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...... 152 Figure 4.11: Timber at landing point in Fang Daeng Village...... 153 Figure 4.12: “Degraded Forest”...... 156 Figure 4.13 and 4.14: “Shocking” clearance of dense forest Thamii Village...... 157 Figure 4.15: Oji LPFL expatriate staff survey the forest clearing ...... 157

Figure 5.1: Land being zoned for plantations development by Oji LPFL...... 176 Figure 5.2: Land classifications within the concession area...... 177 Figure 5.3: Shifting cultivation in Hinboun District...... 180 Figure 5.4: GIS map with geo-referenced land use planning maps and research villages ... 186 Figure 5.5: Geo-referenced land use planning maps on Oji LPFL planting data ...... 187 Figure 5.6: Khon Gaeo / Thamii Village area...... 191 Figure 5.7: Land use map of Khon Gaeo Village and Thamii plantation...... 193 Figure 5.8: Houay Hua / Vangmone Village area map...... 196 Figure 5.9: Satellite imagery showing Oji LPFL plantation cleared areas...... 199 Figure 5.10: Map highlighting growth in LPFL plantings from 2007 to 2010...... 200 Figure 5.11: BGA era land use planning in Lao Kha Village,...... 202 Figure 5.12: Lao Kha Village geo-referenced LUP map with Oji LPFL plantings...... 203 Figure 5.13: Lao Kha Village LUP zoning overlayed with 2010 Oji LPFL plantations...... 204 Figure 5.14: Phonsaart Village land use planning signboard ...... 207 Figure 5.15: Oji LPFL plantation map in and around Phonsaart Village ...... 209 Figure 5.16: Phonsaart Village LUP map overlayed with Oji LPFL GIS data...... 210

Table 1.1: Trends in forest cover by province ...... 24 Table 1.2: Export of wood and wood products...... 39 Table 1.3: Value of timber exports as a percentage of total exports 2000-2004 ...... 41 Table 1.4: Wood processing factories 1980-2006 ...... 43

Table 2.1: Yields on consecutive year cropping...... 57 Table 2.2: Population densities and respective shares of the territory of Laos...... 97

Table 3.1: Investment trends in Lao agricultural sector ...... 106 Table 3.2: Major agro-forestry investments in Laos...... 107 Table 3.3: Projects under CPI consideration as of Feb 2007...... 107 Table 3.4: Self stated reasons for Oji Papers' investment in Laos...... 112 Table 3.5: Oji LPFL plan for plantations development ...... 117 Table 3.6: Oji LPFL social contribution projects and costs...... 125

Table 4.1: Primary research villages presented in research findings...... 133 Table 4.2: Secondary research villages presented in research findings...... 133 Table 4.3: Recorded loss of NTFP in research villages...... 136 Table 4.4: Data on recorded losses of trees ...... 148 Table 4.5: Oji LPFL data on shifting cultivation areas in research villages...... 161

Table 5.1: Lease survey implementation table ...... 171 Table 5.2: PAFO records of Oji LPFL village plantation areas ...... 172 Table 5.3: Analysis of land use planning maps and Oji LPFL concessions data ...... 188 Table 5.4: Forest and land use zones acquired for LPFL plantations...... 189 Table 5.5: Land and forest categorisations in Phonsaart Village...... 207

x FRAMING THE THESIS

GENERAL INTRODUCTION

Contents

1. Setting the Case...... 2 1.1. Rationale ...... 2

2. Thesis Structure ...... 5 2.1 Research Questions...... 5 2.2 Chapter Structure ...... 5

3. Contextualising the Research ...... 7 3.1 The Case Studies...... 7 3.2 The Research Area...... 8

4. Methodology...... 12

5. Conclusion ...... 15

1 1. Setting the Case 1.1. Rationale

In most countries of the humid and dry tropics, forests are being cleared or degraded at a rapid rate… A review of the status of conservation and development of the tropical forests was undertaken during the FAO/UNEP/UNESCO Expert Meeting held in Rome in January 1982. Since then a number of important fora and publications have continued to reflect the concern of the world community about the deterioration of the tropical forest cover and its adverse effect on sustaining balanced land use and the provision of goods and services on which many local communities, as well as society at large, depend. Tropical Forest Action Plan, (FAO, 1985).

Laos is a country where the majority of people make a living from subsistence farming and rely on forest resources for their livelihood. This country is facing deforestation and forest degradation caused by human factors, such as illegal logging practices and. excessive reliance on forest resources affected by overpopulation and poverty. The government of Laos has developed a national plan to reduce poverty through improvements in the forestry sector, and is currently developing ways to implement REDD plus as a measure to combat climate change. In order to support these efforts comprehensively, JICA has committed to the promotion of better forest management through the Forestry Strategy Implementation Promotion Project as well as the Participatory Land and Forest Management Project for Reducing Deforestation in Lao PDR.. JICA's Policy for Cooperation on Biodiversity Conservation (JICA, 2010)

The two above statements are twenty five years apart, yet represent a common thread of concern toward the protection of forests spaning a quarter of a century. Both statements recognise that forest loss is multifaceted. On the one hand, the protection of forests is a global environmental concern. On the other hand, the loss of tropical forests impacts communities that depend on tropical forests and the resources contained therein, for their survival.

Human industrial development has come at great cost to the environment through massive species decline and habitat destruction. The loss of the world’s tropical forests is a major continuing theme in discussions on environmental degradation. In the 1980’s global public attention was focused on the clearing of Amazonian rainforest (we all read about the large

2 number of football fields that were cleared every day in the Amazon basin). The Tropical Forest Action Plan (TFAP) from which the first quote above is taken was a major international attempt to halt the destruction of tropical forests. However, since the TFAP was launched the destruction of the world’s tropical forests has not only continued, but in the case of South East Asia the rate of deforestation has actually increased from an annual 0.83% between 1990-2000 to an annual 0.98% between 2000 - 2005 (FAO, 2006).

Today, in the age of climate change, tropical forests are recognised particularly for the important role they play in the sequestration of carbon dioxide from the atmosphere. This has come into sharp focus in the last decade, as carbon dioxide levels in the atmosphere have now surpassed levels that are considered safe (Hansen et. al., 2008). Controversial carbon trading mechanisms, such as Reduced Emissions from Deforestation and Forest Degradation (REDD), have been promoted as the latest mechanism by which to halt seemingly unstoppable forest decline in the developing world. In recent years, the issue of biodiversity loss has also come to the forefront of environmental concern. In response to the dramatic loss of biodiversity that has happened in the last century, 2010 was decreed the International Year of Biodiversity, and reminiscent perhaps of the TFAP, an International Convention on Biodiversity was negotiated in Nagoya, Japan in late 2010, in yet another international attempt to halt ongoing destruction of (among other things) the worlds Tropical Forests.

TFAP, the Rio Earth Summit, the Kyoto Protocol, and now REDD and REDD plus. There is no shortage of awareness, concern, promises, mechanisms nor money thrown at the problem of global deforestation. Yet deforestation continues unabated. Why is it that these efforts to halt global deforestation continue to fail? This research will examine this central question not from an international perspective but rather through a close analysis of forest dependent communities on the front line of the deforestation wave in mainland South East Asia. This research will examine the dynamics of the clash between tropical forests and international investment in one of the newly opened frontiers of forest lost, in the Lao People’s Democratic Republic (Lao PDR, also known as Laos).

This research examines the complicated dynamics of forests, deforestation, and the mechanisms of both “aid” intervention in forests and deforestation, through the eyeglass of a flagship agro-forestry (industrial tree plantation) Foreign Direct Investment (FDI) project in Laos. The project is a foreign direct investment from Japan and was the first multi-national

3 agri-business investor to establish operations in Laos. Perhaps a reader of this research would ask “Why research Japanese foreign direct investment, and why examine FDI in an examination of deforestation?”

Firstly, Japan is an important power in both environmental conservation efforts, (particularly in forest initiatives in Laos) and also a global economic powerhouse with multiple economic interests in the region. Beginning with the Kyoto Protocol in 1997, and more recently with the Convention on Biodiversity in Nagoya in late 2010, Japan is firmly positioned as an international promoter of global environmental initiatives. In addition, the Japanese government is the largest bilateral foreign aid donor to Laos, in 2007 providing over 50% of all bilateral aid to the country (McCarty and Julian, 2009). It is topical then to undertake an analysis of Japanese FDI to examine the relationship between Japanese investment and how that investment affects Japanese efforts to protect tropical forests and the associated biodiversity in Laos. To this end, the researcher has utilised his knowledge of Japan and Japanese language, in order to access various unpublished reports, attend Japanese language meetings, and interview various Japanese actors working in the forest sector in Laos.

Secondly, in recent years “land grabbing” has come to light as an issue of concern related to agri-business investments both around the world and in Laos (Cotula, Vermeulen, Leonard, and Keeley, 2009; Dwyer, 2011). In this context, agri-business investments are at the forefront of criticism in the appropriation of traditional community lands, including forests. This research examines the ways in which the forests and traditional lands of forest dependent communities are being appropriated for agri-business investments in Laos.

4 2. Thesis Structure

2.1 Research Questions

The broad rationale set out above can be contextualised into the follow research questions:

1. What are the strategies and foci of forestry sector aid and development to Laos? a) What or who is identified as the problem causing deforestation, and does this identification reflect the reality of deforestation in Laos? b) Who are the targets of such aid?

2. Why is forestry sector aid and development failing to stop deforestation in Laos?

These research questions set the theoretical framework upon which this thesis is based and upon the methodology laid out later in this chapter. The research questions also form the basis for the analysis of findings in later chapters.

2.2 Chapter Structure

This thesis is divided into two parts. In Part one, beginning with Chapter 1, I briefly introduce Laos in the context of forests and biodiversity, providing an overview of the main theme of the research data, which is the current situation in the forests of Laos and the impact on the people whose livelihoods are attached to those forests. After an introduction of the importance of forests, in rural livelihoods and the overall situation of forests in Laos, I then present an examination of forest related legislation, examining the forest tenure status of rural villagers in Laos. I then examine the causes of deforestation, through a careful analysis of both Lao government statistics and other data, followed by a summation of recent research into the socio-political context of forests in Laos.

Chapter 2 focuses on an in depth examination of the issue of shifting cultivation in the context of Laos. Shifting cultivation is a critical issue intrinsically connected to any discussions on forests in Laos. Beginning with a brief introduction to shifting cultivation and the varying discourse surrounding the agricultural practice I then undertake an in-depth

5 examination of shifting cultivation in Laos, and the various policies and legislation affecting shifting cultivation in the country.

Part II of the thesis presents the results of my field research conducted in Khammouane Province, and to a lesser extent, Bolikhamxay Province in central Laos. Chapter 3 examines the theory behind Foreign Direct Investment (FDI) and the discourse surrounding FDI and poverty alleviation, with the introduction to the tree plantation company at the centre of my case studies, Oji Paper, and its subsidiary in Laos, Oji Lao Plantations Forestry Limited (Oji LPFL). In introducing Oji LPFL I examine their agreement with the Government of Laos, the companies’ policies, their concession area and ongoing themes in their plantation operations in Laos.

Chapter 4 begins with an examination of the case studies presented in this research focusing on the level to which natural resource loss - including Non Timber Forest Products and Tree species – is taking place in Oji LPFL plantation operations. Different case studies are brought together from Hinboun and Pakkading districts to illustrate natural resource loss as a common theme in Oji LPFL plantations. I also examine how this resource loss is impacting both the target communities where plantations take place and also the surrounding communities.

Following this discussion on resource loss, Chapter 5 will examine the crucial topic of land acquisition in Oji LPFL plantations. Firstly, I will examine company’s policies related to the acquisition of land under the Oji LPFL project. After then looking at the company’s approaches to shifting cultivation and degraded land, I will present my field case studies and examine the actual implementation of land acquisition under the Oji LPFL project to show the way in which land is being acquired from communities for plantations development.

In the concluding chapter, I examine the results from the field case studies and address the main thesis questions.

6 3. Contextualising the Research This research was originally intended to examine Japanese forest sector aid projects in Laos, as the sole means of answering the research questions above. However, after undertaking research on aid projects north of the capital Vientiane and in Khammouane Province, the author was confronted with ongoing deforestation issues resulting from the recent implementation of a Foreign Direct Investment (FDI) project also located in Khammouane Province. The deforestation, land clearing and associated impacts that were taking place under this FDI project allowed the author to gain a unique first hand experience and insight into the mechanics of deforestation as it was happening. As such, the research focus moved away from a critique of particular forestry sector aid interventions, into an examination of FDI as a principal cause of land grabbing and associated deforestation.

The research examines the mechanics of deforestation through the microcosm of Foreign Direct Investment in the Lao plantation sector. To this extent, the research utilises multiple village level case studies to comment on the reasons behind deforestation, and to comment on the overall impact, effectiveness and mechanics of forestry aid projects that are attempting to halt deforestation in Laos. The utilisation of multiple case studies assists in drawing comparisons and similarities across different villages, in order to reach conclusions about the broader activities and mechanics of the FDI project under examination. Much of the information presented in this research has been obtained through both formal and informal interviews with adult villagers; however, I have also conducted various formal and informal interviews with NGO, bilateral and government stakeholders in these target areas, and also in the forestry sector in Laos as a whole.

3.1 The Case Studies Oji Lao Plantation Forests Limited

Oji LPFL is a publicly listed Japanese Pulp and Paper company, one of the biggest in the world, which conducts its own plantations around the world to supply raw materials for paper production. In early 2005, Oji Paper purchased all the shares of a previous joint venture plantation company, acquiring their pre-negotiated 50,000 hectares concession area agreement. Half of the concession area acquired by the company was located in Hinboun District of Khammouane Province, an area where I was already conducting research looking at the community forestry project run by a small Japanese NGO. While FDI is not commonly

7 considered under the paradigm of “foreign aid”, much of the discourse surrounding FDI and Oji Paper plantation project in Laos is similar to the discourse surrounding traditional foreign aid projects attempting to halt deforestation. Plantations, locally in Laos as well as internationally, particularly in Japan, are commonly promoted as a way to stop deforestation. Paper derived from planted forests is commonly marketed as a forest friendly alternative to paper derived from natural forest areas and is seen as helping to stop deforestation. In addition, foreign investment is commonly promoted in commentary on international aid as an “aid” solution. While this research focuses on Oji Paper’s plantation investment in Laos, it is, at the same time, a case study on the clash of interests between multi-national plantation projects and the small community forestry project run by an NGO in the same district.

3.2 The Research Area

Laos is located in the middle of mainland South East Asia. Surrounded by economic powerhouses like Thailand, Vietnam and China, it is a land locked mountainous country, where 80% of the population is involved in subsistence agriculture, combined with hunting and foraging in forests for their food requirements. The country was part of French Indochina and was occupied briefly by Japan during World War II. Following the end of World War II the French returned; however a strong independence movement grounded in Marxist-Leninist philosophy allied closely to the Vietnamese communist independence movement of the same time, eventually brought Laos into the Vietnam War. The war in Laos is often referred to as the secret war, as both Vietnam and the US secretly ran military operations in the country. The country is noted for being the most heavily bombed country of all time and that legacy is still being felt with unexploded ordinance still littered around the eastern part of the country. Following the US defeat in Vietnam, the Lao People’s Democratic Republic was proclaimed on the 2nd of December 1975. Since that time the country has been run under a single party communist government.

The secretive state began to open up in 1986 with the introduction of perestroika style market based reforms dubbed the New Economic Mechanisms (NEM). Since then the country has gradually opened itself to global markets and international trade. In line with these reforms, international aid has also been increasing to Laos. However, Laos is still considered a Least Developed Country (LDC), although it has, over the past decade, adopted an economic

8 growth based poverty alleviation strategy, which aims for the country to “graduate” from LDC status by 2020.

The economic growth model of development pursued by the Government of Laos (GoL) has resulted in dramatic changes over the last decade. A rapid increase in investment has brought tremendous wealth for a small minority of the elite, while in rural areas, this investment has brought with it increased conflict as the economic strategies pursued by the state clash with subsistence communities. This dissertation examines that clash through the lens of one particular FDI project.

Hinboun District in Khammouane Province, where the majority of the research presented in this thesis has been conducted, is a lowland area of Laos located approximately 270 km by road south of the capital Vientiane. Hinboun district is relatively integrated into local and international trade. The district is located adjacent to the Mekong River which acts as an international border between Thailand and Laos, and route 13, the main national north–south highway, cuts through Hinboun district. The district is predominantly populated by lowland Lao who are commonly engaged in wet paddy rice cultivation, except for communities along the Hinboun River who have had their wet season paddy fields rendered unusable due to aggravated flooding along the Hinboun River caused by a large Hydropower project. The communities presented in this research are all communities that are either located on or relatively close to route 13. Some communities presented in the case study are located along the Hinboun River, and are impacted by the hydropower scheme upstream. In these latter communities, villagers often conduct shifting cultivation agriculture systems because of repeated failed harvests in flooded paddy fields.

9 Figure I.1: Map of Lao PDR

Source: http://reliefweb.int/node/1836 Accessed 26 July, 2011

10 Figure I.2: Location of field target area and research villages

Pakkading District

Hinboun Hinboun District River

Thakhek Mekong District Thailand River

GIS map developed by author Data sourced from Lao National Geographic Centre supplemented with GPS data

11 4. Methodology The collection of data used in this case study has been obtained through a variety of different channels. In addition to published materials in both Japanese and English languages, research data for this case study has been obtained through open ended interviews with development professionals, Lao government officials, independent researchers, village residents as well as through simple observation of ongoing activities through numerous field visits. Finally, the author has gained valuable information from attendance at a number of public and private presentations made by Oji Paper to various sections of the Japanese development community in Vientiane between 2005 and 2007.

The collection of qualitative field data has proved to be the greatest methodological challenge in undertaking this research. In Laos there is no free access to village communities. Official research is typically tightly controlled by the state and often researchers must use government minders (commonly called counterparts). In dealing with politically sensitive issues, as is the nature of forestry, FDI and its impacts on villagers’ livelihoods, such ‘counterparts’ commonly inhibit the gathering of useful information. In this regard, I have worked closely with numerous development partners in order to facilitate free and open access to village communities.

In Khammouane Province, access to village communities was primarily conducted through my involvement with a Japanese Non-Government Organisation (NGO) working in that area. Through my research I arranged for an internship and later, a volunteer position with the Japan International Volunteer Centre (JVC). The organisation is a rural development based NGO, which has been working on community forestry projects in Khammouane Province since the early 1990’s. A number of the organisation’s target villages were located in Hinboun district, the same area in which Oji Paper had been granted prospecting rights as part of its land concession agreement with the GoL. Other sight visits were arranged through the Lao Luxemburg Project working in Pakkading District, north of Hinbourn District, and also through ongoing collaboration with Keith Barney who was conducting field research in Pak Veng Village in Hinboun District for his doctoral dissertation at York University in Toronto, Canada.

12 Immediately after acquiring the concession in 2005, Oji LFPL began rapidly expanding their operations in Hinboun district. In following the work of JVC in Hinboun District, it became clear that there were conflicts taking place between villagers and the company. Initially I was interested in Oji LPFL’s activities only in terms of the conflicts arising between JVC and its target villages as part of the later organisations efforts in the implementation of a rights based community forestry project in Khammouane Province. However, when several other opportunities arose to meet with villagers who had given permission for Oji Paper to undertake plantation activities on their land, the research became more and more focused on the investment of Oji Paper through their forestry project in Central Laos.

Given the desire for foreign investment in the country, and the direct and indirect interests of both upper and lower levels of the Lao bureaucracy in the plantation sector (in terms of employment, taxes, and reafforestation goals), researching what often amounts to conflict between a major multinational investment company and rural populations is not without significant difficulties, particularly as a foreign national. Gaining access to villagers in which the company was conducting, or hoping to conduct, plantation operations, can prove especially difficult, as evidenced by one Japanese freelance reporter who came to Laos investigating Oji Paper in late 2006. That reporter requested and was denied access by Oji Paper to visit and meet with villagers in the concession area where Oji Paper is conducting its plantation activities (Masano 2006, pers. comm., 8 December).

Due to these difficulties, initially I envisioned gaining access to village communities through target villages of JVC. However, the various target villages in which the NGO was conducting its community forestry project, only two villages were ever actually approached by the company and both these villages refused permission for the company to conduct plantation activities on their land (although these villages were able to provide useful narratives on the experience of neighbouring villages who had accepted Oji LPFL plantations). While the two JVC target villages offered some interesting insights into dealing with the company, in terms of actual plantation activities and the livelihood changes that accompany plantation development in rural communities, it was necessary to gain access to other villages outside of the NGO target villages.

Not wanting to go through company or government channels to gain access to villagers, for fear of compromising research results, I have had to rely on a number of different avenues in

13 order to obtain information on, and access to, other village communities on whose land Oji Papers' plantation projects are being conducted. Access to villages has been facilitated through development organisations/professionals, independent researchers, and sympathetic government officials. In addition, by means of interview, the above parties have provided useful anecdotal information based on their own communications with village communities. This methodological process, while not scientifically ideal, has allowed a largely unrestricted, and open approach to conducting field interviews. In all but one case interviews with villagers have been conducted alongside development organisations, and / or researchers in the village, who have been working closely with the villagers over an extended period of time and whom have the trust of villagers. This trust, combined with the fact that many villagers were eager to express their frustration over the company’s activities in relation to their livelihoods has facilitated the gathering of qualitative data directly from village communities.

This approach has allowed me to visit a total of seven different villages and speak directly with villagers from five of these villages. All but one of these villagers was located in Hinboun District in the North West of Khammouane Province, the other being in Pakkading district of South Western Bolikhamxay Province. In addition to these village visits, discussions with villagers and authorities working closely with other villagers and or the company in the concession area, has given me an understanding of the situation in a further four Oji villages through anecdotal information. This total of 11 villages represents only a small number of the multiple villages targeted for plantations by Oji Paper, nevertheless the attempt has been to draw conclusions about the overall operations by Oji Paper based on these results.

14 5. Conclusion This chapter has served as an introduction to this thesis. It has highlighted the issue of forests and forestry as an issue of international importance, and has established the link between forests and different mechanisms such as “aid” and “development”, which aims to preserve the world’s remaining forest resources. Various mechanisms have been designed over the last several decades in an attempt to halt global deforestation, yet these mechanisms have largely failed to stem the rate of deforestation around the world. This chapter also introduced the role of both Japan and Laos in the discussion of deforestation: Japan has positioned itself as a major partner for international environmental causes such as biodiversity and climate change, while Laos is a Least Developed Country with a tumultuous recent history trying to balance poverty alleviation with environmental protection.

This introduction has also provided a brief overview of the case studies that were the subject of this research. Research methodology was presented, and discussed briefly regarding the constraints of conducting field research in a highly restrictive and secretive public sphere, particularly when research topics involve sensitive political issues such as land alienation, corruption and illegal logging.

In summary, this chapter has provided a brief overview of the subject material of this dissertation. In Part I of this thesis, I endeavour to paint a more detailed picture of the full extent of forests and the forestry sector in Laos. Through the examination of Lao Forests in Chapter 1 and Shifting cultivation in Chapter 2 I hope to provide a detailed background, to the reader, of the situation of Lao Forests in order to facilitate a mature understanding of the case studies presented in Part II of this thesis.

15 PART I

CHAPTER ONE

THE FORESTS OF LAOS

Contents

1. Introduction...... 17 1.1 Village Utilisation of Land and Forest...... 18 1.1.1 Non Timber Forest Products...... 18 1.1.2 Shifting Cultivation or Rotational Upland Agriculture ...... 20 1.1.3 Grazing Lands...... 20 1.1.4 Timber Harvest ...... 21 1.2 State of the Nations Forests ...... 21 1.2.1 Concerns over the Quality of Data...... 22 1.2.2 Forest Cover...... 23

2 Forest Related Legislation...... 26 2.1 Definition of Forests ...... 26 2.2 Forest Tenure ...... 29 2.3 Degraded and Barren Forest ...... 32

3 Causes of Deforestation...... 36 3.1 Commercial Logging ...... 36 3.2 Infrastructure / Land Development based logging...... 38 3.3 Export of Timber...... 38 3.4 Domestic Wood Processing ...... 42 3.5 Household Use...... 44

4 The Politics of Forests in recent Lao history...... 45 4.1 Controversy and Land Grabbing...... 45 4.2 The NLMA and Plantations...... 47 4.3 The Land Concession Moratorium that Wasn’t...... 50

5 Chapter Synthesis ...... 52

16 1. Introduction Laos is an environmentally significant country in South East Asia. Described by the World Wide Fund for Nature (WWF) as a biodiversity hotspot (WWF 2008), the country retains many of its natural ecosystems; where many of Laos’ neighbours have already lost these ecosystems. Laos has suffered a very difficult recent history with colonialism, war, and a revolution that installed a secretive Marxist Leninist single party government into power in 1975. Compared with its neighbours, Laos has a relatively small population of approximately six million people, and until very recently it has been relatively cut off from the world, both physically and economically, with limited road infrastructure making access around the country extremely challenging. Laos has had very little integration into the global market economy. These factors have meant that clearing of natural forests for logging, and agri- business has been far less extensive in Laos than in many other South East Asian countries where global market forces have led to the expansion of logging and land intensive agribusiness (Dauvergne, 1997).

Laos is situated right in the middle of the Greater Mekong Subregion (GMS), which the WWF recognises as a unique biodiversity hotspot, containing 16 WWF “ecoregions”: a term that describes “critical landscapes of international biological importance” (WWF, 2008:2). Such is the biodiversity and relative isolation of the Mekong region that from 1997-2007, a total of 1,068 new species had been discovered (WWF, 2008). Much of this biodiversity lies in the natural forests that are still abundant in Laos. However, the last decade has seen increasing infrastructure linking Laos to the regional powerhouses of China, Vietnam and Thailand. With this increasing linkage, and resource depletion in neighbouring countries, the Forests of Laos, and the people whose livelihoods depend on them, are now under threat from a variety of external pressures such as increased logging to supply neighbouring countries with raw materials for furniture production (UNDP, 2006; EIA, 2008) and increasing land intensive agri-business investment. This loss of forest resources has a direct impact on rural communities who depend on forests for their livelihoods. Following is a brief description of the extent of, and the way in which, subsistence communities rely on forest resources.

17 Figure 1.3: Forest resource availability in Laos

Source: WFP (2004)

1.1 Village Utilisation of Land and Forest

80% of the population of Laos are classified as rural subsistence farmers. Depending on the proximity to markets these farmers often complement their subsistence based livelihoods with small scale trading in locally available resources or agricultural produce. As the map from the World Food Program (WFP), in Figures 1.1 and 1.2 indicate, rural communities have many forest resources available to them and are very often dependent on these natural resources. Benefits are derived from forests in a variety of different ways.

1.1.1 Non Timber Forest Products

Non-Timber Forest Products (NTFP) are perhaps one of the most important aspects of Lao forests in terms of the livelihoods of subsistence village communities. The definition of Non- Timber Forest Products (NTFP) is complicated by the lack of a universally accepted

18 definition of what NTFP consist (Belcher, 2003). However, for the purpose of this study, unless otherwise stated, use is made of De beer and McDermott’s 1989 definition of NTFP;

The term ‘Non-Timber Forest Products’ (NTFP’s) encompasses all biological materials other than timber, which are extracted from forests for human use. (De beer & McDermott, 1989)

NTFP’s are utilised by communities for a variety of purposes, for example for food, traditional medicines, housing materials, and handicrafts among other uses. Although there has been much research in Laos, on NTFP and the importance they provide to rural communities, this work is mostly focused at the individual village level, and does not provide an overall national picture. Foppes and Ketphanh (2000) estimated that NTFP collection equates to approximately $280 per family per year in value, of which $200 is forest foods, $40 is firewood, and the other $40 for NTFP’s such as medicine and handicrafts.

Figure 1.4: Village dependency of NTFP in Laos

Source: WFP (2004)

19 Edible NTFP provide rural communities with an essential source of vitamins, minerals and proteins, and also act as a safety net in years when rice harvests are low. Villagers collect many different plant species. Saotouki and Vongviengkham (2005) provide a useful glimpse of villager dependency on NTFP, citing 128 different species of forest vegetables collected by the villagers of two neighbouring villages in Khammouane Province. In Foppes and Ketphanh’s (2000) study, the local villagers considered edible bamboo shoots, fish, vegetables, and wildlife as the most important food products from the forest. The importance of these forest products cannot be understated. Foppes (2008) states that second to rice NTFP are an essential component in the makeup of village dietary requirement. In a study in Salavan Province in Southern Laos, Foppes found that forest foods amounted to 61% and 70% of total consumption of all foods other than rice (Ibid, p.5). In addition, there are many edible and non edible NTFP that are collected by villagers in Laos that are sold to generate cash income (Saotouki & Vongviengkham, 2005; Baird & Bounphasy, No year). Foppes & Ketphanh record that up to 50% of the cash income of subsistence villagers is derived from NTFP (Foppes & Ketphanh, 2000).

1.1.2 Shifting Cultivation or Rotational Upland Agriculture

Rural villagers in Laos are commonly rice farmers. Shifting Cultivation is one of the two principal methods of rice cultivation practised in Laos (the other being wet paddy fields). Shifting cultivation is often practised in the more mountainous areas of Laos, where there is insufficient flat land available for rice paddy production. Due to the complex nature of the agricultural system, and the discourse surrounding that system, shifting cultivation is discussed in depth in the following chapter. For this chapter however, it should be noted that shifting cultivation is a traditional agro-forestry production system that combines rotating wet season rice cultivation with forest fallow systems and incorporates the collection of NTFP, livestock grazing in areas of fallow forest, and as such is an important part of villagers’ use of forest.

1.1.3 Grazing Lands

Villagers often keep livestock, such as water buffalo or cattle, which can be sold to traders if villagers are in need of cash. Rather than keep these livestock penned, subsistence villagers in Laos commonly release animals into secondary forest areas to graze, particularly in forest

20 areas that are part of the agro-forestry cycle of shifting cultivation. After an area has been utilised for upland rice production it is then left in fallow allowing the forest to regenerate. However, large areas of low density secondary forest left to fallow create an ideal area for the grazing of livestock.

1.1.4 Timber Harvest

Villagers also use their forest areas for the harvesting of trees for construction purposes for all manner of buildings, principally houses, but also for rice stores, temples and schools. The extent of village level harvest of timber is, in theory, regulated by law. However, village communities are able to determine their own management plans for timber harvesting. With little to no monitoring of village logging by government agencies, communities are often left to log timber for their own consumption as they see fit.

Figure 1.5: Villagers using Timber for house construction

Source: Photo taken by K. Barney, 2006

1.2 State of the Nations Forests

While the livelihoods of village communities are largely dependent on forests and the resources contained there-in, forests also provide various benefits to the State. Apart from the various environmental services that forests provide, such as biodiversity value through preservation of plant and animal habitats, and carbon sequestration, Lao forests contain various high value timber species which the State extracts to raise revenue. Additionally,

21 Forest areas provide watershed protection to stop soil erosion and increase underground water aquifers. More recently, with the world facing issues of climate change and an increasingly strong push to halt deforestation, forests can now potentially provide the State with income in the form of carbon trading mechanisms such as Reducing Emissions from Deforestation and Forest Degradation or REDD (AIPP, FPP, IWGIA and Tebtebba, 2010). Given these benefits to the State, it is worth examining the state of the forests of Laos, and the interplay between various State and community needs for forest resources.

1.2.1 Concerns over the Quality of Data

Examination of the current state of Lao forests necessitates that a caveat be raised in terms of Laos official forest data. Forests and deforestation are highly political issues in any country, and more so in forest rich developing countries where poverty and extraordinarily large stands of high value timber species, combined with high market demand in foreign countries for such timber, typically lead to large scale corruption in the forestry sector and long and complex networks of patronage (Dauvaugne, 1997; Baird, 2010). Baird (2010) writes that high levels of patronage and rent seeking within the timber commodity chain, and within the Lao government, facilitate unsustainable logging practices. Hence, any attempt to grasp the full situation relating to the forests of Laos is fraught with difficulties. A common theme in literature on Lao Forestry issues is often the references to the lack of, or intrinsically weak, data and statistics in relation to the forestry sector (GoL, 1989; MAF, 1999; World Bank, SIDA and Government of Finland, 2001). In the new century it would appear that nothing has changed. A 2006 internal Department of Forestry (DoF) report, commissioned under the Forest Strategy Implementation Project (FSIP), on the monitoring of forestry sector performance in Laos is highly critical of forestry-related data. The report, called the Forestry Sector Indicators Report, notes that most data for monitoring the implementation of government plans in the forestry sector is obtained through the provincial offices of the DoF, and the report notes in no uncertain terms that the "Provinces tend to report in accordance with the plans, targets or quotas, and it is difficult for [central level] DoF to grasp figures which reflects (sic) the actual situation" (Sugimoto, 2006:pp.1-2).

Capacity restraints that exist at all levels of the DoF also hinder the understanding of the overall state of Lao forests. The report notes the difficulty in obtaining any information from provincial branches of the DoF due to both insufficient budget and a lack of recognition of

22 necessity, as well as inadequate data collection systems (Sugimoto, 2006). Management of data is noted as a hindrance, citing the "scattered" nature of data, where information is not kept in central locations but often kept personally by individuals in their desk, or in case of electronic formats on a single individuals’ computer, without any backup or installation of virus software (Ibid.).

The 2006 and other subsequent Forestry Sector Indicator Reports are not the only reports to highlight the lack of management of Lao forests, or forest related sectors. In recent years, Laos has seen a rapid increase in agro-forestry related Land concessions in the form of Foreign Direct Investment (FDI) and similar comments have been made as to the Government of Laos’ (GoL) management of this FDI. A comprehensive study into land concessions and land leases by the German Aid Agency GTZ found a complete lack of management of agri-business investments in the country (Schumann et al., 2006). In a similar vein, Baird also cites the lack of proper forest surveying on the ground as an impediment to achieving long term sustainable timber harvesting of Lao forests (Baird, 2010:p.19).

As with many of the commentaries on Lao forestry over the years, the Forestry Sector Indicators reports also make recommendations for more detailed data on shifting cultivation, tree harvesting, and the utilisation of NTFP at the village level. It appears then, that after two decades of international support to the Lao Forest sector, data concerning the forest situation in Laos remains both lacking and/or weak. Throughout this thesis, I have tried to ensure that data and statistics are from the most reliable sources. However, due to the general lack of overall data on Lao forestry any data should be viewed with a degree of caution, and I have made further reference to this in appropriate sections.

1.2.2 Forest Cover

While this chapter does not attempt to gauge the extent of deforestation in Laos, it is still useful for the purposes of the discussion to highlight overall trends in deforestation in the country. There are presently at least two separate definitions of 'forest' existing in Laos today (see 2.1 below). When reference is made to “the national forest coverage”, 'forest' is typically defined as areas having at least 20% canopy cover. Since 1980 satellite imagery and aerial reconnaissance has been used to map forest cover using this standard. While the accuracy of determining forest cover from satellite is not in itself free from criticism (Robbins, 2001),

23 measurements taken around the years of 1982, 1992, and 2002 show the overall trend in forest cover over the past 3 decades. These surveys show that over the past half a century, forest cover in Laos has seen an increasing rate of forest decline: from an estimated 17 million hectares, 70% of the country’s forests, in the 1940s to 64% in the 1960s, to 49.1% in 1982, 47.2% in 1992 and 41.5% in 2002; 2002 being the most recent survey (MAF, 2005). While significant areas of forest in Laos were destroyed as a result of bombing along the Ho Chi Min trail (which ran inside Laos) during the Vietnamese-American War, much of present day deforestation is attributed to logging and shifting cultivation farming practices. To what extent these activities result in deforestation, is further discussed below and in proceeding chapters. However, as the data in Table 1.1 reveals, the overall picture of forest cover indicates a growing trend to deforestation in all but the most remote provinces.

Table 1.1: Trends in forest cover by province Province 1982 1992 2002 Bolikhamxay (C) 68.4 65.9 61.4 Savanaket (S) 56.7 55.5 56.5 Saravane (S) 55.6 54.4 54.8 Champasak (S) 62.7 61.5 54 Khammouane (S) 62.1 59.5 54 Sekong (S) 55.5 54.3 53 Attapu (S) 68.1 66.9 49.2 Bokeo (N) - - 44.3 Xaysomboun (C) - - 39.8 Xiengkhuang (N) - - 38.7 Xayaboury (C) 44.3 42.2 34.9 Luang Namtha (N) - - 32.9 Key: Oudomxay (N) - - 30.7 N=north Houaphanh (N) 38.1 36.1 29.7 C=central Vientiane Province (C) - - 24.3 S=south Phongsaly (N) 43.8 41.7 23.8 Vientiane Capital (C) 35.1 32.5 22.2 Luang Prabang (N) 24.2 22.2 12.8 Source: MAF/DoF (2005), Report on the Assessment of Forest Cover and Land Use during 1992-2002, (cited in Sugimoto, 2006:14)

Both Sugimoto (2006:15) and MAF (2005:16) acknowledge that national rates of deforestation have actually increased from 1992 to 2002 when compared with previous decades. In an attempt to halt this increasing trend of deforestation, several bilateral aid agencies, most notably Swedish, Japanese and more recently German, have been actively involved in interventions in the Lao forest sector. The GoL adopted their first Forest Law in

24 1997, and in 2001 introduced a second logging ban1. Furthermore, since 1993 the GoL has implemented a network of 20 protected forest areas (National Biodiversity Conservation Areas [NBCA]) covering 3 million hectares as a means to conserve high value forest areas. At the local level several forestry intervention projects in community forestry have been ongoing around the country, including various community forest intervention projects by the World Bank. Despite increasing amounts of donor assistance, deforestation continues unabated, and is recognised by the GoL as increasing (MAF, 2005; Sugimoto, 2006). A sure indicator of the increase in timber extraction is the rapid increase in wood processing factories. These factories, (non furniture manufactures) have increased from 182 in 2001 to 261 in 2005/6 (DoF, 2007:p.45). With the increase in the number of processing factories, comes an increase in demand for timber, and a corresponding increase in illegal logging. While Baird (2010) writes that the central government is attempting to close various loopholes allowing unsustainable and illegal logging practices, various community forestry projects are having difficulties conserving community forests against outside forces intent on their exploitation (Johnson, 2006; Hodgdon, 2006, 2007; Hunt, 2006; JVC, 2011). Reports indicate that illegal logging continues to occur inside NBCA's (World Bank et al., 2001; Schipani, 2006; Baird, 2010).

Despite many attempts at reform in the Lao Forestry sector, a 2001 World Bank report described the sector as being in "disarray", stating that "undisciplined exploitation" was already exerting pressure on NBCA’s and documented the "continued and accelerating quantitative and qualitative deterioration" of Lao forest resources (World Bank et al., 2001). In the words of one development worker who resigned in frustration after running a community forestry project which did not have the support of local government authorities: "the term 'forestry' cannot aptly be used to describe the state of management in most Lao forests; it is better termed 'timber mining.'" (Hodgdon, 2006:4)

1 The first logging ban implemented in 1991 actually resulted in a net increase in deforestation rates (MAF, 2005:4)

25 2 Forest Related Legislation Forests in Laos are legislated under the 1996 Forestry Law and the 1997 Land Law (amended in 2003). The 1996 Forestry Law was the first forest law in post revolutionary Laos, but it followed very closely the Prime Ministerial (PM) Decree 169, issued in 1993 governing Forests. The Forest Law underwent a major revision in 2007 after this chapter had already been in draft format. As my research was conducted at a time when the 2003 amended Land Law was in force I have kept my original analysis of the Forest law in place as this was the governing legislation at the time. While many of the tenets of the old Forestry Law were very similar in the revised 2007 Forest Law, there are nevertheless some significant changes in legislative thinking in the new Forest Law, and where applicable I have tried to give a brief summary of the status of the new Forest Law circa 2007.

2.1 Definition of Forests The history of the definition of forests under Lao law is interesting partly in terms of the way in which forest lands are defined, and the evolution of this change in definition. The 1993 PM Decree 169 defined forests as non-agricultural areas under the management of the Ministry of Agriculture and Forestry (MAF).

Forest land is defined as all areas under the management of the Ministry of Agriculture and Forestry, whether covered with forests or not, but which is not used for, or defined as, permanent agricultural land.

This definition of Forest in terms of State management, continued into the 1996 Forest Law, where it states;

Forests lands are all parcels of land which do or do not have forest coverage which the State has determined are forest lands. (Art. 4)

In the 2007 Forest Law, Article 3 lists the many definitions of common terminology used in the forest law. Under this article, “Forestlands” are described as;

…all land plots with or without forest cover, which are determined by the state as forestlands.

26 The common themes are that 1) Forest is not necessarily an area that has trees (in fact it may have no forest cover, that is trees, at all), and 2) That the State ultimately has the complete authority to determine what is and isn’t forest.

The first point is perhaps a practical approach to forest lands, in that rotational shifting cultivation agriculture and the accompanying fallow cycle’s, means that forests in Laos are not necessarily a static entity, but rather can change over time. The second point, perhaps fits the one party rule of Laos which ensures that the State retains total control of all institutions (Stuart-Fox, 2006). This leads into the broader and more important discussion of forest tenure discussed below.

While the above definitions seem all encompassing, they reflect the top down decision making processes of the Lao state. Of course, when determining the 'forest cover' of the country a more quantifiable definition is required, and as such a very different definition is used. In the context of forest cover, "forest" is defined as an area having more than 20% canopy cover (MAF, 2005). Under the 1996 Forest Law, there were five national forest categories for the purpose of preservation and development. However, the 2007 Forest Law has seen this number reduced to three, namely; Protection Forests, Conservation Forests and Production Forests. While these forest categorisations are supposed to dictate which forests are protected and utilised, the categorisation process is problematic for a number of reasons.

Firstly, there is substantial overlap of forest categorisation. This is because forest classification takes place at both national, provincial, district and village administrative levels, creating a layering effect; whereby different provincial, district and village level land classifications exist inside one another and inside nationally classified areas. The three forest types all exist at national and provincial levels, and are demarcated on large scale maps in blocks that contain other land categories as well. At the village level there are various other different categorisations including “degraded forest”, “future agriculture land”, “regeneration forest” and “sacred forest” to name but a few. While national level data exists on forest areas designated under national categories, there is no national data on village level forest categories, as these categories are never reported to higher levels of Agriculture and Forestry Offices.

27 In the 1996 Forestry law, there were two other forest categories, namely; regeneration forest and degraded forest. The concept of degraded forest was (and still is) problematic, because it allows for lands to be appropriated for plantation development under article 13 of the 1996 Law, and articles 72-75 of the 2007 Forest Law. Previously the definitions under the forest law were quite ambiguous and did not take into account the continually evolving nature of forest in various agro-forestry systems like shifting cultivation. The ambiguity of forest definitions under the law, particularly relating to degraded forest has created numerous problems in terms of large scale deforestation through inappropriate designation by forest departments. This will be examined further in subsequent chapters. Possibly in an attempt to clarify the various legal ambiguities of forest types, the Ministry of Agriculture and Forestry published, in 2005, a two page Annex in its Forest Strategy to 2020, in which, there was an attempt to clarify forest areas with detailed definitions of the different types of land and forest. Within these new definitions there are eleven land and forest areas. This was further backed up in the 2007 Forest Law with almost three pages of forest category definitions listed at the beginning of the law.

Under the definitions listed in the FS 2020 and the 2007 Forest Law there are a couple of important points that should be noted. Current forest is described as including both natural forest and plantation forest, and is referred to land with a tree canopy cover of more than 20% and area of more than 0.5 hectares, with trees able to reach a minimum height of 5 meters (MAF, 2005). In effect this definition means that both plantation and natural forest can be counted as forest under the law. While this definition is largely inline with the FAO definition of Forest, the definition has important ramifications for national reafforestation strategies, meaning that planted forests now contribute to national forest cover. This will be discussed more in later chapters.

Lastly, the classification of forest areas is problematic because these classifications are not updated regularly enough, if at all, to account for changes in forest land use. National level forest classifications have not taken into account population increase, and rapid change in land use (MAF, 2005:12). Village forest classifications under land and forest allocation zonings, conducted at the village level, are not updated to reflect the changing forest ecology from extensive agro-forestry production systems, (such as that which occurs under shifting cultivation), to sedentary livelihood scenarios that are promoted by GoL.

28 2.2 Forest Tenure

As shown in Section 1 above, subsistence farmers have a high degree of dependency on forest derived resources. As such, forest tenure is an important aspect in maintaining the health and wellbeing of rural farmers. Yet, as we have observed, the State also has large interests in maintaining its access to forest lands. The question of “who owns the forests” is never clear in countries that have large (often indigenous) populations who depend extensively on forest resources. The fact that the Declaration on the Rights of Indigenous People took twenty five years to be adopted by the General Assembly of the United Nations is testament to the ongoing conflict between indigenous forest dwelling / forest dependent peoples with their historic connection to forest lands on the one hand, and the desire of National governments to maintain ultimate control of all natural resources within their borders.

