[asia-apec 1712] Laos stops World Bank forestry programme

[Kevin Yuk-shing Li]

The following article is taken from the World Rainforest Movement's 
Bulletin No 41, December 2000. 

- Laos stops World Bank forestry programme

The Government of Laos (GoL) has halted the Forest Management and
Conservation Programme (FOMACOP) after the first five-year phase because
of difficulties between the GoL and external actors including the World
Bank over the management of logging revenues from the programme.
Initiated by the GoL to promote "Sustainable Forest Management", the
Fomacop was planned to be a 10-15 years programme with the first phase
beginning in January 1995 and ending in September 2000. Fomacop had two
subprogrammes: forest management and biodiversity conservation. The
forest management programme consisted of "Village Forestry" in 60 villages
comprising 20,000 village people and 145,000 hectares (ha) of land and
forests in the Savannakhet and Khammoune provinces.

Fomacop started with a total budget of US$20.3 million financed by a loan
of $8.3 million from the World Bank, $5.6 million for technical assistance
from the Government of Finland, a grant of $5 million from the Global
Environment Facility (GEF) and $1 million from the GoL. Implemented by the
Department of Forestry and the district forestry offices, the consultants
for Fomacop were the Finland-based Jaakko Poyry Consulting (of Finland),
CARE International and Burapha Consultants in Laos.

One of the main features of the programme was the establishment of Village
Forestry Associations (VFAs) that consisted of training local communities
in "village forestry" that including logging of "village forest management
areas" ranging in size from 400 to 600 ha. While the forests remained
under state ownership, the village people in the programme areas would
keep the revenue from logging "after paying royalties and other taxes".
The programme ran into difficulties in early 2000, after a World Bank
Evaluation Mission reported in its Mission Aide-Memoire dated February 5,
2000 that: "Accompanying the investment program, the project design
anticipated significant reforms in the policy framework. These included
preparation of sector legislation, deregulation of market controls on wood
to ensure export parity pricing of timber and issuance of implementing
regulations, satisfactory to the Bank, for forest management. Compliance
with these measures has been slow and partial.

"The timeline shows a persistent pattern of policy changes, incomplete and
inconsistent directions and excessive intrusion into the management and
commercial practices of the VFAs.. These doubts are consistent with the
mission's assessment of the revenue foregone by virtue of the timber sales
procedure imposed by the Government.. it can be estimated that foregone
Government revenues will amount to approximately US$800,000 and losses to
VFAs . to nearly US$700,000.

". losses of this magnitude are not justifiable. They are suggestive of
aggressive rent-seeking and preferential treatment of favored local timber
purchasers at significant cost to the economy and intended project
beneficiaries."

The Aide-Memoire also warned that: "the village forestry model . has
enormous potential to contribute to sustainable poverty alleviation and
Government revenue mobilization. The prospect that this potential will be
ignored is deeply troubling and will be raised by the mission with the
World Bank Management and Finland Ministry of Foreign Affairs."
Marko Katila, Former Chief Technical Adviser of Fomacop, stated that with
the village forestry management, "the villagers can sell the logs, and pay
taxes like everyone else. They can keep the balance for communal
development purposes only and to finance their future conservation and
management efforts. On average, each village has received about US$3000
per year, which may not sound a lot of money but for villagers it is quite
a lot."

About the reasons for GoL halting the programme, Katila said: "The main
problems have been mainly at the policy level. Fomacop has been in many
ways a pioneering project in Laos in the area of community forestry. For
many government forestry officers and industry people, the idea of
community/village forestry was so new that they have been slow to accept
it, which in way is understandable, because traditionally forestry has
been state-driven and industry-oriented in Laos."

"Also, Fomacop has been a pilot project so maybe it is not realistic to
expect a single project to change things so quickly. However, that fact is
some groups have wanted to continue practising forestry as "business as
usual", which of course has created problems in the project area e.g. in
the areas of log sales. One problem is that Laos still does not a have a
clear policy and legal framework that would recognize village forestry and
villagers' rights and also duties regarding forest resources, especially
when it comes to natural production forests."

The programme spent only US$1.8 million of the $8.3 million credit during
the six years of Phase I; the GoL has returned the remaining funds to the
World Bank. Although the programme is now stopped, the Finnish government
has offered to provide a grant of US$18,000 for the government to continue
with the work started by Fomacop, said Mr. Buahong Phantanusi, former head
of the Forest Management and Conservation Project in Laos.

By: Noel Rajesh, TERRA