A new report by the Environmental Investigation Agency confirms that logs from Laos continue to pour over the border into Vietnam feeding a booming furniture industry there, despite a ban on exports of unprocessed timber from Laos. This illegal trade has serious implications for REDD in both countries.
EIA notes that the only beneficiaries of this trade are corrupt government officials and businessmen like Phonesack Vilaysackwho sells logs to buyers in Vietnam for cash, while his wooden flooring factory in Laos faces a shortage of wood. One of the biggest loggers in Vietnam is a company owned by the Vietnamese military.
The report is available here: “Crossroads: The Illicit Timber Trade Between Laos and Vietnam,” (pdf file 1.2 MB).
EIA researchers posed as timber dealers in Laos and Vietnam. EIA produced a video, including undercover film of timber traders:
The impact on forests in Laos is increasingly difficult to ignore. According to the Ministry of Agriculture and Forestry, forest cover in Laos fell from 64% in 1960, to 47.2% in 1992 and 41% in 2001. The Ministry is currently undertaking a survey of forest cover in the country. According to a recent report in the Vientiane Times, “land officials predict the figure could be less than 40 percent.”
In an interview with the Asia Times last year, a forestry consultant explained that,
“Laos insists it still has 40% of its forests, but in fact the dense crown cover, that is the old growth or relatively intact forest, accounts for only 3% of what is left. And that only exists because it’s hard to access. Laos has an additional 23% that is seriously degraded, that is a few tall trees with lots of bamboo understory and regrowth saplings, and another 11% that is so scrappy it has little or no value for biodiversity.”
The problem is not an absence of laws controlling logging and the timber trade in Laos. The problem, as EIA notes, is that these laws are “widely subverted or simply ignored”.
One of the major drivers of deforestation is the rapid expansion of hydropower dams in Laos. The original developers of the Xekaman 1 dam included a Malaysian logging firm, Idris Hydraulic. The project has now been taken over by Vietnam. When EIA’s researchers visited the area earlier this year, they were stopped by out-of-uniform Lao military personel, who were protecting a logging area that appeared to be inside the Dong Amphan protected area. The company carrying out the logging, COECCO, has close connections with the Vietnamese military.
Another driver of deforestation in Laos is the expansion of industrial plantations and land concessions. Vast areas of land have been converted to rubber plantations – in the north of Laos by Chinese companies and in the centre and south by Vietnamese companies.
These problems have been documented in detail for more than a decade by NGOs including International Rivers, TERRA and World Rainforest Movement. Academics have produced dissertations and doctoral studies. Several journalists have reported on the problems. Yet the deforestation continues.
Another important driver is Vietnam’s booming timber industry. EIA’s report sums up the problem as follows: In 2011, Vietnam’s income from wood exports is expected to reach US$4 billion, up from US$3.4 billion last year. By 2020, the government hopes to expand income to US$7.8 billion. Imported timber accounts for 80% of timber supplies. In 2008, the main markets were the European Union, United States and Japan. As demand from the EU and US decreased as a result of the financial crisis, exports to China and countries in the Middle East have increased. Laos provides much of the tropical hardwood feeding Vietnam’s furniture industry.
EIA’s researchers investigated three companies logging in Laos and exporting the logs to Vietnam. Two Vietnamese companies: COECCO (Company of Economic Cooperation – Ministry of Defence), and Nicewood; and one Lao company: Phonesack. EIA also traces the finished furniture to companies in Europe and the USA.
Obviously this has serious implications for REDD programmes in Laos and Vietnam. Vietnam’s Readiness Preparation Proposal to the World Bank’s FCPF acknowledges that the country does not implement its timber trade regulations that require that only timber from legal origins is imported:
Proof of legal provenance is not required for imports of species other than those listed under CITES. This leads to a situation where wood imports are deemed legal even though they may have been illegally exported from elsewhere, in particular from Laos and Cambodia from areas where there are log and sawn wood export bans.
The problem has been raised during discussions about the Lao Readiness Preparation Proposal, presented to the FCPF Participants Committee in November 2010. The Participants Committee requested a revised R-PP to address seven key issues, one of which was to “elaborate on the risk of international leakage, cross border timber trade and describe ongoing and potential regional coordination to address these important issues.”
An FCPF Facility Management Team Completeness Check (pdf file 285.2 KB), dated 16 June 2011, notes that the revised R-PP acknowledges the problem and proposes solutions:
A new section added to component 2a states that the risk of international leakage is very high. Studies in Vietnam suggest very large quantities of unrecorded logs pass from Lao PDR to Vietnam. Similar transfers to Thailand and China are also reported. It notes that resources are limited to tackle the problem nationwide immediately.
The draft REDD strategy proposes a staged and two pronged approach to dealing with illegal logging that combines detailed investigation and monitoring of logging to get a better understanding of the scale and cause of the problem, followed up by strong law enforcement, to be undertaken in selected areas. The problem of uncontrolled land-use change resulting from concessions will be tackled through improved Land-use planning that will assess carbon stocks as part of the planning process, so that conversion of areas with high carbon stocks can be avoided.
As knowledge increases and experience is gained, the successful measures will be extended to other areas.
It remains to be seen whether Laos or Vietnam are serious about addressing this issue. EIA has documented the scale of the problem and the level of corruption and collusion within the Lao government as well as the involvement of the Vietnamese and Lao military. Meanwhile, the Vietnamese government appears to be turning a blind eye to the illegal imports.
EIA ends its report with a recommendation:
The governments of Laos and Vietnam need to urgently address this issue and shut the border to illicit trade in timber. As Vietnam has effectively exported deforestation from within its borders to neighbouring Laos, REDD+ negotiations with Vietnam must include a robust assessment of regional leakage. The fact that both countries have expressed interest in negotiating a VPA [Voluntary Partnership Agreement – part of the EU’s Forest Law Enforcement, Government and Trade Action Plan] with the EU provides a basis for resolving these issues. Until the required action is taken, consumers should shun Vietnamese-produced wood products made from illicit logs from Laos.
 “Researchers concerned about forest loss”, Vientiane Times, 7 July 2011.
 Keith Barney, “Grounding Global Forest Economies: Resource Governance and Commodity Power in Rural Laos,” York University, Toronto, July 2011.