Mann and Luangkhot (2008) write of the clear concepts of communal land systems incorporated into upland agricultural societies in Laos, particularly with ethnic minority groups. However, as in many countries, essentially all forest land remains the property of the State, and communal land systems do not exist under legislative framework (Mann & Luangkhot, 2008). The first Forestry Law enacted in 1996 maintained that all natural forest and forest lands are the property of the national community, which is represented by the State (Art.5). A similar phrase has been maintained into the 2007 forestry law. Article 4 of the Forestry Law 2007 states;

Natural forest and forestland is the property of the national community and (sic) the State manages through centralization and unity through out the country. (GoL, 2007)

The above article has profound implications for forests, community forestry and forestry sector intervention in Laos. In an article describing the experiences of a WWF project in Southern Laos, Hodgdon (2006) describes the implications of this ideal regarding community participation in village forestry (in this case in terms of villagers deriving revenue from timber sales). The project attempted to implement Participatory Sustainable Forest Management (PSFM), whereby villagers sustainably manage forests, specifically timber resources and derive benefit from their sale. The article provides an interesting experience of

29 the project where government partners actually use the forest law to inform the project that it is going against the spirit of the Lao law, and the above article is provided as proof. Hodgdon sums up the projects experience with community forestry as follows:

Core ideals central to the success of community forestry – ideals like democracy and transparency are values that are not commonly held by those with political power in the system that dominates in Laos. Laos is not a democracy. It is a single-party, authoritarian state, where all decision-making authority is concentrated with the Communist Party, from the centre all the way down to the village level. The idea that villagers should have decision- making power over a valuable resource like timber, and that they should be given a significant share of the profits, is anathema to the dominant political culture in Laos. Simply put, the spirit of the PSFM legislation runs counter to the values that dominate Lao politics. (Hodgdon, 2006: p.44)

While the aims of the WWF project were to give villagers increased benefit from timber sales as a way of managing forests, it is perhaps not so surprising given that the Lao government has traditionally benefited from timber sales and or royalties. However, the situation with WWF is interesting in that it shows very clearly where ultimate forest tenure lies.

That isn’t to say that villagers have no rights at all over forest resources. Article 5 of the Forestry Law (1996) states that

Individuals and organization shall have the right to possess and use any tree, natural forest and forest land provided only that (they) have received approval from the relevant authorized agency.

Similarly, the 2007 Forestry Law gives villagers the rights to customary utilisation. Article 42 states that villagers are allowed customary use of forest so long as it has been practiced in accordance with laws and regulations (Art.42). While villagers are given rights under the law to use the forest resources (that they have always used), the situation with forest tenure is such that the government of Laos has complete legal tenure over forest lands, and villagers have almost none. What little tenure rights villagers do have, lies in the fact that village headmen/women are representatives of the government at the village level. In response to

30 ongoing loss of traditional village lands that have been taking place in Laos in recent years, the MAF printed a new policy manual for land and forest zoning in which it explicitly recognises villagers’ right to refuse land concessions:

… villagers retain the right to refuse the allocation of village lands for plantation purposes. (MAF & NLMA, 2010:104)

As the headman or woman is a representative of the Lao government at the village level, if the headman refuses to formally agree to exploitation of forests within the village boundaries, then in effect this represents a Lao government official refusing to agree to the exploitation. While the above policy manual does clearly state that the village has the right to refuse land concessions, information in later chapters will show that the ultimate power of this single figure to adjudicate on whether a village will accept a land concession on their land, this is largely dependent on individual headman’s personal feelings towards representation of the broader community and their ability to effectively resist pressure from upper levels of government, to agree to land concessions and / or to refuse any personal reward that may be offered to them in order to facilitate the land concession.

As a result of this situation, in recent years the weak tenure framework for villagers has combined with an increase in investment in agribusiness, combined with various logging interests, and a general lack of oversight and transparency has resulted in the loss of villager’s lands to various agro-forestry investments. Exactly how this happens will be discussed in proceeding chapters. However, one of the results of the recent large scale land alienation of rural communities has been a growing awareness at various levels that there is a need for greater tenure for villagers over their traditional forests and natural resources.

In this regard, in 2007 a minor ministerial instruction (No.564/NLMA) was developed by the National Land Management Authority that redefined three categories of land: “State Land”, “Private Land” and importantly “Communal Land”. Communal Land is identified as;

Land of cooperatives, collective organizations, village communal land use in common by the community of persons, the various ethnic groups in the villages, the collective land comprises: land that the population had allocated to households for use for agricultural production during the season with nobody

31 being the owner of the use right of the land, the forest for use, the production forest, cemeteries, sacred forests. Land where rituals are held, land set for cattle raising and other lands that have the characteristics to be collectively used of the village. (Art. 4.11 NLMA, 2007)

The statute is referring to communal land in the context of land title. The article goes on to state that any communal land title would not be able to be used for land concession, or sold or leased in any way. This is a relatively new concept in Laos, as it would appear that there is a much stronger right of tenure towards villagers. This concept of communal title has now been incorporated into village level land use planning programmes2. However, as of writing (early 2011) there was yet no clear delineation on how communal land titles should be issued and no issuance of communal land titles across forest areas anywhere in the country. Indeed as Dixon and Lunnay (2007:3) write, communal rights have never been accepted by the GoL, and it would appear that the large scale issuance of communal titles is still a long way off.

2.3 Degraded and Barren Forest

An important concept in Lao legislation is the concept of “degraded land / forest” or “barren land / forest”. Both the Land Law and the Forestry Law’s of 2007 and 1996 refer to the concept of degraded or barren forest, a concept of particular relevance to this study, as it has a unique relationship with plantation development, and thereby, deforestation and land alienation. Article 21 of the 1996 Forestry Law defines degraded forest as;

…forests which have been heavily damaged, i.e.: the land area has no forest [coverage] or the area is defoliated

While the 1996 Forest Law included degraded forest as a national forest category, the 2007 Forest Law has removed degraded forest from the list of national forest categories. However, the concept is retained as a general term in three terminology definitions, as described in Article 3 of the 2007 Forest Law.

2 Land Use Planning discussed in the following chapter

32 Degraded forest are the forest areas that have been heavily damaged such as land without forest or barren forestland, which are allocated for tree replanting, agriculture-tree products, permanent animal husbandry areas or for using land for other purposes in accordance with socio-economic development plans.

Degraded Forestland are the forestland areas where forests have been heavily and continually damaged and degraded causing the loss of balance in organic matter, which may not be able to regenerate naturally or become a rich forest again. Typical species of plants and trees growing in this area are: Alang alang (Imperata cylindrica), May Tiou (Cratoxylon sp.), small bamboo, broom grass (Thysanolaena maxima) or other various species.

Barren Forestland are the forestland areas without trees caused by natural or human destruction.

The reason degraded land is of such importance to this discussion is because the state retains the right to grant such land to individuals and corporations as part of “forest rehabilitation”. Under the 1996 Forest Law, Articles 13 and 50 gave the State this power. Article 13 stipulates that the State is able to assign degraded forest land to both individuals and organisations for the purpose of planting forests, while Article 50 stipulates that this assignment is at the discretion of an unnamed 'agency', presumably the Agriculture and Forest Offices located in provinces and districts.

Forestry Law Article 13 The State assigns rights to the use of degraded forest lands or defoliated lands to individuals and organizations according to their labour and financial capacity to plant and rehabilitate forests

Forestry Law Article 50 Assignment is the decision of the competent agency to assign the forest and forest land to the individuals 85% and organization for the possession and long term use

33 If we take "organisation" here to mean company and "plant and rehabilitate" to mean grow tree plantations, then these two articles essentially allow the state to assign "degraded forest land" to companies for the purpose of long term plantation development.

In the 2007 Forestry Law, Articles 72-75 determine the rights of different administrative levels of government to allocate “degraded forestland” and “barren forestland” for regeneration purposes, including the planting of industrial tree plantations. However, it should be noted, that in a significant change from the 1996 Forest Law: “fallow forest” now exists as a separate entity from degraded forest and baron forest. Fallow forests are areas of land or forest that have been used by shifting cultivators (see next chapter), where, following the harvesting of agricultural goods, these lands are left to fallow: a period where the forest can regenerate. This does represent a major change in the way degraded forest is allocated.

However, under the 1997 Land Law, Article 21 stipulates the extent of degraded land that can be assigned by the state. In the case of individuals this is three ha, while for organisations the limitations on approval for areas of forest land are only limited by the production capacity of the organisation.

Land Law Article 21; The State authorizes individuals and families to use forest lands which have been defoliated or degraded forests… not to exceed three (3) hectares per one labourer in a family… For organizations, approval of forest land area for use shall be subject to the actual production capacity.

In other words, if you are an international plantation company wanting to undertake plantations on degraded lands, the State can authorise you to have as much land as it is the capacity of your company to take (Foreign investment legislation dictates that the upper limit of plantation concession is 50,000 ha). This would appear to concur with data from the Committee for Planing and Investment (CPI), which shows significantly larger areas of land granted to the large pulp and paper manufactures of Japanese Oji Paper and Indian Grassim Birla (50,000 hectares each) than to smaller Vietnamese producers (<10,000 ha) (CPI, 2007). The replanting of forest is in line with the stated development goals of the Lao state which specifically promote plantations development as part of the economic growth strategy of the 2004 National Growth and Poverty Eradication Strategy (NGPES). Furthermore these

34 policies are supported by property laws guaranteeing the rights of property ownership, transfer and inheritance to individuals and organisations (author’s italics) that plant forests by their own means (GoL, 2007:Art.5). The Lao State is hoping to reverse the rate of deforestation (recorded at 41.5% forest cover in 2000 (MAF, 2005)), and to increase the rate of forest cover to 60% (previously 70%) of land area by 2020. They aim to do this through, among other things, industrial tree plantations (GoL, 2004). It should be noted that many international civil society actors have pointed out that there are vast differences between natural and monoculture plantation forest, particularly in terms of the food security of forest dependent peoples (WRM, 2010). However, Lao and international definitions of forest both include industrial tree plantations as 'forest'.3 As noted above, the Lao State has the right to designate degraded forest land for reforestation/plantation development as explicitly stated under Article 13 of the 1996 Forestry Law. Until the introduction of the Forest Law 2007, the definition of degraded land has been simplistic and open to interpretation about what exactly qualifies as degraded land. This has led to the labelling of dense forest as “degraded” (Barney, 2007).

It is necessary to examine further the concept of 'degraded forest' in the context of tree plantations and traditional forms of upland agriculture, known as shifting cultivation, and what this means for “development” in the forestry sector. This will be dealt with in the following chapter.

3 Granda P. 2006 writes that the definition process of forests by the FAO has led to a broad recognition that forests are defined as; tree covered areas not predominantly used for purposes other than forestry, p.13

35 3 Causes of Deforestation

3.1 Commercial Logging Commercial harvesting of natural forests has, until relatively recently, been the mainstay of budget revenue in Laos. In the French colonial era, budget shortfalls resulted in the logging of approximately 12-15,000 cubic meters per year of teak from the northern parts of Laos and floating the timber down the Mekong to Saigon for export (Stuart-Fox, 1996).

In the present day, the extent of logging in Laos, both legal and illegal, like much of data on the forest sector, is extremely difficult to gauge. However, a growing number of small independent and often unpublished reports from across the country are pointing to a general increase in the extraction of timber. Where data is available, discrepancies exist not only between different government agencies, but even within agencies themselves (Sugimoto, 2006:35). A 2005 MAF report, states that ‘officially’, GoL has reduced log extraction from 734,000m3 in 1998 to 260,000m3 in 2000/1 and 2001/2, with a further reduction to 150,000m3 in 2004/5 (MAF, 2005). However, this official ‘data’ can be seen as absurdly low, as recent evidence (Sugimoto, 2006; 2009; DoF, 2007; UNDP, 2006) suggests 150,000 m3 appears to be a spectacular under estimate of commercial log extraction rates in Laos. World Bank et al. (2001) estimate that log extraction in 1998 was at 808,000m3 based on the assumption that 10% of log production was going unreported (World Bank et al., 2001:13). However, from 2006 independent estimates, from an internal report written by a Japanese consultant for the joint JICA-SIDA funded Forestry Strategy Implementation Project (FSIP) in the Department of Forestry, have far higher estimates. In the 2006 Forestry Sector Indicators report, logging rates estimated for 2005/6 at 620,000m3 per year. However, this figure conflicts with various other reports including from the same author’s updated reports in 2007 and 2009. In the 2007 Forestry Sector Indicators report the 2005/6 estimate was revised up to 860,000m3 per year (DoF, 2007:30) and then in a 2009 version of the report revised upwards again to 1,360,000m3 per year (Sugimoto, 2009:25) The reason for the dramatic change in estimates appears to have come from different methods of estimating harvest data based on new information from a World Bank field report and from Ministry of Industry and Commerce data.

The extent of commercial logging in Laos is the subject of much debate and speculation, both inside and outside of the country. The Forest Sector Indicators reports from 2006, 2007 and

36 2009 highlight the difficulty in making accurate estimates. There are also other factors which give us pause to question even Sugimoto’s estimates of commercial timber extraction. Sugimoto (2006) calculates his estimate of timber harvest as follows:

Total timber harvest in Lao PDR estimated by the author is at 620,000 cu. meters per year. This estimation consists of two components; log export and estimated log consumption in wood processing factories. Log export volume is estimated at 28,000 cu. meters per year based on weight of logs (HS4403) data collected by Customs Departments in FY2004/05. Estimation of log consumption in wood processing factories is based on estimated operating capacity in 2005/6 and ratio of log consumption to operating capacity of wood processing factories in 4 southern provinces surveyed by Blackeney et al. (2005). (Sugimoto, 2006:19)

In other words, Sugimoto adds the volume of non-processed timber (i.e. HS4403 or round wood) to statistics derived from sawmills. Theoretically, this should capture all commercial timber harvest, as all logs are either being processed and recorded or exported and reported. However, as I will show in section 3.3 below, there is ample evidence to question the accuracy of this export data.

While senior MAF officials have previously stated that the logging problem in Laos "is not so severe" (Watershed, 1999b), the overwhelming consensus is that commercial logging is a major contributor to deforestation in Laos (MAF, 2005; World Bank et al., 2001; UNDP, 2006). There are many complex factors involved in the commercial extraction of timber in Laos, including quota systems issued by central and provincial authorities, increasing demand from neighbouring/regional countries (EIA,2008), and an increase in infrastructure development logging (World Bank et al., 2001). I have discussed some of these points in further detail below.

37 3.2 Infrastructure / Land Development based logging Timber derived from infrastructure or land development, is timber that has come from the logging of forest that was cleared for the purpose of establishing some sort of development project whether private investment or as a public project. Infrastructure development is one of the primary means of providing timber to the timber industry. In 2001 logging derived from land development operations accounted for roughly two thirds of all timber extraction (World Bank et al., 2001). Such development cases have often been the result of logging in the future reservoirs of Hydro electric dam projects, or roads. However, it can be the result of much smaller development projects such as schools. On a smaller scale, it is common for school yards in rural areas in Laos to be void of tree cover as trees are cleared before the school is built. More recently, 'development' based logging operations have been taking place with industrial tree plantations, often where tree plantations are used as a cover to log large numbers of high quality trees in collusion with local government officials (Hunt, 2006; Barney, 2007; JVC, 2011). This issue is examined in detail in Part II of this thesis.

3.3 Export of Timber Despite a ban on the export of unprocessed logs in 2001, Laos exports much of its timber through formal and informal channels to Thailand, Vietnam, China (including Taiwan), as well as Japan (Sugimoto, 2009:57-61). Indeed, the rate of export of timber appears to have been steadily increasing since the logging ban came into place. Central to the increased rate of exports, is the increasing demand in neighbouring countries, with depleted timber supplies and/or have implemented strict logging bans. The Vietnamese furniture manufacturing sector is almost entirely dependent on imported timber, and with the Vietnamese government’s elimination of import duties and licences on all imported timber and lumber in 2004, there has been a four fold increase in the export of furniture from Vietnam (UNDP, 2006:96). Additionally, Lao Cypress has increasingly been in high demand in Japan since Taiwan banned the felling of Cypress there (Yamane and Chanthirath, 2000).

One method for gauging the export of timber and wood products from Laos is through the statistics on exports compiled by the Lao customs department. However, the highly secretive Lao government has never publicly released this data, and until 2006 had resisted pressure to release such information, leading even the UNDP office in Laos to be forced to use mirror data from the customs bureaus of neighbouring importing states, to ascertain the extent of the

38 timber exports harvested. However, export data has since been released internally within the Department of Forestry as a result of donor pressure (Kitamura 2008, pers. comm. 3 July), and is reported in Sugimoto (2006). Table 1.2 shows data complied by Lao customs on wood and wood product exports by category. The international trade in wood and wood products is standardised under the Harmonized Commodity Description and Coding System (HS), and the data in Table 1.2 below, is categorised under this system.

Table 1.2: Export of wood and wood products FY 2003/4 FY 2004/5

HS Classification kg USD, FOB kg USD, FOB

4401 Fuel wood, wood in chips, or particles, wood waste 9,376,293 928,674 8,196,360 1,317,398 4402 Wood charcoal (including shell or nut charcoal) 196,584 13,768 370,976 81,265 4403 Wood in rough or roughly squared 29,693,168 2,367,175 27,533,958 2,975,770 4404 Hoopwood, split poles, pile, pickets and stakes 160,426 17,365 93,020 5,209 4405 Wood wool, wood flour 1,000,000 12,000 126,000 1,260 4406 Railway or tramway sleepers (cross-ties) of wood 173,983 20,878 0 0 4407 Wood sawn or chipped lengthwise, sliced or peeled 107,949,446 17,608,225 129,864,868 20,946,092 4408 Veneers and sheets for plywood etc <6m thick 4,984,792 1,159,842 3,687,236 755,937 4409 Wood continuously shaped along any edges 80,677,532 15,464,009 112,208,335 6,820,600 4410 Particle board, similar board, wood, ligneous material 252,400 43,613 676,644 65,923 4412 Plywood, veneered panels & similar laminated wood 18,927,716 6,842,784 16,035,245 5,590,714 4414 Wooden frames for paintings, photographs, mirrors 59,161 55,898 75,106 109,729 4415 Wooden cases, boxes, crates, drums, pallets, etc 2,271 6,400 1,920 1,200 4416 Wooden casks, barrels, vats, tubs, etc 0 0 20,069 2,408 4417 Tools, broom handles, bodies, etc, of wood 0 0 663,727 37,699 4418 Builders joinery and carpentry, of wood 90,699,992 16,511,063 105,171,152 22,380,513 4419 Tableware and kitchenware, of wood 417,055 93,333 132,196 29,865 4420 Ornaments of wood, jewel, cutlery caskets and cases 93,085 19,051 33,571 59,609 4421 Articles of wood 128,630 7,226 155,790 38,192 344,792,532 61,171,304 405,046,172 61,219,383 Source: Lao customs department (cited in Sugimoto, 2006:37)

As stated in section 3.1 Sugimoto (2006) estimates timber harvests at 620,000m3 per year, based partly on a 28,000m3 export per year of timber that is derived from 27.5 million kg of wood exported under HS4403 as per the table above (Sugimoto, 2006:18-19). Sugimoto does not include HS4407 or HS4409 in this data as he considers this to have been part of the 592,000m3 of low value 'processed' timber coming from sawmills and hence contained within sawmill production data (data which contains many questions as to accuracy as is shown is

39 section 3.4 below). However, despite the data in Table 1.2 suggesting that processed logs total 242 million kg. or 242,000m3 (HS4407+HS4409) in 2004/5, it has been noted that observations of log trucks are more common at major export points than are processed sawn logs (World Bank et al., 2001:23; UNDP, 2006:95-6). This suggests that the export of whole logs is either under reported or reported incorrectly as processed logs, most likely under HS4407 or HS4409.

Sugimoto treats HS4407 and HS4409 as part of the estimate of the processed timber, when there are large amounts of uncut round wood being recorded into HS4407 and HS4409, which the processing data from sawmills would not include. If such timber was in fact not going through any processing, and being reported incorrectly at customs as processed timber, Sugimoto's estimation would miss this misrepresented round wood timber entirely, thereby leading to large underestimates of both exported round wood as well as total commercial timber harvests.

One method to examine the accuracy of timber exports is to examine timber imports into neighbouring countries. The UNDP has done just this in a 2006 country report on Laos focusing on International Trade and Human Development. In this report an examination of mirror data from import entry points into neighbouring countries reveals that the Lao customs data may be under reported by at least half and likely much more. The mirror data examines timber exports, not wood products, and if we calculated this to be in three HS categories (HS44 - 03, 07, 09), then according to the Lao customs data in Table 1.2, these three categories account for US$30.7 million in 2004, approximately half the total export value of all wood and wood products as defined under HS44.4 However, mirror data suggests that there is in fact a far larger trade in timber than is being reported by Lao customs.

4 HS94 categorises furniture, so it is possible that there may be wood based furniture products exported under HS94 in addition to the HS44 category, however total exports of HS94 categories we negligible at only US$160,000 in 2003/4; US$275,000 in 2004/5 and US$135,000 in 2005/6 (cited in Sugimoto, 2006).

40 Table 1.3: Value of timber exports (millions of US$) as a percentage of total exports5 2000-2004 2000 2001 2002 2003 2004 US$ % US$ % US$ % US$ % US$ % Timber Exports 70.1 18.1 106.8 26.6 114.3 28.4 128.4 25.7 144.9 24.7 Source: UNDP (2006)

While Lao customs data reports a value of timber exports at USD$30.7 million in 2004, mirror data calculates that the value of imports as USD$144.9 million, an almost five fold increase. Furthermore, UNDP (2006) states these figures are conservative due, to incomplete monitoring in Vietnam (which according to Lao customs data accounts for approximately one third of all wood and wood product exports by volume [Sugimoto, 2006:38]), and also due to the large informal networks exporting timber that are not included in any data (UNDP, 2006:96-97).

It is immediately noticeable from Table 1.3, that the mirror data for 2003 and 2004 is more than double the value of the total wood and wood product exports supplied by Lao customs in Sugimoto 2006 (Table 1.2). Secondly, where Lao customs shows a slight decrease in the export of wood over 2003/4 and 2004/5, mirror data shows an increase in the value of Timber exports of $16.5 million over 2003-4, and a doubling in the value of timber exports from 2000-04. The comparison of these two data sets is complicated by the use of fiscal year figures (Oct-Sep) and Calendar years. However, the data is still a timely reminder of the warnings raised earlier in this thesis as to the overall reliability of Lao government data on politically sensitive issues such as logging.

The mirror data, which indicates a doubling in the value of wood and wood products over a four year period, is not that surprising given the ongoing improvement of national road networks, as part of the GMS highway expansion plans. This not only facilitates the export of timber to neighbouring countries, but also provides increasingly improved access to more remote areas, facilitating the removal of timber previously inaccessible. Similarly the underreporting of data is also not surprising given the political and socio-economic context of Laos, with the rent seeking and corruption that follow the timber trade (Stuart-Fox, 2006, Baird, 2010). The sheer value of the timber exports create financial incentives for low paid

5 Not including electricity exports

41 ($20-40/month) government employees to turn a blind eye, or to actively facilitate logging activities, under the guise of infrastructure development (UNDP, 2006:95-6; Hunt, 2006; Baird, 2010).

All these findings support recent studies pointing to the ongoing presence of illegal logging / timber smuggling operations in Laos (EIA, 2008; Forest Trends, 2009; Baird 2010). Baird (2010) writes:

It is generally difficult to say with any certainty whether some or any of the timber that is exported from Laos has been harvested, transported and sold without any illegalities having taken place. There are so many places along the timber commodity chain where it is possible for officials to gain ‘illegal’ benefits that it seems unlikely that any timber is exported from Laos without at least some technical level of illegality being involved .(Baird, 2010:31)

Vietnam in particular is in great need of raw materials to support its wood furniture export industry: exporting high quality furniture to Japan, the US and Europe. EIA writes that in 2007, exports of furniture reached US$ 2.4 billion in value, a stunning ten-fold increase since 2000, making wood products Vietnam's fifth largest export earner (EIA, 2008:6). The Vietnamese furniture manufacturing industry has high demands for tropical hardwoods, and with weak governance and rich forest resources, Lao forests are able to meet that demand.

3.4 Domestic Wood Processing

Commercial wood processing is also attributed to the increasing deforestation in Laos. The most recent survey of the wood processing industry in Laos shows that there was an increase in the number of wood processing factories from 182 to 261 from 2001 to 2006 to somewhere between 340-587 in 2007 (Sugimoto, 2006, 2009)6. The 2006 version of same report estimates that 582,000m3 are consumed by the Lao domestic wood processing industry. However, the potential operational capacity of the industry as a whole is far above this at 2,213,000m3 in 2005/6; up from 1,543,000m3 in 2001. Sugimoto's estimate is,

6 Sugimoto (2009:61) states that figures prepared by the Ministry of Industry and Commerce (MIC) in 2007 are “partly questionable” and Sugimoto has adjusted the number of non-furniture based wood processing factories to between 340-350. Exactly why the MIC figures are questionable is not stated.

42 therefore, based on an estimate that the ratio of log consumption to operating capacity is only 26.3%. This ratio has apparently been derived from a 2005 survey on sawmill production in four southern provinces that measured the ‘capacity’ to ‘log consumption’ ratios of sawmills. This ratio has then been extrapolated across the entire country. However, it is unclear to what extent the production capacity of sawmills in the four southern provinces can be extrapolated in this way, and this is not commented on by Sugimoto. Using capacity to consumption ratios in the south of Laos, and transposing those ratios across areas of the country that are very different in terms of the number of wood mills, road access, population density and tree cover, leave open the likelihood for large margins of error in Sugimoto's estimate of wood processing.

Table 1.4: Wood processing factories 1980-2006 Year 1974 1980 1990 1999 2001 2005/06 Sawmill and wood processing 78 56 88 133 182 261 Source: Data compiled from UNIDO, DoF and GoL (cited in Sugimoto, 2006:32)

Data from Table 1.4 indicate that saw mills in Laos have been increasing in number and that the rate of establishment of factories is also becoming more rapid. This trend in the growth of the saw mills would seem to suggest that overall more timber is being processed, rather than less. By volume, the total operational capacity of the 261 wood processing factories is 2,213,000m3 (Sugimoto, 2006); however, it is far more difficult to assess the actual log consumption details in the wood processing sector. No doubt there are those who benefit from a lack of transparency in the wood processing sector. World Bank consultants reported in an internal project report that access to saw-mills is denied, and when it is granted data is either not kept or not available (Jonsson, 2006). In spite of the large resources being poured into the Lao forestry sector by donor organisations, the overall picture of Lao commercial timber consumption continues to be blurred, and if experience of timber extraction in countries such as Indonesia and the Philippines is any indication (Dauvergne, 1997), logging activities will continue in Laos unabated.

In summary, there is insufficient data to establish an accurate estimate of timber harvesting in Laos today. However, reports over the last two decades have consistently pointed to the need to curb commercial logging; yet, indications are that both exports and processing are increasing. It was cautioned by the World Bank in 2001, that present practises of logging

43 were unsustainable and could result in the collapse of the Lao timber industry within the next one or two decades, if both policy and practice were not reformed (World Bank et al., 2001). Alas, it would appear from the data mentioned above that no such reform is taking place on the ground and the commercial extraction of timber is in fact increasing.

3.5 Household Use

80% of the Lao population are in rural areas and, while much of the population is in some way connected to the market economy, most rural people are dependent to a large extent on forest resources. The most commonly utilised wood resource among rural villagers is fuel wood: used as the primary energy source by 85% of villagers (MAF and STEA, 2004). There is wide variability in estimates of per capita usage of fuel wood, ranging from 0.75 - 2.92m3

or 0.58 - 2.26 tonnes (Ibid). Timber and wood products are also used for a variety of other purposes, such as house construction, boat and cart construction, furniture etc. Much of this resource comes from non-commercial sources and is not considered significant to rural deforestation (World Bank et al, 2001). The same argument could apply to the rural use of wood for fuel.

44 4 The Politics of Forests in recent Lao history

4.1 Controversy and Land Grabbing

With the legislative situation concerning tenure of forests firmly in the hands of the State, and going against rural villagers, it is perhaps no surprise that, since Laos has opened up to investment in the mid 2000’s there has been a significant increase in land conflicts between companies and villagers in Laos (see Part II of this thesis for further discussion on this). Called ‘land grabbing’ by some, this phenomenon is not just limited to Laos, but has been happening all over the world (Cotula et al., 2009; Braun & Meinzen-Dick, 2009), and reached worldwide attention as food prices increased significantly in the 2007-8 food crisis.

This rapid increase, in largely uncontrolled (Schumann et al, 2006) plantations development which began in Laos in 2006 (See chapter 3), has generated much controversy amongst villagers, urban citizens, the development community and at all levels of government in Laos. In March of 2006, I was able to go with a research colleague down to a Luxemburg Government run integrated rural development project in Pakkading District, Bolikhamxay Province in central Laos. The results of this trip were written up in an unpublished document (Hunt, 2006) that was circulated amongst the development community in Vientiane. The document described three large scale development projects in Pakkading district that were clearing village forest lands, much to the anger of expatriate project officials working on the project. One of these, the Lao World Coconut Plantation concession, provided graphic photographic evidence of intensive logging operations taking place in the area where the coconut plantation was being established, raising significant questions about the motives of the plantation company.

At around the same time concerns were being raised in the North of Laos where increases in rubber agro-forestry investments were causing friction between rural villagers and companies (Phouthonesy, 2006). Largely in response to the concern of large scale rubber plantings, in May of 2006 the Lao National Agriculture and Forestry Research Institute (NAFRI) ran a workshop on Rubber Plantations with the support of major donors in the agriculture and Forestry Sectors, such as the Swiss Agency for Development and Cooperation (SDC), SIDA and GTZ. The recommendations of the Rubber workshop included the establishment of a working group to draw lessons from the impacts to date from industrial tree plantations. In August 2006 an article appeared in the English language Vientiane Times newspaper, rarely

45 critical of a Vietnamese owned Rubber Plantation, and described the plight of rural villagers against the plantation company. The article described how the company, which had a 7,000 hectare Rubber Plantation in a remote district of Luang Prabang Province, was confiscating village buffalos that strayed onto plantation land due to the lack of forage areas and the absence of any fencing around the plantation. The company was then forcing villagers to pay fines to have buffalo released (Phouthonesy, 2006). The level of concern around land conflicts and plantations investments had even made its way into upper levels of the GoL. By late 2006 there were frequent reports circulating within the development community in Vientiane regarding serious discussion of the 'plantations or concessions problem' taking place in the National Assembly. The situation prompted the Head of the Secretary Office of the Prime Minister’s Office to send an official announcement (No.1373) on September the 8th 2006, to Ministers of Agriculture and Forestry as well as Finance, and to every Governor in the country to remind them to respect the laws relating to concessions and land leasing. Specifically, the announcement emphasised that plantations are allowed in the areas of degraded forest, empty land and bare hills. It warned that any province that had previously approved plantations development that went against laws and regulations must cancel their approvals, and warned of action in the courts if breaches were discovered. Finally it emphasised that in considering approval for all concessions, authorities must especially avoid destroying water source forest, conservation areas, environmental protection forest… and the essential production areas of the people (PMO, 2006).

Concern in the development community in Laos led to more and more attention being paid to plantations development as a key threat to rural livelihoods. In 2006 the INGO network of Laos began a small working group called the Industrial Tree Plantations Working Group, whose main focus was to monitor land concessions issues, and multilateral aid in the country promoting plantations (particularly the ADB FPDP project) (private notebook, 2006). This working group then evolved in early 2007 to become the Land Issues Working Group with a stated goal to “promote awareness and understanding of [land] issues by carrying out studies, sharing information and facilitating dialogue7.” This group, of which I have acted as both the Chair and Vice-Chair on different occasions, has been involved since that time in numerous discussions about land / forest policy in Laos as well as supporting several high level meetings with Government Ministries.

7 See www.laolandissues.org

46 4.2 The NLMA and Plantations

As part of the World Bank and AusAid joint funded Land Titling Project (LTP), which ran in two phases from 1997-2008, a new government department was established specifically to oversee Land Management (Dixon & Lunnay, 2007). Previously land was managed under a variety of different line ministries, (Finance, Agriculture and Forestry, Planning and Investment), and the LTP endeavoured to centralise land management under a single department of lands within the National Land Management Authority (NLMA). For several years the department was funded entirely by the LTP (Dwyer 2007, pers. comm., 5 March), and Ministerial funding was not forthcoming from the GoL. As the NLMA took more prominence, it began to try and exert its influence in order to justify its role within the Lao bureaucracy, and to show that Land Management indeed needed to be taken away from other Lao government offices and put under the jurisdiction of the NLMA. In 2006, the situation with land concessions and plantations in the country had been described as “chaotic” in a GTZ report on land leasing and concessions, and this provided the opportunity for the NLMA to justify its new role in Land Management.

In November 2006 the then Chairman of the (NLMA), Mr Khamouane Bouppha, sent a letter to the Prime Minister informing him of the findings of the highly critical report, by the German Development Agency, (GTZ) on the study of State Land Leases and Concessions in Laos. The NLMA supported the critical GTZ report findings, in this letter to the Prime Minister, a highly unusual occurrence within the mechanics of the Lao Government, where there is rarely any criticism of government agencies. Given the context of the new bureaucratic agency, perhaps the many of the criticisms raised by the NLMA need to be viewed in the context of there being a ‘turf war’ between the NLMA and MAF. Indeed, this was the long term view of many development agency professionals working on land issues at the time (personal notes). Perhaps the critical stance was also facilitated by the fact that the NLMA was being funded entirely by the LTP allowing it to take a more critical position towards government agencies.

This critical posture may have been a strategic positioning by the NLMA to garner more support from the wider donor community to help increase the status and presence of the NLMA. This initial critical posture towards State land policy saw a flurry of organisations willing to work with the NLMA on addressing land issues in Laos, and this is no better

47 highlighted than the willingness of the Bangkok based Mekong regional advocacy NGO TERRA, to work with the NLMA on conducting broad assessments of plantation development in the South of the country. TERRA has a long history of advocacy in the Mekong region and especially since TERRA’s campaign against the Nam Theun 2 hydropower project, (the Thai based campaign which culminated in a large demonstration outside the Bangkok headquarters of the World Bank), which led to significant antagonism between TERRA and the GoL. It could be said, then, that the collaboration between an organisation like TERRA and the NLMA is indicative of the willingness of the NLMA to garner broad support.

The contents of the letter sent by the NLMA Chairman to the Prime Minister are worth noting. The letter advised the Prime Minister of the GTZ study’s findings, particularly in the failing of the state to generate revenue from the leasing of land. The letter requested that the Prime Minister consider;

Issuing an order relating to the lease and concession of State lands, so that sectors and local administration can be unified in putting laws into practice (NLMA, 2006:4).

The letter went on to paint a dark picture of the present state of plantation and concession development, stating that the present conditions of concession administration had destroyed the national resources and environment by allowing concessions covering areas which constitute the livelihood and production of ethnic minorities, and in some cases, by allowing the lease of lands that covered rich forests. The Chairman also noted that leased land was mostly used for logging and mining operations; that local wages derived from such operations were low with determinants for setting wages dependent solely on the investor, and that concessions did not support Lao labour, because many sectors had proposed bringing in foreign labour because of an ineffective Lao labour force. The letter also stated that many lease and concession areas were being implemented on areas that covered houses, livelihoods and the productive lands of the population, often resulting in relocation without adequate compensation.

Finally the Chairman made six proposals to the Prime Minister, aimed at resolving the above weak points and pending issues as summarised below.

1. That laws and regulations be issued to act as a reference point for converting state property into revenue. 2. The NLMA and other government agencies in-charge of land promulgate the laws and decrees related to land through seminars with professionals in the field. 3. To re-examine the activities of concession holders of state property to analyse and evaluate (the extent) that contracts have been carried out in accordance with the law. 4. To issue an order or statement to establish a commission to ensure utilisation of land in accordance with laws and regulations. 5. To issue orders prohibiting local administrations to authorise lease or concession of property to foreign individuals or entities for the purpose of investing in the Laos and to state that Authority for Land Management are the only authorities who can authorise lease or concessions of state property. 6. Issue advice to local authorities to authorise lease and concessions of property as determined in article 25 of Prime Ministerial Decree 301, dated 10 October 2005, regarding the implementation of law and promotion of foreign investment. (Ibid:3-4)

This critical letter was then followed up with a workshop in the middle of February 2007 specifically on Tree Plantations; reflecting the increasing problems associated with tree plantations around the country. The workshop was held in Vientiane over two days by the National Land Management Authority (NLMA) and the Ministry of Agriculture and Forestry (MAF) and funded by the Swiss Development Agency SDC. The workshop was notable for a number of reasons, firstly that it was symbolic of the ‘turf war’ between the two government bureaucracies over land. The absence of the Minister of Agriculture and Forestry throughout most of the conference was all the more conspicuous due to the continued presence of the NLMA Chairman throughout. The opening speech by the Chairman of the NLMA was decidedly critical regarding the present situation regarding industrial tree plantations and in his opening statement the Chairman made an attempt to further define the ambiguous term of 'degraded forest', stating that degraded forest meant:

Land that cannot be regenerated without the intervention of man, or barren land – Land that has no big trees, only grassy vegetation

49 Also interesting to note, the NLMA specifically invited NGO / Research representatives to give presentations on the problems with land concessions and plantations. That highly critical presentations were allowed to be made at a high level meeting chaired by the heads of two Lao government ministries is also highly unusual given the Lao socio-political context (Stuart-Fox, 2006), and is also perhaps representative of NLMA’s above stated positioning.

4.3 The Land Concession Moratorium that Wasn’t

All these discussions, both public through the media, and in high level government meetings, were beginning to paint a picture of the government having lost control of land concessions and agro-forestry investments. Around this time there was much speculation within the development community that the government was preparing to call a moratorium on land concessions. At a joint donor / GoL sub-working group meeting on plantations in September 2006 a member of the Lao DoF staff, asked a visiting plantation forestry consultant from Australia, who had just given a presentation on the need for a Lao plantation vision for the 21st century, if he thought a Moratorium on plantation development would be a good idea (meeting notes). Then, at the February 2007 workshop on tree plantations, the governor of Luang Namtha Province (where a Provincial moratorium had already been put in place) openly suggested to the meeting that a national moratorium be put in place (meeting notes). GTZ expatriate staff working closely with the NLMA confirmed at the February INGO meeting that the GoL were moving closer to a moratorium every month (notes from meeting). Finally on May 9 2007 the Prime Minister Bouasone Bouphavanh was on the front page of the English language Vientiane Times newspaper announcing a halt to all large scale (>100ha) land concessions from investors whether local or foreign. The halt was termed as "indefinite or until a more comprehensive strategy could be devised."

While many, myself included, who had been attempting to raise awareness about the problems land concessions were causing, saw the moratorium initially as a victory and a step in the right direction for a more balanced approach towards the forestry sector, the elation was short lived. The moratorium did not cover plantation MoU’s that had been signed but were not yet planted, of which there were already hundreds of thousands of hectares (CPI, 2007). Also, it became clear overtime that local district and provincial governments were circumventing the decree by signing multiple land concessions all smaller than 100 hectares (Ling 2008, pers. comm., 13 August), or simply ignoring the moratorium altogether and

50 continuing to sign Memorandum of Understandings for large scale concessions (Kenny- Lazar, 2010). Following the signing of the moratorium, the NLMA set about drafting a decree on land concessions and began a nationwide inventory of land concessions in an attempt to examine how much land had already been signed and appropriated. The inventory was undertaken with the support of GTZ. Following the issuance of the Decree on State Land Lease or Concessions, the GoL briefly lifted the moratorium on land concessions in May 2009, only to have it re-imposed again two weeks later by the National Assembly following complaints by several NA members who cited that their constituents were complaining about negative effects of land concessions on their livelihoods. This time the moratorium was not as strict with 1000 hectares being the maximum allowable limit (Vientiane Times, 2009a, 2009b; PMO, 2009). However, since that time there have been reports, in the press, about several large scale investments starting up, although it is not clear from press reports exactly when these had been approved (see SEN, 2010). The moratorium does not cover existing projects, and as a result land concessions continue to be a problem in Laos. The issues of land concession and foreign direct investment will be examined in detail in Part II of this thesis.

51 5 Chapter Synthesis

This chapter has given an overview of the situation of Lao forests. Firstly, Lao forests provide rural people, whose livelihood is subsistence based, with valuable resources. Not only do they provide timber for housing, but also many other non-timber resources. These non-timber resources form an important aspect of the livelihoods of rural villagers in Laos: edible foods as well as medicinal plants and items used in handicrafts or for manufacturing can be obtained from forests. Many of these products, villagers are able to sell in small local markets, thus providing subsistence farmers with important cash incomes. The contribution of forest resources in providing subsistence farmers with overall food security should not be understated.

However, despite the high degree of dependence of subsistence farmers on these forest resources, there is little in the way of forest tenure security for these same subsistence farmers. The Forestry Law of Laos, and indeed the government as a whole, while recognising customary usage rights, regards all forest as the domain of the state. This has important implications for Laos and for the subsistence farmers who depend on forest resources. If villagers are unable to have security of tenure over their forests, there exists a high potential for those forests to be cleared by outside forces such as foreign investment projects. Furthermore, without legal tenure to forests, it is much harder for villagers to claim compensation for livelihood restoration when forests are cleared through state acquisition mechanisms. This is particularly relevant when we consider that the 1996 Forest Law (amended in 2005), which was in place during the course of fieldwork undertaken for this research, gave the State the right to allocate so called “degraded forests” to companies and investors for monoculture plantation development.

At the State level, Lao Forests provide revenue through tariffs and taxes on timber exports; not to mention the jobs involved in timber harvesting and processing. Apart from this economic aspect, Lao Forests also have an ecological and environment value. They are an important global resource that provides unique biodiversity and also acts as a carbon sink. Both these environmental provisions are increasingly gaining recognition as to their importance to life on earth, and also gaining monetary value through international mechanisms such as Reducing Emissions from Deforestation and Forest Degradation (REDD). The rich nature of the Forests in Laos provide a pull effect for tourism to the

52 country, as can be seen by the large numbers of trekking or rafting tours to wilderness areas on offer by major tourist centres.

While it is clear that the Forests of Laos are a valuable resource in multiple aspects, this chapter has attempted to show the precarious state of the Forests of Laos. Although there has been a consistent decline in forest cover, the GoL has very weak systems in place to properly manage forest resources. There are large questions concerning the accuracy of data provided to central government policy makers, to properly monitor national forests. Furthermore, despite international donor interest in protecting the remaining forest resources, there are still great impediments to understanding the state of forest resources and their exploitation. An examination of export data of wood products and the “mirror” import data into neighbouring countries reveals that there is an enormous trade in timber that is entirely unreported. It is clear that logging and timber smuggling are a major cause of deforestation in Laos, and there is much research documenting this trade. However, the involvement of politically powerful actors in patronage networks behind the Lao timber trade (Baird, 2010) mean that political realities require that the trade in Lao timber continues to remains opaque.

53 CHAPTER TWO

SHIFTING CULTIVATION IN LAOS

Contents

1 Background of Shifting Cultivation...... 54 1.1 Introduction...... 55 1.2 Shifting Cultivation and Village Livelihoods...... 57 1.3 Common Arguments against Shifting Cultivation...... 59 1.3.1 Malthusian pressure ...... 60 1.3.2 Soil degradation due to overuse...... 62 1.4 Historic Perceptions of Shifting Cultivation...... 63

2 Shifting Cultivation in Present Day Laos ...... 66 2.1 Definitions - Pioneer and Rotational Terminology...... 66 2.2 Extent of Shifting Cultivation...... 68 2.3 The Creation of Modern Day Shifting Cultivation Policy...... 72

3 Present Day Policy on Shifting Cultivation...... 76 3.1 The Cause of Environmental Destruction?...... 76 3.2 Shifting Cultivation Policy ...... 77

4 The Legal Basis for Shifting Cultivation ...... 80 4.1 Absence of Legal Existence...... 80 4.1.1 The Agriculture Law - Legislating Eradication...... 80 4.1.2 Forest Law ...... 81 4.1.3 Land Law ...... 82 4.1.4 PM Decree No.3 and the 3 Year Rule...... 84 4.1.5 Shifting Cultivation Under the Law...... 85

5 Lao Policies affecting Shifting Cultivation...... 86 5.1 Land Use Planning and Land Allocation (LUPLA) ...... 86 5.1.1 Shifting Cultivation in LUPLA...... 87 5.1.2 LUPLA and the 3 Year Rule...... 90 5.1.3 PLUP – The Future of LUPLA...... 91 5.1.4 LUPLA and Land Tenure ...... 92 5.2 Afforestation of shifting cultivation fallow as “degraded land”...... 93 5.3 Village Relocation and Consolidation ...... 96

6 Chapter Synthesis ...... 100

54 1 Background of Shifting Cultivation

1.1 Introduction

In Laos, discussion of forestry is invariably linked to the traditional agricultural practice of upland rice farming, commonly known as shifting cultivation. This is because shifting cultivation is generally regarded by forest policy makers as one of the primary causes of deforestation, and hence forestry intervention is more often than not connected to shifting cultivation. Hence, while this dissertation is principally concerned with Foreign Direct Investment in the plantation sector, it is necessary to examine the discourse that has evolved around shifting cultivation in Laos.

Shifting cultivation is also known by the pejorative term 'slash and burn' farming. The practice is one of two traditional agricultural techniques (the other method being wet paddy) used across South-East Asia for growing the dietary staple rice, which in Laos is a glutenous 'sticky' rice known as khao niao similar to the mochi gome rice grown in Japan.

