AMBASSADOR

AUSTRALIAN EMBASSY
HANOI

1 December 2009

HE Mr Ngo Thinh Duc

Vice Minister
Ministry of Transport
Socialist Republic of Vietnam
80 Tran Hung Dao
Hanoi

Your Excel

Thank you for co-chairing the 25th November joint Government-ADB

stakeholder meeting on the Central Mekong Delta Connectivity Project,
which includes the proposed Cao Lanh bridge. As we have discussed
previously, cooperation with Vietnam on this important project remains one
of the highest priorities for the Australian Government.

Following this meeting, it has been agreed that the Ministry of Transport will
advise donors on the Government's decision regarding the final scope of the
project by 5th December, following an independent economic analysis of the
two Options proposed by the Government.

From the Australian Government's perspective, we agree that this decision

needs to be made quickly so as to ensure that the current Project
Preparatory Technical Assistance (PPTA) continues without interruption and
can be completed by mid-2010. Australia's commitment of AUD12 million
for the design of the Cao Lanh bridge and any further commitments relating
to construction remain subject to the outcome of the PPTA, including the
final economic analysis. As confirmed on 3 November, the Australian
Government has already agreed to offer AUD 1.7 million in assistance in
order to facilitate the completion of the PPTA upon finalisation of the project
scope.

Australian Embassy, 8 Dao Tan Street, Ba Dinh District, Hanoi, Vietnam

In order to maximise loan funding from the international development
banks, it will be important that whichever Option is chosen by the
Government, it exceeds the 12 per cent Economic Internal Rate of Return
(EIRR) threshold required by the ADB and KEXIM Bank for infrastructure
projects of this nature. It is also important that the selected Option is able
to be met within the financing scale proposed. In the case of Option Two, we
recognise that this Option would require a significant level of Government
financing and that the availability of these funds would need to be confirmed
with the Ministry of Planning and Investment, the Ministry of Finance and
the State Bank of Vietnam as part of the current internal discussions within
the Government. We would be very concerned if confirming this
Government financing were to result in further delays to the project's
progress.

The Australian Government remains committed to working closely with the

Government of Vietnam, the ADB and KEXIM Bank to advance this project
and I would like to thank you again for your continued leadership.

Yours sincerely

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Allaster Cox

CC: Ministry of Planning and Investment

Ministry of Finance
State Bank of Vietnam
ADB Vietnam Resident Mission
ADB Manila
KEXIM Bank Hanoi
PMU-MT