Economic Development Plan 2016–2020, and MOES Education and Sports Sector Development

Plan 2016–2020. Vientiane. 5 Unless otherwise noted, PPE herein refers to formal general secondary education, TVET, higher education (including

teacher education), and NFE at post-primary levels. 6 The SDP modality, under the precursor Secondary Education SDP, supported reforms during 2010–2017, which

introduced a new curriculum and extended secondary education through grade 12, in line with international norms.

Appendix 6 147

10. Financing and implementation period by SDP component. The government has requested ADB financing of $50 million for this SDP, which will include:

(i) $10 million PBL component—a single retroactive tranche will be released after loan effectiveness. The policy matrix also identifies (but does not attach PBL financing to) downstream reform actions as part of the P3F, which are targeted for completion by 2022 and will be supported by the project component; and

(ii) $40 million investment project component—this will be implemented over a five-year period, from the end of 2019 through physical completion by 31 December 2024 (and loan closure by 30 June 2025), to allow seamless support to medium-term reforms through the end of the next Education and Sports Sector Development Plan, 2021–25.

Overview of Investment Project Support Under Each Output

11. Output 1: Alignment of Post-Primary Education with Labor Market Demand Strengthened. 12. Project support will be structured around two sub-outputs, supporting: (i) strengthened MOES capacity to strategically and cohesively align skill supply from PPE subsectors; and (ii) Education for Employment SDP-wide management and monitoring.

Sub-output 1A: Capacity to align skill supply and skill demand strengthened

a. Activity Area 1A1: Strengthening capacity and systems for monitoring skill supply from PPE

13. This SDP will build the capacity of the MOES Education and Sports Statistics Center (ESSC), Department of Planning to consolidate and analyze data on PPE. This will provide MOES with a strengthened evidence-base for strategic planning to align skills supply with demand. The Lao PDR Education and Sports Management Information System (LESMIS)7 is envisaged to consolidate data currently covered by multiple management information systems within MOES (Education Management Information System [EMIS] for general education, and separate management information system (MIS) for TVET, higher education, teachers, human resources, personnel, financing, etc.). 14. Based on the LESMIS Strategic Plan, the SDP will strengthen ESSC capacity to:

(i) Integrate TVET, higher education and non-formal education data into LESMIS (with general education data) allowing consolidated and comprehensive sector-wide analysis;

(ii) Analyze enrolment, attendance, completion, and transition rates from primary-secondary, within secondary, TVET, higher education, and NFE, disaggregated by gender, geography, and ethnic groups;

(iii) Develop and improve data collection, archiving, retrieval, analysis, and dissemination functions; and

(iv) Analyze external data (e.g., data from the 2015 Census, periodic surveys, etc.) to complement analysis of skill supply (e.g., numbers of youth completing various levels and types of education and training, etc.).

7 LESMIS is currently in development through a pilot phase and is planned to be fully operational in 2020.

148 Appendix 6

15. In addition, the SDP will assist ESSC to strengthen and institutionalize the school network mapping (SNM) system to ensure that it is fully operational and used for comprehensive analysis and planning for secondary, TVET, higher education and NFE. This will include support to integrate public TVET, higher education, and NFE institutions (under MOES and other ministries) into school network mapping (SNM), helping MOES achieve P3F reform action P1.1(a). 16. The SDP will initially provide technical support to undertake ESSC capacity and needs assessment (with a focus on PPE-related data), and drawing on findings from the ongoing LESMIS pilot implementation, to inform capacity development support for ESSC which may include:

(i) Capacity development8 for ESSC staff through on-the-job/workshop training; (ii) Equipment for ESSC; and (iii) Consultant support for systems development and mentoring.

b. Activity Area 1A2: Strengthen capacity for collaboration and planning to

improve skills supply

17. This SDP will strengthen cross-ministerial and government-industry collaboration to align the supply of soft and hard skills from PPE - secondary education, higher education, and TVET - with the evolving skill demands in the economy. It will support the Human Resource Development (HRD) Office under the Department of Planning in its role as the Secretariat of the National Commission on Human Resource Development (NCHRD). It will strengthen mechanisms and the capacity of the HRD Office and sub-national counterparts to promote collaboration between MOES, Ministry of Labour and Social Welfare, MCI, MPI (including Lao Statistics Bureau [LSB]), Lao National Chamber of Commerce and Industry (LNCCI), Lao Commission for the Advancement of Women, Youth Union, and other labor-, trade-, and industry-related associations. 18. It will support the Human Resource Department (HRD) Office and existing HRD Research Team (organized by the HRD Office and including members from other agencies and the private sector) to:

(i) Facilitate multi-stakeholder dialogue between government and private sector around education-employment linkages and decent job creation;

(ii) Consolidate and analyze data on education-employment linkages (which is currently fragmented across multiple ministries and platforms);

(iii) Produce assessments of evolving skill demand and supply, including disaggregation by sex, geographic area, etc.; and

(iv) Design and implement nationally representative tracer studies of both lower and upper secondary graduates.

19. This SDP will support MOES, under the direction of the Department of Planning and working with relevant departments, to develop and coordinate specific strategies and programs, across secondary education, TVET, higher education, and NFE to better provide key soft and hard skills needed as the economy modernizes, with a priority on science, technology, engineering and mathematics (STEM) related skills. This activity will draw on analysis and reports from activities 1A1 and 1A2. Additionally, this activity help MOES achieve P3F reform action

8 This term is used generically throughout this document. Specific types of support needed may range from capacity

building provided/facilitated by consultants to formal training (particularly if available in-country). All consultant terms of references are expected to emphasize capacity development of government counterparts to ensure sustainable impacts.

Appendix 6 149

P1.1(b) by supporting development of plans and budgets for 2023 to include priority investments in post-primary education to target human capital constraints. 20. The SDP will support the incorporation of PPE priorities articulated in these strategies into the MOES’ Department of Planning’s formulation of the next Education SDP for 2021–2025, as well as the Department of Finance’s dialogue with MOF on education budgeting. The latter support will link with support for medium-term expenditure framework formulation under the proposed ADB 2019 Strengthening Public Finance Management Program as well as relevant support from other DPOs (e.g., the European Union). 21. This SDP will provide the following support:

(i) Capacity development; (ii) Appropriate Information and Communication Technology (ICT) resources (office

equipment, software, etc.); (iii) TA (consultants to support development of tools/systems, analysis, coordination

mechanisms, on-the-job training and coaching, surveys/studies); (iv) Workshops, seminars, conferences; and (v) Possible support to technical exchanges to other Association of Southeast Asian

Nations countries focused on education reform programs and innovations related to skills supply

c. Activity Area 1A3: Partnering models linking secondary TVET, and NFE

schools/centers

22. The SDP will support the Department of General Education (DGE) (in collaboration with the Departments of TVET and NFE) to formulate and pilot new partnership arrangements between selected secondary schools, TVET schools, and NFE centers in 8 provinces. Support is expected to focus on two models:

(i) Model 1: additional TVET or NFE short-courses during holiday periods—Interested students in LSE and USE schools from grades 8 to 12 (studying the full LSE or USE curriculum full-time during the school year) can attend short-courses at nearby TVET schools/NFE Centers during school holiday periods. This will allow them to pursue vocation-specific “hard skills” and potential certification, in addition to “soft skills” learned through their general secondary education. Model 1 will be piloted in 8 provincial and 12 district secondary school clusters (output 2); and

(ii) Model 2: Mixed-study model (general USE plus TVET). In USE schools and complete secondary schools immediately adjacent to TVET schools, interested USE students may opt for a mixed-study or hybrid model, replicating a modified version of a model MOES has pilot tested to date in 3 ethnic boarding schools. During the school year, these students will attend most USE classes, but will be released from some classes to allow them to attend TVET courses in neighboring TVET schools.9 Model 2 will be piloted in the 8 provincial secondary school clusters since TVET schools are present only at the provincial level (output 2).

