Documentation:Open Case Studies/FRST522/Illegal Logging in Lao Peoples Democratic Republic

Illegal Logging in Lao People's Democratic Republic

Introduction

Lao PDR map

Lao People's Democratic Republic (Lao PDR) is a country in South-East Asia. Lao PDR has no access to the sea as it is locked in by the borders of Myanmar and China in the north, Thailand in the west, Cambodia in the south and, most importantly to this case study, Vietnam along the eastern border. Lao PDR is a country rich in history and culture tracing back to the kingdom of Lan Xang Hom Khao in the 14th century. After centuries of decline Lao PDR came under Thai rule in the late 18th century. In 1893 Lao PDR became a part of French-Indochina (French Colonial Empire). Lao PDR gained independence in 1953. After a long civil war, the Communist Pathet Lao (CPL) movement rose to power in 1975. The CPL implemented a strict communist regime with close ties to Vietnam.

Lao DPR is a socialist republic with the People's Revolutionary Party (PRP) being the only party. The military controls the leadership positions in the PRP. The government and military of Vietnam wield huge influence in Lao PDR. In the last 2-3 decades the Lao PDR government has re-opened the economy to private enterprise and foreign investment. Lao PDR now participates in numerous international organizations like ASEAN, FAO, WTO, WHO, UN, UNIDO and UNWTO. Even though Lao PDR is making progress to reform many problems still exist. Corruption is a big problem and Transparency International ranks the country consistently among the most corrupt countries in the world. Corruption is a big obstacle standing in the way of the active rule of law and regulation. In addition there is a large gap between legislation and its implementation. Despite reforms and economic growth Lao PDR is a poor country with 23.2% of its population living below the national poverty line. With GNI per capita of $2,150 and GDP up to 15.903 billion in 2016, its economic growth is one of the fastest in East Asia. The economy depends heavily on natural resource exports like hydro power, mining and logging but questions are being asked on how sustainable that growth actually is.

Framing the Problem

The forest sector in Lao PDR

Deforestation in Lao PDR

Deforestation and degraded forests are a major challenge. Since the 1950's the forests of Lao PDR have gone through major changes. Commercially harvested timber, both legal and illegal, and conversion for agriculture and plantations along with major investment in infrastructure like roads and hydro dams, have reduced forest cover to under 40% from 70% in the 1950's. Forests are very important to the economy of Lao PDR providing livelihoods and jobs but Lao PDR is mainly exporting raw products such as logs and saw wood while more finished products like pulp, paper and furniture are minimal. In 2016 Lao PDR government, in an effort to stimulate local production of timber, implemented a ban on exports of raw wood products such as logs and sawnwood. Prior to the export ban Vietnam and China were the main export markets for Lao PDR timber while direct exports of timber to the EU were minimal. However, it is very likely that Lao timber has reached the EU via those other channels.

Illegal Logging defined

Illegal logging definitions:

“Illegal logging is the harvesting, processing, transporting, buying or selling of timber in contravention of national and international laws.” EUFLEGT

“Illegal logging takes place when timber is harvested, transported, bought or sold in violation of national laws.” (Brack 2003).

“The harvesting procedure itself may be illegal, including corrupt means to gain access to forests, extraction without permission or from a protected area, cutting of protected species or extraction of timber in excess of agreed limits. Illegalities may also occur during transport, including illegal processing and export, miss-declaration to Customs and avoidance of taxes and other charges”. (Brack 2003).

Those definitions are all well and good but the most important definition is always going to be the official Lao PDR government definition and whether that definition is followed by all stakeholders like government officials, Customs offices, judges, police and etc. Legal definitions will only hold up in a court of law that is itself not corrupt.

It is important look at the whole timber product value chain when deciding if a specific case of logging is legal or not. Illegal logging is not necessarily done in the dark when nobody is awake but more often in broad daylight through corruption and force and with the consent of government officials.

Framing the Problem: Layering Perspectives

• The problem is illegal logging in a country that faces the prospect of losing one of its most important resources, not only economically but equally important ecologically, environmentally and socially. That resource -- forests -- are vital to Lao's future survival but forests are highly endangered on account of short-sighted greed. This is one way of looking at the problem:
• Is there another way to look at it?
• How can we better understand the situation in Lao PDR?

Historical Context

Lao PDR and its bordering countries, Myanmar, Thailand, Cambodia and Vietnam, with the exception of China, suffered devastating war and conflict during the Cold War. This fact has left a huge mark on these countries in all aspects. Lao PDR was isolated for decades after the conflict under a strict Communist regime. The fact that Lao PDR is land locked means it is in many ways more dependent on its neighbors, especially Vietnam along the eastern border. The Vietnam Army has huge influence in the region and holds the key to many of Lao PDR problems with illegal logging.

