Rubber processing factories in Oudomxay province are facing unexpected problems because China is not allowing the import of rubber from Laos at the moment, causing large amounts of the material to remain in stock. Sino-Lao Rubber Company Director Mr Oun told the media recently that, after the company had invested in the building of a rubber processing factory, they encountered an export problem when China refused to allow imports of their rubber, forcing the factory to hold 270 tonnes of processed rubber, worth over one billion kip, in stock.

“If they do not allow the goods into China, all local people as well as the rubber growers will be affected because the factory will be forced to decrease the price it pays for the rubber. So all the business operators hope that they will receive immediate assistance from the relevant sectors to negotiate a solution,” he said.

Rubber is a major export product in Oudomxay province and its production has become a career for many local people. It helps to improve their standard of living and to solve the difficult issue of illegal narcotics growing also. Sino-Lao Rubber has encouraged the local people to grow rubber or purchase it from around the country for processing and export to China. After the company urged the people to grow more rubber, it decided to build a processing factory, which can produce 6,000 tonnes a year, to cater for the increased production.

The company’s secondary objective was to encourage the local people to stop growing narcotics like the opium poppy and change to producing rubber because it helps to generate a better and more reliable income and will give them a higher standard of living as well as strongly supporting the national socio-economic development policy. Mr Oun said that since almost the beginning of the year the company has encountered export problems when it couldn’t export to China the 270 tonnes of processed rubber they had in stock because they were told the product wasn’t allowed to be imported into China and, even if it was, the customs tariff would be raised.

“Now it has become a burden that the company has to shoulder because we must purchase rubber from the local people at market price. The company hopes that it will receive assistance from the relevant sectors to negotiate with China to accept the product so that we will able to export it and earn the income we need to use in the business. If this issue is not resolved quickly, the company will be forced to reduce the price at which it can buy the raw material, and limit the amount of rubber it can purchase in order to sustain its business,” he said.

He added that the company has plans to bring in a modern machine to use in the processing to increase its rubber production capacity and encourage the local people to grow rubber in more areas. The aim is to promote the rubber production industry in Laos to meet the anticipated demands of a market that will grow bigger in the next two years.

Laos is seeking help from the Chinese government to conduct detailed surveys of its mineral wealth, aiming to use the information to help regulate the mining industry, according to a senior government official. Deputy Minister of Energy and Mines Mr Somboun Rasasombath said as quoted in the South China Morning Post this week that he would discuss the matter with Chinese Deputy Minister of Land and Resources, Mr Wang Min, at the China-Asean Mining Co-operation Forum in China.

“A lack of knowledge about our mineral wealth meant it was difficult for us to challenge our investors, even if we suspected some of them were lying about the amount of work they had done and the resources they had found,” Mr Rasasombath said. “My advice to would-be investors is that they’d better conduct their own geological work before purchasing any projects.”

The Lao government only has a rough idea of the locations of many mineral deposits, since it lacks the resources to conduct detailed prospecting and has to rely on preliminary geological surveys conducted many years ago by countries such as France, Russia, China and Britain. The government of Laos suspended approvals of new mine exploration licences in June last year until 2015 saying it needs to review the investment licences it has allocated to mining firms.

Mr Somboun said less than 5 percent of the 355 mining projects that have been granted mining licences in Laos have met their contractual exploration commitments to the government. Many of the companies are trading and investment firms, which are sitting on their exploration licences waiting for their projects to be bought out by others at a premium.

“Most of these firms have done a poor job in delivering their promises, while some have caused environmental damage and affected the livelihood of our communities,” Mr Somboun said.

Some firms have managed to extend the validity of their exploration licences to more than 10 years, although they are supposedly not extendable after six years, as Vientiane has taken an accommodative attitude in the past to encourage more investments. The existence of a large number of unexploded cluster bombs in Laos, dropped during the Indochina war, means investors have to spend money to clear them before mining.

“Our government has approved too many projects in the past, which our regulatory resources cannot cope with,” Mr Somboun said. “We also need to improve laws related to mining and better train our staff to thoroughly review all 355 projects on their progress.”