The technique of shifting cultivation has been used by farmers for thousands of years. It was practiced in Europe until the end of the nineteenth century and in the pine woodlands of North America until as recently as the 1940s (Collins, Sayer, and Whitmore, 1991; Thrupp, Hecht, Browder, Lynch, Megateli and O’Brien, 1997). Presently, shifting cultivation continues to be practised only in the tropical zones of Africa, Asia and Latin America. Thrupp et al. (1997) estimate that there could be as many as one billion people globally or four hundred million people in Asia who use this farming method. In South East Asia, upland farming is the predominant method of growing rice and other food among the many different ethnic (minority) groups who reside in mountainous upland areas. Lowland peoples do not practise upland farming but wet paddy cultivation; thus, shifting cultivation is often regarded as a primitive 'backward' form of agriculture by South-East Asia's ruling elite who mostly belong to the ethnic majority who live in the lowlands and practise wet paddy farming. (Dove, 1983; Lohmann, 1999).

The technique of shifting cultivation itself has various styles but all of these involve the cutting of live forest vegetation during the dry season well before the monsoon rains. In Laos this usually takes place from late February into March. From the end of March to April,

55 farmers burn the dry vegetation and then plant their crop in the ashes at the beginning of the monsoon. Ideally, after harvest the area is left to fallow for anywhere between 10 and 15 years, and the farmer 'rotates' to a new field repeating this process. During the fallow period the natural forest re-grows and the nutrients return to the soil, so that after sufficient fallow the farmer may return to the previous area and be able to reap a sizeable harvest from the same area.

Collins et al, write of shifting cultivation in The Conservation Atlas of Tropical Forests that; When the field is cleared, trees and shrubs are commonly cut at knee height and care is taken to leave certain deep-rooted species. These 'fallow' species regenerate rapidly after cultivation ceases. They tap the nutrients which have been leached deep into the soil, beyond the reach of annual crops, and some of them fix atmospheric nitrogen; these nutrients are accumulated in the living plants and released into the soil when the plant decomposes. Most nutrients in the generally infertile soils of the moist tropics are held in the organic matter in the topsoil. Traditional fallow systems allow these nutrients to build up to the point where another food crop is possible. (Collins et al., 1991)

Figure 2.6: Young shifting cultivation fields Vang Vieng District, Vientiane Province

Source: Photograph taken by author, June 2005

The importance of the length of the fallow period should not be understated here. It is essential to maintaining sustainable yields both from harvests and gathering of forest products. All commentary on shifting cultivation stress the importance of long fallow periods, and shortened fallow periods are routinely cited as the primary cause of land degradation

56 under the shifting cultivation system (see, for example, IKAP-Network, 2006). Similarly, consecutive year cropping of shifting cultivation fields, with no fallow period leads to dramatic reduction in yields due to the depletion of nutrients from the soil. Table 1 below shows the decline in agricultural yields from shifting cultivation in kilograms per hectare.

Table 2.5: Yields on consecutive year cropping Year Cotton Mung Bean Rice Maize 1 1,094 956 2,538 2,675 2 794 1,113 1,888 631 3 600 431 1,388 344 Source: Collins, et al., 1991

However, cultivators themselves are acutely aware of the need for long fallow periods (Rapport, 1976; IKAP-Network, 2006; Trankansuphakon, 2009), and it is routinely reported that where cultivators have reduced fallows or undertaken consecutive year cropping it is generally because of imposed restrictions upon their shifting cultivating practices. These restrictions commonly take the form of actual physical limitations of available land area and agricultural restrictions imposed by the State; often in the form of polices to undertake sedentary agriculture (these will be discussed further below).

1.2 Shifting Cultivation and Village Livelihoods

Shifting Cultivation continues to play a vital part in upland agricultural systems in Laos as it does in many upland communities around the world. Since the 1950’s numerous studies have documented the sustainability of shifting cultivation in tropical forest systems around the world (Condominas 1957; Conklin 1954; Freeman, 1955; Izikowitz, 1951; Spenser, 1966). In Laos there has been very little comprehensive research into shifting cultivation systems on a large scale and the importance of the systems in village livelihood and belief systems. There are however, several recent studies from neighbouring Thailand, which shares similar ethnic peoples, climate and topography to that of Laos. These Thai studies have highlighted the unique agricultural and natural biodiversity present in traditional shifting cultivation systems, as well as the spiritual and cultural links that indigenous peoples have to shifting cultivation (see IKAP-Network, 2006; Trakansuphakon, 2009). It is interesting to note that these two authors use the framework of the United Nations Declaration on the Rights of Indigenous

57 Peoples (UNDRIP) to argue that shifting cultivation is part of an indigenous cultural belief system. The UNDRIP enshrines the cultural beliefs and traditions (not to mention the lands) of indigenous people as an intrinsic right (UNGA, 2010). Framing the argument of shifting cultivation as part of a spiritual and cultural belief system moves the discussion of shifting cultivation from a purely deforestation / conservation discourse to that of an indigenous rights discourse. In a similar vein a recent ILO study from Nepal has suggested that indigenous shifting cultivators in Nepal have rights to engage in shifting cultivation as a distinct cultural identity under ILO Conventions 111 (Discrimination [Employment and Occupation] Convention, 1958) and 169 (Indigenous and Tribal Peoples Convention, 1989) (ILO, 2008).

Shifting cultivation systems are complex and multidimensional. Other studies have noted the historic symbiotic relationships between upland and lowland peoples with much trade in cash crops and NTFP flowing from the uplands to the lowlands (Guren, 2001). In addition, Guren’s historical examination of rice trades in Stung Treng (North East Cambodia) at the beginning of the twentieth century found that the rice trade would flow back and forth between upland and lowland communities to make up for rice shortfalls at particular times of the year, or in the case of bad harvests resulting from natural disasters such as floods in the lowlands or drought in the uplands (Ibid.).

While rice - the dietary staple - is the most important crop for shifting cultivators in South East Asia, it is not the only crop obtained from shifting cultivation. Shifting cultivators often crop - either between the rice crop or directly adjacent to the rice crop - a variety of species of vegetables, herbs, spices, legumes or other cash crops which may be consumed or sold to traders. It has been observed in Papua New Guinea that the agricultural diversity of shifting cultivators may surpass that of western agriculturalists with up to 100 major crops derived from upland fields (Rappaport, 1971 – cited in Collins et al., 1991:32). In Luang Prabang Province in Northern Laos, up to 15 different species of crop have been recorded growing between the rice in shifting cultivation fields including yams, cassava, potatoes, chilli, cucumber, melons, gourds, pulses, eggplant, job's tear, tobacco and sesame (Yokoyama, 2004:138). This high biodiversity of the shifting cultivation crop assists villagers to supplement their diet and income as some produce can be sold in local markets or to traders. Farmers also graze livestock such as water buffalo and cows in swidden fallow fields, which simultaneously assists in the rejuvenation and fertilisation of fallow soils. 58 Furthermore, shifting cultivation fields provide nutritional sustenance (edible foodstuffs), income (saleable products), traditional medicines and other resources (eg. housing materials) to village communities during the fallow period (Collins et al., 1991; Namura and Inoue, 1998; Ducourtieux, 2004; Yokoyama, 2004; Barney 2007; Trakansuphakon, 2009). A common example are the mushrooms that villagers collect from the decaying trees left in the fallow. A less common example includes the bark of the Styrax tree (styrax tonkinensis), from which villagers obtain Benzoin resin8; a tradition dating back many centuries for which the quality of product in Laos was famed (Yokoyama, 2004). Villagers stated that Benzoin resin could only be harvested after 6 years of tree growth and that resin production would dry up after 11 years of tree growth (Ibid.), hence shifting cultivation works towards, not against the production of this vital economic resource. In a study from Northern Thailand cited in Trakansuphakon 2009, there were 49 different edible plant species collected by villagers in their fallow fields, representing 54% of all plant species eaten by villagers (Doclamyai, 2009 cited in Trakarnsuphankorn 2009).

1.3 Common Arguments against Shifting Cultivation

This is not to say that shifting cultivation methods of agricultural production are by any means free of problems. Like any system, shifting cultivation requires careful management, and is highly vulnerable to external pressures. There are numerous questions raised with regard to the long term sustainability of shifting cultivation systems, however, promoters of indigenous rights argue that these criticisms have at their root an inherent prejudice and misunderstanding of these indigenous farming systems. For an understanding of the various claims for and against shifting cultivation, The Discourse of Rotational Farming in Thai society (Trakansuphakon, 2009:pp.2-20) has a long chapter on the various common claims made against shifting cultivation. I have attempted to briefly highlight two of the main criticisms commonly levelled at the sustainability of shifting cultivation system below.

8 Benzoin resin, known as Ansokukou in Japanese is used in a variety of incense products around the Asian region. 59 1.3.1 Malthusian pressure

Over population is the principal criticism levelled against the practice of shifting cultivation around South-East Asia (Lestrelin, 2010). Shifting cultivation is seen as a system that can only work in areas with low population density, but as populations grow the system becomes untenable.

Essentially shifting cultivation requires a large land area to ensure sustainable cultivation because of the long fallow periods. The amount of land a villager clears in a year depends on a variety of factors including the amount of labour required in the clearing process and the number of people in the family to feed. However, if we suppose that young Lao families (for whom shifting cultivation is the only source of rice production) clear on average a single hectare plot every year we can gain a good idea of the land requirements in relation to fallow periods and population growth as per Figure 2.2 below. While there are no clear rules on how long land should be left to fallow, an 8-year rotation is cited by Rappaport (1976) as a sufficient length of time to allow for fallow lands to regenerate, although longer fallow periods are also reported (Bass, 1994; IKAP Network, 2006; Yokoyama, 2004). Based on this assumption of one hectare of land per family per year, the figure below graphs the total land area needed for shifting cultivation agriculture based on 8, 10, 12 and 15 year fallow rotations and the number of households in the village. An 8 year fallow with single year cropping converts to a requirement of eight hectares per family, and so forth.

60 Figure 2.7: Land area required for long fallow systems

2500

2000

1500 Land Area (15ha) Land Area (12ha) Land Area (10ha) Land Area (8ha) 1000 Total Land Area Required Land Area Total

500

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 Families in Village

What becomes clear from this graph is that the larger the population the more difficult it is to sustain a shifting cultivation system with long fallow periods. Hence a dramatic increase in population density can lead to: 1) Shortened fallow periods, which results in lowered yields and simultaneous loss of biodiversity through infestation of grasses, as well as erosion and overall land degradation; 2) Increased clearing of dense forest lands, due to the need to open up new swidden fields which results in the widespread clearing of high value tree species and continual degradation of natural forest.

The above rationale forms the basis of the Malthusian argument against shifting cultivation, however, as I will discuss further in Section 5.3, in Laos there is considerable controversy as to whether populations have actually achieved such high density rates (Vandergeest, 2003). Bass (1994) also notes that in Vietnam, areas where shifting cultivation is practised are typically where forest density was still the highest in the country in the early nineties.

61 Trakansuphakon (2009) dismisses the Malthusian argument as paternalistic and based on the assumption that shifting cultivators are not aware of the threats that mismanagement of the fallow system poses to their rice harvests. Trakansuphakon argues that shifting cultivators are dynamic and recognise the need to adapt to increasing population pressures, and this they do with diversification of occupations and migration to other areas (pp16-17). Trakansuphakon further asserts that the Malthusian argument is simply an excuse to justify the policy of forcing indigenous peoples to abandon their traditional agricultural systems. He quotes a farmer from Chaing Mai Province in Thailand:

If the government says that our descendants will increase and that they are afraid that we will clear more forest for rotational farming, then I would like to ask that they give us the legal right to limit the land that we clear for swiddens, and give us the freedom to manage our rotational farming in our own way; how we rotate, how many years we fallow land, and so on. We will absolutely not encroach onto the forest lands to increase farming land, and as for the rise in population, we ask that we be allowed to take responsibility for that ourselves. (Ibid:17)

1.3.2 Soil degradation due to overuse

Certain agricultural practices used by cultivators are problematic. These practises involve clearing an area and using that area for crop production for several years until the nutrients in the soil are depleted. The area is then abandoned, and the cultivator moves to a new field, never returning to old fields. This process is known as "pioneer shifting cultivation", as opposed to the "rotational shifting cultivation" methods described above. Pioneer shifting cultivation is often cited as leading to erosion, weed infestation, continual degradation of forest, and soil infertility. Some authors have attributed this practice to the cultural nuances of particular ethnic groups such as the Hmong (Collins et al., 1991; Souvanthong, 1995; Yamane, 2000). However, other authors have suggested that pioneer shifting cultivation evolved because certain ethnic groups have been severely marginalised (such as the Hmong in Laos who sided with the CIA in the Indochina war) and/or the lack of any tenure security over land (Thrupp et al., 1997; Colchester, 1992).

62 1.4 Historic Perceptions of Shifting Cultivation

The practice of shifting cultivation has historically been regarded as leading to serious environmental and land degradation. Much of the criticism directed against swidden systems has its roots in the colonial eras of the 17th, 18th and 19th centuries. During those times, the practice was seen as a barbaric act practised by primitive people (Dove, 1983; Thrupp et al., 1997). Over the centuries, and even in recent decades, shifting cultivation has been cited as the cause of numerous environmental ills, namely: deforestation of tropical forests, general degradation of forest lands, erosion, loss of wildlife, loss of water, decreased rainfall and more recently, climate change (through the firing of cleared land; see http://www.asb.cgiar.org/). However, it is far from certain that some, or indeed any of these accusations warrant justification; and numerous arguments are made against all of the criticism levelled against shifting cultivation (Dove 1983; Thrupp et al., 1997; Walker, 2003; Vandergeest, 2003; Trakansuphakon, 2009, Lestrelin, 2010).

Bryant (1998) notes that the colonial authorities in Burma in the early nineteenth century regarded shifting cultivation, as practised by the Karen, as contributing to the deforestation of teak forests, which were an important revenue source for the colonial administration. Similarly Guérin (2001) writes that in 1902 the Franco-Khmer administration in Stung Treng Province, Cambodia, then part of French Indochina, unsuccessfully attempted to stop upland minority communities from practising shifting cultivation, offering them the seeds of cash crops such as castor beans, coffee, and peanuts. Guerin writes that the French and Khmer authorities in the early twentieth century saw the traditional rice cultivation methods practiced by upland minority communities in provincial Cambodia as backward, compared with the 'civilised' lowland Lao and Khmer people who practised wet rice paddy cultivation. Dove (1983) writes that the Dutch in colonial Indonesia referred to shifting cultivation as the “robber economy”: implying that the practice robbed the physical environment, the farmers themselves, the country as a whole, or rather as Dove writes it 'robbed' the colonial government which had little way of controlling and hence exploiting such dispersed, uncapitalized, peasant farmers (p.91).

Yet, both Bryant and Guérin note the practice of shifting cultivation has also had its supporters during these early colonial years. In 1910 a French agricultural engineer dispatched to Cambodia, wrote of shifting cultivation: 63

This cultivation method may seem primitive and even barbaric, but is nevertheless very rational, if we consider the very special conditions these populations find themselves in …. The mountain rice has the same needs as the European cereals, i.e. to be able to grow the rice must find decomposed mineral substances. The ashes from the burned forest furnish precisely these necessary minerals, and when these are used up, the harvests will not grow anymore and the land has to be abandoned. (Guérin, 2001)

However, this engineer’s comments appeared to have gone unnoticed by colonial administrators. In 1918 the French Résident (local governor general) of Stung Treng Province in North Eastern Cambodia, described in his official reports the "savage people" who practiced "barbaric methods of forest fire for the cultivation of rice" (Ibid., 2001). It was not until several pioneering studies on shifting cultivation in the mid 20th century (Condominas 1957; Conklin, 1954; Freeman, 1955; Izikowitz, 1951; Spencer, 1966) that it was demonstrated that long fallow shifting cultivation systems are not only sustainable, but a sophisticated use of the environment and energy (Dove, 1983).

Indeed, some writers have suggested that much of the antagonism directed toward shifting cultivation is based on the ethnocentric cultural bias of the lowland bureaucratic elite against upland minorities (Dove, 1983; Bass, 1994; Thrupp et al., 1997; McElwee, 1999). Lowlanders lived in 'civilised' towns and engaged predominantly in the cultivation of wet rice paddy whereas upland minorities were often isolated and far removed from ‘civilisation’, lived close to forested areas, and practiced 'primitive' shifting cultivation on mountain slopes. The same cultural bias is responsible for the widely held belief that upland shifting cultivation does not give as good a yield as wet rice paddy, thereby leaving swidden agriculturalists in perpetual poverty. Yet this is not always so black and white. Guérin (2001) makes an analysis of harvest records made by French authorities in Stung Treng between 1905 and 1919 which reveals that upland swidden harvests were more reliable than wet paddy which often suffered from flood. In fact Guérin’s (2001) examination of the trade in rice harvests between upland and lowland communities resulting from crop failures due to floods or drought, showed that swidden rice harvests rescued the paddy farmers in 5 of these 15 years after severe flooding destroyed the lowland paddy crop, while the lowland farmers 64 rescued the upland farmers only once in the same period. Meanwhile others have also demonstrated that shifting cultivation actually delivers a higher yield of produce per unit effort of labour than does labour intensive monoculture paddy making it an ideal system for sparsely populated upland areas (Dove, 1983:91)

65 2 Shifting Cultivation in Present Day Laos

2.1 Definitions - Pioneer and Rotational Terminology

Discussion on shifting cultivation in Laos is complicated by the fact that not only is there a variety of different terms which are used to refer to shifting cultivation (swidden, upland, dry rice etc), but that the definitions of the terminology have yet to be standardised. In Laos the definition and meaning of shifting cultivation changes depending on the report and/or the government agency. Shifting cultivation in Laos has long been troubled by the lack of differentiation between pioneer shifting cultivation and rotational shifting cultivation. For much of the 1990's there was little distinction made between the two styles (Souvanthong, 1995). It was only in a 1999 Agricultural strategy that a distinction was made between the two styles, that of Pioneering Shifting Cultivation (PSC) and Rotational Shifting Cultivation (RSC) (MAF, 1999:26-7).

In Lao language PSC is known as hay kheuan nhai (other documents also refer to hay leun leuy), while RSC is hay moun vien. This terminology fits well with the English translation; hay referring to shifting cultivation, while kheuan nhai means "to move" and moun vien means "to rotate". However, the release of the Forest Strategy 2020 (FS2020) in 2005 saw a dramatic change to this definition. As of FS2020, hay kheuan nhai is now translated as "shifting cultivation" while hay moun vien is translated as "rotational cultivation" (MAF, 2005:39). The author is of the view that this translation of shifting cultivation as used by FS2020 is problematic, not only because it is a departure from both international 9 and previous domestic definitions of shifting cultivation, but also because the use of the generic term "shifting cultivation" to describe PSC will lead to a misunderstanding in English literature on the state of Lao agriculture.

Furthermore, the new definition / translation of shifting cultivation cited in FS2020 is problematic in the sense that any English language comment on Lao "shifting cultivation" post FS2020 is supposed to be referring to "pioneer" style shifting cultivation and not to "rotational" style shifting cultivation. However, if one accepts the new FS2020 definition it

9 The Oxford English Dictionary defines shifting cultivation as one of several forms of agriculture in which an area of ground is cleared of vegetation and cultivated for a (usu. small) number of years and then abandoned because of nomadic habits or deliberate fallowing or because the yield of crop has become uneconomic, when cultivation is begun elsewhere (OED, 2007). In other words both pioneer and rotational methods are still defined as shifting cultivation. 66 would appear that there is simply no longer any discussion of rotational shifting cultivation. In a 2003 MAF discussion paper on shifting cultivation the distinction between rotational and pioneer was still being made, and in this report RSC was determined to be largely unsustainable due to heavily reduced fallow periods (MAF, 2003a). Yet in spite of these concerns over RSC, post FS2020, GoL documents that comment on upland rice systems talk only of "shifting cultivation" (that is PSC in old terminology), while "rotational cultivation" (RSC) is completely missing from any discussion despite the problems previously raised in MAF (2003a), (see, for example, GoL, 2006; Lengsavad, 2006; ADB, 2006). To further complicate the matter, there is no standardisation as other researchers still use RSC / PSC distinction (eg Chamberlin, 2007; Sugimoto, 2006).

Meanwhile in two of the major laws pertaining to shifting cultivation, the Forestry Law (2005) and Lao Agriculture Law (1998), the Lao versions both contain similar forms of the word for upland farming. While the 1998 Agriculture Law could possibly be dismissed as having been drafted before the changes to terminology went through, the 2005 amended Forest Law cannot use the same defence as it was drafted well after the various draft versions of the FS2020 in 2003 and 2004, and well after the Discussion Paper on Village Land Use and Forest Management (MAF, 2003b) which first cited the change in terminology outlined in FS2020. Yet when one examines both the 1998 Agriculture Law and the 2005 Forest Law we notice that the terminology for shifting cultivation has not changed. Both Laws describe shifting cultivation simply in terms of 'hai'.

The 1998 Agriculture Law states, in Article 11, garn yud dti garn tharng paa het hai (lit. stopping the slashing of forest and to do hai). In 2005 the Forest Law states, in Article 22, garn yud ti garn tam lai paa mai pen dton garn taang paa het hai (lit. stopping forest destruction such as the slashing of forest and doing of hai). Both laws use the Lao phrase garn taang paa het hai to refer to shifting cultivation. Taang paa literally means slashing forest while het hai literally means to "do hai". Yet both the Agriculture Law and the Forest Law do not bother to qualify hai in terms of hai kheuan nhai or hai moun vien. To put it another way hai is simply hai. These two laws show us that not only are the new definitions of shifting cultivation not being used in Lao language legislation, but in fact there has been no change in legislative terminology since either the 1999 Agriculture strategy (where PSC and RSC were first distinguished) or the FS2020 where it was claimed there was a re- 67 definition into hai moun vien and hai khuean nhai. In Laos the agricultural practice commonly known as 'shifting cultivation' is called het hai (lit. to do shifting cultivation). This legal definition corresponds to the common usage of hai (shifting cultivation) and naa (rice paddy) that all Lao speaking people use to refer to the two distinct methods of rice cultivation in use across Laos.

It is of the opinion of this author, for the reasons stated above, that the new definition of "shifting cultivation" developed in FS2020 has further blurred, rather than facilitated an understanding of, GoL policy on shifting cultivation per se. In an attempt to lessen confusion around shifting cultivation, throughout this dissertation the author has used the standard definition of shifting cultivation as simply hai, and not the definition used by FS2020. Shifting cultivation comes in two distinct forms, yet as will be shown in this dissertation there is almost no attempt to distinguish between the two forms in everyday Laos.

2.2 Extent of Shifting Cultivation

While shifting cultivation is one of the major agricultural systems in Laos, there is little reliable data available to provide an overall picture of shifting cultivation and importantly, its impact on deforestation (Bass, 1994; MAF, 2005). Instead, research into shifting cultivation in Laos is predominately of a small scale localised format. The lack of overall data on shifting cultivation appears to be a long standing situation. A review of the literature on Lao shifting cultivation over the last two decades reveals report after report citing the lack of data on shifting cultivation in Laos, and the need for research to determine the extent of deforestation caused by shifting cultivation (Collins et al., 1991; Bass, 1994; Souvanthong, 1995; Tsechalicha and Gilmour, 2000; Keonuchan, 2000; MAF, 2005; Sugimoto, 2006). The Forest Strategy 2020, published in 2005, presently has in its implementation framework a plan to at last study the impacts of shifting cultivation, although this was not to be undertaken until 2010 (MAF, 2005 - Annex 2:10-11) and would be entirely dependent on donor assistance. However, with the end of the major support in April of 2010 to the Department of Forestry through the tri-party Forest Strategy Implementation Project (FSIP), supported jointly by JICA, GTZ and SIDA, it would appear that this study is also to be put on hold.

68 Long term research into the critically important fallow periods of shifting cultivators is also lacking and generally researchers rely on farmer estimates of rotational periods. The recent exception is research presently being undertaken in the JICA administered Forest Management and Community Support Project (FORCOM) (itself a project attempting to create alternatives to shifting cultivation as a means to reduce the practice) that, since 2005, has measured with GPS monitoring equipment the locations of rotational shifting cultivation fields of every villager in one village of Viengkham District, Luang Prabang Province.

Figure 2.8: Shifting cultivation mapping over 4 year period by JICA FORCOM Project

Shifting Cultivation Area 2005 Community Forest Shifting Cultivation Area 2006 Village Boundary Shifting Cultivation Area 2007

Shifting Cultivation Area 2008

Source: JICA, 2009

The research, conducted with the University of Kyoto, was to continue in the short term and was designed to measure the actual fallow periods under the shifting cultivation system. The JICA / Kyoto University research that has been systematically measuring upland fields, and the map produced by the research, provides an interesting narrative of forest use in upland farming systems. In discussions with the project team leader, it was stated that the villagers categorically stated at the beginning of the project that they only did swidden in 3 private 69 plots as is commonly prescribed in the LUPLA programme (Namura 2009, pers. comm., 28 August). However, after 4 years of plotting upland rice fields, there was still no overlap, and furthermore a picture has emerged that the villagers are using the complete forest area for shifting cultivation agriculture. This is the first time that this author is aware that long term research of fallow periods has been conducted in Laos, and although it is reported that villagers claim they only do 3 year rotations as is in line with GoL policy, after 4 years this research was still showing a long fallow rotation that had yet to return to the initial area (JICA, 2009).

While the central government does collect data on the extent of shifting cultivation conducted by rural populations, these records are regarded as inaccurate because they follow central timetables for the reduction of shifting cultivation (Sugimoto, 2006)10. The dynamic of data collection in Laos is partly to blame for the inaccuracy of records. Data records begin at the lowest level of government, the village head. They record the extent of swidden agriculture in their village and pass this on to the relevant district authority, who then passes the information to the province and so on up to central authorities. However, given the top-down paradigm of the Lao political process, essentially each level of the government bureaucracy is imposing targets on the one below, to achieve reductions in shifting cultivation. Thus, it ultimately falls to the village to bring areas of shifting cultivation down. Without adequate alternative livelihood measures to replace shifting cultivation livelihood systems (Ducourtieux, 2004), villagers are often compelled to simply hide their shifting cultivation practices. Villagers are aware of the GoL policy to eliminate the practice, so often hide their shifting cultivation fields well away from the main road, where it can not be seen by local authorities. Villagers often state that they do not have shifting cultivation fields, and there is a growing tendency of villagers to refer to shifting cultivation fields as rice gardens (swan khao). This downward pressure to eliminate shifting cultivation can lead to extreme underestimates in the reporting of upland rice areas, not only in official reporting but also in reporting by development agencies and researchers. In this vein, a 2005 IUCN report cited official provincial statistics showing three southern provinces with significant upland areas, Salavan, Sekong, and Attapeu as having a total shifting cultivation area of only 10, 5 and 5

10 MAF (2003) states that the target for 2005 shifting cultivation reduction should be to reduce the total area to 29,400 ha. Actual recorded data for shifting cultivation (PSC) in FS2020 is exactly 29,400 ha.

70 hectares respectively (Rosales, Kallesoe, Gerrard, Muangchanh, Phomtavong, and Khamsomphou, 2005:6). While individual villagers presented in this research can have as much as five hectares per household, to have official statistics reporting that the entire area of shifting cultivation of Salavan, Sekong, and Attapeu Provinces combined is only 20 hectares in total is, while a spectacular miscalculation, also a good example of the unreliability of data, given the political discourse surrounding shifting cultivation farming systems.

Given the limitations in the accuracy of any data pertaining to shifting cultivation systems, it is perhaps a futile effort to make an estimation of the total area under shifting cultivation in the country. Further adding to the confusion around approximate areas of shifting cultivation is the lack of standardised terminology around total areas utilised for shifting cultivation (including young and old fallow areas as well as actual plantings). However, various commentators have highlighted different statistics and these are worth noting here for the sake of background information.

Official GoL statistics on the extent of shifting cultivation in the country as a whole are not uniform. Different reports cite different statistics on the extent of shifting cultivation in Laos in the 1980’s and 1990’s (DoF, 2007; MAF, 1999). Officially, the area under “pioneer shifting cultivation” in 2005 stood at 29,400 ha, however, even this figure is deemed “questionable” by the Forestry Department itself because of the exactness with which this actual figure corresponds to the 2005 target for reduction of shifting cultivation (DoF, 2007). The 29,400 hectare figure has supposedly dropped from 249,000 hectares of shifting cultivation in 1990 (MAF, 2005), and 300,000 hectares in the 1980’s (MAF, 1999). Although the categorisation of PSC was not in official discourse at that time, it is not clear whether this area was considered as pioneer shifting cultivation, or shifting cultivation in general. Indeed, a closer inspection of a 1999 MAF report reveals that “shifting cultivation” is recorded at 148,000 hectares, yet the report goes on to state in a separate section that Pioneer Shifting Cultivation is “not anymore widespread”, and that Rotational Shifting Cultivation is the “more prevalent of the two systems and covers a much wider area” (MAF, 1999:p.27).

Meanwhile, the 2005 MAF and DoF Report on the Assessment of Forest Cover and Land Use During 1992-2002 cites that “Ray” (a variation on the spelling of hai) areas covered 516,900 hectares in 2002. In the report “Ray” is defined as; 71

An area where the forest has been cut and burnt for temporary cultivation of rice and other crops. The area should be classified as Ray from the time of clearcut until one year after it has been abandoned. (Cited in DoF, 2007:p.40)

Given this definition, shifting cultivation in 2002 could potentially have been as high as 208,450 hectares (half the 516,900 hectare figure). However, the DoF 2007 Indicators report states that the total area under "upland rice production" in 2002 was 135,000 hectares (of which 74,000 was pioneer) and in 2005 total “upland rice production” stood at 105,000 hectares (DoF, 2007).

The truth is that in 2007 the area under shifting cultivation was just as unknown, (and given recent village tendencies to under-report shifting cultivation fields, perhaps more so) as it was in 1987.

2.3 The Creation of Modern Day Shifting Cultivation Policy

Shifting cultivation policy, while tending towards the elimination of the practice, tends to chop and change depending on departmental authorship of policy within the Lao bureaucracy. The policy towards shifting cultivation in Laos is complex and incorporates many political factors such as ethnicity and development, as much as it incorporates environmental or forest factors. While Laos is a multi-ethnic country with more than 200 identified ethno-linguistic groups, the political landscape is by and large dominated by the governing lowland Lao (commonly known as Lao Loum) ethnic grouping. Lao Loum have traditionally engaged in lowland paddy cultivation, and not shifting cultivation, and it is for this reason that many have argued that many of the policies surrounding shifting cultivation are not based on reason, but rather on old perceptions of shifting cultivation as a destructive force practised by primitive and backward minorities (Ducourtieux, 2004; Baird and Shoemaker, 2005; Conford and Matthews, 2007). In this regard, many official statements on shifting cultivation in Laos are reminiscent of the type of colonial era misunderstanding and prejudice described earlier. Shifting cultivation is regularly vilified by GoL as being an "ineffective land-use system" that depletes forests, water sources and leads to a decrease in soil fertility, and also to an increase in poverty (see, for example, MAF and STEA, 2004:86).

72 While commercial logging is sometimes given mention in official reports on deforestation, it is always second to the impacts of shifting cultivation (GoL, 1989; MAF, 2005). In Laos, antipathy towards shifting cultivation is by no means consigned only to the post revolutionary Communist Government. Shifting cultivation was also targeted by the pre-revolutionary Royal Lao Government (RLG) and the international donors supporting the RLG. At that time there were a number of small scale attempts at limiting shifting cultivation production across the country, the most significant of which was the Lao-Australian Reforestation Project (LARP). This project, which began in 1967, identified shifting cultivation from the outset as a "destructive agricultural practice" performed by "mountain people," that was "decimating" mountain forests and reducing timber reserves and stated confidently that shifting cultivation simply "must result in erosion of topsoil and fertility depletion" (Ovington, McGrath, Florence, and Waring, 1968: pp.7, 9, 13, 18). The project’s solution was to reafforest lands "decimated" by shifting cultivation by establishing tree plantations (mostly of eucalyptus species) on 517 plots throughout Pakse, Savannakhet, Luang Prabang, Sayaboury and Vientiane Provinces (Ovington, et al., 1968; LARP, 1977). Interestingly, logging was not identified as a problem by the LARP stating that "areas of logged, but otherwise undisturbed forest are available for forest management" (Ovington, 1968:10).

In 1975 the Lao Peoples Revolutionary Party (LPRP) led a communist revolution overthrowing the RLG. The new government began programmes to limit shifting cultivation as early as 1976 (Collins, et al., 1991). The 1979 Council of Ministers (CM) Instruction No. 74 was the first comprehensive forestry legislation that, among other things, banned shifting cultivation in watershed areas (MAF, 2005). Collins writes that efforts to prohibit shifting cultivation in the late 70's and early 80's were focused mainly on the resettlement of upland swidden communities into lowland areas, and under these schemes more than 17,000 families were resettled from 1976 to 1980 (FAO and UNEP cited in Collins, et al., 1991).

The emergence of much of the formal present day shifting cultivation stabilisation / eradication policies began with the 4th Party Congress in 1986, which ushered in an era of economic reform. The reforms known as the New Economic Mechanism (NEM) led to the introduction of what GoL now refers to as a "state led market-oriented economic system" (MAF, 2005). Essentially the 1986 reforms were the beginning of a change from a Leninist- Marxist state centralised economy to a capitalist market orientated economic system. The 73 reforms oversaw the commoditisation of the country’s natural resources and facilitated a massive increase in Lao-foreign joint ventures in the timber industry. One report states that in 1987 and 1988 there were no less then 120 joint ventures in the timber industry between foreign companies and Lao partners (Lang, no date). The Thai logging ban of 1989 further increased the pressures on the Lao forests (Sluiter, 1992). Shifting cultivation was also addressed in the 4th Party Congress. The 2nd Socio-economic development plan (1986-90) that resulted from the Congress had as its second priority, a plan to "curb and eventually stabilise"11 shifting cultivation (MAF, 2005). Souvanthong (1995) writes that the plan (never successfully implemented) involved restricting the shifting cultivation practices of 227,000 families by means of, among other things, "transformation of shifting cultivation into permanent upland agriculture."

1989 saw the First National Conference on Forestry, a seven day national conference to address the growing crisis in the nation’s forests. The conference was attended by 500 members of the upper levels of government, and a strategic plan was devised to guide the country’s forestry policy towards the year 2000. While measures to address the logging of natural forest were not in themselves mentioned in the official resolutions that emerged from the conference, shifting cultivation was firmly planted in the sights of GoL Forestry Policy. Indeed, the late President Kaysone Phomvihan, in his closing speech at the conference, said that “the time has come to stop slash and burn and establish settlements and sedentary professions for villagers" (Phomvihan, 1989, cited in Sigaty, 2003). There was an emphasis on halting the felling and burning of forests and the establishment of sedentary populations through the "rational use of forests" and the allocation of forest lands to villagers. This was promoted as an alternative to shifting cultivation that would encourage sedentary vocations (GoL, 1989; MAF, 2005). From this conference came one of the first substantial pieces of Forestry legislation, the Council of Ministers Decree No. 117 on the Management and Use of Forests and Forested Land: enacted in 1989. This legislation contained 3 articles (Art. 3-5) aimed at addressing shifting cultivation that have formed much of the basis of present day

11 The stabilisation of shifting cultivation is still part of government policy today, however, exactly what is meant by the term "stabilise" remains blurred to say the least. A review of GoL literature on stabilisation appears to indicate that stabilisation means a halt to pioneer style shifting cultivation that continually encroaches on natural forest lands and instead rotates only around 3 plots. However, during field research when upland rice fields were pointed out as being "stabilised" by villagers, it was meant that the farmer no longer rotates the field but simply harvests dry rice year after year. It appeared that there were vast differences in understanding from central policy makers to the districts on the ground. 74 GoL strategies to curb shifting cultivation. These articles were;

• the allocation of forest lands to households and villages (2-5 and 100-500 hectares for families and villages respectively); • allowing villagers to manage and use allocated forest with inheritance and transfer rights; and • the recognition of ownership to individuals and groups of fallow or degraded land for the purposes of regeneration and reafforestation, or of combining cultivation- livestock-forestry (abridged from GoL, 1989b)

In 1990, with assistance provided by the ADB and SIDA, GoL established a National Forest Action Plan (NFAP) under the FAO initiated Tropical Forest Action Plan (TFAP), under which the government formulated a plan to establish 1.5 million hectares of tree plantations on denuded or unstocked lands (of which shifting cultivation fallow is included) as part of measures to increase forestation (MAF, 1999; Lohmann, 1990; Colchester, 1992). The need for the gradual stabilisation of shifting cultivation in the country was also raised in the TFAP and has appeared in subsequent forestry policy documents (Tsechalicha, et al., 2000). In 1993 the Medium Term Socio-Economic Development Plan recommended a stabilisation of shifting cultivation, and by 1994 a policy of "elimination" of shifting cultivation had been decided, and a target set to eliminate the practice by the year 2000.12 This was to be achieved through the promotion of sedentary agricultural extension in the form of paddy fields, livestock raising, tree plantations, and cash cropping (Goudineau, 1997; Keonuchan, 2000:75). Keonuchan (2000) writes that in 1998 a National Program for Shifting Cultivation Stabilisation was established within MAF, the objectives of which were to 1) manage land use, planning and land allocation in sensitive areas including watershed and protected areas and 2) re-educate shifting cultivators to understand government policy. Both these policies reflect the top down structure of the GoL, a structure which, as we shall see, is still present in today's policies towards shifting cultivation.

12 This target date was subsequently postponed until 2020 and then brought back to 2010, with the 'stabilisation' of shifting cultivation to be reached by 2005. It was announced at the end of 2010 in the Vientiane Times that the government had failed to reach this target but assured that the practice would be gone in the “next five years or possibly two or three.” (Vientiane Times, 2010d) 75 3 Present Day Policy on Shifting Cultivation

3.1 The Cause of Environmental Destruction?

In Laos, as in many of the other South East Asian countries, shifting cultivation is widely seen as a major contributor to a variety of environmental problems: first and foremost deforestation, but also soil degradation, loss of water (including rain), and more recently as a contributor to climate change. Government of Lao policy and discourse around shifting cultivation closely resembles that of Thailand where shifting cultivation is seen as the cause of many environmental problems (Trakansuphakon, 2009). Walker (2002) writes that while in Northern Thailand there is a common phrase “mii paa, mii fon” (lit. have forest, have rain), the evidence suggests that forest cover has no impact on largely monsoonal marine sourced rainfalls.

The 2003 MAF Discussion Paper on Shifting Cultivation Stabilisation for the Forest Strategy 2020 cites the following impacts of Shifting Cultivation in Laos: 1) Decrease of Forest Cover 2) Degraded soils leading to low productivity 3) Reduction of rain, and “unusually” warm weather 4) Shifting cultivators have general “livelihood” difficulties including more time spent for production, and a lack of wild foods, construction materials and wood fuel, leading to the need for migration and lack of permanent settlement.

Yet despite the various studies rebutting these common accusations levelled against shifting cultivators, no evidence is presented for these environmental impacts within government documentation.

The rationale for shifting cultivation as the primary cause of deforestation is to be largely found in the higher rates of deforestation in the mountainous regions where shifting cultivation is practised. Aerial and satellite surveys of forest cover conducted in 1982, 1992 and 2002, consistently put those areas in the north of the country as having the lowest percentages of forest cover. Given the prevalence of shifting cultivation in mountainous areas, it has been assumed that shifting cultivation is the cause of the deforestation (Souvanthong, 1995). Yet while shifting cultivation is blamed for deforestation, at the same

76 time there is recognition, even within government literature, that long fallow systems are a sustainable agro forestry practice and that the continual regeneration of fallow lands does not have a large impact on deforestation (MAF, 2003a). It is commonly stated that these systems are no longer sustainable due to population pressures. However, many commentators state that it is in fact the government policies themselves, such as forced resettlement, focal zone development, opium eradication, industrial tree and commercial crop production and various shifting cultivation eradication policies, that make for increased population densities and thereby unstable swidden systems (Baird and Shoemaker, 2005, 2007; SPC, 2001). I will discuss this further in section 5.3 of this chapter.

3.2 Shifting Cultivation Policy

At the central level, shifting cultivation policy is inconsistent to say the least. Central policy is the domain of the Ministry of Agriculture and Forestry, and policy has long reflected the belief that shifting agriculture is a major cause of forest destruction and therefore needs to be stopped. An examination of recent documentation reveals vilification of shifting cultivation as an unsustainable land practice (MAF, 1999) and ineffective land use system (MAF and STEA, 2004:89) that destroys forests (MAF, 2003a:4), depletes water sources and decreases soil fertility (MAF and STEA, 2004:89), and is a general cause of poverty in upland areas (MAF, 2003a:3-4). These perceptions led to the development of a policy as part of the National Growth and Poverty Eradication Strategy, to eliminate shifting cultivation by 2010 (GoL, 2004:3).

Yet the most recent National Forest Strategy to the year 2020 (FS2020), developed and published with a large amount of assistance and input from JICA in 2005, has moved away from a hardline stance against shifting cultivation to a general acceptance of rotational systems of shifting cultivation, albeit with the conditional "preference" for sedentary forms of agriculture (MAF, 2005:39). While FS2020 may not signify a policy reversal on shifting cultivation, the change is perhaps indicative of discussion of shifting cultivation policy taking place within the Department of Forestry. This is perhaps not surprising given the recent criticisms of GoL policies to eradicate shifting cultivation, particularly the Participatory Poverty Assessment, which drew a very strong correlation between policies to eradicate and stabilise shifting cultivation and the emergence of "new" rural poverty (SPC, 2001). Large

77 workshops held by national forestry research bodies such as NAFRI in recent years have also provided a forum to discuss problems and strategies related to GoL policy on shifting cultivation (see particularly NAFRI, 2004).

The beginning of this movement towards a more lenient approach towards shifting cultivation came with the 1999 MAF Agricultural Strategy document that differentiated between Rotational and Pioneer methods, and then in 2005 with MAF Forest Strategy to 2020, in which the previously mentioned radical redefinition of shifting cultivation to mean only Pioneer shifting cultivation, was released. However, it should be noted that these documents are often written with a large amount of assistance from donor agencies. In this case JICA has had the same long term advisor, imbedded within the Department of Forestry, for almost the last two decades. While it is difficult to ascertain the extent to which these sorts of advisors impact government policy, the distribution of policy documents such as the FS2020 and the revision of the LUPLA in 2009 are in fact centred around the same JICA advisors’ office, which at the time of writing was also overseeing the Forest Strategy Implementation Project (FSIP) within DoF in Vientiane, in coordination with SIDA and GTZ.

It is difficult to ascertain from exactly where the reform of shifting cultivation policy is emanating within the central government, and whether these progressive policies are only supported by a few people or departments, or are reflective of wider sentiment within the bureaucracy. However, although some policy movements might hint at an easing of the pejorative policies towards shifting cultivation, it should be recognised that antipathy towards shifting cultivation still remains strong within government policy overall, as noted above. In this light then, it is perhaps no surprise that the National Growth and Poverty Eradication Strategy aimed to eliminate shifting cultivation by 2010 (GoL, 2004:3).

Policy implementation in Laos is hindered by the fact that while policy may be installed at the central level, dissemination and implementation of central GoL policy on the ground is limited by inadequate budget and resources available to provincial and district offices, as well as a lack of effective communication between central and field offices. In effect this has led to the existence of two levels of GoL policy on shifting cultivation: the official central level policy of differentiation between RSC and PSC as highlighted in various recent major policy documents (MAF, 2005; MAF and NLMA, 2010), and the field level implementation policy 78 which in my experience undertaking field work in Laos makes no differentiation between the two types.

In that sense it is difficult to write an unequivocal GoL policy towards shifting cultivation at the field level. However, both rotational and pioneering forms of shifting cultivation appear to be vilified (Ducorteiux, 2004; IUCN, 2003, Barney, 2007). In interviews with villagers I undertook in Vang Vieng District as preliminary research for this thesis, it was common for farmers to simply deny the existence of upland shifting cultivation, or to refer instead to their fields as "rice gardens" (swan khao) rather than the politically sensitive hai (shifting cultivation). This hesitance on the part of villagers to provide accurate details of the extent of upland farms would appear to indicate that shifting cultivation is generally frowned upon by local authorities. However, discussions with local authorities in Vang Vieng District also indicated that they were fully aware that villagers often have no other alternative for rice production than to grow in upland fields. My observation in Vang Vieng District was that both villagers and local officials appear to be partners in a wider game of simply turning a blind eye towards shifting cultivation: where villagers conduct shifting cultivation out of sight of local authorities, who in turn do not go looking for fields.

79 4 The Legal Basis for Shifting Cultivation

4.1 Absence of Legal Existence

The Land Law 1997 (amended 2003), the Forest Law 1996 (amended 2005) and Agriculture Law 1998 form the basis of national laws pertaining to shifting cultivation and are the main laws in Laos legislating on land and forest. Shifting cultivation, as one of the two predominant agricultural practices in Laos, is an issue of land, forest and agricultural use. Yet until recently there was only one Article in all three laws directly referencing the practice, and this, it should be noted, was entirely in reference to the eradication of shifting cultivation (Agriculture Law, 1998 Article 11 – see below). While the 2005 amended Forest Law now contains a number of direct references to shifting cultivation, the amended 2003 Land Law makes no mention of the practice, while the Agricultural Law makes reference only in terms of its reduction and eradication.