Implications

If we compare illegal logging to drug trafficking and the structural hierarchy behind the operations there are many similarities. The most important being that the lowest members of the hierarchy rarely reap the benefits and they are commonly not participants by choice. Their participation in the process is likely the result of necessity or by force. They are also more likely to be caught by authorities or to suffer at the hand of higher members of the hierarchy. The top echelon of the authority, however is in the strongest position, takes most of the money made and can use that to assure immunity from prosecution. Illegal logging operations are black market operations and do not bow to the same rules as legal operations. Like a disease it will infect all parts of the society. Authorities trusted to take care of the problem are often part of the problem itself, enmeshed in regulatory capture

Illegal logging of rosewood

Environmental

Generally illegal logging has serious consequences, apart from deforestation and forest degradation, like lost biodiversity, carbon stock and water quality. It is difficult to confirm just how much of Lao PDR forests have been lost or degraded but the most common estimate is that Lao PDR still has 40% of its forests. There is a debate on exactly how much of that is intact old growth forest. Some suggest that old growth now only accounts for 3% of the remaining forest and 23% are seriously degraded. Same sources suggest that the majority of the remaining forest has now lost much of its biodiversity.

The valuable rosewood timber is in huge demand from the growing wealth of China and could be totally lost from Lao PDR forests in the near future. The logging and export of rosewood are banned but that seems to have had little effect and business thrives under the protection of corruption. It is now more likely than ever that rosewood will become commercially extinct in Lao PDR forests.

The Asian elephant is also in danger of disappearing form the forests in Lao PDR. The elephant that is a big part of Laotian culture is being worked to death, destroying its own home.

Political

Emblem of Lao PDR

The Lao PDR government has passed but not implemented the many laws and regulations specifying the procedures to manage the country's forests:

Constitution of the Lao People’s Democratic Republic

Lao Constitution states that all organizations and citizens are obligated to protect the environment and natural resources of Lao PDR. (GOL, 2003)

Forestry Law

Forestry Law from 2007 has the main goal of preserving natural forests through sustainable forest management.

Decree on State Land Lease or Concession, No 135/PM

Degree No 135 involves the process for leasing land and granting concessions. The degree is fairly open about who can be granted a lease or concession. In practice that means the government can control land as it pleases.

Specific attention should be paid to:

• Forest Categories (Forestry Law 2007, Articles 9-12)
• Preservation of Production Forests (Forestry Law 2007, Article 25)
• Logging and Harvesting of Forest Products (Forestry Law 207, Article 49)
• Decree on Sustainable Management of Production Forest Area, No 59/2002
• Forest and Forestland Inspection Forms (Forest Law 2007, Article 115)
• Environmental Protection Law, No 02-99/NA
• Decree on Environmental Impact Assessment, No 112/PM
• Decree on State Land Lease or Concession, No 135/PM
• Forestry Sector Strategy 2020 (FS2020)
• Forest Resources Inspection Strategy Action Plan

Implementation problems and “loopholes” in the legislation are a major problem. While the law is vague in its definition and “loopholes” exist, implementation is always going to be problematic. Normally the “loopholes” can be found in discretionary wording like “unless approved by the government” or “in the interest of the national community”. It is always going to be difficult for the weaker in society to defend their rights against the actions of the stronger if the law is not clear. Regardless of government law and policy on protecting the environment, in the absence of effective governance, including law enforcement, the economically powerful elite will always have its way when it comes to choosing between the environment and profitable projects. (Lestrelin, 2010)

Economic

The rosewood elite

Communities that almost solely depend on forest as a source of income suffer greatly at the hands of illegal logging. As with other black market operations it is difficult to invest the money back in the communities. The profit from the illegal operation will vanish along with the future possibility for the local communities to harvest the forest sustainably. Local communities are not able to levy and collect taxes as the operations are all under the radar. Legal operations will find it difficult to compete against illegal logging as illegal timber could under-bid legal timber in the market. In this situation no normal business can function or grow. Illegal logging will skew all normal competition in the market and possibly put legal operations out of business with the loss of jobs and livelihoods. The same rules also apply at the central government level. Tax revenues will be foregone and with that the possibility to support the local communities through healthcare, infrastructure, education and development.

When illegal logging is left to prosper for a period of time it infects all systems with corruption. Over time the systems will be “taken ill” and will not function as they are supposed to. Corrupted government will lose all credibility with its people and the international community. The country will lose its credibility in international markets and, hopefully, consumers who are increasingly letting fair trade influence their buying habits, will boycott products from corrupted countries. This will not only apply to timber products' exports from the corrupted country but also to other products as well.

