PLANTATIONS, DEFORESTATION AND FOREST SECTOR AID INTERVENTIONS: AN ANALYSIS OF JAPANESE PLANTATIONS AS FOREIGN DIRECT INVESTMENT IN CENTRAL LAO PDR Glenn Hunt Japanese Studies Department of International Studies Faculty of Arts Macquarie University November 2011 This thesis is presented for the degree of Masters of Philosophy TABLE OF CONTENTS ABSTRACT iv STATEMENT OF CANDIDATE v ACKNOWLEDGEMENTS vi LIST OF ABBREVIATIONS vii LIST OF FIGURES AND TABLES ix GENERAL INTRODUCTION 1 1 SETTING THE CASE 2 2 THESIS STRUCTURE 5 3 CONTEXTUALISING THE RESEARCH 7 4 METHODOLOGY 12 5 CONCLUSION 15 PART I 16 CHAPTER 1 : THE FORESTS OF LAOS 16 1 INTRODUCTION 17 2 FOREST RELATED LEGISLATION 26 3 CAUSES OF DEFORESTATION 36 4 THE POLITICS OF FORESTS IN RECENT LAO PDR HISTORY 45 5 CHAPTER SYNTHESIS 52 CHAPTER 2 : SHIFTING CULTIVATION IN LAOS 54 1 BACKGROUND OF SHIFTING CULTIVATION 55 2 SHIFTING CULTIVATION IN PRESENT DAY LAOS 66 3 PRESENT DAY POLICY ON SHIFTING CULTIVATION 76 4 THE LEGAL BASIS FOR SHIFTING CULTIVATION 80 5 LAO POLICIES AFFECTING SHIFTING CULTIVATION 86 6 CHAPTER SYNTHESIS 100 PART II 102 CHAPTER 3 : FOREIGN DIRECT INVESTMENT AS AID: AN INTRODUCTION TO OJI LPFL 102 1 FOREIGN DIRECT INVESTMENT AS AID 103 2 OJI LPFL 110 3 THE CONCESSION AGREEMENT 115 4 OJI LPFL SOCIAL CONTRIBUTION PROGRAMME 122 5 CHAPTER SYNTHESIS 128 CHAPTER 4 : VILLAGE LEVEL RESOURCE LOSS 130 1 INTRODUCTION 131 2 RESOURCE LOSS 134 3 TIMBER AND FOREST LOSSES 146 4 SUMMARY OF NTFP / FOREST LOSS 158 5 OTHER LANDS LOST 160 6 CHAPTER SYNTHESIS 164 ii CHAPTER 5 : THE MECHANICS OF COMMERCIAL LAND ACQUISITION 165 1 LAND ACQUISITION – A THEORECTICAL PERSPECTIVE 166 2 ZONING PLANTATION LAND 170 3 LAND ACQUISITION PROCESS AT THE VILLAGE LEVEL 181 4 CHAPTER SYNTHESIS 217 GENERAL CONCLUSION 220 1 OVERVIEW OF THE THESIS AND SITUTATION 221 2 DONOR AGENCIES AND THEIR ROLE IN FOREST MANAGEMENT AND FDI 223 3 DICSUSSION ON THE CASE OF OJI LPFL 225 4 SUMMARY AND CONCLUSIONS 228 BIBLIOGRAPHY 230 APPENDIX 244 iii ABSTRACT The ongoing deforestation of the world’s tropical forest is one of the key environmental issues confronting human civilization as we struggle to control various environmental challenges such as unprecedented species loss and climate change. South East Asia is no exception in this regard, and the Lao People’s Democratic Republic (Lao PDR) stands as one of the last remaining countries in mainland South East Asia with rich tropical forest cover. International Aid is one of the mechanisms that has attempted and largely failed over the last several decades to bring a halt to increasing levels of deforestation in Lao PDR. Japan is the largest donor of foreign aid to Lao PDR, and having firmly positioned itself as a global leader in environmental causes since the development of the Kyoto Protocol in 1997, Japan is also a leading donor in efforts to halt deforestation in Lao PDR. Yet international aid is at the same time pursuing economic growth as part of the development agenda for Lao PDR. A centrepiece of this development revolves around opening up Laos to Foreign Direct Investment. In this regard too, Japanese companies play a key role. This thesis examines the relationship between deforestation and foreign direct investment in Lao PDR through the lens glass of Japanese agri-business investment. In doing so, the thesis questions the rationale for forest sector interventions in Lao PDR. iv STATEMENT OF CANDIDATE v ACKNOWLEDGEMENTS This research would not have been possible without the help and assistance of many people. I would like to thank my supervisors Dr. Suzie Chow, Dr. Mio Bryce, and Dr. Chris Lyttleton, who have provided invaluable advice and guidance over the course of this research. Numerous people in Laos have also facilitated this research. Particularly I’d like to thank Mr Takayuki Namura and all the staff of Japan International Volunteer Centre for facilitating the internship that has allowed this research to take place. A special thank you must also go to Dr. Keith Barney who has always provided useful advice and with whom many hours of debate and conversation about the contents of this thesis were made. Thank you too to the other researchers and development professionals in Laos who have provided me with the inspiration to keep going with this work, particularly Dr. Mike Dwyer, Dr. Ian Baird, and Miles Kenny-Lazar. Many thanks also to Evelyn Sanders, Dr. Sarinda Singh, Mark Platten and Sarah Whittaker for the hours of proof reading and my partner Rodelita Molina who has been an important source of companionship and support over the course of this undertaking. Lastly I’d like to thank the many communities in Laos that have so willingly offered their time to answer my questions and share their stories and insights that provide the basis of this thesis. vi LIST OF ABBREVIATIONS