4.1.1 The Agriculture Law - Legislating Eradication

Article 8 of the Agriculture Law defines "Agricultural Activities" under the law:

Agricultural activities [refers to] activities relating to cultivation, animal husbandry and fishery. (parenthesis in original)

Shifting cultivation would be considered as agriculture under this broad definition and as such, should be afforded the same rights and protections afforded to other "agricultural activities" under Article 10 of the same law; which legislates the rights and duties of villagers’ agricultural activities, namely;

• To receive legal protection; • To own assets and the products of their agricultural activities; • To receive professional and technological advice and assistance from the agriculture and forestry sector; • To transfer and succeed to agricultural activities. (GoL, 1998:Art.10)

80 Yet the Agriculture Law, in its single reference to shifting cultivation, actually legislates the eradication of the practice. Importantly, Article 11 discusses the way in which agricultural land should be used and states;

The State allocates and promotes the use of agricultural land for production in conformity with targets [and] according to the abilities of each area [of land], so that each household has [sufficient] land to undertake production subject to their labour and capital capacities, by granting the right to use or lease in accordance with the laws and regulations, with the primary objective of raising the productivity of the land to progressively transform it into intensive agriculture.

The State attends to the allocation of land to the [multi-ethnic] people for permanent cultivation to progressively decrease and ultimately stop the practice of slash and burn agriculture. (GoL, 1998:Art. 11 [parenthesis in original])

Land for agriculture is promoted through the granting of user rights by the State to individuals. Importantly, however, this user right is qualified. Firstly, users must conduct agriculture in accordance with laws and regulations, and secondly it must be done with the overall objective of transforming agriculture into an intensive form. Such a statement is reflective of the push for agrarian change along intensive modernist lines dominant in the LPRP (Evans, 1988). Shifting cultivation by its nature is an extensive, rather than intensive form of agriculture and as such, the last paragraph of Article 11 legislates the State’s role in allocating permanent agriculture and the ultimate cessation of slash and burn agriculture.

4.1.2 Forest Law

One of the early incarnations of today's Forest Law was in 1994, as Prime Ministerial Decree No. 169, on the Management and Use of Forests and Forest Land. 13 In that Decree the practice of shifting cultivation was covered under Article 31 which stated in part that;

13 PM Decree 169 replaced the 1989 Council of Ministers Decree No. 117, which was developed from the resolutions of the 1st Forestry Conference. However, the scale of PM Decree 169 was significantly larger, 81

…in order to ensure the populations living conditions, individuals, families and villagers collectives are authorised to conduct rotating slash and burn or orchard cultivation only within degraded land or non-forest land as allotted within each locality, and such cultivation shall have the sole purpose of meeting the requirements of their families. (GoL, 1994b:Art 31)

However, the 1997 Forest Law that superseded PM Decree 169 did not contain any reference to shifting cultivation. The amended 2005 Forest Law now contains the words "shifting cultivation" in a total of 4 articles (Art. 22, 35, 41, and 70), although none of these articles are dedicated to shifting cultivation in the manner of Article 31 from PM Decree 169. Rather than giving legal status to the practice, the Forest Law refers to shifting cultivation only in pejorative terms of forest destruction, or in terms of its prohibition or restriction. Article 22 of The Forest Law unequivocally refers to the need to protect forests from destruction such as slashing forest and shifting cultivation. Article 35 encourages the regrowth of forest fallow at the explicit expense of shifting cultivation, encouraging people to conserve and regenerate fallow forest so it becomes dense forest, by maintaining the forest, not felling trees or cutting and burning the forest to cultivate shifting cultivation fields. This, Article 35 states, will bring special recognition in the form of credit incentives and tax exemptions. Article 41 makes reference to shifting cultivation only in that it is a prohibited activity in Protection Forests, while the reference to shifting cultivation in article 70 is to warn those who conduct shifting cultivation outside of allowed areas that they will be subject to official warnings and education.

4.1.3 Land Law

While the 2003 amended Land Law does not refer to shifting cultivation in name, there are some articles in relation to land use that warrant examination in the discussion of shifting cultivation. Article 21 of the Land Law authorises the use of unstocked or degraded forest lands by families in conformity with their [respective] objectives in an area not exceeding three hectares per labour force in the family. However, Article 17 appears to quantify this

containing 54 Articles of Law, compared to the 16 of CM 117. 82 usage (and in some respects appears to contradict Art. 21) by determining the scope of Agricultural Land Use Rights. It states;

The State authorises individuals and families to use agricultural land in accordance with the allocation plan and objectives, for the long term and in an effective manner, according to areas determined as follows:

• For those using land for cultivating rice and raising animals, the maximum area is one hectare per labour force in the family;

• For those using land for industrial plantation and growing crops, the maximum area is three hectares per labour force in the family;

• For those using land for fruit tree plantation, the maximum area is three hectares per labour force in the family;

• For those who use unstocked land or grassland and thereafter transform such land by planting crops or grass [suitable for grazing] livestock, the maximum area is fifteen hectares per labour force in the family.

This article is important as it makes specific reference to the cultivation of rice as opposed to other "crops", and is one of the only times rice cultivation is specifically mentioned in all three laws. As shifting cultivation is the primary method used by upland communities to grow rice it would appear that this article, when referring to "cultivating rice," is speaking in terms of both shifting cultivation as well as paddy farming. However, as family labour is generally limited to a husband and wife team14 it would seem that under this ruling that families are limited to two hectares of land to cultivate rice. The law does not state how this ruling should work with shifting cultivation: whether two hectares of shifting cultivation could be made per year, or whether a total of two hectares of shifting cultivation fields can be allocated to villagers for rotational use. In the latter sense, two hectares of land is not

14 While there is no clear definition in law for what constitutes a labour force unit in a village, one NGO in Khammouane Province stated that staff and villagers generally agree that a labour unit is anyone at least 17-18 years old that can work with the strength of an adult, and is not subject to gender. (Arai 2008, pers. comm., April 25) 83 sufficient to run sustainable rotational shifting cultivation systems, yet it is not immediately clear whether two hectares of shifting cultivation could be used every year by villagers. Given the previous pejorative references to shifting cultivation in both the agriculture Law, and Forest Law, and with the total lack of mention of shifting cultivation in the Land Law, it does appear however, that Article 17 has not in fact been written with shifting cultivation in mind, but rather with paddy rice cultivation (of which two hectares per family is generally more than sufficient).

4.1.4 PM Decree No.3 and the 3 Year Rule

Research on shifting cultivation and Land Use Planning and Land Allocation (LUPLA) often refers to limitations imposed upon villagers to only conduct 3 year rotations, meaning the fallow period is limited to 3 years, after which the land must be cultivated again or forfeited (Keonuchan, 2000; SPC, 2001). In conducting my own preliminary field research in Vang Vieng District, villagers continually stated that they only practised 3 year rotations (even though every indication was that they practised far longer rotations). As mentioned previously in figure 2.3, a consultant working for the JICA-run FORCOM project also mentioned that villagers reported only conducting 3 year rotations despite 4 years of ongoing measurement of their rotating fields, and maps indicating that villagers are not returning to the same fields for a much longer period of time. All these statements by researchers and project staff indicate that there is to some extent an “official” GoL policy of only conducting 3 year rotations on upland fields. It is likely that this “3 year rule” is derived from Prime Ministerial Decree No. 3 entitled Instructions and Recommendations on the Development of Land Regulation and Land-Forest Allocation. The decree is part of the decrees that are formed under the LUPLA policy (see section 5 below), and in the decree it is stated;

Concerned state agencies shall conduct permanent control over the land-forest allocated land users' performance of their duties … namely the use of land inappropriately with the targets provided in contracts, leaving land vacant for over 3 years without development, damaging land and environmental quality, failure to pay land taxes and concession fees (based on contracts) and failure to comply with other regulations. Persons breaching such obligations shall be warned and fined, or in serious cases, their right of land use shall be

84 withdrawn and the offenders subjected to court proceedings. (GoL, 1996a: clause b. 8)

This clause would appear to suggest that anyone with any sort of land title or land certificate on swidden agricultural land could potentially lose their right to that land if it was left in fallow for more than 3 years. Temporary land use certificates were issued under the LUPLA system programme (see below) which from 1995/6 to 2002/3 was carried out in 6830 villages (MAF, 2005) although it is not apparent how many of these certificates were issued for rotational swidden fields. However, it is likely in the opinion of this author that this decree has been in some way subverted to imply that fallow periods cannot exist for more than 3 years and has created the de facto policy of the “3 year rule” for rotating swidden fields that presently exists.

4.1.5 Shifting Cultivation Under the Law

What can be learnt from the three important laws governing Land Use, Forests and Agriculture in Laos, most importantly, is that shifting cultivation (or rotational cultivation) appears to have no legal basis. The agricultural practice of many hundreds of thousands of families is only mentioned in reference to the destruction of forests. Indeed the law appears to solidify the perception that shifting cultivation is the cause of forest destruction and legislates the eradication of the practice. Such a situation can only lead to a lack of tenure security for shifting cultivators. I would now like to examine GoL policy as it relates to shifting cultivation.

85 5 Lao Policies affecting Shifting Cultivation

5.1 Land Use Planning and Land Allocation (LUPLA)

The Land Use Planning and Land Allocation programme (LUPLA) - also known as Land and Forest Allocation (LFA) - is the principal village level land and forest zoning system used by the GoL in rural areas. Although land allocation in some form has been ongoing since 1990 (MAF, 2003; Keonuchan, 2000), the present procedures for the implementation of LUPLA were developed in 1996 through the Land Allocation Sub-programme of the Lao-Swedish Forestry Programme, with nation-wide implementation commencing in 1996 (Raintree and Soydara, 2001). By 2005 the programme had been implemented in a total of 7,130 villages, comprising a total area of 9.1 million hectares across the country (MAF, 2005:40). The objectives of the LUPLA programme were originally identified as;

1) sustainable management and use of natural resources; 2) reduction and gradual elimination of shifting cultivation and 3) promotion of commercial production (Resolution of Nation-wide Review Conference on Land Management and Land-Forest Allocation, 19 July 1996 – cited in SPC, 2001).

Other stated objectives of the LUPLA programme have been identified by MAF and NLMA, 2010 as;

- increasing the production of food crops and grain production - facilitating a unified agricultural and forest management system for the monitoring and control of land use and to facilitate the collection of land taxes.

As the name suggests, LUPLA is both a land allocation and land management programme. Villages are given formal demarcation of village boundaries in negotiation with neighbouring villages. Following this, land within the village boundary is zoned according to its characteristics and use. Non-forest land such as paddy fields, residential land, gardens etc are allocated as such and villagers receive automatic title to the respective areas. Forest land is also zoned into different forest areas and mapped. Typically these areas follow the basic forest types as recognised by GoL (see earlier): conservation forest (paa sangwan), protection

86 forest (paa pornggan), production (or use) forest (paa somxai), regeneration forest (paa fuenfuu), degraded forest and sacred/cemetery forest. Finally, the programme imposes a village forest management system that has been more or less defined by the state in advance involving various strict regulations governing the use of forest resources, in particular timber.

Figure 2.9: Typical LUPLA map in Hinboun District

Source: Photograph taken by author, August 2008

5.1.1 Shifting Cultivation in LUPLA

Since its inception the LUPLA programme has been seen by the GoL as a mechanism to support the government policy of reducing and eliminating shifting cultivation (MAF and NLMA, 2010 p.3). The fact that the programme has for many years been overseen by the Shifting Cultivation Stabilization Division (SCSD) of the National Agriculture and Extension Service (NAFES), is emblematic of this focus. While elimination of shifting cultivation was not originally the primary purpose of LUPLA, over the years the programme has had shifting

87 cultivation elimination as its raison de etre. In 2005 the FS2020 remarked that the MAF views the primary objective of LUPLA to promote crop production to replace shifting cultivation through allocation and titling of production land (MAF, 2005). While there is a general acceptance of rotational shifting cultivation at the policy level, the LUPLA programme, as implemented in the districts, remains a policy aimed at halting shifting cultivation.

This was perhaps best highlighted for me at the initial “propaganda step15” of LUPLA being implemented in a village in Hinboun District, Khammouane Province. The area has been severely impacted by flooding related to the local Theun Hinboun Hydroelectric Dam (Barney, 2007), resulting in the necessity for villagers to engage in shifting cultivation due to the loss of rain-fed paddy fields in many villages in the area. The “propaganda step” of the LUPLA is designed to raise villagers’ awareness of the laws surrounding land and forests. The LUPLA group consisted of villagers, district and provincial government officials and NGO representatives and during the proceedings, at one point a refresher game was played where the whole group sang the words to a song describing the various benefits provided by forests and the importance of forests in terms of villager’s livelihoods. The game was a sing along16 where, at an appropriate place in the song, a finger would be pointed at a participant who would then state an activity that can be done in the forests. Typical answers included collecting mushrooms, collecting firewood, cutting timber, etc. When my turn came to state an activity I said “het hai go dai” literally meaning “we can do shifting cultivation” which generated great laughter from all the participants, and above the laughter the head of the Provincial Agriculture and Forestry Representative shouted “bo dai, bo dai” meaning “no, that can’t be done!” Given the local government officials’ understanding that the villagers simply had no other choice but to do shifting cultivation to meet their rice needs, it is likely that nobody there seriously expected that shifting cultivation was in any way going to be reduced from the LUPLA exercise. However, the elicited response is emblematic of the government attitude towards shifting cultivation in general, in that it simply cannot be done, and any suggestion that it could is so far against government policy as to be ludicrous. It was telling that both villagers and officials, and NGO staff all immediately reacted to the

15 The “propaganda step” is the first of an 8 step process in implementing LUPLA under a government process. 16 The song went (bpaamai hed nyang godai mii panyod lua lai. Ya dtad man tim lai der bpaa mai hed …… go dai) with the said activity put in the blank space. 88 comment. The laughter from all parties highlights that everyone in the meeting knew that shifting cultivation was something that was not supposed to be done, or at least not to be spoken of even though the practice itself was widespread in the area.

Within the Land Allocation (LA) stage of the LUPLA process, shifting cultivation is addressed through restrictions placed on its practice. Families are limited to the ownership of 3-4 plots for shifting cultivation as per the “3 year rule” described above and are required to pay tax on all the plots regardless of whether the land is being cultivated or is under fallow. Keonuchan (2000) writes that these limitations are imposed by the state, as villagers are initially given temporary land certificates17 (where shifting cultivators have the right to use and clear only the allotted land) for only 3 or 4 plots of a total of 3-8 hectares in size, depending on the availability of labour and the size of the family (Keonuchan, 2000:79). However, as we have seen above, three or four plots implies a fallow period of only two or three years; not enough to result in the sustainable practice of shifting cultivation. Various commentators on shifting cultivation in Laos have remarked on this policy of 3 to 4 year fallow restrictions and it has been claimed that the policy has resulted in severe hardship for villagers (Raintree and Soydara, 2001; SPC, 2001; MAF, 2003b; Moizo, 2004). Perhaps the most critical assessment of the LUPLA process has come from the ADB/SPC Participatory Poverty Assessment (PPA), where the LUPLA process was criticised as a lowland notion that sees permanent agriculture as comprised of only paddy cultivation, gardens, orchards and plantations (SPC, 2001:89). The PPA cites LUPLA, and in particular the restrictions on shifting cultivation, as leading to the impoverishment of swidden families through decreased rice yields, and, increased deterioration and degeneration of wild life and forest resources by families attempting to compensate for rice shortages (SPC, 2001:90). In addition to the loss of shifting cultivation fields, there is a lack of extension support provided to villagers to replace shifting cultivation with alternate forms of agriculture. SPC (2001) did not find one village that had received any agricultural extension support to assist villagers in a change from extensive to intensive farming systems (SPC, 2001).

17 After 3 years of continual use, these certificates in theory can be upgraded to permanent Land Title, although there are no reports of villagers ever having done as such anywhere in the country (MAF, 2005). 89 5.1.2 LUPLA and the 3 Year Rule

While I have previously noted my own opinion that the “3 year rule” emanates from PM Decree No. 3 which forms the legal basis for the LUPLA system, the Ministry of Agriculture and Forestry, in a discussion paper of the effect of the LUPLA on shifting cultivation also cites two different reasons for short 3 year fallows in village shifting cultivation systems.

One is related to village avoidance of payments of land tax. A sustainable shifting cultivation system running on fallow with natural regeneration and zero production during the fallow period would require at least an eight year fallow to replenish soil. (MAF, 2003b:9) However, this would require each family to obtain 8 land use certificates, which would require families to pay land tax on each one of the 8 plots. The present land tax system therefore clearly favours intensive 'permanent' production typical of paddy rice, and is not applicable to extensive upland systems based on long fallow.

The second obstruction to long fallow systems under LUPLA as cited by MAF (2003b), is the regeneration of fallow lands, and what MAF terms the 5 year rule. MAF states that: one of the forest types categorised under LUPLA (not to mention the Forest Law) are regeneration forests – which are secondary forests found in fallow land within rotational shifting cultivation areas (MAF, 2003b:9). MAF further states that, while not supported by legislation, local officials implementing LUPLA often designate fallow land that is more than 5 years old as regeneration forest with the aim of returning that forest to mature forest, thereby taking it out of the swidden cycle. This, MAF states, could have the unintended effect of 'forcing' villagers to slash [forests] again within 3-4 years to pre-empt the declaration [of swidden fallow] as regeneration forest (Ibid.).

Both these arguments I do not find convincing. In my discussions with villagers and other development / forestry experts in Laos, I have continually come across the 3 year rule on swidden fields. The similarity in villagers’ comments around the country in trying to hide their long term fallow systems by claiming that they have only 3 year rotations suggests to me that the rule is in someway a top down decision imposed upon villagers rather than something they themselves do (despite knowing what problems would arise regarding soil fertility) simply to pay less tax. I also find the second argument put by MAF 2003b as incredulous because it implies that there is actually government monitoring, as well as good 90 participation and knowledge among villagers themselves, of the location of delineations for forest zones implemented under the LUPLA, neither of which was particularly common according to MAF (MAF and NLMA, 2010:p6-7).

Many others commentators on the Lao LUPLA process also state that the restrictions on shifting cultivation are mainly to do with the emphasis on forest conservation, which in the process tends to allocate large tracts of conservation and protection forest, with much smaller areas given over to agricultural land including for shifting cultivation (Raintree and Soydara, 2001; Kallabinski and Lundgreen, 2004). Villagers are prohibited from conducting shifting cultivation in the protected forest zones, and many villagers interviewed in the course of this research report on the potential for fines if such prohibitions are broken.

However, as Trakansuphakon indicates, upland communities are completely aware of the need for long fallow rotations when conducting shifting cultivation as part of their indigenous knowledge (Trakansuphakon, 2009). Given that villagers are aware that if they undertake short fallow shifting cultivation, soil degradation and harvest declines would be the result, it can be asked why villagers would cooperate with a system like LUPLA that aims to limit their shifting cultivation rotations, when there is little to no monitoring by government agencies? I put this question to the lead author of the 2001 ADB/SPC Participatory Poverty Assessment, which strongly condemned the LUPLA programme for limiting shifting cultivation rotations. He stated that over the course of the field research conducted for the PPA the research team prioritized interviews with communities who were facing severe hardship. It was found that these communities were predominantly those that had been resettled or were otherwise suffering from external shocks resulting in dramatic land use changes (Chamberlain 2010, pers. comm., 21 September). Policy driven external shock factors will be discussed below, however, it would appear that the evidence presented above would suggest that the 3 year rule in and of itself is somewhat overstated as a factor in limiting shifting cultivation fallow.

5.1.3 PLUP – The Future of LUPLA

From 2008 until 2010 the LUPLA programme has undergone a major review as part of the FSIP. Unusual for many major forest policy initiatives in Laos, the review has involved

91 extensive consultation with NGO LUPLA implementing agencies, of which this author was also included, in the role as the Chair of the Land Issues Working Group (LIWG): a position held from February to September of 2008. The resulting policy is the Participatory Land Use Planning (PLUP) programme, perhaps a “reform”, rather than an “evolution” of LUPLA. The new policy was released in April of 2010 and, significantly, there have been a number of changes regarding shifting cultivation in the implementation of PLUP. Primarily these changes are the recognition that the previous LUPLA focus on limiting shifting cultivation was misguided and has actually led to soil degradation (MAF and NLMA, 2010:p.6) and that there needed to be a refocus towards reducing the emphasis on using PLUP as a mechanism for shifting cultivation reduction and an increase in the focus on PLUP as a means of increasing land tenure security (Ibid:7). The document also continues to support the idea that rotational shifting cultivation (hai moun vien) in a predefined agricultural land area is considered appropriate. Furthermore, the policy document supports the idea of issuance of communal land titles for areas of village agriculture that have no formal ownership, such as is commonly the case with shifting cultivation (Ibid:56, 60). While these are significant changes to the long standing policy of elimination of shifting cultivation, it remains to be seen as to whether or not these changes can and will be applied at the village level.

5.1.4 LUPLA and Land Tenure

While the 'stabilisation' of shifting cultivation is the stated primary goal of LUPLA, it is worth mentioning briefly other ways in which LUPLA is implemented to achieve very different objectives. Several NGOs in Laos have implemented the LUPLA programme in an attempt to protect village forest areas from outside actors such as logging companies and/or private investors, through the village boundary delineation process incorporated into LUPLA. While these boundaries are more complex than they often appear, boundary delineation is seen by some as a way to facilitate village control over land areas. Indeed it has been proposed by one expert on Lao forestry that the village headman, as a Lao government official in the village, has the right to refuse private investment projects across their village lands (Kitamura 2008, pers. comm., 13 June) although this is not specifically referred to in any law this author has ever seen. It is sometimes reported amongst development agencies in Laos that when a village headman refuses to sign a document, then ultimately a company is not allowed to appropriate village lands, although in many cases severe pressure, and or

92 persuasion, is put on a village headman to sign land agreements that they disagree with. This I will examine in detail in Chapter 5 of this thesis.

At best, the limited rights of refusal are no substitute for a proper legal framework of land tenure security for village forest lands. While the programme does provide some limited acknowledgment of the right to use forest lands, LUPLA has not provided villagers with long term tenure security over their forest lands. In fact the loss of village forest lands to commercial concessions by outside investors is cited by some commentators on LUPLA as one of the major problems of the programme (Raintree and Soydara, 2001; MAF/NLMA, 2010:p.6). In an interview in Vientiane between the head of the AusAid / World Bank Land Titling Project and an international NGO, this researcher was told that LUPLA only grants usufruct rights to forest land and does not provide villagers with title over land, and as such was insufficient to stop the appropriation of village lands by outside actors (meeting notes, Lundy, S. 2005).

In Part II it will be shown that, apart from a small number of examples from larger foreign investment companies, the politically marginalised rural population of Laos are not able to receive compensation for lost forest lands (Watershed, 2005; Hunt, 2006), as by and large almost all stakeholders in Laos consider that forest lands are the property of the state (Hodgdon, 2006).

5.2 Afforestation of shifting cultivation fallow as “degraded land”

The previous chapter examined the concept of degraded forest / land, and how degraded forest is regarded under the law as suitable for plantation development. This concept also has important implications for shifting cultivation in that, up until the introduction of the 2007 Forestry Law, degraded forest existed as a national forest type and was defined under the 1996 forestry law as follows.

Degraded forest are forests which have been heavily damaged, i.e.: the land area has no forest [coverage] or the area is defoliated which is separated for reforestation or to assign to an individual and to an organisation to use for reforestation, and to organize reforestation, permanent agro-forestry and

93 livestock production or use for some other purpose according to the national socio-economic development plan. (GoL, 1996b: Art. 21)

Under this terminology shifting cultivation fallow areas can be regarded as degraded forest, and hence under this article and under the Land Law, fallow areas are determined to be suitable for plantation development.

While not implemented as a shifting cultivation specific policy, the reafforestation of degraded lands is a country-wide practice that has been used as a way to physically remove shifting cultivation fallow from village communities. The national forest strategy and poverty alleviation strategy both promote reafforestation of degraded land as a method to increase national forest cover to above 60% by 2020 (GoL, 2004:62); including 500,000 hectares of industrial plantation (ADB, 2005a:3; Midgley, 2006:25). Although there have been some recent policy and legislative changes to separate fallow lands as a distinct category from degraded forest (Art 3: GoL, 2007; MAF and NLMA, 2010), this research was undertaken at a time when this distinction had yet to be made, and as such it was a common method of allocating lands for concession development and as such is therefore relevant to this dissertation.

This “policy” of allocating shifting cultivation fallow as land for plantation development goes back many years. The pre-cursor to the 1996 Forestry Law was Prime Ministerial Decree 186 on the Allocation of Land and Forest Land for Tree Plantation and Forest Protection in which article 2 specifically authorised the use of shifting cultivation fallow for plantation development.

The State allows and supports the use of forest land as “hai” which contains no commercial tree species, land without forest cover degraded and eroded forest land to reforest with plantations. (GoL, 1994a:Art. 2)

This article is indicative of the previously stated assumption that shifting cultivation is a major cause of deforestation. By replanting these “deforested” areas with tree plantations, it is considered by the State that they are reforesting the country, and simultaneously discouraging shifting cultivation. It seems that there were at least plans in the early nineties to 94 put this policy into practice. Souvanthong (1995) writes of an early plan (never successfully implemented) involving restricting shifting cultivation practices of 227,000 families by means of, among other things "integrating upland agriculture with reforestation".

It could be said that this idea of shifting cultivation fallow as degraded forest is a commonly accepted norm, so much so that it is even prevalent within development agency discourse. During my attendance at the same introductory step of a LUPLA programme as mentioned previously, I witnessed a fascinating example of how a “rights based approach” to community forestry presented this policy. Usually this “propaganda step” of the LUPLA involves the lengthy task of reading out selected articles of the numerous laws, including the Land Law and Forestry Law, over a two to three day period. Normally there would be very little understanding about what articles of law, which utilise specialised legal language, would mean in the real sense for villagers. As such, this NGO had developed a variety of posters in order to assist villagers’ understanding of key articles of law. In this regard the NGO had a poster to help villagers understand the 5 forest types that are explained in the (now former) Lao forest law, that being; Protection Forest, Conservation Forest, Production Forest, Regeneration Forest and Degraded Forest. The way in which the NGO staff explained the concept of degraded forest to villagers18 was to use a common word that many villagers would understand: that of “Paa Lao”. Paa Lao is commonly used as a word to describe forest lands that are in fallow. In his research in the same district where this NGO was working, Barney describes villagers talking about Paa Lao Oon and Paa Lao Gae as young and old fallow forest respectively (Barney, 2007:p.65). While this rephrasing of the term degraded forest may have assisted villagers to some extent in their understanding of the term, the NGO staff then went on to inform them that the State had the right to use degraded land for plantations development as per article 21 of the Forest Law, effectively reinforcing to villagers the fact that their fallow lands, where applicable, could be legally appropriated for plantation development. This, in an area that was experiencing a rapid growth in land conflicts from industrial tree plantations, would not appear to be assisting villagers in taking control of their forest rights.

18 In Lao language, “degraded forest” is a technical word that is not immediately understandable to rural villagers, hence the need for a more suitable explanation 95 It is perhaps no surprise that the discourse of degraded land in relation to swidden fallow fields has also permeated its way into the lexicon of rural village folk, however, unlike many bureaucrats and development professionals, villagers appear to have a much more fluid idea of the concept of 'forests'. Forest zoning systems in Laos appear to work on the principle that forests do not change their state over time, but are perpetually stuck in one of the 5 major forest categories. However, as one village leader pointed out in Hinboun District, Khammouane Province, when asked whether swidden fallows were degraded land, he quite sensibly stated that “Yes” it was degraded land, but "if we leave it [degraded forest] for a long time I think it will become conservation forest because the trees will grow again" (Interview with villagers in Ban Nongpue, 2006). And herein lays the basis of the entire problem regarding the concept of degraded forest viz-a-viz shifting cultivation.

Shifting cultivation is an agro-forestry cycle, not a stagnant forest category. If fallow land is considered as degraded forest, then all these lands can legally be appropriated by the government as part of reafforestation and poverty alleviation strategies. It will be shown in Part 2 of this dissertation that this is exactly what is happening. However, as we have already discussed, without appropriate fallow periods a shifting cultivation system cannot work. When fallow lands are removed from the shifting cultivation system the mythology of shifting cultivation as a destructive forest practice becomes self fulfilling, as villagers need to clear new areas of forest to replace fallow fields that have become tree plantations or otherwise suffer from degrading soils due to overuse.

5.3 Village Relocation and Consolidation

Also used as a primary mechanism for the stabilization of shifting cultivation (MAF, 2005:40), village relocation is a government scheme to resettle remote villages into 'focal zones' around which government services (such as hospitals, irrigation, schools etc) are focused. The rationale behind the scheme is that it is more cost effective for the cash strapped Lao government to provide large amount of services in targeted focal zones, rather than in remote and widely dispersed villages.

In Laos, overpopulation is the primary argument used against shifting cultivation and to advocate for sedentary farming. It is argued that while the system of shifting cultivation had

96 previously been sustainable, the continuing population growth in the country has seen increasing pressures on swidden systems, leading to shortened fallows, a decrease in harvest yields and an increase in poverty (MAF, 1999:26-7; MAF, 2003a). It is worth stating again that the argument of overpopulation is really an argument about population density. As shown in Figure 2.2, the higher the population in a village, the more land is needed to run long fallow swidden systems. However, the assertion that Laos has too high a density to support swidden agricultural systems is widely disputed.

Compared with many of its neighbours, Laos has a relatively low population density with only 24 people per km2 (Messerli, Heinimann, Epprecht, Phonesaly, Thiraka, and Minot, 2008) compared to 250 in Thailand and 1000 in Vietnam; countries that also have areas of shifting cultivation (Vandergeest, 2003:p.53). Furthermore, many people live in the lowlands, cultivating paddy, or are urban dwellers, hence population densities of upland rural areas are likely be considerably less. One study, in Phongsaly Province, (where official statistics put forest cover at 23.8%) noted that villages away from the Provincial administrative centre had a population density of only 9 people per km2 (Ducourtieux, 2004). An analysis of the 2005 national census provides a good overview of the breakdown of population density over the entire country. This is represented in Table 3 below. We can see from this table that more than half the area of the country has a population density of less than 10 people per square kilometre, and 35% less than 5 people.

Table 2.6: Population densities and respective shares of the territory of Laos Population Density Corresponding land area of the (people / km2) Lao PDR inhabited in 2005 (%) 5 or Less 35% 10 or Less 57% 20 or Less 75% 50 or Less 90% Source: Messerli et al. (2008), p.20

More importantly, the problem of increased population densities is not simply one of more births in a given area over time, but it is, increasingly, also a problem of migration, often in the form of forced or coerced resettlement resulting from GoL policy (Baird and Shoemaker, 97 2005; ACF, 2005). Resettlement in Laos is complicated by GoL poverty reduction strategies that aim to bring infrastructure to people. For its part the Lao government claims that it is not cost effective for the cash strapped government to provide infrastructure such as roads, medical clinics and schools to small remote communities, and as such promotes policies of village consolidation (consolidating numerous small village into larger villages) and Focal Zones (resettling villages to designated provincial focal zones around which government infrastructure is focused). Baird and Shoemaker (2005) argue that these two policies are implemented as part of the larger strategy of eliminating shifting cultivation, the hope being that when villagers are resettled into focal zones they will find alternate livelihoods and stop shifting cultivation. However, often no viable alternate livelihoods are provided as part of consolidation and focal zone plans or, where alternate options are made available, such as cash cropping, often these are hopelessly inadequate and actually result in an increase in poverty (Ducourtieux, 2004). Without a viable alternative livelihood, villagers resort back to shifting cultivation, except that due to the policies of village resettlement, local population densities have been dramatically increased resulting in unsustainable agricultural practices such as shortened fallow, multi year cropping, and the clearing of new fields which results in a visible reduction in forest areas. Often with extreme cases this leaves large swathes of denuded hills, as can be seen around Luang Prabang city. In addition to focal zone and village consolidation policies, many villagers are forcibly resettled under infrastructure projects such as hydroelectric dams and logging operations as part of the government's industrialisation strategy.

While it is easy to criticize GoL policies that in themselves are largely responsible for increases in population density and hence the collapse of sustainable shifting cultivation practices, in should not be ignored that the government is under pressure to raise the living standards of its population as part of a wider strategy of poverty alleviation under the NGPES, and these policies reflect an attempt to achieve this aim: an aim that itself is supported by many in the donor community. Indeed many aid projects are hesitant to conduct projects in remote communities, themselves having a variety of budget restrictions. Baird and Shoemaker (2005) note that the GoL is often interested in resettling villagers because international aid organisations are more likely to assist communities that are easily accessible. In addition, some see resettlement of upland communities to the accessible lowlands as part of a "country building" process. The head of the JICA administered 98 FORCAP/FORCOM projects stated that the process of resettlement was the only way to provide infrastructure and services to the population, and that the JICA projects were supporting the government in this regard by assisting the GoL to provide alternate livelihoods to rural communities (Iwasa, 2005).

99 6 Chapter Synthesis In summary, shifting cultivation is a complex and difficult issue to follow in Laos. Yet the discourse surrounding shifting cultivation is important because of the way in which Forestry sector intervention, in the form of “aid and development”, takes place in Laos. In spite of the various accusations levelled at shifting cultivation, there is very little reliable data in Laos as to the true extent of shifting cultivation or the damage it is routinely accused of causing. What is clear is that shifting cultivation is an important traditional agricultural system for upland and particularly ethnic minority communities in Laos. This system of agriculture provides upland communities not only with rice, but with many other important crops that they are able to eat and trade. Fallow fields also contain a variety of non-timber forest products that villagers are able to utilize in their livelihoods and which contribute to their food security and income.

In spite of the occasional report emanating from this or that agency suggesting that the current policy towards shifting cultivation is both ineffective and in fact increasing rural poverty (most notably the 2001 SPC Participatory Poverty Assessment), there remains a discernable antagonism towards shifting cultivation on part of GoL towards the practice of shifting cultivation that resembles past colonial era attitudes. The practice of shifting cultivation is routinely vilified by government authorities as the major cause of deforestation, both in the state run media, in public meetings, and in official publications. In the latter, logging operations are only cited - if they are cited at all - as a cause of deforestation secondary to shifting cultivation which remains the main culprit. There is still no recognition of rotational shifting cultivation within the major laws of the country as an acceptable agricultural system. Rather, shifting cultivation remains only in legislation as something that is to be “stabilised and eliminated”.

The official discourse surrounding shifting cultivation as the major cause of forest degradation severely impacts upon the way in which all Forestry intervention works within Laos. Instead of tackling illegal logging or inappropriate land selection for agri-business, or overall corruption within the Forestry Department, development projects for the most part actively support the government policy of stabilising and eliminating shifting cultivation. More importantly, this official discourse views villagers as the single biggest threat to forest management. In doing so, Forestry sector aid and development focused on shifting cultivation 100 eradication is at best continuing to be largely irrelevant and ineffective in Laos, and in its worst forms, is actually increasing the hardships faced by forest dependent communities.

101 PART II

CHAPTER THREE

FOREIGN DIRECT INVESTMENT AS AID

AN INTRODUCTION TO OJI LPFL

Contents

1 Foreign Direct Investment as Aid ...... 103 1.2 Trends in FDI in Laos...... 105 1.3 Investment in Lao Agro-Forestry Sector ...... 106 1.4 Responsible Plantations ...... 108

2 Oji LPFL...... 110 2.1 History of LPFL...... 110 2.2 Oji Paper ...... 110 2.3 Oji Paper in Laos ...... 111 2.4 Corporate Structure of Oji LPFL ...... 114

3 The Concession Agreement...... 115 3.1 Location and Area...... 115 3.2 Plantings and Concession Expansion...... 117 3.3 Financial Arrangements with the State...... 120

4 Oji LPFL Social Contribution Program...... 122 4.1 Legal Requirement...... 122 4.2 Implementation and Costs...... 123 4.3 Social Contribution as compensation...... 126

5 Chapter Synthesis ...... 128

102 1 Foreign Direct Investment as Aid Foreign Direct Investment (FDI) is not considered as international aid in the strict sense of the word. That is, in the case of FDI a project is not implemented through a multilateral, bilateral, or organisational framework for the specific purpose of assisting a target country, rather a private company makes a private investment in the target country with the specific purpose of making a profit on that investment. Yet over the last several decades, private sector development (of which FDI is a part) has emerged as a new strategy for the way in which many international aid organisations promote poverty alleviation in the developing world.

FDI is just one part of wider neo-liberal economic reforms which have become the sole remaining economic philosophy since the collapse of the Soviet Union. These reforms, often referred to as the Washington Consensus, are designed to promote growth and are spearheaded by institutions such as the World Bank, Asian Development Bank (ADB), International Monetary Fund (IMF), World Trade Organisation (WTO) and also the United Nations (UN). The Third United Nations Conference on Least Developed Countries (LDCs) held in Brussels in May of 2001 saw a ten year program formulated to “develop” the world's LDCs toward 2010. The “Brussels Program of Action” which emerged from this conference placed a high priority on market and trade liberalisation including the promotion of FDI. Specifically, FDI was promoted in the Brussels Program as the best means of providing capital, know-how, employment and trade opportunities to developing nations, ultimately resulting in building domestic supply capacity, export growth, technology and skill transfer, employment generation and poverty eradication (Chowdhury, 2002; UNGA, 2001:8).

While the Brussels Program was important in defining a comprehensive policy under the UN framework, the Poverty Reduction Strategy Papers (PRSP) formulated by IMF are the defining documents around which individual countries structure their economic reforms. In Laos, the IMF PRSP is the 2004 National Growth and Poverty Eradication Strategy (NGPES). PSRPs have attracted criticism for being forced on developing countries by the IMF, often with international aid, trade and finance being dependent on acceptance of the IMF template PRSPs (Joy, Malaluan, and Guttal, 2002). So it is that in Laos, the NGPES has become the principal guiding strategy in terms of directing GoL attempts to address poverty. The strategy incorporates a growth centred development model, through a three pillared 103 approach of ensuring economic growth, socio-cultural development and environmental preservation (GoL, 2004:2). The NGPES places strong emphasis on promoting the private sector including FDI:

The private sector, trade and domestic and foreign direct investment (FDI) are expected to be prime factors in driving the economy and every effort must be made to ensure a positive business environment for them.(GoL, 2004:p.6)

While the NGPES has a pro-growth model of poverty alleviation, it should be noted that there is considerable debate as to whether growth achieved through market and trade liberalisation actually contributes to poverty alleviation in developing countries. Many commentators argue that development agencies and governments alike give precedence to economic liberalisation and growth at the expense of socio-cultural and environmental concerns. In countries where rural populations largely depend on the surrounding natural resources for their survival, polices aimed at economic growth have been criticised for resulting in increased poverty levels of the majority of the population (Klein, 2001; 2008; Gutall, 2002; Nuruzamann, 2005). Yet despite the ongoing debate over economic reform, albeit confined largely to academic and activist reporting, both Northern donor countries and Southern developing countries around the world have signed up to the economic growth centred model of development. FDI then, exists within this model and its ongoing establishment in the developing world is promoted as a matter of course in global development policy (World Bank, 2000; GoA, 2006:x-xi; GoA, 2007:5).

When it comes to the economic reform of previously state managed economies, Laos is an unremarkable example. Located in the middle of the Southeast Asian Tiger economies, Laos is a one party communist state that began reforming its centralised economy in 1986 with the adoption of the New Economic Mechanism (NEM) and an 'open door policy' (GoL, 2004). International Financial Institutions (IFI) like the ADB have been promoting economic growth centred poverty alleviation policy ever since. The World Bank stated in a 2000 Aide Memoire on the Lao PRSP that "…growth will be the best means of poverty reduction but also that certain structural and sectoral policies expedite the process" (World Bank, 2000). The promotion of the private sector and FDI is one such sectoral policy that hopes to generate growth. 104 Given this mainstreaming of international aid and its focus on the promotion of the private sector and FDI, an examination into FDI is pertinent as part and parcel of the modern day international aid program. Part II of this thesis examines the case of a Japanese Agro-Forestry FDI project in southern Laos, that of Oji Paper. The industrial tree plantations implemented under Oji Paper's Lao Plantation Forestry Limited (LPFL), provide a useful case study for examining FDI scenarios, not least because they represent a significant change from a rural subsistence based economy into an intensive production based economy as stipulated under the growth models promoted by the World Bank, ADB and IMF, as well as the GoL itself.

1.2 Trends in FDI in Laos

Beginning in the mid 2000’s, Laos has seen an explosion in foreign direct investment in the plantations sector. The increasing investment is due to several factors, not least due to GoL having prioritised investment, including within the agro-forestry sector, as a mechanism for poverty alleviation with plans to greatly expand plantations development (ADB, 2006; Midgley, 2006). Another important factor in the increasing agro-forestry investment in Laos, is the increase in linkages - both physically, through numerous transportation infrastructure projects undertaken by international development agencies as part of the ADB's Greater Mekong Subregion (GMS) strategy; and economically, through measures such as negotiated bilateral and multilateral trade agreements, which lower trade tariffs and link land-locked Laos, to the region and to the global marketplace (Hunt, 2007).

Yet another important reason for the growth of agro-forestry investment is the increasing international demand for forest-derived products such as rubber, lumber for flooring and furniture manufacture, as well as increasing demand for pulp and paper, particularly from within the Asian region (Midgely, 2006:1-6). As with other global industries the international Pulp and Paper industry has increasingly moved production of pulp and paper products offshore, seeking cheap land and labour (Carrere and Lohmann, 1996; Klein, 2001). There are other physical conditions predicating the flow of forestry investment to Laos, such as the location of Laos, situated in the South East Asian tropical belt with annual monsoonal rains, and also the countries relatively low population densities when compared to other countries in the region (Oji LPFL, 2007c).

105 1.3 Investment in Lao Agro-Forestry Sector

Accurate data on the number of concessions in operation in Laos is presently difficult if not impossible to come by, due to the fact that various government departments at the Central, Provincial, and District level are allowed to grant concessions to foreign investors. Schumann (2006) reported a total of 13 large plantation operations (3 no longer operating) approved by the Prime Ministers Office (PMO) and Department of Domestic and Foreign Investment (DDFI) although many more operations approved by different arms of the bureaucracy are in existence. Data collected in 2007 by the Lao Committee for Planning and Investment (CPI), showing yearly approvals for agro-forestry investments, reveals large increases in agro- forestry investment over the last few years, from 21 investment projects totalling around US$17.3 million in 2005, to 39 approvals in 2006 for an investment total of approximately US$458.5 million.

Table 3.7: Investment trends in Lao agricultural sector Year Number of project Investment Value (USD) 2001 13 18,616,250 2002 6 13,988,000 2003 16 17,321,800 2004 19 75,704,017 2005 21 17,352,240 2006 39 458,578,711 200719 9 67,338,533 New20 16 275,158,000 Source: CPI (2007)

Further data provided by CPI lists several of the large scale agro-forestry operators presently working in Laos. At the time this data was released in 2007, Oji Paper (Japan) and Grasim (India) were the only two companies presently holding large concessions that do not come from neighbouring countries. Oji Paper came to Laos in 2005 after buying out a smaller company, while Grasim arrived in Laos in 2006 establishing their own concession agreement.

19 Data from 2007 was only for first 4 months of fiscal year ie. October 2006-Jan 2007 20 This data represents new agro-forestry investments which were being considered in February 2007 106 Table 3.8: Major agro-forestry investments in Laos Project Name Land Area (ha) Investment Value (M.USD) Oji Lao Plantation (Japan) 50,000 49 Grasim (India) 50,000 350 Daklak Rubber (Vietnam): 10,000 30 Saha Company (Vietnam): 10,000 22 BIDINA (Vietnam): 9,485 24 Mith Lao Sugar Co. Ltd. (Thailand) 10,000 22.5 Savannakhet Sugar Corp. (Thailand) 10,000 10 Source: CPI (2007)

Investors seeking land for agro-forestry investment were continuing to arrive in Laos in early 2007. As Table 3 below indicates, as of February 2007 CPI was considering approval of a number of projects with 10,000 plus hectare concessions. While not listed in the table below, 2007 has seen the entry (albeit in the form of a pilot project) of another major international pulp and paper company, the Finnish-Swedish Stora Enso who, at the time of writing, were reportedly considering a 35,000 hectare investment in Savanaket Province (Stora Enso and Burapha, 2008).

Table 3.9: Projects under CPI consideration as of Feb 2007

Project Name Land Area (ha) Investment Value (M.USD) LVF Lao Co., LTD (Vietnam) 5,000 10 Quasa-Geruco (Vietnam) 20,350 18.73 Lao Temdoung Group Co.,LTD 25,000 74.40 Phattana Hungchalern Company 100,000 4.29 COECCO Company 100,000 34.93 Source: CPI (2007)

107 1.4 Responsible Plantations

While Laos is witnessing a rapid increase in agro-forestry investment, many investment companies are coming from smaller operators from neighbouring countries such as China, Vietnam and Thailand. As of 2007, only two major international companies have concessions agreements in Laos; the Indian Grasim – part of the Aditya Birla Group, and the Japanese Oji Paper. A number of other international plantation companies have examined possibilities in Laos: Advanced Pulp and Paper, United Paper Manufacturing, and Stora Enso (Midgley, 2006:38).