Laos has ample resources of gold, copper, iron ore, potash, lead, zinc and sapphires. Vice President Mr Hao Chuanfu of the state-owned China Minmetals Non-ferrous Metals, the parent of the Hong Kong-listed MMG, said MMG had no new exploration projects in Laos but would seek to expand on its Sepon copper mine. The mine’s output grew 7.1 percent last year to 85,150 tonnes. With sales of US$806 million and operating profit of US$491 million last year, it contributed 9 percent of Laos’ gross domestic product and 20 percent of the government’s revenue.

Rubber farmers in Phongsaly province are looking for buyers for their raw rubber after hundreds of kilogrammes they attempted to trade across the Chinese border were seized by Chinese customs officials. Rubber trees planted by farmers in several districts are now ready for harvesting but no company has come forward with a purchase order.

The farmers’ raw rubber were seized by Chinese customs officials at the border because the country has no set quota for rubber imports, provincial forestry section Head Mr Nayphet Boupha told Vientiane Times yesterday.

Farmers have also said they have been cheated on the purchase price by Chinese traders when taking their rubber to sell at the border checkpoint recently. To solve the problem, the provincial authorities, especially the industry and commerce and agriculture and forestry sectors, are planning to set up rubber farmers’ groups, Mr Nayphet said.

The creation of such groups would make it easier for farmers to sell their rubber for a guaranteed price, as provincial authorities would hold talks with Chinese government officials to discuss the trading of rubber. In the past, farmers have sold their rubber independently without entering into contracts with companies and government agencies, said Mr Nayphet. Many families who grow rubber have had trouble finding buyers recently, he added.

A Chinese company is building a rubber-processing factory in Phongsaly province and he hoped processing would begin next year. Farmers are hoping the factory will soon be completed so they can sell their products to the company. Rubber plantations now cover more than 17,000 hectares in the province, including local farmers’ land and plantations managed by foreign companies, Mr Nayphet noted.

Rubber brings in additional money for farmers as a supplement to their earnings from rice cultivation. However, the government recently called a halt to land concessions for rubber and eucalyptus plantations, aiming for more appropriate land use and environmental protection.

To manage natural resources and protect the environment, the government is encouraging the natural resource and environmental sectors to work closely with relevant groups and development partners. Representatives from civil, social, government organisations and development partners gathered in Vientiane on Friday to discuss the achievements and work plan of the natural resource and environment sectors as well as challenges and recommendations to be implemented within the sector.

This 2nd Natural Resources and Environment Sector Working Group (NRESWG) meeting aims to provide a forum for dialogue and coordination between the Ministry of Natural Resources and Environment (MoNRE) and other ministries, development partners and other stakeholders in the sectors, discussing numerous cross cutting issues.

The meeting hopes to promote the development of the NRESWG and will look at joint policy and priority settings, domestic and external resources mobilisation, result-oriented management and monitoring of progress and achievements.

It also wishes to facilitate the implementation of the NRESWG related actions and targets embodied in the Vientiane Declaration Country Action Plan (VDCAP) and to ensure coherence and linkages between the Round Table Meetings as overall coordination forums and for coordination at the sector level. It acts as an umbrella group for the five Sub-Sector Working Groups (SSWGs) covering land, forest, environment and climate change, water resources, disaster response and geology and minerals.

The meeting was chaired by the Minister of Natural Resources and Environment, Mr Noulin Smnbandhit and the German Ambassador to Laos, Mr Robert von Rimscha while the World Bank Representative to Laos, Mr Richard Record was also present. The NRESWG was formed in accordance to the Government’s Notice in 2011 as part of the Round Table Meeting Process.

The overall objective of the establishment and operation of the NRESWG is to support MoNRE and the Government of Lao PDR to implement the National Economic and Social Development Plans (NESDPs) and the Millennium Development Goals. The ministry is also working to coordinate with development partners and domestic and international organisations for better operations, Mr Noulin said.

The Secretariat of NRESWG will convene for at least 2 meetings per year (aligned with the schedule of the Round Table Process) at the executive level, while the SSWGs will convene technical meetings at least four times per year. The results and outputs from the SSWG meetings will contribute directly to the Natural Resources and Environment Sector Working Group, where key proposals will be adopted at the executive level.

