Turning Land into Capital for Whom? Crises and Alternatives of Land Commodification in Laos

On August 3rd, 2017, the Central Committee of the Lao People’s Revolutionary Party (hereafter, the Party) – the only legally permitted political party and the dominant political institution in Laos – issued a resolution on the enhancement of land management and development. ¹ The resolution (mati in Lao) was surprisingly critical of the government’s past policies of land management, especially those concerning land investment and commodification projects, or what the government has termed since 2006 as “Turning Land Into Capital” (kan han thi din pen theun, hereafter TLIC). ² A host of problems associated with TLIC were acknowledged, particularly that it “still has no comprehensive legal framework, due to which the Government and people have not received as many benefits as they should have” and that “land expropriation to serve development projects is not only a heavy burden but also a sensitive issue, affecting public order”. ³

The resolution reflects the concerns of the Party and State (often referred to as “Party-State”, or phak-lat, in Laos because they closely overlap in practice) with the potential for land conflicts to threaten their popular legitimacy. Thus, the Party selected a new set of leaders, most notably Prime Minister Thongloun Sisoulith, to run the government differently as of 2016. They were given a mandate to assert stricter government control over the issues that were sensed to be of greatest concern to Lao people: widespread corruption, the drug trade, rampant illegal logging, and land. ⁴ Laos is often critiqued for its anti-democratic practices due to the ways in which the Party-State dominates practically all aspects of political life in the country. However, its formal commitment to principles of Leninist democratic centralism does at times unevenly allow the concerns of citizens to filter upwards – especially in the form of complaints submitted to the National Assembly (NA) – and influence top-down decision-making.

The resolution also demonstrates that the granting of state land leases and concessions to domestic and foreign investors – a central component of TLIC that has been authorized since 1992 but gained traction since the early 2000s (see Baird, this issue) – has met its limits. Recognizing that land concessions have led to destructive social-environmental impacts while generating limited public benefits, the government has placed moratoria on certain types of concessions since 2007, albeit with conditions that have weakened over time. Affected communities have increasingly complained about the expropriation of their lands or refused to concede large portions of their agricultural and forest lands. ⁵ District and provincial officials have taken note and reported upwards that the large areas of land granted to companies by the central government are simply not available. As a result, investors have started looking for other ways of accessing land, such as by leasing land from communities and households or engaging in contract farming, especially in the agricultural sector.

 Thus, the TLIC policy is at a crossroads as the government considers how it should be revised, particularly in the draft amended Land Law that at the time of writing was tabled for review by the NA in October 2018. Considering that the TLIC plays a prominent role in the Party Resolution on Land it is clearly here to stay. However, there is an outstanding question that the Party-State and Lao society as a whole must wrestle with – for whom is land being turned into capital? And who decides how land is turned into capital or which plots of land are targeted for conversion? Until now, the benefits of TLIC have been realized by land investors and the state, while most of the externalities have been born by Lao land users and the public at large. In this essay, I contend that the Party-State takes seriously the issue of how to more evenly distribute the “goods” and “bads” of TLIC, but at the same time is not prepared to take on the substantive policy and political-economic reforms necessary to achieve such goals. Thus, the crisis of land governance in the context of TLIC in Laos is likely to continue as “the old is dying and the new cannot be born”. ⁶

The Vague Promises of Turning Land into Capital

In August 2017, I participated in a research project evaluating how TLIC has operated over the past 10 years. ⁷ The 33 interviews conducted – which serve as the evidentiary basis for this essay – demonstrated that on the whole, Lao people, including those working outside the government in international non-government organizations (INGOs), domestic non-profit associations (NPAs), and Lao consultancy firms, held broadly similar sentiments towards the TLIC policy. One interviewee’s response represented this perspective clearly: “the policy is good in principle, but it has many problems in its implementation. There is no transparency, accountability, or good governance in how it is implemented. It is all done in a top-down system”. ⁸ Focusing on the implementation rather than the content of a policy is a typical strategy used by Lao people for framing their critiques of government policy lightly. Nonetheless, interviewees expressed genuine appreciation of the policy’s intentions, especially considering the ways it intersects with Lao desires for development. ⁹

