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

4. Land Titling and Recording of Land for Land Tax Purposes: Interactions and Contradictions

At present, there is at least de jure a standardized land titling system in Laos for securing private property rights to land, and for extensive and guaranteed transfer. The legal framework and the regulations for implementation have been created, and the practical application of land registration has been tested since October 1995 in selected districts of the capital, Vientiane, in a pilot scheme conducted by the World Bank (World Bank 1995c). In contrast, properties - especially in rural areas - have been recorded de facto with the simplest methods since the beginning of the 90s. The primary objective here is the raising of taxes and not the setting up of a simple cadastre.

Thus there would theoretically be the chance, at least partially, to further develop a land titling system and a cadastre out of already existing structures. But in practice, there is currently rather more the danger that two systems are developing parallel to one another and are only insufficiently inter-connected with one another. Since the Land Titling Project set-up by the State is only at the beginning of the pilot phase, the two have so far few points of contact in everyday administrative life. With the growth of cities and the urbanization of villages, they will cross paths more and more in the future. If their compatibility is not ensured now, it will only be possible to turn recording for tax purposes into a land title capable of registration effectively at high cost.

The attempt is made in Figure 3 to make both systems for recording plots or rather the planned registration and their legislative framework clear.

Land titles in Laos were originally established in 1912 and were kept in force under the Royal Order Law No. 135 from 1958. "These titles certified ownership of land and were supported by cadastral plans and maps for the towns of Vientiane, Pakse, Savannakhet and Luang Prabang" (World Bank 1995c). The continuation and maintenance of this French influenced system proved to be difficult in spite of several attempts to actualize it and spread it further, and it was finally given up in 1975. This means that the reconstruction of a Land Titling System can only take place on a fragmentary data base; it has to battle with a slight degree of familiarity amongst, and little acceptance by, the mass of the population, especially in rural areas

In contrast, there has been a perfectly good continuation of informal land transaction recordings, also in rural areas after 1975. [FN 28] Land use rights remained informally recognized and a process of administering and recording transactions with those rights has developed. This process continues even today: "...although the land use rights now have legal standing and registration of transactions with those rights is required by law (by the Decree on Document Registration, M.K.), the system is one of registration of transactions rather than certification of title." [FN 29] (World Bank 1995c:2). [FN 30]

This recording of transactions is indeed not in place in all areas of the country and is not being fully used by the people, however the State was able to draw upon the experience of the participants when it began systematic nation-wide registration of all privately used land in 1993 by enacting the Land Tax Decree. Parallel to this, the Fifth Party Congress in March 1991 had already noted that it was necessary to "accelerate land registration and issue land certificates to those who have legal right to use it, so that each plot of land will have a legal owner." [FN 31]

Land registration forms a cornerstone to build-up a comprehensive and consistent land management and administration policy. The focus of registration is the need for more efficient land markets and to improve the sustainable management of land, water and forest resources in rural areas. With that, the various requirements of urban and rural areas are recognized. The twin land management and administration policy objectives are

• to improve resource management and
• the more productive use of land resources through the provision of incentives to users,
• to improve the regulatory capacity of the Government to ensure that the benefits of more efficient land markets are more equitably shared,
• to stop the illegal selling of land and to bring increasing land conflicts to an end.

Figure 3: Land Registration and Recording of Land for Land Tax Purposes

The high priority for a land registration system and the issuing of titles to all landholders is reflected in the current Public Investment Program 1994-2000 (PIP) which nominated land titling as a key project (Lao PDR 1994b). Currently it can only partly be tested whether or not the demands of the World Bank on the Land Titling Project are feasible: [FN 32]

• projects should be designed simply with minimal objectives and a single implementing agency with clear management links at provincial or regional level;
• projects should be designed on the basis of the country's existing human skills and institutions,
• projects should focus on existing land rights, and not on addressing their reallocation.

Land Titling and Land Registration Procedures

Does the land titling project fulfills these requirements? The planned land registration in Laos is as such simply fashioned because the simple aim is the construction of a system for the handing out of land titles and for land valuation. The lessons from the first attempt by the Lao Government, a pilot scheme in 1994, begin to show [FN 33] that the fear of the citizens of control through the State is great (tax payments) and eligibility is a lasting problem because owners have no proof of their rights. The pilot scheme financed by the World Bank is also restricted to Vientiane for the moment. Along with practical considerations (staff training, infrastructure), there is also pressure from a coalition of influential private interest groups which demand that the current ownership structure is quickly settled.

The responsibility of the carrying out of land titling is already clearly set out in the Decree on the Organization of the Ministry of Finance (No. 104 from 1993). It states that the issuing of title laid centrally within the responsibility of the Ministry of Finance, and indeed for all land which is not state property [FN 34] in the Department of Land and Housing Management (DOLHM). This is the core national agency responsible for the design and implementation of land management and administration programs (World Bank 1995c:6).

