Laos

An image of the country's flag.

The Lao People’s Democratic Republic (Lao PDR) is a landlocked country situated in Southeast Asia,bordering Thailand, Cambodia, Vietnam, China and Myanmar. Despite a recent increase in the rate of urbanization and a relatively small amount of arable land per capita, most people in Lao PDR live in rural areas and work in an agriculture sector dominated by subsistence farming. Lao PDR’s economy relies heavily on its natural resources, with over half the country’s wealth produced by agricultural land, forests, water and hydropower and mineral resources.

All land in Lao PDR belongs to the population as a whole. The state administers the land on the people’s behalf, and individuals and organizations access land through land-use rights. Recent land titling programs have formalized permanent land-use rights in urban and peri-urban areas, and land allocation programs have formalized temporary land-use rights for agricultural and forest land. Communal tenure, which is common in rural areas, has not been formalized. Individual use rights in rural areas are short term and insecure.

Land concessions to foreign investors are controversial in Lao PDR due to their social and environmental impacts. The Government of Lao PDR (GOL) has expressed its intention to address these issues when revising the land law. Although draft amendments were submitted to the National Assembly in 2012, the revisions have not yet been adopted.

KEY ISSUES AND INTERVENTION CONSTRAINTS

  • Support GOL development of comprehensive program of land sector reforms. The GOL has expressed its intention to create an overarching program of land reforms, including the introduction of a new land law. Within this framework, the GOL plans to create a system for establishing and registering communal land rights, as well as procedures that can be applied to balance stakeholder interests in large scale acquisitions of land. The government also will develop the legal and implementation framework for completing land titling, with a focus on replacing temporary use rights to agricultural and forest lands with more permanent, secure rights. Donors could support the GOL in its land-sector reform efforts, including efforts to create an effective legal framework that accomplishes the following: establishes rights to communal land; creates adequate procedures for large-scale land investments; and incorporates customary land governance functions. Donors could also explore ways to assist the GOL in establishing a legal and implementation framework for formally recognizing long-term secure rights to agricultural and forest lands. Donors could work with the GOL to ensure that positive lessons from the World Bank’s previous program in Lao PDR to include women’s names on land titles are applied to new legislation and programs.
  • Support overarching strategies for meaningful public participation and benefit-sharing in development of land and natural resources. Most of the proposed development of hydropower, minerals and forest-based programs will be implemented in remote areas of the country where poverty levels are high and people depend heavily on natural resources for subsistence. One notable forest program is REDD+, a program of the Forest Carbon Partnership Facility that builds upon the original Reducing Emission from Deforestation and Forest Degradation (REDD) program to include support for conservation, sustainable forest management and enhancement of forest carbon stocks. The GOL often grants land concessions in rural areas where local communities are less able to assert their interests in the land and natural resources than the concessioners can over the land that GOL is providing to them. Even when welldrafted legislation provides for community consultation and participation in GOL decisions on investment and development of natural resources, in practice benefit sharing and support for local partnerships and other forms of community engagement are extraordinarily difficult to implement effectively. Possible solutions – including capacity-building, legal literacy training, access to legal resources to support meaningful local participation and technical assistance in enterprise development – will require the GOL to develop comprehensive strategies and pay focused attention to implementation. Drawing on experience with the large hydropower project, Nam Theun 2, and projects in other countries, donors can assist the GOL by helping design an overarching strategy and cross-sector approach to ensure that local communities, particularly the poorest and most marginalized, are able to participate meaningfully in developing natural resources and that benefit-sharing is locally relevant, democratically controlled and long-term. Large initiatives, such as USAID’s Feed the Future program and the REDD+ program, offer potential opportunities to extend existing projects. Extension activities could include building the capacity of local communities to do the following: secure rights to land and natural resources; negotiate with the government, project planners and potential investors regarding land use and development opportunities; and develop systems for local governance of natural resources.
  • Support for comprehensive legal frameworks and governance structures for water, forests and minerals. The GOL is in the process of creating and revising the legal frameworks governing water, forests and minerals and has identified two needs: (1) to protect and strengthen community rights to those natural resources; and (2) to protect against negative impacts that could result from development of natural resources. In particular, the GOL has struggled to develop the institutional support needed to implement laws, especially provisions that address mapping and monitoring natural-resource use and enforcement of local rights and environmental protections. Allocations of rights to exploit natural resources through concessions, licenses and leases should, in the interests of transparency and conflict avoidance, include verification and audit requirements and be subject to local review. Donors can draw on experience from other countries to help the GOL identify and address gaps and establish necessary governance bodies and mechanisms for control and enforcement of rights to natural resources. In addition to providing support for legal frameworks, donors should continue efforts to assist the government in creating and strengthening core institutions at the local level as well as appropriate links between the institutions and the public.
  • Support small-scale and artisanal mining. Many rural residents supplement their income by engaging in small-scale and artisanal mining on a part-time or seasonal basis. A significant percentage (as high as 75% in some surveys) of these miners are women. Much of the small-scale and artisanal mining sector operates without regulatory oversight, leaving significant potential for negative outcomes: exploitation of miners by middlemen trading in raw minerals; dangerous mining practices; and environmental degradation. Donors can assist the GOL in creating appropriate strategies for developing the small-scale and artisanal mining sector. Technical assistance is needed to help draft and implement legislation and pilot programs to regularize artisanal mining rights and provide small business development support, with particular attention to supporting women miners. Technical assistance is also needed to establish and implement appropriate safety standards for miners and the communities in which they operate and to ensure that environmental standards are enforced.

