Foreign Direct Investment (FDI) in Land in developing countries

43Legal multi- and bilateral environmentLaos signed 24 BITs. All relevant FDI in landinvesting countries are included. Laos’ BITsinclude compensation for expropriation andmeasures to protect the domestic economy.Legal domestic environmentAccording to the constitution, land is completelyowned by the state and, therefore, land cannot besold de jure. Nevertheless, the assignment ofpermanent use rights allows the evolution of aland market. According to the Land Law 2003,the Lao tenure system is de facto based on stateland and private land, whereas private property,as long as it is not colliding with public interests,is secured by article 16 of the constitution. Additionally,communal land is defined in the Decree88 from 2008, but not yet included within theLand Law.In rural areas, generally no titles are issued, mainlybecause 99% of the rural areas would not qualifyfor the current requirements that have to be metto receive a title. However, for local villagers atraditional system based on the knowledge of thevillage community can guarantee the use rights aslong as there are no conflicting outside claims. Incases of FDI in land, the traditional system is notappropriate for saving the rights of the traditionalowners as these rights are not recognised by thestate. Neither individual nor common/collectiveuse rights are registered. Hence, the state considersall rural land to be state land which it can allocatein form of concessions. Since 2002, when pressureon land resources increased, caused by the emergenceof FDI in land and by resettlement programmes,tenure insecurity in rural areas hasgrown tremendously.Since 1997 the Lao government, supported by theLand Titling Project initiated by the World Bank,has allocated roughly 540,000 land titles, butnearly exclusively in settlement areas. The LandTitling projects concentrated on settlement areasbecause the majority of people live there and landvalues are much higher.Domestic and foreign investors can obtain landvia long-term state land concessions. Concessionrefers to a type of investment whereby land istransferred to companies that are responsible forall its investment and cultivation/construction.Large concessions are usually the preferred formof investment since it maximises company controlover the land. As mentioned above, a majorproblem for investors is the fact that local peoplemay have legitimated rights on these lands whichoften results in conflicts between the investor andthe local farmers whose farms become destroyedby the investor.To access land, foreign investors must submit theirproposals to the Department of Domestic andForeign Investment (DDFI) of the Committee forPlanning and Investment. FDI worth less than 3million US$ can be approved at the provinciallevel, less than 10 million US$ gets signed by thepresident of the DDFI, and investment exceeding20 million US$ has to be proved by the PrimeMinister. 18 Besides the monetary triggers, responsibilityof the different levels is defined on the basisof the area of the FDI in land. This creates anambiguous framework that does not clearlyconfine the responsibility of different authorities.Table 8: Authorities in charge depending on land sizeLand sizeAuthority< 3 ha District authorities3 – 100 ha Province authorities100 – 10,000 ha Ministry on Agriculture & Fisheries> 10,000 ha Approval by the National AssemblySource: GTZ, 2006.18 FDI exceeding the limits can be approved by the National Assembly.