Business Models for Foreign Investment in Agriculture in Laos

The report analyzes FDI in Laos' agriculture sector, focusing on land concessions and contract farming. While FDI has driven macroeconomic growth, the authors argue it often fails to align with local economic development and food security goals due to poor transparency, land tenure insecurity, and a lack of rigorous social impact assessments.

• Between 2005 and 2011, Laos approved nearly 250 agricultural FDI projects with a combined value estimated between US$1.1 billion and US$1.7 billion, primarily driven by investors from China, Thailand, and Vietnam.
• Foreign investors primarily use two business models: land concessions, common for perennial tree crops and pulp wood, and contract farming, more common for annual crops.
• Land concessions are estimated to account for 9–14 per cent of total agricultural land in Laos, with the majority dedicated to rubber and eucalyptus, raising concerns for national food security.
• Land concessions often result in 'land grabs' where local landholders are forced to cede rights for minimal compensation, often between US$2 and US$6 per hectare, due to a lack of bargaining power and corruption.
• Contract farming models in Laos include the '2+3' model (landholder provides land and labour; investor provides capital, technology, and marketing) and the '1+4' model (where investors may potentially obtain the land).
• While FDI meets macroeconomic growth targets, it often fails to deliver local economic development, sometimes displacing traditional livelihoods and increasing indebtedness for contract farmers.
• The regulatory environment in Laos is characterized by vague laws, high levels of corruption, and poor contract enforcement, with the country ranking 165th out of 183 in the World Bank's 'Ease of doing business' rankings.
• Despite a 2010 Decree requiring Environmental and Social Impact Assessments (ESIA), agricultural projects frequently avoid these assessments, particularly at the provincial level.
• Land tenure is highly insecure for rural populations; many hold only Land Tax Receipts, which do not guarantee compensation if the state or foreign investors acquire the land.
• The report recommends greater collaboration between FDI and Official Development Assistance (ODA) to better align investment with development objectives rather than just growth.

APA

Campbell, R., Knowles, T., & Sayasenh, A. (2012). Business Models for Foreign Investment in Agriculture in Laos. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/business_models_ag_investment_laos.pdf

Chicago

Campbell, Roderick, Tristan Knowles, and Amphaphone Sayasenh. Business Models for Foreign Investment in Agriculture in Laos. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/business_models_ag_investment_laos.pdf.

Wikipedia

{{cite report |last1=Campbell |first1=Roderick |last2=Knowles |first2=Tristan |last3=Sayasenh |first3=Amphaphone |title=Business Models for Foreign Investment in Agriculture in Laos |publisher=International Institute for Sustainable Development |date=July 2012 |url=https://www.iisd.org/system/files/publications/business_models_ag_investment_laos.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{campbell2012business, author = {Campbell, Roderick and Knowles, Tristan and Sayasenh, Amphaphone}, title = {{Business Models for Foreign Investment in Agriculture in Laos}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = jul, url = {https://www.iisd.org/system/files/publications/business_models_ag_investment_laos.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }