A tale of two countries: Laos and Indonesia

ERJ staff report (TP)

Oudomxay, Laos / East Kalimantan, Indonesia – The secretive nation of Laos − surrounded by Myanmar, Thailand, Cambodia, Vietnam and China − has witnessed a series of recent land-grabs and investment in its rubber industry.

The deforested area in the northern province of Oudoxmay has been subject to strong Chinese and Vietnamese influence, and according to The Economist: “Four of the province’s districts are among the fastest-growing rural economies in the country … investment is flowing into agriculture, typically rubber plantations … much of it destined for the huge Chinese population to the north. The side-effects include a loss of forests and biodiversity, serious soil erosion and growing numbers of people in this multi-ethnic province being pushed off their land.”

Rubber concessions have been secured by Chinese companies in a province 30,000 hectares in size. The plan is not for Laotian workers to be employed, but that tens of thousands of Chinese workers will tap the rubber.

In the last ten years the government has granted land concessions across the country to Chinese, Vietnamese and, occasionally, Thai operators. A senior government spokesman said that Laos has provided concessions on 30% of its land to foreigners.

Improvements in the rail infrastructure are also planned, based on the anticipated revenue generated, not from rubber, but from its mining industry.

A 421-km passenger and freight railway is the grand vision − from Kunming, in the south-western Chinese province of Yunnan, passing through Oudomxay, and onto Vientiane, the Laotian capital.

The Economist said: “The $7.2bn (€5.33bn) price tag (including interest) is nearly as big as Laos’ entire formal economy. It will take 50,000 workers five years just to lay the tracks. Two-thirds of the route will run through 76 planned tunnels or over bridges.”

Indonesia’s story is vastly different – 238m people sprawled across roughly 17,508 islands – the world’s fourth most populous country and second-largest rubber producer.

East Kalimantan comprises part of the island of Borneo and has seen a threat to rubber production in the shape of rapacious coal mining.

Samarinda, the largest city in the province, is the centre of the growing coal industry with more than 1,000 mines and concessions.

In October The Guardian found: “Nearly 70% of the city has been handed to coal companies as concessions. In theory, Samarinda could be swallowed by coal.”

The British newspaper’s adroit investigations also revealed that “so far, 449 exploration concessions have been awarded, covering 15,313 square miles (39,662 sq km) – about 25% of the area of the whole densely forested province”.

Naturally, these massive changes to the local populace and environment have not been universally welcomed.

Erly Aisha, a Dayak leader from Maruwei village, told the World Development Movement: "We receive all the negatives of coal but very little of the benefits. We will receive the full impact of the waste when they start dumping. The forest will be gone and we will lose our rubber trees.”

The speed of the mining is accelerating with more than 8.5m tonnes of coal dug last year in comparison with less than 1m tonnes in 2005. Estimates suggest by 2020 that firms could be extracting more than 20m tonnes a year.

While Laos’ natural resources are not fully exploited and the development of its rubber industry looks destined for greater expansion; Indonesia’s rubber production has seemingly taken a knock from coal mining and a new voracious quest for black gold.

This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.

Full stories can be found at The Economist and The Guardian