Philippines - SZOPAD Social Fund Project

Document of The World Bank Report No: 17228-PH PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$10 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A SZOPAD SOCIAL FUND PROJECT FEBRUARY 26, 1998 Rural Development and Natural Resources Sector Unit Philippines Country Management Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective as of November 17, 1997) Currency Unit = Peso US$ 1.00 = 34.05 peso I peso = US$0.029 FISCAL YEAR Government: January I - December 31 IBRD: July 1 - June 30 ABBREVIATIONS AND ACRONYMS CAS - Country Assistance Strategy DO - Development Objective DBM - Department of Budget and Management ERR - Economic Rate of Return GOP - Government of Philippines ICB - Intemational Competitive Bidding IP - Implementation Progress LBP - Land Bank of the Philippines LBPF - Land Bank of the Philippines Foundation LGUs - Local Government Units MDF - Municipal Development Fund MIS - Management Information System MNLF - Moro National Liberation Front NCB - National Competitive Bidding NEDA - National Economic and Development Authority NGOs - Non-Governmental Organizations NPV - Net Present Value O&M - Operations and Maintenance SA - Special Account SOE - Statement of Expenditure SPCPD - Southern Philippines Council for Peace and Development SPDA - Southern Philippines Development Authority SZOPAD - Special Zone for Peace and Development Vice President :Jean-Michel Severino, EAP Country Director :Vinay Bhargava, EACPF Sector Manager :Geoffrey Fox, EASRD Task Team Leader :Franlk Byarnugisha, EASRD  PHILIPPINES SZOPAD SOCIAL FUND PROJECT CONTENTS Page No. A. Project Development Objective ................... ............................................2 1. Project development objective and key performance indicators .............. ...................2 B. Strategic Context ...............................................................2 1. Sector-related CAS goal supported by the project .......................................................2 2. Main sector issues and Government strategy ................................. . . 3 3. Sector issues to be addressed by the project and strategic choices ..............................3 C. Project Description Summary ..............................................................4 1. Project components ...............................................................4 2. Key policy and institutional reforms supported by the project ....................................4 3. Benefits and target population ..............................................................5 4. Institutional and implementation arrangements ...........................................................5 D. Project Rationale ...............................................................7 1. Project alternatives considered and reasons for rejection ...................... ......................7 2. Major related projects financed by the Bank and/or other development agencies ......8 3. Lessons learned and reflected in proposed project design ..................... ......................8 4. Indications of borrower commitment and ownership ............................... ...................9 5. Value added of Bank support in this project ...............................................................9 E. Summary Project Analyses .............................................................. 10 1. Economic .............................................................. 10 2. Financial .............................................................. 10 3. Technical .............................................................. 10 4. Institutional .............................................................. 10 5. Social ..............................................................1 1 6. Environmental assessment .............................................................. 12 7. Participatory approach .............................................................. 12 F. Sustainabity and Risks .............................................................. 12 1. Sustainability .............................................................. 12 2. Critical risks .............................................................. 13 3. Possible controversial aspects .............................................................. 14  Paee No. G. Main Loan Conditions ........................ 14 1. Effectiveness conditions ..................... 14 2. Other ..................... 14 H. Readiness for Implementation ........................ 15 I. Compliance with Bank Policies ........................ 15 Annexes Annex la Project Design Summary Annex lb Performance Indicators Annex 2a Detailed Project Description Annex 2b Targeting and Eligibility Criteria Annex 3. Estimated Project Costs Annex 4. Financial Summary Annex 5. Procurement and Disbursement Arrangements Table A. Project Costs by Procurement Arrangements Table B. Thresholds for Procurement Methods and Prior Review Table C. Allocation of Loan Proceeds Annex 6. Project Processing Budget and Schedule Annex 7. Documents in Project File Annex 8. Statement of Loans and Credits Annex 9. Philippines at a Glance Map IBRD 29355  Philippines SZOPAD Social Fund Project Project Appraisal Document East Asia and Pacific Region Date: February 26, 1998 Task Team Leader: Frank Byamugisha Country Director: Vinay Bhargava Sector Manager: Geoffrey Fox Project ID: PH-PE-51386 Sector: Social Program Objective Category: Poverty Reduction Lending Instrument: Specific Investment Project Program of Targeted Intervention: X] Yes [ ]_No Project Financing Data [X1 Loan [] Credit [] Guarantee [] Other [Specify] For Loans/Credits/Others: Amount (US$m): 10.0 Proposed terms: [ Multicurrency [X] Single currency, dollar Grace period (years): 5 [ Standard Variable [ Fixed [X] LIBOR-based Years to maturity: 20 Commitment fee: 0.75% Service charge: 0.0% Financing plan (US$m): Source Local Foreign Total Government 4.72 0.00 4.72 IBRD 4.67 5.33 10.00 Beneficiaries 0.61 0.00 0.61 Total 10.00 5.33 15.33 Borrower: Republic of the Philippines Responsible agency(ies): SZOPAD Social Fund Estimated disbursements (Bank FYIUS$M): 1998 1999 2000 2001 Annual 1.0 3.0 4.0 2.0 Cumulative 1.0 4.0 8.0 10.0 Proposed coverage: Special Zone for Peace and Development (14 provinces and 9 cities in Mindanao and Palawan province) Project implementation period: 04/01/1998 to 12/31/00. Expected effectiveness date: 07/31/98 Closing date: 12/31/01  Page 2 A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1): Overall Obiective The overall goal of the project is to facilitate the Borrower's efforts to implement the development provisions of the peace agreement signed on September 2, 1996 between the Government of Philippines (GOP) and the Moro National Liberation Front (MNLF) through speedy financing of local development initiatives in the Special Zone for Peace and Development (SZOPAD). Specific Objective The objective of the project is to increase the access of the population in the poor and most conflict-affected areas of SZOPAD to basic economic and social infrastructure, services and employment opportunities. MIS data, disaggregated by province/municipality, will be maintained in order to monitor the percentage of infrastructure, services and employment opportunities provided in the poor and most conflict-affected areas of SZOPAD. Two sets of indicators would be tracked in order to monitor the progress of the project: (i) the number of basic economic and social infrastructure facilities completed and in service; and (ii) the number of employment opportunities created. These indicators would be monitored regularly through the MIS (see Section C, para. 4 and Annex lb). B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): CAS document number: 15362-PH Date of latest CAS discussion: 04/04/96. A CAS update will be presented on March 24, 1998. The Bank's assistance strategy for the Philippines gives high priority to poverty reduction through assisting the design and implementation of effective and efficient policies for poverty reduction while upgrading the quality of social services to the poor. For more than 20 years, the civil war did not permit development assistance, particularly investment in infrastructure and institutional capacity, to be delivered in SZOPAD; consequently, it has the highest concentration of poor people in the country. For example, the poverty incidence in SZOPAD (51.2%) is significantly higher than for the whole country (35.7%) and for the other regions of Luzon (37%) and Visayas (37.7%). The signing of the peace agreement has provided an opportunity to engage in development assistance for the SZOPAD. During the December 1996 Consultative Group Meeting in Tokyo, the Government agreed with the donors to refocus donor assistance on Mindanao in support of the implementation of the development aspects of the peace agreement. The Bank's assistance strategy for Mindanao emphasizes enhanced lending and speedy disbursements in Mindanao, paiticularly in SZOPAD areas. The proposed SZOPAD Social Fund Project provides a mechanism for the quick and efficient financing of development activities in the region; it comprises one of three legs of the Bank's assistance strategy for Mindanao. The other two legs include: financing of investment projects that take a longer time to prepare and are based on the priorities identified in the Govemment of Philippines Development Framework and Investment Priority Plan for SZOPAD (Mindanao); and fast-tracking (i.e. expediting disbursements) ongoing Bank projects with components in SZOPAD. The three legs complement each other.  Page 3 2. Main sector issues and Government strategy: The Government's Development Framework for Mindanao identifies a number of development issues relating to the Mindanao Region, and SZOPAD in particular. These include: * high incidence of poverty prevailing in many SZOPAD areas; * lack of livelihood/employment opportunities especially for the poor in the rural areas and for those dependent on agri-based occupations; * shortages of basic services and facilities in depressed areas such as water, primary health care, quality basic education, electricity, and housing facilities; and * limited infrastructure and institutional capacity, due to armed conflict, leading to reduced accessibility and participation of the marginalised groups and the poor in the development process. Accordingly, the government's development strategy for Mindanao focuses on: * provision of livelihood and employment opportunities especially for landless tenants, crop farmers, fisher folk, indigenous people and women; - improvement of access to basic infrastructure and services in depressed areas and communities; and * strengthening institutional mechanisms for planning, implementation, and monitor.ng for better govemance. Past government assistance to Mindanao has not achieved its objectives adequately due, inter alia, to poor capacity of both national and local government agencies; consequently, large parts of the region remain underserved with respect to basic economic and social infrastructure and services. Since local agencies might be better able to respond to local demands, the government is increasingly supporting decentralized approaches to development including the establishment of the Social Fund, as a mechanism to provide rapid and effective financing for small sub-projects proposed by local governmental and non-governmental entities, including comnmunity groups. 3. Sector issues to be addressed by the project and strategic choices: A key sector issue that will be addressed by the project is the decentralization of the delivery of infrastructure and services. The project supports the Government's decentralization approach to poverty reduction, and encourages local involvement in the identification and management of small scale projects that benefit the poor. Top-down approaches of central line ministries supported in the past have not been fully successful in efficient and equitable provision of basic infrastructure and services in Mindanao. The Social Fund Project encourages local input in development initiatives. Unlike past development programs, where the government was a major, if not the only, player, the Social Fund Project seeks to involve a wider range of entities in service provision such as non-governmental organizations and community groups. A strategic choice made by the govemment is that the project should focus on social and economic infrastructure and services instead of directly supporting the livelihood needs of ex-MNLF combatants. The latter are being supported under other projects funded by UNDP, USAID, AusAID and CIDA. While future support to livelihood activities by the Bank is not ruled out, at present, the other donors who are already supporting these activities are expected to meet this need. The Social Fund project, therefore, focuses on the delivery of physical infrastructure and services and the generation of employment opportunities. The aim is to improve access to infrastructure and services in underserved areas of Mindanao while creating jobs that provide quick income transfers. The Bank's proven track-record in undertaking such activities speedily and efficiently through Social Funds in emergency situations justifies the present focus of this project.  Page 4 C: Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3for a detailed cost breakdown): Component Category Cost Incl. % of Total Bank- % of Contingenci financing Bank- es (US$M) (US$M) financing Financing for Sub-Projects. The Social Fund Physical 12.3 80.0 8.25 83 will provide grant financing to Local Government Units (LGUs), Non-Governmental Organizations (NGOs), and Community Groups for small scale social and economic infrastructure such as rural roads, rural water supply and sanitation, small scale irrigation schemes, communal clinics and schools. Financing will also be made available for supplies, equipment and technical services related to the delivery of community services such as teaching materials and supplies, medical equipment and supplies, and essential medicines. Grant financing is appropriate as the project is supporting the provision of public goods. Sub-projects (up to a maximum cost of US$250,000 each) will be appraised against a set of pre-determined eligibility criteria. Eligibility criteria were developed during project preparation, and are included in the Operations Manual. The project will benefit population groups in SZOPAD in the Southern Philippines, with priority being given to poor people and areas most affected by the conflict. As evidence of commitment to the project, the beneficiaries will be required to make a minimum contribution of 5 percent to the capital costs of subprojects in cash and materials and/or through participation in project design and supervision. Institutional Support for the Social Fund. This Institution 3.0 20.0 1.75 17 component will finance services of Social Fund Building; contracted staff, vehicles, office equipment and and Project operating expenses, as well as technical Management assistance and training to help improve the Social Funds' operations capacity and internal procedures Total 15.3 100.0 10.0 100 2. Key policy and institutional reforms supported by the project: The project supports implementation of the development provision of the peace agreement through support for provision of quick and visible benefits to the underserved and conflict-affected populations in SZOPAD. Because of the emergency nature of the project, it does not attempt to support policy and institutional reforms that typically would require more time to prepare and implement.  Page 5 3. Benefits and target population: Major project benefits include: * construction and/or rehabilitation of infrastructure and provision of specific services: * creation of short-term employment opportunities; and * building local capacity for participation in and management of development projects. More broadly, the project will facilitate the Government's efforts to implement the peace agreement by bringing quick and visible benefits to the underserved and conflict-affected populations in SZOPAD. It will also strengthen the capacity of local governments to manage development. Project Target Population. The project will cover population groups in the 14 provinces and 9 cities of SZOPAD with an estimated population of 10 million. It will target poor and most conflict-affected areas of SZOPAD, with priority given to MNLF areas and lumad communities (indigenous peoples). The project will adopt three targeting mechanisms to ensure that project benefits reach poor areas and poor groups within SZOPAD. First, through geographic targeting, it will establish limits on the share of resources going to each province based on the province's relative access to basic services and other available poverty indicators as well as its population. This will ensure that the better-off provinces do not corner SZOPAD resources while depriving the relatively less well-off provinces. Second, also through geographic targeting, a ranking of municipalities within each province will be established based on available poverty indicators and will be used to prioritize subproject proposals for appraisal. Third, through self targeting, the subproject menu will be restricted to basic and primary level services in order to ensure that poor groups who are the main users of such services would receive a greater proportion of the benefits. There is also a maximum ceiling on the size of subprojects of US$250,000 each. 4. Institutional and implementation arrangements: Implementation Period: The project will be implemented over three years, with a possibility for a roll over, expansion and/or replication. Project Management: The Social Fund was established under the office of the President on October 1, 1997 through Executive Order No. E0445. It will appraise and finance sub-project proposals from sponsoring entities (see the next section). The Executive Order provides for the constitution of a Social Fund's Board of Directors, chaired by the Executive Secretary and including the Secretaries of Finance and Budget and Management, the Director General of the National Economic and Development Authority (NEDA) and the chairman of the Southern Philippines Council for Peace and Development (SPCPD); the Board has the Executive Director of the Social Fund and the Presidential Adviser on the Peace Process as non-voting ex-officio members. The Board, which is mandated to establish the Social Fund's financial policies and guidelines and review and approve its annual work and financial plans and budgets, will meet every three months and as may be necessary to resolve issues emerging from the operations of the Social Fund. The President will designate members of the Executive Committee (upon recommendation of the Board) which will be chaired by a permanent representative of the SPCPD and will include the Executive Director as a non-voting ex- officio member, permanent representatives of the 5 voting members of the Board of Directors, a representative from the NGOs and a representative from the private sector. The Executive Committee will represent the Board of Directors in carrying out the Board's policies and approving sub-projects. The Executive Director who will serve as the chief executive of the Social Fund will head a Management Office, composed of administrative and technical personnel, and responsible for managing and administering the day-to-day operations of the Social Fund. The Executive Committee shall meet every two weeks or as often as may be necessary to review and approve sub-project proposals. The Management Office will serve as the Secretariat of the Executive Committee. The Fund's Executive Director shall establish the Operational Units (Finance and Administration, Promotion and Outreach, Appraisal, Supervision and Legal) and Support Units (Internal Audit and MIS) and appoint the required staff to assist him in carrying out the Fund's operations and administration.  Page 6 Sub-project Sponsors. The Social Fund itself will not propose sub-projects. It will not be involved in sub-project identification, preparation, and implementation. Instead, the Social Fund will invite sub-project proposals from sponsoring entities including: * Local Government Units (LGUs); * Non-govemmental Organizations (NGOs); and * Community Groups The sub-project sponsors will be responsible for identifying, designing, and implementing sub-projects. Project Coordination: The Social Fund will be responsible for ensuring the overall coordination among the different sub-project activities. In addition, it will be responsible for ensuring coordination and consistency of Social Fund activities with sectoral standards and priorities. Such coordination and consistency will be achieved through the following ways: * During sub-project appraisal, Social Fund staff will consult and coordinate with local government staff to ensure there is no overlap with planned or ongoing activities; * Lists of all eligible sub-projects will be submitted to the local departments of the relevant line ministries and to local governments (in cases where the subproject sponsor is not a local government) for their non- objection within 10 working days; * Where existing technical standards available from the respective line ministries conform to sectoral best practice, these will be used by the Social Fund; where they do not, the Social Fund will develop them in coordination with the relevant line ministries; * The policy-setting body of the Social Fund, i.e. the Board of Directors, is made up of representatives of relevant national government agencies (and a representative of the SPCPD) who will ensure overall coordination of Social Fund activities with government programs; and * Agencies that are responsible for the operations and maintenance of the Social Fund-financed investments will be appropriately consulted and evaluated in order to ascertain their commitment and capacity. Project Oversight (policy guidance. etc.): The Social Fund, through its Board of Directors, will retain responsibility for overall project oversight and will be responsible for monitoring sub-project activities and for conducting impact evaluations. Adequate mechanisms will be in place to ensure that lessons of experience feedback into the Social Fund's decision-making processes. Accounting. Financial Reporting and Auditing Arrangements: As it is intended that the Social Fund have autonomy for the purpose of project implementation, accounting and financial control arrangements have to be established for the Social Fund from scratch. A draft Personnel, Finance and Administration Manual was submitted and reviewed by the Bank as part of the project appraisal process. Among other things, the Manual describes in detail the internal control procedures, governing accounting principles, arrangements for maintaining separate project accounts and administrative procedures governing internal management of the Fund. The Manual is based on the principles developed by the Commission on Audit of the Republic of the Philippines, with Bank support, for project accounting and financial information systems for foreign assisted projects. A computerized accounting system based on the manual is being developed and is required to be operational as a condition of loan effectiveness. The local branch of an internationally recognized public accounting company has been retained to advise the Project Preparation Team in setting up the accounting system. The project accounts and the Social Fund annual financial statements shall be prepared on the basis of generally accepted accounting principles. The financial statements and the project accounts shall be audited by an independent auditor acceptable to the Bank. The annual financial statements shall also include a summary of Special Account (SA) activities and disbursements made under statement of expenditure (SOE) procedures. The independent auditors shall be required to express a separate opinion on the operations of the SA and SOE procedures.  Page 7 Monitoring and Evaluation Arrangements: The Social Fund will deploy two mechanisms/instruments for project monitoring and evaluation (see also Annex lb for performance indicators): * Management Information System (MIS). The computerized MIS will track three kinds of variables: - financial indicators (e.g. amounts contracted and amounts disbursed). - operational speed indicators (e.g. number of weeks between receiving sub-project proposals from sub- project sponsoring agency and conveying sub-project approval/rejection decision; and number of weeks between sub-project approval and first disbursement). - physical indicators (e.g. number of clinics rehabilitated; kms of roads constructed and number of jobs created). Appropriate disaggregation of the above data (e.g. by type of sub-project and by geographic location) will be maintained. * Sample Surveys. Quantitative surveys will be conducted on a sample of sub-projects to determine the targeting effectiveness of the project and to establish the overall development impact of sub-project activities. These surveys may be contracted out to local or international consultants. The impact of sub- project activities, including the level of satisfaction of beneficiaries, will also be ascertained through qualitative Beneficiary Assessments. D: Project Rationale 1. Project alternatives considered and reasons for rejection: Two alternatives to a Social Fund were considered but rejected for the reasons explained below: (a) Designing a new standard investment project. A normal Bank investment project usually takes over one year to prepare and disburses over a 5-7 year period. This time frame was considered inappropriate for responding urgently to the post-conflict situation in Mindanao and quickly demonstrating the gains from peace. (b) Channeling funding to LGUs through the Municipal Development Fund (MDF). The MDF could have been used to channel resources to LGUs. However, it was considered necessary not to restrict the project to LGUs but, instead, to tap all existing capacity -- local governmental and non-governmental -- in order to provide basic infrastructure and services speedily. The Social Fund provides a mechanism for doing so. With the Social Fund model, various options were considered with respect to its institutional framework: - establishing the Social Fund as a subsidiary of the Southern Philippines Development Authority (SPDA); - establishing the Social Fund as a new subsidiary of the Land Bank of the Philippines (LBP), and - establishing the Social Fund as a subsidiary of the LBP Foundation (LBPF). None of these options could ensure the speedy and efficient functioning of the project and the effective achievement of its objectives.  Page 8 2. Major related projectsfinanced by the Bank and/or other development agencies (completed, ongoing and planned): Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed projects only) Implementation Development Progress Objective (IP) (DO) Bank-financed Beneficiary participation in Second Communal S S irrigation management Irrigation Project Operation and maintenance Second Rural Roads S S Project (closed; ICR done) Improvement of education Third Elementary S S quality Education Project Poverty reduction Proposed Mindanao Not Applicable Not Rural Development Applicable Project Increasing access to portable First Water Supply S S water and sanitation and Sanitation Project (closed; ICR done) Other development agencies Emergency recovery USAID - Emergency Not Applicable Not Livelihood Assistance Applicable Program Emergency recovery UNDP - Emergency Not Applicable Not Assistance for Applicable Development of Basic Services, Livelihood and Job Creation Program for MNLF Soldiers and their Families IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: The above projects have generated country-wide lessons, particularly the need for beneficiary participation and firm cost recovery measures. A recent review of the Social Fund portfolio commissioned by the Bank's Quality Assurance Group "Portfolio Improvement Program: Review of the Social Funds Portfolio, World Bank, 1997" found that Social Funds have proven to be effective instruments for responding to emergency situations through the provision of basic infrastructure while rapidly creating short-term employment opportunities. The review synthesized lessons learnt and best practices from across 34 countries where Social Funds are currently operating. The proposed project incorporates the lessons learnt and international best practices identified in the Review with respect to, inter alia, targeting the poor and sustainability of subprojects. It also incorporates best practice approaches to beneficiary participation and cost recovery drawn from past experiences in the Philippines. The preparation of the project involved key stakeholders, notably: (i) the Department of Budget and Management (DBM) which was involved in discussions of the project concept and design to ensure that the often encountered problems of lack of counterpart funds do not hinder project progress; and (ii) SPCPD, a new organization with no experience in managing development projects, which was provided an opportunity to learn on the job during project preparation.  Page 9 Specifically, the operational lessons incorporated in the design of the proposed project are: * autonomy for the Social Fund with control over the sub-project approval process in order to avoid political interference; * streamlined procurement and disbursement rules and regulations to ensure speedy implementation; * competitive salaries for Social Fund staff to attract highly competent and motivated individuals; * detailed operational manual, computerized MIS to track project inputs and outputs, standardized accounting procedures, regular and rigorous auditing, and quantitative and qualitative evaluations of Social Fund outcomes, all aimed at ensuring transparency, accountability, and development effectiveness (see Block 1, Section 4 on monitoring and evaluation arrangements); * mechanisms for sector coordination with line ministries that are flexible enough not to compromise the independence and efficiency of the Fund (see Block 1, Section 4 on project coordination arrangements); and * incorporation of sustainability conditions in the design of the Social Fund to ensure a continued flow of sub-project benefits. At the conceptual level, two main lessons of experience are incorporated in the design of the present project. First, the Social Fund is one element of a much broader development strategy. The Social Fund project is one of three legs of the Bank's assistance strategy for Mindanao. The other two legs include the financing of selected investments based on the priorities identified in the Government of Philippines Development Framework and Investment Priority Plan for SZOPAD; and the fast-tracking of ongoing Bank projects with components in Mindanao. The three legs complement each other within the overall framework of the proposed pro-poor macroeconomic policies. Second, the role and time frame of the Social Fund should be and have been explicitly thought through. The SZOPAD Social Fund Project is an emergency operation designed to disburse over a three and half year period. Its main role is to facilitate the implementation of the first phase of the peace process through the speedy provision of basic infrastructure while also creating employment opportunities. Towards the end of the first three years, the appropriateness of a roll-over, expansion, or replication of the project will be examined. Meanwhile, concurrent operations are being supported by UNDP and other donors to build local governmental capacity. If adequate capacity is not built-up in LGUs within the time frame of the SZOPAD Social Fund project or if LGUs find that their comparative advantage lies in focusing on broader policy issues rather than in directly managing small scale investments, a longer term role may emerge for the Social Fund. If so, the design of the Social Fund will be significantly altered to reflect its changed role and objectives. 4. Indications of borrower commitment and ownership: Following a World Bank's fact finding mission for support to the Development of Mindanao in February 1997, the Government of the Philippines expressed a strong interest in the idea of a Social Fund as a mechanism to respond to the urgent need for financing of infrastructure and employment generating activities in the poor and conflict-affected areas of Mindanao. In a follow-up World Bank identification mission in June 1997, the Government of the Philippines and the SPCPD endorsed the creation of a Social Fund as an autonomous entity and agreed on arrangements for preparation and processing of a Social Fund project for SZOPAD. GOP has shown satisfactory evidence of its commitment to the project in at least two ways: (i) high level officials were significantly involved in the decisions which led to initiating the project particularly in the programming discussions with World Bank management; and (ii) GOP prepared and issued promptly the Executive Order necessary to establish the Social Fund. 5. Value added of Bank support in this project: There are three ways in which Bank's support adds value to the project: * The Bank loan will act as seed capital for leveraging co-financing from other donors. * The Bank will bring international experience from past and ongoing social funds in other post-conflict countries to bear on the design and implementation of the Social Fund in Mindanao.  