VIETNAMESE CROSS-BORDER AGRICULTURAL INVESTMENTS IN Laos and cambodia

1. VIETNAMESE CROSS-
BORDER AGRICULTURAL
INVESTMENTS IN Laos and
cambodia
Presented by: Dr. Pham Quang Tu
Special 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 investment
Article 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
Cambodia
Report 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

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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