Contribution of Forestry to Poverty Alleviation - APFNet

limitations and obstacles. Some key issues include, for instance, unplanned village settlements,
unclear NBCA boundaries, pressure from exploitation, encroachment and large-scale development
projects 4 , inadequate institutional arrangements, lack of knowledge and experience, lack of funds,
and other concerns.
Economic Situation
In terms of economy, Lao PDR is currently in the transition period, moving towards a market economy.
In general, the economy has performed relatively well in recent years in spite of the global financial
crisis. Currently, Lao PDR belongs to the top 10 countries that improved their human development
index (HDI) and ranks 122nd out of 169 countries listed (UNDP 2010). The gross domestic product
(GDP) shows a steady growth of about 7.9% per annum in the last five years and it is projected to
continue growing steadily in the future.
Within the total growth, the agriculture sector grew on average at 4.1%, with a 30.4% share in the GDP;
the industry sector at 12.5% with 26% share; and the service sector grew at 8.4% with 37.2% share. The
rest was accounted for by indirect taxes (Report on the High Level Round Table Meeting 2010).
The economic growth in Lao PDR has been extensively attributed to external demand and massive
inflows of foreign direct investment (FDI) from neighboring countries, particularly China and Viet
Nam. During the period from 2000 to 2009, the FDI in Lao PDR accounted for US$ 12.2 billion, out
of which 34% went to electricity generation, 26% to mining, 12% to service, 9% to agriculture, 8%
to industry and handicraft, and 11% to the other sectors (PEI 2010). The number of approved and
implemented projects gradually rose. In 2009 alone, 208 projects were approved and implemented,
valued at approximately US$ 4.3 billion of FDI.
Table VI.1. Characteristics of affected populations from hydro & mining investments in
Lao PDR
Hydro:
planned (with
MOU)*
Within 1 hour’s walk of
current/planned
hydro**
177
Mining:
exploitation
stage
Mining: exploration
/general survey***
Villages 293 255 36 1,225
Population 104,962 112,256 19,082 568,370
Poverty Rate 47% 42% 37% 40%
Literacy rate 60% 69% 46% 40%
* Based on 42/81 hydro projects,“planned” include under construction, planning or feasibility study
**Excluding population within the inundated area, based on 42/81 hydro projects
***Rough average of projects in exploration or general survey stage
Source: Fenton et.al, 2010 in Lao PDR Development Report 2010. Background Paper. Social Impact Mitigation from
Hydropower and Mining in Lao PDR: Examining Potential for Benefit-Sharing Approaches.
The investments are mostly concentrated on resource sectors such as hydropower electricity generation,
mining and agriculture, particularly commercial plantations (Ibid.). The majority of these projects are
located in remote rural areas where poverty incidence is high. Table VI.1 above depicts examples of the
characteristics of affected populations from hydro and mining investments in Lao PDR.
In general, Lao PDR has achieved a rapid economic growth that drives development. However, the GoL
has recognized that the growth does not reflect sustainable development because it is mainly derived
from the exploitation and export of natural resources (Report of the Lao President to the IX Party
Congress 2011). Increasing demand for the country’s abundant natural resources will further accelerate
the pace of exploitation of these resources, frequently without adequate measures to prevent or mitigate
their adverse impacts.
4 Large-scale development projects that challenge NBCAs include hydro-power development, mining, and
industrial agriculture production, and plantations.