World Rainforest Movement

Plantations Development in Laos – The scramble for a piece of the Lao pie

Since 2006 the small landlocked South East Asian nation of Laos has seen an explosion of small, large and medium scale plantations, particularly rubber, eucalyptus and biofuel crops. This increase in industrial tree plantations has not come about by itself however, but has been promoted by IFI’s over the past decade as a means to increase Lao GDP. Foremost among the promoters of plantations development in Laos is the Asian Development Bank. Despite being one of the most corrupt countries in the world (Laos ranked 163 out of 171 in 2007 on transparency internationals Corruption Perceptions Index), the Asian Development Bank has been fervently promoting agro-forestry investment for many years. Their sordid history of plantations promotion is perhaps best known for the disastrous 11 million dollar loan project running from 1996 to 2003 with the express purpose of promoting plantations in Laos. That project alone has left large numbers of impoverished farmers with an unpayable debt, has nearly bankrupted the government run Agriculture Promotion Bank, and has facilitated large scale plantation operations in Laos.

Despite the lack of secure land tenure arrangements and a lack of capacity within the government to monitor and regulate plantations investment, the ADB had no qualms about actively promoting Laos as a destination for trans-national agro-forestry companies, inviting large agro-forestry investors to advertise Laos as an ideal plantations investment destination in the capital Vientiane in 2004. These promotion activities undertaken by the ADB appear to have worked, as in 2005 the Japanese pulp and paper giant Oji Paper became the first major multi-national to invest in plantations in Laos (acquiring a 50,000 hectare concession). Following the entry of Oji, investments in the Lao agro forestry sector have sky-rocketed. Figures from the Ministry of Planning and Investment show a doubling of the number of agro-forestry investments from 2004 to 2006 with a corresponding increase in total investment value from 75 million dollars in 2004 to 458 million dollars in 2006. While there are numerous small and medium sized plantation operations, particularly from neighbouring countries, at the moment large scale investors comprise Grassim-Birla Group of India who followed soon after Oji, securing a 50,000 hectare concession, and more recently Finnish pulp and paper giant Stora Enso has been working to sign a 35,000 hectare concession agreement to plant eucalyptus in Southern Laos. Finally, Oji Paper is pursuing a further 30,000 hectare concession in the south of the country.

Yet in a country where government salaries are only $30 a month, and capacities of government staff to monitor concessions are weak, natural resource loss and the disruption of traditional livelihoods has invariably accompanied plantations development. Reports by the German Development Agency GTZ reveal a near total lack of regulation of land concessions in Laos. Among the many damning findings of a 2006 GTZ report are that there is little to no understanding of the extent of concessions that have been issued across the country due largely to a decentralised and unregulated process of handing out land concessions. Not only are different government agencies able to grant land concessions, but both national, provincial and district branches of the government can allocate land for plantations development without consolidating this information in any one place. This aspect alone has led to a situation whereby concession areas allocated to different companies now overlap with one another meaning that plantation companies are now scrambling to secure their concession areas before they are lost to other companies.

Despite the extraordinary growth of agro-forestry investments in recent years, the process for allocating land for concessions remains woefully inadequate. Reports from some disgruntled government staff and from villagers themselves indicate that companies are in effect allowed to allocate themselves land by putting local government officials on the company pay role, with the express purpose of securing land for the company. And in a system where there are many more impoverished officials to replace those that can’t or won’t find land, it is not surprising that there are frequent reports of manipulation, exaggeration of benefits, and forced coercion of villages to hand over land to plantation companies.

While theoretically the previous forestry law stipulated that only “degraded land” could be used for plantations development, time and time again dense tropical forest has been logged to make way for plantations development (providing handy income from log sales at the same time). In Central Bolikhamxay Province several large scale logging operations disguised as palm oil and coconut oil plantations were reported by local development agencies, and independent researchers have documented the clearing of rich areas of primary and secondary forest for Oji Paper’s ‘flagship’ eucalypt plantations.

For the rural communities who remain largely dependent on forest resources for their livelihoods the picture is grim. Village
communities presently have no secure land tenure under the law, as all forest land is recognised as the property of the state. Plantations development have been used by the government of Laos for many years as a tool to physically disrupt shifting cultivation systems curtailing fallow periods and reducing food security. Furthermore, rural communities, despite often loosing hundreds of hectares of forest land to plantations often derive only very minimal benefit from plantations operations. Tree planting periods coincide with the rice planting season meaning that jobs often go to outside contract labourers. When work is available to villagers it is mostly irregular and mainly only accessible to a small number of villagers at any one time.

By May 2007 the government of Laos had lost control of the situation with land concessions and as more and more reports were
emerging (even in the usually placid state run media) of hardships faced by villagers in relation to plantations, the Prime Minister of Laos announced a nation-wide moratorium on land concessions. However, even this moratorium has failed to stem the tide of land concessions across the country, as it is either ignored by local elites, or circumvented through loopholes in the moratorium that allow companies who have already signed concession agreements to continue to fill those concessions, or by allowing multiple 100 ha concessions to be issued to the same company.

While there have been some recent positive movements by the Lao government and donor agencies to both acknowledge and address
the serious failings of plantations investment in Laos, only time will tell if the government of Laos is able to reign in run away plantations development and protect the natural resources so important to villagers and the stability of the country.

Report compiled by visiting WRM researchers during 2008