Page 10 * The Bank's involvement will ensure international standards of transparency and accountability in the operation of the Social Fund and will also result in high standards in monitoring and impact evaluations. E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 7) 1. Economic: The actual activities that will be financed and, hence, the benefits cannot be accurately quantified as the project is demand-driven. NPV and ERR are not relevant for Social Fund projects. Average costs per relevant unit will be compiled for each municipality by type of infrastructure, updated regularly, and used as efficiency indicators to appraise subprojects. 2. Financial (see Annex 4): Financing of the project's investment and recurrent costs is easily manageable as the US$10 million from the World Bank is certain; so is the US $4.72 million counterpart contribution from GOP since it is already included in the 1998 Budget appropriation. The US $0.61 million contribution from beneficiary communities and sponsoring agencies is also judged certain as financing methods which include cash, kind and beneficiary participation in project design and supervision are flexible and affordable. Following completion of the project (during the operational period), the financing requirements will mainly be for O&M which will be met by beneficiary communities, absorbed into the budgets of their relevant local governments, and/or under the responsibility of the line agencies (in cases where O&M is not devolved to LGUs). Fiscal impact: During project implementation, US$4.72 million (US$2.8 million plus US $1.92 million in taxes and duties) will be contributed by GOP to the project; the full amount was included in the 1998 Budget appropriation. This claim on the budget is judged as manageable and will not cause undue burden. After project completion, the demands on the government budget will be minimal as the O&M costs of subprojects are not expected to be sizable and will largely be financed by beneficiary communities. The only demand on the budget will be the servicing of the US $10 million loan which will commence after the five year grace period. Again, the burden of servicing such a small debt is judged manageable. 3. Technical: The project will focus on supporting small-scale social and economic infrastructure subprojects which are not technically difficult. During subproject selection, a key appraisal criteria will be technical soundness of the subproject. The technical criteria have been developed for each subproject type based on the existing norms available from the respective national government agencies to ensure sectoral coherence and compatibility; where the norms and standards are inconsistent with sectoral best practices, the Social Fund will adopt modified ones. Technical appraisal will confirm that the project design and specifications comply with these norms. It will also ensure that infrastructure, equipment and other inputs are consistent in scale, quality, cost, and content with the proposed activities of the subproject and that implementation is technically feasible. 4. Institutional: Institutional Assessments were conducted during the preparation of the SZOPAD Social Fund Project. They shed light on the strength and weaknesses of existing governmental and non-governmental institutions in Mindanao. The information generated was used as a basis to design Social Fund's outreach and training program geared to strengthening the weaker sponsoring entities. The Bank will regularly assess the institutional performance of the Social Fund itself and take necessary actions through the project's institutional support component or through other appropriate channels.  Page I 1 a. Sponsoring and Implementing entities: Institutional appraisal criteria will be established to ensure that sponsoring entities whose sub-project proposals are selected have the capacity to successfully implement the subprojects and to ensure that appropriate arrangements for operation and maintenance are made, once completed. The appraisers would confirm the nature and amount of the beneficiaries' counterpart contribution to the project, which must total a minimum 5 percent of the subproject cost, and would gain assurances that operational and maintenance costs of the subprojects will be covered. During appraisal, the appraisal staff will also be required to consult and coordinate with the LGUs to ensure that there is no overlap with other planned or ongoing activities. As the Social Fund will also undertake supervision of implementation of subprojects through its Supervision Department, supervision efforts would be stepped up for the subprojects whose sponsors are relatively weak. During the implementation phase, the performance of the different implementing entities, including contractors, will be monitored; those entities whose performance is found wanting will not be contracted to undertake future Social Fund sub-projects. Such a follow-up on the capacity of sponsoring and implementing entities will also help to target the Social Fund's outreach and training activities to specific institutions in need. b. Project management: Capacity for project management was assessed right from the beginning of conceptualization of the project. As the institutions (dominated by SPCPD) recently established under the Peace Agreement have no experience in managing development projects, particularly those financed by external donors, it was found necessary to establish an interim special institution -- the Social Fund -- to manage the project while building the capacity of existing more conventional organizations. To ensure that the Social Fund is established and run efficiently, the hiring of the key staff of the Social Fund will be preceded by a careful review of the candidates' qualifications and experience by the management of the Social Fund in consultation with the World Bank. And to ensure that high quality personnel are hired and retained, the Social Fund would hire staff on a contract basis and offer them remuneration packages that are competitive with those offered in the private sector. To further enhance the quality of project management, an MIS will be established to facilitate project management (see section 4). 5. Social: As the project targets poor and most conflict-affected areas with priority given to MNLF areas and lumad comnunities, the Social Fund staff would gather data on the number of direct beneficiaries of the project with disaggregation by categories including: indigenous peoples; and MNLF ex-combatants and their families, widows, and orphans. The employment opportunities generated by the project would also be monitored. In addition to data gathering for purposes of monitoring project impact, an initial assessment is being done as part of project pre-implementation, involving a scoping and mapping of communities with MNLF combatants, lumads and the poor and their needs. This would be used as a basis for detailed planning of promotion and outreach activities. In addition, during implementation, special attention would be paid to: (i) resettlement; and (ii) indigenous peoples. (i) Resettlement. No land acquisition, demolition of houses/structures and displacement of persons are anticipated. Should these be necessary, they would be kept to a minimum. Sub-project proposals that would require demolishing houses or acquiring land would be carefully reviewed and their adverse impacts minimized through alternative designs and/or alignments. Proposals that require more than minor expansion along rights of way would be reviewed carefully and the affected persons appropriately compensated according to the agreed upon guidelines for compensation and/or land acquisition contained in the Operations Manual which conform to the World Bank's OD 4.30, and a resettlement plan (where necessary) approved by the Bank.  Page 12 (ii) Indigenous Peoples. The screening and appraisal unit of the Social Fund will provide additional attention in reviewing and appraising subprojects involving communities with indigenous groups. The government Department for Indigenous Affairs and the Office of the Southern Cultural Communities will be consulted. Project guidelines on indigenous peoples have been included in the Operations Manual. Project staff, particularly those in the appraisal unit will be provided orientation on the World Bank's OD 4.20 and training on development for indigenous populations. 6. Environmental assessment: Environmental Category [IA [XI B [IC Environmental assessment will be undertaken on all projects according to routine environmental appraisal criteria although given the nature and small-size of sub-projects, no significant environmental impacts are anticipated. If necessary, technical assistance will be provided to the Social Fund to develop environmental assessment policies and procedures, and the capacity to undertake them. If adverse impacts are foreseen, necessary mitigating measures, if not already planned, would be incorporated into the sub-project design at appraisal. The Social Fund may also reject sub- project proposals on the ground that they involve excessive environmental risk. It is also possible that some of the sub- projects financed by the Social Fund have a direct positive effect on the environment as, for example, in the case of drainage, sanitation or water conservation sub- projects. This project is assigned a "B" environmental classification 7. Partiipatory approach: a. Primary beneficiaries and other affected groups: One of the eligibility criteria for sub-project selection is that beneficiary communities are involved in decision-making related to and/or management of various aspects of the sub- project as appropriate; this is in line with the demand-based design of the project. During project preparation, direct consultations were conducted with representative groups of LGUs, NGOs, cooperatives and private organizations including contractors. As an appraisal criteria, beneficiary communities and/or their sponsors are required to contribute a minimum of 5 percent of the sub-project costs in the form of undertaking specific tasks related to sub-project preparation, implementation, supervision, and operations and maintenance and/or cash, materials, equipment and other contributions specified by sub-project activities. Beneficiary participation and contributions are necessary to ensure that the activities truly reflect beneficiary "demand" and commitment to the subproject. b. Other key stakeholders: National Government Agencies, particularly the Department of Finance, Department of Budget and Management, National Economic and Development Authority and the President's Office were closely involved in shaping the project concept, designing implementation arrangements particularly the preparation of the Executive Order for establishing the Social Fund, and in processing the project. SPCPD played a critical role in overseeing and managing the project preparation process. During project