Yet, with the increase in all kinds of plantation investment throughout the length and breath of Laos, there has been an increasing chorus of concerns and complaints raised by NGOs, donor organisations, GoL officials, and not least villagers themselves, about plantation operations that ignore villagers' wishes and take villagers' lands and natural resources. Academics, donor organisations, NGO's, and even the state run English language newspapers have documented a number of these smaller plantation operations (Barney, 2007; Schumann et al., 2006; Hunt, 2006; Phouthonesy, 2006) and reports in the local media from the recently established National Assembly complaints hotline regularly list complaints related to land conflict between companies and villagers (see, for, example Vientiane Times, 2010a; 2010b; 2010c). Land conflicts from foreign investment had become so bad by 2007, that in May of that year the GoL announced a country-wide moratorium on all land concessions over 100 hectares in an attempt to remedy a situation that was viewed as largely unregulated and out of control.

Some commentators in the international forestry and plantation sector in Laos blame most of the problems in agro-forestry investments on the multiple small Chinese and Vietnamese plantation operators around the country. Such commentators typically state that small "unscrupulous" operators do not observe international best practice standards, and do not have company codes of conduct with strict Environmental and Social guidelines. Midgley (2006) argues that a viable plantation sector could be developed in Laos through the use of "best practice" multinational plantation operators. These companies, states Midgley, have many (often hundreds) of years of experience in the plantation sector, are endowed with strict Environmental and Social guidelines, commitments to corporate responsibility, transparency,

108 and are beholden to foreign share holders and international public opinion (Midgley, public meeting, 2006).

From a research perspective then, the examination of an "international best practice" multinational plantation company such as Oji Paper, offers a chance to examine not a "worst case" scenario of plantation companies logging dense natural forest and the consequences this has on forest dependent rural farmers (Kenny-Lazar, 2010; Hunt, 2006), but a "best case" scenario of a corporately responsible, best practice, multinational plantation operation run under foreign directorship, beholden to foreign shareholders, and international public opinion. This is the kind of investment in the plantations sector that proponents of FDI see as the ideal mechanism for poverty alleviation in the developing world, and as such it can serve as a test case for the promotion of FDI in the forestry sector throughout the developing world. The case of Oji Paper is what I will now examine in the proceeding chapters.

109 2 Oji LPFL

2.1 History of LPFL

The Lao Plantation Forest Company Ltd. (LPFL) began life in the early 1990s as the BGA Lao Plantation Forest Company Ltd. BGA, as the company was commonly known, was originally a joint venture between New Zealand founded Brierley Investments Limited, the Thai Finance company General Finance and Asia Tech, a Thai Plantation company and the GoL. However, both Asia Tech and General Finance pulled out of the company after the 1997 Asian financial crisis, leaving Brierley and GoL as the only partners (Lang, 2002).

After early surveying work in 1993, BGA began initial plantations in 1996, however these initial trial plantations were very small with 24.9, 43 and 62 hectares planted from 1996 until 1998 respectively. The company signed an MOU with GoL in 1997, and in 1999 GoL gave its formal approval to the company granting BGA a 50,000 hectare concession to plant eucalyptus and acacia trees across a 150,000 hectare prospecting area (see concession section below). Following GoL approval in 1999 plantings gained some momentum and the company was able to obtain concessionary loans under the ADB Industrial Tree Plantation Project; however, these plantings were still relatively small with 104.5, 321.6, 426.6 and 439.3 hectares planted respectively from 1999 until 2002 (Ibid; Oji LPFL, 2006c:1). In 2002, the BGA plantations in Laos were criticised by the World Rainforest Movement, an international organisation advocating against monoculture tree plantations, for its land acquisition practices. The company was accused of using the GoL Land and Forest Allocation program to allocate itself plantation land, utilising previously productive village land such as swidden fields, grazing lands, and degraded forest for their plantation activities, as well as for the destruction of dense tropical forest (Lang, 2002:47-8). It is not clear why BGA saw a dramatic drop in plantings from 2002 with only 91.7 hectares planted in 2003 and none in 2004, the last year of BGA ownership before the company was bought out by Japanese Oji Paper.

2.2 Oji Paper

Japanese Oji Paper is a giant in the global pulp and paper industry. Founded in 1873 the company is the largest pulp and paper company in Japan with 1,265.7 trillion Yen in sales in

110 Japanese FY 2006/7. Globally, the company is rated as the 6th largest in terms of pulp and board production output (PPI, 2007; Oji LPFL, 2007c). Like all the large pulp and paper companies in the world, since the middle of the twentieth century, Oji Paper has moved to foreign countries, such as those in South East Asia where both land and labour is cheap to source their wood fibre production. Oji Paper presently has eleven plantation projects in six countries comprising approximately 140,000 hectares around the world with the aim of having 300,000 hectares under plantation by 2010 in order to provide a secure supply of raw materials for producing paper at the company’s pulp mills around the world.

2.3 Oji Paper in Laos

In February 2005 Oji Paper purchased all the shares in BGA Holdings Asia holding company, thereby becoming the majority shareholder in what is now the Oji Lao Plantation Forest Co. Ltd. Oji Paper’s entry into the Lao plantation sector was a milestone for Laos as it was the first of the global pulp and paper multi-nationals to come to Laos. The entry of such a major international player is significant as it represents increasing confidence in Laos as a place for foreign investment. Indeed, structural reforms and investment in infrastructure, (particularly road infrastructure) by donor agencies and multilateral financial institutions, have been targeting such investment as a poverty alleviation tool (Lang, 2002; ADB, 2002; 2005b; 2006; GoL, 2004; 2006; Hunt, 2007).

However, economic reform and infrastructure development are not the only ways in which multilateral donor agencies have supported the entry of large pulp and paper into Laos. In August of 2004, the ADB provided assistance to the GoL to hold a Private Sector Consultation Workshop in Vientiane; the aim of which was to present potential investment opportunities in Laos to multinational pulp and paper companies. The ADB attributed much of Oji Paper's decision to enter Laos as being a result of that workshop, stating that "when introduced to such opportunities in Laos for the first time, (Oji Paper) was so convinced that it acquired BGA Plantation Company Ltd within months" (ADB, 2005a:21). Statements made at a public meeting on the 27th of October 2005 by Mr Tokunaga, the Director of Oji Paper, indicating that Oji purchased BGA without first conducting a feasibility study (personal notes from meeting), would appear to support the ADB's assessment of the

111 importance of the August workshop in convincing Oji of Laos' suitability for plantations development.

During this workshop the ADB was also instrumental in advocating for plantations investment within Laos. Barney (2004) provides minutes of this meeting which highlight the ADB's promotion of FDI in the Lao plantation sector. Barney writes that Mr. Akmal Siddiq from the ADB stated during a presentation at the August workshop, that Laos had numerous "comparative advantages" when compared with other neighbouring countries, namely; o low population density; o large unstocked and degraded forest areas on flat lands; o emerging markets surrounding the country, particularly China; o appropriate rainfall for plantations development o an unjustified label as a country with high political risk

While it is difficult to gauge the importance attributed to different aspects of the reasoning behind Oji Paper's entry into Laos, for their part, Oji Paper describes the reasons for investing in Laos as per table 3.4.

Table 3.10: Self stated reasons for Oji Papers' investment in Laos Availability of Land Low population density and the ability to use former swidden cultivation fields Environmental Favourable precipitation levels and soil fertility, lead to expectations Suitability of quality plantations Road Linkages Despite being land locked, the upgrade of roads to Vietnam means the company is able to export chips from Vietnamese ports Investment Climate Stable political / economic environment Source: Translated by author from Oji LPFL (2007c:5)

Both the ADB’s and Oji Paper's statements are worth noting here because they point to some important aspects of GoL policy in the promotion of foreign investment. Apart from the physiological appropriateness of Laos in terms of precipitation and soil fertility, we can see the importance of multilateral and bilateral aid in facilitating investment in Laos. This comes in the form of tangible infrastructure such as road linkages, as well as more subtle ways such as developing an appropriate investment climate, and conducting public relations work on behalf of the State to present the country as an investment opportunity to the international

112 business community. In this sense we should recognise that investment in Laos has not happened by accident, but rather has been facilitated by stakeholders like the ADB, JICA, the World Bank and other donor countries to Laos.

Another important aspect of the statements made by Oji Paper and the ADB is the focus on the overall availability of land in Laos. Both organisations cite low population density as a key element of the appropriateness of plantations in Laos. The assumption is that while monoculture plantations in developing countries are often criticised for appropriating traditional lands, this is not a concern in Laos, because of the low population density. While it is true that population density is low at the national level as discussed in the introductory chapters, the GoL has a policy to resettle villagers from remote upland areas to roadsides and “focal zones” as a method of increasing community access to public services such as hospitals, schools and the electricity grid. However, as Oji Paper has pointed out, they also need the same road linkages to transport raw materials to ports in Vietnam. As such, while the national population density is low, the main concession area for Oji Paper in Hinboun and Pakkading districts is located beside route 13, the major north south road in Laos: linking Vientiane to Pakse. There are a large number of villagers by the road within these two districts, and the population density is much higher than the national average in many places. Data from the national census records population density within the Oji concession area as varying between < 10 people per square kilometre, to as high as 80-150 people per square kilometre (Messerli et.al., 2008:p.21).

The ADB also cites the large areas of “unstocked” and “degraded” forest areas available on flat lands as an appropriate reason as to why Laos has advantages for investors. As we have seen in the previous chapter, in the Lao context these terms often refer to shifting cultivation fallow lands, the focus of plantation development under GoL policy. This policy is even acknowledged by Oji Paper as one of the reasons for their investment in Laos. Oji Paper admits that the ability to appropriate shifting cultivation fields is one of the reasons they have invested in Laos. What is not stated here is what happens to those shifting cultivation systems where fallow land is reduced. As I have discussed previously, simply planting shifting cultivation fallow areas with tree plantations, removes land from the swidden cycle, and can lead to degradation of soils and reduced harvests.

113 2.4 Corporate Structure of Oji LPFL

The Oji Paper plantation operations in Laos are known as the Oji Lao Plantation Forest Company Limited. The company is a joint venture between Oji Lao Plantation Holdings Limited (LPH), holding 85% of shares, and an investment company run by GoL, which holds the remaining 15%. Since January 2006 LPH has become a joint venture between Oji Paper and 15 separate Japanese companies. Oji Paper retains the majority share holdings of 71.75% of shares, with Kokusai Pulp and Paper, Shueisha, Mitsui OSK Lines, Senshukai, and Recruit all holding 5% of shares in LPH. Another 10 Japanese companies have nominal share holdings of under 1% in LPH. As of July 2006 the investment in Laos had surpassed US$14 million dollars (Oji LPFL, 2006b).

Figure 3.10: Corporate structure of Oji LPFL

Oji Paper + 15 other

companies

Lao Plantations Holding Government of Laos Limited

Lao Plantation Forest Company Limited Source: Oji LPFL (2007b)

114 3 The Concession Agreement

3.1 Location and Area Oji Paper's purchase of BGA has undoubtedly been highly advantageous for the company. Through the purchase, Oji Paper has managed to secure a concession in a country that is one of the most difficult in the world in which to invest (Stuart-Fox 2006; Schumann et al., 2006; ADB 2005b; World Bank, 2006). The World Bank (2006) lists Laos as one of the least investment-friendly countries in the East Asia / Pacific region; requiring 9 procedures and 200 days to start a business: the most of any country in the region. In purchasing BGA, Oji Paper has been able to avoid the complexities of negotiating a concession agreement as it has simply acquired the previously negotiated BGA concession. Under this concession agreement Oji Paper is entitled to locate and plant 50,000 hectares of fast growing tree plantations (primarily eucalyptus, but with some acacia) over a 150,000 hectare prospecting area which covers the western edge of neighbouring Pakkading and Hinboun Districts in Bolikhamxay and Khammouane Provinces respectively. The concession area is bounded by the Pakkading River in the North, the Mekong River in the West, the Hinboun River and Pakkading District Mountain ranges in the East, and the boundary of Hinboun District in the South (see Figure 3.2).

The LPFL Concession agreement is located beside the major North South highway (Route 13), which runs along the length of the concession and also connects the concession area to the capital Vientiane approximately 150 km north from Pakkading town. Both the northern and southern points of the concession area are in close proximity to major east-west transportation routes (Route 8 in the north and Route 12 in the South) that facilitate the export of wood chips from the concession area to deep sea ports in Vietnam. From here wood chips will likely be exported to one of Oji's pulp and paper mills in either Japan or Shanghai (Oji LPFL, 2007a; Lang, 2006). It is worth noting that all 3 of these road projects provide essential transport infrastructure for the successful operation of Oji's LPFL plantations, and have been constructed under bilateral aid, multilateral aid and development projects (Hunt, 2007).

It should also be stated that the 150,000 hectare concession area is home to more than 56,000 people in 109 villages, with 69 villages located in Hinboun District and 40 in Bolikhamxay (Oji LPFL, 2006c). 115 Figure 3.11: Location of LPFL concession area showing routes to Vietnamese ports

Source: Oji LPFL (2007a)

Figure 3.12: Oji LPFL concession area

Source: Oji LPFL, (2007a)

116 3.2 Plantings and Concession Expansion

When Oji Paper purchased BGA in early 2005 18,900 hectares worth of lease agreements had been signed, but only 1,600 hectares of this had actually been planted.21 LPFL was intending to finalise all 50,000 hectares of lease agreements by the end of 2006 (LPFL 2006a), however as of December 2006 this had still not been achieved, as Oji Paper had come to the conclusion that there was actually less than 30,000 hectares of suitable land available for plantations development within their 150,000 hectare concession area (Steinhardt 2007, pers. comm. 15 March).

Table 3.11: Oji LPFL plan for plantations development Year 2006 2007 2008 2009 2010 2011 2012 Total Area planted (ha) 4000 7000 7000 7000 7000 7000 7000 46,000 ha Monies payed ($) 200,000 350,000 350'000 350,000 350,000 350,000 350,000 $2,300,000 Data for years 2006 onwards are planned areas, ~2004 and 2005 are actual plantings Source: Oji LPFL (2006a)

As a result, LPFL applied to the Ministry of Agriculture and Forestry to obtain more land beyond their concession area (Hyakumura 2006, pers. comm. 14 December). According to sources within Oji LPFL the concession agreement between the GoL and Oji Paper contains a clause stipulating that if 50,000 hectares of land cannot be found within the original concession area, the GoL is bound to find the company more land outside of this original concession area (Steinhardt 2008, pers. comm. 3 October). As a result of this clause Oji LPFL now has concession areas in many more locations around Laos, including in Xieng Kouang Province, Vang Vieng District in Vientiane Province, in Hinboun District on the eastern side of the Hinboun River, as well as Mahaxay and Boulapha districts, Paksan district in Bolikhamxay Province, and possibly many other areas. In addition, from 2007 Oji Paper has been conducting feasibility studies for a new project with a further 30,000 hectare concession across five provinces in the south of the country, namely Savannakhet, Saravane, Xekong, Attapu, and Champasak (Oji LPFL, 2007c). As of mid 2009, the application for the Southern

21 The exact number of leases and total areas agreed to under lease for plantations is unclear. The figure of 18,900 hectares given in this report is derived from a Japanese language document handed out at an Oji LPFL public seminar on August 19, 2006. However, Oji LPFL also stated in a February 2007 workshop that as of that date only 18,000 hectares had been agreed to under lease. Furthermore, data obtained by Barney (2007) from provincial authorities (Table 4.5) show a total of only 14,678 hectares having been surveyed for plantations as of August 2006. The reasons for this discrepancy are unclear. 117 concession agreement has not been given final approval; however, Oji Paper is confident that their second concession agreement would be approved in the near future.

In spite of the difficulties obtaining land in the original concession area, Oji LPFL is now embarking on a major planting push with plans to establish 7,000 additional hectares of plantation every year from 2007 until 2012, which, provided such an intensity of plantings can be maintained, would bring Oji LPFL very close to their agreed concession area of 50,000 hectares of plantations as per the table 3.5 above.

However, it would appear that Oji Paper is running into a number of difficulties in planting trees in the ground. The data in Table 3.5 is taken from a public presentation made by Oji Paper in July 2006 showing a target of 4,000 hectares of plantings in 2006; however, this target was not realised by the company, with only 3,430 hectares having been planted in 2006 (Oji LPFL, 2007b), making for total plantations of 5,308 hectares across their concession by years end. The fact that Oji was not able to meet its targeted plantings in 2006 is indicative of difficulties in the plantings process. In this regard, Oji Paper made a number of public statements in 2007 which offer a glimpse of what the company sees as the difficulties faced by the project in getting trees in the ground (Oji LPFL, 2007b). These statements reveal that difficulties exist primarily in the process of acquiring the land to be used for tree plantations. In 2008, Oji LPFL had completed 7000 hectares of plantings; however, of these 2000 hectares were in areas that were prone to flooding and were expected by the company to be lost (Steinhardt 2010, pers. comm. 4 November).

118 Figure 3.13: Oji LPFL concession area map indicating areas planted and areas planting, 24 August 2006

Source: Oji LPFL, Unpublished Map, 2006

119 3.3 Financial Arrangements with the State

Concession agreements for private investment projects are notoriously secretive in Laos (Schumann et al., 2006; Midgely, 2006). While it is difficult to ascertain exactly the extent of financial agreements made between Oji Paper and the Lao State, there is some information from other researchers that sheds light on the nature of the joint venture agreement. In addition we can assess the contribution of the company towards the State revenue collection through investment policies towards the agro-forestry sector.

Schumann et al (2006) writes that Laos has comparatively cheap land rental for agro-forestry investments and found it was commonplace to see only $3 per hectare per year for land rental fees compared to $30-$70 per hectare per year in neighbouring countries. However, in spite of these already cheap rates, under the joint venture agreement between Oji Paper and the GoL, Oji Paper pays nothing for land rental. Instead the GoL agreed to provide land rental for free in exchange for a 15% stake in the company (Midgley, 2006: Annex 4). According to Barney (2006b) this equity was worth approximately two million US dollars in shares as of 2006. How and why this arrangement has come about remains unclear, however, when BGA signed the concession agreement in 1999 the viability of commercial industrial tree plantations in Laos was, as it still is today, unproven. Poor technical capacity of local staff and GoL officials has resulted in financially unviable growth rates for industrial plantations up until 2005 (MAF, 2005). In addition the land tenure situation is not clear, leading to significant levels of risk in terms of commercial viability.

While GoL presently owns around 2 million dollars in shares due to its 15% equity in the project, the financial arrangements mean that GoL must wait until the company begins to make a profit from the project before any monetary income can flow into state coffers, and by Oji's own forecasting the earliest this will happen is not until 2014, and that is provided that the complications with securing land can be resolved. There are many question marks as to the viability of the Oji LPFL concession and it would appear that the GoL has exposed itself to significant commercial risk in the venture by forgoing potentially millions of dollars in land leasing fees every year, in exchange for a profit that may or may not be realised.

120 The GoL heavily promotes investments in tree plantations as a strategy to increase forest cover (MAF, 2005) and in this regard provides a number of financial incentives to investors. Under Prime Ministerial Decree 150 (Implementation of Presidential Decree 3 on Land Tax) all plantation operations that plant more than 1,100 trees per hectare are exempt from paying land tax (cited in Sigaty, 2003:p10). Oji Paper’s operations aim for 1,250 trees per hectare and are therefore able to take advantage of this law. Business tax exceptions are also available for foreign investors in the plantation sector and profit tax holiday periods are provided until the company begins to make a profit (Tax Law – Art. 27, 31, and 38; Foreign Investment Law – Art. 16)

In addition to these numerous tax exemptions, during the BGA era LPFL was also able to benefit from more than US$1 million dollars worth of low interest loans under the ADB's controversial Industrial Tree Plantation Project. However, these loans have since been repaid ahead of schedule (Barney, 2007), reportedly because of Oji Paper wanting to disassociate itself from the heavily criticised project (Lang and Shoemaker, 2006).

In summary it appears that Oji Paper has acquired its concession agreement under extremely favourable terms. With no land leasing fees, no land tax and various tax exemption provisions under Lao law, the company will be offering little in the way of revenue to the State until it begins to turn a profit. Midgely (2006) writes of Oji Paper that they see their contribution to the improvement of living standards in Laos primarily through the creation of jobs, and through their social contributions program.

121 4 Oji LPFL Social Contribution Program As part of Oji Paper's Corporate Social Responsibility (CSR) program, the company provides various development initiatives to village communities where they have conducted plantation within the village boundary. This is called the Oji LPFL social contribution program. While various benefits received under the program are often referred to by villagers and researchers as “compensation”, in fact this program should not be seen as compensation. As we saw in the analysis of Lao laws, villagers have no legal tenure over forest lands and as such there is no need to compensate for lost forest lands. In fact, the Social Contribution Program is a project to which the company is legally bound to provide development assistance to local communities in plantation areas. As part of my introduction to the company’s activities in Laos, I would like to briefly discuss the Social Contribution Program which is provided to villagers.

4.1 Legal Requirement

While the GoL has been the recipient of a 15% equity stake in Oji LPFL for providing land rent free, the land upon which plantations are established are first and foremost traditional village land areas. Yet in spite of this, villagers are not entitled to any rental fees from the project, let alone equity in the company. Instead the company has committed to undertake projects in villages as part of a "social contribution" program which forms part of the 1999 joint venture agreement. Under the agreement the company is required to contribute to rural development in villages (on whose traditional lands the company establishes industrial tree plantations) at the value of $50 per hectare of trees planted. The terms of this "social contribution project" are outlined under article 7.2(b) of the Joint Venture agreement which states that the company must

Ensure that the company completes the infrastructure and capital expenditures as outlined in the feasibility study, including a contribution of US$2,500,000 (two million five hundred thousand US dollars) for residential housing, a school, budgets for land and forest allocation works. The infrastructure and capital expenditure will be made at the rate of US$50(fifty US dollars) per surveyed hectare of land that the company first plants, until the full US$2.500,000 … is completed and 50,000 (fifty thousand) hectares of land being made available to and planted by the company. (Oji LPFL, 2006c) 122 As a result of this clause, LPFL provides infrastructure projects to villages upon whose land plantations are established. Of interest here is the fact that while Article 7.2(b) indicates that Oji's social contribution payments may also cover budgets for GoL run Land and Forest Allocation zonings in villages, it appears from Oji LPFL's own statements and documents that Oji LPFL is not including the costs of Land and Forest Allocation zonings as part of their social contribution package, but rather bearing those costs as part of their general project costs (except in one case - see Table 3.6 below). It is not clear why Oji LPFL does not include LFA costs in the social contribution package, but it could be explained through Oji LPFL wanting to be seen as providing tangible benefits to village communities, or perhaps to avoid criticism that its social contribution project was being used to provide a legal framework for Oji LPFL plantation development, by allocating itself land under LFA projects, already a controversial issue in light of previous WRM criticism.

4.2 Implementation and Costs

As per Article 7.2 (b) of the joint venture agreement, Oji LPFL's social contribution package takes the form of infrastructure projects. Village communities interviewed for this research have indicated that they are often given a choice of a temple, a school, or a road when asked what they want from Oji LPFL as part of the $50 / ha social contribution package. An examination of LPFL's documentation supports villager’s statements, and shows that water sources are also a common project provided by Oji LPFL. Table 3.6 below shows the 41 projects implemented by Oji LPFL as part of the $50 / ha social contribution package in fiscal 2005 / 2006.

Of all the projects undertaken over this period water sanitation projects were most prevalent, with 18 projects including 8 repairs to existing wells, and 10 newly dug wells. Road construction was the second most common form of assistance with 11 projects, followed by the construction of schools (6) and temples (1). While there are a number of other, smaller projects including irrigation and watering facilities (2), electrification costs (2), support for a local festival and unexplained support for the district school (1), the projects generally fall into 3 main categories: A) Road construction, B) construction of schools/temple and C) water supply. From the data, the average cost of these 3 major project categories is of particular interest.

123 The costs of road construction ranged from $60-$25,476 with an average cost of $7,084. At the $50/ha rate of Oji LPFL contribution; this equates to an equivalent plantation area of 141.7 hectares. School/temple construction projects over the 2005/6 period averaged $1074 per village equating to only 21.5 hectares of land22. Water supply projects had an average cost of $1080, similarly equating to a plantation area of only 21.6 ha.

Considering that many communities do not need roads given their immediate proximity to the main highway, and that most villages already have schools located in the village23, it appears that simply finding ways to actually fulfil the obligations of Article 7.2(b) poses a challenge to Oji LPFL if the present format of social contributions is followed. Indeed, in the public seminar on Oji LPFL's activities in August of 2006, the Oji Paper representative described how the company was actually experiencing difficulty in finding projects on which to spend the 50/ha social contribution payment (Meeting notes). Oji LFPL does state that these infrastructure projects represent only the beginning of the company's assistance to village communities - however, what form social contributions will take remains unclear, and how this development assistance will mitigate the negative impact on village livelihoods through loss of traditional lands also remains largely unclear. Oji LPFL does have a strategy in their Social Guidelines to promote agriculture and livestock development, particularly in relation to commercial cash cropping. The company has stated that it is willing to provide development assistance to villagers to engage in commercial crop production of cassava and soybean production in paddy rice areas. However, the complexities surrounding such basic development focused livelihood scenarios are such that it is questionable as to whether it is even appropriate for a commercial venture to dedicate resources to such projects, let alone whether any such projects could be successful. Over the course of this study, this researcher has failed to see any projects in any Oji LPFL villages which have directly addressed the consequences of loss of traditional lands experienced by the affected villages to any substantive degree.

22 Given the great variability of costs in each item categorised under Building Materials for School/Temple it is unlikely that each of the 7 projects has involved building a school/temple from scratch, but rather has provisioned materials for the repair of existing buildings. 23 Annex 3 of Oji LPFL Social guidelines indicates that only 3 of 93 villages did not have a school of any description. 124 Table 3.12: Oji LPFL social contribution projects and costsby category FY 2005 to 2006

Village Type Year Contents Amount (USD)

Houaykasa Belief 2005 GRID for Temple 194 Namthong Belief 2006 Building materials for temple 1,679 Samakyxay Boat race festival 2005 Financial Support 317 Hinboune Nuea Education 2006 Building materials for school 699 Laoluang Education 2005 Building materials for school 324 Phavang Education 2006 Building materials for school 1,472 Phonxay Education 2006 Building materials for school 300 Songhong Education 2005 Watering facilities 44 Songhong Education 2005 Support school 1,331 Songhong Education 2006 Building materials for school 2,898 Songhong Education 2005 Building materials for school 147 Houaybone Infrastructure 2006 Village Road Construction 7,261 Houaynangly Infrastructure 2005 Village Road Construction 324 Kateap Infrastructure 2006 Village Road Construction 23,748 Nam Duea Infrastructure 2006 Electricity Grid main cable 10,180 Nathan, Phondy Infrastructure 2006 Village Road Construction 25,476 Nongboua Noi Infrastructure 2006 Village Road Construction 3,100 Nongchanla Infrastructure 2006 Village Road Construction 1,733 Parkveng Infrastructure 2005 Village Road Construction 3,000 Phonethong Infrastructure 2005 Village Road Construction 1,431 Samakyxay Infrastructure 2005 Village Road Construction 60 Songhong Infrastructure 2005 Village Road Construction 250 Thasomhong Infrastructure 2006 Village Road Construction 11,538 Phontong Irrigation 2005 Pipe material 63 Hinboun District Local Authority Support 2005 Repair Cars 280 Hinboun District Local Authority Support 2005 Computers 500 Hinboun District Local Authority Support 2005 Fuel 36 Hinlaht, Mengphongnua, Financial Support for LFA Local Authroity Support 2005 1,007 Hatxaykham Program Danhi Safe Water 2006 Repairing deep well 810 Danhi Safe Water 2006 Digging deep well 1,065 Danhi Safe Water 2006 Digging deep well 1,300 Houayheua nok Safe Water 2006 Repairing deep well 810 Houayheua nok Safe Water 2006 Digging deep well 1,300 Houaykhiew Safe Water 2006 Digging deep well 1,300 Houaykhiew Safe Water 2006 Digging deep well 1,300 Laoluang Safe Water 2006 Repairing deep well 810 Laoluang Safe Water 2006 Digging deep well 1,300 Naheuang Safe Water 2006 Digging deep well 1,301 Nonghoi Safe Water 2006 Digging deep well 1,300 Phonsaat Safe Water 2006 Repairing deep well 810 Phonsaat, Phonxay, Safe Water 2005 Repairing deep well 1,003 Laoluang, Phonsung Phonsavang Safe Water 2006 Repairing deep well 810 Phonsavang Safe Water 2006 Digging deep well 1,300 Phonsoung Safe Water 2006 Digging deep well 1,300 Phontong Safe Water 2006 Repairing deep well 810 Phonxay Safe Water 2006 Repairing deep well 810 Source: Oji LPFL (2006c) 125 4.3 Social Contribution as compensation

Oji LPFL is at pains to present their social contribution projects as an adequate form of development to “compensate” for the loss of village lands. Oji LPFL highlight this social provision as part of the company’s corporate social responsibility in contributing to the development of Laos. The social contribution projects, to which Oji LPFL themselves continually refer in their promotional material (Oji LPFL, 2006a; 2006b; 2007b; 2007c), have mistakenly been interpreted as a compensation program for villagers by some commentators on the company (Barney, 2007). This is not particularly surprising given the company’s promotion of the infrastructure projects carried out under clause 7.2(b). The author has attended public seminars held with the Japanese expatriate community (many of whom are employed in the Japanese government or civil society development sector) in Vientiane in October 2005 and again in August 2006. At these seminars the Oji LPFL representative communicated at length about the social contribution program in terms of the overall monies to be spent on behalf of village communities under the social contribution package.

When these monies are viewed in total, they are quite substantial amounts. Oji LPFL states that monies are provided per hectare planted, hence if it were assumed that plantations operations proceed as planned in Table 3.5, in 2006 total cost of projects due to villages would be $200,000 (4000 ha) and in 2007 $350,000 (7,000 ha). However, from initial observations it would appear that in some villages the contributions made to the village lag behind the areas of hectares planted.

While it may appear that these monies represent significant amounts on an overall basis, the $50 / ha payments are not to be made on a yearly basis, but simply as a one-off contribution to the village upon the establishment of the plantation. In fact, while Oji LPFL states that land is being leased from the village, essentially this land is being purchased from the village at an extremely low rate of $50 / ha. Oji LPFL has a 50 year concession period, which essentially means that village communities will lose all access to the natural resources and swidden rice fields that this land provides.

Barney (2007) writes that given the 50 year concession period, villagers are in actuality receiving only $1/ha/year from Oji LPFL for the land. However, it is highly likely that land will be permanently lost to village communities once it is given to Oji LPFL for plantations 126 development. Oji LPFL has stated its willingness to continue to utilise the land it acquires in Laos beyond the 50 year lease period, stating that they would like to establish permanent plantations in the area which.24 Given that present Oji LPFL staff and GoL officials are unable or unwilling to acknowledge the importance of swidden fields and secondary forest to the livelihoods of rural communities in the present day, it seems highly probable that a new generation of bureaucrats and LPFL managers / staff will be even less willing to acknowledge those relationships in the future when land has already seen decades of plantations development and the institutional and community memories of the original state of land is lost.

In addition it is questionable whether after 50 years of intensive fast growing eucalypt plantations, any such land would even be useful for village communities due to the diminished ability of native forest lands to naturally regenerate. Thus, even if the descendants of today's rural communities in Hinboun and Pakkading insist on the return of plantation lands to them after the 50 year concession period expires, various environmental factors such as weed infestation typically associated with tree plantations (Evans, 1999) could quite likely mean that land would not be able to naturally regenerate into natural forest areas.

24 These statements were made in a public seminar about Oji LPFL's activities in Vientiane on August 19, 2006. 127 5 Chapter Synthesis In this chapter I have provided an introduction to the idea of FDI as a tool of poverty alleviation. I have also introduced the subject of the following case study, the FDI project of Oji LPFL. This chapter has presented an overview of the company, its history and involvement in Laos, target areas, and social contribution program. The Oji LPFL investment project is regarded by observers in Laos as a flagship project with strong environmental and social guideline policies compared with initiatives from other companies in neighbouring countries. As such, it is considered the type of project which Laos should be encouraging, as leading to better outcomes for communities and less likely to cause environmental and social problems.

The project concession agreement in Laos gives the company the right to plant 50,000 hectares of planted eucalypt and acacia forest. While the concession area is intended to be in Pakkading District, Bolikhamxay Province, and Hinboun District, Khammouane Province, the company retains a clause which allows it to look anywhere in Laos if the land cannot be found in these districts.

Oji Paper has stated that their decision to invest in Laos is because of 1) the availability of land including the low population density, and the “ability to use former swidden cultivation fields”, 2) Favourable precipitation and soil levels, 3) Upgraded road infrastructure, and 4) Stable economic and political environment. As we have observed in the introductory chapters, a shifting cultivation system requires long term fallow in order for soils to be able to successfully regenerate. Nevertheless Oji LPFL acknowledges the GoL policy of planting tree plantations on shifting cultivation fields, as one of the main reasons for its involvement in Laos. At a theoretical level, we can already see that the potential to impact village livelihoods exists if these shifting cultivation systems are interfered with. Furthermore the present social contribution program offers little in the way of long term livelihood solutions to villagers whose shifting cultivation systems have been appropriated. Rather, the social contribution package provided by Oji LPFL is focused on one-off short term infrastructure projects, to a value of only $50 / hectare over a 50 year lease period.

Furthermore this chapter has clearly shown that this investment by Oji Paper in Laos has not happened by accident. By that I mean that both this investment by Oji Paper, and indeed 128 investment in the plantation sector as a whole, has been both supported and facilitated by multilateral aid agencies who conduct regulatory reform to facilitate investment, as well as actively promote the country as an investment opportunity to potential foreign investors. Bilateral aid agencies such as JICA who have been pursuing large scale road infrastructure projects, such as the upgrading of route 13 as well as route 8 to Vietnam, also facilitate this investment by providing the physical infrastructure to support investment opportunities. This is not surprising because, as I have already explained, multilateral and bilateral aid institutions regard investment as a solution to poverty in the third world.

The ADB has promoted Laos as having a comparative advantage for plantation investment because it possesses large areas of “unstocked” and “degraded” forest. Oji Paper has acknowledged that the ability to utilise shifting cultivation fallow is one of the primary reasons they have decided to invest in Laos. While it is true that population densities in Laos are on the whole, low, inside the land concession prospecting area granted to Oji Paper there are population densities recorded as high as 80-150 people per square kilometre (Messerli et al., 2008). As I will show in the next few chapters many of these people are themselves shifting cultivators. It would appear that the appropriation of shifting cultivation fallow lands for the Oji LPFL plantation project has the potential to seriously undermine village agricultural systems and livelihoods which are already under pressure from high roadside population densities.

In the next two chapters I will present and engage in an analysis of the results of the field work undertaken for this part of the research, in order to examine the impacts that Oji LPFL’s project has had on rural communities in its target areas. By doing so I hope to be able to ascertain the effectiveness of FDI, from the point of view of this best practice investment project, and evaluate its impact on villagers, as well as the natural environment in terms of forest degradation and deforestation.

129

CHAPTER FOUR

VILLAGE LEVEL RESOURCE LOSS

Contents

1. Introduction...... 131

2 Resource Loss...... 134 2.1 NTFP and Natural Resource Losses ...... 135 2.1.1 Summary...... 135 2.1.2 Case Studies...... 136 2.2 Resource Pressures Compounding Boundary Conflicts ...... 140 2.2.1 Summary...... 140 2.2.2 Case Studies...... 140 2.3 Resource loss Conclusion ...... 144

3 Timber and Forest Losses ...... 146 3.1 Legal Perspectives ...... 146 3.2 Village Data ...... 148 3.2.1 Results Summary ...... 148 3.2.2 Case Studies...... 149

4 Summary of NTFP / Forest Loss...... 158

5 Other Lands lost ...... 160 5.1 Shifting cultivation Lands...... 160 5.1.1 Summary...... 160 5.1.2 Case Studies...... 161 5.2 Grazing Lands...... 162

6 Chapter Synthesis ...... 164

130 1. Introduction

As explained in the Methodology, the research conducted in Oji LPFL villages is mostly qualitative in nature. In total, this research examines, to differing degrees, the case studies of 9 villages across Hinboun and Pakkading Districts. However, due to the difficulties in accessing villages, the author has been able to physically visit only six villages presented in this study. However, over the course of this research, the researcher has also collected evidence from interviews and field reports with staff from development project that work in the other 3 villages.

Figure 4.14: Map of research villages in Hinboun District

GIS map developed by author Data sourced from Lao National Geographic Centre supplemented with GPS data

131 A number of villages presented in Table 4.1 below do not actually have Oji LPFL plantations on their village land. Despite the lack of plantations, information gathered at these villages has been invaluable in understanding the process by which land is acquired from villages and also how village communities view land acquisition by Oji LPFL in terms of their own natural resource base. In addition, interviews conducted with some villagers have revealed information about villagers' experiences in working in other villages as contract labour for Oji LPFL. I have been able to obtain information from a small number of district government officials, who have shared their knowledge of Oji LPFL's activities in specific villages where they have worked, although due to restrictions of access to villages in Laos, I have not always been able to verify claims made by government officials, although there is no reason to doubt their claims. I have also been able to conduct interviews with consultants working for Oji LPFL who have extensive experience with Oji LPFL. In calculating and measuring plantation areas I have also been able to use spatial data through geographic information systems (GIS) using Oji LPFL datasets given to me by the GoL. This is described further in the following chapter.

Tables 4.1 and 4.2 below show all the villages presented in these findings and the various sources of the information obtained in each case, to assess each community’s experiences with Oji LPFL. In the case of table 4.2, information has been derived from comments made by government officials or through comments by villagers interviewed in Table 4.1, or through comments and evidence shared with the researcher from consultants working for LPFL.

132 Table 4.13: Primary research villages presented in research findings Total Obtained Development Total Planned Village Visited by Households Year of Village Village Project in Plantation (District) Researcher (population) Plantation Land Area Info from Village Area (ha) (ha) missing Lao Luang Yes OR, V from Oji No BGA era unsure 118* (Hinboun) Baseline Phonethone 88 (471) Yes R, V, DP Lux Dev 2006 unsure 212* (Pakkading) - Oji BL Pak Veng 46 (253) Yes R, V, OR No 2006 1830 610* (Hinboun) - Author Village 80 requested Kon Gaeo R, V, 38 (209) Yes JVC Refuse 962 / Nil (Hinboun) DP, CN - JVC 2006 signed** Village Nongpue 78 (411) Yes V JVC Refuse 435 Nil signed** (Hinboun) - JVC 2005 Gataep 91 (407) Yes R, GO No 2006 unsure Unsure (Hinboun) - Oji BL Village Phachoua V, GO, 19 (?) Village Yet to be Yes Requested Nil (Hinboun) DP - Author Refuse determined LFA Phonsaart V, GO, 35 (193) Yes No 2000-2005 1246 296*** (Hinboun) DP - Oji BL BGA and Lao Kha 137f (748) No DP, OR No more 3158 629*** (Hinboun) – Oji BL recent Hyayhua 67f (332) No DP No 2006 Unsure 20*** (Hinboun) - JVC Village Thanaa tai 102 (567) Village No GO, DP Requested No LFA 0*** (Hinboun) - JVC Refuse LUPLA f - number corresponds to families in the village rather than households Plantation area data used in this table has been sourced from the following: * - Data sourced from Oji Baseline ** - Data sourced from interviews with villagers *** - GIS data analysis using Oji LPFL plantations data provided by the government of Laos or actual GIS maps made by Oji LPFL and supplied to the GoL referenced across land use planning signboards geo- referenced by the author.

Table 4.14: Secondary research villages presented in research findings (Anecdotal Evidence) Village Visited by Village Development Planned Researcher Info Project in Plantation Area Village (ha) Tamii No OV, DP, 86.4*** CN Pakpagarn No OV Yes - Unsure Key R= Researcher, OR = Other Researcher, CN = Oji LFPL Consultant, DP = Development Project staff, GO = Government Official, V = Villager (of village in question), OV = Other villager (from a different village)

133 2 Resource Loss

Research findings from multiple primary and secondary sources show that village communities across the Oji LPFL concession area have experienced large scale loss of natural resources due to the clearing of large areas of both dense and secondary forest areas. In villages where resource loss has taken place, villagers themselves have spoken at length about the loss of various natural resources. In some cases where village communities are working on short term contract with Oji LPFL, they have also spoken about resource loss in the villages in which they have worked. The author has, where possible, tried to triangulate this information. This resource loss has been confirmed by both local authorities that have spoken privately with the author, and through development workers in two different development agencies that have also spoken at length with the author about resource loss witnessed in project villages. In addition, a consultant working with Oji LPFL has spoken at length with the author about their own observations and photographs of extensive resource / forest loss across the Oji LPFL plantation area. Finally actual resource loss has been witnessed by the author first hand on three different occasions. In addition to these reported and witnessed losses there are also a far larger amount of anecdotal evidence of resource loss coming from statements of villagers all across the concession area that have witnessed resource loss in their own and other villages in Hinboun and Pakkading districts. However, due to restrictions on gaining access to villages in Laos the author has not been able to verify all these cases. A small number of these anecdotal cases are presented in these research findings where the author has heard from at least two separate sources that resource loss has occurred.

Four different areas of resource loss have continually appeared in discussions with all three of the above stakeholders. These are: 1) the loss of NTFP resources; 2) the loss of timber resources; and 3) the loss of livestock grazing lands. In addition to these common losses, villagers where shifting cultivation is practised have also cited the loss of shifting cultivation lands as another resource loss due to Oji LPFL plantations.

134 2.1 NTFP and Natural Resource Losses

2.1.1 Summary

In the course of this research the loss of NTFP (including firewood) was one of the most commonly cited resource losses taking place in Oji LPFL villages. As we have seen in earlier chapters, NTFP play an important role in village livelihoods and have been recorded as providing an estimated 60-80% of non-rice food consumption and 38-55% of cash income (MAF, 2003c:1), the loss of which can have dramatic effects on the food security of villagers (WFP, 2007) and in NTFP derived income. Foopes and Ketphanh (2001) state that NTFPs provide a low-cost survival system securing food, housing and medicinal needs. Their importance cannot be overstated.

Secondly, as NTFP are found in almost all communal land and forest areas, including secondary forest areas that are (under the 1997 forest law) the forest types eligible for plantations development, it could be said that the loss of NTFP resources is an expected outcome of plantations development. However, while the outcome of a loss in NTFP resources was an expected finding, an attempt has been made in the course of this research to ascertain whether or not losses of NTFP have indeed occurred, particularly as Oji LPFL states unequivocally that plantations will not be undertaken in areas where NTFP are collected (Oji LPFL, 2006b:11). Table 3 below records only a Yes for NTFP loss, when it has been specifically recorded that NTFP resources have been depleted due to the clearing of lands. In the case of the loss of large areas of communal forest where there is a high likelihood of NTFP loss, due to anecdotal evidence, "anecdotal" has been written in the table. In total there have been recorded losses of NTFP in 5 of the 8 villagers for which there is first hand information and one case in a village where there is anecdotal information that has not been verified. Finally, in two of the villages, the fear of NTFP losses was cited by villagers as a reason for not wanting to grant LPFL access to village lands.

135 Table 4.15: Recorded loss of NTFP in research villages Village NTFP Losses Lao Luang Yes – BGA Phonethone Yes Pak Veng Yes Kon Gaeo Feared by villagers Nongpue Feared by villagers Gataep Yes Phachoua Yes – Anecdotal Phonsaart Yes Lao Kha Yes Hyayhua Yes Thanaa tai Yes – Anecdotal

Thamii Unclear Pakpagan Yes

These cases are described in further detail below.

2.1.2 Case Studies

Phonethone Village The clearest case of NTFP loss was recorded in Phonethone Village. The village is a target village of the Luxembourg Development Integrated Rural Development Project in Pakkading District. Both Luxembourg Development and villagers claimed that an area of 800 hectares of village land was cleared from the village, and stated that they had suffered a loss of NTFP resources previously located in the plantation area. From discussion with villagers and Luxembourg Development staff it was established that NTFP resources from the plantation area were collected both for consumption and income. Villagers stated that they had previously collected numerous NTFP from the cleared area, and among these were edible products such as bamboo shoots and mushrooms, but also saleable NTFP such as tree resins (for more on this important resource see Baird, 2005), vines (Hem) used in traditional medicines, and cardamom, all of which were sold to local markets to generate income. In regard to the cardamom the villagers stated, and Luxembourg project staff confirmed, that within the cleared area there used to be a naturally occurring cardamom grove that provided villagers with an important cash income of up to $50 per cardamom collector per year (field notes). Villagers stated that they felt worried (uk jai lai) about the loss of these important livelihood resources.