The government is committed to ensuring that the compensation provided to villagers affected by land development projects is done in such a way that villagers are satisfied with the outcomes. The move is aimed to address land disputes in Laos, which have been an ongoing issue as villagers sometimes feel that they don’t receive appropriate compensation for land lost to development projects.

Director General of the Land Administration Department within the Ministry of Natural Resources and Environment, Mr Siphandone Sihavong, told Vientiane Times last week that if land compensation is paid in accordance with market prices, all the problems can be resolved. In fact, Prime Ministerial Decree No.192 stipulates that land compensation for any affected villagers needs to ensure that those people enjoy improved livelihoods after relocating to other areas.

Unfortunately, the decree is not enforced properly, causing many affected villagers to complain as they that they have not received adequate compensation for the land taken away. Many villagers became poorer after losing their land to development projects, due to inappropriate compensation.

Given the importance of reparations for land lost, the government issued a decree last year which asked the relevant sectors to review the compensation process in order to ensure that it is appropriate, thereby avoiding further issues and grievances. Mr Siphandone indicated that under the new policy, villagers will have a more involved role in the development projects as they will be given an opportunity to convert their land to shares within the development projects or take cash payments instead, as they see fit.

Now, for some development projects, the authorities are purchasing land plots from the original owners before allowing any development to take place, which results in less disputes than if villagers see the value of their land rising before they receive compensation at a later date.

Last week, the government approved a draft National Land Policy to provide guidelines for the management and development of land resources in a bid to address the issues that are arising. Once the policy enters into force, some aspects of the land law and other legislation which are contrary to the new regulations will need to change so that it is easier for the enforcement process to take place. It also addresses the current realities of the land situation in Laos.

Meanwhile, the government will review the fees charged for land leasing and concessions because some fees for land classifications are too low and the government receives very little revenue from the projects. The current issue is that development projects begin before land allocation and planning takes place, which makes it difficult for authorities to locate appropriate plots. Urban planning in Laos is often affected because of this.

Some projects take a long time to compensate villagers because authorities and those in affected communities need to agree on a compensation rate, causing delays in the project’s development. In others, authorities are unable to complete the compensation process for villagers even after the project has finished. Land holdings are directly related to the livelihoods of many people in Laos and although investment projects are good for the country’s economy, they are unsuccessful if villagers are made poorer in the process.

Investors from neighbouring China plan to pour more capital into developing a new tea processing plant in Laos’ northernmost province of Phongsaly, aiming to process good quality tea for export to China. The Phongsaly Provincial Governor Mr Khamjane Vongphosy delivered a report about the plan during the government’s four-day open meeting that closed in Vientiane recently.

The new plant, set to be built in the provincial capital of Phongaly, will have the capacity to process up to 5,000 tonnes of tea per year, adding fuel to the province’s tea production potential. Currently, there are only a few small-scale tea processing plants operating in the province. “Once it is operational, the new plant is expected to produce a better quality of tea products,” the governor told local media.

Tea is now being grown on around 2,650 hectares of land in Phongsaly. Tea planting and processing has the potential to be a major cash crop for the province and local authorities have encouraged farmers to cultivate it on a commercial basis in a bid to drive economic growth. “We have the markets available,” Mr Khamjane said, explaining that over the past six months, more than 38 tonnes of dried tea leaves have been exported to China, driving total export volumes to more than 67 billion kip, up 43 percent compared to the same period the year before.

Export products grown in Phongsaly also include sugarcane, rubber, sweet corn, bananas, pumpkins and coal, amongst other things. “Tea is our main export product though,” Mr Khamchane stressed, adding that the province has the potential to further expand tea planting initiatives.

The province also has wild tea trees aging from 400 to more than 1000 years old, whose leaves fetch considerably high prices on international markets. “We have set a clear plan to continue promoting tea planting and production, through collaboration with Chinese investors,” the governor said. In addition, he stated that coffee plantations are another emerging business with 460 hectares of land now dedicated to the cultivation of the crop.