preparation, intensive consultations were carried out with the donors involved in the financing of SZOPAD. F: Sustainability and Risks 1. Sustainability: The project would be economically, institutionally, and environmentally sustainable. Sub-project appraisal criteria include some factors aimed at ensuring economic sustainability of subproject benefits: (i) the operations and maintenance (O&M) cost implied by the subproject can be effectively met and the sponsor possesses adequate know-how about maintenance; and (ii) the sponsors and/or beneficiaries are required to contribute toward the subproject capital costs in the form of cash, kind, and participation in subproject design and supervision. Funding for O&M for infrastructure investments by LGUs should not be burdensome because: (i) investments will be focused on rehabilitation of infrastructure which had run into disrepair because of the civil war; (ii) the LGUs will be receiving funds from the central government, the so-called IRA allocations under the local government code, which could be used for maintenance; and (iii) funding requirements will not be large as the investments are not expected to be large for any of the LGUs. Moreover, there is a follow-up Mindanao  Page 13 Rural Development Project, now under preparation, which will complement this project and help ensure sustainability of investments. Furthermore, the appraisal criteria include institutional and environmental analysis that would aim to ensure institutional and environmental sustainability (see sections 4 and 6 above). The project includes financing to support strengthening of the Social Fund, sponsoring agencies and community groups to enable them fulfill their obligations for project appraisal, implementation, supervision, and sustainability. Institutional strengthening is necessary even for some LGUs and local NGOs. While the LGUs have been found to possess comparative strengths in areas including commitment to development, local knowledge and implementation of small projects (under decentralized responsibilities), the LGUs in conflict-affected areas lack experience in handling donor-assisted projects and their requirements. Similarly, local NGOs have strong points related to their good knowledge base of the local conditions and experience in implementing small-scale projects, but they are dominated by Christian NGOs, pointing to the need to develop and give opportunities to Muslim NGOs. These weaknesses are recognized by the project and will be addressed through some institutional strengthening support which comes with the promotion and financing of sub-projects, particularly in targeted areas of the project. 2. Critical Risks: (see fourth column of Annex 1): Project outputs to development objectives Risk Risk Rating Risk Minimization Measure Politicization of the Social Fund Low GOP's undertaking to promote and ensure autonomy of the Social Fund, well-specified and publicized eligibility and appraisal criteria, computerized MIS to ensure transparency and accountability, accurate and uptodate records of Social Fund operations and finances. Lack of sustainability of created Low Project design includes sustainability measures infrastructure including upfront beneficiary contributions, evidence of commitment to O&M from sponsoring agencies and relevant government agencies, involvement of beneficiaries in decision making in subproject planning and implementation, and sound subproject eligibility criteria. Project components to outputs Peace collapses Moderate Project supports implementation of Peace Agreement and is designed as an emergency operation to demonstrate quick and visible development benefits from peace. Overall project risk rating Moderate There is strong commitment from central government and SPCPD to implement the project successfully and make the Peace Agreement work.  Page 14 3. Possible Controversial Aspects: The undertaking by GOP to promote and ensure autonomy of the Social Fund might be unpopular to implement among specific groups. However, autoncrny of the Social Fund is considered critical for the project to operate with speed and efficiency and in a transparent and accountable way. Concurrent projects are expected to develop capacity in the public sector to function with speed and efficiency as well. G: Main Loan Conditions 1. Effectiveness Conditions: * an agreement to be entered into between the Social Fund and the Borrower to the effect that the latter will make the proceeds of the loan available to the Social Fund, on a non-reimbursable grant basis, as well as other resources, including counterpart funds, needed by the Social Fund to carry out the project; * establishment of a data base of unit costs of the project for each geographical zone; and * establishment of a computerized accounting system. 2. Other: * the Social Fund would approve only those sub-projects that meet the eligibility criteria contained in the Operations Manual satisfactory to the Bank; * no change would be made to the Operations Manual without Bank approval; * the Social Fund would, no later than August 31, 1998, appoint a director for each of its essential operating units (including Finance and Administration, Promotion and Outreach and Appraisal) with qualifications and experience, and functions and responsibilities acceptable to the Bank; * project implementation would include a joint mid-term review to be conducted no later than June 30, 1999; * the Social Fund would ensure sustainability of the project by obtaining evidence of commitment to and ownership of the subprojects by beneficiaries (applicants and sponsors) in the form of an upfront contribution of a minimum of 5 percent to subproject costs and, for public projects, by obtaining evidence of commitment to O&M support from the relevant government agencies. During the project's mid-term review, progress in implementing O&M measures would be assessed and appropriate action taken to ensure project sustainability; * a subproject agreement, satisfactory to the Bank, would be entered into by the Social Fund and each applicant for sub-project funding; * the Social Fund would review and update the subproject unit cost database at least once every six months; * selected performance indicators, agreed with the Bank, would be used to monitor the Social Fund's performance and impact; * annual financial audits will be conducted by an independent auditor acceptable to the Bank and will follow TORs in accordance with appropriate auditing principles, as approved by the Bank, and such audits will be submitted to the Bank within 6 months of the close of each fiscal year; * the Social Fund would, by November 10 of each year, starting November 1998, furnish to the Bank for its review and comments an annual work plan and implement it thereafter taking into consideration the comments from the Bank; and * the Social Fund would ensure that the following reporting arrangements are met: (i) submission to the Bank of a semi-annual report on January 31 and July 31 of each year, commencing on January 31, 1999; (ii) submission to the Bank of a quarterly progress report based on the computerized MIS, on January 31, April 30, July 31 and October 31 of each year, commencing with October 31, 1998; (iii) submission to the Bank, by June 30, 1999, a report for the project's mid-term review, integrating the results of the monitoring and evaluation activities including the performance indicators agreed with the Bank; and (iv) submission to the  Page 15 Bank, within 6 months after project completion, of the Fund's contribution to the Implementation Completion Report that will evaluate the project's performance H. Readiness for Implementation The SZOPAD Social Fund is already established. The Policies and Guidelines of the Social Fund have already been approved by the Social Fund's Board of Directors. The Executive Director of the Social Fund is already appointed; he has already advertised for hire the key staff positions of the Social Fund. There is financing available from a PHRD Grant to support the operations of the Social Fund until the Bank loan is approved. I. Compliance with Bank Policies This project complies with all applicable Bank policies. Task Team Leader: Frank Byamugisha Sector Manager: Geoffrey Fox Country Director: Vinay Bhargava  Page 16 Annex la Philippines SZOPAD Social Fund Project Project Design Summary Narrative Summary Key Performance Indicators' Monitoring and Critical Assumptions Supervision and Risks CAS Objective (CAS Objective to Bank Mission) Poverty reduction. 1. 60 percentage of beneficiaries 1. Beneficiary assessment reported improved living standards. and impact study. Better standard of living. 2. 60 percentage of beneficiaries 2. Beneficiary assessment Peace agreement facilitated. perceived project as a genuine and impact study. attempt by GoP to assist them. Project Development Objectives (Development Objectives to CAS Objective) Access to basic economic and 1. No. of local schools renovated and 1. MIS tracking of physical 1. Infrastructure and social infrastructure, services and operational. outputs. services are utilized employment opportunities in the by beneficiaries. SZOPAD improved by community groups, LGUs, NGOs and private 2. No. of local health clinics 2. As above. 2. Infrastructure and sector with assistance from the renovated and operational. services provided to Social Fund. appropriate target groups. 3. No. km of roads rehabilitated and 3. As above. 3. Infrastructure will be expanded. well operated and maintained after project is over. 4. No. of small irrigation systems 4. As above. facilities rehabilitated and expanded. 5. No. of water supply and sanitation 5. As above. facilities rehabilitated and expanded. 6. No. of employment opportunities 6. As above. created. 7. No. of community groups received 7. As above. training in community management and hygiene education. l Baseline and targeted values would be developed before the project is launched, with the latter divided into values expected at mid-term, end of project and full impact; the exercise would take into account the fact that the project is demand-driven.  Page 17 Narrative Summary Key Performance Indicators' Monitoring and Critical Assumptions Supervision and Risks Project Outputs (Outputs to Development Objectives) 1. Social Fund established and a) Operational, financial and a) Manuals for operation, 1. Social Fund enjoys operational. administration systems and finance and political support but procedures established. administration. is not politicized. b) Fund screening, appraisal process b) Screening, appraisal and and disbursement procedures disbursement criteria. established. c) Monitoring and supervision c) Monitoring and procedures established. supervision reports. d) Staff and facilities in place. d) List of staff, office building and equipment. e) SF makes approval/rejection of a e) Approval letters. subproject application/ proposal within one month of receiving it. f) Routine quarterly project progress f) Quarterly project reports. reports issued by PMU. 2. Demand driven Social Fund a) Value (US$) of sub-projects funded a) MIS tracking. 