Working independently from this Department is the Department of State Assets (DSA), which is responsible for the registration, supervision and maintenance of state assets. On top of that, it registers leases between foreign investors and Lao entities relating to state property. It also maintains the register for all leases between parties. [FN 35]

Through the Land and Housing Management Office (LHMO), the Department occupies a subordinate office in every province as part of the Division of Finance of the general Province Administration. This office has an extensive field of operation: it maintains the land register, registers land use rights and operates the voluntary titling program, registers all contracts relating to land transfer, collects registration fees and starts local investigations, checks and monitors land valuation for the purpose of registration, assists at the district level in the process resolving disputes, assesses land tax and assists with its collection. One unit is responsible for the land titling records and cadastral surveys, the second is responsible for levying land tax. Essential for future planning is that at least the administrative preconditions have been met for being able to standardize the system of Land Titling for cadastral purposes with the system for land registration for calculating land tax.

Both functions are brought together in the District Office, which has an important function in the formal documentation registration and land tax collection system. This is because the officials carry out the procedures which have been formulated by the legislator (see below). The district level land officer represents the provincial administration in the villages in carrying out land registration activities. At the same time, the district is responsible for the identification of eight land classifications which are based on information from formal and informal transactions (Lao PDR 1995b:7). These categories reflect social reality in Laos more than any wording of the law since restitution, land conflicts and unresolved questions of ownership must be dealt with specifically:

1. state land, such as government buildings,
2. community land,
3. private plots covered by household use rights,
4. foreign-owned land under pre-1975 conditions,
5. foreign legations,
6. land owned by Laotians who left the country in 1975,
7. unknown ownership and
8. ownership of houses and land in dispute.

In their registration work, the land officers are supported by the village headman. Both provide the documentation including tax certification and proof of ownership together with the required witnesses and documentation to the provincial office as it is the provincial office which certifies and signs the document for land. (This procedure will be discussed in conjunction with land tax collection.)

With the Decree for Land Re-Management Committee (No. 42 from 1994), the Land Re-Management Committee was created as a coordination office to provide policy direction and implementation assistance across institutions at all levels. It possesses the mandate to supervise the implementation of the relevant decree, and thus has an important land management policy-making function. Using it, the attempt is at least made to deal with the complexity of land policy and land management better, and likewise the imminent problems of implementation which will arise alone through the coordination of the numerous administration offices involved. The CPC, the Ministry of Finance and the Ministry of Agriculture and Forestry carry out key functions in the Committee. The DOLHM is used as an implementing agency.

This Committee is so far insufficiently institutionalized. At the national level, only parts of the tasks assigned to it have been dealt with. It has concentrated on policy and program design guidance to DOLHM in the areas of demarcation, registration and titling, adjudication and resolution of land disputes, and in particular on directing a pilot registration program to be commenced in Vientiane Prefecture. At the Province level it is, in part, not constituted at all. [FN 36] "These directives do not address core policy priorities. It is also not clear how the committee's mandate covers the rural land demarcation and utilization issues that require urgent attention" (Lao PDR 1995b:7). Thus important portions of the land policy and land-related policy are formulated and implemented outside the main government agencies which ought to have the mandate. In this way, demarcation is undertaken independent of the Dep. of Forestry.

The Provisional Ministerial Direction on Adjudication of Land Possession and Use Right (No. 990 form 1995) makes the commencement of the pilot project possible. Its objective is "...to provide the facility to the issuing of land certificates and to broaden the interest in registration for people who have not yet registered their land, to promote the development of highly effective land markets and to establish clear systematic land use rights" (Preamble of the Direction). Even if in reality the Land Titling Project in both the pilot and main phases in the urban area will remain restricted, the Direction will generally regulate all central steps of land registration for urban and rural areas in the future. These are:

• Land adjudication of land location and boundaries as well as people's rights relating to land parcels;
• The rights, duties, tasks and the putting together of the land adjudication team;
• The publication and propagation of decisions taken by the adjudication working teams;
• Regulations for the application for re-consideration in disputed cases;
• Procedures for filing complaints in court;
• Terms and forms for issuing provisional or permanent land certificates;
• payment of fees.

So far, there exists hardly any practical experience in land registration. Only the technical and administrative requirements for successfully carrying it out have been created: the requisite laws have been made, regulations for implementation are there, the choice of pilot scheme zones minimizes logistic problems, and financing and training of personnel have been secured. The Land Titling Scheme forms, however, one of the big, controversial topics in Laos, comparable to big investments schemes for dam construction. One must distinguish between two levels of criticism: 1) doubt in the feasibility and achievability of the set objectives and 2) general misgivings about whether the existing concept is in keeping with socio-economic and legal reality in the country about what broad effect it may ever have.

