Contribution of Forestry to Poverty Alleviation - APFNet

land use planning, logging operation, and capacity building that villagers can take part in during the
implementation. Daily wages range from LAK 25,000 to 50,000 per day. For example, from January
2009 to June 2010, SUFORD paid labor service to villagers who were involved in the activities a total
amount of more than LAK 750 million for 5,568 working days. Given that SUFORD is working in more
than 700 villages throughout the country where thousands of people live, the payment is considered
minimal and only a small number of villagers can access the benefits.
Wood processing and wood products
As a consequence of the log export bans in1990, the GoL has promoted downstream processing and
export of finished or semi-finished wood products. This has led to the growth of the wood-processing
industry. However, being in an early stage of development, wood processing in Lao PDR has been
deemed inefficient, having low recovery rates and generating low-value products. To reverse the
situation, the GoL has instituted a reform of the wood industry to promote efficiency and final products
processing and export.
In August 2007, 326 of 587 sawmills and secondary processing factories were closed, 185 were
recommended for improvement within one year, and only 76 were allowed to continue operations. Of
1,528 furniture factories, 1,188 were closed, 212 were recommended for improvement within one year,
and only 128 were allowed to continue operations.
Meanwhile, the private sector has formed the Lao Wood Processing Industry Association, the main
objective of which is to facilitate the allocation of government timber quotas to individual factories. The
association is expected to play key roles in technology upgrading and skills improvement, marketing
cooperation, and promotion of the use of timber from sustainably-managed forest areas. The association
also collects chain of custody (CoC) certification information in relation to the processing and export
of certified wood.
The wood-processing sector in Lao PDR is foreseen to make an important contribution to both the
national economy and employment in the country. To the national economy, it contributes approximately
6% of GDP and 32% of the manufacturing production value (MAF 2005), but no official national
record is available regarding employment.
In the 1990s, wood and wood products accounted for 40% of export earnings, almost half of which
were from the export of logs. The total value of wood and wood products exports reached US$ 67-75
million in financial year 2001-2002 and increased to US$ 97 million in 2005-2006, as a result of the
additional wood supply obtained from the clearing at the site of the Nam Theun 2 Dam (NT2) and the
plantation program (Sayakoummane and Manivong 2007).
In addition, the wood industry also contributes to the household economy. A recent study conducted in
48 forest-based enterprises from Vientiane and Savannakhet Province reveals that the average direct
earning (salary) for an employee working in forest-processing enterprises is US$ 105 per month or
about US$ 1, 270 per year. Compared to the average individual income in the country, especially of
those working in the governmental sector (US$ 30-100 per month), the average salary paid by factories
is relatively higher. Apart from salaries, employees also received non-salary incomes such as overtime
payment, annual bonus, and compensation for hospitalization costs. They are also granted factory
waste. According to the survey, majority of respondents appeared to be satisfied with the paid income,
with only 19% of them reported as not satisfied (NAFRI/FRC 2006).
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