136 Pak Veng Village A village with a large land area (1830ha) but suffering from aggravated flooding on the Theun Hinboun River, resulting in regular flooding of their rice paddy crop; thereby necessitating shifting cultivation by villagers as a means of securing their rice needs. Barney (2007) has documented the case of resource losses including NTFP's extensively. However, this author was able to visit the village and in a meeting with the village in May 2006, after 100ha of land had been cleared for plantations development in 2005. During this meeting, the village headman detailed numerous NTFP resources that had previously been collected from within the area of land that had been cleared by Oji LPFL including mushrooms, and a variety of vegetables. In addition he also detailed how wild chickens and other birds, had been hunted in the area and also how villagers had fished in small streams. He stated that while some NTFP could still be collected in the Oji plantation area such as vines, mushrooms, and nor khem (a local species of bamboo), many others had disappeared. The headman also stated that Rattan (Wai), Pipal tree (Poh), and Grasses (Nya) all used to be sold from these areas to give the villagers an income. Villagers claimed that rattan is used for making traditional baskets, while Poh is used to make rope, and grasses are used to make roofing for houses. All products were previously sold on the market via local traders. While the headman stated that the village still had enough of these products in other locations to be sufficient to meet the needs for the village, he also reflected that NTFP's were becoming increasingly more difficult to collect, and that he was not happy that the land had been lost to Oji. At time of interview, approximately 100 hectares of land had been cleared for plantation development, out of a total maximum of 610 hectares and likely 300-400 hectares total area. Villagers were unaware of the areas that would be selected for future plantation development; however, all villagers interviewed stated that they were alarmed that the company may continue to remove natural resources, thereby increasing the pressure on remaining NTFP areas. Indeed, when asked what they would do for NTFP resources if Oji LPFL cleared all 600 hectares of land, villagers would simply joke that they would die (dtai).

Lao Luang Village Lao Luang Village has had plantations on its land since 1997 when BGA LPFL was running plantation operations. When the researcher visited the village in 2005 together with a study tour from Sweden and with Oji LPFL officials the headman stated that areas lost to the plantation were areas of former shifting cultivation fields. However, he either would not or could not state what, if any, NTFPs were previously found in the area. Despite this, reports

137 from Lang, (2002; 2003) quote villagers as saying that they had to walk further for mushrooms and forest vegetables since the plantation land had been cleared at that time.

Kon Gaeo, Nongpue, and Pakpagarn Villages Nongpue and Kon Gaeo villages are both villages which refused to grant permission to Oji LPFL to clear village land for plantations. While these refusals will be discussed further in Chapter 5, it is important to note that one of the main reasons both villages gave for not giving land to the company was because of a fear of the loss of NTFP resources, which were of vital importance to village livelihoods. In particular, interviews conducted with a group of 10-15 villagers, plus the vice-headman at the 78 household Nongpue Village, offer an important insight into villagers' experience with the company and the very real fear villagers faced of the removal of NTFP resources from their land with Oji LPFL plantations.

Nongpue Village has a total land area of 435 hectares of which agricultural land is the largest land classification area (286.72 ha), followed by production forest (66.25 ha) and different combinations of conservation and sacred forest (68 ha). The village decided not to grant Oji LPFL land when it came seeking land in October 2005 because, villagers stated, they would lose resources such as firewood, traditional medicines and forest vegetables for human consumption, as well as wild animals. One villager put it simply that if the village had allowed the company to take land, that there [would] be no vegetables or animals. While this may be an oversimplification, villagers did state that this fear was based on their own experience with Oji and previous BGA LPFL operations from employment in contract farming jobs for the company in other villages, notably Pakpagarn Village.

A number of people (although it is not clear exactly how many) in the village had been to work as contract labour for Oji Paper in Pakpagarn Village to the south. During a group interview, villagers described what they saw as impacts from Oji LPFL clearing operations.

We can see a lot of impacts, for example in the past villagers in Hinboun district could use mai hia bamboo and mai parng bamboo trees to sell and also for use in their livelihood. Now Oji comes to plant eucalyptus and before they plant they need to cut and remove the trees in those areas.

138 Figure 4.15 and 4.16: Bamboo sheeting woven by villagers is sold to traders

Photographs taken by author 18 December 2006 in Fang Deng and Gatep villages, Hinboun District

Huayhua Village In Huayhua Village, 20 hectares of land were cleared for plantations by contractors hired by Oji LPFL in July 2007. A field report filed by a local NGO conducting rural development projects in the village stated that the cleared land had previously been classified as conservation forest under the 1995 village LFA agreement. The report records that villagers in Huayhua were clearly against the clearing of areas of their conservation forest for plantations development because the village was dependent on a variety of resources coming from the forest area due to the loss of rice paddy fields that are exposed to flooding from the Theun Hinboun hydropower plant upstream on the Hinboun river (RMR, 2006). Villagers initially refused the company permission to clear areas of land, but when the company began clearing land anyway after acquiring permission from the neighbouring village to clear the same area (this is explained in detail in the next chapter), the village managed to have the clearing stopped by district authorities after a total of only 20 hectares were cleared (JVC, 2007a). Nevertheless, the clearing of high value conservation forest is indicative of Oji LPFL and the GoL indifference to both resource loss, and protection of high value forest. This is discussed in further detail later.

139 2.2 Resource Pressures Compounding Boundary Conflicts

2.2.1 Summary

It could be hypothesised that subsistence based rural communities that have experienced extensive natural resource loss from the clearing of land, will, without any substitute livelihood, be forced to search further afield to replace the cleared resources. This is precisely what is happening in Hinboun district, where villagers with insufficient remaining resources within their traditional village territorial boundaries are being forced into neighbouring villages in search of these resources, leading to resource conflicts between villages.

In northern Hinboun district this researcher has witnessed extensive evidence of intra-village conflict resulting from the loss of natural resources due to Oji LPFL plantation operations. The examples below offer further evidence of the extent of NTFP resource loss occurring under the LPFL plantations; they also show how resource losses under the project affect not only the village that agrees to plantations development, but also neighbouring communities as well.

2.2.2 Case Studies

Lao Kha, Phonsaart and neighbouring villages Both Lao Kha and Phonsaart (spelt in Figure 4.3 as Phonsa-At) Villages have a long history of first BGA, and later Oji LPFL plantations on their traditional lands. However, large scale development of plantations on their land has led to a depletion of natural resources to the extent that now there are resource conflicts with the neighbouring villages of Phachoua and Thanna (both of whom have not allowed Oji LPFL plantation development on their land). The following case studies provide a good example of how the loss of natural resources has flow-on effects outside of just the village with the plantations.

140 Figure 4.17: Lao Kha Village and surrounds

Source: Oji LPFL (2007a)

*note that the position of Phachoua Village on the above map is mistaken. This is due to inaccuracies in data collection in Laos. The exact location of Phachoua Village has been confirmed by the author using GPS satellite technology in April 2008. The correct location of the village is as per Figure I.2 in the introductory chapter

Lao Kha Village Lao Kha Village is a large village with a recorded population in 2007 of 748 people (137 families), and with more than 3000 hectares of land allocated under the LUPLA process conducted in 1999. Lao Kha villagers reported that Oji LPFL has approximately 900 hectares of eucalypt plantations (JVC, 2007b); however, through GIS data obtained by the author, I have been able to ascertain that actual plantings by Oji LPFL are approximately 629 hectares. The villagers' quoted figure of 900 hectares could be in reference to the total area of land allocated to the company by the local government, as opposed to actual plantings.

A local non-government development organisation met with Lao Kha villagers, after hearing complaints from neighbouring Thanaa Tai Village that Lao Kha villagers were taking natural resources from within Thanaa Tai Village's forest boundary. As a result of the complaints about NTFP theft by Lao Kha villagers, the development organisation went to the Lao Kha Village in July and October of 2007 to meet with villagers and discuss the boundary problem.

141 The field report generated from that visit highlights direct connections between the loss of 400 hectares of bamboo forest to inter-village resource conflicts (JVC, 2007b).

Also noteworthy are the differing viewpoints offered by village headman (who receive monthly payments from Oji LPFL), and ordinary villagers whose only benefit is the social contribution package. While village authority members state that lands given to Oji LPFL were “regeneration forest” (paa funfuu) the 4 villagers at the meeting stated that the land given to Oji LPFL was village production forest and conservation forest which were rich in NTFP resources: resources which villagers had previously used in their livelihoods (JVC, 2007b). Such differentiation in responses is not unusual in Laos. Often village authority members do not want to bring any sort of shame to the village, or to their own implementation of Lao law, nor even to admit that there have been difficulties caused by a company clearing land, and defer to the official government policy of only “degraded” land (in this case “regeneration”) land having been used for plantations. However, it would appear in this case that the village authority member had confused his laws, because article 13 of the 1996 Forestry Law states that only degraded land can be used for plantations development. Oji LPFL’s own social guidelines checklist states that the company should be wary of planting on lands that can regenerate.

While it is difficult to determine the scale of natural resource loss from land clearing operations that involve complex, multi-faceted village livelihood scenarios, more so given the political context of Laos, it could be assumed that such livelihood arrangements are severe if villagers need to go to other villages in order to secure the same natural resources as before the plantations. This is indeed the case in Lao Kha Village and is supported by statements from ordinary villages in Lao Kha and Thanaa Tai Villages (JVC, 2007b; JVC, 2007c). In fact, the field report from neighbouring Thanaa Tai Village quotes villagers as saying that Lao Kha Village had previously approached Thanaa Tai to ask if it would be possible to use areas of Thanaa Tai Village for agricultural development (JVC, 2007c). Field reports compiled by the same development organisation in Khammouane province reveal that there appears to be no doubt that there is conflict over resources between the two villagers. The situation became so bad that Thanaa Tai, after trying in vain to resolve the territorial dispute through local district officials, requested a development agency to undertake the LUPLA program in Thanaa25 Village as a way of trying to prevent the loss of their village resources.

25 Tai means “south”, so Thanaa Tai village literally means Southern Thanaa village, while Thanaa village

142 Given the scale of the clearing undertaken by Oji LPFL in Lao Kha Village, and particularly due to the clearing in areas of conservation forest and grasslands (see Chapter 5), it is not entirely unforeseeable that such depletion of natural resources is taking place in Lao Kha. In this sense village statements only serve to confirm that this resource loss is indeed having an adverse impact upon their livelihoods.

Phonsaart Village In neighbouring Phonsaart Village a similar situation has arisen to that in Lao Kha Village. While the party secretary and the village headman (both of whom are paid a 700,000 kip (US$70) monthly salary by Oji LPFL) deny that there has been a loss of NTFP resources from the village as a result of Oji LPFL's plantation, villagers in neighbouring Thanaa Tai and Phachoua villages assert that Phonsaart villagers are taking resources from their village forest areas for their own use and that such resource loss has only taken place since Phonsaart Village agreed to allow Oji LFPL plantations within Phonsaart Village boundaries (JVC, 2007c, 2008a). These findings are also supported by local district authorities, one of whom reported to the author on a separate occasion that

…now Phonsaat Village gave their land to Oji, and now they don’t have any land, and they need some land from Thanaa Village. (Hinboun district official 2006, pers. comm., 18 December)

Indeed, even Oji LPFL’s own baseline study in 2006 suggests that the destruction of natural resources has taken place in the village, largely against villagers’ wishes. The baseline survey conducted in July 2006 resulted in comments from Phonsaart villagers stating that Oji LPFL should “think about the natural resources (of) local (people)” (Oji LPFL 2006b, Annex 3:23). Interviews conducted by the author and unpublished field reports from a rural development agency reveal the conflict over natural resources between Phachoua Village and Phonsaart Village. This conflict came to light when a local development agency was contacted by district Forestry authorities to conduct a Land and Forest Allocation zoning in Phachoua Village to help resolve a land dispute between Phachoua and Phonsaart Villages.

Upon further investigation it was revealed that this resource conflict was the result of a number of causes, but ultimately was born of the loss of Phonsaart land to Oji LPFL

refers to the combined north and south villages.

143 plantations from 2001 – 2005. The documentation from the Phonsaart LFA supported by BGA in 1999/2000 revealed that the village boundary with Phachoua Village had never been agreed upon by Phachoua Village authority, and had remained disputed territory. When natural resource loss began to occur from the Oji LFPL plantation, Phonsaart villagers began to collect natural resources in the disputed area. This led to complaints by Phachoua Village about the theft of resources from what they considered to be their forest area. During meetings with the village authorities from both villages it appeared that the disputed land was in a mountainous area between the two villages.

A member of the Phachoua Village authority described how he believed that the reason Phonsaart villagers were taking the forest resources of Phachoua Village was because the former village had given too much land to Oji Paper's plantations resulting in the loss of their own resources (JVC, 2008a; Arai 2008, pers. comm. 25 April). However, the Party Secretary of Phonsaart Village denied this stating that the land upon which the plantations were planted was in fact degraded land (JVC, 2008a). The resolution of this conflict however offers a telling suggestion as to the situation with regard to natural resources in Phonsaart Village. After a meeting between the two villages it was decided that the disputed area should be divided evenly between the two villages, because of the fact that there were no other areas available in Phonsaart Village that were rich in forest resources (Arai 2008, pers. comm. 25 April).

2.3 Resource Loss Conclusion

The instance of resource pressures resulting from the removal of natural resources by monoculture tree plantations is not in itself surprising. Forest dependent villagers are largely dependent on forest resources for daily livelihoods; if resources within the village area are under severe pressure, and the resources are then removed, it is to be expected that villagers will move to areas where resources are more abundant.

In the cases of both Thanaa Tai and Phachoua Villages, villagers have attributed the collection of resources from their traditional lands by neighbouring villagers to be a direct result of the loss of resource rich land in those villages to Oji LPFL for plantations development. The irony in these cases is that while Thanaa Tai and Phachoua Villages have attempted to secure their own resources, by refusing to sign areas of land to Oji Paper for

144 plantations development, these resources are now under pressure due to the actions of the same company in neighbouring villages.

Finally, it is a sign of the seriousness with which such resource loss is taken by village communities, that both Thanaa Tai and Phachoua Villages have sought to secure their natural resources by requesting the assistance of local authorities, who have subsequently requested a local NGO in 2007/8 to assist the village in securing its village boundaries and forest areas with LUPLA zoning.

145 3 Timber and Forest Losses The removal of dense tropical forest is a highly controversial one around the world, particularly in a period of heightened concern about greenhouse gas emissions and ongoing third world deforestation. Deforestation is an often cited complaint made of industrial tree plantation operations around the world, and is a particularly sensitive area for Pulp and Paper plantations, as these operations are often considered to be an environmentally sound source of paper when compared to the logging of natural forest for pulp and paper fibres, (as has occurred in Tasmania). Yet, throughout the course of this research the author has come across numerous reports from villagers, government officials, researchers and development workers reporting on the loss of timber resources due to Oji LPFL plantations. These timber resources provide a valuable livelihood to village communities not only through the provision of timber for housing (villagers are allowed to log 5 cubic meters of timber per year for housing and school construction DoF, 2007:18), but also through saleable products such as tree resin colleted from various dipterocarp tree species that are then sold by villagers (Saotouki et al., 2005).

In the following chapter I will conduct an analysis of Land Use Planning maps and Oji LPFL plantation data to show that in many cases plantations have taken place in areas classified as conservation forest under local village forest management systems. However, given the haphazard approach to Land Use Planning and the tendency for local officials to over- allocate conservation forest areas in LUPLA exercises (MAF, 2005), such data does not in itself equate with forest loss. Hence in section three of this chapter I would like to focus on actual cases where credible evidence exists of forest clearing having taken place as a result of Oji LPFL plantations.

3.1 Legal Perspectives

Before going into the case studies, I would like to briefly review some of the legal articles surrounding the clearing of forests for industrial tree plantations. As discussed previously in Chapter 3, Oji LPFL state that their operations will protect areas of forest (defined as 20% canopy stand over a 0.5 hectare area with tree heights of 5m or more). Through the course of this research many different sources have complained to the author about the loss of timber resources due to Oji LFPL plantations. Additionally, article 13 of the Lao Forestry Law 1996

146 (superseded in December 2007), would appear to imply that the purpose of tree plantations is for the reforestation of degraded lands:

The state grants rights to use degraded forest and barren land to individuals and organisations, for the purpose of planting trees or regenerating forest depending on their capacity in terms of labour and capital.

The article goes on to implicitly ban the clearing of natural forest for plantations:

It is forbidden for individuals or organisations to use well developed natural forest or fallow forest, which can regenerate naturally, for tree planting.

However, even given the strong wording of article 13, it is extremely difficult to assert, either way, the legality or illegality of any logging undertaken through Oji LPFL plantations. This is because the GoL retains a system of quotas for the logging of trees nationally to supply raw timber for construction and industry purposes and as a means to generate revenue. During a discussion with an expatriate expert working inside the DoF in Vientiane, this author was able to view documents which appeared to sanction the logging of trees under the Oji LPFL plantation project at the highest level of the government under the national logging quota system. Every year GoL establishes a quota for the logging of trees in native forest. This quota is kept secret, however the author was able to view the 2007 timber quota (although unable to keep a copy) during a meeting with the above mentioned DoF expert advisor. Under this 2007 quota there was a quota provision for Oji LPFL of 2,846 cubic meters. It is unclear how this quota under Oji LPFL was developed, nor how this relates to Article 13 of the Lao Forestry Law. However, statements by Oji LPFL put the responsibility of logging squarely in the government domain (Oji Paper, 2007). Theoretically it would be perfectly legal for the government to allocate areas of forest as part of the national logging quota and then, once these areas are cleared, to grant that land as concession to Oji LPFL, and not be violating article 13 above. Alas, such information is more or less a state secret, and not publicly available for scrutiny.

Due to such factors this thesis does not attempt to argue one way or the other the legality (in terms of Lao law) of Oji LPFL's clearing of forest lands. Rather I intend to simply show that the clearing of large stands of trees utilised by villagers is occurring, and that these same

147 village communities, as well as government officials and development agencies are unhappy about the loss of timber resources in these forest areas. Whether or not Oji Paper is aware of this is a matter of opinion. Officially Oji LPFL takes the position that Oji Paper does not clear forest land for plantations development; however, a consultant working for the company from 2006-2009 claimed in interviews for this research that in fact Oji Paper simply turned a blind eye to logging (Steinhardt 2007, pers. comm. 15 March; Steinhardt 2008, pers. comm. 3 October).

3.2 Village Data

3.2.1 Results Summary

In total the author has witnessed first hand the logging of trees under the Oji LPFL plantation operations within only 3 villages, (Phonsaart, Gataep, and Phonthong). These observations are further supported by research conducted by Keith Barney in nearby Pak Veng Village where the logging of timber resources has been well documented. The low number of direct observations of logging by the author is due to the random and haphazard nature of many of the encounters that have led to this research. However, when combined with witness testimony obtained through village interviews the logging of trees has been reported in a significant number of the villages that are the subject of this report as detailed in Table 4.4 below.

Table 4.16: Data on recorded losses of trees Village Timber Resource Losses Lao Luang Yes - BGA Phonethone Yes Pak Veng Yes Kon Gaeo No Plantation Nongpue No plantation - Feared Gataep Yes Lao Kha Yes - BGA Huayhua Unclear Thanaa tai Yes Phonsaart Yes Phachoua N/A

Secondary sources Thamii Yes Pakpagan Yes

148 3.2.2 Case Studies

Lao Kha and Lao Luang Village It should be emphasised that the logging of forest areas for LPFL plantations are not just a recent phenomenon of the Oji LPFL plantations. Even before Oji purchased BGA shares in 2005, researchers and campaigners had recorded the logging of trees under BGA LPFL. Lang (2003; Lang 2008, pers. comm., 20 February), in a visit to these villages in November 2000, recorded that the logging of dense forest had taken place under the BGA plantations in Lao Kha and Lao Luang.

Figure 4.18 and 4.19: Photographs of cleared areas in Lao Luang Village circa 2000

Source: Lang, C. online resource at http://www.flickr.com/photos/chrislang/6069829/ http://www.flickr.com/photos/chrislang/6069826/

In the following chapter I will show clearly how Oji LPFL plantations have been conducted on areas previously designated as conservation forest under the village land use planning maps in Lao Kha Village. While it has not been possible to speak with villagers in Lao Kha or to examine plantation areas prior to clearing, it remains alarming that forest land considered to be of value for conservation forest in 2000 has been demarcated for plantations development 6 years later.

149 Phonethong Village As with NTFP loss, Phonethong Village emerged as a clear case of loss of timber resources. The area being cleared by Oji contractors in 2006 was located adjacent to what appeared to be either new settlers to the village, or new families who had migrated away from the main village to establish new homes in the area. When the author and other researchers interviewed villagers in this area, they stated that they had settled there due to the regular supply of artesian water on this land. In discussions with Oji LPFL it emerged that these villagers may have been resettled into Phonethong Village under a relocation program and have a different ethnic background to the main villagers in the main urban area of Phonethong Village. It was not immediately clear how long villagers had been living in or around the present area; however, their knowledge of immediate forest resources appeared to show that it had been for a substantial length of time. When this author interviewed villagers with the Luxembourg International aid agency (Luxembourg Development), villagers in this area were living only in bamboo housing, and were in the process of cutting lumber for more permanent timber housing. The interviewed villagers complained that contractors had cleared areas of production forest that the villagers had previously used for house construction. Indeed, during the visit we observed Oji LPFL contractors cutting down trees in the area well in excess of Oji LPFL’s five meter rule.

Figure 4.20 and 4.21: Contractors clearing trees in Oji Plantation area Phonthong Village, March 2006

Source: Photographs taken by K. Barney

150 Loss of timber resources is not the only result of the felling of trees in the village. Villagers stated that they had trees that had provided them with both revenue and resources in the form of Kisi tree resin from the Mai Nyang (shorea alatus) tree, and that trees known locally as Mai Tiew and Mai Bok, used in charcoal production, were also cut down from the forest area. Trees used for charcoal production are often quite thin and exist in swidden fallow areas and are a by product of the swidden agriculture process that allows villagers to make extra income. Villagers stated that they had previously cut down thin trees from the area to make charcoal for both their own consumption and also to sell by the roadside to generate revenue, although such trees are likely to have been within the Oji LPFL five meter rule.

Gateap Village The proposition that LPFL is clearing forestlands with productive value around their concession area is also supported by local government officials in the area. During the meeting at Nongpue Village, discussed previously, a local government official who did not wish to be identified stated that he had seen LPFL cutting down many trees of more than 20 cm in diameter, and indicated that he was aware of Oji LPFL's policy on clearing of forest. This official took us to Gateap Village in the north of Hinboun District where Oji had previously conducted plantations and was in the process of clearing further lands for plantation development. The official indicated to us an area just outside of Gateap Village where he stated dense forest had been cleared to make way for eucalypt plantations. Unfortunately, it was not possible to verify these claims with local villagers, as we were not given permission to speak with villagers in Gateap Village. However, the official stated that he had previously worked on the LPFL project in the village, and that the forest cleared by the company was dense forest containing large trees. He stated that the area under plantation had been planted with eucalyptus in 2006.

151

Figure 4.22: Clearing of dense forest in Gataep Village

Source: Photograph taken by author December, 2006 Note the dense forest in the background suggesting the state of this area before clearing

Figure 4.23: Clearing of forest in Gateap Village

Source: Photograph taken by author December, 2009

152 Continuing along the road past Gateap Village and towards the visibly poorer village of Fang Daeng we passed a large area we estimated as being at least a hundred hectares in size, which was in the process of being cleared by contractors (Figure 4.9 above). While it was once again difficult to state with clarity what the area looked like before the land had been cleared, photographic evidence taken at the time showed many tall trees still standing and burning of tree trunks which appeared to be much more than 20 cm in diameter. Following the road past this clearing, we came across 50-100 trees which had been logged and we're awaiting removal by logging trucks. The two local officials in the car stated that these logs were from the Oji site back down the road which was in the process of being cleared by contractors, although this could also not be independently verified.

Figure 4.24: Timber at landing point in Fang Daeng Village

Source: Photograph taken by author December, 2006

Nongpue and Pakpagarn Villages – Fear of Timber losses During interviews with the villagers in Nongpue Village, it became clear that along with NTFPs and firewood, the fear of the loss of timber and trees from village forest areas was one of the primary reasons the villagers stated for refusing plantations development. Commonly, talk of trees in the village context does not always equate to large scale high value tropical timbers, of the type that can be used in housing construction. However, in Nongpue Village, the villagers were very clear in stating that it was precisely these types of trees they feared would be removed by Oji LPFL. In response to a question as to why the village had refused to allow Oji LPFL to plant eucalyptus, one villager stated that “if Oji had come, they would

153 pull out all of the trees”. He followed this statement with the question “then where can we get wood for making houses?”

Following the suggestion that Oji LPFL would remove tree resources that villagers can utilize for houses, I inquired as to why this villager thought that Oji would come and cut down their trees. The villager responded;

Oji doesn’t say they will come to cut the trees, they say that they will plant Eucalyptus, but before they grow (the eucalyptus) they have to open the land and cut down the trees.

The assertion that Oji LPFL was removing timber resources from village forests was also supported by village officials in Nongpue Village. The vice headman of the village (the headman being absent) equated the giving of land to Oji LPFL as losing access to timber and tree resources.

I have a chance to go to a study tour … to Vientiane and we met someone from the Ministry of Agriculture and Forestry and I explained to him that, 'Regarding Oji, why does the central level prohibit only the villagers from (cutting trees)? Why don’t you stop Oji because before they go to the village they have to come to the central level first to get permission', but the central level man said 'we only allow them to use only the degraded Forest or the forest that villagers can not use' But then Oji ask for the other types of Forest." – Vice Headman, Nongpue Village 18th December 2006

The villagers of Nongpue were aware of these impacts from Oji Paper's plantations primarily due to the fact that they had witnessed similar situations in neighbouring villages. Villagers gave the example of nearby Pakpagarn Village where some villagers had been sent as contract labourers by Oji LPFL. They stated that before the trees were planted, the company "cut down and removed trees" from the plantation area.

154 Huayhua Village While it is not clear from the field report filed by the local development agency whether timber was removed from the conservation forest zone in Huayhua Village, the designation of forest as conservation forest under the village LFA would appear to suggest that the area contained valuable forest area. Hence, the clearing of conservation forest zones as has happened in Huayhua (see Huayhua resource loss above) would appear to suggest that timber resources have been removed in this process.

Pak Veng Village The loss of village timber resources from Oji LPFL plantation has been well documented by Barney (2007: 75-85) in his case study in Pak Veng Village. In his analysis, Barney describes how government officials allocated dense stands of forest as “degraded,” and contractors then cleared these areas for plantations development. Without a clear guideline of what “degraded” actually means, and under a land allocation system where local authorities are paid by Oji LPFL to find land for the company plantation operations, Pak Veng Village has witnessed extensive loss of timber resources. The clearing of dense forest in Pak Veng prompted one villager to comment:

“If the villagers cut the big forest like this, we would go to jail… Laos loses benefits from these actions.” (Barney, 2007: 77)

155 Figure 4.25: “Degraded Forest”

This is forest allocated as "degraded" in Pak Veng Village Source Barney (2007:79)

Thamii Village

The relationship between Thamii Village and Khon Gaeo Village, explained further in Chapter 5, is due to the interesting narrative of the land acquisition process that took place in Kong Gaeo Village, and the relationship between that village and plantations development that occurred in Thamii Village. However, from the authors’ discussions with a consultant from Plantations International, formerly an Australian based forestry consulting company working with Oji LPFL, it was noted that both Oji LPFL expatriate staff and Plantations International visited Thamii Village after a complaint was made directly to the managing director of Oji LPFL by a Khammouane based NGO. In responding to a question about the conflict between the NGO and Oji LPFL, the consultant for Plantations International confirmed that large scale logging of dense tropical forest had taken place in Thamii Village, and that he was personally so shocked by the large scale logging of “tropical rainforest” there, that he told the author “Morally, [Plantations International] cannot be involved in this [project]” (Plantations International, 2008, pers. comm. 3 October). Due to restrictions on village visits, it was not possible for either the author or NGO representatives to visit Thamii Village; however photographs supplied to the author taken immediately after the clearing of lands do show that a considerable logging of dense tropical forest has taken place in Thami Village.

156 Figure 4.26 and 4.27: “Shocking” clearance of dense forest Thamii Village August, 2007

Source: Anonymous Photographer

Figure 4.28: Oji LPFL expatriate staff survey the forest clearing Thamii Village August, 2007

Source: Anonymous Photographer

157 4 Summary of NTFP / Forest Loss

Finally, while this section has shown that logging of village forest areas and clearing of natural resources is occurring across Oji LPFL plantation operations in Hinboun and Pakkading districts, it is not possible to determine where any timber is ending up. However, it should be noted that recent reports by the illegal logging watchdog EIA show that Khammouane Province, where Oji LPFL is based, is a major hub for the illegal export of round wood timber into Vietnam (EIA, 2008; 2011). The EIA reports highlight highly complex patronage networks involving local authorities and military elites who openly export banned un-sawn round wood logs into Vietnam, to supply that country’s booming furniture industry in tropical hardwoods.

Barney's analysis of this one village of Pak Veng and his frequent stays in the village have allowed him to record the extensive loss of timber resources in the village as they happen. His research is important in the context of this research primarily because it provides such an important documentary record of the extent of clearing of dense forest. As we have seen in both the timber resource and non-timber resource losses reported here, much of the information is coming from village communities after clearing has already taken place. As such, this research has relied primarily upon statements from both villagers and local officials to document the clearing of these resources. In this context Barney's work provides an example of how such clearing is taking place across all these villages. As all but one of the case study villages reported here are located within Hinboun district, including Pak Veng, it can be assumed that the same local officials and Oji LPFL staff are involved in the land acquisition process, and therefore, there is little reason to suspect that the case of Pak Veng is particularly unique in this regard.

Statements made by local officials on the ground in Hinboun district in late 2006 were pervaded by a sense of frustration and resentment at Oji LPFL activities, by local officials. In a village meeting I had at which some local officials were present, one of them remarked:

Presently they [Oji LPFL] are removing trees and putting them in piles, the size of the wood is 20 cm in diameter, and burning the lot. They only need land, they don’t need wood.

158 Later I asked the same official what he thought about this burning of timber resources and he stated,

I think that the government should get the wood and sell it to make money for the government.

However, while there would appear to be a level of frustration in government circles about the economic waste of burning valuable stands of timber, it would also appear that at least this one government official is also aware of the negative impacts of resource loss under Oji LPFL plantations. He stated:

I’m not satisfied. Because it seems that it is not development but damaging. For example, if Oji wants to do development, they should do LFA and choose the land that has flood or use land that cannot be cultivated.

The above statement is particularly telling, in that he recognises that prime cultivation land is being used for plantations development, rather than what his idea of "degraded" land is, ie land that has floods, or use land that cannot be cultivated. This he recognises is damaging to the environment and society, and is not part of what his idea of "development" consists.

159 5 Other Lands lost

5.1 Shifting cultivation Lands

5.1.1 Summary

It has been quite difficult to ascertain the extent of shifting cultivation fallow areas that have been planted with Oji LPFL plantations in this research. This is largely due to the temporary nature of shifting cultivation fields, and the lack of recognition of the agricultural system itself, and possibly also because of a general unwillingness on the part of villagers to discuss shifting cultivation systems that they perceive to be regarded by the State, as illegal. Oji LPFL itself has an unclear policy on shifting cultivation fallow; on the one hand writing in their social guidelines about the importance of swidden systems for village livelihoods yet, as we have seen in the previous chapter, simultaneously commenting on the ability to use swidden systems as a reason for their fondness of using Laos as an investment destination.

I discuss the overall situation of shifting cultivation areas contained within the concession area in the follow chapter; however, for this section I briefly mention the references to shifting cultivation which I came across in the course of this research. The research uncovered two clear cases where villagers have complained that areas being cleared for plantation development have been swidden fallow areas / secondary forest ready for swidden development. Both these cases have occurred along the Hinboun River, where extensive loss of paddy land due to flooding caused by the Theun Hinboun Hydropower project, has resulted in the adoption of shifting cultivation agriculture as the primary means of rice production. In addition to these two cases, there was a further instance where villagers refused to allow the company to develop plantations on their land because they claimed that they needed land for conducting swidden agriculture.

In support of these findings I have also included data in table 5 below collected by Oji LPFL in 2006 as part of their base line survey showing the extent of shifting cultivation in terms of area and in terms of the number of households practising shifting cultivation. I discuss this further in the following chapter. However, what is clear is that shifting cultivation is practised within the research villages.

160 Table 4.17: Oji LPFL data on shifting cultivation areas in research villages Village Name LPFL SC LPFL SC Area (Ha) # of HH Thanaa Tai 0 0 Vangmone 54 54 Pak Veng 47* 47 Pakpagarn 5 20 Lao Luang - 45 Gateap 20 30 Lao Kha 40 40 Phonesaart 20 31 Houayhua 40 33 Phonethong 27 28 Kon Gaeo Not Not Available Available Thamii Not Not Available Available Data Source: Oji LPFL (2006c) * My own data recorded in December 2006 showed that there were 50.12 ha of shifting cultivation planted in Pak Veng Village in that year.

5.1.2 Case Studies Phontong Village During the visit to Phontong Village with the Lao Luxembourg project in 2006, villagers described some of the forest areas lost to the company as having previously been used to conduct shifting cultivation. However, there was little follow-up discussion made of this topic.

Pak Veng Village Pak Veng Village has been heavily impacted by flooding of paddy rice fields during the rainy season resulting from sedimentation build-up from the nearby Theun Hinboun hydropower project (Barney, 2007). This has resulted in villagers switching en masse to upland swidden agriculture to replace paddy fields that have been unproductive since aggravated flooding began decimating paddy rice harvests, after the dam's opening in 1998 (RMR, 2006). In fact, in December 2006 I recorded only 0.72 hectares of paddy field planted that year. This case of aggravated flooding was extensively detailed in a social environmental impact report made

161 by the Hydropower dam in question, and later followed up in a report by Keith Barney with whom as previously stated, this author also worked with closely in this village.

Barney has extensively discussed the appropriation of shifting cultivation lands in Pak Veng Village in his 2007 paper Power, Progress and Impoverishment. In this, Barney shows clearly that areas used by villagers for shifting cultivation have been utilised for plantations development.

Kon Gaeo Village While Kon Gaeo Village did not have land cleared by Oji LPFL, of the three main reasons that Kon Gaeo Village leaders named for not wanting to allow Oji LPFL to conduct plantations on their land (case discussed in following chapter), the necessity for sufficient land to conduct shifting cultivation is cited as one (field notes). Similar to many other villages in the area, this village also experiences significant levels of flooding which RMR (2006) states is the result of sediment build-up from the Theun Hinboun Hydropower dam inhibiting water flow in Hinboun river tributaries, leading to aggravated flooding along those tributaries.

5.2 Grazing Lands

As I discussed in my chapter on shifting cultivation, it is often the case in Laos that fallow fields are also used for grazing land for livestock, once rice harvests have been completed. This is because fallow land contains the stubs of rice stalks and the lack of a canopy facilitates the growth of grasses in the first years before the forests begin to regenerate. Cattle are often released into secondary forest areas to graze; hence there is often a close relationship between loss of shifting cultivation fallow and loss of grazing land for cattle and buffalo.

Buffalo and cattle raising are particularly important livelihood source for rural communities in Laos. Livestock act as a bank or safety net for many families. When villagers are confronted with sudden economic shocks such as sickness that requires medical treatment, or rice shortages, money can be obtained at short notice from the sale of buffalo or cattle. With average prices for mature cattle and buffalo around US$3-400 per head, this livestock wealth has significant economic value. However, livestock are rarely managed in any sort of

162 industrial sense and, typically, with very little or no veterinary assistance. The typical manner of raising these large livestock is to let them graze by themselves in grasslands, or areas of secondary forest that contain sufficient stocks of fodder. The conversion of such grazing areas to industrial tree plantations then can have a dramatic impact on the health and wellbeing of livestock grazing. However, this researcher has not heard of complaints by villagers regarding this issue in any of the research villages, although Kon Gaeo Village did name loss of grazing areas as a reason that they did not want to allow Oji LPFL to appropriate village lands.

163 6 Chapter Synthesis

It has been my intention in this chapter to show only that in spite of Oji LPFL social and environmental guidelines, widespread deforestation and destruction of natural resources has in fact taken place in the Oji LPFL villages. As we have seen there is very clear evidence both from villagers, this author’s observations, government and development organisation staff and even from staff working with Oji LPFL, that logging of tropical forest is taking place and is being threatened often against the wishes of rural communities. Of the ten villages in this study that actually had plantations located within their administrative borders, nine have confirmed that forest has been removed. Of the 3 villages presented in the study that do not have Oji LPFL plantations within their administrative boundaries, at least one (Nongpue) clearly stated that one reason for not allowing the company to take village land was the fear of the loss of forest land. By its nature, large scale deforestation also takes a heavy toll on village forest resources, and we have confirmation in all but one case that villagers have lost NTFP resources. As I have shown, NTFP resource loss appears to be such an issue that even in villages neighbouring those with Oji LPFL plantations, inter-village conflict has been taking place over NTFP resources even when those other villagers have not had Oji LPFL plantation in their lands.

While the losses of NTFP and forests have been shown to have taken place across the research villages, it is still not clear how and why these losses are taking place. What is the process of land acquisition that allows important forest resources to be removed for industrial tree plantations? How is it that, despite environmental and social guidelines which highlight the importance of NTFPs and shifting cultivation fallow for communities; which strictly state that trees with more than a 20cm diameter and 5 meters in hight should not be cut down; this appears to be exactly what is happening? How is it that a government strategy to promote reforestation and poverty alleviation is cutting down forests and removing natural resources? This is something I would like to discuss further in the next chapter.

164 CHAPTER FIVE

THE MECHANICS OF COMMERCIAL LAND ACQUISITION

Contents

1 Land Acquisition...... 166 1.1 Land Acquisition and the LUPLA process ...... 166

1.2 Committee Per-Diem ...... 168

1.3 Headman salaries ...... 168 1.3.1 Pak Veng Village ...... 169

2 Zoning Plantation Land ...... 170 2.1 The official process...... 170

2.2 Oji LPFL shifting cultivation and "degraded land" ...... 174

2.3 Extent of Shifting Cultivation in Concession Zone ...... 178

3 Land Acquisition Process at the village level ...... 181 3.1 Introduction...... 181 3.1.1 Methodology...... 181 3.1.2 Company Difficulties...... 183

3.2 Land Acquisition – Village level Case Studies...... 185 3.2.1 Review of Land Use Planning Maps ...... 185 3.2.2 Village Level Case Studies ...... 190

3.3 Land Acquisition Summary ...... 213 3.3.1 Land Use Planning – Irrelevant or Simply a conduit for control of villagers?...... 213 3.3.2 Insufficiencies in process of Land Acquisition...... 214

4 Chapter Synthesis ...... 217

165 1 Land Acquisition

The physical acquisition of the land is central to Oji LPFL plantations. As discussed in Chapter 3, by 2014 the company hopes to have 50,000 hectares of land under plantation over that land for at least a 50 year period. However, the physical acquisition of land under the LFPL concession sees villagers, GoL and companies become engaged in complex processes of negotiation and often conflict. How these processes take place is one of the least understood aspects of any concession process in Laos. It is my intention in this chapter to examine both official company policy (in terms of Oji LPFL acquisition model) and the unofficial implementation (in terms of village experience with the LPFL acquisition process) of how land acquisition is taking place under the Oji LPFL project, and offer an analysis as to how village land is appropriated by the company.

Schumann et al (2006: p.12) write that GoL does not have any sort of inventory on land availability for plantations development and as a result all companies in Laos must search for available land by their own means, albeit in consultation with provincial and district authorities. As such, Oji LPFL, like all plantation companies operating in Laos, is essentially engaged in a complex and time consuming process of negotiation with villages, one by one, for allotments of land within village administrative zones. As I have discussed in the chapter on Lao Forestry, under the 1997 Lao Forestry Law, companies are allowed to undertake negotiations with village authorities to conduct plantation on what is termed ‘degraded land’. However, as previously discussed the concept of degraded forest is rather loosely applied in the Lao context. As we have examined in the previous chapter, large areas of forest and valuable NTFP resources have been cleared for forest areas. How and why this is happening is the purpose of this chapter.

1.1 Land Acquisition and the LUPLA process

As I have discussed in earlier chapters, the Land Use Planning and Land Allocation process (LUPLA) is the primary system overseeing the planning of land use in rural areas of Laos. The LUPLA process is ostensibly a forest management tool and is supposed to be used as a way to allocate areas of forest following designated types recognised under the Forest Law; namely conservation, production, regeneration, protection and degraded forest. The process demarcates forest zones and establishes mechanisms for forest management, typically in the

166 form of restrictions on various types of forest use. The LUPLA process also provides for village boundary demarcation in order to formalise the legal administrative powers of the village (the lowest level of Lao government), represented by the village headman, over an area of land.

The LUPLA process was originally designed as a mechanism that should be implemented independently by the government or with support from donor agencies. However, the process has been notoriously slow and there is a lack of funds to continue LUPLA in 40% of villages across the country (MAF 2005). Thus in many cases, village administrative boundaries and land use categories have yet to be defined in areas where land concessions are granted. As LUPLA is the only mechanism to date to formalise village land use under Lao law, it is difficult for companies to formalise negotiations with villages without also conducting formalised LUPLA zoning in target villages. This reality on the ground has led to a situation whereby Oji LPFL must provide funding and assistance to undertake LUPLA zoning at the same time as negotiating for land allotments on which to conduct tree plantations. Both Lang (2002) and Barney (2007) have criticised the former BGA and present Oji LPFL for usurping a GoL rural land management programme designed for village land management to allocate themselves land for plantations. As Barney points out:

This situation introduces a more direct conflict of interest into the [LUPLA] process, whereby a commercial plantation company with a direct interest in accessing land, is significantly adding to the salaries of the Provincial and District Forestry Department staff charged with implementing the state land zoning process. (Barney 2007:54)

It should be noted that while Barney's case study in Pak Veng Village, (as many of the case studies presented here), involves Oji LPFL in the implementation of LUPLA, this is not always the case. Oji LPFL has also approached villagers on which LUPLA has already been established. However, even under these circumstances the conflict of interest expressed by Barney is still apparent. Whether in previously un-zoned or post LUPLA zoned villages, Oji LPFL is involved in the negotiation with villagers with government counterparts who are receiving monies from the company as per-diems. Typically in Laos, any organisation going to the field with government staff must pay a per-diem to government staff for that day. But Oji is no doubt paying for a lot more than per-diems through its support of LUPLA in

167 plantation areas. As one Oji staff member stated in relation to the LUPLA process, "It is an expensive process and it's good that we have a wealthy Japanese company supporting us to implement the land demarcation”, (Mr Ang; Feb 2007 – Plantations Workshop). Such a statement only highlights Barney's statements above that Oji LPFL’s total support for the LUPLA process has the potential to have a corrupting influence on the overall LUPLA programme. There is a distinct conflict of interest in a process where Oji LPFL is not only directly involved, but also funding a village land allocation process that determines the level of plantation land the company can utilise in a village.

1.2 Committee Per-Diem

Issues arising over a conflict of interest are not only limited to Oji support for the LUPLA and village level negotiation processes. Over the course of this research it became apparent through statements by villagers, local district officials and company representatives that some form of salary is being paid by Oji LPFL to various persons in both PAFO and DAFO offices in Hinboun District (Anonymous DAFO official 2007, pers. comm., 18 December). Staff working at Oji LPFL also confirmed that the company pays what is called a “committee per- diem” to various government staff in both Khammouane and Bolikhamxay PAFO and Pakkading and Hinboun DAFO offices (Steinhardt 2009, pers. comm., 20 June). While the author has not been able to obtain exact details on these payments, comments by lower level officials in 2006 suggested that senior staff in DAFO and PAFO offices and district governors were receiving 500,000 to 700,000 kip (US$50-$70) in monthly payments from Oji LPFL (Anonymous 2006, pers. comm., 18 December). In a country where government officials are paid 300,000 to 400,000 kip per month for their regular government salary the amount committee per-diem is higher than ordinary monthly salaries. According to sources in Oji LPFL these committee per-diems are being authorised by Japanese management staff in Vientiane every month, and come to a total of about US$1,000 per month (Steinhardt 2009, pers. comm., 20 June).

1.3 Headman salaries

In addition to the “Committee per-diem's” of upper level government staff, Oji LPFL is also engaged in paying monthly salaries to village headmen in villages where Oji LFPL have

168 plantations established. Reports from villagers indicate that in some villages, other persons in official positions in the village are also receiving monthly salaries (JVC, 2007b; JVC, 20008a; interview notes – Pak Veng Village, 2006). Officially village headmen are paid a salary by Oji LPFL as assistants to oversee the plantation in the village. Depending on the village, these salary payments to village officials appear to be between 500,000 – 700,000 kip ($50-$70).

1.3.1 Pak Veng Village

Some of the clearest information about the Oji LPFL payments to village headmen has come from Pak Veng Village, a research target site of Keith Barney, PhD candidate at the University of Toronto, Canada. In this village, both Keith and I were able to talk freely with the headman, away from any government staff. When Oji LPFL plantations were first established in Pak Veng Village, the village headman did not understand what he was supposed to be doing for the company for his payment of 500,000 kip per month (Barney 2006, pers. comm., 17 August). In late 2008 when Keith and I went to the village together, we discussed the payments with the headman of Pak Veng Village and he stated that he was the only villager receiving payments from the company. The headman saw his position as that of a company employee, as local village level staff, and that his primary job was to organise villagers when the company came for meetings or other activities. He insisted that even if he was to step down from the position of headman he would still receive the payments from Oji LPFL, yet he also stated that he had never signed any contract with Oji LPFL to undertake the work that the company was requesting.