23. The SDP will provide the following support: (i) Technical support (consultancy) for program formulation (program guidelines,

etc.); (ii) Related capacity development for schools/TVET/NFE centers; (iii) Procurement of modest equipment and consumables; and

9 A modified USE curriculum, based on a reduced timetable, will be established to enable attendance at TVET schools.

150 Appendix 6

(iv) Funds for school-level activity support for eligible costs (excluding staff salaries, etc.) to be specified in the program guidelines: e.g., funding for student travel and accommodation for Model 1.

d. Activity Area 1A4: Models for student guidance on academic and career

options piloted

24. The SDP will support DGE to pilot student guidance in the 8 provincial secondary school clusters (output 2). Each cluster school (indicatively 48) will assign at least one Career Guidance Counsellor (the principal and/or teachers) to advise students in Grades 8-12 on career and further education opportunities. This will include engaging with TVET and NFE centers (where they exist) and the local business community to enable students to better understand the world of work and further study. 25. The SDP will provide the following support;

(i) Technical support (consultancy) for development of guidelines, counselling materials, manuals;

(ii) Related capacity development; and (iii) Modest provision of funds per school per year for site visits (retail, factories,

tourism and hospitality, professional services, universities, etc.) and other school-based or external activities related to career guidance.

Sub-output 1B: Education for Employment SDP implemented and

monitored effectively

a. Activity Area 1B1: Program management support

26. The current Secondary Education (SDP) PMU will transition into being the PMU for the Education for Employment (SDP). This SDP will support provision for some PMU contractual staff (mobilized as individual consultants embedded in the PMU) to complement MOES-seconded staff; capacity development including on areas such as financial management, procurement, etc.; office equipment (to augment that already provided by the Secondary Education SDP); up to five vehicles; and various operational costs. MOES will provide office accommodation and basic utilities for the PMU and consultants as government contribution.

b. Activity Area 1B2: Education for Employment SDP-wide monitoring and evaluation (M&E)

27. This SDP will support establishment and operation of an M&E system spanning both PBL and project components providing continuous tracking of progress towards P3F reform actions as well as project initiatives10, implementation of safeguards, and the Gender Action Plan (GAP), etc. M&E will ensure disaggregation by sex, ethnic group, and other relevant dimensions. This consolidated M&E system will be augmented by and draw from specific M&E interventions linked to project activity areas. It will also ensure timely reporting to broader MOES M&E processes (annual reporting, etc.). This SDP support may include

(i) Capacity development; (ii) Other workshops/forums; (iii) Consultant support to develop and implement M&E tools; (iv) Travel-related costs for MOES staff to conduct in-field M&E, etc.

10 This will include tracking of all persons attending training and capacity building in a database.

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28. Output 2: Secondary education quality and relevance to emerging skills demands improved. 29. Project support will be structured around three sub-outputs, which will support: (i) curriculum improvements in priority subjects (Mathematics, Sciences, Lao language, and English), modernized pedagogy and assessment to support more effective delivery of the curriculum; (iii) provision of equipment and teaching and learning resources; and (iii) enhanced management to promote improved secondary education quality and relevance. 30. Support will be largely be national/nationwide in scope however selected interventions will be geographically targeted for purposes of pilot testing. In particular, on a pilot basis, the SDP will support MOES’ establishment of Secondary School Clusters (SSC) as a mechanism to improve secondary education quality and (to varying degrees) also access and management. For example, SSCs may serve as groupings for capacity development of and experience-sharing across teachers, school leaders and administrators, and communities; pilot testing implementation approaches to new policies; data collection and analysis to inform decision-making; etc.11 Twenty SSCs will be established as follows:

(i) 8 “Provincial SSCs” will comprise selected secondary schools in (or near) provincial centers12. Each provincial SSC will indicatively comprise an average of 6 schools, including an established ICT school; and

(ii) 12 “District SSCs” located in the same 8 provinces, one in each of the 12 districts targeted under this SDP’s Output 313. Indicatively, each district SSC will comprise 5-7 schools (on average 6).

31. If demonstrated successful, SSCs can be expanded over time to generate a broader SSC network for leadership and management purposes.