One reason why TLIC in the abstract may appeal to Lao people is because of its vague definition, compared to its myriad forms of concrete application. Many Lao interviewees understood the intentions of the policy in the broadest terms possible: to increase the economic productivity of the country’s land through various forms of investment to generate broad-based benefits for the country and its people. TLIC lacks a concrete definition because it was never actually written down and issued as an official policy, reportedly due to the drafting committee’s disagreements concerning its precise meaning! ¹⁰ Interviewees expressed various understandings of the policy’s goals: 1) generating broad-based economic value, 2) funding government projects, 3) privatizing and commodifying state land, and 4) retaining Lao control over land as a national or public asset. Furthermore, they identified a range of projects that fit into the framework of TLIC, sometimes disagreeing as to which types were “true” examples of TLIC. These included 1) trading state land with private investors for infrastructure, particularly government office buildings, ¹¹ 2) selling state land to finance road infrastructure, such as in the case of the 450 Year Road, ¹² 3) granting state land to investors as leases and concessions, and 4) titling land for the purpose of creating and developing land markets.

These disparate goals and models of TLIC are only united by the broad idea of generating economic value from land for the purpose of developing infrastructure, creating government revenue, and building wealth. However, the ways in which these goals have been pursued are highly problematic, as interviewees cogently articulated. When ministries exchange land they own for a new office, they relinquish significant government assets to the private sector, calling into question the value of such a deal for the government and the people it represents. The strategy of selling land to finance road infrastructure has led to unfair land expropriation from Lao citizens and has been bogged down with compensation problems due to the low rates offered. ¹³ State land concessions and leases have led to negative socio-environmental impacts and have generated limited economic benefits for the government and rural communities (see Figure 1). ¹⁴ Finally, land titling and the creation of land markets has generated intense land speculation and inflated the cost of land in urban areas. ¹⁵

A combination of these factors has created a sense at the highest levels of government that TLIC has spun out of control, failing to achieve its economic goals while leading to negative externalities for Lao society. As Thongloun Sisoulith pronounced in mid-2016, not long after he had assumed the position of Prime Minister, the policy “has faced many challenges over the past years because several projects undertaken according to this policy haven’t proved effective and have caused loopholes in revenue collection” and that such projects are “causing negative impacts on the people and creating more conflicts in society”. ¹⁶ Thus, if the TLIC policy has yet to provide significant benefits for the Lao government or society, who is it for? The government recognizes the crisis but remains unsure of how to address it and forge a new path of development. Nonetheless, alternatives have begun to emerge that may change the dynamics of land capitalization in the country despite little proactive government regulation.

Turning Land into Capital for the People?

 Although land concessions catch the most media attention as a form of TLIC that drive significant socio-environmental transformations, there are other ways in which land has been capitalized that have greater potential to generate benefits for the rural poor. Alternative forms of investment, especially in the agricultural sector, have been spurred on by an emerging peasant resistance and governmental regulatory responses to the impacts of land concessions. Such alternatives include the agricultural investments that farmers and agricultural cooperatives make as well as contract farming with agribusinesses. ¹⁷ Additionally, companies have begun leasing land from individual households, such as for cultivating bananas in northern Laos, thus bypassing the government. ¹⁸ Companies that have pre-existing concession agreements have also begun negotiating lease agreements with communities who refuse to concede their land. ¹⁹ Each of these alternatives can be as socio-environmentally destructive as land concessions and are by no means ideal solutions. For example, the government has banned the further expansion of banana plantations because of their destructive impacts on the land and on human and animal health. ²⁰ Yet, they are important steps away from concession-based forms of TLIC where the majority of benefits accrue to the company and government while the impacts are borne by rural communities and the public. As the government is committed to TLIC as a policy idea, it is worth considering the multiple ways in which Lao civil society, peasants, government reformers, and the public at large can shape it to be more people-centered in practice.

Miles Kenney-Lazar
Assistant Professor, Department of Geography, National University of Singapore

Note: The same phrasing of the title was first used for the Laos section title of the Mekong State of Land Report: Ingalls, M.L., Diepart, J.-C., Truong, N., Hayward, D., Neil, T., Phomphakdy, M., Bernhard, R., Fogarizzu, S., Epprecht, M., Nanthavong, V., Vo, D.H., Nguyen, D., Nguyen, P.A., Saphanthong, T., Inthavong, C., Hett, C. and Tagliarino, N. 2018. State of Land in the Mekong Region. Centre for Development and Environment, University of Bern and Mekong Region Land Governance. Bern, Switzerland and Vientiane, Lao PDR, with Bern Open Publishing.

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