It is difficult to ascertain whether the headman would be able to keep working for LPFL if he were not in fact headman; however, the payments to village headmen appear to be remarkably similar to the payments to government officials. The village headman is considered as a government employee, as the headman represents the entire village in all matters. The headman can, on his own signature, approve anything he wishes in the village. In this regard, monthly payments directly to the village headman, again, constitute a conflict of interest in that the headman, whose primary job is to represent his village, is receiving significant financial benefit from a commercial enterprise that has the acquisition of village land as an imperative for the successful operation of the company.

169 2 Zoning Plantation Land

2.1 The official process

Information on the precise process for the zoning of land for Oji LPFL plantations is limited and it is difficult to say with any degree of certainty exactly how the process works on the ground. Indeed, there is a variety of differing reports emanating from village communities regarding the land zoning process. However, at a theoretical level we can obtain an idea of how the process is supposed to work from Oji LPFL Social Guidelines, and a presentation made by Oji LPFL in February 2007. These two sources form the basis of the following description of the official land zoning process conducted by Oji LPFL.

The transformation of traditional village lands to private land is a controversial matter and industrial tree plantation companies who require land for plantations have been the subject of much criticism for appropriating the land of politically marginalised subsistence communities around the world. Given the propensity for land conflicts and Oji Paper’s experience with plantations in 6 countries around the world, it is surprising that Oji LPFL does not have more detailed guidelines relating to land acquisition. Yet the Oji LPFL Social Guidelines (Oji LPFL, 2006b / 2006c) – originally written by a Vientiane based consultant in Japanese and then translated into English and later into Lao – contain only vague references to the importance of rural livelihoods in the acquisition of land. The social guidelines principal tool in the land acquisition process is a checklist that contains a series of "whether or not" questions that do not attempt to guide the acquisition process of the company. 26 On the important issue of livelihoods the checklist simply asks:

1. Whether there are negative impacts on the livelihoods of residents because of the project? When they are necessary has the mitigation of impacts been considered? Has the project considered the residents livelihoods, especially in terms of their forest based means of livelihoods such as agriculture, raising livestock, hunting, fishing and collection of NTFPs? (Oji LPFL, 2006b:14)

26 It should be mentioned that the English translation of the guidelines is of substandard quality that make it extremely difficult to understand. The author has had to translate sections of the Japanese version of Oji LPFL Social Guidelines in order to understand the exact wording of the checklist.

170 Such a checklist does not serve as a guide to structure company processes around the acquisition of land. By simply asking whether or not the mitigation of impacts has been considered, does not for example indicate how these impacts should be mitigated. The actual process of zoning plantations on village land is divided into two surveys that I will outline in turn: (i) an Initial Lease Survey; and (ii) a Plantable Survey.

Table 5.1 highlights how the initial Lease Survey is conducted and which parties are involved at each stage. As we can observe Oji LPFL is intimately involved in the acquisition process, working together with local authorities to secure land from village communities for plantations development.

Table 5.18: Lease survey implementation table Description VP VA LPFL Dst Pr Cnt 1. GoL/BGA concession Provision for only the region that agreement (10 Feb covers the concession and the X X 1999) concession area of 50,000ha 2. Tentative Agreement with PAFO X 3. Notification of Notify village of beginning of Survey Commencement survey X X X X 4. Meeting with Tripartite meeting villagers X X X X X 5. Begin Measurement Measurement of outer reference X X X X X Survey point 6. Draft and submit Draft survey report (PAFEO) X application report Tripartite sign MOU X X X District governor Approval X Provincial governor Approval X 7. Conclusion of lease GoL X X contract Key: VP – Villager LPFL – Staff of LPFL Pr – Provincial government VA – Village Authority Dst – District government Cnt – Central government

Source: Oji LPFL (2006b:10-11)

Oji LPFL Social guidelines describe the purpose of the Lease Survey as "to work in cooperation with GoL and relevant local authorities to determine the outline of the plantation lease site in consultation with villagers and village authorities." Oji LPFL state that this survey is conducted by a survey team consisting of one person each from the PAFO Forest Division, DAFO Forest Division, and District Office of Finance Land Administration Division, as well as two staff from LPFL, and village authorities (Headman, Vice headman, village elder, village public peace officer, village police, youth union, and women's union) (Oji LPFL, 2006b:10). As per item six on the above table (Table 5.1), once this team decides

171 on areas to be used for plantations development, the company submits the proposal to Provincial and District Governors for approval. While the company states that 18,000 hectares had been surveyed when Oji Paper bought out BGA holdings in 2005 the record of surveyed lands held by Hinboun and Pakkading PAFO show that only 14,718 hectares had been surveyed as of August 2006 (Barney, 2007).

Table 5.19: PAFO records of Oji LPFL village plantation areas as of August 2006

Area Area Village Village (hectares) (hectares)

Hinboun District Pak Pa Kan 388 Hoauy Kasa 360 Houay Kamin Ngai 65 Phon Kor 450 Ban Houay Kamin 43 Noi Phong Tai 581 Vang Houa Pa 685 Phong Kang 586 Pha Veng 128 Phong Neua 1,340 Na Heuang 181 Hahtxaykham 92 Phone Sa Vang 179 Hin Laht 110 Lao Louang 118 Meng 663 Phone Thaong 141 Na Than 337 Song Hong 67 (Nursery Phone Xay 144 & Trial Area) Phone 124 Pakkading District Mouang Pha Chua 438 Pak Xun 1,623 Vang Mon 678 Phon Sy 363 Xang 233 Phon Ngam 836 Song Kom 177 Phon Thong 212 Pak Theuk 359 Phon Hai 1,266 Pak Veng 610 Na In 125 Haht Ikom 21 Nam Thone 9 (Nursery) Total Area 14,718 ha Average Area (non-nursery) 430.6 ha Source: Barney (2007): Annex 7

The initial Lease Survey is followed by a Plantable Survey, the stated purpose of which is to demarcate village land use areas and develop in dialogue with residents a detailed map of the plantation area (Oji LPFL, 2006b:11). In the Plantable Survey, areas of paddy lands are removed from the plantation areas initially mapped out in the Lease Survey. In addition areas that are too steep, too rocky, or areas that are considered Natural Resource areas and

172 Environmental Protection areas are also removed from the plantation area. Oji LPFL Social Guidelines contain a number of paragraphs on areas of high conservation priority inside plantation zones. It denotes areas that deserve protection as natural resource conservation zones. One conservation area relates to NTFP collection areas. The guidelines note the importance of these areas to the livelihoods of village communities, both in terms of saleable products and for villagers’ daily livelihoods. The Japanese language version of the guidelines state that:

"especially with regard to areas where NTFP are collected, plantations will not be undertaken, and methods of conservation will be investigated" (Oji LPFL, 2006b:11 – translated by author).

The Social Guidelines also highlight future agricultural areas as priority conservation areas and the guidelines state;

"Presently, even if lands are degraded lands or grasslands, where land is fertile and flat there is a high probability that these lands will be developed into fields in the future. It is important to sufficiently investigate this kind of area to determine whether to develop a plantation giving consideration also to the future increase in population." (Oji LPFL, 2006b:11 – translated by author).

Oji LPFL Social Guidelines also remark on areas that should be removed from plantation zones due to the reasons of Environmental Protection. Along with 20 meter buffer areas alongside water channels, forest areas are also highlighted as deserving protection in plantation zones. Oji uses the classification of forest as defined by FS2020, as areas that exceed a canopy ratio of 20% over a 0.5 hectare area with tree height of more than 5 meters. The LFPL social guidelines state that

"Areas corresponding to this forest definition will be preserved as conservation areas within the planned plantation area" (Oji LPFL, 2006b:11 – translated by author)

173 To determine all of the above areas, Oji LPFL make initial assessments based both satellite and aerial photography, then combines this assessment with soil data. Oji LPFL states that the process not only involves remote observation, but also "detailed ground investigation with villagers." 27 Plantation plots are then formalised through discussions with village communities and through on-site exploration. Oji LPFL has stated they estimate that 30% of the land is removed from the plantation area during this process (meeting notes from Oji LPFL public forum, 19 August 2006, Vientiane).

Yet despite Oji LPFL rhetoric about conducting “detailed ground investigations” and understanding village land tenure use as already discussed in the previous chapter, there were multiple cases of the clearance of areas of importance for NTFPs and forest.

2.2 Oji LPFL shifting cultivation and "degraded land"

As highlighted in the Chapter 2, plantations development in Laos is often associated with GoL policy to eliminate shifting cultivation and promote commercial crop production. It is important to examine shifting cultivation in the context of land acquisition because fallow land/forest is often used for plantations development in Laos. While not an official policy, this practice can have serious consequences for village communities by acting as a physical barrier to the rotational fallow system, removing fallow land and exacerbating pressures on the surrounding forest, often leading to shortened fallow periods and decreasing rice yields (SPC, 2001).

The Oji LPFL plantation project explicitly promotes itself as supporting GoL’s policy on shifting cultivation. The company frequently refers to the GoL policy to “stabilise and eradicate” shifting cultivation in its official documents and public statements (Oji LPFL, 2006a, 2006c, 2007b, 2007c; GEC, 2005, Oji Paper 2007). Indeed, as we have seen in previous chapters, the company goes so far as to cite a major reason for the suitability of Laos for plantations development as being the ability to develop plantations on shifting cultivation fallow. In response to a letter of complaint about LPFL practices written by an NGO working in Hinboun district, Oji Paper (2007) wrote that under the “official proclamation of PM Decree 186 and PM Decree 03, individuals, investors and organisations

27 These comments were made during a presentation by Mr Ang Kwang, a field research officer of Oji LPFL at a presentation on 14 February 2007.

174 can utilise areas of land for plantations that are degraded, [and] shifting cultivation fallow”. Oji Paper is referring here to article 2 of PM Decree 186 which states that:

The State allows and supports the use of forest land as “hai” [shifting cultivation fields] which contains no commercial tree species, land without forest cover, degraded and eroded forest land to reforest with plantations (GoL, 1994a).

However, what Oji Paper fails to mention is that PM Decree 186 was established in October 1994 and subsequently supplanted by the Forestry Law declared in October 1996, and that the 1996 Forestry Law does not specifically recognise the use of shifting cultivation fallow as suitable for plantations development. Not only does Oji LPFL mistakenly cite outdated government legislation regarding the legality of conducting plantations on shifting cultivation fallow, but the company also ignores the importance of upland agricultural shifting cultivation systems. Hence, Oji LPFL effectively discounts the complexity of mixed cropping methods in shifting cultivation systems (Barney, 2007; Thrupp et al., 1997; Fox, 2000), as well as the importance of NTFP collection from fallow lands (Trakansuphakon, 2009) and ultimately the relationship between shifting cultivation and village food security.

In a further sign of the company’s obfuscation of shifting cultivation agricultural systems, since its arrival in Laos, Oji LPFL has been seeking to obtain carbon credits through the Kyoto Protocol's Clean Development Mechanism (CDM) (Oji LPFL, 2005; GEC, 2005). As recently as October 2010, Oji LPFL was receiving funding from the Japanese government to undertake a feasibility study on applying REDD+ credits for their plantations in Laos (Nikkei BP., 2010). The company claims that its plantation operations are contributing to lower carbon emissions due precisely to the fact that they are actively stopping land from continuing to be burnt under the shifting cultivation process and because the fast growing eucalyptus trees rapidly sequester CO2 from the air (Oji LPFL, 2006a; GEC, 2005). Yet, there is no clear evidence to the assertion that swidden systems contribute to net CO2 emission and others have contested this assertion arguing that there is in fact a net uptake of carbon in swidden systems due to the continual regeneration of vegetation during the fallow period (Thrupp et al., 1997). Other writers also contend that there is a contradiction in stating that industrial tree plantations destined for pulp and paper production could possibly act as carbon

175 sinks due to the fact that the paper making process itself has very high carbon emissions (Lang, 2006).

Oji LPFL frequently relates shifting cultivation with the degradation of land and deforestation. In a public meeting in Vientiane, the company handed out information sheets on which it stated that it would establish plantations “on land that is ruined due to slash and burn etc, and on unusable land where the possibility of future use is low” (Oji LPFL, 2006a). In another public workshop on tree plantations in Vientiane in February 2007, a Field Survey Officer from Oji LPFL insisted that the company, in acquiring land for plantations, uses only “degraded land”. This, he qualified as meaning “barren land, or grassland.” Yet the same representative went on to show several slides in a PowerPoint presentation providing visual examples of the kind of land the company uses for plantations.

Figure 5.29: Land being zoned for plantations development by Oji LPFL

Source: Oji LPFL (2007a)

Figure 5.1 offers a glimpse from the company’s own account of the type of forest land utilized by Oji LPFL for plantation development. It need not be stated that neither this image – nor any others in the presentation – showed barren land or grassland in the literal sense of the word. Yet, this forest may well be classified as 'degraded land' due to the ambiguities of the concept of degraded forest under the Lao Forest Law (Chapter 1) and the propensity for

176 the forestry department to view forest value in terms of the standing number of commercially valuable trees, rather than the resources derived from the land by villagers.

Indeed, in the same February 2007 presentation, Oji LPFL presented a GIS map, made under the former BGA LPFL, yet apparently still used by Oji LPFL today, that highlights what the company views as the extent of degraded land within the concession area.

Figure 5.30: Land classifications within the concession area

Source: Oji LPFL (2007a)

Figure 5.2 above provides a map of the land use classification as presented by Oji LPFL. The map is of interest to this discussion because the largest land use area mapped here is "Degraded Forest" which measures 96,500 hectares in total, by far and away the largest land use category. In the presentation, Oji LPFL went on to state that these 96,500 hectares comprised grazing land, shifting cultivation fallow and degraded forest. It was assumed that approximately 40%-50% of this was suitable for plantations development: approximately 39,000-48,000 hectares.

177 It is unclear to what extent this 96,500 hectares of degraded land is shifting cultivation fallow; however, the above paints a picture of the classic plantation framework in Laos, as presented in Chapter 2, where shifting cultivation fallow is classified as degraded forest and made available for plantations development.

In fact, the assertion by Oji LPFL that shifting cultivation fallow is suitable land for plantations development comes despite numerous caveats contained in its own Social Guidelines about the importance to village livelihoods of shifting cultivation and NTFP collection from fallow forest (Oji LPFL, 2006c: section 2.3.3 and 2.3.8). However, given the analysis of Oji LPFL policies regarding the establishment of plantations on shifting cultivation land and their stated comments at public workshops, it is clear that the company views shifting cultivation fallow as an appropriate location for plantation development, and that without an appropriate long-term alternative livelihood option, village communities will suffer hardships due to a decrease in food security.

2.3 Extent of Shifting Cultivation in Concession Zone

In order to determine at a theoretical level the potential loss of shifting cultivation fallow and what effect that would have on individual families, we need to examine the extent of shifting cultivation practised within villages. Oji LPFL has collected data on this for villages inside their original concession area. The area located in the concession zone is largely flat and shifting cultivation is largely secondary to wet season rice production. However, shifting cultivation is still an important livelihood source within the concession zone and should not be disregarded, particularly for villages along the Hinboun River who are no longer able to farm paddy rice because of flooding from the Theun-Hinboun hydropower project (RMR, 2006; Barney, 2007). Data on shifting cultivation production is only available on villages within the original concession area, and not in the concession zones expanded in 2007 and in subsequent years. This is unfortunate as it would appear that shifting cultivation is more prevalent in areas away from the relatively flat original concession zone. So, the following numerical data is likely an under-estimate of villages’ reliance on shifting cultivation across the expanded concession zone.

According to the companies own baseline study contained in Annex 3 of Oji LPFL Social Guidelines, on average 16.5% of households practise shifting cultivation across the

178 concession, with an average plot size of 1 hectare per household. The study states that most shifting cultivation occurs in areas along the Hinboun River (where 22.3% of households across 12 villages conduct shifting cultivation) and in villages parallel to the Hinboun River along Route 13 (where 33.5% of households across 12 villages conduct shifting cultivation). It is not surprising to see large areas of shifting cultivation in areas of Hinboun district adjacent to the Hinboun River. These areas have been subject to aggravated flooding of wet season paddy rice fields as a result of a nearby trans-basin diversion hydropower project that has resulted in the loss of wet season paddy fields located along the Hinboun River. Much of the shifting cultivation in this area appears to be largely in response to the loss of wet season paddy rice fields (Barney, 2007; FIVAS, 2007).

In other areas28, Oji LPFL data states that rates of shifting cultivation range from between 11.2% and 17.3% of households. Hidden within these statistics however, is the individual village data. There is remarkable variation in shifting cultivation statistics and many villages have no recorded shifting cultivation statistics at all. In Hinboun District, nearly half (25) of the 60 villages surveyed showed no shifting cultivation at all. Of the 35 villages surveyed by Oji LPFL in Pakkading district, roughly two thirds (23) reported no shifting cultivation. However, by analysing only those villages that recorded households as practising shifting cultivation we can examine more closely the extent of shifting cultivation in individual villages.

In Hinboun district, the district where most shifting cultivation takes place in the concession zone, Oji LPFL records 35 villages engaging in at least some form of shifting cultivation. Yet a further analysis of this data reveals that in half of these villages more than 40% of the households have shifting cultivation plots, and in approximately one third of the villages more than 65% of the village households practise shifting cultivation.

28 Oji LPFL divides the concession area into zones. Zone A along the Mekong River comprises 33 villages in which shifting cultivation is practised by 11.2% of households. Zone B is along the northern half of Route 13 in Pakkading district, comprising 16 villages where 15% of households conduct shifting cultivation. Zone C is along the Southern section of Route 13 in Hinboun district comprising 12 villages in which 35.5% of households conduct shifting cultivation. Zone D is along the Hinboun River and comprises 12 villages where 22.3% of households conduct shifting cultivation. Zone E is all other areas inland east and west of Route 13, comprising 20 villages in which 17.3% of households conduct shifting cultivation.

179 Figure 5.31: Shifting cultivation in Hinboun District Percentage of households conducting shifting cultivation and average land Area (ha) of fields per household

100.0% 6.0

90.0% 5.0 80.0%

70.0% 4.0 60.0%

50.0% 3.0

40.0% 2.0 30.0%

20.0% 1.0 10.0%

0.0% 0.0 24 15 28 60 46 41 11 27 56 62 69 25 34 63 23 32 37 58 47 64 19 66 61 14 59 54 65 38 29 39 26 57 22 18 67 Oji LPFL Village ID number

Percentage of HH doing SC Area (ha) / HH

Data Source: Oji LPFL (2006c)

As Figure 5.3 above indicates, data on average field size is highly variable, reaching a seemingly impossibly high figure of 5.7 hectares of shifting cultivation land per household, and with 46% of villages having at least one hectare of shifting cultivation land per household. Oji LPFL offer no explanation as to the variability of such data, however this is perhaps reflective the complex inter-village networks whereby one village may rent fields owned by other villages or work on larger fields owned by relatives in neighbouring villages.

Even using only Oji LPFL baseline data, clearly there is significant shifting cultivation taking place within the concession zone, although mostly within Hinboun District. The data collected by Oji LPFL shows that large numbers of people are practising shifting cultivation as a primary means of rice cultivation. This is particularly worrying in the context of using fallow land for plantations as indicated previously.

180 3 Land Acquisition Process at the village level

3.1 Introduction

The process of land acquisition for land concessions is one of the most complex and controversial processes surrounding industrial tree plantations in Laos. Since Laos began opening up to investors for plantations development there has been wide criticism of the process both in the media (Phouthonesy, E., 2006) and in the development sector (LBA, 2008; Nouphanh, Phueiphan, Meena, Svsaweui, Serntai and Jones, 2007; Barney, 2007; Hunt, 2007, Kenny-Lazar, 2010). In fact, the situation became so notorious that GoL implemented a state wide moratorium on land concessions in May 2007 (Vientiane Times, 2007). However, this moratorium did not apply to companies that had already signed concession agreements, including Oji LPFL, who were allowed to continue a business as usual approach in acquiring village land under concession.

As mentioned in the introductory chapters, in theory villagers, through the village headman, have the right to refuse land concessions inside their village territory. Given the loss of natural resources as described in the previous chapter then, why is it that villagers are handing over resource rich land to the LPFL plantation operations? I will devote this section to analysing that question.

3.1.1 Methodology

As a foreign researcher based outside of village communities it is particularly difficult to get a view as to the internal decision making process in village communities, largely because visits are made to communities infrequently and mostly in the company of government ‘minders’ who oversee all conversations with villagers. Whether a community or village headman decides to grant land to a company depends on any number of circumstances including: the unity within the village; the sense of any individual headman’s responsibility towards his village; the ability of the headman or village committee to oppose an application for land; and resolve of company or government staff to acquire land from a specific village. However, pressure and coercion of villagers is not unknown in Laos. For example, a report on communal lands noted that in four villages from 21 surveyed, "government officials have tried to persuade villagers to enter into contractual agreements with private companies over the cultivation of rubber trees on parts of their communal lands" (Seidel et al., 2007:22). Of

181 these four villagers only one had managed not to succumb to that pressure. In another study, half of the target villages of an NGO had lost land against their will to companies for land concessions (JVC, 2008b). Given the prevalence of such unofficial pressure and coercion, a variety of methods are needed to assess the acquisition of village land for concessions. In looking at ways in which land was allocated to the Oji LPFP, I have taken a two-pronged approach including: (i) village mapping; and (ii) village case studies.

Firstly, I collected a range of map sources to compare the Oji LPFL plantation areas against the village land use planning maps that were made between 2000-2008. When a village undertakes a land use planning process, the typical result is the production of a map that is then given to the village and the DAFO in the form of a LUPLA handbook, and secondly a large signboard that is erected in front of the village displaying the map. These maps are generally to scale and as they are based on old paper maps developed by the former Soviet Union in the 1980’s contain references to streams, roads and sometimes mountain peaks. During my time in Hinboun District I was able to take quite a number of photographs of the land use planning map signboards. In addition, I was able to make several scans of land use planning maps developed by an NGO working in the area, and received some photographs of paper maps from Keith Barney who was also conducting research in Pak Veng Village. Using these various images, I was then used GIS software to geo-reference each village map, developing a mosaic of village land use planning maps along Route 13 in upper Hinboun District. Through this process I was able to develop a visual representation of approximate village boundaries and also Land Use planning zones within a village. This allows me to then load this data across Oji LPFL plantation data to analyse exactly where LPFL plantations are taking place.

Secondly, I collected numerous village case studies from Hinboun District to examine villagers’ perspectives on the processes by which land was allocated to the company. This data comes from a variety of sources, including my own interviews and secondary sources, such as development agencies working with villagers.

182 3.1.2 Company Difficulties

In this section, I outline the experiences of Oji LPFL at the village level in the process of land acquisition.

Oji LFPL has publicly acknowledged a number of difficulties in the land acquisition process. In a presentation in September 2007, the company acknowledged that it faced intensification of land conflicts due to an increase in investments from neighbouring countries (Oji LPFL, 2007c). The lack of GoL capacity to manage the various companies seeking concession areas has led to a situation whereby the companies are scrambling to be the first to secure land from within the same concession prospecting areas, which subsequently leads to rushed and inappropriate land acquisition. In addition to the loss of lease land from investments, Oji LPFL reported that villagers themselves were increasingly developing land signed over to Oji LPFL (Ibid.). One of the company’s strategies, to rectify the situation of small investors moving onto land was to petition both villagers and local authorities, that, unlike other small investors, Oji LPFL's projects were based on long term planning and that it was a sustainable project that had undergone thorough project examination (Oji LPFL, 2007c).

Yet, in spite of these claims, the land acquisition process has been the subject of criticism since BGA first began operations in LPFL. Lang (2002) writes that land officially classified as degraded forest was in fact being used by villagers for shifting cultivation, grazing and NTFP collection, and therefore BGA’s claims that the land is unproductive were illogical. Lang also criticises BGA LPFL operations for having actually allocated areas of dense natural forest for plantations development in the villages of Lao Kha Village and Lao Luang Village – villages that will be examined here as case studies below.

Similar reports have been making their way out of Oji LPFL areas since the company began major plantings in 2006, although to date only one of these reports has ever been turned into published material (see Barney, 2007). Indeed, in response to an unpublished report by this author (Hunt, 2006) circulated among the Vientiane development community in early 2006, Oji LPFL recognised that there were problems in the process of selecting land for plantations development but that this was the job of GoL to allocate land for plantations (Namura 2006, pers. comm., 25 April). At that time the company saw the use of satellite imagery and

183 discussions with villagers as mechanisms to improve land selection for plantations development (Oji LPFL, 2007).

Yet, problems with land selection continue to plague Oji LPFL. Both Lang (2006) and Barney (2007) have continued to criticise the land selection processes of the company. For example, inappropriate practices have included felling dense forest areas and productive village lands, even if these lands are secondary forest. In addition, it was widely reported around Vientiane development circles that Oji LPFL and their Provincial and District counterparts were called before the Ministry of Foreign Affairs in 2006 reportedly to answer questions about logging irregularities within their project, although there information on this discussion is not publically available.

In September 2007, the Japanese NGO JVC that worked in Hinboun District submitted a formal complaint to Oji LPFL raising seven different problems29 with their operations and citing various case studies – some of which are also part of this study. JVC received an official response from Oji LPFL on the 10 October 2007, regarding the problems that were raised with regard to land acquisition or inappropriate land selection. Oji LPFL stated that it is the job of GoL as a shareholder in the company to provide the land for the plantations.

LPFL is a joint venture company that has formed between LPH (a conglomerate company of Japanese industry) by joining Japanese companies with the Lao government. The Lao government investment is the supply of land so, for that investment value the government owns 15% of stocks in LPFL. LPFL conducts our plantations on land that the Lao government has approved. (Oji Paper, 2007: 1)

LPFL's plantation areas are lands that have low utilisation value in the future for villagers, they are agreed upon with village cooperation, and are supplied by the Lao Government. (Oji Paper, 2007: 4)

29 This included: 1) actual plantation areas; 2) land acquisition process; 3) boundary problems; 4) loss of NTFP resources and associated conflict; 5) loss of agricultural land and timber resources; 6) problems with compensation; and 7) systematic problems in LPFL payments to counterparts.

184 Essentially, Oji LPFL attempted to abrogate any responsibility for inappropriate land acquisition to GoL. While GoL is indeed responsible for finding land for LPFL under the conditions of the joint venture agreement, it would seem to be a far stretch for the company to simply remove itself from any responsibility for inappropriate land acquisitions. Furthermore, as land acquisitions frequently take place through government allocation and it is shown that these acquisitions are causing negative impacts due predominantly to inappropriate allocations from GoL, then it begs the question as to why it is that plantations are being promoted in Laos by development agencies such as the ADB in the first place (Barney, 2004).

I will now examine the land acquisition case studies in more detail by considering some village case studies.

3.2 Land Acquisition – Village level Case Studies

3.2.1 Review of Land Use Planning Maps

As the first part of the land acquisition analysis, I examine the role of Land Use Planning (LUP) process in determining where land concessions take place in Oji LPFL concession areas. As described above, I created a mosaic of geo-referenced land use maps in Hinboun District in order to provide an indication of which areas LPFL concessions have been allocated, within the context of village land use maps. Following are two maps. The first is a GIS developed map showing land use planning maps in upper Hinboun District. The case study villages highlighted in this study are labelled. The second map, then, overlays these LUP maps on GIS data of actual plantation sites as provided by Oji LPFL to the Lao National Land Management Authority through the national Land Concessions Inventory Programme. In this way, we can get a good approximation of the LUP zones in which LPFL plantations are taking place.

185 Figure 5.32: GIS map with geo-referenced land use planning maps and research villages

GIS data source: Lao NGD datasets supplemented with GPS readings

186 Figure 5.33: Geo-referenced land use planning maps on Oji LPFL planting data

Map developed by author using GIS data source from Lao NGD datasets and Oji LPFL plantation data as provided to NLMA.

The above maps form the basis of the following analysis. As we can see, many of these maps are the same villages that form the principal case studies for this research. However, there are 10 other village LUP maps that have been geo-referenced that are outside of the main village case studies. It should be noted that I have not tried to calculate exact areas of plantations over Land Use Planning zones. The geo-referencing, while providing a good guide, is not to a level of accuracy where we could determine the hectares of plantations over a given land use zone. Perhaps the one exception to this is Lao Kha Village, where the LUP data obtained has been digitized by Oji LPFL and provides, therefore, a high degree of accuracy. The following table (Table 5.3) lists all the villages for which I was able to geo-reference LUP maps, and then following my analysis, lists the different land use zones upon which Oji LPFL has acquired land for its plantations.

187 Table 5.20: Analysis of land use planning maps and Oji LPFL concessions data

Case LUP LUP Map Village Study Map Source Oji Plantation on LUP area* Year Support Village Digital GIS Agriculture Land, Conservation Forest, Regeneration Laokha Yes 2000 BGA JPEG Map Forest, Grassland, Degraded Forest Pre Conservation Forest, Plantation Area, Production Phonsaart Yes BGA Signboard 2005 Forest, Future Agriculture Land, Degraded Forest Paper Map LFA KhonGaeo Yes 2005 JVC No Plantations handbook Gateap Yes 2007 Oji Signboard Oji Plantation Area Paper Map LFA Thana Yes 2007 JVC Production Forest (small area) handbook Plantation Land, Conservation Forest, Paa Lao Houayhua Yes 2007 Oji LPFL Signboard (Secondary Forest) Paper Map LFA Phachua Yes 2008 JVC No Plantations handbook Fandaeng Yes Unsure Unclear Signboard Paa Lao (Secondary Forest) Pre Paper Map in Fut. Agriculture Land, Plantation Land, Regeneration Pakveng Yes BGA 2005 village Forest, Protection Forest, Conservation Forest Paa Lao (Secondary Forest), Conservation Forest, Phonsavang No 2000 Unclear Signboard Agriculture Land, Spiritual Forest Conservation Forest, Production Forest, Agriculture Phonsai No 2000 BGA Signboard Land Plantation Land, Paa Lao (Secondary Forest), Phonthong No 2000 BGA Signboard Conservation Forest Plantation land, Degraded land, Secondary Forest Nongluang No 2001 BGA Signboard (Paa Lao), Production Forest, Sacred Forest Plantation Land, Production Forest, Paa Lao Danhii No 2001 BGA Signboard (Secondary Forest), Agriculture Land Pre Conservation Forest, Allocated Plantation Area, Phonsung No BGA Signboard 2005 Agriculture Land, Regeneration Forest Paper Map LFA Napo No 2006 JVC Other Soils, Conservation Forest handbook Nakhaa No 2007 Oji LPFL Signboard Oji Plantation Area, Protection Forest Pre Thonglom No FOMACOP Signboard No Plantations 2000 Paper Map in Future Agriculture Land, Agriculture Land, Protection PakTheuk No Unsure Unclear village Forest * LUP zonings for each village are listed in order of the highest total number of plantations to the lowest total number

An important aspect of this analysis, which should be noted here, is that areas that had been zoned with the help of Oji LPFL, or its precursor BGA LPFL, appeared to incorporate plantation zones within the LUP map. However, this is not the case with non-LPFL areas such as development projects. This is clearly an important weakness of the LUP maps, in that they ultimately reflect the priorities of whichever agency is funding the implementation and often do not consider whether there should be plantations development in the future. Barney

188 (2007) is certainly right to raise concerns as to whether Oji LPFL allocating plantations during a LUPLA process funded by itself also constitutes a conflict of interest. Another aspect of these maps is that we can see the consistent allocation of restricted forest zones to LPFL operations. In seven of the 15 villages where LPFL has acquired land, Conservation Forest was listed as one of the top two LUP zones that have been allocated for plantations development. This is second only to Plantation Land, which is recorded nine times in the largest two land use zones allocated on the LUP maps.

Table 5.4 below is an analysis of Oji LPFL Plantation areas against Land Use Planning Maps.

Table 5.21: Forest and land use zones acquired for LPFL plantations

Conserv Regen Product Protect Sacred Agri Fut. Agri Paa Lao / Plantatn Village Other Forest Forest Forest Forest Forest Land Land Deg For. Area

Laokha X X X X X X Phonsaart X X X X X Gateap X Thana X Houayhua X X X Fandaeng X Pakveng X X X X X Phonsavang X X X X Phonsai X X X Phonthong X X X Nongluang X X X X Danhii X X X X Phonsung X X X X Napo X X Nakhaa X X PakTheuk X X X Count 9 3 5 3 2 6 3 2 8 10

189 While this table is somewhat misleading, because it only gives a yes or no entry for whether plantations were conducted on village LUP zones and does not look at total area of each plantation within the village, it is still revealing in that zoned conservation forest areas appear to have been repeatedly cleared for LPFL plantations. By itself this data does not necessarily implicate LPFL in the clearing of village conservation forest lands, as it could be argued that either the local officials had been over zealous in the allocation of conservation forest (MAF and NLMA, 2010), or that these conservation forest areas had since been cleared and had subsequently become “degraded”. Yet taken in context with the information on forest and resource loss presented in the previous chapter, it would appear to show a strong correlation between Oji LPFL plantations and the clearing of conservation forest.

The third highest plantation zoning category in Table 6.4 above is Paa Lao and degraded forest (actually two similar zones put together) also warrant some comment in the context of this analysis. As we have discussed in the introductory chapters, in the context of the pre 2007 Forest Law, Paa Lao and degraded forest are almost mutually interchangeable. However, what is not clear, especially given the high level of shifting cultivation taking place in Hinboun District, is whether this forest type is in fact removing shifting cultivation fallow lands for LPFL plantations.

With this data in mind I would now like to examine in much closer detail five particular case studies in which this author was able to provide a more detailed insight into the way in which land acquisition is taking place at the village level.

3.2.2 Village Level Case Studies

3.2.2.1 Khon Gaeo and Thamii Villages Khon Gaeo Village is located on the Nam Pakan River a tributary of the lower Nam Hinboun River. Similarly to Pak Veng Village, Khon Gaeo has suffered from extenuated flooding leading to multiple consecutive failed paddy harvests over a 6-7 year period (interview notes).

190 Figure 5.34: Khon Gaeo / Thamii Village area

Map Source: GIS map created by author using geo-referenced topographic base maps and NGD datasets

As a result of this aggravated flooding, Khon Gaeo Village is now conducting a large amount of upland swidden rice farming, as an alternative to rice paddy production that has seen continually bad or non-existent harvests due to flooding in the Nam Pakan River (Oji LPFL, 2007a). Recent reports attribute aggravated flooding to sediment build-up resulting from large-scale erosion due to the Theun Hinboun Dam, located upstream on the Hinboun River (RMR, 2006; Barney, 2007). Khon Gaeo (or Khonkeo) Village is a target village of a rural development and community forestry project of a Japanese NGO that was previously working in Khammouane Province. The village and the government implemented the LUPLA process through the financial assistance of the NGO. The following information came directly from villagers from Khon Gaeo Village during a periodical visit by the NGO to their project site. The author happened to attend the same village meeting on the 15th January 2007. Unfortunately it was not possible to visit Thamii Village to independently verify the conflict there. When the Japanese NGO requested to the GoL that they conduct LUPLA in Thamii Village, they were informed that this was not necessary, as Oji LPFL was already

191 engaged in undertaking LUPLA in Thamii Village. In spite of this, however, some evidence of the experience of neighbouring Thamii Village has been gathered from staff and consultants of Oji LPFL.

In late 2006, Oji LPFL began surveying land in Thamii Village, a small village at the upstream end of the Nam Pathen River in Hinboun District. Like many LPFL villages, Thamii Village did not yet have land and forest zoning as part of the government administered LUPLA process. However the neighbouring village of Khon Gaeo had undergone LUPLA supported by the aforementioned NGO, and due to this, the boundary between the two villages had been demarcated. According to the claims of Khon Gaeo villagers, Thamii Village was hesitant to grant any land to LPFL although the reasons for this are less than clear. It is likely that flood-induced abandonment of paddy lands for upland shifting cultivation fields resulted in the need for larger tracts of land for the village, thereby leading to reluctance to give up land to outsiders.

While Thamii Village was hesitant to grant land to LPFL, the village ultimately agreed to give land to LPFL that was part of an ongoing land dispute with Khon Gaeo Village which had arisen with the LUPLA agreement. Thamii Village granted a parcel of land to LPFL that for the most part was located within the LUPLA demarcated boundaries of Khon Gaeo Village. Of the land that Thamii Village granted to LPFL, a strip of land running around the Khon Gaeo Village boundary was all that was located in Thamii Village. Once LPFL became aware that the majority of land granted to them by Thamii Village was actually located in Khon Gaeo, they approached Khon Gaeo Village seeking permission to conduct plantation activities on Khon Gaeo Village land. Figure 5.7 below gives a visual impression of Khon Gaeo Village and the area of land being sought by LPFL.

The map below is sourced from the 2005 LUPLA documentation in Khon Gaeo Village and categorises different forest areas that represent the different land and forest zonings of the village. That said, the 80 hectares requested by Oji Paper cut across 3 different categories of land use zonings. These are the conservation forest in the east (zone 7), the land for future agriculture production in the west (zone 6), and the village production forest (also known as use forest) area in the middle (zone 10).

192

Figure 5.35: Land use map of Khon Gaeo Village and Thamii plantation

LUP Zone Legend

Approximation of Area of Land Requested

Map source: Land Use Planning and Land Allocation Documentation of Khon Gaeo Village, 2005, overlayed using geo- referencing done by author with topographic map base layer and Oji LPFL plantings shown in red. Oji LPFL plantation data sourced from NLMA land concessions inventory project. Note area requested is authors’ estimation.

Interaction between Oji LPFL and Khon Gaeo Villagers LPFL approached the village on four different occasions in December 2006 requesting the 80 hectare land parcel, however, on all four occasions Khon Gaeo Village refused to sign over their village land to Oji Paper for eucalypt plantations. The villagers gave the following three reasons as to why they did not want to give lands to Oji Paper: 1. The aforementioned aggravated flooding in the village had given the villagers a very unreliable paddy harvest that was frequently decimated due to prolonged periods of flooding. Villagers stated that they have suffered often from total loss of rice paddy production after paddy lands are submerged in water often, for a month at a time. As a result, large numbers of villagers are now conducting upland swidden rice farming as a substitute to paddy rice or at the very least as a backup crop. Khon Gaeo villagers stated that due to increased land pressure from upland rice farming, they did not want to grant land to the company.

193 2. In a similar vein, flooding has also resulted in the large scale loss of lowland wet season livestock grazing areas. Villagers have now re-located wet season grazing lands to upland areas and the 80 hectares requested by Oji also cut across some these lands. 3. Loss of NTFPs were also cited as another reason why the village did not want to grant land to the company. In particular, bamboo forest areas were noted as being present in the land area requested by the company.

Villagers stated that the first person to request the land for LPFL plantations was someone from the DAFO who arrived around the beginning of December 2006. On the second, third, and forth occasions, LPFL staff came directly to the village to negotiate with the villagers. On each visit the LPFL staff tried to persuade the villagers by mentioning the different benefits that they could derive from the plantation, such as income from work on the plantation, and infrastructure projects such as a school or a temple. However, on each occasions villagers rejected the requests stating that they needed their land more than a new school or temple, and were adamant that they did not want to grant any of their land to LPFL.

In spite of villagers’ determination not to grant land to LPFL on each of these occasions, it seems that the company was not prepared to give up its attempts to secure the 80 hectare land parcel. When the NGO arrived at the village in mid January 2007, villagers there informed the NGO staff that the village was soon due to receive yet another visit from LPFL to discuss the land issue. The villagers expressed their frustration with the company’s repeated attempts to negotiate with the village despite villagers’ insistence that they did not want to give the land to the company, and they specifically requested the NGO to assist them by asking the company not to approach the village requesting land any more.

Interaction between NGO and Oji LPFL This, the NGO did, by-passing government channels and going straight to the expatriate director of LPFL, Mr. Seiro Tokunaga in Vientiane. In this regard, the fact that the company and the NGO were run by expatriates from the same country, greatly facilitated this discussion. According to the country representative of the NGO, the Oji LPFL Director was unaware of what LPFL was doing on the ground in Khon Gaeo Village, but assured the NGO representative that the company would no longer seek the land in question, and stated that the

194 company should not have been seeking land on village conservation forest land in the first place (Arai, pers.com. 2008).

From the perspective of Khon Gaeo Village this intervention had a successful outcome, however, it appears that the same could not be said for Thamii Village. Upon re-visiting the village two weeks after the initial meeting Khon Gaeo villagers stated that Thamii Village was now experiencing more pressure from LPFL to increase the size of the land given to LPFL. Neither the NGO nor the author was able to visit Thamii Village to ascertain the extent of LPFL plantation activities there. As we have seen in the previous chapter, the LPFL plantation operations in Thamii Village were the scene of destruction of high value areas that Oji LPFL expatriate staff investigated even expressed shock (Steinhardt 2009, pers. comm., 20 June).

3.3.2.2 Huayhua Village While the above case study of Khon Gaeo Village could be construed as harassment of villagers for land, the case of Huayhua Village highlights the extent in which intimidation and threats directed towards villagers, by local government officials, can be used as a means to pressure villagers into agreeing to plantations development. In addition, Houayhua also highlights what has appeared to be a reoccurring theme in Oji LPFL land conflicts: general confusion, misunderstanding and conflict over existing village boundaries.

Although the following information could not be verified by the author, the information comes from a field report and interviews conducted with staff at a Khammouane based NGO that had been working with villages to resolve land disputes in Hinboun District. According to Houayhua villagers they underwent the LUPLA process in 1995; however an area of land remained in contention with neighbouring Vangmone Village. It should be noted that the Houayhua LUPLA map below is from a signboard dated December 2007, so it should be recognised that the LUPLA has been redone since this story took place. Unfortunately I was not able to acquire a LUP map for neighbouring Vangmon Village. Still the fact that the LUPLA was redone in 2007, presumably with the help of Oji LPFL, as we shall see, raises even more questions about Oji LPFL’s disregard for its own LUPLA work.

195 Figure 5.36: Houay Hua / Vangmone Village area map

Area of conflict in 2007

Source (Oji LPFL plantation data; NGD GIS dataset)

In the above map (Figure 5.8), we can observe the location of the two villages marked in red. North of Route 13 close to the road is the first plantation area planted by BGA LPFL, sometime before 2005, and reportedly with no problems according to villages. Interestingly, we can observe in Figure 6.8 that despite the fact that Oji LPFL has undertaken LUP in Houayhua Village as recently as December 2007 it appears that the village boundaries do not fit with neighbouring Danhii Village to the south-east, and also Phonsung Village to the north-west. The geo-referenced map overlayed on the 2010 Oji LPFL plantation dataset also shows us how the plantation area appears to have greatly expanded since 2007 to a size far beyond 20 hectares. I will show this further below.

196 Intimidation and Threats It was reported by villagers in Huayhua Village that when Oji LPFL first came to the village in 2005 to request land, they were quite threatening to villagers. Villagers reported that the local district authority member working with LPFL threatened:

“If you don’t agree to the utilization of your land, the villagers will go to gaol, or you will be locked into a container... Even if the village refuses [to give land] Oji will still probably use the land” (JVC, 2007a).

The statement here highlights two important points. Firstly, the threat of incarceration is quite clear. Secondly, the official states the futility of refusing to agree to give the lands to the company. Such a statement reflects the authoritarian nature of politics in Laos (whether perceived or real), even if it is more reminiscent of the decade following the 1975 revolution where authoritarian rule resulted in forced disappearances for questioning high authority (see, for example, Khamkeo, 2006). In this vein, when the Houayhua villagers pulled out their village LUPLA map in an attempt to show the legitimacy of their claim over the area of land under the government official working for Oji LPFL remarked:

“That’s a nice map! Who drew that for you? I don’t know if that is real” (JVC, 2007a).

Again the official is attempting to use his power as on official in a higher position to simply dismiss any arguments put forward by the villagers. I use the word ‘attempting’ here because, despite the above pressure put on Huoayhua Village authority, as of 2007 they had still managed to resist signing over land to Oji LPFL. According to the field report written by the development organisation, this is because villagers recognised the importance of the conservation forest area to their livelihoods in terms of food security. Looking at the plantation data as I write this in 2011, it seems however that perhaps Houayhua villagers were not able to resist this pressure indefinitely.

Although this initial approach from Oji LPFL did not result in the village granting access to village lands for plantation development, the case does offer an interesting perspective on some of the more aggressive methods employed for pushing villagers into granting land. While the village ultimately decided that, despite the aggressive nature of local authorities,

197 the land was too important to sign away, we could surmise that this may not be the same case in every village, and where the village authority was not so committed to saving their land, they may very well have given into the threats and intimidation. It could also be surmised that the same situation may not have happened if the company had been less scrupulous and not even needed the façade of legitimacy through a headman signature. To this extent Oji LPFL probably represents the better end of the spectrum of plantations development in Laos.

Village territorial dispute Despite the village initially refusing authorisation of village lands for plantation development, Oji LPFL ended up conducting plantations on the village land anyway. The way in which this happened is a reoccurring theme not just in Oji LPFL but in many plantation areas in Laos, that being by way of village territorial disputes. By way of background to the dispute, despite the LUPLA process having been conducted in the village reportedly in 1995, a long simmering dispute has been ongoing between Houayhua, and neighbouring Vangmone Village. Both villagers claim ownership of an area of rich forest land, that they call their village conservation forest. This is reflective of common problems in the LUPLA process of demarcating territorial boundaries that in many cases have traditionally existed as common areas between neighbouring villages.

