Michael Kirk (1996):
Land Tenure Development and Divestiture in Lao P.D.R.

I. Introduction

1. Issues and Objectives

With its program of economic reform, the "New Economic Mechanism" (NEM), which was already being tackled in 1986 before the implosion of the centrally planned economies in Eastern Europe, the Lao People's Democratic Republic (PDR) has initiated a far-reaching transformation process [FN 1] in economics, politics, administration, and also partially in its social structure. At the same time, the current developments in Lao PDR cannot be looked upon as prototypical of changes in Indochina as a whole for several reasons. What is, however, comparable to developments in Cambodia and Vietnam, is that the current economic and social problems and newly arising conflicts between different interest groups cannot be understood without considering the disruptions and consequences of the Vietnam War. Moreover, the people in all these countries had to live in different, strongly polarized systems for the period of time of only one generation, and were then confronted with the challenges and constraints of a rapid and fundamental re-orientation, both political and economic, after the collapse of the Soviet Union at the end of the 80s.

At the same time, especially in Laos and Cambodia, disagreements about desirable property regimes in general, and the land/resource tenure regime in particular form a cornerstone of the question of orientation towards socialist principles and central planning or towards the principles of a market economy and of decentralized decision making. Moreover, the solution of the property question is also the central precondition for an effective and steady process of transformation. Above and beyond this, the land question in an agrarian society which has a particular bond to land which has either been inherited or has been worked for generations is of the highest emotional significance.

The process of economic transformation in Laos is already well advanced and extensive: firstly, the reform program NEM now encompasses all sectors of the economy; the strong impulse that started by a vigorous private sector is being maintained by foreign investors and expatriate Laotians returning to the country. Positive results can be seen in the re-orientation of the economy which is moving away from its emphasis on public ownership of key resources towards a market-oriented property regimes (World Bank 1994).

Secondly, not just content with re-defining its macro-economic policy, the Government of Laos (GoL) at the same time tackled one of the most difficult parts of the transformation of a social and economic system, namely the fundamental restructuring of the entire legal and regulatory framework. This takes in a far-reaching scrutinizing and reforming of previous institutional structures.

As in other countries which are in a process of transformation, the success of economic and social restructuring of the Lao PDR is closely measured by international donors by how far the emerging civil society and their legitimate institutions such as the national assembly has managed to get the old control and command State to divest itself of its resources and to transfer greater power or authority to the individual or the (local) community (Myers 1995). Thus far, Laos has only been partially successful in putting this objective into action. In spite of economic reforms, the rebuild of product and factor markets in mainly urban the State-party system, including the Politbureau, all sub-organizations and the central planning commission (CPC) continue to exist and continue to have a crucial influence on the direction and speed of institutional change. In cases of the seemingly successful divestiture of former state property, military people and the political elite have secured themselves key functions in newly created businesses (e.g. logging companies).

Thirdly, the liberalization of the economy is altering not only the economic as well as the social structures through the creation of a system of market incentives and the continuing integration of the population into markets for commodities and services and labor, capital and land markets. This is especially true for the agriculture and forestry sector, which - based on their contribution to the GDP, exports and employment - play a dominant role in Laos, and which will be the focal point of this paper.

It is the objective of this study to discuss the socio-economic aspects of land tenure, or rather resource tenure in the process of economic and - as far as it can be demonstrated - political liberalization in the Lao PDR. In doing so it makes a contribution to the analysis and evaluation of the tenure systems in the Lao PDR, in particular to the dynamics and the interrelationship of land/resource tenure, divestiture and the process of privatization. It will demonstrate which direct effects and which indirect multiplicator effects existing resource regimes and tenure reforms have in a country, the wealth of which is based on its natural resources, especially in phases of transition and rapid social and economic change which is controlled in part by influential international investors and donors.

It is also the intention of this study to present those constraints and difficulties which must be overcome in order to give newly formed and reformed property rights regimes an extensive legal and regulatory framework and to let property rights be effective within this framework. The restructuring of resource tenure at all levels does not only influence key issues within economy and society, such as the willingness to invest, factor-productivity. It influences as well the degree of acceptance of the altered political system and the seriousness of democratization and participation at the village level, and thus it influences political stability in the long run. At the same time, the key functions of a consistent, extensive and practicable resource tenure system for the maintenance of soil fertility of agricultural lands, the sustainability of forest lands and the preservation of natural resources for future generations will be worked through in particular.

Accordingly, an introductory sketch of the cornerstones and problems of the transformation process in recent years will be made in Chapter I. Chapter II will concentrate on the analysis and evaluation of elements and problems of land policy and the more recent land-related legislation: objectives, the contents of land, forest and water legislation as well as their integration into an extensive legal framework, their implementation and enforcement at various levels. Here, the appropriate consideration of the interrelation between customary tenure regimes and statuary law, gender implications as well as the effects on various socio-economic strata (the poor, the landless, and returning refugees as well) are of central significance for development cooperation. This is also true for the interaction between land tenure and land use patterns as well as their effects on land use planning, integrated rural development, etc..

Chapter III attempts to assess the -hitherto neglected- processes of the emergence and resulting effects of land markets, particular those markets in urban and peri-urban areas. The existing material allows the identification of the various stakeholders (Chapter IV), and the analysis of the role of political and economic interest groups in the formation of and the exertion of influence on tenure legislation, as well as how the basic pattern of conflicts over crucial natural resources and capacities of institutions and instruments for solving conflicts are worked out (Chapter V).

Chapter VI analyses the findings pertaining to the activities of international and bilateral donors and NGOs in the Lao PDR which devote themselves to the question of land. Recommendations for future development cooperation can also be derived from this information in Chapter VII.