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

III. Land Markets and the Privatization of Land Rights

1. Driving forces for the re-emergence of land markets in Laos

As has already been established in the previous section (Chapter II), the Laotian State attaches great importance to the restrengthening of functioning land markets within the framework of its economic policy. This did not happen without pressure from "outside" through the influence of economic and political interest groups. After the upheaval of the socialist regime, they emphatically demanded that the State Party re-establishs a legal and regulatory framework for land markets as quickly as possible.

This resuscitation of efficient and open urban and rural land markets had to be a declared objective of the post-"control and command" state for highly varying reasons:

• The question of landownership (private, state or "people’s" property) always formed the core of the dispute, indeed the battle of social and economic systems. Therefore, the guarantee of private property and its unhindered transfer forms a basic indicator for the seriousness and desire of the state to make reforms, and is the basis of the trust investors have in future economic policy.
• Although Laos is endowed with extensive land resources, it suffers from a shortage of land with convenient access and a well-developed infrastructure for industrial services and agro-forestry activities. The growing economic value of such areas of land has already given rise to "gray" land markets hidden in the socialist system. With that, the transactions of the market participants were not protected by State law; acquired rights could not be sued for.
• No matter how the Laotian State may resolve the restitution claims of former landowners, the discussion about it has brought the problem to the attention of all parties involved that an "institutional memory" exists concerning unavailable land titles from the royal era or Land Register files which do still exist. This cannot be ignored since the state claims that it upholds principles of law and defends basic civil rights.
• An effective demand for functioning land markets comes from three groups of stakeholders who have particularly strong economic weight and who accordingly who have emphatically been able to assert their interests in the face of the State:

• private investors, be they Laotians having returned from exile or investors, in particular from neighboring Asian countries;
• the bank sector which demands credit security through guaranteed land titles;
• international donors, led by the World Bank, who look upon secure private property rights as the precondition for long-term financial commitment.

There is the pressing question of how far the mass of smallholders have raised or have been able to raise their voices in this political bargaining process. For the large majority the opportunities of land markets as well as the risks and consequences of socioeconomic differentiation are not (yet) known and have not yet been made clear "from above". These groups have scarcely been able to exert direct influences on the process of legislation in the capital by using lobbying organizations; at any rate, committed NGO representatives have posed the question again and again about the "scope" of land markets in a country in which subsistence-oriented farming is still of great importance (see Chapter VI).

If land markets are thus given such a strong political key role, it must be explained what quantitative weight they are being given at present in Laos. The data basis for evaluating their current and future importance is completely unsatisfactory. Land is, of course, being traded, although the turnover figures as measured in recorded land transactions are not high and transactions are hampered by the problem of establishing ownership as long as the legislation is not yet amended (Land Law) or existing Decrees (Land Decree) are not fully implemented (land titling process). Most residential land is sold on a cash basis, while the lending which is occurring with respect to commercial or agricultural properties is made with cash flow in mind rather than the security of the title and the inadequacies in existing mortgage laws. There is inevitably a prevalence of illegal possession, sale and use of land and a large number of court cases relating to land: all these are symptoms of existing, vivid but still inefficient land markets.

A precise count of the number of parcels is not possible as long as the surveying of land for land tax purposes is not complete. It has been estimated that there are approximately 1.6 million parcels in the country, agriculture being the dominant land use (Lao PDR 199_b:277 f, World Bank 1995c:10 f). From the approx. 259,000 ha. of land which were taxed in 1993-1994, only about 7.6 percent were earmarked for construction, i.e. rural and urban buildings. [FN 72] Doubtlessly these are plots with an already high economic value; land is already transferred and mortgaged, an active land market already exists.