2. Counterpart funding subprojects established and for local schools' renovation and of $5.33M (25% of operational. operation. $10M) available and b) Value (US$) of sub-projects funded b) MIS tracking. on time. for local rural health units and barangay stations' renovation and operation. c) Value (US$) of sub-projects funded c) MIS tracking. for local road rehabilitation and expansion. d) Value (US$) of sub-projects funded d) MIS tracking. for small irrigation system rehabilitation and expansion. e) Value (US$) of sub-projects funded e) MIS tracking. for water supply and sanitation facilities rehabilitation and expansion. 3. Demand-driven capacity a) Value (US$) of sub-projects funded a) MIS tracking. building and technical for selected social services in assistance provided. technical capacity building, community management, hygiene education and operation and maintenance. b) Community training b) No. of people received training in records and reports. technical skills, community management, hygiene education and operation and maintenance. 4. Social Fund promotion and a) Workshop and quarterly outreach prograrn implemented. a) All mayors in the 14 SZOPAD project reports. provinces and 9 cities informed of project through provincial workshops and meetings. b) Outreach implementation b) Special targeted promotion and plans and reports. outreach conducted in MNLF and lumad inhabited areas.  Page 18 Narrative Summary Key Performance Indicators' Monitoring and Critical Assumptions Supervision and Risks Project Components/ (Components to Activities Outputs) [See Annex 2a for a detailed description.] 1. 1. Peace situation a) Recruit and train staff. Institutional Support: US$M a) List of staff; training continues. reports. b) Set up screening, appraisal and Technical Assistance: US$M b) Operational manual. disbursement procedures. c) Set up financial disbursement Infrastructure sub-projects: US$M c) Financial and mechanisms. administrative manuals. d) Set up procurement procedures. Equipment sub-projects: US$M d) Procurement reports. e) Set up monitoring and e) Monitoring and supervision procedures. Services sub-projects: US$M supervision reports. f) Establish MIS. f) MIS data 2. a) Develop technical criteria, a) Technical reports. standard designs, costings, and contracting qualification. b) Set up coordinating and b) Memos/letters of working mechanisms with agreement. sectoral line agencies in government. 3. a) Training modules and list a) Develop appropriate technical of qualified training assistance programs in: institutions. - health clinic renovation and operation; - schools renovation and operation; - road rehabilitation and maintenance; and - irrigation systems, water supply and sanitation facilities improvement and operation and maintenance. b) Conduct training. b) Training reports; field visits. 4. a) Design one general and one a) Outreach modules. targeted outreach program. b) Conduct general outreach b) Quarterly progress program in all SZOPAD reports. provinces. c) Target and select poorer c) Targeting plan and list of municipalities and depressed areas. areas. d) Conduct targeted outreach in d) Quarterly progress above municipalities and poor reports. areas.  Page 19 Annex lb Philippines SZOPAD Social Fund Project Performance Indicators Indicators Unit Year 1 Year 2 Year 3 Implementation: 1. Operational, financing, administration systems & procedures % 100 established 2. Monitoring and supervision procedures established % 100 3. Appropriate staff, equipment and facilities in place 90 100 4. Time taken for appraisal and approval of eligible subprojects Weeks 16 12 8 from date of receipt 5. Time between subproject approval and first disbursement Weeks 8 6 6 outputsoutcomes 1. Percentage of beneficiaries reported improved access to % 30 60 facilities & services under the project . 2. Percentage of targetted communities received promotion and % 60 100 outreach service 3. Number of employment opportunities created Man/month 7,000 19,000 26,000 4. Number of basic facilities completed:* (a) local schools renovated and operational Unit 40 100 137 (b) local clinics renovated and operational Unit 10 35 50 (c) roads rehabilitated and expanded Unit 15 50 80 (d) water suply & sanitation facilities rehabilitated & expanded Unit 30 100 1200 (e) small scale irrigation rehabilitated & expanded Unit 10 30 60 * As a demand-driven project, individual targets are less important than the overall project targets  Page 20 Annex 2a Philippines SZOPAD Social Fund Project Project Description 1. Financing for Sub-Projects - US$12.3 million The Social Fund will provide grant financing to Local Government Units (LGU), Non-Governmental Organizations (NGOs), or Community Groups for small scale social and economic infrastructure and services such as rural roads, rural water supply and sanitation, small scale irrigation schemes, communal clinics and schools. Financing will also be made for supplies, equipment and technical services, related to the delivery of community services such as teaching materials and supplies, medical equipment and supplies, and essential medicines. Grant financing is appropriate as the project is supporting the provision of public goods which the private sector cannot provide. Sub-projects (up to a maximum cost of US$250,000 each) will be appraised against a set of pre-determined eligibility criteria. Eligibility criteria were developed during project preparation, included in the Operations Manual and have been appraised. The project will benefit population groups in the Special Zone of Peace and Development (SZOPAD) in the Southern Philippines with priority being given to poor people and areas most affected by the conflict. As demonstration of their commitment to the project, the sponsoring entities and/or beneficiaries will be required to make a minimum contribution of 5 percent to the capital costs of subprojects in cash and materials and/or through participation in project design and supervision. 2. Institutional Support for the Social Fund - US$3.0 million This component will finance services of Social Fund contracted staff, equipment and operating costs, as well as technical assistance and training to help improve the Social Funds'operational, managerial and administrative capacity.  Page 21 Annex 2b Philippines SZOPAD Social Fund Project Targeting and Eligibility Criteria Targeting. The Social Fund Project would cover all the 14 provinces and 9 cities of SZOPAD which has a population of nearly 10 million. While beneficiaries in the whole of SZOPAD can submit applications and proposals for financing from the Social Fund, priority in promoting Social Fund activities and in financing would be given to poor municipalities especially those with MNLF combatants and their families as well as the lumads (the indigenous peoples). Subproject Eligibility Principles. The following principles will be used to screen subprojects for eligibility for financing under the Social Fund: * subproject benefits the poor; * subproject generates social and/or economic benefits; * the sponsoring entity is capable of effectively managing the implementation of the subproject; * subproject meets "cost per unit" and "cost per beneficiary" ceilings established by the Social Fund; * subproject is labor-intensive or otherwise generates a significant social impact; * the financial, technical and institutional requirements for the operations and maintenance of the subproject are in place; * beneficiary communities are involved in decision making related to and/or management of various aspects of the subproject such as subproject design, implementation and supervision, as appropriate; - beneficiary communities and/or their sponsors contribute a minimum of 5 percent of the subproject costs in cash, kind or other relevant form including participation in design and supervision; and - subproject is additional to existing or planned public investments.  Page 22 Annex 3 Philippines SZOPAD Social Fund Project Estimated Project Costs Project Cost Component Local Foreign Total -------------------US $ million-------------------- Institutional Support Salaries and Fees 1.55 0.17 1.72 Vehicles and Equipment 0.02 0.32 0.35 Operating Expenses 0.14 0.27 0.40 Technical Assistance and Training 0.12 0.46 0.58 Sub-total Institutional Support 1.83 1.22 3.05 Social Fund Sub-projects Social Infrastructure 3.91 2.88 6.79 Economic Infrastructure 2.24 1.67 3.91 Equipment 0.44 0.14 0.58 Social Services 0.78 0.23 1.01 Sub-total Sub-Projects 7.37 4.91 12.28 Total Project Costs 9.20 6.13 15.33  Page 23 Annex 4 Philippines SZOPAD Social Fund Project Financial Summary (US$ Million, Year ending December 31) Implementation Period -_____________ 1998 1999 2000 Project Costs Investment Costs 3.91 6.15 3.14 Recurrent Costs 0.69 0.75 0.69 Total 4.60 6.90 3.83 Financing Sources (% of total project costs. less taxes and duties) IBRD 75 75 75 Co-financiers 0.00 0.00 0.00 Government - Central 20 20 20 - Local User Fees/Beneficiaries 5 5 5 Total 100 100 100  Page 24 Annex 5 Philippines SZOPAD Social Fund Project Procurement and Disbursement Arrangements Procurement Procurement Methods (Table A): All procurement for the implementation of sub-projects would be undertaken by the applicants, with assistance from the sponsoring agencies. Procurement of items for the Social Fund itself will be undertaken by the Social Fund. Procurement of civil works and goods would be done using the World Bank Guidelines: Procurement under IBRD Loans and IDA Credits, dated January 1995 and revised January and August 1996 and September 1997. a. Civil Works: No international competitive bidding (ICB) is expected under the proposed project given the small size of subproject contracts -- the maximum subproject cost is US$250,000, with an average subproject cost estimated to be around US$25,000. Contracts of civil works estimated to cost US$50,000 or more would be procured according to National Competitive Bidding (NCB) procedures acceptable to the Bank. Some of the Philippines' NCB procedures, such as procedures of advertising and eligibility for participation of foreign contractors, are not acceptable to the Bank; these would be addressed through a side letter. About US$3.5 mnillion of civil works (infrastructure) contracts are expected to be awarded through NCB. Civil works contracts estimated to cost less than US$50,000 would be procured through direct contracting, based on a strict application of unit costs supplied by the Social Fund. Direct contracting is justified given the prevalence of small scale, labor-intensive works in scattered and remote areas and would also encourage contractors to expand their operations to these areas. The problem cannot be overcome by packaging groups of subprojects for procurement purposes as this is unlikely to be possible except under circumstances in which a sponsoring agency has applied for a package of investments. Direct contracting would be allowed up to an aggregate amount of about US$7.3 million. To ensure cost efficiency, direct contracting would be made to strictly adhere to the costs provided in the provincial cost data base kept by the Social Fund which would be updated regularly. All cost estimates for subprojects will have to fall within the cost limits determined by the data base. This has proved an effective tool for controlling subproject costing and procurement in other Social Funds. As an additional safe guard, the SZOPAD Social Fund would limit the total value of contracts that can be awarded through direct contracting to any one contractor to US$300,000. These direct contracting guidelines are included in the Operations Manual. b. Goods: Goods and equipment to be procured under the project's institutional support component include vehicles, computers and office equipment. Under the subprojects component, they include tools, furniture and basic equipment for health clinics, schools and other facilities. Sizable packages (greater than US$100,000) of goods and equipment suitable for procurement under ICB are not anticipated. Contracts of less than US$100,000 and totaling about US$280,000 would be procured according to NCB procedures acceptable to the Bank while contracts of less than US$50,000 and totaling about US$350,000 would be procured according to national shopping procedures acceptable to the Bank. Vehicles to cost no more than US$120,000 under the institutional support component would be procured through the UN Inter-Agency Procurement Services Office as these are urgently needed.  