The globalization of the pulp and paper industry – Part II

By Chris Lang, MSc Thesis, Oxford University, 1996.

Vietnam is currently involved in a large scale “reforestation” programme. Between 1993 and 1995 the Government of Vietnam (GOV) reports that 850,000 hectares of trees were planted nationwide (Asian Timber 1995: 8). There are many examples of statements from Ho Chi Minh advising the Vietnamese of the importance of forests, such as “Forest is gold. If we know how to conserve and use it well, it will be very precious”. Ho Chi Minh initiated tree planting at the Tet festival (the lunar New Year) in the early 1950s, and Tet has since become a time to plant trees throughout the country (Kemf 1990). There is a tradition of tree planting in “homegardens” in Vietnam, and a wide range of tree species are planted of benefit to farmers (Le Trong Cuc 1992: 27).

However, large areas of Vietnam are now being covered with monoculture plantations, often for export as wood chips to Taiwan and Japan (The Nation 1/10/91). Such plantations have been supported directly and indirectly by some of the institutions involved in the promotion of the international pulp and paper industry mentioned in Part I of this study. The following section will look at how the some of these institutions have influenced plantation development in recent years in Vietnam.

Vietnam’s Tropical Forestry Action Plan (TFAP)

Since its inception in 1985 by the World Bank, FAO, UNDP, and WRI the TFAP has been implemented in 89 countries (FAO 1995: 1), and although it was initially welcomed by many environmentalists, as more information became available, and as the first TFAP reports appeared, a growing body of criticism emerged from NGOs, local community organizations, and villagers. These criticisms were compiled by the World Rainforest Movement (1992) and can be summarized in the Vietnamese context as follows (Lang 1996).

The TFAP is essentially top down, involving international agencies, government officials, and largely excludes local consultation or involvement of people affected by the TFAP’s proposals.
The TFAP pays insufficient attention to forest dwellers’ needs, traditional land ownership patterns and agricultural practices. Each of these vary widely in different countries, and even within the same country. In Vietnam, there are 54 ethnic minority groups, many practising forms of shifting agriculture differing depending on such variables as climate, aspect, culture, tradition, and soil fertility (Bloch and An Van Bay 1993b: 20).
An effect of TFAP is to increase investment in commercial forestry, even in countries where almost all the natural forest has been cleared. In the Philippines, where primary dipterocarp forests now cover only three per cent of the country, the TFAP proposed further logging of these forests, relying on the logging companies to monitor themselves (Lohmann and Colchester 1990: 93).
The TFAP fails to address the root causes of deforestation, assuming that deforestation is caused by the rural poor and not by logging, for example. WRI produced a report on the TFAP in 1990, which lists underlying causes including logging, encroachment by landless farmers, destruction of common property ownership systems and large scale development, and concludes, “In short the causes of deforestation are many and complex and a fundamental challenge to the framers and implementers of the Tropical Forestry Action Plan” (Winterbottom 1990: 45).
There is a total failure within TFAP to criticize or even discuss the impact of large scale development projects on forests and on the people living in or near the forests. For example, the TFAPs prepared for Laos, Thailand and Vietnam all failed to look at potential alternatives for a series of enormous hydropower dams on the Mekong River and its tributaries, proposed by the Mekong Committee (now the Mekong River Commission, a UN agency based in Bangkok). This is despite the fact that these dams will be a major cause of deforestation and displacement of villagers (see Lohmann 1990b and 1991, and Lang 1994).
Foreign experts outnumber local professional staff on Forestry Sector Review teams. In the Vietnamese TFAP all the technical reports were written by international consultants. The consultants spent around two months in the country to produce their reports, at a time when travel was severely restricted by the GOV.
These experts have a vested interest in not criticizing either the TFAP or the forestry practices of the country under study. One of the results of the TFAP process is a series of proposed projects, all of which require international consultants, and there are good career opportunities available for the consultant who is prepared to toe the line.
The TFAP has failed to reduce the rate of deforestation.