Sub-output 2A: Secondary education curriculum, pedagogy and student assessment improved

32. This sub-output will support curriculum improvements and more effective delivery of curriculum, emphasizing adoption of learner-centered and active learning pedagogies, and improved use of formative student assessment. the SDP support will prioritize Science and Mathematics (critical foundations for STEM skills), and English and Lao-language (focused on communication skills).

a. Activity Area 2A1: Improving subject-level curriculum and developing and distributing teaching and learning materials in priority subjects

33. This SDP will provide support to the Research Institute for Education Sciences (RIES) to improve the curriculum (supporting MOES’s achievement of P3F reform action P2.1(a).), teacher guides and supplementary teaching and learning materials to ensure nationwide implementation in schools from 2022/23. Revisions to curriculum will focus on three aspects;

11 The approach will be distinct from hardware-driven models in which “key/flagship schools” are provided extensive

facilities and expected to share access with “satellite schools”. Such models have a weak track record internationally. 12 In the provinces: Bolikhamxai, Huaphan, Luangnamtha, Luangprabang, Oudomxai, Salavan, Vientiane Province,

and Xekong. 13 Dakcheung, Feuang, Hoon, Huameuang, Khamkeuth, Kuane, Nambak, Meun, Pakkading, Sing, Tai Oi, and Xamtay.

152 Appendix 6

(i) Reducing content overload to enable increased emphasis on application rather than memorization of knowledge;

(ii) Further improving pedagogy to strengthen student-centered learning, and (iii) Aligning with new primary curriculum (currently being revised).

34. Curriculum will be improved in the following priority subjects:

(i) LSE: four subjects: integrated science, mathematics, Lao Language, and English; and

(ii) USE: six subjects: sciences (Chemistry, Biology, Physics), mathematics, Lao Language, and English curricula and teaching and learning resources.

35. To ensure start-to-finish support under the SDP, this will involve parallel cohort-based phase-in of improved curriculum in LSE and USE grades as detailed in Table 1. Among other key processes and milestones, this will include:

(i) Development and approval of M1-M7 curricula in selected subjects by late 2020. If necessary M5-M7 curricula could be approved by early 2021;

(ii) Development of new M1 teacher guides and supplementary materials in selected subjects by early 2021 (M2-M4 will be introduced year-by-year);

(iii) Parallel development and introduction (but starting one year later) of the new M5-M7 teacher guides and supplementary materials in the selected subjects year-by-year;

(iv) Printing and distribution of teacher guides and supplementary materials according to the schedule of initial in-service training (INSET) (see 2A2), prior to the school-year start (a second round of INSET will be provided for each grade in the following year);

(v) Development of digital content for teaching and learning materials for teachers through ICT approaches.

Table A6.1: Introduction of Improved Curriculum (Selected Subjects) in Schools 2021/22–

2024/25

LSE = lower secondary education, USE = upper secondary education, Q= quarter.

36. The curriculum improvement process will ensure alignment of LSE curricula with primary curricula (currently under revision), and also take into account learning progression from

Appendix 6 153

LSE/USE into TVET and higher education. It will also include consultations with private sector stakeholders (industry/employers) to support alignment with their soft skill demands. 37. This SDP support will include:

(i) Capacity development; (ii) Other workshops/forums; (iii) Consultant services; (iv) Printing and distribution of teacher guides and supplementary materials to all

secondary schools; and (v) Production of digital resources for teachers through ICT approaches.

b. Activity Area 2A2: INSET of secondary education teachers and school

principals

38. The SDP will support nationwide implementation of INSET for teachers in the priority subjects, and all school principals. The project will support the Department of Teacher Education (DTE) and the Institute for Education Administration Development (IFEAD)14 to develop INSET design, implementation plans and specific training modules. A two-stage model of training of trainers, then teachers/principals, will be used and will build on lessons learned from the Secondary Education SDP. INSET will be implemented according to the schedule outlined above. Teachers and principals will attend an initial round of 6 day INSET followed by a second round of 4 day INSET the following year for ‘refresher’ training and additional capacity building relating to specific priority issues identified. 39. Teacher INSET will focus on delivery of the improved curriculum in the priority subjects (4 LSE and 6 USE subjects). It will emphasize effective teaching and learning strategies, integration of “soft skill” learning, and classroom-based assessment (linked to activity 2A5). INSET will be complemented by broader continuous professional development (CPD) under activity area 2A3.

40. INSET for school principals will be implemented alongside teacher INSET. It will support capacity development for principals in a) improved instructional leadership to enable principals and subject-lead teachers to proactively support and monitor teachers’ shift to learner-centered/active learning approaches, and b) school-based management (administration and finance, including management of school block grants) to improve teaching and learning conditions.