ADB Asian Development Bank BGA Brierley, General Finance, Advanced Agro (Joint Venture Plantation Company) CPI Committee for Planning and Investment DAFO District Agriculture and Forestry Office DoF Department of Forestry DRIP See UNDRIP FAO Food and Agriculture Organisation FDI Foreign Direct Investment FOB Free On Board FPDP Forest Plantations for Development Project FS2020 Forest Strategy to the Year 2020 FSC Forest Stewardship Council FSIP Forest Strategy Implementation Project GIS Geographic Information Systems GMS Greater Mekong Subregion GoA Government of Australia GoL Government of Laos GoF Government of Finland GPS Global Positioning System GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit (German Society for Technical Cooperation) IFI International Financial Institution IMF International Monetary Fund INGO International Non Government Organisation JICA Japan International Cooperation Agency JVC Japan International Volunteer Centre LARP Lao Australian Reforestation Project LFA Land and Forest Allocation LPH Lao Plantations Holding LPFL Lao Plantation Forest Company Limited LPRP Lao Peoples Revolutionary Party LTP Land Titling Project LUP Land Use Planning LUPLA Land Use Planning and Land Allocation (aka LFA) MAF Ministry of Agriculture and Forestry MIC Ministry of Industry and Commerce NA National Assembly NAFES National Agriculture and Forestry Extension Service NAFRI National Agriculture and Forestry Research Institute NBCA National Biodiversity Conservation Area NEM New Economic Mechanism NGD National Geographic Database NGPES National Growth and Poverty Eradication Strategy NGO Non Government Organisation NLMA National Land Management Authority ODA Official Development Assistance PAFO Provincial Agriculture and Forestry Office vii PDR People’s Democratic Republic PLUP Participatory Land Use Planning PMO Prime Minister’s Office PPI Pulp and Paper International PRSP Poverty Reduction Strategy Paper PSC Pioneer Shifting Cultivation REDD Reducing Emissions from Deforestation and Forest Degradation RLG Royal Lao Government RSC Rotational Shifting Cultivation SCSD Shifting Cultivation Stabilisation Division SDC Swiss Agency for Development and Cooperation SIDA Swedish International Development Agency STEA Science Technology and Environment Agency UN United Nations UNGA United Nations General Assembly UNDRIP United Nations Declaration on the Rights of Indigenous People USD United States Dollar WB World Bank WFP World Food Program WRM World Rainforest Movement WWF World Wide Fund for Nature viii LIST OF FIGURES AND TABLES Figure I.1: Map of Lao PDR................................................................................................... 10 Figure I.2: Location of field target area and research villages ............................................... 11 Figure 1.1: Forest resource availability in Laos...................................................................... 18 Figure 1.2: Village dependency of NTFP in Laos .................................................................. 19 Figure 1.3: Villagers using Timber for house construction .................................................... 21 Figure 2.1: Young shifting cultivation fields Vang Vieng District, Vientiane Province........ 56 Figure 2.2: Land area required for long fallow systems ......................................................... 61 Figure 2.3: Shifting cultivation mapping over 4 year period.................................................. 69 Figure 2.4: Typical LUPLA map in Hinboun District............................................................ 87 Figure 3.1: Corporate structure of Oji LPFL ........................................................................ 114 Figure 3.2: Location of LPFL concession area showing routes to Vietnamese ports........... 116 Figure 3.3: Oji LPFL concession area .................................................................................. 116 Figure 3.4: Oji LPFL concession area map indicating areas planted and planting............... 119 Figure 4.1: Map of research villages in Hinboun District .................................................... 131 Figure 4.2 and 4.3: Bamboo sheeting woven by villagers is sold to traders......................... 139 Figure 4.4: Lao Kha Village and surrounds.......................................................................... 141 Figure 4.5 and 4.6: Photographs of cleared areas in Lao Luang Village circa 2000........... 149 Figure 4.7 and 4.8: Contractors clearing trees in Oji Plantation area................................... 150 Figure 4.9: Clearing of dense forest in Gataep Village ........................................................ 152 Figure 4.10: Clearing of forest in Gateap Village................................................................