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

II. Land Policy and Resource Tenure Related Legislation

1. Land Policy as a Component of Development Guidelines: Recent Development and Cornerstones

The steps introduced for the economic transformation process were first of all the fundamental prerequisite for the working out of the current official objectives for economic and political development by the year 2000. It is easy to recognize in the wording of these guidelines (see below) that neither is this process by any means complete, nor is it sufficiently stable. (Lao PDR 1994a, Pham 1994, Lao PDR/GTZ 1994):

• the consolidation of the macro-economic reforms to ensure a smooth transition to a market-oriented economy;
• the improvement of the efficiency and the performance of the public sector;
• the acceleration of the socioeconomic development and the improvement of living standards by expanding the economic and social infrastructure and by increasing the quality and availability of social services in order to improve the level of human capital;
• to halt the degradation of the natural resource basis by developing and adopting sustainable resource and conservation management approaches to the use of natural resources.

These objectives are thus a reflection of the main bottlenecks and serious restrictions in the transformation process used up until now. It is precisely the consolidation of the macro-economic reforms and the halting of the degradation of the natural resource basis which demand further, even more durable measures for the completion of the legal and regulatory framework.

Natural Resource Use and Policy Failures in the Past

Alongside extensive reforms in the public sector, it is particularly necessary to improve the conditions for economic trade in the agrarian sector. Structural and policy changes following the adoption of NEM have led to a positive overall growth of the economy, accelerated in particular by the emergence of the private sector, but the agricultural sector, on the other hand, has contributed less and less to this overall growth in recent years (Kaosa-ard et al. 1995). "As the government sees it, the overriding concern is to improve agriculture production." (Dep. of Forestry 1995a:11). This sector will also form the backbone of any future socio-economic development; in so doing, it includes the forest sector, which is very important for Laos. Together they provide 58 percent of the gross domestic product, 83 percent of employment and up to 55 percent of export earnings (World Bank 1995a,b).

Laos is without doubt still rich in forests, water, biodiversity, mineral and land resources. The rapidly increasing scarcity of resources in the two last decades, conditioned by population growth as well as policy failure, makes an extensive and consistent land and resource policy from the State and other parties involved all the more urgent in order to be able to achieve the central development objectives.

1. Lao PDR has the largest per capita volume of renewable water resources in Asia, whereby 82 percent of water usage goes to agriculture, a mere 10 percent to private households, and only 8 percent to industry. At the same time, the access of the population to clean water and waste water treatment remains limited. Groundwater contamination from waste water is a serious issue in Vientiane and other urban areas. These trends demand clear and above all enforceable water rights, especially in rural areas on the basis of community-based water supply systems and regulations for the distribution and pricing of water.

2. The country uses only a fraction of the hydroelectricity it produces itself. About 70 percent is exported to Thailand which earns about 25 percent of Laos' foreign exchange. The potential for economic use of hydropower is enormous: over 50 dam projects are in various stages of planning. 20 alone are supposed to be finished by the year 2009. Serious problems and conflicts connected with this kind of unchecked economic growth in this sector arise through the displacement of local population and issues of compensation and resettlement including State recognition of the property rights of these groups. Added to this, of course, are further environmental problems, such as the loss of biodiversity, effects on water catchment potentials, drainage capacities, etc. [FN 3]

Measured against its neighboring countries, Laos still has a considerable portion of forest cover in spite of massive drops in passed decades. Given the total forest area was approx. 70 percent of the total area of the country in 1970, the amount was then estimated at about 47 percent at the end of the 80s. With a figure of 40 percent in 1992, timber and timber products were still the largest export article and contributed to 15 percent of the GDP. Deforestation is serious: ca. 300.000 ha of forest are lost every year. The overfelling is more noticeable in the north than in the south, whereby shifting cultivation in particular is made responsible for this along with unsustainable and illegal logging activities and forest fires.

3. Land degradation and forest loss are generally blamed on unsustainable shifting cultivation practices which is deeply rooted in the tradition of that particular rural population which practices upland rice farming on cleared areas of land. The growing population pressure has accelerated the ever more rapid clearing of further areas, shortened fallow periods and it leads to a shortage of land in the more accessible areas. The results of this are declining soil fertility, reduced crop yields and a sharp increase in labor costs due to weeding requirements. Both of these things not only reduce the prospects for agricultural growth in the uplands, but also lead to the clearing of more forests. Given the currently stated factor proportions, the resource-destroying character of the practice of shifting cultivation is undisputed. Added to this is the fact that traditional shifting cultivators are increasingly competing for land with lowland marginal farmers who have been moving upland, practicing shifting cultivation as well.

4. In view of the topography and the poor infrastructure of the country, farming is concentrated on patches of low-lying plains along the Mekong river. Extension of agriculture on to hillslopes and uplands continues due to poor soil fertility as well as inadequate support to farmers for agricultural intensification. The development of irrigation systems is far below its potential. This pincer movement of the conversion of areas of land in the valleys, and of forest to agriculture on hillsides is the basis of further conflicts over village boundaries, utilization rights, and the role of old-established owners and new settlers. In the rebuilding-up of a consistent legal framework which has been underway since 1989, these land rights conflicts must be tackled, and long-lasting patterns for solutions at the local level must be offered.