41. The SDP support will include:

(i) Capacity development; (ii) Training materials development; (iii) Training of trainers, and final-stage INSET workshops for teachers/principals; and (iv) Consultant services to support INSET design and development of materials.

c. Activity Area 2A3: CPD system to support secondary education

teachers piloted

42. The SDP will support MOES’ achievement of P3F reform action P2.1(d) and will focus on further developing and strengthening the secondary pedagogical advisor (SPA) system (piloted under Secondary Education SDP) to support CPD. SPAs will be appointed in selected SSC schools to support a range of teaching and learning related activities targeted to clusters, in

14 IFEAD is responsible for the professional development of school principals.

154 Appendix 6

particular CPD. Indicatively there will be 120 SPAs assuming one for each of the six priority subjects per cluster. 43. CPD is a multi-mode, ongoing and flexible school-based approach to teacher development, distinct from formal INSET (see activity 2A2). This SDP will support DTE and DGE to develop a CPD strategy for secondary education teachers including a focus on competent facilitators/mentors, clear processes, logistics efficiencies to improve effectiveness, and evaluation of CPD programs. Modules and/or other materials developed with project support will assist teacher collaboration (which may include co-teaching, peer coaching, etc.) to improve aspects of teaching and learning including:

(i) Teaching strategies; (ii) Lesson preparation; (iii) Classroom-based student assessment; and

44. This SDP will support piloting of this new CPD system in the 20 SSCs (indicatively 120 schools). Support will include:

(i) Capacity building workshops (national and sub-national levels); (ii) Materials development and distribution; (iii) Motorbikes and operating costs for SPA’s; (iv) Consultancy services (e.g. for needs assessments, field studies, materials

development); and (v) piloting of digital teaching and learning materials for teachers through ICT

approaches (e.g. tablets, DVDs etc.).

d. Activity Area 2A4: Upgrading secondary school teacher qualifications

45. This SDP will provide support to upgrading the qualifications of selected secondary school teachers from higher diploma level (required for lower secondary teachers) to bachelor level (required for upper secondary teachers). Teachers will attend established upgrading courses at teacher training institutions and universities implemented during the school year break. Selection will prioritize teachers required to staff new/expanded upper secondary schools. Implementation will draw upon experiences from implementing teacher upgrading through the same approach under Secondary Education SDP. 46. The SDP support will include course fees and necessary expenses for teachers to participate.

e. Activity Area 2A5: Strengthening the capacity of selected teacher training institutions offering teacher pre-service education of secondary education teachers

47. The SDP will provide support to selected teacher training institutions (TTIs) to better implement STEP programs in majors for which they are accredited/ specialized. Support will include:

(i) Development and implementation of professional development programs through INSET for STEP instructors/lecturers at accredited TTIs, focused on preparing future teachers to effectively implement the improved school curriculum (learner centered pedagogy, classroom-based assessment etc.); and

(ii) Provision of additional teaching and learning materials, and equipment where justified by needs assessment.

Appendix 6 155

48. The SDP support will include: (i) INSET workshops; (ii) Materials development, teaching and learning materials, equipment; and (iii) Consultancy services.

f. Activity Area 2A6: Strengthening classroom-based assessment and

implementing national sample-based learning assessments

49. This DP will assist DGE, RIES, and DTE to develop and introduce improved systems for classroom-based formative assessment and other school-based assessment, linked to the improved curriculum (2A1). In addition, national sample-based assessment of student learning outcomes [ASLO], etc.) will provide evidence for diagnostic purposes to inform strategies to further improve teaching and learning. This will include support to:

(i) Develop specific tools/instruments, guidelines and training materials for implementing classroom-based student assessment. Capacity development for classroom-based assessment will be provided through INSET (2A2).

(ii) Implementation of ASLO rounds for LSE and USE (indicatively with 3 rounds each, potentially in SY2021/22, SY2023/24 and SY2025/26), ensuring coordination with related EU/UNICEF support (and supporting MOES’ achievement of P3F reform action P2.1(e))


(i) Capacity development; (ii) Other workshops/forums (iii) Consultant support; (iv) Survey implementation (ASLO); and (v) Production and distribution of related materials.

Sub-output 2B: Selected secondary schools equipped to deliver improved

curriculum effectively

51. This sub-output will provide facilities and teaching and learning resources to support delivery of the improved SE curriculum (including curriculum, instruction, and assessment).

a. Activity Area 2B1: Provision of laboratory equipment for priority subjects

52. The SDP will provide laboratory equipment, and capacity building in its use, to support effective delivery of the improved science curriculum. It will provide the following support:

(i) For newly-constructed LSE and USE science classrooms provided under facilities support (3A1) package(s) of furniture and science equipment will be provided;

(ii) For schools within Secondary School Clusters15 (indicatively 120 schools) that are not provided with new classrooms, basic packages of furniture and science equipment may be provided subject to assessment on the capacity to effectively accommodate, maintain and use the resources; and

(iii) Capacity building for science teachers to support effective management, utilization, and maintenance of science labs/rooms and resources.

15 Provision of equipment/resources will not be provided to schools where this would duplicate support provided under

the Secondary Education SDP.

156 Appendix 6

b. Activity Area 2B2: Provision of additional teaching and learning and library resources

53. The SDP will provide library, teaching and learning resources, and capacity building in its use, to support effective delivery of the improved curriculum. It will provide:

(i) For newly-constructed LSE and USE library/multi-purpose rooms provided under facilities support (3A1) package(s) of. furniture (including shelving) as well as basic equipment and learning resources will be provided. The latter will include print and media-based materials (e.g., books and magazines and basic audio-visual media) and low cost and robust ICT hardware (e.g., 2-3 computers and an LCD projector) to allow teachers and students to use media-based materials in the library;

(ii) For schools within SSCs (indicatively 120 schools) that are not provided with new library/multi-purpose rooms, basic packages of furniture, equipment and resources may be provided subject to assessment on the capacity to effectively accommodate, maintain and use the resources; and

(iii) Capacity building for “Librarian-Teachers” (selected existing teachers) for effective management and utilization of library resources, and their role in facilitating the integration of the library into regular study, student research, and individual and group project work.

Sub-output 2C: Management to promote enhanced secondary education

quality and relevance strengthened

54. This sub-output will provide capacity development and other support at central- to school-levels and will indicatively focus on the following activity areas.

a. Activity Area 2C1: Capacity development on planning, management, monitoring and evaluation of teaching and learning

55. The SDP will support a two-track approach, including:

(i) National level interventions—it will support professional development for Department of Inspection, DGE, Department of Planning and other relevant departments, and Provincial Education Sports Services (PESS), to further strengthen school and teacher performance monitoring/ assessment systems (introduced under Secondary Education SDP); and

(ii) Intensive support in 20 SSCs—This will include capacity development of DGE and central to district officials, and secondary school principals, on strategic planning, monitoring and evaluation, and data collection and analysis, and also support their role in promoting effective teaching methods, mentoring and coaching skills, and school leadership and management. Annual conferences and/or other activities will support experience-sharing and allow DGE and other departments, PESS, and DESB to review the role of SSCs’ in improving teaching and learning.


(i) Capacity development; (ii) Other workshops/forums; (iii) Preparation and distribution of basic materials; (iv) Field supervision costs; (v) Related consultant support; and

Appendix 6 157

(vi) Possible support to technical exchanges to other countries focused on good practice and successful approaches to improving teaching and learning (e.g. school improvement, teacher performance assessment)

57. Output 3: Equitable secondary education access and completion increased 58. Project support will be structured around three sub-outputs, supporting interventions to (i) address secondary education supply-side constraints; (ii) address secondary education demand-side constraints; and (iii) strengthen management to improve secondary access and completion.

Sub-output 3A: Supply-side constraints to secondary education access and completion reduced in targeted districts

59. This sub-output will focus on targeted districts with high early school leaving after primary school and overcrowding in secondary schools. Within the overall MOES list of 47 priority districts for government and development partner investment, MOES (with TA support) has identified 12 target districts16 located in 8 provinces for the SDP civil works support.17

a. Activity Area 3A1: Construction of secondary school facilities at existing schools to expand access and completion

60. To address supply-side constraints, this SDP will support construction of additional facilities (classroom blocks, dormitories, and wash facilities) in 12 target districts at a total of 60 existing primary and secondary school sites. 61. All this SDP’s civil works will be constructed on vacant land within the existing government school premises with no encumbrances. Civil works support at the 60 sites can be classified into 3 basic types, as elaborated further below:

(i) Type A will construct new LSE facilities (including grade 6-9 classrooms) within the grounds of existing primary school sites;

(ii) Type B will construct new USE facilities (including grade 10-12 classrooms) within the grounds of existing lower secondary school sites; and

(iii) Type C will construct additional facilities to address overcrowding at existing secondary schools.