The first pilot scheme has brought future practical problems in the registration process to light (Gaston 1995a, Lao PDR 1995b, 1995c):

• The eligibility for land registration and the granting of titles is a controversial issue. The incidence of a lack of fully registered documentary evidence is so high that a systematic program will fail unless the criteria for issuing titles are relaxed.
• Requirements for coordinating the work with the National Geographic Department (NGD) or other organizations with Geographical Information Systems (GIS) were underestimated in order to have a sufficient mapping base. There is a lack of cadastral maps which makes it difficult to relate parcels to one another and to identify those parcels for which titles have been issued and those which have not.
• The low incidence of registration in the first pilot phase gives rise to concerns about the sustainability of a land titling system in future. It must be determined whether or not participation is to be voluntary or mandatory.
• It must be settled whether or not and in what ways penalties for non-registration [FN 37] should be replaced by in incentives to register.

There remains a basic criticism from development practitioners, donors, NGO's, environmental organizations and human rights activists:

• According to them, the land titling project cements and increases the already existing unequal distribution of income and wealth, above all between the small circle of urban-oriented people who profit from the economic transformation and the mass of those in rural areas for whom adaptation to the structural adjustment and economic liberalization first of all through price rises, inflation and the reduction of subsidies for basic subsidies has been perceived. A powerful coalition of Lao and foreign business men, politicians and military people have an interest in legalizing the land tenure status quo in the towns in view of the dynamic land markets with high expectation of profits. [FN 38]
• From NGO circles comes the accusation [FN 39] against the World Bank that it exclusively pursues allocation goals, and that it is neglecting, temporarily at least, the appearance of negative distribution effects. The Bank wants doubtlessly to strengthen land markets, legal security and willingness to invest through land registration. In its statements, it also sounds as though the Bank would like to sell a "product" with its model of land titling in Laos which it self sees as being successful in neighboring countries, and gives the scheme very high priority (World Bank 1995c).
• Eligibility for land registration raises the question about the status of those Laotians who fled the country and the ability to claim land rights now. The legislator, which itself is not prepared to make definite decisions about dispossession or restitution, has passed the buck on to implementation organizations for land titling. They cannot solve the problem, and long-term conflicts which should have been settled before the beginning of registration, will continue into the future.
• Customary rights remain extensively unattended to. They are an important aspect of land use activity in rural areas, but have yet to be formally defined. Whilst it is Government policy to protect customary rights, [FN 40] it is not presently possible to do so in law. The recording of communal land and other customary rights is not planned in land titling, likewise sanctions against unauthorized encroachment on those rights. The program is basically oriented towards the partially foreign concept of individual private ownership.
• It is disputed whether or not the planned process will be comparably simple for women meaning that they are be able to register land in their husbands' name, in particular because the men areseen as the head of the house in most cases.
• There continues to be a considerable ambiguity and lack of coordination between the roles and responsibilities of government agencies with interests in land matters at national and provincial levels. The role of DoF in villagers’ land registration in forestry areas seems to have a parallel but uncoordinated relationship with the DOLHM land titling project (Lao PDR 1995b). The actual performance of the LRMC seems to be at some variance to the original intent.
• The cost-benefit-ratio of a nation-wide dissemination of land titling, in particular in regions not opened up, is accordingly estimated as less favorable than the opportunity costs of alternative approaches which build up on existing structures.
• As long as the areas of land which are registered in both systems cannot be clearly identified by mapping and GIS, and cannot be transferred to each other the parallelism of the two registration systems will continue. Thus the formation of two classes of legal security is also reinforced (recognition in court!).

The ways of functioning, the strengths and weaknesses of the land tax collection systems and the registration of surveyed land will be analyzed in the following section.

Land Tax Collection and Registration of Surveyed Land

The systematic levying of the newly fashioned Land Tax and the simple registration of parcels of land began in 1993 following the enactment of the Decree on Land Tax and also the Instruction for the Implementation of the Decree on Land Tax (No. 267). While this registration is already well advanced in Districts near the capital which have a built-up infrastructure the percentage of registered land areas in the Province of Xieng Khouang is maximum 30 percent the process has not yet been started in other Provinces, according to verbal communication. So far, "private land" has primarily been registered, as well as paddy fields and orchards. Shifting cultivation land areas have so far been paid less attention to, although all land used for agriculture (including pasture) officially ought to be taxed. [FN 41] Since the form of utilization constantly changes through the constant encroachment of farming into forest land, it is scarcely possible to be able to charge the correct tax rate. There exist additionally particular coordination requirements of the Ministry of Finance with the Ministry of Agriculture and Forestry, since according to the Decree on the Use of Forests and Forest Land (No. 169), shifting cultivation land areas come under their area of responsibility and DAFO will be responsible for the demarcation between forest and agricultural land (see Figure 3).

