During project preparation, an unprecedented inflow of foreign direct investment (FDI) in cross-border contract farming and large land concessions marked the agriculture and natural resources (ANR) sector of the Lao People’s Democratic Republic (Lao PDR). Investors included businesses from the People’s Republic of China, India, Republic of Korea, Thailand, and Viet Nam. While such land concessions could have considerable development potential; serious concerns were raised about the nature and duration of the leases; the soundness of the approval and allocation procedures; their impact on food security, local livelihoods, and natural resources; and more. That FDIs have high risks of environmental damage and limited transparency, mainly benefiting foreign and affluent domestic interests and potentially disadvantaging vulnerable groups, was an overriding concern.
To ensure that benefits are equitably shared and harmful impacts are avoided, the government planned to manage FDIs in the ANR sector. It requested the Asian Development Bank (ADB) for financing support, and in response, ADB approved a grant of $20 million in February 2009 for the Sustainable Natural Resource Management and Productivity Enhancement Project. With $15 million cofinancing from the International Fund for Agricultural Development and using a sector approach, the project aimed to deliver three outputs ─ capacity building for agriculture and natural resource sector management, investment in resource management and productivity enhancement, and efficient project management. Strengthening government capacity to screen and appraise FDI proposals for land concessions, monitor and enforce compliance with laws, contracts and licenses, and protect natural resources was a focus.
However, even a year before the grant was approved, the government already declared a moratorium on land concessions larger than 100 hectares. Suspension of land concessions followed in 2012, which meant that the project can no longer be implemented as designed. But instead of changing the project scope, an informal process to redesign the activities was undertaken through the subproject preparation and subproject implementation manuals. Capacity building activities were subsequently aligned to subproject preparation and implementation, effectively making them a part of project management and an overhead to the investment component.
Despite having been reoriented and drastically reduced, activities under the capability building output only partially achieved their intended outputs. Under the investment component, 749 water users’ associations/farmers’ groups were established, 71 subprojects were implemented, and village-level land use maps were prepared for all the subproject areas. The project completion review mission however found several weaknesses in the appraisal and design of the subprojects. For instance, erroneous economic viability calculations and inadequate due diligence characterized several subprojects.
Because of diminished relevance, incomplete delivery of planned results, and ambiguous sustainability of results, the project was rated less than successful. It was completed within the planned timeframe and estimated total cost. However, implementation management cost was very high at 32% of the total $36.95 million actual project cost.
The Ministry of Agriculture and Forestry was the executing agency. The offices of the provincial governors of Attapeu, Champassak, Salavane, Savannakhet, and Sekong ─ the five project provinces ─ were the implementing agencies.