62. Type A civil works (LSE facilities). In many underserved areas of the 12 target districts, the lack of nearby LSE schools forces large numbers of students to drop out after primary education. The SDP will construct new LSE facilities within the grounds of existing primary schools, including stand-alone LSE classroom blocks as well as sex-segregated student and teacher dormitories and wash facilities. LSE classroom blocks will be based on models for USE classroom blocks developed with ADB support under Secondary Education SDP, which are now MOES’ standard and ensure access to disabled children. As LSE has 4 grades (versus 3 in USE),

16 Luangnamtha’s Sing District, Oudomxai’s Hoon District, Luangprabang’s Nambak District; Huapanh’s Huamuuang,

Xamtai, and Kuan Districts; Vientiane Province’s Feuang and Muen Districts; Borikhamxay’s Parkkading and Khamkeuth Districts; Saravane’s Ta Oi District; and Sekong’s Dakcheung District.

17 This subset of 12 districts was selected based on criteria including (i) high rates of dropout between primary grade 5 and LSE grade 9; (ii) high overcrowding in existing LSE and USE schools; (iii) presence of many areas with large numbers of primary students cannot be served by any nearby LSE schools and/or where large numbers of LSE students cannot be served by any nearby USE or complete secondary schools; (iv) large ethnic group populations; and (v) geographic considerations, including distribution in northern, central, and southern regions, as well as adjacency to other target districts (to allow more effective monitoring, etc.).

158 Appendix 6

minor modification will be made to add 1 regular classroom, in a “4+1+1+1” design for LSE classroom blocks, including:

(i) 4 standard classrooms (1 for each of grades 6-9); (ii) A dedicated science classroom;18 (iii) A library and multi-activity room; and (iv) A teacher-use room.

63. Type B civil works (USE facilities). Other underserved areas of the 12 target districts have 1 or more LSE schools but lack nearby schools offering USE grades 10-12, meaning that many youths are unable to complete secondary education.19 This SDP will construct new USE facilities within the grounds of existing LSE schools, including stand-alone USE classroom blocks as well as sex-segregated student and teacher dormitories and wash facilities. USE classroom blocks will be based on models developed with ADB support under the Secondary Education SDP, and have a “3+1+1+1” design for USE classroom blocks, including:

(i) 3 standard classrooms (1 for each of grades 10-12); (ii) A dedicated science classroom; (iii) A library and multi-activity room; and (iv) A teacher-use room.

64. Incorporating experiences from the Secondary Education SDP, this SDP will also construct improved models of sex-segregated dorms for students and teachers and sex-segregated wash facilities with connection to potable water supply, as well as connection to a reliable electricity supply or provision of a generator (if needed). Solar power and water harvesting will be provided where appropriate. 65. Type C civil works (additional facilities). In other areas of the 12 target districts, existing secondary school facilities suffer from substantial overcrowding. TA-supported analysis indicates that overcrowding is a key driver of dropout in these areas, while it also undermines education quality and constrains learning outcomes. Whereas Type A and B civil works will be contracted and completed early in the project, incorporating TA-supported refinements to existing (Secondary Education SDP-supported) models, this SDP will support design of additional models to efficiently address overcrowding at identified Type C sites. This will include exploring options such as prefabricated units to flexibly meet varied needs. The scope of civil works is expected to be similar or more minor in nature to Type A and B sites (e.g., some schools may require standard classrooms but not science classrooms, etc.), and designs will also ensure access to youth with disabilities. 66. The SDP will also support DGE in updating the dormitory management guidelines developed with Secondary Education SDP support. Student stipends will be provided to support accommodation needs for students travelling large distances (see activity 3B2) drawing on lessons learned from implementation of stipends under Secondary Education SDP. This SDP will ensure quality inspection of all civil works and health, safety, and security conditions in schools, dormitories, and WASH facilities (safeguards) – inclusive designs for CWD.

