1. National University of Laos
Economic and Social Impacts of Chinese Agricultural Investment in Northern Uplands of Lao PDR and Perspective from different Stakeholders ( )
Maiyer Xiong
National University of Laos
Workshop on “Responsible Large Scale Agricultural Investment in the Mekong Region”
November 16, 2017

2. Content I. Introduction to socio-economic development of Lao PDR
II. Overview of Foreign Direct Investment in Lao PDR
III. Chinese Agribusiness Investment in Northern Laos and its impacts
IV. Investors’ perspective on Agribusiness in Laos
V. Conclusion and recommendation

3. I. Introduction
Country is mountainous: upland and mountains cover 2/3 of total surface area of the country.

4. Source: www.worlbank.org. 2013
Table 1: GDP per capital in ASEAN countries
I. Introduction
No.
Country
GDP/capita in 2013 1
Brunei Darussalam
38,563.31  2
Cambodia
1,007.57  3
Indonesia
3,475.25  4
Lao PDR
1,645.74  5
Malaysia
10,513.71  6
Myanmar -  7
Philippines
2,764.58  8
Thailand
5,778.98  9
Timor-Leste
1,370.67
 10
Vietnam
1,910.53
Country is economically poor
Lao PDR
Source:

5. II. Overview of Foreign Direct Investment in Lao PDR
Table 2:
Figure 1:

6. II. Overview of Foreign Direct Investment in Lao PDR
2.2. Agribusiness Investment in Laos
Agricultural sector employed about 70% of total Lao labor force and accounting for 27 percent of gross domestic product in 2011.
The government expected that Foreign Direct Investment in Agribusiness will create the jobs and increase the income of rural people as well as an opportunity to achieve poverty eradication goal.
As shown in table above, China is one among three largest investors in Laos between
The main location of Chinese Agricultural investment is in Northern provinces Laos that have border with Yunnan province of China.
The Chinese investment is not only brought in positive impacts to the locals (income, infrastructure etc.) but the local communities are also experiencing some social and environmental concerns.

7. III. Chinese Agribusiness Investment in Northern Laos
3.1. Objective of study
To learn about the perception of Local community and authority towards Chinese investment in the Northern Laos in particular the impacts of the investments
To learn about Chinese investors’ perception on investment in Northern Laos,
3.2. Study team
Faculty of Agriculture of the National University of Laos
Faculty of Economics of Yunnan Agriculture University

8. III. Chinese Agribusiness Investment in Northern Laos
3.3. Methodology
The research used in-depth case study.
Location: Northern provinces (Luang Namtha, Oudomxay and Phongsaly)
Product: rubber, banana and coffee
Mode of investment: contract farming and land lease
Data collection: 1) group discussion with Lao authority using guide questions and 2). Semi-structured interviews with villagers, workers and Chinese investors.
Target group : 207 samples.
- Data analysis: qualitative

9. III. Chinese Agribusiness Investment in Northern Laos
3.3. Findings
Incentives of Chinese for investing in Laos:
Inspiring by Chinese “go abroad” policy and going for new economic development,
Laos cheaper land price and good natural environment,
Neighboring country and bilateral cooperation
Type of companies: state owned companies under opium substitute program and private companies
Investment size of company: 67 hectares to 6600 hectares.

10. III. Chinese Agribusiness Investment in Northern Laos
Economic Impacts from Community perspective
a). Direct Impact
Income
Observation on Economic impacts:
The poor have less opportunity to participate in the investment because lacking of production factors and for instance, working in the farm as wage labor. The farmers that have production factors benefit more from the Chinese investment

11. III. Chinese Agribusiness Investment in Northern Laos
Community perspective on land lease contracts
Reason of satisfy
Reason for not satisfy
Providing investment on input
Increasing of income
Market Opportunity
Opportunity to have certain production equipment
low land lease price
using much of chemical inputs
delay of payment
no management of agricultural waste

12. III. Chinese Agribusiness Investment in Northern Laos
Community perspective on fairness of contract
In general the contract that companies/investors have with local community is fair (in the case of land lease)

13. III. Chinese Agribusiness Investment in Northern Laos
a). Community and local author’s Perception on social and labor impact
Increasing of job opportunity
Increasing the labor skills: training and visit
Improvement infrastructure: road access
Investor prefers to hire Chinese labor rather than Lao labor because Lao labors are lacking technical skill.
The Chinese investment also provides chances to Lao labor to attend training on site and some Lao labors even have chance to go to China for study tour.
Labors are packing and uploading banana for export to China

14. III. Chinese Agribusiness Investment in Northern Laos
Working environment
Housing of workers: not permanent, children welfare is not ensure since the housing and preparing chemical input place are close to each other

15. IV. Investors’ perspective on Agribusiness in Laos
2 companies:
2 private companies : Banana
Contracts: Land lease 1+4
- Land lease cost 7 – 20 millions kip/ha with a duration of 5 years
incentives of companies to investment in Laos
have long experience on NTFPs trading in Laos,
knew about the advantages of investment in Laos and market demand,
and low land lease price.
Current status of the companies:
High cost of investment: inputs, irrigation system, labour cost, and land lease cost.
BUT: low marketing risk, harvest annually, and have annual income for investment

16. IV. Investors’ perspective on Agribusiness in Laos
Plan and Future difficulties:
Main issues for Banana companies
lack of investment budget, too high investment cost.
NO policy support and tax exemption from Chinese government.
However: plan to continue to invest in Laos, because of land available, lower investment cost compare to China.

17. V. Conclusion Chinese investment has brought:
Increase the income of local community however this income is not sustainable and there is unequal repartition of income among people,
Improving of infrastructure, creation of the job opportunity, enhance the technical skill of Lao labors,
However,
Chinese labors were found working in Chinese farms and plantation which is not conformed to Lao labor and investment laws,
Use high agrichemical inputs which impacted to public health (especially workers but also community around the plantation)
Unrespect of regulation: lease of paddy field
Banana lease have destroyed the land boundaries of farmers, difficult for reclaim land after lease.

18. V. Recommendation
Lao and Chinese government should agree on supporting the Chinese company to conduct the technical training to Lao farmers/labors that it will solve the problem of importing the illegal labors to Laos,
Promotion and enforcement of Lao law and regulation: contract agreement, chemical input and labor law,
Lao and Chinese government should seriously in action of anti corruption among the officers and investors,
Lao government should review the land renting policies, better to promote the direct investment by owner of the land.
Better selection of the Chinese companies will ensure the benefit for the local community and society as a whole,
Lao government should create the despots reporting center where workers and investors can report the unfair contract practices or un followed law and regulation practice,

19. Thank you very much! 21