Vietnam’s TFAP process was started after an initial visit in November 1988 by Chuck Lankester (then of UNDP, and later to become infamous as Executive Agent at the Mekong Committee), and R. D. H. Lowe (of the World Bank) (FAO 1990). Although at the time the Vietnamese TFAP was carried out (the main report was produced in December 1991) increasing criticism of the TFAP process resulted in a meeting held in Geneva to “revamp” the TFAP, neither the criticisms nor the review process were mentioned in any of Vietnam’s TFAP documents.

TFAP and Vietnam’s pulp and paper industry

Several of the TFAP consultants look in detail at Vietnam’s pulp and paper industry. Keith Gray, director of Fortech, an Australian forestry consultancy firm, argues that an expanded pulp and paper industry is necessary in Vietnam, not because of a shortage of paper in the country, or in order to boost the economy, or provide jobs, but in order to solve the future “major marketing dilemma” that will be created by the government’s reforestation plans (Gray 1991: 42). His argument is that plantations grown purely for fuelwood needs are uneconomic, as fuelwood is traditionally either collected free or sold cheaply. So only 50 per cent of the products from plantations can economically be used for fuelwood, the rest must be sold at a higher price as poles or pulpwood, to cover the cost of the plantation. The commercial bias of the argument excludes the fact that farmers may want to grow trees in order to meet their own needs (which may not necessarily involve cutting down the trees after six years).

Inconsistencies between consultants abound in Vietnam’s TFAP. For example, Gray states that the major part of Vietnam’s plantation programme consists of Eucalyptus camaldulensis, Acacia auriculiformis, A. Mangium and Casuarina equistifolia, and suggests widening the range of species in plantations, as “there are many other species from Australia and elsewhere to choose from” (Gray 1991: 43). Another consultant, Axel Bergman explains that Pinus species dominate existing plantations, although the share of Eucalyptus is increasing (Bergman 1990: 1). Bergmann considers that large concentrated fuelwood plantations are not possible, because of the “general scarcity of suitable land with good soils” (Bergman 1990: 9). However, when it comes to providing raw material for the pulp and paper industry, “there are large areas available for pulpwood plantation on degraded hills” (Bergman 1991: 13). Bergman suggests that a nation-wide identification of sites suitable for pulpwood plantations should be carried out, in connection with a study on the future Vietnamese pulp industry (Bergman 1991: 13).

Another consultant recommends an increase in the number of small to medium sized pulp and paper mills, rather than large scale investment in one or two huge mills, in order to meet the anticipated increased demand in paper consumption up to the year 2005 (Davies 1991: 19), and yet another suggests that a total of US$891.3 million should be invested in the forestry sector, including US$507.8 million on “forest based industries development” including the pulp and paper industry (Siddabutar 1991: 11).

As a result of the TFAP process in Vietnam a “shopping list” of 34 projects was drawn up, including a review of the pulp and paper sector (US$140,000), industrial plantations development (US$25 million), and identification of sites for industrial plantations (US$150,000). Projects actually underway include a three year capacity building programme for national forestry planning, funded by Sweden, and the reorganization of the Ministry of Forestry, funded by Germany (FAO 1995: 212). However, out of a total of almost US$200 million requested for investment or aid in the forestry sector, up to 1994 only around US$4 million had actually been committed (FAO 1994).

TFAP’s influence, rather than in terms of numbers of projects, is better understood as a “foot in the door” of Vietnam’s forestry sector for a number of international institutions and consultants. Despite the lack of subsequent investment, according to the World Bank, the GOV’s programme to develop denuded forests and barren lands was a result of Vietnam’s TFAP (World Bank 1995: 4).

Programme 327: regreening Vietnam?

This programme was formalized in Decision 327-CT, entitled On the policy of the use of open and barren hills, alluvium shores and water bodies, introduced by prime minister Vo Van Kiet on 15 September 1992. The policy (known in Vietnam as programme 327) aims to achieve the following:

regreening of the major part of the degraded hills,
utilization of bare land in hilly areas, of coastal alluvial flats, and of water bodies for production of goods and supply of industrial raw materials,
fulfilling the programme for fixed cultivation and sedentarization,
stabilizing and gradually improving the material as well as the spiritual life of people in new economic zones and of people belonging to ethnic minorities,
creating incomes to the State and consolidating the national security (GOV 1992).