18 Education for Employment SDP Type A civil works will provide a dedicated room for science, whereas Secondary

Education SDP-supported LSE classroom blocks provided one room to be jointly used for science, library use, and other activities.

19 In Lao PDR, USE is offered in “complete secondary schools” that offer all secondary grades 6-12, and “USE schools” that provide only grades 10-12.

Appendix 6 159

Sub-output 3B: Demand-side constraints to secondary education access and completion reduced

a. Activity Area 3B1: Needs-targeted stipends for LSE and USE students

67. This SDP will support targeted stipends to promote transition into and completion of LSE and USE in 12 districts, and is expected to focus on disadvantaged students (especially dorm residents, with some priority given to females and ethnic group youth per the GAP and ethnic group plan) entering the 60 schools receiving support under activity area 3A1. Criteria will additionally include merit-based factors.20 Subject to detailed program design after project approval, indicatively 2,400 students will be provided with stipends of KN150,000/month21, including:

(i) LSE stipends at Type A sites—survey/evidence-based selection of up to 40 children from the cohort of children enrolled in primary grade 5 in SY2021/22 in communities surrounding Type A sites, to support their entry into M1 in Type A schools in SY2022/23. Selection for stipends and dormitories is expected to be at least partially linked. Selected students in that cohort would receive stipends for all 4 years of LSE (during SY2022/23-SY2025/6), conditional on attendance and satisfactory performance;

(ii) USE stipends at Type B sites—survey/evidence-based selection of up to 40 children from the cohort of children enrolled in M4 in SY2022/23 in communities surrounding Type B sites, to support their entry into M5 in Type B schools in SY2023/24. Selection for stipends and dormitories is expected to be at least partially linked, and selected students in that cohort would receive stipends for all 3 years of USE (during SY2023/24-SY2025/6), conditional on attendance and satisfactory performance; and

(iii) LSE and/or USE stipends at Type C sites—these would follow a similar approach, but potentially may cover somewhat larger numbers of students given these sites are significantly overcrowded.

68. This SDP’s support for the above will include:

(i) workshops to develop program guidelines, building on experiences and guidelines under the Secondary Education SDP and the government-budgeted stipend program;

(ii) capacity development on stipend program management at the central to school levels;

(iii) financing of stipends; (iv) PMU contractual staff to support program management; (v) contracting of a rigorous impact evaluation of the stipend program22

20 Subject to detailed program design (to be laid out in a stipend guidelines), it is indicatively planned to have a singular

selection process combining need- and merit-related factors in determining a single list 21 Consistent with the rates stipulated in the MOES Decree No. 968, 5 March 2018, on Stipends for Poor and

Disadvantaged Students in General Education. 22 The impact evaluation is expected to use a randomized control trial (RCT) design, which may randomize across

candidates who meet stipend program selection criteria.

160 Appendix 6

Sub-output 3C: Analysis and planning to promote increased secondary education access and completion strengthened

a. Activity Area 3C1: Strengthening analytical and planning capacity to inform effective interventions to increase secondary education completion

69. The SDP will provide support to build DGE and DP (including ESSC) capacity to conduct secondary education related analysis and draw policy and planning recommendations from data from EMIS and other sources (e.g., data from LSIS and future census and survey data on risk factors and reasons reported for dropout). It will also provide support to enhance and mainstream SNM as a tool to more equitably and efficiently prioritize investments in secondary education supply to target unmet demand and underserved communities. 70. Linked to MOES’ achievement of P3F reform action P3.1(a), this SDP will support (i) an assessment of the government-budgeted initial expansion stipend program (introduced in the 2018 budget); (ii) DGE in formulation of an Operational Plan on Increasing Secondary Education Completion, 2021-2025; and (iii) review of that Operational Plan and formulation of a follow-on plan for 2026-2030. To feed into these Operational Plans, the SDP will support assessment of other access-related interventions, adding to existing evidence (e.g., a Secondary Education SDP-supported assessment of the role of dormitories on SES access). Findings from the rigorous impact evaluation of stipends will also help to inform the Operational Plan. 71. This SDP support to DGE and ESSC for the above may include:

(i) Capacity development; (ii) Other workshops/forums; and (iii) Consultant support (e.g. for capacity development and assessments etc.).