VIETNAMESE CROSS-BORDER AGRICULTURAL INVESTMENTS IN Laos and cambodiaPresented by: Dr. Pham Quang TuSpecial Project Manager, Oxfam in Vietnam

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Overview• As a lower-middle income country, Vietnam is

increasingly a source as well as a recipient of foreign direct investment (FDI)

• Vietnamese investment is flowing to neighboring countries, particularly Laos and Cambodia, for both geographical and historical-political reasons• Vietnam is one of the leading sources of investment in other Lower

Mekong countries

• Vietnamese investors include both state-owned and private firms

• Agriculture and natural resources is a focus both of Vietnamese investors and recipient governments

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Vietnamese laws on investment• Vietnam has a Foreign Investment Agency (Cục Đầu tư Nước

Ngoài) under the Ministry of Planning and Investment• 2014 Investment Law: contains a chapter on outbound investmentArticle 51: 1. Investors are encouraged by the State to make outward investment in order

to expand the market, improve the export of goods/services, and receipt of foreign currencies; improve access to modern technologies, raise the managerial capability and develop resources for socio-economic development.

2. Investors making overseas investments shall comply with this Law, other regulations of law, laws of the countries or territories in which investments are made (hereinafter referred to as host countries), and the international agreements to which the Socialist Republic of Vietnam is a signatory, and take responsibility for overseas investments they make.

• Article 54: Projects in agriculture with capital of VND 800 billion or more (US $36 million) require approval of PM.• In other cases, MPI issues an Offshore Investment Registration

Certificate• Decree 83 (2015) requires certification of project sites

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Vietnamese outward investment period 1989 - 2014

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Top 10 countries of vietnamese outbound investment *

(*) Cumulative the number of project until 31/12/2012

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Vietnam investment to Cambodia and Lao

Cambodia Lào

Ranking of investor TOP5 TOP3

Number of projects (1/2016) 183 258

% of total number of outward projects

18% 27%

Total registered capital (billion USD)

2.8(2 billions in agriculture)

4.9(1 billion in agriculture)

% of total investment capital 22% 26%

Source: MPI, 2016

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Political importance of investment

Sources: News articles; Hoang Anh Gia Lai website

CPV General Secretary Nguyen Phu Trong visits investment in Attapeu, Laos

Officials open a school built with Vietnamese donations in Takeo, Cambodia

Annual investment

conferences between Vietnam

and Cambodia (far left) and Laos

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Oxfam initiatives on cross-border agricultural investment

• So far, most research and advocacy on Vietnamese investment has been done in receiving countries (esp. Cambodia); aim to complement this with information from VN

• Oxfam is working with VCCI and PanNature, a Vietnamese NGO with an interest in cross-border environmental issues

• Oxfam in Vietnam cooperating with Oxfam Hong Kong, Oxfam offices in Laos and Cambodia, and Mekong Region Land Governance project (MRLG) to engage investors

• In may 2016: Conducting field trip to 5 provinces (Kratie and Rattanakiri of Cambodia; Attapur, Champasak and Savanakhet of Lao) in the investment area of 7 Vietnamese companies

• Report will be available in August and workshop will be held in September 2016 with participation of both Government and Companies

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Some positive impacts of Vietnamese investment• Capital investment to improve infrastructure and socio-

economic development: HAGL and Attapur province• Job creation for local people: Lao government requires

90% of labor are local: Viet-Lao company create job for 2,000 people with average salary of 200 usd /moth

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Criticism of negative impacts• Large land concessions have been made by the government

(ELCs) without reality check on the ground; this causes lots of problems since the concession interferes with areas where people live and farm

• Forest and natural resource destruction • Investors can clear timber before planting rubber or other crops (or

flooding a hydropower reservoir) • Demand for luxury timber in China and Vietnam seen as a primary driver

for deforestation (NGO Union Group, Logs and Patronage, 2015)

• Some concessions are inside national parks/protected areas: • Huu nghi company has clear 223 ha of national park in Bachieng district,

Champasak province, Lao• Dak Lak rubber company encroach about 300 ha of forest in Chungpon

district, Champasak province, Lao

• Investors have not completed or avoid to do environmental impact assessments (EIA) by split to small company

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Criticism of negative impacts (con’t)• The companies take advantage of the ELCs which are

granted by the central government without taking the law very seriously.

• The companies avoid the maximum land size through a systems of subsidiaries or by splitting up companies artificially; by keeping ‘registered’ land size below 5000 ha

• Vietnamese (and other) investments have led to damage to local livelihoods, especially of indigenous ethnic minorities in southern Laos, NE Cambodia• Loss of household land and access to communal land (forest,

water resources, spiritual sites) • Low or no compensation

• Investors have brought in Vietnamese workers, rather than hire locals (especially sensitive in Cambodia)

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Case study of Hoàng Anh Gia Lai

• Established in 1990, originally is a private company of timber processing – then transfer to the join-stock company

• Head quarter: Pleku city, Gia Lai province, Vietnam

• Chairman: Doan Nguyen Duc

• Area of investment: Estate, hydropower, agriculture, mining and construction - service

• Registered capital: 7.899 billion VNĐ = 350 million USD

• Total 31 subsidized companies

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Structure of outward investment of HAGL

15 subsidized companies in 4 country: Lao, Cambodia, Myanmar and Thailand

8/15 companies in Lao work on hydropower, agriculture, construction and mining

5/15 companies in Cambodia to invest in agriculture Nguồn: Báo cáo tài chính Hoàng Anh Gia Lai Quý III/2015

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Criticism of HAGL invesment in CambodiaReport from Global Witness - “Rubber Barons –

2013”:1. Having 47.370 ha of land in Cambodia, while the law

regulates concession for each company not more than 10.000 ha;

2. Cutting the original forest within and outside license area

3. Destroy people’s livelihood and environment:

4. Close relationship with high ranking politician and employ army and police to protect land area

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Community response in HAGL project area

People in Kanat Thom village in Rattanakiri stopped machine to encroach secret forest

Nguồn: IDI & EC

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“Follow money” in the case of HAGL

Nguồn: IDI & EC

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International pressure to HAGL

On 10/02/2014: 05 NGO represented people from 17 village of Andong Meas and O’Chum, Rattanakiri complained to Compliance Advisor Ombudsman (CAO) of (IFC);

Asking the company to compensate in the project area of 3 subsidized companies

– CRD company

– Heng Brothers company

– Hoàng Anh Oyadav company

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Complain letter on negative impacts to social and environment

Source: CAO-Ombudsman website

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Process of conflict resolution of HAGL based on CAO’s procedure

People and Nature Reconciliation

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Recommendations In general the image of Vietnamese companies on agricultural

investment in Cambodia and Lao are not so good (some event bad), therefore:

1. Vietnamese government should better enforce Investment Law article 51(2) and monitor compliance with Vietnamese law, host country laws, and international agreements, including through field visits to investment sites

2. Promote compliance with the UN Committee on Food Security’s Voluntary Guidelines on Governance of Land Tenure (VGGT) and other existing guidelines on responsible investment

3. Investors should consult with affected communities throughout the investment process, according to the principle of Free, Prior and Informed Consent (FPIC)

4. Vietnamese banks should conduct environmental and social risk assessments before making loans to external investment

Oxfam, VCCI and PanNature will develop score-card for performance assessment and guidelines for improving responsible investment and invite the companies to join voluntary