Page 25 c. Consultants services and Training: About US$580,000 would be allocated to consultants services and training under the project. The selection and appointment of consultants would be done in accordance with Guidelines: Selection and Employment of Consultants by World Bank Borrowers, dated January 1997, and using the Bank's Standard Form of Contract for Consultants' Services, dated June 1995, and the Standard Request for Proposal, dated July 1997. The selection of firms would be based on quality and cost while the selection of individual consultants would be based on quality as reflected in the qualifications and experience. Consultancy services provided by NGOs, very small assignments or assignments in remote areas and costing not more than US$50,000 equivalent in total, would be procured through single source selection. d. Salaries and Fees of Contracted Staff. About US$1.7 million would be allocated to the payment of salaries and fees of personnel contracted to run the Social Fund. The contracting of these professional and technical personnel would be done according to the Guidelines: Selection and Employmerit of Consultants by World Bank Borrowers, dated January 1997 and revised in September 1997. They would be selected based on their qualifications and experience. e. Operating Costs. About US$400,000 would be allocated to covering the costs of operating the Social Fund, including staff travel and office utilities. These would be funded by the Borrower and procured using its own procurement procedures. Prior Review Threshold (Table B): All civil works and goods contracts procured according to NCB (over US$50,000 equivalent) and the first ten (10) civil works contracts under US$50,000 equivalent would be subject to the Bank's prior review. Prior review of civil works and goods include bidding documents, evaluation reports and contracts. Since many contracts of civil works are expected to be small and procured through direct contracting, prior review for civil works contracts would cover about 45 percent of the value of civil works. As contracts of goods are anticipated to be small and procurement would be done mainly through national shopping, prior review would cover only about 40 percent of the value of goods' contracts. Prior Bank review would also be required for contracts of individual consultants estimated to cost US$50,000 or more and for firms estimated to cost US$100,000 or more. Prior review procedures would apply regardless of the value of consultants' contracts with respect to draft letters of invitation and contracts, terms of reference, sole source selection, qualification criteria, evaluation reports, award proposals and final contracts when substantial differences to the original draft are made. For contracting the professional staff of the SZOPAD Social Fund, prior review would only be required for management positions. Disbursement Allocation of loan proceeds (Table C) Disbursement of the proceeds of the loan would be made against expenditure categories as shown in Table C. Use of Statements of Expenditures (SOEs): For all sub-grants, all contracts for goods below US$50,000, all services of contracted staff of the Social Fund, all training and all consultants' contracts below US$50,000 equivalent for individuals and US$100,000 equivalent for firms, withdrawal applications will be supported by Statements of Expenditures (SOEs). For consulting firms' contracts over US$100,000 equivalent and individual consultants' contracts over US$50,000 equivalent, withdrawal applications would be supported by full documentation and signed contracts.  Page 26 Special account: In order to facilitate disbursements, a Special Account would be established in a commercial bank specifically designated for this purpose by the Borrower's central bank and on terms and conditions acceptable to the Bank. The account would be established in US currency with an authorized allocation of US$1,000,000 equivalent, with an initial withdrawal of US$500,000 and the balance to be withdrawn when the amounts disbursed and committed total US$4.0 million. The Social Fund would submit replenishment applications for the Special Account on a monthly basis, or when the account is drawn down by 30 percent of the initial deposit, whichever occurs first. Replenishment of the Special Account would follow Bank procedures. The Special Account would be audited annually, as will the project accounts, by independent auditors acceptable to the Bank. Retroactive financing would be provided up to US$1 million equivalent for eligible expenditures made after January 1, 1998.  Page 27 Annex 5, Table A: Project Costs by Procurement Arrangements2 (in US$ million equivalent) Expenditure Category Procurement Method a/ NCB National Direct Other b/ Total Costs Shopping Contracts (Including Contingencies) 1. Institutional Support Contract staff Salaries and 1.73 1.73 Fees (1.00) (1.00) Vehicles and Equipment 0.13 0.10 0.12 0.35 (0.10) (0.05) (0.10) (0.25) Operating Costs 0.40 0.40 (0.00) (0-00) Consultancy Services: Technical Assistance 0.43 0.43 (0.35) (0.35) Training 0.15 0.15 (0.15) (0.15) 2. Subprojects Infrastructure Subprojects 3.45 6.33 9.78 (2.25) (4.13) (6.38) Services Subprojects 0.95 0.95 (0.66) (0.66) Equipment Subprojects 0.15 0.25 0.40 (0.06) (0.20) (0.26) Unallocated 1.15 (1.00) Total 3.73 0.35 7.28 2.82 15.33 (2.41) (0.25) (4.79) (1.60) (10.05) Notes: a/ Figures in parenthesis are the amounts to be financed by the Bank loan. b/ Includes consultant services, services of contracted staff of the Social Fund, training, incremental operating costs of the Social Fund and the UN Inter-Agency Procurement Services. 2For details on presentation of Procurement Methods refer to ODI 1.02, "Procurement Arrangements for Investment Operations." Details on Consultant Services can be shown more easily in the Table Al format (additional to Table A, where applicable).  Page 28 Annex 5, Table B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject Category (US$) Method to (Threshold) Prior Review 1. Works Less than 50,000 Direct Contracting First 10 contracts More than 50,000 NCB All contracts 2. Goods Less than 100,000 NCB All Contracts Less than 50,000 National Shopping None 3. Services Individual Less than 50,000 Consultants' All Qualifications More than 50,000 Consultants' All Qualifications Firms Less than 100,000 Quality and Cost-Based All Selection More than 100,000 Quality and Cost-Based All Selection  Page 29 Annex 5, Table C: Allocation of Loan Proceeds Expenditure Category Amount in Financing US$million Percentage A. Sub-grants in support of subprojects 7.50 70 B. Goods 0.30 90% of foreign expenditures, 90% of local expenditures (ex- factory costs) and 75% of local expenditures for other items procured locally C. Consultants' services and Training 0.45 100 D. Services of Contracted Staff of the Social 1.00 80 Fund E. Unallocated 0.75 Total 10.00  Page 30 Annex 6 Philippines SZOPAD Social Fund Project Project Processing Budget and Schedule A. Project Budget (US$) Planned Actual (At final PCD stage) 382,000 (Revised) 279,000 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 5 months 5 months First Bank rnission (identification) 06/01/1997 06/01/1997 Appraisal mission departure 11/19/1997 09/12/1997 Negotiations 01/15/1998 02/10/1998 Planned Date of Effectiveness 07/31/1998 07/31/1998 NOTE: Project Budget at final PCD stage was $228,714. Prepared by: A team headed by the Southern Philippines Council for Peace and Development (SPCPD) Preparation assistance: PHRD Grant Bank staff who worked on the project included: NAME SPECIALTY Frank Byamugisha Task Manager Wael Zakout Co-Task Manager Mary Judd Anthropologist Wijaya Wickrema Financial and Accounting Specialist Soniya Carvalho Economist Maria Thereza Quinones Community Participation Specialist Cecilia Vales Procurement and Disbursement Specialist Hoi-Chan Nguyen Lawyer Vimala Abraham Disbursement Officer Christopher Chamberlin Peer Reviewer Alexander Marc Peer Reviewer Jacob Bregman Peer Reviewer Nat Colletta Peer Reviewer Kathryn Cherrie Task Assistant Brenda Phillips Task Assistant  Page 31 Annex 7 Philippines SZOPAD Social Fund Project Documents in the Project File A. Project Implementation Plan 1. Operational Manual (3 Volumes) 2. Finance and Administratiion Manual B. Bank Staff Assessments 1. Project Supervision Plan 2. Project Procurement Plan 3. Cambodia: Social Fund Project, May 11, 1995, Staff Appraisal Report No. 14010-KH 4. Cambodia: Operations Manual, May 15, 1995 5. World Bank, Portfolio Improvement Program - Social Funds Review, March 1997. C. Other 1. Executive Order establishing the Social Fund  Page 32 Annex 8 Philippines SZOPAD Social Fund Project Statement of Loans and Credits STATUS OF BANK GROUP OPERATIONS IN PHILIPPINES A. STATEMENT OF BANK LOANS AND IDA CREDITS /a (As of June 30,1997) Amount (US$ million) Loan or (less cancella0ons) /b Credit Fiscal Undis- Number Year Borrower Purpose IBRD IDA_b bursed One hundred and sixty-five Loans and seven Credits closed. 6,445.60 171.18 0.60 Of which SALs, SECALs and Program Loans 1903 1981 Republic of the Philippines SAL I 199.96 2266 1983 Republic of the Philippines SAL II 302.25 2277 1991 Republic of the Philippines Environment & Natural Res. Mgt. 66.00 2469 1985 Republic of the Philippines Agriculture Sector Inputs 150.00 2787 1987 Republic of the Philippines Economic Recovery Program 300.00 2956 1988 Republic of the Philippines Program for Govt. Reform 200.00 3049 1989 Republic of the Philippines Financial Sector 300.00 3149 1990 Republic of the Philippines Debt Management Loan 200.00 3539 1993 Republic of the Philippines Economic Integration Loan 200.00 1.852.21 66.00 3099 1989 Republic of the Philippines Health Development 70.10 2.50 3204 1990 Republic of the Philippines Coconut Farms Development 120.95 58.83 3242 1990 Republic of the Philippines WS/Sewer/Sanitabon I 47.93 6.63 3261 1991 Republic of the Philippines Communal Irrigaton II 46.20 23.12 3360 (S) 1991 Republic of the Philippines Env. & Natural Res. Mgt. 158.00 23.42 3430 1992 Republic of the Philippines Highway Management 150.00 90.41 3435 1992 Republic of the Philippines Engineering & Science Educ. 61.00 14.68 3439 1992 Natonal Electdrif. Adm. Rural Electdrificaton 91.30 46.31 3455 1992 Republic of the Philippines Municipal Development III 68.00 44.18 2392 1992 Republic of the Philippines Second Vocatonal Training 36.00 15.75 2506 1993 Republic of the Philippines Urban Health & Nutrition 70.00 59.36 3603 1993 Republic of the Philippines Tax Computerization 63.00 36.12 3607 1993 Republic of the Philippines Irrigaton Operaton Support II 51.30 31.33 3626 1993 Philippines Nabonal Power Corp. Power Transmission & Rehab. 