Khong Island

B. Khong Island

4. An analysis of the poverty situation in Khong Island could provide a more specific insight into the possible impact of the Project. The Project included improving approximately 47 km of existing roads on Khong Island. This island, located in the Mekong River, is physically insulated from the rest of Champasack Province. A ferry connects it to the mainland. The main occupation of the people on this island is agriculture, although this is gradually changing, since they are diversifying into other occupations. During discussions with residents on the island, they heavily attributed the change in their economic conditions to the presence of the improved road.

5. The poverty reduction fund (PRF) of the Lao PDR Government initiated a survey to estimate the level of poverty in different provinces. In Khong Island, the PRF has a survey office that provided key indicators of change on the Khong Island, summarized in Table A4:

1 Published by the State Planning Committee, National Statistical Center. December 1999. 2 LECS 2002/03 (LECS3), published by the Committee of Planning and Cooperation. National Statistical Center.

March 2004.

36 Appendix 4

Table A4: Key Indicators

Year Total Total

Villages Villages Population Number

Villages

Villages

Lacking Lacking Surveyed

22 7 9 0 Source: Poverty Reduction Fund, Lao People’s Democratic Republic.

6. The data show that there was overall improvement in access to basic infrastructure, except for health facilities. The reason for the decline in access to health facilities is not apparent; a point to be noted is that the island had good health facilities before the Project was completed. At the same time, the socioeconomic survey (Appendix 3) indicated that people living in the project area perceived a general improvement in health care facilities.

7. All the other indicators show a distinct improvement that could be heavily, though not wholly, attributed to the Project. In the case of both education and water supply, the Government has been pursuing an expansion of facilities independently. However, the presence of an improved road helped these efforts by providing easier access for transport of goods and materials to the remote parts of the island.

8. Access to Better Agricultural Credit. With the provision of better access to remote areas, a number of operations of agricultural banks in rural areas have improved. Although the Agricultural Promotion Bank (APB) of the Lao PDR had a branch on Khong Island, its annual credit disbursements were limited to KN2 billion in 2000. With improved access to and within the island, APB expanded its operations, increasing its disbursements to KN6 billion in 2004. Other factors responsible for the rise in credit were increase in demand due to changes in agricultural patterns, as well as easing up of the credit application procedures.

9. Changes in Agricultural Patterns. Before the Project was completed, farmers used to grow one rice crop in a year and could manage their livelihoods with it. However, with better access to markets, farmers have been attempting to produce two rice crops in a year. This has been hampered to a certain extent by the lack of irrigation and by the high cost of installing irrigation systems. In some other cases, farmers have diversified into growing cash crops such as tobacco, with high profit margins. An unexpected benefit of the Project has been that the traders have now organized a transport service wherein their trucks pick up agricultural produce directly from the farms. This has been made possible due to improved roads.

Appendix 5