Resource information
Forestry contributes 7-10 percent of Lao
Gross Domestic Product (GDP) and 15-20 percent of
non-agricultural GDP. In rural areas forest exploitation is
one of the few available economic activities, and non-timber
products provide more than half of family income. The sector
contributes 34 percent of total export value, and even more
of net foreign exchange. Forestry royalties as a share of
government revenues have decreased from 20 percent in the
mid-1990s to 6 percent of tax revenues and 5 percent of all
revenues last year. Collection rates are low, around 50
percent, and royalty revenues have been declining since
mid-1990s. Over the last five years, Treasury has realized
only about one-third of the estimated market value of the
timber harvested. Current wood industries' capacity
exceeds long-term sustainable AAC, and despite heavy
investment, their performance has not met expectations.
There is no evidence that wood production has had a positive
impact on rural poverty; rather it has had a negative one by
destroying the environment on which the poor depend. This
report concludes that fundamental problems in the forest
policy framework can, and must be corrected for forestry to
make its full contribution to national development. This
Review focuses on proposing a narrow and select set of
priority policy and implementation initiatives: improving
production forest management and utilization, community
participation in forest management, and controlling illegal
logging. With interlinked and mutually reinforcing efforts
in these areas, the production forestry sub-sector could be
put on a sustainable path, greatly enhancing prospects or
success in biodiversity conservation, watershed management
and upland rural development. The blend of policy
institutional and investment action needed, and priority for
implementation is indicated in the attached summary Forest
Policy Matrix and Proposed Action Plan.
