VIETNAMINDUSTRIAL POLLUTION MANAGEMENT PROJECT (P113151)

Due Diligence Review of Involuntary Resettlement at Nhon Trach 3 and Chau Duc Industrial Zones

May-July, 2012

A. PROJECT OBJECTIVES AND PROJECT COMPONENTS

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

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

Screening of potential ethnic minority presence in the project area indicated that there are no Ethnic Minorities living in and/or around project areas, therefore, the Bank Policy OP 4.10 is not triggered.

B. FOCUS OF REVIEW AND METHODOLOGY

Focus of the Due Diligence Review (DD)

The review focuses on involuntary resettlement in the two Industrial Zones (IZs) selected for the first year of project implementation. The objective of the DD as per the SEMF is to ensure that all involuntary resettlement activities in the project area were carried out in full compliance with Government of Vietnam (GoV) regulations and norms and consistent with the Bank OP 4.12. The methodology and approach of the Due Diligence (DD) review was based on the guidance of the Project’s Social and Environment Management Framework (SEMF). It covered notably:

(i) Review of official documents prepared for pertinent organizations in charge of involuntary resettlement and confirm their compliance with the Government regulations

(ii) Review, analyze and summarize process and procedures that have been undertaken by the governmental organizations and selected companies.

(iii) Conduct site visits for field observation in the IZs and interviews with key governmental officials, company staff members and affected people to gather primary information related to perceptions, descriptions, claims, and other pertinent information.

(iv) Assess the consistency with the Bank policy objectives of activities carried out regarding livelihood restoration.

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RP1326

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Methodology

Methods employed include: (i) desk review of secondary information (including project documents prepared by the GoV for the proposed sites), Bank’s proposed project documents (see Appendix 2); and (ii) interviews with relevant government officials, IZ representatives, representatives from about 52 affected households and other key informants in the IZs (Appendix 1); and c) field observations.

For Chau Duc IZ where the compensation was completed (for the CETP area and the area outside of CETP), 42 PAP originally from the CETP area (including 7 cases pending) and 5 PAP from the larger area outside CETP were interviewed. Stratified sampling is in the table below.

New Resettlement Area (40 ha)

No of HH interviewed

Hữu Phước New Residence Area

No of HH interviewed

CETP service area (excluding Huu Phuoc and Resettlement Plan (120ha)

No of HH interviewed

Outside CETP interviewed

HH losing agricultural land/structures

26 5 50 5 82 5 5

HH relocating 35 10 6 5 25 5 5

Including pending HHs

7 7

TOTAL 61 15 56 17 107 10 5

For Nhon Trach 3 where compensation started in 1998 and was completed 2007, in addition to interviews with IZ owners, government representatives, site visits were made and three households who settle down near by the IZ were interviewed for how the compensation were made and if their livelihoods are fully restored.

Review

World Bank’s Social development specialists (staff and consultant) , travelled to Dong Nai and Ba Ria Vung Provinces on three different occasions between May and July 2012 to carry out the DD review. They visited the two IZs sites, held meetings and interviewed key informants, affected people, and staff and managers of two IZs proposed for the first year of project implementation. The review confirmed that in Nhon Trach 3 IZ managed by Tin Nghia Corp,

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and Chau Duc IZ managed by Sonadezi Company, the CETPs site areas are identified, cleared, filled and leveled (see map Appendix3). In the case of Nhon Trach 3, land compensation is fully completed for the entire IZ. In the case of Chau Duc IZ resettlement and compensation are substantially advanced.

Nhon Trach 3 IZ

Nhon Trach 3 IZ (Nhon Trach District, Dong Nai Province) was established in November 2006, with a total area of 360.5 ha. Twenty nine industries are the current occupants of the IZ (20 companies fully operating, 9 initiating operation). Details on the infrastructure of the IZ are included in the subproject’s Environmental Impact Assessment (EIA).

The review confirmed that the resettlement and compensation started in 1998 and was fully completed for the entire IZ, in 2007. About 200 households affected primarily with agricultural land, were compensated in accordance with the local government laws/regulation. According to the information gathered affected agricultural land was poor quality and suitable only for growing low-value crops like cashew, and cassava. According to the information gathered some affected households in their agricultural land, resettle closer to IZ , while others, which made the majority of households affected, moved to other distant areas that offered better soil quality for farming activities.