The targets for reforestation are very ambitious, with the GOV aiming to plant 5 million hectares in 10 years (Nguyen Cat Giao 1995: 26). The actual number of projects established is difficult to ascertain, however, as reports vary from 1200 projects at a cost of US$60 million, (Nguyen Cat Giao 1995: 28), to 800 projects at a cost of US$50 million (Nam Binh 1994: 5) both in September 1994, to 426 projects at a cost of US$12 million, in June 1994 (VN 1994d: 1). The areas planted, and the areas of forest land allocated for future planting are even more difficult to establish. Reports in the state run Vietnam News vary from 725,000 hectares planted, including 65,830 hectares of industrial plantation, in March 1995 (VN 1995a: 2), to 260,000 hectares planted, in January 1994, plus 120,000 hectares planned for the rest of the year, (VN 1994a: 1), to 230,000 hectares planted, in June 1994 (VN 1994d: 1) to only 22,000 hectares planted, in December 1994 (VN 1994e: 1).

In addition to programme 327 two other policy decisions from outside the forestry sector have played an important role in shaping the reforestation programme. In July 1993 the GOV introduced a new Land Law which clarified the allocation of land to families previously promulgated under the 1988 Land Law. Land could now be allocated for 20 years for agricultural crops, and up to 50 years for forestry (Ton Gia Huyen 1995: 14). Thus forestry land allocated to farmers and families under the Land Law could be reforested with grants obtained through programme 327.

Under the GOV’s doi moi policy (“renovation” – Vietnam’s version of perestroika) introduced in 1986, state funding of forest enterprises was abolished in 1993, and as a result forest enterprises could no longer rely on GOV sponsorship (Doran and Vo Quy 1993: 3). Programme 327 provides a way that forest enterprises can continue to receive state funding (Nguyen Ngoc Tri 1995). The implementation of programme 327 has not been smooth, and in 1993 financial difficulties were reported, with just 4 per cent of the total budget allocated for reforestation actually dispersed in the first six months of the year (VN 1993: 2).

The World Bank has been influential in both the Land Law and the GOV?s policy of doi moi. The 1993 Land Law was drafted with the support of the Bank’s legal department (Chossudovsky 1994: 19). The Bank is currently undertaking a land use research project in Vietnam, under the leadership of Gary Budgen, an international property law partner with Australian law firm Mallisons Stephen Jacques. His role will involve drafting policy on land use and establishing a registration system to assist the GOV with the influx of foreign investors (Vietnam Today 1993: 8).

Through behind the scenes pressure during the 1980s, and a US$150 million structural adjustment credit announced in October 1994 the World Bank has been very influential in the liberalization of Vietnam’s economy. Doi moi, as well as bringing reforms at government level, has had a devastating effect on the country’s social welfare system, and accelerated the pace at which foreign investors can operate in Vietnam (Lang 1995: 2-5).

The combined effect of the 1993 Land Law and the “privatisation” of forestry enterprises has created problems. The 1993 Land Law explicitly states that provincial authorities have the power to determine land use and can therefore allocate or confiscate land accordingly. Such powers, accompanied by provincial government and forest enterprise needs to create their own funding, have led to an increase in commercial crops, including industrial tree crops, often at the expense of subsistence economies of village communities (Houghton 1996: 39). For example, in Song Be province, one of the most popular provinces with foreign investors, investment in plantation projects has occupied large tracts of land, eroded farmers’ land rights and turned farmers into permanent tenants rather than landowners (Ratcliffe 1994: 2).

