The AF focuses on institutionalizing and mainstreaming the socio-economic development planning approach in the broader planning andbudget allocation processes in the project area. The PDO will, therefore, be revised to capture this important element of the AF. Project Development Objective for the AF is revised to read: The Project Development Objective (PDO) is to enhance the living standards of the Project Beneficiaries by improving: (i) their access to productive infrastructure; (ii) the productive and institutionalcapacity of local governments and communities; (iii) commune integrated investment planning and (iv) market linkages and business innovations.

The development objective of the Second Northern Mountains Poverty Reduction Project (NMPRP2) for Vietnam is to enhance the livelihood opportunities of the rural poor and ethnic minorities of disadvantaged communes and districts in the northern mountains. There are four components to the project. The first component of the project is district economic development. The objective of this component will be to provide investment support to the district Socio-Economic Development Plans (SEDPs), focusing on productive and economic infrastructure for increased agriculture productivity, direct local employment and income generation, and to facilitate diversification of the livelihoods of the rural poor, including, among others, business innovation. The second component of the project is commune development budget. This component will provide block grants to communes to finance small-scale sub-projects at village level for productive infrastructure and activities that are identified through participatory planning processes. This component builds on a key innovation and an area of particular success under the first NMPRP. The third component of the project is capacity building. The objective of this component will be to improve capacity of central, provincial, district, communes and villages levels to plan, manage, implement, supervise, and maintain productive infrastructure and livelihood improvement programs in their localities. The fourth component of the project is project management. This component is to ensure effective and efficient project management through facilitation of various implementation, coordination, communication, information sharing and learning, and quality enhancement efforts.