In addition to tea, the provincial authorities will continue promoting the cultivation of coffee and cardamom along with animal husbandry enterprises to alleviate poverty and improve the living conditions of local residents, whose incomes remain relatively low. The average income per capita of the province’s residents is only around 4.8 million kip (US$ 627) per annum which is only half of the national average level of more than 10.3 million kip (US$1,355).

In order to maximise the potential of these cash crops, the governor recognises the need to upgrade the knowledge of technical staff so that they can provide better planting know-how to local farmers. “More training courses will be conducted, along with on-the-job experience as well,” he confirmed.

Oudomxay provincial authorities will not issue new investment licenses for the plantation of bananas for export. The decision to impose the ban has been made after banana growing has caused negative impacts to the environment and a reduction in rice production in the province.

Deputy Head of the Provincial Agriculture and Foresty Department Mr Souvik Chanthayod told the Vientiane Timesthis week that the provincial authority has already banned new banana investment projects for two years.

Such projects reduce rice production in the province as the people lease their rice fields to investors for banana cultivation for export to China.

The official said that banana projects also have a bad effect on the environment through the use of chemical fertilisers. These projects also do not follow the right investment formula as determined by the government and known as 2+3. This refers to the involvement of the people in the project, which should be labour and land on the one side, while the investors are responsible for technology, funding and sales.

Mr Souvik said “Investment in banana projects is conducted in the form of 1+4 as the local people only receive funds from leasing the land while all the other benefits go to the investors. The provincial authority allocates the site for crop projects and then the investors go to lease the land from the local people. Investors will normally pay rent of about 6 million kip per hectare of rice paddy per year or 3 million kip per hectare per annum for undeveloped land, he said.

At the present time, six foreign companies are carrying out banana growing projects on a total land area of 675 hectares in two districts of the province, Xay and Baeng, according to statistics from the provincial Agriculture and Forestry Department. Oudomxay provincial authority began to issue investment licences for banana plantations six years ago and now there are many companies interested in operating similar projects, but they are not being allowed to do so currently. Besides banning banana projects, other crops such as cassava and rubber have also been forbidden because there are no buyers for cassava and the rubber tree plantations encroached into areas of national forest conservation.

Authorities are encouraging vegetable growers in Vientiane to grow more organic produce for sale at the twice-weekly market on the That Luang esplanade, to ensure consumers eat healthily. These days many people in Vientiane are recognising the benefits of organic food. Eating vegetables that have been organically grown is better for your health because they are free from potentially harmful chemicals.

“But farmers cannot keep up with demand because there is no funding to expand vegetable beds further,” the Head of the Organic Vegetable Group in Nontae village in Xaythany district, Mr Khamphou Phanthaboun, told Vientiane Times on Friday.The organic market at That Luang takes place every Wednesday and Saturday. It starts in the early morning at 4am and has normally sold out by 9 or 10am.

“We want to borrow money from the Agriculture Promotion Bank to expand the area for planting cash crops, but the bank requires farmers to repay the full amount borrowed within six months.” It’s not possible for growers to repay the money so quickly because in six months they won’t have received any income from their crops.

There is no farming family in Nontae village that will borrow money from the Agriculture Promotion Bank under these terms, vegetable grower Mr Khamphou added. “If we borrow from the bank to expand our plots to meet the growing demand for organic vegetables, we will soon become defaulting debtors, so we won’t do it.” “We can borrow money from the bank if it allows growers to repay with interest in about two or three years,” he said.

Currently, 100 families are growing vegetables in Nontae village with 13 of them farming organically, on an area of about one or two hectares each. The village’s Organic Vegetable Group supplies about 150 kilogrammes of organic produce to the market at That Luang each Wednesday and Saturday.

In Vientiane there is organic farming in Xaythany, Xaysettha, Naxaithong, Pakngum and Hadxaifong districts, and in a village in Vientiane province. All their vegetables are delivered to the organic market at the That Luang esplanade. Vientiane is suitable for growing more organic produce because the soil remains largely unpolluted by chemical fertilisers. The Agriculture Promotion Bank should consider helping farmers to eliminate the use of chemical fertilisers and pesticides because of the negative impacts these can have on human health