Manila, Feb 7, 2006 AEST (ABN Newswire) - Asian Development Bank (ASX: ATB) will support the development of forest plantations in the Lao People's Democratic Republic (Lao PDR) through a US$10 million loan and grant package.
Forests, along with water, are the most important natural resource in Lao PDR. While forests account for 34% of the country's total export value, forest cover has dropped from 70% in 1970 to about 42% in 2000.
This has resulted in vast areas of degraded forestland that can be brought under productive forest plantations. The Lao PDR, along the Lao Mekong Plains, has significant potential and a comparative advantage over its neighbors to develop financially viable forest plantations.
"The development of livelihood plantations is an effective way to reduce poverty because it helps create jobs and assets, and provides an additional and alternative source of income for poor households," says Akmal Siddiq, an ADB Principal Project Performance Management Specialist.
Building upon lessons learned from ADB's Industrial Tree Plantation Project in 1993, the project will establish a financially viable and self-sustaining Lao Plantation Authority (LPA), which will spearhead the efficient and sustainable development of the plantations subsector in the country.
LPA will identify lands that can be developed into forest plantations, and help about 2,000 households establish small livelihood plantations covering 9,500 hectares in Vientiane Capital, Bolikhamxay, Saravane, and Champasack provinces.
LPA will also facilitate the entry of large firms into the subsector, particularly in Khammuane and Savannakhet; provide technical, financial, and marketing support for medium-sized plantations; and support the development of associated small and medium-sized enterprises, such as charcoal-making and furniture manufacturing.
Conservative estimates show that as much as 150,000 hectares may be under industrial plantation by 2015, resulting in the creation of a massive number of jobs for the rural poor. Through these initiatives and activities, the project will help reduce poverty and raise revenues for the Government.
ADB's support comes in the form of a $7 million loan and a $3 million grant from its concessional Asian Development Fund. The loan carries a 32-year term, including a grace period of 8 years, and interest charged at 1% per annum during the grace period, and 1.5% thereafter.
The Government of Malaysia is considering providing $652,000 equivalent grant financing, and the Lao PDR Government will contribute $2.12 million toward the project's total estimated cost of $15.35 million. The beneficiaries will shoulder the balance of $2.29million equivalent.
The Ministry of Agriculture and Forestry is the executing agency for the project, which is due for completion around December 2011.
Contact
Floyd Whaley
Email: fwhaley@adb.org
Tel:+632 632 6848; +63 9717 888 6848
Graham Dwyer
Email: gdwyer@adb.org
Tel:+632 632 5253; +632 898 3413
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