While the author has not been able to obtain LUPLA maps for either the earlier 1995 Huoayhua LUP nor anything for the neighbouring Vangmone Village, I have provided an artistic interpretation of village land use areas to illustrate the overlap between village boundaries in Figure 5.9 below. Transposed onto this is publicly available satellite imagery from Google Earth, which can give a good indication of where the area of conflict may be.

198 Figure 5.37: Satellite imagery showing Oji LPFL plantation cleared areas with an artistic interpretation of the village land use areas

Disputed A

Source: (Oji LPFL, 2006; Google Earth, 2009) Geo-referencing using Hinboun River and Route 13. Village boundaries are not accurate and provided only as an illustration of boundary dispute

While it is not entirely clear if the areas above are the same as the actual areas concerned with the story, the Google Earth imagery above is date stamped as 24 January 2007 (Google Earth, 2009). According to villagers the logging began in 2006 and trees were planted by Oji LPFL in June 2007 (JVC, 2007a). Given these dates, it is entirely possible that these cleared areas represented on Google Earth are the same as those disputed by villagers - though a site visit or 1995 era Houayhua LUPLA maps would be needed to confirm the actual locations. According to Houayhua villagers the disputed area between the villages was zoned in Houayhua Village as village conservation forest. Villagers stated that after Houayhua refused to offer land to the company, Oji LPFL went with local officials to neighbouring Vangmone Village where they were able to persuade the village to hand over land to the company. Unfortunately, due to limited access, it has not been possible to follow-up with Vangmone Village about the way in which the land was acquired from the village.

199 In the figure below we can also clearly observe against the Google Earth satellite image how the plantation area has vastly increased in size since January 2007. Given Houayhua villages’ opposition to Oji plantations before 2007, we can only wonder at how it was the area of plantations in Houayhua Village has seen such a dramatic increase.

Figure 5.38: Map highlighting growth in LPFL plantings from 2007 to 2010

New LPFL areas opened up post 2007 Area shown on Google Earth 2007

Source: (Google Earth, 2009, Oji LPFL GIS dataset, 2010) Geo-referencing of Google Earth Image done using Hinboun River and Route 13.

In mid 2007 when the local NGO was involved in mediation of this land conflict between Houayhua Village and Oji LPFL, the villagers demanded through appeals to government authorities that the company cease clearing the conservation forest areas of Houayhua Village and return the lands to the village. At the end of 2007, the NGO ceased to be involved in the village. However, we can observe that the clearing of conservation forest has continued since the NGO’s withdrawal although we can only guess what took place to lead to the large increase in plantations, particularly given the fact that in late 2007 the GoL had conducted a Land Use Planning in the village in which Houayhua Village conservation forest areas had been zoned on the same areas that are now plantations.

200 3.2.2.3 Lao Kha Village Irrelevance of LUPLA As discussed in the previous chapter, Lao Kha Village is a large village with more that 3000 hectares of land allocated under the LUPLA process. JVC (2007b) writes that Lao Kha villagers claim that Oji has taken more than 900 hectares of village land for eucalypt plantations, although GIS spatial analysis conducted by the author shows 629 hectares of actual plantings within village boundaries. These two figures correspond with Oji’s assessment that only two thirds of actual land can be utilised for plantations development. Oji LPFL baseline data confirms that the initial area of plantations development by BGA was 300 hectares of land (Oji, 2006b). In the case of Lao Kha Village, the author of this research was able to obtain a digitised copy of the Land Use map made by BGA LPFL in the year 2000 after the LFA was completed. This map corresponds to the present LFA sign board in Lao Kha Village. The Land Use Planning Map is developed under the LUPLA process conducted by government officials with support from the plantation company (then BGA LPFL). The Land Use Planning conducted in 2000 in Lao Kha Village is supposed to delineate the forest and land types within the village boundaries. Indeed, this very map was presented by Oji Paper in a national meeting in Lao capital, Vientiane, in February of 2007 as a “typical example” of the Land Use Planning that Oji LPFL engages when conducting surveys in villages. The map below (Figure 5.11) clearly shows the area delineated for Oji's (then BGA's) plantation as a shade of dark green. The key to the left of the map states that plantation area in the village was 234 hectares.

201 Figure 5.39: BGA era land use planning in Lao Kha Village, the “typical example” of Oji LPFL Land Use Planning

Source: Oji LPFL (2007a)

The largest land area in the village, represented in yellow, is Potential Agriculture Land comprising 1369 ha. Conservation Forest (in red) and Regeneration Forest (in dark brown) represent the two major protected forest zones at the north eastern extremities of the village boundary and represent 314 and 629 hectares respectively. Areas of grassland are also identified in the centre and south of the village (in bright green), while areas of degraded forest totalling 70 hectares (in bright pink) are located in the east adjacent to the conservation forest area. Areas for village use highlighted in gold reveal that the village production forest areas consist of only 148 hectares of which 97 hectares are village use, while 51 hectares are for village construction.

Yet despite what appears to be a relatively clear map showing plantation areas in the village, field reports obtained from a development agency that had visited the village quoted villagers as stating that the company had first been allocated 300 hectares under the original land use planning followed by another 200 hectares in 2003 and another 400 hectares in 2007 totalling 900 hectares of plantation agreed to by the village for plantations development (JVC, 2007b), where the initial plantation area was demarcated by BGA LPFL as only 234 hectares. A map supplied to this author dating from August 2006 offers a spectacular view into the irrelevance

202 of the LUPLA process for government imposed concession planning at the village level as we shall see below. Figure 5.12 geo-references Figure 5.11 above with Oji Papers own maps of the location of plantation areas from August 2006 (Figure 3.4).

Figure 5.40: Lao Kha Village geo-referenced land use planning map overlaid with Oji LPFL plantings as of Aug 2006

Lao Kha Village LUP zones

Geo-referencing conducted by author using intersections of major roads and rivers as geo-reference points

Figure 5.12 clearly shows that only the smaller of the two original plots designated as plantation land for the company has been utilised for plantations development and matches with the LUPLA map. Yet, this area is very small in comparison to the larger blue area (representing actual plantations in from 1996 – 2005) located in the north west of the village and the area planned for plantations development in 2006 in yellow located in the east of the

203 village. Villagers stated that Oji LPFL again signed an agreement with the village in 2007 and the expanded plantations are shown below. However, even with this 2006 plantations map, through the use of geo-referencing techniques it is immediately apparent that the Oji LPFL plantations have taken place on potential agricultural land, (possibly with a small amount of village use forest and regeneration forest), and of more concern the 2006 plan, now implemented, to plant eucalyptus trees straight across the village grasslands and conservation forest areas. We can also observe that the original square area intended for plantation by BGA LPFL was never implemented.

In the course of writing this chapter the author has been able to obtain the previously mentioned Oji LPFL plantation GIS dataset through the NLMA land concessions inventory process. An examination of this data against the previous plantation data as of August 2006 reveals that plantation areas have continued to increase.

Figure 5.41: Lao Kha Village LUP zoning overlaid with 2010 Oji LPFL plantation areas

Legend

Source: GIS map created by author using Oji LPFL plantation data; NGD GIS datasets

204 As we can see when Figure 5.13 is compared to Figure 5.12, the plantation area (areas overlayed in red) has continued to expand into both the conservation and regeneration forest areas in the north of the village.

Lao Kha Village stands as a classic example of irrelevant state imposed Land Use Planning in the context of FDI as has been noted by MAF and NLMA (2010). Not only has conservation forest again been slated for clearance for plantations development, but so too have large areas of regeneration forest. In addition, one of the original areas of land identified for plantations development by the company has not been planted. This map supports the assertion that dense forest clearance as well as NTFP clearance has taken place in the village, as per the statements in the previous chapter by both Lao Kha as well as by neighbouring Thana tai and Phachoua villagers.

As is born out in the LUP analysis, as well as the previous case studies of Khon Gaeo, Houayhua and now Lao Kha, we can see a similar pattern of clearance of conservation forest emerge. In Lao Kha Village in particular, we are presented with a very clear picture of conservation forest land having been repeatedly cleared on several different occasions for plantation development by Oji LPFL.

Authority of Headman over villagers Lao Kha Village offers yet another interesting perspective on the power relationships within a village vis-à-vis LPFL land acquisition process. Villagers in Lao Kha complained to the rural development NGO, (trying to solve the boundary conflict), that only the village headman was privy to information concerning the village LUPLA agreement and company contracts, and that decisions affecting the whole village were not shared with regular villagers. This is another common theme of plantations development in Laos. As discussed previously, as the representative of the Lao government in the village, ultimately the village headman, maintains absolute authority to decide the fate of their village regarding plantations development. Unlike Houayhua and Khon Gaeo Villages, where the headman at the time had refused to succumb to threats and pressure to release land to the company, in Lao Kha 900 hectares of village land were signed away by the headman seemingly with very little consultation with villagers.

205 In Lao Kha, villagers complained to the visiting rural development NGO that the village headman held onto the LUPLA handbook of the village, as well as various other official documents and contracts, and that none of these were shared with the rest of the villagers. The village headman was not present at the meeting between the NGO and the villagers because he was engaged in finding land for Oji LPFL (JVC, 2007b). In summary, this case highlights how the headman’s power leaves the land acquisition process open to abuse, where the village headman can be unduly pressured or offered private incentives to sign village land over to the company.

3.2.2.4 Phonsaart Village Phonsaart Village is located immediately adjacent to Lao Kha Village, and went through the government LUPLA process in 2000 supported by BGA LPFL. As discussed previously in Chapter 5, Phonsaart Village offered an example of the over-allocation of forest areas to Oji LPFL that led to resource conflicts, boundary disputes and impacts on the area of a neighbouring village. As with the case of Lao Kha Village, the LUPLA Process conducted with the support of BGA LPFL in Phonsaart Village in 2000 also highlights the irrelevance of LUPLA to the actual planning and acquisition of plantation lands.

206 Figure 5.42: Phonsaart Village land use planning signboard

(The dark blue colour identifies BGA plantation area while the light blue indicates Use Forest) Photograph July 2008 by author

Figure 5.14 above shows the areas of land categorised for under the LUPLA process conducted with the support of BGA LPFL in 2000. The forest and land categories are divided as per Table 5.5 below.

Table 5.22: Land and forest categorisations in Phonsaart Village Conservation Forest 444.58 ha Degraded Forest 79.19 ha Planted Forest 36.60 ha Production (Use) Forest 143.09 ha Protection Forest 5.64 ha BGA company tree No Figure plantation land Regeneration Forest 57.93 ha Spiritual Forest 25.27 ha Agricultural Land 258.92 ha Future land construction 17.62 ha Urban land 5.5 ha Future agricultural land 158.61 ha Road 10.86 ha

207 The Phonsaart Village signboard is a good example of the confusion surrounding land and forest areas in Laos. While the total land area in the village is determined to be 1246 hectares, the area zoned for BGA plantations is absent despite there being a considerable area shaded as zoned for company plantations.30 It is unclear if the total land area stated on the signboard is inclusive of the plantation area or does not include the plantation area. Such a lack of clear data does little to facilitate village understanding, not to mention outside researcher understanding, of the extent of company plantation land areas.

While the official signboard does not state how much land BGA was allocated under the land and forest allocation programme, allocated for plantations in 1999, Phonsaart Village officials state that the village agreed to the use of 130 hectares of land for plantations by the company in 2001. This land was located on the south side of the village, apparently corresponding to the markings indicated on the village signboard. Following this, Oji LPFL came back to the village in 2005 to request more land and the village agreed to a further 300 hectares of plantation land to the north of the village. The figures given by villagers correspond to totals in Oji LPFL baseline data of 102 hectares of plantations undertaken by BGA and 230 hectares planned by Oji LPFL as of 2006 (Oji LPFL, 2006c: Annex 3).

30 Furthermore, as is common with village signboards, the Phonsaart signboard appears to contain numerous inaccuracies in totalling village land area. When the above land areas are totalled together, total village land area comes to 1,243.81 hectares. This is 2.19 hectares less than the stated total land area on the village signboard. Furthermore, the BGA plantations area is not included in land totals despite being a sizeable area (sea blue shading on the signboard).

208 Figure 5.43: Oji LPFL plantation map in and around Phonsaart Village

(Source Oji LPFL, 2006d)

Allocation of Land An examination of the Phonsaart Village Land Use Planning Map indicates the extent to which these sorts of Land Use Planning exercises are not used as a means to designate plantations land to villagers. The geo-referenced signboard map shows extensive plantations in the south of the village outside of the boundaries allocated for BGA plantations and in areas that are supposed to be Village Use Forest. Furthermore, site visits to village forest areas in 2008 indicated that areas of village agriculture land and future agriculture land (gold and dark orange shadings on the village signboard) have been used for plantations development. This loss of agricultural land is particularly noteworthy given that Oji LPFL baseline surveys indicate that 31 out of the total 35 households in the village conduct shifting cultivation (Oji LPFL, 2006c), requiring far more extensive land than a permanent paddy field.

As we saw in the previous chapter, the level of resource loss in Phonsaart Village was so high, that the village boundary with Phachua Village needed to be renegotiated with assistance from a development project and GoL. The following map (Figure 5.6), show in

209 detail the level of clearing for Oji LPFL plantations that has taken place in Phonsaart Village. Again, we can observe in the north-east of the village that plantations have clearly gone up into the Conservation Forest (identified in green).

Figure 5.44: Phonsaart Village LUP map overlayed with Oji LPFL GIS data

Key to

LUP zones

Source: GIS map produced May 2011 by author using geo-referenced LUP signboard and Oji LPFL planting data (in red) from NLMA

3.2.2.5 Pak Veng Village While Oji LPFL’s relationship with the village of Pak Veng has been extensively detailed in Barney 2007, the process of land acquisition was something that was not touched on so much in that report and is something I would like to examine here. The case of Pak Veng Village also offers an interesting example of the way in which government officials and company representatives collude in the process of acquiring land from village communities.

Oji Paper Meets with Villagers During a stay in Pak Veng Village on the 19 September 2008, the small research team of which I was a part happened to be in the village at the same time as Oji LPFL Company and a government representative appeared in the village to discuss with villagers about the

210 planting of small holder eucalyptus crops. While this case is not specifically related to the acquisition of land for land concessions, the exchange provides a unique insight into the relationship and means of manipulation undertaken by company and government staff against village authorities, and villagers in general.

The meeting that took place in the house of the village headman that evening was attended by approximately 10 Oji LPFL staff and also by a single DAFO staff member. There were approximately five villagers in attendance including the village headman. Ostensibly the meeting was about a matter of confusion between Oji LPFL and Pak Veng villagers. The company had given approximately 12 villagers an interest free loan of 500,000 kip (US$50) to help them buy fertiliser for their small holder eucalyptus saplings which Oji LPFL was promoting as an alternative to concession based plantations. It appeared that there was some confusion over this within the village. Villagers claimed they were not aware that the money was only a loan, with one villager saying “if I knew it was a loan I wouldn't have taken it” and another villager saying “can you give us fertilizer because I've already used the 500,000 for something else” (field notes from meeting).

After some initial confusion about the loan and the fact that it could be repaid after the tree harvest, both the LPFL representative and the district government official began telling the assembled villagers how much money could be made from selling the trees once they were harvested. At one point during the meeting, the Oji LPFL official informed the villagers that after only seven years the villagers could have 20 million kip ($2,000), and at another point he asked the villagers “who wants to have money?”, which predicably resulted in a chorus of villagers proclaiming their desire to be rich. Given the experience in Laos with the ADB Industrial Tree Plantation Project – where many hundreds of small holder farmers were put into debt because of loans pushed on them for small holder eucalypt farms that were subsequently unviable (Lang and Shoemaker, 2006) – it seems from this meeting that the ease of making money from eucalypt plantations was overly emphasised so as simply to encourage villagers to take up small-holder cropping. Even at this early stage however, there already appeared to be problems with the small holder-crops. At one point, the village headman wanted to know if villagers could get new seedlings to replace the dead seedlings (field notes from meeting).

211 While there was some attempt to inform the villagers of the importance of having high growth rates through the application of fertiliser, the Oji LPFL and government officials presented an overly rosy picture of eucalypt plantations. In Pak Veng Village, the Theun Hinboun Hydropower project had previously given villagers rubber tree saplings so that they may be able to undertake their own rubber tree plantations. When this came up during the meeting, the government official working with Oji LPFL proceeded to tell villagers about various disadvantages of planting rubber, as opposed to eucalyptus, and proceeded to tell villagers that when planting eucalyptus weeding could be easily controlled after only 2-3 years, while rubber trees took much longer because the spacing was much bigger with rubber trees.

While it is impossible to tell from this one meeting how the actual state of small holder crops will proceed in Pak Veng Village in the future, the meeting itself highlights the way in which both company and government officials manipulate villagers with stories of making money, and with very little monitoring or independent oversight as to how village land negotiations take place. With observations of such local interactions, one has to wonder if the same techniques are also used in acquiring land for large concessions. This is particularly so given the number of villages that mention the various benefits explained to them by local officials if they grant land to the company (as was the case in Khon Gaeo village).

This discussion that took place in Pak Veng Village, while not specifically related to the acquisition of lands for plantation concessions, is nevertheless significant in the fact that it highlights the way that company officials, in collusion with paid government representatives can easily manipulate villagers through exaggerated claims of benefits to villagers relating to plantations. It is not hard to imagine the ease with which villagers could likewise be manipulated through exaggerated claims of jobs or other benefits from plantation operations to agree to grant plantation operations on their land.

212 3.3 Land Acquisition Summary

Before making a final conclusion on this chapter, I offer a brief summary of the above sections on land acquisition undertaken in the Oji LPFL project. In section 3 of this chapter, I have raised a number of different case studies using actual observations and reports from villagers as well regarding the acquisition of their lands for plantations development. I have also used a unique methodology of using geographic information systems to geo-reference GoL land use planning maps located in villages to clearly show exactly where plantations are taking place. Many of the findings in this section raise important questions that I will revisit in the final chapter, however, a number of important points should be highlighted as themes from the information presented above.

3.3.1 Land Use Planning – Irrelevant or simply a conduit to control villagers?

As we have seen through an analysis of the LUPLA maps and the five village case studies, there is a continual tendency for industrial tree plantations to be conducted on lands allocated as Conservation Forest under the LUP programme. A topical question raised by the above case studies is thus, ‘why are government officials allowing the clearing of registered village conservation forest areas when they have already registered the area as a conservation zone?’ It is my thesis that the LUPLA process conducted by the Provincial and District Agriculture and Forestry Offices is viewed by government authorities solely as a tool to manage village forest use as a means to stop a perceived threat (whether real or not) from logging conducted by villagers themselves. Although village LUPLA was supposed to be a tool to guide all land use at the village level, it is generally recognised that government departments rarely, if ever, refer to the land use maps of villages when deciding concessions development (MAF, 2005; MAF/NLMA, 2010). This has also been borne out in the three case studies above. I argue that this is because GoL does not view itself in need of regulation, due largely to the authoritarian tendencies of the administration. Only villagers need to have their land use practices managed and this has been the primary purpose of LUPLA over the last decade (MAF, 2005). Even the Ministry of Agriculture and Forestry acknowledge that there has been mismanagement of the storage of data collected on land use from villages. Maps are lost by local agriculture and forestry departments, and are not shared with other departments responsible for concessions (such as planning and investment), nor are they even shared

213 between departments in the same DAFO office, as we can see from the case above (MAF, 2005). Indeed, Oji LPFL has previously come to photocopy LUPLA maps from the same Khammouane based NGO because they were unable to find any maps in local government offices (Arai, Pers. Com., 2008). While in some of the case studies presented above the original LUP maps are dated from 2000 or before, there are also cases where LUP maps have been more recently developed such as Khon Gaeo Village (2005) or Houayhua Village (2007). And yet, in the process of allocating land for plantations development the land use planning these maps have been completely disregarded. With such a close proximity between these systems for LUP and the establishment of plantations, arguments that maps are lost or unknown to district officials are far less believable, and lead further credence to the idea that government officials themselves do not see the LUP map as something to guide their own planning.

3.3.2 Insufficiencies in process of Land Acquisition

The above cases illustrate numerous problems associated with the process of land acquisition in Hinboun District, and with the Oji LPFL plantations. I will summarise the main themes below.

Harassment and Coercion Perhaps the most serious of these is that local government officials at the district level, as well as company officials, are unduly pressuring and coercing villagers into signing land over to companies. We saw this in Khon Gaeo Village and at a much-elevated state in Houayhua Village. In the case of Khon Gaeo Village, we saw continual harassment by company officials to sign land over for Oji LPFL plantation operations in spite of villagers clearly stating that they did not wish to have their lands appropriated for Oji LPFL plantations. Only with the intervention of a third party in the form of an international NGO did such harassment cease. In the case of Houayhua Village, intimidation and threats were made to villagers, including the threat of incarceration and the ultimate futility of resisting the wishes of GoL and the company. In the case of Houayhua, where no intervention was made by a third party, it appears that ultimately the village has lost the battle to protect its land as most of the village Conservation Forest was ultimately appropriated for Oji LPFL plantations. Given the socio-political context of Laos, where there is no independent judiciary nor independent media, there is very little villagers can do when faced with such harassment or

214 forced coercion. In the case of Khon Gaeo Village, the villagers appealed to an international NGO for intervention, an intervention that ultimately resulted in villagers’ wishes being respected where they had previously not.

GoL officials working on behalf of Oji LPFL The incidents of harassment and coercion mentioned above stem from the basic problem with the process of land acquisitions in Laos, that being that government officials at the local level cease to loose their independence as a regulating or oversight body as soon as they start receiving allowances from plantation companies to engage in work finding land for plantation investors. Of course, the practice of paying per-diem to government staff to undertake any sort of work is the norm in Laos. Yet, while this system may be a way for underpaid government staff to receive extra income, by paying government officials for services in finding land, a direct financial incentive is placed on the local officials to use whatever means necessary to get the village headman to sign land over to the company. It is when such incentives exist that GoL officials become simply an arm of the company to manipulate villagers (whether through exaggerated claims of the benefits of plantations [Khon Gaeo, Pak Veng] or through coercion and intimidation of villagers [Houayhua]), in order to achieve company land acquisition objectives, even if these objectives are not in the long term interests of villagers.

Power and corruption of village headmen Another major problem with the land acquisition process that has come out of these case studies is the unchecked power that the village headman has compared to other villagers in determining whether or not plantations development occurs. Such a process is so obviously open to manipulation in a country that has a very high degree of institutionalised corruption (Haslach, 2007). During my time working in the community forestry sector in Laos, I repeatedly heard of village headmen being offered motorbikes or money to sign over village land for plantations development. As we have seen already, in the case of Oji LPFL, village headmen and sometimes party secretaries receive monthly payments from Oji LPFL. While Oji LPFL states that these are ostensibly for organising villagers and managing plantation lands (Oji Paper, 2007), it also likely ensures that the executive power at the village level is kept appeased. As was shown in the cases above, discussions between the company and the village often occur only with the village authority (Pak Veng) and often it is only the

215 headman who are privy to the contents of contracts, and negotiations with companies are often conducted without any consultation with villagers (Lao Kha, Phonsaart).

Lack of Informed Consent The cases of Khon Gaeo and Pak Veng also highlight the way in which villagers are manipulated through a lack of information, specifically through a lack of information on risks and disadvantages of plantations development, and also through exaggerated benefits of plantations development. The discussion undertaken by the DAFO counterpart to Oji Paper in Pak Veng Village clearly misrepresented the difficulties of undertaking smallholder eucalypt plantations only asking if villagers wanted to have money, a question that obviously no one would answer in the negative. A situation whereby villagers are presented with only a one- sided view of plantations development means they are not able to give ‘informed consent’ to the development of plantations on their land.

216 4 Chapter Synthesis

This chapter has attempted to show in detail the process of commercial land acquisition by Oji LPFL operations, as it takes place at the village level. It should be kept in mind that the situation that is occurring at Oji LPFL is likely to be one of the better examples of land acquisition processes taking place within Laos. I have shown the actual processes of land acquisition through a diverse range of analytical methods, including: the comparison of policies and practices; village case studies; and mapping exercises.

On the one hand, we have seen the way in which Oji LPFL makes monthly payments to government officials at different levels through the payment of ‘committee per-diems’ to upper level government officials and also monthly payments to headmen and party secretaries in the villages where they have plantation operations. In addition, we have seen the way in which payments made to government officials, as part of negotiating land deals for the company, could be construed as a conflict of interest.

I have shown, too, how the present system of land acquisition is prone to corruption and bribery through the ruling elite in the village. This particularly implicates the village headman, whose signature is all that is required at the village level (as the GoL representative at the village level) to acquire land for plantations development within the confines of the village territorial boundaries. I have shown how villagers in Lao Kha and Phonsaart Villages complained of the fact that there were not privy to any of the discussions between the headman and the company.

I have also shown the extent of the importance of shifting cultivation systems for the villages in Hinboun District and the way in which Oji LPFL disregards these systems and actively targets them for plantations, incorrectly citing out-of-date legislation as proof of the legality of conducting plantations development on shifting cultivation fallow land. I have explored the way in which the concept of ‘degraded land’ has been used as a mechanism to appropriate shifting cultivation fallow and other lands that have low commercial timber value, but not necessarily low value land uses (e.g. NTFPs, grazing). Despite some promising phrases in Oji LPFL guidelines to protect areas of NTFP significance, what we have seen in both this and previous chapters is a continual loss or threat of loss of areas that contain different NTFP resources. In examining the discussion on degraded land and shifting cultivation fallow, what

217 we can observe is the way in which village livelihood interests are being overlooked by both GoL and Oji LPFL, and forests are looked at in terms of a static entity that does not change over time. Yet, rotation shifting cultivation systems are by their very nature continually rotating between agricultural croplands, bare hills regenerating scrub and secondary forest.

We have also examined a number of the policies contained in the Social Guidelines for Oji LPFL, which state the importance of forest and land areas for village livelihoods and asserting a commitment to ensuring that such areas are not utilised for plantations development. However, we have also seen the extent to which Oji LPFL is involved in the land acquisition processes, intimately working with the local government offices in acquiring village land. Finally, we have examined the great disconnect between Oji LPFL stated policy intentions and the reality on the ground faced by village communities. Through an analysis of plantation locations across land use planning maps, we have been able to view firsthand the way in which Oji LPFL plantation operations consistently ignore village land use planning zones and forest categorisations. Conservation Forest areas where consistently cleared for plantation operations despite the director of Oji LPFL specifically stating that this was against his company policies. Both GoL and company officials are clearly ignoring LUP zonings even when Oji LPFL or its predecessor BGA LPFL had supported LUP programmes in the same villages a few years earlier. This, I have posited, is primarily because the GoL regards LUP only as a tool for controlling villagers land and forest use, ensuring that such land and resources are freed up for government use. The evidence suggests that village LUP is not referred to by GoL when planning for foreign direct investment in tree plantations. I suggest this is because the GoL does not regard LUP as a tool to control anyone other than villagers.

Finally I have undertaken a close examination of five very different case studies, and looked at the varied ways in which land acquisition takes place at the village level. We have seen how village communities are manipulated through exaggeration of benefits, harassed, and cajoled into accepting plantation operations. I have shown how government counterparts who are paid per-diem allowances can potentially manipulate communities into agreeing to plantations by purposely showing them a rose-coloured view of plantations, without explaining risks. Finally, I have shown how the appearance of an independent entity with some political power was able to bring pressure to bear on Oji LPFL in order to request the company desist from contacting villagers to conduct plantations operations in their village

218 (Khon Gaeo), while the lack of an independent party in another case resulted in a massive increase in plantations despite village head objections to the operations (Houayhua). Clearly there are serious concerns regarding Oji LPFL operations in Hinboun District. In summary, what this chapter has shown is that Oji LPFL staff and GoL officials are operating above both government law and policy, and also above Oji LPFL’s own company policy when acquiring land for plantations. Oji LPFL land acquisitions have been shown to be removing forest land that is zoned as restricted forest zonings (conservation, protection, regeneration). In addition these land acquisitions do not appear to be in the interests of improving villagers’ livelihoods, and in most cases, villagers themselves (if not the authority, then the ordinary village folk) were opposed to the plantations on their land. The opposition of villagers is not particularly surprising given that, as I have shown in previous chapters, villagers lose their various natural resources and the nature of the concessions as ‘investments’ do not produce any livelihood alternative in return. The only benefits many villagers receive are small, one-off infrastructure projects as part of the social contribution programme of Oji LPFL and a loose ‘promise’ of jobs.

This analysis shows that under the auspices of the Oji LPFL, there has been widespread deforestation and destruction of traditional village lands. What does this mean for the theme of this thesis, when we talk about deforestation, forestry sector aid interventions, foreign direct investment and poverty alleviation? This question is examined in my final concluding chapter.

219

CONCLUSION

Contents

1 Overview of the Thesis and Situation ...... 221

2 Donor Agencies and their Role in Forest Management and FDI...... 223

3 Discussion on the Case of Oji LPFL...... 225 3.1 ‘Best Case’ scenario of forest degradation ...... 225 3.2 Oji LPFL and Governance in Laos ...... 226

4 Summary and Conclusions ...... 228

220 1 Overview of the Thesis and Situation This research has examined the issue of natural forests, and deforestation in Laos through the lens of foreign direct investment. The forests of Laos are some of the most important forests remaining in mainland South East Asia and they provide various environmental and ecosystem services: removing carbon dioxide from the air and providing important habitats for a diverse range of flora and fauna species. In addition, I have shown how the forests of Laos provide an important role in the livelihoods of rural subsistence communities. The forests provide not only lumber for constructing housing, but other housing materials such as bamboo, as well as numerous varieties of forest vegetables, food stuffs, medicinal products, and to provide the raw materials for various handicraft activities. I have also shown the importance of how forests provide agricultural produce (particularly rice) through the traditional agro-forestry system commonly known as shifting cultivation.

It is clear however, that the forests of Laos are under threat from uncontrolled logging. Despite decades of forest interventions and vast resources having been administered through multilateral and bilateral aid projects, in an attempt to halt the depletion of natural forests in Laos, such deforestation has not only continued but, as I have shown, much of the available data show trends that deforestation and logging is increasing. This increase is even acknowledged by the Lao Ministry of Agriculture and Forestry in its Forest Strategy 2020 (MAF, 2005). Additionally, I have shown how in spite of the importance of forests to subsistence rural communities, Lao law and policy only provide communities with certain usufruct rights over forests. This results in very limited community control over important village resources and traditional lands, from which subsistence communities draw their livelihoods. Legislatively, all forests are considered to be the property of the State and communities retain only limited usufruct rights under the law.

Meanwhile, shifting cultivation is an important source of agricultural production for many upland communities and sometimes even lowland communities, as we have seen in Hinboun District. Shifting cultivation is an important aspect of traditional biodiversity and food security. Furthermore, since the 1950’s academic consensus is that when conducted on long fallow rotations the practice is highly sustainable. Yet in Laos, as in many other countries in Asia, shifting cultivation is commonly referred to as a major cause of deforestation by the government, even though GoL itself presents very little reliable data to substantiate the claim.

221 Both historically and presently, GoL forest policy maintains the elimination of shifting cultivation as a long term policy goal. We have seen how various different forest related policies have been undertaken under a banner of forest conservation in an effort to achieve a halt in shifting cultivation, including through the LUPLA policy as well as policies aimed at using shifting cultivation fallow for plantations development.

As I have presented in this thesis, there is considerable independent data showing that the logging of forests is being conducted on an ever increasing scale. Data from within the Department of Forestry, from external agencies such as the UN and independent research conducted by NGO’s show that unrecorded export of timber to neighbouring countries is taking place on a very large and increasing scale. Yet, as we have seen in the chapter on forestry, official GoL statistics vastly under-record this timber exiting Lao ports (EIA, 2011). This is evidence of the massive fraud in the forestry sector in Laos, with unreported logging, extraction and illegal trade in timber. Many of these problems are governance related and involve many powerful actors such as the Lao and Vietnamese military as well as other highly placed officials (EIA, 2011). The situation would appear to be largely out of control. Despite this evidence, GoL continues to conveniently toe the line that deforestation (while nominally coming from illegal logging) is predominately a problem to do with villagers destroying forest, and shifting cultivation is cited as the primary cause in this regard.

222 2 Donor Agencies and their Role in Forest Management and FDI Despite the problems inherent in the Lao Forestry Sector, forestry interventions in Laos continue to view the Lao subsistence farmer as the principal cause of deforestation in line with GoL policy. Japanese government forest interventions, such as the JICA FORCAP and FORCOM projects, had at their focus the reduction of shifting cultivation. In the case of the FORCAP project, the promotion of “agro-forestry” activities saw planting of acacia tree species on fallow areas and conveniently ignored the fact that shifting cultivation is itself agro-forestry (JICA, 2003). The World Bank’s FOMACOP and SUFORD projects, as well as WWF attempt at Participatory Sustainable Forestry Management (PSFM) in Attapeu Province, all aimed to encourage villagers’ sustainable management of forest areas. While villagers are obviously essential stakeholders in forest management, all of the above programmes focused predominantly on village forest management systems without considering the broader implications of forest tenure, nor illegal logging by government officials and other outside parties. Both SIDA, GIZ (formerly GTZ) and JICA have long vested interests in the LUPLA system. SIDA established the LUPLA system to guide rural forest management and watched as the system was turned into a tool to control and restrict shifting cultivation. The LUPLA system has subsequently been criticised as a policy that has only increased the poverty and land degradation of upland farmers (SPC, 2001), and it has failed as a tool to ensure proper management of forests. While allowing the LUPLA system to be co-opted for GoL’s shifting cultivation eradication strategy, donor agencies failed to deal with the politically sensitive issue of tenure, leading to the situation reported in the previous chapter where local government agencies fail to follow village forest management plans and simply clear restricted forest zones for plantations development against villagers wishes. The failure to address the issue of forest tenure and give villagers real rights over forest areas has, as we have seen in chapter one, only led to increasing levels of deforestation and log extraction in Laos over the last 15 years.

On the other side of the coin, as I have noted, the Brussels Program of Action specifically calls for increased levels of FDI in the Agricultural and Agro-Industries sector. The programme stipulates that development agencies should provide support for LDC undertakings to improve agricultural productivity and increase competitiveness, inter alia through ODA and increased foreign direct investment. In following this accord, various

223 donors have been busy freeing up and promoting agro-investment in Laos as part of the global trend to push free market economies. Prominent among these donors is the ADB who has facilitated various investment workshops, including the one that led to Oji Paper’s acquisition of BGA LPFL. The World Bank has noted that Laos remains one of the hardest places to start a business and the ADB’s solution to this in 2006 was to promote a “one stop shop” investment service to streamline and speed up investment into the country. While that project did not proceed, the idea hung around and has since been implemented (Vientiane Times, 2011). Yet it seems there is little propensity for donor agencies to deal with the regulation of agriculture based investments, nor to tackle the politically sensitive issue of forest tenure. ‘Bring the investment and poverty will be decreased’ appears to be the mantra. Yet if this research has shown anything, it is that FDI in the agro-forestry sector is only facilitating deforestation and loss of natural resources. While it is outside the scope of this thesis to make a determination as to whether poverty is being decreased or increased as a result of these agro-forestry investments, the testimonies of forest dependent communities in Hinboun District, presented in this thesis, appear to indicate that villagers are facing increased hardship because of these losses.

In summary, it would appear that in the rush to promote investment, donor agencies have failed to ensure adequate regulation, monitoring and safeguards for the agro-forestry sector in Laos. Additionally, donor agencies have continued to follow government policy that sees villagers, and particularly shifting cultivators, as the principal cause of deforestation, and have largely failed to address forest tenure issues leading to the ongoing appropriation of traditional village forest lands for commercial interests.

224 3 Discussion on the Case of Oji LPFL

3.1 ‘Best Case’ scenario of forest degradation

The case of Oji LPFL is important in the context of this broader discussion on FDI, because Oji LPFL represents the type of ‘quality investment’ promoted by development agencies. Oji LPFL is headquartered in Japan, a leading developed economy, and the company has multiple pulp and plantation operations around the world. Also, unlike some plantation investors who have at their heart ulterior motives, such as illegal logging, Oji LFPL only interest in its investment in Laos is to conduct commercially viable plantations to supply raw materials for their pulp and paper operations. Indeed as we have seen, Oji LPFL market themselves in this regard as a trustworthy company compared to smaller local and regional investors.

As such, the case of Oji paper is relevant to the broader discussion on plantations investment in Laos because it represents what we could call a ‘best case’ scenario for plantation operations in Laos. There is at least a will among some field based staff and middle management staff to implement viable plantation projects and the company management does not wish to be involved in illegal timber operations. Whatever destructive practices are being undertaken in Oji LPFL operations, it is entirely foreseeable that this is the top end of the spectrum of plantations in Laos, and that far more flagrant disregard of Lao Law and policy are being undertaken in other plantation operations run by smaller less-reputable companies. Recent reports from around the country on land concessions would support this theory (Hunt, 2007; Nouphanh et al., 2007; Obien, 2007; LBA, 2008; NLMA, 2009; Kenny-Lazar, 2010).

Research presented in this thesis paints a damning picture of Oji LPFL operations. Through case studies, we have heard the voices of government staff, development workers, Oji LPFL staff, contractors and importantly villagers, all describing how land rich in both timber and natural resources is being cleared as a result of Oji LPFL operations. This is taking place in violation of Oji LPFL social and environmental guidelines. In section 1.3.5 of Oji LPFL’s Policy on Social Guidelines published in October 2006, the company set out areas designated ‘resource protection’ and considered important in terms of conservation in the village context as a guide to its plantation operations in Laos. The first of such areas listed in the guidelines are areas used by villagers for NTFP collection. The guidelines cite the importance of NTFP to traditional village livelihoods and state that NTFP areas will be protected from plantations

225 development. Yet, despite these guidelines stating the importance of NTFP and also the importance of arable land to villagers, this research has shown multiple examples of the removal of NTPF resources and a general lack of concern for shifting cultivation agricultural systems. While the cases presented here would indicate that Oji LPFL is in violation of its own guidelines, the same can also be said for the Lao law. Although article 13 of the 1996 Forestry Law explicitly prohibits plantations from dense forest and limits plantations to degraded forest, the logging quota system is often used as a method to access rich forest lands through land concessions (EIA 2011).

We have seen that Oji LPFL also had a logging quota issued under the quota system, although it is not clear if Oji LPFL management are even aware of this fact given the secretive nature of Lao quota systems. While the legality of such logging practices is open to discussion, I have shown both through villager, government and company staff testimony that dense forest has been removed before the planting of Oji LPFL operations. Through the use of mapping technology and freely available satellite imagery I have also shown how Oji LPFL operations have cleared designated village conservation forest areas and other restricted forest zones. Although the management of Oji LPFL have clearly indicated that the clearance of conservation forest is not allowed under company policy, and despite Oji LFPL policy protecting areas of resource importance, Oji LPFL plantations have been shown to break all these policies. While Oji Paper claims that ultimately it is the responsibility of the GoL to acquire land for their plantations, at the same time the company also notes their own participation in land surveys and to this regard they do bear responsibility for these practices. The information presented in this thesis shows ultimately that Oji LPFL plantations are facilitating massive deforestation in Southern Laos even if Oji LPFL is not directly responsible for the deforestation. As Oji LPFL represents a best case plantation operation it is entirely foreseeable that agro-forestry investments all over Laos are facilitating deforestation on a scale never before witnessed in Lao history.

3.2 Oji LPFL and Governance in Laos

It could be said that one of the principal problems with investments and deforestation in Laos is a problem of governance and a lack of respect for the rule of law. Laos is a country where corruption is endemic and EIA (2011) highlight the extent to which corruption exists within the Lao forest sector, where logging bans and log export regulations are continually violated.

226 This research has also shown how investments in the agro-forestry sector are structured in a way that stops government officials from acting as regulators and actively co-opts government agencies to work to promote investors interests. We have seen how Oji LPFL operations pay monthly per diems to powerful people in government, including local government officials or village authorities. GoL officials are paid per-diems to work with Oji LPFL to find land for plantations. While Oji LPFL justifies these payments as keeping in line with standard practices in Laos, it cannot be denied that they lead to a situation whereby government officials are less likely to act on behalf of villagers interests given their financial interest in working for the company. We have seen how this financial interest has played out in rural villagers where officials have openly threatened villagers with gaol for not agreeing to cede land to Oji LPFL.

We can observe the conflict of interest that is taking place with Oji LPFL payment of local government representatives and village officials’ long term per-diems through the example of village grievance mechanisms. The typical grievance redress system for rural villagers in Laos is to go to their village headman for resolution. In conflicts between villagers themselves, it is possible that the headman may be able to mediate a solution. However in cases involving outside actors such as companies and outside investors, the headman typically takes grievances up to the district government. In the case of land issues this is typically the DAFO arm of the government. However, in the case of Oji LPFL where both village headmen and district officials are paid by he company, it is not hard to imagine a situation whereby there is a clear conflict of interest in the fact that authorities who are supposed to act in a neutral state as regulating agencies, have a clear financial incentive to act first and foremost in the companies interest. Such a situation was born out in the case study of Khon Gaeo Village where despite village requests to desist, company officials repeatedly returned to the village to pressure villagers to give land to the company. With district government officials in the pay of Oji LPFL, the requests of villagers to an international NGO to intervene on their behalf is hardly surprising. Likewise in Lao Kha and Phonsaart Villages, village leaders under the pay of monthly per-diems reported no problems with Oji LPFL operations while other villagers reported disappearing resources, loss of fallow land and corrupt village authorities. While Oji LPFL may be correct in stating that the payment of per-diems may be standard practice in Laos, it is also true that this system in itself does not facilitate the GoL’s role to act as an arbitrator.

227 4 Summary and Conclusions This thesis considers the question as to why after so many years and vast resources having been directed at halting deforestation, deforestation not only continues but is also increasing in Laos. Deforestation is a very complex and multi-facetted issue. However, through the example of foreign direct investment in the agro-forestry sector, I have shown how forests and natural resources are being cleared and traditional village lands allocated to private interests with no compensation and very little tangible benefit to villagers. In multiple case studies, I have shown how rich forest areas have been threatened and cleared under the guise of plantation development and ‘poverty alleviation’.

In looking then at the reasons why deforestation is rampant in Laos, a number of issues have emerged from this research. Principally, forestry interventions themselves fail to acknowledge one of the main drivers of deforestation: that being GoL. Instead, forestry interventions continue to approach deforestation by attempting to control villagers’ forest use and restrict and eliminate villagers’ traditional shifting cultivation practices. By and large development interventions in Laos have been unable or unwilling to undertake the politically difficult task of imposing restrictions on government agencies in managing forests. The GoL does not see itself as bound by Land Use Planning guidelines at the village level and as we have seen openly allows clearing of village conservation forest areas for plantations development. On the other hand, Lao law considers the State to have complete control over all forest areas in the country and there is little will present within GoL to allow villagers to gain tenure over forests.

We have seen how villagers themselves have no legislated secure tenure over forest lands. Without any clear legal authority for villagers to claim ownership over forest lands, villagers are unable to even attempt to use nominally legal means to stop unwanted land appropriations clearing their forest lands and natural resources. Instead, as I have presented in this research, villagers are involved in protracted negotiations with government agencies who work in and on behalf of commercial interests that are seeking to appropriate their lands for plantations development. These villagers have very little power, nor capacity to undertake negotiations and are at a distinct disadvantage in this regard. While I have not explored this in this research, without clear forest tenure arrangements villagers also have no incentive for sustainable management of forests and resources because these resources could at anytime be appropriated by government agencies without any compensation. To put it another way, it

228 could be said that secure forest tenure is a prerequisite for community-based sustainable forest management. In a similar vein, government policy seeks to eliminate and denigrate traditional shifting cultivation practices rather than try to work with villagers in developing and ensuring sustainable shifting cultivation, as was argued for in the Participatory Poverty Assessment (ADB, 2001). This policy of eradication is itself leading to further degradation of Lao forests, through unsustainable fallow periods, and the acquisition of fallow lands for plantations development that only leads to the opening up of new areas of forest for shifting cultivation. So long as GoL policy continues to blame shifting cultivators as the principal culprit for deforestation and so long as forestry interventions continue to support this policy, it is difficult to see an end to continued deforestation in Laos.

Finally, the ongoing facilitation and promotion of agro-forestry investment is posing an enormous challenge to efforts to curb deforestation. While these investments have been facilitated by development agencies, these same development agencies have failed to ensure adequate regulation and monitoring capacity has been put in place to properly supervise these investments. As we have seen agro-forestry investments are virtually unregulated and there is very little, if any, monitoring taking place of such investments. This combined with the very serious governance issues presented in this research means that agro-forestry investments will only continue to facilitate deforestation in Laos. So long as GoL continues to act as an extension of commercial interests, facilitating, rather than independently regulating investments, then uncontrolled investment is only going to continue. This combined with a lack of rule of law and high rates of corruption in the forestry sector means that the problem of deforestation is not going to be resolved for the foreseeable future so long as plantations continue to expand.

This research has indeed painted a bleak picture of the ongoing issue of deforestation in Laos. Measures to alleviate poverty through the promotion of foreign direct investment in the agro- forestry sector are clearly highly problematic both in terms of deforestation and land alienation for local communities. The issues surrounding deforestation are complex and highly political, yet if we as human beings are serious about halting deforestation in Laos we will have to confront the many issues presented in this research. Without the will to confront these difficult issues, or alternatively to ensure that Lao and donor government agencies confront these difficult issues, then the continuing destruction of the natural forest resources of Laos is set to continue.

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243 APPENDIX – Ethics Final Approval

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