LAD number:	LAD010320210103
ARN number:	LA2021000103
Title (main, Eng):	Business Models for Foreign Investment in Agriculture in Laos
Literary indicators:	V (Non-conventional/ເອກະສານບໍ່ເຜີຍແຜ່)
Corporate authors:	Business Models for Foreign Investment in Agriculture In Laos
Publication code(s):	Not specific
Author address code(s):	Not specific
Report type:	Research Literature
Level:	M
Media type:	Book
Primary subject category:	Agricultural economics and policies - ເສດຖະສາດ ແລະ ນະໂຍບາຍກະສິກຳ
Secondary subject category:	Agriculture - General aspects - ການກະສິກຳທົ່ວໄປ
Availability:	NAFRI Library, Vientiane (Lao PDR)
Publication place:	Vietiance, ( Lao PDR )
Publication date:	2012
Pages (book, total):	54
Publisher:	Business Models for Foreign Investment in Agriculture In Laos
Summary statement:	Eng
Language of text:	Eng
Descriptors:	Agriculture; Agricultural extension; ກະສິກຳ; ການສົ່ງເສີມກະສິກຳ;
Keywords:	Agriculture in Laos; Foreign Investment in Agriculture in Laos; Development Strategy for Laos; Foreign Direct Investment in Agriculture;
Abstract (Eng):	The Lao People’s Democratic Republic (Lao PDR or Laos) is a landlocked Southeast Asian country bordering Cambodia, China, Myanmar, Thailand and Vietnam. The population and economy of Laos are small in comparison to others in the region, with a population of approximately 6 million and gross domestic product (GDP) of US$7.3 billion in 2010. Laos is currently classified as a Least-Developed Country (LDC) but is aiming to shake off this status by 2020. To graduate from LDC status, Laos has ambitious plans for economic growth, including in the agriculture sector that currently supports 75 per cent of the population and accounts for 33 per cent of GDP. The sector has experienced a growth rate in recent years of over 4 per cent, and it is expected that this rate will be maintained over the coming decade. Foreign direct investment (FDI) in agriculture was restricted until 2005 but has since expanded rapidly, with nearly 250 projects approved with a combined value of between US$1.1 billion and US$1.7 billion. Due to data limitations it is unclear how this investment has been split between investment in annual crops, perennial crops, plantations, livestock and fisheries. Adequate and reliable data remains an ongoing issue to analysis of the sector. The stated long-term goals (by 2020) for the agriculture sector are twofold: to modernize lowland farming with a focus on market-orientated production (cash crops) for smallholders; and to better conserve upland ecosystems to ensure food security and improve the livelihoods of rural populations. The planned role of FDI is to assist with the shift from subsistence to more a commercially focused agriculture sector with a specific focus on irrigated agriculture, commodity crop production and farmer organization. Foreign investors in Laos generally utilize one of two business models to acquire productive agricultural land: land concessions and contract farming. Land concessions grant the use of land and associated water resources to an investor for a period of time. Concessions are common in Lao agriculture because under the constitution all land is technically owned by the state, and so the sale of land is not possible. Land concessions are more commonly used in Laos for perennial tree crop and pulp wood plantations. Concessions are popular with investors due to the greater level of control they gain over land and associated water. The commercial orientation of concession agriculture has contributed to growth in agricultural output over the last five years. Smallholders may also favor a concession-like arrangement if they have little faith in the investors, little knowledge of the commodity or are not prepared to wait for a return. In such cases, local people may opt for the apparent certainty of rent payments and wage labour. Negative aspects of concessions can arise because the interests of investors and government bodies are not always aligned with landholders, who often have little bargaining power to negotiate the terms of concessions on their land. Such deals often appear to be land grabs by voracious investors in collusion with corrupt officials. Numerous examples are well documented—and certainly there are many that are not—of landholders being forced to concede rights to their land for minimal compensation. In the hurry to increase investment, concessions have often been granted at rates very favourable to investors (between US$2 and US$6 per hectare), but that return little revenue to governments.
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