Sustainable Development in the Plantation Industry in Laos: An Examination of the Role of the Ministry of Planning and Investment

The plantation industry in the Lao People's Democratic Republic has seen rapid growth in recent years, driven predominantly by overseas investment. This paper examines the investment boom in the sector, the current policy, regulations and decision-making mechanisms, and the important role the Ministry of Planning and Investment could play in ensuring that investment flows into the Lao PDR achieve the best environmental and social outcomes for the country.

Key findings:

• The Government of the Lao People's Democratic Republic (GOL) has identified the agricultural industry, which includes the plantation industry, as one of most important tools for alleviating poverty and raising standards of living. However, concerns have recently been raised by the GOL and other stakeholders about the true value of some of these investments when weighed against their environmental and social impacts.

• A national land management meeting in mid-2007 concluded that the vast number of concessions granted have significant negative impacts on the environment and local communities. Some of these impacts include change/loss of traditional cultures and livelihoods, deforestation and loss of biodiversity, degradation of soil quality and productivity caused by intensive planting and misuse of chemical fertilisers and insecticides, increasing livelihood uncertainty. In an effort to prevent the rapid loss of natural resources the GOL has recently suspended new land concessions over areas of more than 100 hectares.

• The plantation industry in the Lao PDR has grown significantly in recent years. Specific information about the size, location and types of plantations and investors, however, remains limited and dispersed across various government agencies. Furthermore information on projects approved and implemented at the provincial level is often not available at the national level. Total plantation investment data is not currently held by the Ministry of Planning and Investment (MPI). As a result, the overall scope of investment in the plantation sector is unclear which has hindered planning efforts.

• The MPI is the main agency responsible for decision-making around investments in the Lao PDR. Despite its critical role throughout the entire investment decision-making process, it has so far played only a minor role in ensuring that environmental and social issues are taken into account. Currently those issues are left to other ministries. Therefore there are significant issues around a lack of coordination among other agencies to ensure environmental issues are taken into consideration, lack of capacity within the MPI to address environmental issues, and limited financial resources for adequate studies and processes. Moreover, there is currently no monitoring and evaluating function within the MPI to ensure that environmental issues are a part of decision-making.

Key recommendations:

• The Ministry of Planning and Investment is the lead government agency responsible for managing overseas investment and needs to effectively manage a process that mainstreams environmental and social issues into the decision-making process by strengthening collaboration among relevant ministries through the formulation of an inter- and intra-agency environmental working group.

• Information on investments in the plantation sector needs to be available to decision-makers and researchers. By setting up an environmental information and data center at the Ministry of Agriculture and Forestry or the National Land Management Authority, the Ministry of Planning and Investment could ensure that information related to current investments, land availability, land allocation data, background information on current companies investing in the Lao PDR, among others, is available and utilised.

• The Ministry of Planning and Investment should set up an environmental monitoring and evaluation system at central and local levels in collaboration with other concerned ministries. Upward reporting from provinces to central level would be essential to this process and the central inspection team should concentrate on developing concrete measures for promoting companies with exemplary environmental protection and sustainable development practices and punishing the companies violating regulations and laws.

• Lack of human capacity and finances is a central constraint to improving decision-making around investments that include environmental and social considerations. Therefore, the Ministry of Planning and Investment should work closely with the Ministry of Finance to ensure that adequate resources are allocated so that the MPI can play a central role in ensuring environmentally sound investment.