51.60 4.98 3700 1994 Nabonal Power Corporation Leyte Cebu Geothermal 147.00 33.72 3702 1994 Philippines Nabonal Oil Co. Leyte Cebu Geothermal 64.00 16.15 3745 1994 Subic Bay Metropolitan Authority Subic Bay Freeport 40.00 6.78 3746 1994 National Power Corporabon Leyte Luzon Geothermal 113.00 48.73 3747 1994 Philippine Nabonal Oil Co. Leyte Luzon Geothermal 114.00 72.72 3852 1995 Republic of the Philippines Womens Health & Safety 18.00 17.62 3938 1996 Land Bank of the Philippines Rural Finance ll 50.00 29.28 3939 1996 Land Bank of the Philippines Rural Finance II 50.00 32.52 3940 1996 Land Bank of the Philippines Rural Finance II 50.00 22.81 3996 1996 Nabonal Power Corporaton Transmission Gfid Reinforcement 100.00 90.02 3997 1996 Natonal Power Corporabon Transmission Gid Reinforcement 150.00 147.23 4019- 1996 Metro. Water Works & Sewerage System Manila 2nd Sewerage 57.00 57.00 4108 1997 Republic of the Philippines Third Elementary Educaton 113.40 113.40  Pagc 33 STATUS OF BANK GROUP OPERATIONS IN PHILIPPINES A. STATEMENT OF BANK LOANS AND IDA CREDITS /a (As of June 30,1997) Amount (US$ million) Loan or (less cancellations) h Credit Fiscal Undis- Number Year Borrower Purpose IBRD IDA/b bursed 4109 1997 Republic of the Philippines Agrarian Reform 50.00 50.00 4110 1997 Republic of the Philippines Water Resources Development 58.00 58.00 4111 ^^ 1997 Subic Bay Metropolitan Authority Second Subic Bay 60.00 60.00 Total- 8,659.38 277.18 1,314.21 of which has been repaid 3,241.00 13.45 Total now held by Bank and IDA 5.418.38 263.72 Amount sold 31.35 Of which repaid 31.35 Total Undisbursed 1.238.Z5 7. 1314.21 /a The status of the projects listed in Part A is described in a separate report on all IBRDllDA-financed projects in executon, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. Amounts are presented net of cancellations. b Principal amounts in US$ equivalent at date of negotatons, and undisbursed amounts in equivalent are valued at exchange rate applicable on the date of this statement. (S) Indicates SAIJSECAL Loan and Credits. Not yet effective. Not yet signed. Total Approved, Repayments, and Outstanding balance represent both active and inactve Loans and Credits.  Philippines at a glance 2/238 Lower- POVERTY and SOCIAL East mkldle- Philippines fAsia incme Development diamond* Populaton mid-1996 (millions) 70.0 1,726 1,125 GNP per capita1S998 (US$) 1,190 890 1,750 Ufe expectancy GNP 1996 (Illions' US$) 83.3 1,542 1,967 Average annual:growth, 1990-96 Population (%) ~2.2 1.3 1.4 Laborfore (%) 2.7 1.3 1.8 GNP Grass per primary Most,recent^estimate (lAtest year availablesince1989) capita enrollment Poverty: headcount index % otpopulaion: 54 :Urban population(%ttotal populationl000 t ) 54 31 56 Ufeexpectancyatbrth(years) 66 68 67 Intant mortality (per 1,000 Ii ye births) tf ; 00 t: 0; j ; 0 9 39 t: t: ii j 0 440 41: 0 E Access to safe water Child malnutrition (% of children under 5) 30 Access to saftwater (W fpo% qlatn,): 84 77 Illiteracy(% of populationage 15+) : 5 17 Gross prlmaryenrollment (% ot schoolagepopulation) 111 117: 04 ppies Male .* 120 105 Lower-middle-income group Female I.11 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 I 1985; 1905 1996 Economic ratIoe' GDP 0(bilionsIUS$) 15.0 30.7 74.2 83.8 Gross domesilJc nvestmentlGDP. 30.9 15.3 22.2 24.7 Exports o. goods aservicesGOP: 21.0 24.0 36.4 46 Opennessofeconomy Gross domestIc savings/GOP 24.8 17.4 Gross national savings/GDP 26.6 i 15.9 17.8 20.0 Current account balance/GDP -6.2 - 0.1 -4A -4.7 Interest payments/G)P 0.8 3.1 2.8 Savings Investment Total deWGOP 27.8 86.6 53.2 49.2: Total debt servicelexports 14.4 31,6 16.5: 14.7 Present value'of debtIGOP'- . Present value of debt:exportsss 197584.5 1986-96 1995 o196 1997-05 (average iannualgrowEth) - E : E: f:f: :;:::::0;: 0g; -0y :g00:i ;:X :: ;0 0 0 0 g4 g;f 0 0 ;:i 0: :0;; Philippines GOD3. 3.2 4.8 5. 55 GNP peri ta 0.3 1.5 2.5 4.4 as Lower-middle-income group Exports:tof.goods and services 7.6 8.7 12.0 23.9 10.5 _ , _ STRUCTURE of the ECONOMY 1975 1985 1995 1996 (% of GDP) Growth rates of output and Investment (%) Agriculture 30.3 24.6 21.6 21.4 20 Industry 34.6 35.1 32.1 31.7 10 Manufacturing 25.7 25.2 23.0 22.6 Services 35.0 40.4 46.3 46.9 n o- 93 94 95 96 Private consumption 64.5 75.0 74.2 73.9 -20 General government consumption 10.7 7.6 11.4 11.7 -GDI 0-GDP Imports of goods and services 27.1 21.9 44.2 53.9 I 1975-85 1986-96 1995 1996 (average annual growth) Growth rates of exports and Imports (V.) Agriculture 2.2 1.7 0.8 3.0 2S Industry 2.6 3.3 7.0 6.3 20D_ Manufacturing 1.8 3.2 6.8 5.6 15-. Services 3.8 3.8 5.0 6.5 o0 Private consumption 3.3 4.1 8.5 5.3 s- General govemnment consumption 0.4 4.6 5.4 5.2 0 I Gross domestic investment -0.4 6.9 3o 15.6 4* 92 93 94 9s 96 imports of goods and services 3.9 12.3 16.0 21.1 -Exports ---Imports Gross national product 2.7 3.8 5.0 6.9 Note: 1996 data are preliminary estimates. - I he diamonds snow tour key Indicators in the country (in bold) compared with its income-group average. it data are missing, tile diamond will be incomplete.  Philippines PRICES and GOVERNMENT FINANCE Diomeatic pfes 1975 t985 1995 1996 Iflaton (% change) 20 Consumer prices 6.8 23.1 8.1 8.4 is Implicit GDP deflator 9.3 17.6 7.5 8.9 10 Govemnment finance o (% of GDP) 91 92 93 94 95 96 Current revenue .. 12.1 18.5 19.5 Current budget balance .. 2.4 2.5 3.1 - GDP de. 0 CPI Overall surplus/deficit .. .. -1.4 -0.4 TRADE _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (mlions US$) o985 1995 1996 Exprt and import levels (mill. USS) Total exports (fob) .. 4,629 17,447 20,543 35.0O Coconut oil .. 347 826 571 30,000 Sugar 185 74 139 25,00D Manufactures .. 2,539 13,868 17,106 20,00D Total imports (cif) .. 5,111 26,391 31,885 15,5r Food .. 256 1.204 1,578 l0,000 Fuel and energy 1,452 2.481 3,008 50 Capital goads .. 769 8,029 10.472 0 9B0 91 92 93 94 95 96i Export price index (1987=100) .. 81 124 124 Import price index (1987=100) .. 63 124 126 0 Exports S Imports Terms of trade (1987=100) .. 127 100 99 BALANCE of PAYMENTS 1975 1985 1995 1996 (millions US$) Current account balance to GDP ratio t%) Exports of goods and services 3,000 6,864 21,978 28,566 0 o Imports of goads and services 4,116 5,961 33,314 42,254 90 | 991 |929 Resource balance -1,116 903 -11,336 -13,688 .1 U| | Net income -126 -1,317 7,157 9,185 |2 Net current transfers 318 379 882 589 MLI3 Current account balance, | 4X1 1L L before official capital transfers -923 -35 -3,297 -3,914 Financing items (net) 912 867 3,928 8,021 1L Changes in net reserves 11 -832 -631 -4,107 | Memo: . Reserves including gold (mill. US$) 1,458 1,098 7,762 11,745 Conversion rate (loca/tUS$) 7.2 18.6 25.7 26.2 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1995 1996 (millions US$) Composition of total debt, 1996 (mill. USS) Total debt outstanding and disbursed 4,171 26,639 39,445 41,214 iBRD 238 2,421 5,002 4,666 A IDA 17 84 183 193 4666 B 7969 193 Total debt service 457 2,534 5,337 5,778 405 IBRD 26 285 790 766 IDA 0 1 3 3 3079 Composition of net resource flows Official grants 72 139 276 Official creditors 185 381 -648 .. E Private creditors 348 776 1,166 .. 1 12085 Foreign direct investment 98 12 1,478 1,600 12817 Portfolio equity 0 0 1,961 1,333 World Bank program Commitments 114 104 168 528 A-IBRD E-Bilateral Disbursements 94 276 402 457 B - IDA D - Other muLtilateral F - Private Principal repayments 12 110 415 426 C - IMF G - Short-term Net flows 82 166 -13 31 1 _ Interest payments 14 176 378 343 Net transfers 68 -10 -391 -312 Development Economics 2/23/98  MAP SECTION  lID I20- 1220 PHILIPPINES 12 0 2 CHINA SPECIAL ZONE OF PEACE AND DEVELOPMENT IN SOUTHERN BND)ViEAMo PHILIPPINES (SZOPAD) 2-- - (-o-- SZOPAD BOUNDARY 8 . P1000 PROJECT AREA M ALAY A PAN-PHIUPPINE HIGHWAY OTHER RAbIN ROADS 1nd FERRIES + LNTERNATIONAI AIRPORTS I N D 0 N E 5 I A MAJOR PORTS V-.N';-10 RIVERSApn RIVERS 19CiYi I 6 >Aparrl / ~~ ~ ~~~~ ~~~~ ~~100 110 12P' AUSTRLALIA IbO' * PROYINCE CAPITALS 0000 Coi'Y ASRAI IS' Sa REGION CAPITALS 2 126 ----- PROVINCE BOUNDARIES I R I I . T 108 0 r~~~~~~~~~ ~~hu .R opoooo by h. Mop 000190~ U11 oY Th.o Wond Bo-R REGION BOUNDARIES Vgoo' S .TOYOOOOIRr TRbOwm pR,d RcO2 d OEM OIhof O O2 ohOf E thmlo-oopd olo-ply,ooAoh.p-olPThi,W-old 8.kOnG-p, 0 Regions and Provinces LobumpI P -oo'H bud- m .oooo ny Llooondo, G0~~~~~~~~~~. ~10 I Roooo llornm sx 1 - 0.t 0so 3 boo UmnS/ o, 9 t > 4 Ponoo-nA M I u CAR Cordillr AdO,jni-ooosio R.gi- ST. P.n 7odo' 71 7 Bon0oOl - C g 6 . I S 11Cocyc VollY -F0S 0X 1 22 _ I Co0n(o 2 tlu I T00 COY 9. Nuevc.l.c V.1Ibo . III p IX Wof- Mono ....iodonoo U 'I PoOlbo 1T B-o1-S= bo00, iolondo 9 F -I, 9 57 Z.-nbooo0o del So, OlonoopooHIEO2 I X No.th... Mi.donoo .... 0 S- i NCR Notio..1 Copitol RRgion I2 *- vML2N ' * IV S-o!h-r, TogOL1g ol ' Ce Tre0 s D n ,nSdn0Coo, o,o P-ng-lb-n ? 0o.00gr. XI SOUH ern Mi,d.nao _,. i. _ 0L00 14 C2 Dnm Al N sugboV Lp - f14 25 63. RooD- So - 6S~~~~O So,b Conbol Lobon BohngooC,lF'V = ASbn s10doe Cg Toloonon 67 e Ibn KEldono Ilni 0>CoIo 000 -Ioo 31 E ~~~XII Conlool Miooiono(5 .CoooPOn I m -P 000 0aTnbgoi 6g Lontod8lNi 0000 - .t ondoqo1 - - V Booloodlo 69 Nm6 C bob *iv _ . - / L,oo Ldg--pi C.y ~~~~~~~.t- fMisn r.d-r> A idr s~\srS V A i Iwr ;- . ii 7- M-c- Mgtbnob;on Bob -6 ARMM AoItonroow,o R f *C:loon0 , - Amin oyo T B 52 - Polopog VI Wooloon V.ooyol Mosli., Miodaiooo S3' 5bOyo:h bo . S 12~ ~ ~~~~7 B.1 S Lnob mS > < Mooboleo \ owIbyogo 0Owo,2 12' 07~~~~~~~~~~~ mooTo,o B ,,,0o 0 0801OI 2 Vll C nFral Vi yus ~~~CobsonW 0:n Nob:; P>oo --ze )oToHlg S e s: - Ium:lW dsisbeci:/ Nb 31- { jLb7nm- X ~ ~ ~ ~ ~ ~ ~ ~ ~~cno *aCI !oina - Y,I \o - gsa c< VIII booboro Viyoo . DEVELOPMENT IN SO0THERN ,fo -- Polo I PHLPIE0SOAD1 * ,oooil 080 Aboyog ,;ou MA AY I C.0,lo',, I' - ITe' . s,00ooI I 1 tT _ 77 ,.. 0Sig,, 6 B S Utgo 3 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ o~ PtO0OR V 6] 00oo 20 0 IOEES r CI Iooood I I C I ai~ ~ ~ ~~~~~ Poll Ponoo C 1o 0 I2 126Y 126 o> '~ I~9 01. *TnnoNJoooIV d. 2 L - Booob,Poool 1100 o - R~~~~~~~~~~~~~~~~~o<,00.. D-9.1I ', .',~~~Pooopooid lo- N~~~'[. Pni,-. City Negpo J. T.~~~~~~~~~p000IO C I' Coooyoo 0,0- - 01~~~~~~~~~~~~~wo MALAYSIA To~~~~~~~~~~~~~~~~~~~~~~, To. B~~~~~~~~oy ------ PHILIPPINES (SZOPAO TY 30 IILOIBETRSD a- 11~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. Cl Nol~~~~~~~~~~~~~~~~~~~~~~~~~ 0 0~~~~~, 110' iTT' 122' 120 1.00~~~~~~~~~~~~~~~~~~X