SUMMARY

Despite its mostly mountainous terrain and limited arable land, Lao PDR is primarily a rural and agricultural society. Most Lao citizens rely on subsistence agriculture for their food and livelihoods. Only 10% of Lao PDR’s land is classified as agricultural, while 77% of the population works in the agricultural sector, mostly on family farms. Urbanization is estimated to be 5% annually. Although it is still considered a least developed country, Lao PDR has grown economically and has made significant progress in poverty reduction since the 1990s. Land degradation and unexploded ordnance, especially in the most remote areas, present additional challenges to accessing agricultural land.

Lao PDR is a one-party communist state, and all land belongs to the nation as a whole and is managed by the government. Land rights are mainly governed by the 2003 Land Law, under which all land is ultimately owned by the national community, but the law obligates the state to safeguard long-term use of land by ensuring protection, use, usufruct, transfer and inheritance rights. Most rural land is held in small plots, averaging 1.6 hectares.

Beginning in the 1990s, Lao PDR began to formalize individual land-use rights and strengthen tenure security through land titling and land allocation programs. Land titling was implemented in urban and peri-urban areas, with the eventual (though yet unrealized) goal of extending it throughout the country. The project was considered moderately successful, distributing titles for 122,934 parcels, 85% of the government’s target. A land title is evidence of permanent land-use rights, which can be bought and sold, mortgaged or bequeathed.

In rural areas, the state distributed temporary land-use certificates (TLUCs) for agricultural and forest land. TLUCs are valid for three years, and the use rights evidenced by a TLUC can be bequeathed and inherited but cannot be sold, leased or used as collateral. As of 2005, the TLUC program had been systematically implemented in two-thirds of officially recorded villages in Lao PDR. More recently, budget constraints have slowed implementation and follow-up activities. Thus, many TLUCs haveexpired and have not been renewed. Rural holders may also prove their land-use rights with a Land Survey Certificate, Land Tax Declaration or Land Tax Receipt. Communal tenure, under which local communities control common property such as upland areas, grazing land, village-use forests and sacred forests, is prevalent in rural areas, although the state does not yet formally recognize such tenure. Rural families may also hold informal rights to agricultural land allocated by traditional authorities under informal or customary rules.

National law provides that women and men shall enjoy equal property rights, and women also can inherit land under many customary systems in Lao PDR. Although land titles in urban areas have been issued on a roughly equal gender basis, land allocation programs in rural areas have been less successful in including women’s names on TLUCs.

Private investment (both foreign and domestic) in agriculture as well as industry has increased in recent years due to the liberalization of Lao PDR’s economy. The government has approved large land concessions to private investors, mostly from China, Thailand and Vietnam. Increased investment along with population growth and increased formalization of land tenure systems have led to a more mature land market and increasing property values. However, when investors’ promises of improved infrastructure and employment that are often part of proposed compensation packages have not materialized, land investments have harmed local populations by depriving them of access to land without their receiving anticipated benefits.

In relation to its relatively small population, Lao PDR has an abundance of water, forests and mineral resources. In particular, hydropower, timber, gold and copper have in the last decade contributed steadily increasing portions of the country’s GDP and export revenue. The natural resource base supports the continued development and expansion of these sectors, and their contribution to the country’s economic growth is expected to continue to increase in the decades ahead. By some estimates, hydropower and mining will contribute more than 25% of GDP by 2020, and the combined revenues from those two sectors are expected to grow by more than 20% by that time. Given this potential, the pressure for rapid and broad-based development of hydropower and mineral exploitation is enormous. The GOL, with support from donors, is well along in its race to develop and implement comprehensive legal frameworks and governance structures to support sustainable use of the nation’s natural resources. However, significant gaps remain, especially at local levels where implementation of pro-community provisions and programs depends on the capacity of local officials. Laws and policies include aspirational statements of environmental protection, community participation and local benefit-sharing, but the local governance structures needed to realize these goals are often not in place or function poorly.

Published / Updated: June 2013