Problems associated with the land allocation programme include the fact that the Kinh (the largest and dominant ethnic group in Vietnam) tend to be favoured. The government and many of the provincial authorities are dominated by Kinh. Through the GOV’s transmigration policy of creating “new economic zones”, as well as through spontaneous migration, the Kinh have effectively colonized much of the lower more productive lands throughout the country, forcing indigenous groups further up into the forested hills. The low lying fertile land is readily taken up by Kinh farmers and families, but land taxes and complications of individual ownership (which may be outside the traditional ownership patterns of some ethnic groups) mean that many indigenous groups are unwilling to register formal ownership of land (Bloch 1994).

Without formal land titles, the very poor have neither the land nor the finances required to benefit from programme 327, and the risks involved with loans may be considered too great. Further, some indigenous peoples in Vietnam, such as the Van Khieu, are reluctant to borrow money on any terms (Midgley 1996).

Chambers et al (1989: 74) point out that funding of tree planting on farms in India has proved more popular with relatively large land owners, absentee land owners and businessmen, due to their higher incomes and ability to respond to new enterprises better. Tree planting on land previously used for agriculture crops tends also to displace labour, and substitute male for female labour. Although the situation in north Vietnam is different to that in India similar problems might be expected to arise at the expense of the poor.

In fact programme 327 is not entirely aimed at benefiting the rural poor or the indigenous peoples of Vietnam. Article 1 of Decision 327-CT encourages the establishment of projects on bare land and degraded hills “in order to use the land”. Article 2 gives priority to “projects with quick return of funds”, and aims for the promotion of a “close linkage between processing industries and the domestic as well as the international market”. Article 10 emphasizes international cooperation particularly involving funding from the private sector, and Article 11 encourages state enterprises, households, companies, and foreign joint ventures to invest in plantations on bare lands in new economic zones (GOV 1992b).

On 22 July 1992, two months before programme 327 was introduced, Prime Minister Vo Van Kiet announced Decision 264-CT, entitled On policies encouraging the investment for forestry development (GOV 1992a). This law allows the state to hand out grants for the establishment of protection forests, and credits at preferential interest rates (30-50 per cent of the market rate) for short rotation plantations supplying raw material for pulp and paper.

The World Bank in Vietnam

Despite the encouragement of foreign investment, programme 327 has proved very expensive to the GOV. In May 1995, representatives of the MOF visited Washington, in order to present programme 327 to the World Bank, hoping to attract Bank funding of the project. As a result of these approaches, the Bank is currently considering funding a US$70 million forestry project in Vietnam, entitled Forest Protection and Barren Lands Development. The project will be appraised by the World Bank in November 1996, and the project will go to the board in April 1997 (World Bank 1995: 1).

The Bank’s Project Information Document (PID) is the only publicly available information on the scheme, and Dr. Choeng Hoy Chung, the Bank’s representative in Hanoi, does not reply to letters asking for information on the Bank’s activities in Vietnam. The PID does not explain how the “barren land” will be developed, or how this will provide improved livelihoods and income for those living there. In fact the “barren lands” of the project title is strangely omitted in the project description itself, which is divided into park/reserve protection; buffer zone development and institutional development and monitoring.

The Bank anticipates that “the buffer zone and protection parcels development” will provide “environmentally-neutral economic development opportunities (including development of barren lands) to relatively poor landless and poorly educated families / communities” (World Bank 1995: 9). The PID goes into no detail how these “target populations” will benefit. However, the Bank views improving the GOV’s hill area settlement programmes as a key issue, and the main sources of forest degradation as shifting cultivation and arable land expansion (World Bank 1995: 2). (Fuelwood consumption, commercial logging and fire damage are relegated to the status of a footnote, in the revised PID (World Bank 1995:2).)

Although rapid rural appraisal methods will be used to establish the views of commune and village representatives, these are planned to take place after the project has been planned at Bank, government, and NGO level (World Bank 1995: 8).

The relationship between the Bank’s project and the GOV’s 327 programme is not clear. How the 327 programme will be modified is not mentioned in relation to the implementation of the Bank’s project, and it is not clear whether the Bank plans to fund the 327 programme or establishing a parallel “barren lands” development project.