The team interviewed affected households who stayed near the IZ (including not affected HHs), to confirm the appropriateness of the compensation paid to affected households. Testimonies confirmed that compensation payments provided them with the opportunity to acquire improved land quality for their farming or/ and to pursue other sources of income from non-farm activities. In other words, prices paid for compensation, improved their farming income and offered other effective income-generation sources. For households visited, their livelihoods, as well as those who settled near the IZ were fully restored. Most of them do retailed businesses/ services forces who come for industries in the IZ.

The whole Nhon Trach 3 IZ area is now under the operation of Tin Nghia Company who holds the Land Use Right Certificate (LURC, known also as the “Red Book”) since 2008 for this entire Nhon Trach 3 IZ area. The company also has a Operational Contract Agreement with the Dong Nai People's Committee (Contract Agreement & sample of LURCs for CETP location, Appendix 4). No further land acquisition will be required for Nhon Trach 3 IZ.

In sum, the DD review for Nhon Trach 3 IZ confirmed that there are not land legacy issues of land related to acquisition and resettlement. The compensation was made by the district government, and in accordance with the government’s laws and regulations then. The livelihoods of affected households were fully restored and for affected households interviewed the compensation was an opportunity for them to diversify and improve their income sources.

Chau Duc IZ

The Chau Duc IZ (Chau Duc District, Ba Ria Vung Tau Province) was established in October 2008 following government’s approval of the Master Plan for the construction of Chau Duc IZ in 2008. The total are of land being acquired is 2,287 ha, including 1,556 ha for the industrial area, 731 ha for residential land (42ha for the resettlement site and 689 ha for new residential land which are located inside the industrial zone. The land acquisition carried out by the District

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Resettlement Committee commenced in 2008, and compensation plan(s) were prepared for 852 ha, an area that includes the IZ, the new residential area, and the resettlement site. Within the area of 852 ha, 1,300 households were affected, primarily with agricultural land. A total of 201 households lost thier residence and needed to relocated.

The “CETP service area”, as defined in the project’s SEMF, accounts for 202 ha (including 120 ha of industrial area, 42 ha of a resettlement site, and 40 ha of a residential area). Within the CETP service area, land clearance affected 224 households were affected.

Compliance with GoV regulations According to the DD review of the compensation plan(s) provided by Sonadezi Company, the resettlement policy and the definition of entitlements have strictly followed Vietnamese regulations (Land Law 2003 and Decree 69/2009). Chau Duc District Resettlement Committee (DRC) was in charge of the preparation and implementation of the Chau Duc IZ, and assigned by Ba Ria Vung Tau Provincial Peoples Committee, following GoV's regulations.

Compensation funding. Funds for resettlement compensation were provided by the Sonadezi Company. The People’s Committee of Chau Duc district was delegated by the provincial government to formulate the compensation/resettlement plan (in accordance with current government’s laws/regulations). The Chau Duc Resettlement Committee made the payments to affected people, in accordance with the resettlement plan approved by the provincial government, with the above- mentioned funding channeled to the Chau Duc District Treasury.

Options provided to Affected Households (AHs). These were as follows: (i) for loss of agricultural land, affected households were offered cash compensation, (ii) for affected structures, losses were paid at replacement cost; (iii) for affected residential land, households were offered one of two options, cash compensation or land-for-land in the resettlement site. The households requiring relocation were provided with rental housing costs, until the finalization of the resettlement site construction scheduled for the end of 2012.

Schedule for Compensation and Relocation. The General Compensation Plan for the IZ was issued and approved by provincial government in 2008. The land compensation (carried out by the District Resettlement Committee) was commenced in early 2009. For the case of the CETP service area, 224 households were affected, of which 66 needed to relocate.

Entitlements for Affected Households (AHs): the entitlements were approved by District Authorities since 2008. The proposed entitlements for affected households were acceptable to affected households (AH) after several rounds of public community consultation meetings1. Entitlements included land affected, houses/structures lost (partially or complete), and businesses affected. Assistance and allowances to affected households as defined in GoV regulations, are also considered as part of packages offered to affected households.

Consultations: included four rounds of community meetings where consultations were conducted among affected people (list of participants and sites in this document) and all compensation plan(s) were disclosed in the communal public area. According to the records, about 570 AHs participated in public consultation meetings. AHs were informed about compensation policy and

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relocation options for them to select. Comments, feedback and recommendations from AHs were gathered during the consultation meetings, for DRC’s consideration in the compensation plan(s).