Social

Many social groups rely on the forest for livelihood but the scale is very much different. Forest communities comprising rural people and indigenous peoples that rely on the forest for livelihood and habitat have the most to lose. For centuries they have depended on the forest. When the forest is lost and people are being relocated and asked to change their way of life other problems will arise. For these people urbanization is normally not the answer and will only bring more poverty and misery.

The other groups that have a lot to lose are the powerful elite groups who depend on illegal logging for profit and the corrupted officials that rely on bribes as part of their income. These groups are the biggest obstacle to change.

Initiatives to Combat Illegal Logging

UN and EU programs

Lao PDR forest policy 2030

Lao PDR government is making efforts to regulate the forest sector and to reduce exports of logs and raw wood products. Government efforts include the National Land Policy and the Forest Law. The Lao PDR government has entered into partnerships and negotiation with the UN and the EU to implement the REDD program, the EU FLEGT program and VPA agreements. The government sees these processes as an opportunity to develop the forest industry from raw material exports to more local production.

What is FLEGT?

The EU FLEGT (Forest Law Enforcement, Governance and Trade) action plan was published in 2003 with the main goal to provide itself and its members with tools to battle illegal logging through out the World’s forests. As the EU countries are one of the Worlds largest consumers of timber, and import a considerable portion coming form the tropical forests in Asia, Africa and South America, it is very important to verify the legality of imports. Traditional export documents and country of origin certifications are more and more put into question because of corruption and governmental incompetence. Other measures are needed to secure timber is from a legal source.

What are VPAs?

VPA’s (Voluntary Partnership Agreements) looks to influence the illegality timber products through forest governance and legislation. It tries to look at the whole picture and address both environmental, ecological, economic and social factors. It aims to bring together all stakeholders, whoever they might be, to the table of decision making. Special care should be taken to involve groups who are traditionally alienated form decision making like indigenous people. VPA’s are a integral part of EU FLEGT.

FAO efforts REDD and REDD+

What is REDD and REDD+?

REDD stands for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries and is a United Nations Collaborative Programme. It was lunched in 2008 and is a collaboration between the UN Food and Agriculture Organization (FAO), the UN Development Programme (UNDP) and UN Environment Programme (UNEP). The overall goal is to reduces forest emission and build carbon stock while helping national sustainable development. REDD+ are the actions or processes taken under the UN-REDD Programme.

FAO role in REDD+ is to share its expertise and knowledge and provide countries with technical assistance regarding forest management.

National government

The Lao PDR government has taken steps through laws, regulations and international programs to try to stop or control illegal logging. All the framework seems to be in place, so why is illegal logging thriving as ever? A government that has “total” control over all of the country's systems and resources is not able or willing to act on the matter, how can that be? The answer can be sought in the high levels of official corruption and the low levels of governance.

Recommendations

Corruption

There are many actions that can be taken to fight illegal logging in Lao PDR but are any of them going to be a success if the country does not take measures to fight corruption? At the moment it seams that the government is a part of the problem or reluctant to take any action.

Here are some actions the government could initiate:

Environmental

Forest inventory. What measures are the best options for Lao PDR government to map the lands and forests and keep a reliable inventory? Reliable forest inventory is essential to forest management and decision making. (Kamusoko et al., 2011)

Economic

Incentives to Customs officials. Is it possible to give out incentives to Customs officials as a way to stamp down on corruption?

Invest in local timber productions. Is it possible to invest in innovation to promote local enterprise or give tax credits to local companies who invest in advanced wood processing equipment?

Political

Negotiating with the Vietnam Government about Customs and border controls. Because of the illegal timber transport from Lao PDR to Vietnam both governments could collaborate to control the situation?

International and government initiative appraising plan. It is very important to appraise the success of the ongoing initiatives like EU FLEGT, VPA’s and REDD+ with the percentage of grant to local communities as a key factor in the success rate. Another factor to look at could be the scale of resentment towards foreign interference in local affairs and its part in successfully implementing these initiatives. What are the obligations of the actors involved combating illegal logging? (Qian, Xu, Yang, & Nie, 2016) Can Lao PDR sustain economic growth, reduce poverty and deforestation and battle illegal logging all at once? (Nambiar AO, 2015) (Mustalahti, Cramm, Ramcilovic-Suominen, & Tegegne, 2017)

Social

Improved knowledge and education about the environment is essential to accomplish change. This does not necessary apply to the rural poor or indigenous people but much more to policy makers, officials and judges with in the government because that is were the change needs to happen. How could this be implemented?

Ownership rights to indigenous people and local communities in the rural areas. What policies are the best way to empower people who live in or close by forests in decision making? (Smith et al., 2017)

Poverty alleviation programs are very important thing to fight deforestation. What are the best ways to really fight poverty in Lao PDR?