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Post Info TOPIC: Chinese dominance over Lao rubber industry reaches Savannakhet

Chinese dominance over Lao rubber industry reaches Savannakhet

Chinese rubber firm plans large plantation in Savannakhet

Vientiane Times, 18 Sep 2009

A Chinese company is to set plans in motion for a major new rubber
plantation and processing plant in the central province of
Savannakhet .

The Lao Rong Xiang Rubber Development Co., Ltd. unveiled the plan on
Wednesday at a signing ceremony for the project with the Lao
government, held at the Ministry of Planning and Investment in
Vientiane .

Mr Thongmy Phomvixay ( right ) and Mr Line's E Gao after signing the
project development agreement.

Company Chairman, Mr Line's E Gao, and Deputy Minister of Planning and
Investment, Mr Thongmy Phomvixay, signed the agreement allowing the
company to request a land concession for the rubber plantation from
the National Land Management Authority.

Speaking at the signing ceremony, Mr E Gao said his company was
committed to doing business in Laos that would benefit the local
community, and would actively participate in local development.

He pointed out that the Lao government would also gain taxes from the
investment and operation of the company.

The rubber producer expects to plant trees over an area of 2,407
hectares in Xepon district, providing sufficient raw materials to
operate the processing plant.

The Lao government announced the suspension of land concessions above
1,000 hectares in June this year after deeming that Laos was not ready
to allocate suitable land for industrial trees plantations. The
government has not yet completed a presidential decree on land
concessions and lease fees.

An avenue still exists for investors seeking land concessions from the
Lao government, however, and in urgent cases the Prime Minster and
Deputy Prime Minister can consider and approve land concession
agreements, according to government officials.

Company staff said they were able to convince the authorities to grant
them the Xepon concession because they had been surveying land there
for six years and the case was considered a mature project. “The
government will not grant land concessions if you only just proposed a
project, but we have been doing this since 2003,” said a company

Company staff said the project would comprise three phases of
investment, with an initial investment of US$4 million. The company
will build the factory after seven years tree growth so the raw
materials are available in sufficient quantity for processing.

The products will be exported to foreign countries including China ,
where demand for rubber is increasing due to the rapidly growing car

Falling demand due to the global financial crisis has seen the price
of rubber tumble around the world, but economists have expressed
confidence that commodity prices would recover during the course of
the coming year.

The Lao rubber industry has experienced a boom over the past 10 years
as the government pushes for the export of more agricultural products
to the world market.

But large land concessions for rubber plantations were found to have a
negative impact as investors often failed to conduct feasibility
studies on the effect of their project on the local community, leading
to the current suspension of large land concessions for this purpose.



That's good idea to study more negative impact.

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