Grievances Redress Mechanism. A grievance system was established in the District Resettlement Committee (DRC) to resolve all complaints raised by affected AHs regarding all land acquisition aspects, compensation, and resettlement issues. In addition, information on how IZ staff could be contacted along with instructions to submit complaints at district/commune levels was provided. For land included in the CETP service area, some complaints were registered regarding compensation payments, inaccuracy of land measurement, as well of claims on evaluation of structures and crops losses. Resolution of claims of affected households has been addressed by the DRC as defined by the GoV norms and in cooperation with the IZ owner although by June 2012, there were 7 cases pending to be solved, which need careful monitoring. Claims unsolved are mainly due to inaccuracy of the land measurements.

Livelihood Restoration Plan (LRP): Affected households have been provided with support, assistance and allowances as part of the compensation plans, according to the GoV norms and regulations, consisting of transport allowances, living stabilization allowance, vocational training allowance, house renting allowance, and special allowances for those who fall under the category of poor and vulnerable affected people.

The DD review confirmed that by July 2012, 97% of the total affected houses (224 households within the CETP service area) had been compensated. Only 7 affected households remain pending (to be compensated) due delay in re-check of detailed measurement survey results, or/and being in the process of resolving internal disputes within their own households regarding allocation of compensation benefits. The Chau Duc IZ owner confirmed the 7 pending cases will be solved by the end of September 2012.

CONCLUSIONS

Based on information provided by the local governments and the two IZ owners, team’s interviews with different stakeholders, including affected households, IZ owner, government representatives, field observations the concluding aspects of the DD are as follow

(i) Nhon Trach 3 IZ the resettlement and compensation was carried out in compliance with government’s laws/regulation and consistent with Bank’s OP 4.12. Tin Nghia Company, who is the moment the operator of the Nhon Trach 3 IZ holds the Land Use Right Certificate which was issued by provincial government since 2008 for the whole IZ. The DD review also confirmed that the livelihoods of the affected households are fully restored.

(ii) For Chau Duc IZ, land acquisition was carried out by the District Resettlement Committee was commenced in early 2008 before project’s cut-off date of May 2010. The DD review confirmed that by July 2012 the implementation of the resettlement, compensation and assistance plans, processes are in compliance with the Government’s laws and regulations and are in consistency with the Bank’s OP4.12 based on the review of the criteria as mentioned above

Based on the review findings the project needs to continue to monitor the compensation payments of the affected households, for the seven households pending (which is scheduled to be

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completed by September 2012) by means of site visits and interviews with the affected households and preparation of a detailed update report before the construction of the CETP. In addition, monitoring during finalization and completion as per the approach defined in the Project’s SEMF requirements, should be carried out, including monitoring until all livelihoods of affected households, particularly those within the CETP area, are fully restored

APPENDIX 1: LIST OF THE PEOPLE MET DURING THE MISSION

1. INDUSTRIAL ZONE AUTHORITIES IN CHARGE OF RESETTLEMENT

For Tin Nghia Corp

Mr. Nguyen Thanh BinhDeputy Director General, Tin Nghia Corp

Mr. Truong Thanh TungInvestment and Development DirectorTin Nghia Corp.

Mr. Vu Van LuyenDirector of An Phuoc IZ Tin Nghia Corp.

Mrs. Le Nguyen Diem HangChief of Environment DeptTin Nghia Corp.

For Sonadezi Chau Duc Shareholding Company

Mr. Tran Hoa HiepDeputy Director GeneralSonadezi Chau Duc Shareholding Company.

Mr. Dinh Quang MinhStaffSonadezi Chau Duc Shareholding Company.

Mr.Nguyen Tan ThauStaffSonadezi Chau Duc Shareholding Company.

Mr. Pham Nguyen NhungStaffSonadezi Chau Duc Shareholding Company.