5. Lao PDR's forests provide a substantial natural habitat for a wide variety of flora and fauna. To conserve biological diversity, the Laos government has identified 71 potential areas for protection with the help of IUCN and SIDA. Eighteen of these have been declared National Biodiversity Conservation Areas (NBCA) (Kaosa-ard et al. 1995). The aim in these areas is an active participation of local communities to preserve the natural richness. The challenges for the future formation of rights of access to and of use of forests, pastures, water and farming land in these regions is accordingly large.

The World Bank also sees the causes for the poor performance of the agro-forestry sector on into the 90s more as result of government policies, i.e. policy failure, than as a result of factors outside the control of Government, like droughts, floods and external market developments (World Bank 1995a). Land policy and resource tenure related legislation issues are right at the top of this list of policies :

• insecure property rights;
• inefficient use and depletion of state-owned assets;
• poor or non-existent transportation and communication, infrastructure, and a lack of a skilled manpower base;
• low or negative economic returns from donor-funded projects; and
• poor agricultural support services.

Something which further aggravates the situation of insecure property rights is the limited implementation and promulgation of already existing laws and regulations; along with this are unclear roles and divisions of tasks and responsibilities among sectors and central and provincial authorities as well as poorly trained civil servants at all levels.

Future Development Perspectives and Constraints

Accordingly, a change in the content, scope and quality of government intervention must be of crucial importance for future development perspectives; it is undisputed that, above and beyond this, further serious bottlenecks will continue to exist (Dep. of Forestry 1995a). Social constraints include a high population growth (2.8 percent), illiteracy, material poverty, poor health, and a low level of formal education. Economic and financial constraints include: a limited technical infrastructure, underdeveloped production methods (and hence low productivity), a poorly trained labor force, a shortage of capital and uncertain product and factor markets.

The regional differences in resource endowment and growth potential continue to be considerable; in general, the southern and central provinces show a higher percentage of land suitable for irrigation with fertile soils as well as more favorable precipitation conditions than northern parts of the country. The economically usable forests in the north have already been considerably reduced. Lao PDR has among the world's most difficult and costly internal and external communications due to rugged terrain and long distances between settlements with an extremely low population density of 18 persons per km2. Marketing channels are also poor, partially as a direct result of the poor transport infrastructure.

In view of scanty resources, priorities must be taken into account regarding an urgently required extension of the physical infrastructure. What also must be taken into account are the effects of an improved infrastructure on the protection of forests and other conservation areas from encroachment by unregulated commercial exploiters or an influx of shifting cultivators into areas susceptible to forestry and soil degradation (World Bank 1995a).

In the future, dependence upon what is still primarily subsistence-oriented rainfed agriculture will continue. The result of this can be significant seasonal food shortages. Accordingly, the "Socio-Economic Development Strategies" orient themselves toward the agricultural and forest sector with five programmatic approaches (Dep. of Forestry 1995a):

1. to achieve food security in the fertile plains;
2. to control deforestation and timber cutting, and to offer alternatives to shifting cultivation,
3. to improve farming practices;
4. to develop an integrated rural development approach in pilot areas;
5. to develop appropriate irrigation systems.

In detail, the following ambitious, but in part contradictory strategies for achieving objectives are being strived for (Dep. of Forestry 1995a):

1. To establish a commercially productive agro-forestry industry and services. This also comprises the development of hydropower for the provision of energy. In order to preserve the environment, forests and wildlife are looked upon as particularly compatible where these objectives are concerned.
2. To encourage joint efforts between the government and the private sector. This approach is aimed at transforming the nature-based economy into the market economy.
3. To pursue integrated rural development by promoting farming techniques for improving family farms and establish industrial processing bases.
4. To clearly define the government's role in macro-economic management in order to eliminate the remainder of the command economy and promote private enterprises.
5. To further expand economic cooperation with foreign countries; to attract foreign investment in various forms so as to create long-term co-operation - in agriculture, forestry, the generation of hydro-electricity, the establishment of the social and economic infrastructure; it is further intended to upgrade human resources for implementing the policy; to develop the regulations, policies, and comprehensive laws so as to create ventures with foreign investors.
6. To undertake sustainable human resource development so as to create a workforce with the capabilities needed to meet national development demands.

Conflicts in the objectives within these strategies, such as between economic growth and environmental protection, are to be expected. On the one hand, there is a clear admission of the extensive exploitation of the greatest material wealth of the country, its water and forest resources; at the same time, particular protection of this wealth is being looked at for following generations on the other hand. But there is no evidence of any special approach towards reaching any harmony. In the area of forestry legislation, this potential for conflict was given strong attention early - by international donors as well - which will be made very distinct through the example of Decree 169 (see II.2). In the case of hydropower policy, the discussion is in full swing, as well as in connection with the pending legislation. The topic seems to have been taken up the least in the area of farming and livestock keeping: for example, the conflict between high production objectives for rice and livestock production and the growing need for cultivable land remains as long as conclusive concepts for intensification (extension services, inputs, credit) are not available.

Further, inconsistencies exist in the emphasis of market principles and promotion of foreign, public and above all private investments on the one hand, and by the simultaneous continued existence of central and often inflexible planning processes on the other. This can be seen most markedly in the elevated function of the Commission for Planning and Cooperation (CPC), by which all external projects must be approved. It reveals itself in the way the highest State representatives, such as ministers, hang on to rigid ways of thinking and planning categories, such as in the planning of land use and the zoning of village land according to the pattern of former production cooperatives. One can also see the tense relationship here between the ruling political elite who wants to secure the power of the state party, and the vested interests of the cadres, and the pressure of the international donors, who want to achieve political liberalization after economic liberalization has been achieved.