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 employee.
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 industry.
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.