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2. INTERVIEW OF 52 AFFECTED HOUSEHOLDS

For Nhon Trach 3 IZ, (totally 3 households interviewed)

Le Huu Phuoc,Village 5, Hiep Phuoc CommuneNhon Trach District, Dong Nai Province

Tran Tan Duc,Village 1, Long Tho CommuneNhon Trach District, Dong Nai Province

Truong Dinh Huu,Village 3, Long Tho CommuneNhon Trach District, Dong Nai Province

For Chau Duc IZ, (totally 49 households interviewed, who is now living in Suoi Nghe Commune, Chau Duc District, Ba Ria Vung Tau Province)

CETP Service Area (17 Households)

Agricultural Land Impacted Households Vo TanhPham Quang ThaiTran Van BinhVo Quang HaiVo TuanNguyen Minh KhanhNguyen ThoLe Thi TuanLe MungLe MuonLe LonLe MienDuong Thi Thu NguyetNguyen Linh

Relocated HouseholdsDuong De, Le Phuoc, Nguyen Hoang

Huu Phuoc Urban Residential Area (17 Households)

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Agricultural Land Impacted Households Doan Ngoc LamDoan Van DenDang TuyenNguyen Van LaiTran BonNguyen Van PhucBui Ngoc SonBui Thi MaiNguyen Minh KhanhNgo Tan Duc

Relocated HouseholdsVo Thi LeDo Thi Nham

Pending Cases2

Nguyen Huu Dau, with agricultural land affectedPhan Thi Thanh Tam, with affected with agricultural landDang Minh Phuong, with residential land affected, Nguyen Thi Hong , with agricultural land affected.

Resettlement Site Area (15 Households)

Agricultural Land Impacted Households Ma Van ChutNguyen Thi CoNguyen Van DungNguyen Dinh HungHoang Huu Tri Ta Van Hoang

Relocated HouseholdsTruong Thi AiMai Thi CanMai Thi HanhNguyen DuongNguyen TheNguyen Huu DeNguyen CuNguyen AnLe Thi Tien

2 There was 03 remaining pending cases invited for interview, but they did not come

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APPENDIX 2: LIST OF THE DOCUMENTS REVIEWED DURING THE MISSION

For Nhon Trach 3 IZ

1. Report on Implementation Progress for Nhon Trach 3 IZ

2. Brochure of the Tin Nghia Corp.

3. Contract between Dong Nai Provincial People's Committee and Tin Ngia Corp on Land Renting Agreement;

4. Sample of LURCs3

For Chau Duc IZ

1. Document No 919/TTg-CN issued by PM dated November 7, 2007 on approval of Chau Duc IZ and Urban Quarter Investment in Chau Duc District, Ba Ria Vung Tau Province

2. Document No 2657/UBND-XD issued by Ba Ria Vung Tau Province People's Committee dated August 5, 2007 on project location agreement for master plan survey 1/2000.

3. Decision 2915/QD-UBND issued by Ba Ria Vung Tau Province People's Committee dated August 28, 2008 on approval of 1/2000 master plan.

4. Document 164/TB-UBND issued by Chau Duc District People's Committee dated September 18, 2007 on announcement of land acquisition process for investment of Chau Duc IZ and Urban Quarter.

5. Minutes of Community Consultation Meeting held on June 25, 2008 in Nghia Thanh Commune and on June 26, 2009 in Suoi Nghe Commune for land acquisition and compensation purpose.

6. Decision 1947/QD-UBND issued by Ba Ria Vung Tau Province People's Committee dated December 6, 2000 on approval of general compensation plan.

7. Decision 3600/QD-UBND issued by Ba Ria Vung Tau Province People's Committee dated September 16, 2008 on establishment of Chau Duc IZ

8. Other Decision(s) on approval of supplementary compensation plans, inclusive of project impacts and entitlements for compensation and resettlement.

3 The Tin Nghia Corp. has been issued 37 LURCs for the whole IZs area.

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APPENDIX 3: LOCATION MAP OF PROPOSED CETPS,

Figure 1: Location Map of proposed CETP in Nhon Trach 3 Industrial Zone.

Figure 2: The Existing CETP in Nhon Trach 3 Industrial Zone.

Figure 3: Location Map for Proposed Module 2 (under VIPMP) in Nhon Trach 3 Industrial Zone.

Figure 4: Proposed Site for Module 2 in Nhon Trach 3 Industrial Zone.

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CETP

APPENDIX 4: SAMPLE OF AGREEMENT CONTRACT AND LURCS

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CETP2Module 1

Figure.1 Location of CETP 2 in Chau Duc IZ and its service areas

Phase 1 – Industrial area

120ha

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