The practical procedure for surveying and registering land is as follows: [FN 42] surveying teams are put together from the people responsible at the District Office (MoF), as well as those at the District Agriculture and Forestry Office (MAF). The surveying of land, its classification and the settling of minor disputes between neighbours is always done in conjunction with village members. [FN 43] Together they form an ad hoc committee. The people from the village involved are normally: the village head, the village tax officer, representatives of the main village organizations (women, elders, security). The work is carried out systematically, plot byplot, whereby only the most simple aids such as measuring tapes can be used.

In the Registration Sheet (see Annex), basic information about the possessors is recorded as well as a description of the position of the property, in particular prominent border points, and houses or trees which are to be found on the land. It is accordingly classified as settlement land, agricultural land, or land in remote areas. Encumbrances, such as rights of trespassing can also be included in the sheet. During the assessment of land areas in the initial phase, there were frequently disputes and conflicts, as well in particular because the personnel was badly trained and possessed too little understanding of village structures and customary regulations for the settlement of open questions of land!

If the assignment of land to an owner takes place harmoniously, a copy of the registration sheet stays with the owner, and another one goes to the Administration. In view of the poor coordination and logistic problems between the District, Province and Central Document Administration, the files remain in the District Office and do not get sent on to the central government as is supposed to happen. The danger of original documents being lost, destroyed or not properly looked after is therefore great. This is a hint that the process being practiced thus far offers too little legal security, and it is possible that they cannot be presented in court as evidence.

The registration sheet provides further columns for the point of time and the type of change of possession (inheritance, gifts, selling). For the acknowledgment of such a change of possession, a special request must be made to the District Office. With this, the parties involved must present proof of, or witnesses to, the origin of the land and the legality of the transfer. Further, the village head has to certify the application. In addition, the District Office has to check again the site where the transfer takes place before making the entry of registration. There are small fees for this procedure, as well as the tax for the conversion of possession, the rate of which is calculated as a percentage of the land value, and varies according to how closely the people are related, all in accordance with the Decree on Document Registration.

Chances and weak points in the legal framework and implementation of land policy and land management reveal themselves here: rights to land get registered, even the transfer of these rights is already documented. In order to also develop the system as a basis for land titling, a distinct, recognizable identification of the various plots would be necessary first of all. Additionally, it is inconsistent that the value of the land cannot be determined in the process of registration, since the officials are neither trained for this, nor do they have guidelines to fall back on. The market value can also only be realized (through selling) and will be evident for the levying of tax in the case of a commercial transaction, but in other cases, levying taxes is not possible.

The original purpose of registration is the calculation and levying of the land tax: if the sum of the tax is determined following registration, it is collected by the village tax officer [FN 44] . If the land tax is not paid on time, penalties accrue. In extreme cases, refusal to pay or insolvency can result in dispossession of parts of the land by the State. In such cases, these areas of land get passed on to government officials who have been transferred to the villages. But since traditional village solidarity would scarcely permit such a dispossession, harmonious solutions are usually worked out locally. In more out-of-the-way places, enforcement is not possible at all meaning, a poor tax moral cannot be fought against.

In the understanding of the State, the registration document ought in no way have the character of a land title. Such a title is only awarded through the Land Titling Project. Thus land which has been registered for the purposes of tax cannot officially be used as collateral for credit. However, a further certificate can be drawn up on the basis of the registration document which can serve as collateral with banks. Such an application must be made at the Province level. This additionally extravagant piece of administration became necessary after the banks were confronted again and again with claims from third parties when plots of land were dispossessed because of insolvency.

In addition to the application, witnesses must also be brought along (members of the village council, private people) who can verify the history of the property in the last twenty years since the current register was only begun in 1993. There are also problems here when pieces of land are involved which were taken over by people who fled Laos in 1975. A certificate is not normally awarded in such cases. In order to calculate the credit margin of the bank, the land is valuated on site based on the village's decisions about the actual value. (It would be interesting to investigate whether or not making things public in such a process increases the value of land, or reduces it). In the case of insolvency, the banks normally turn to the District Administration to resell the land. [FN 45]

An evaluation of the costs and benefits of registration for the purposes of taxation is unknown. What is certain is that tax revenue from the Land Tax is slight when compared nation-wide to other taxes, and the administrative effort does not seemed justified just for fiscal purposes. [FN 46] In contrast, the potential of seeing registration as the basis of a multi-purpose cadastre and to promote it nation-wide has so far not been supported either by the State or by international donors. The World Bank has devoted hardly any attention to the problem of the future parallelism of the systems, the DOLHM, in which land titling as well as land tax are administratively established, likewise after the new project for land titling had obviously tied up a large part of its planning experts. Worries about future development are rather more dominant in the DoF which collaborates closely with the District officials of the MoF for the delineation of forest and agricultural land and for the regulation of village borders.