Lao People’s Democratic Republic Peace Independence Democracy Unity Prosperity

Project Document

Forestry Strategy 2020 Implementation Promotion Project (FSIP)

Implemented by: Department of Forestry Ministry of Agriculture and Forestry

Supported by: Japan International Cooperation Agency, Japan Swedish International Development Cooperation Agency, Sweden

May 2, 2006

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FS 2020 Implementation Promotion Project

Project Summary

Project title Forestry Strategy 2020 Implementation Promotion Project (FSIP)

Main components 1) Preparation of MAF 5 year and annual FS 2020 Implementation Plans and Reports

2) Monitoring of FS 2020 implementation status and forestry sector performance

3) Establishment of institutional framework to promote effective inputs of stakeholders to FS 2020 implementation

4) Establishment of proper institutional framework of sector planning and management for the following period after project termination

5) Addressing policy related Actions and policy implementation/law enforcement

Duration Four and half years

Expected start date April 1, 2006

Project site Department of Forestry Vientiane Capital, Lao PDR

Executing agency Ministry of Agriculture and Forestry

Implementing agency Department of Forestry, MAF

Total external contributions 1) US$ 1,579,960 2) Two long term advisers 3) Short term training in Japan

JICA contributions 1) US$ 510,600 2) Two long term advisers 3) Short term training in Japan

Sida contributions US$ 1,069,360 (SEK 8,560,000)

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Table of Contents

1. INTRODUCTION

2. PROJECT CONTEXT 2-1. Forestry sector’s roles in socio-economic development and environmental conservation 2-2. Status of forestry sector management and performance 2-3. Formulation of Forestry Strategy 2020 2-4. Forestry Strategy 2020 and poverty eradication

2-4.1. Forestry Strategy 2020 and NGPES 2-4.2. Forestry Strategy 2020 implementation and poverty eradication

2-5. GOL commitment for implementation of Forestry Strategy 2020 2-5.1. GOL actions taken to implement Forestry Strategy 2020 2-5.2. Establishment of FS 2020 implementation mechanism

3. CHALLENGES AND OPPORTUNITIES TO BE ADDRESSED 3-1. Resource mobilization and alignment

3-1.1. Monitoring and dissemination of FS 2020 implementation 3-1.2. Monitoring of sector performance and planning 3-1.3. Stakeholder consultation

3-2. Addressing key policy related Actions and policy implementation/law enforcement 3-2.1. Policy related Actions 3-2.2. Policy implementation/Law enforcement

4. PROJECT STRATEGY 4-1. Capacity building 4-2. Contact and coordination with stakeholders 4-3. Strong linkage with research and extension 4-4. Two-phased project implementation

5. PROJECT DESIGN 5-1. Development objective/Overall Goal 5-2. Project purpose/Project objective 5-3. Component Output and Main Activities 5-4. Project duration 5-5. Plan of Operation and Project work plan 5-6. Inputs

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5-6.1. Government of Lao PDR 5-6.2. Government of Japan 5-6.3. Government of Sweden

5-7. Risks and risk management 5-8. Project design matrix/Logical framework

6. BUDGET

7. ENVIRONMENTAL and GENDER IMPLICATIONS

8. EX-ANTE EVALUATION

8-1. Relevance 8-2. Effectiveness8-3. Efficiency 8-4. Impacts 8-5. Sustainability 8-6. Conclusion

9. MONITORING AND EVALUATION

ANNEXES

Annex 1 MAF Instruction on Secretariat for FS 2020 Implementation Annex 2 MAF Instruction on Appointment of Executive Members of FS Secretariat Annex 3 Planning and Monitoring System of FS 2020 Implementation Annex 4 List of Urgent Policy Related Actions Annex 5 Outline of Inception phase work plan (draft) Annex 6 Indicative Project Implementation Schedule Annex 7 FS Implementation Plans and FSIP Work Plans Annex 8 Terms of reference for GOL project staff Annex 9 Terms of Reference for JICA advisers Annex 10 Project design matrix/Logical framework Annex 11 Budget

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10. INTRODUCTION

The Government of Lao PDR/The Ministry of Agriculture and Forestry made a request for support for implementation of FS 2020 to the Governments of Japan and Sweden in July 2004 and July 2005 respectively as a three party cooperation project.

Upon GOL endorsement of the FS 2020 in August 2005 and establishment of the Secretariat for FS 2020 Implementation by MAF in Jan 2006, MAF prepared a draft project document of the FS 2020 Implementation Promotion Project and informally submitted it to JICA and Sida to be a basis for start of a project formulation process with the two donors.

The draft project document for the FS 2020 Implementation Promotion Project (FSIP) has been revised and improved through a series of sincere and honest discussions between the three parties, namely MAF, JICA and Sida. This final draft represents the results of these discussions and is agreed upon as the guiding document for implementation of the Project. However, this project document may need to be reviewed and revised in the course of project implementation so that the project well fits actual and/or changing situations.

11. PROJECT CONTEXT

11-1. Forestry sector’s roles in socio-economic development and environmental conservation

The Lao PDR is particularly endowed with valuable, productive and ecologically unique forests in comparison with neighboring countries. They are a vital economic resource, which provides essential contributions to the consumption and income of the rural population, and particularly the rural poor. Some eighty % of the population relies heavily on the forest for timber, food, fuel, medicines and spiritual protection. In rural areas, forests provide one of the few available economic activities, and in forest rich areas non-timber products contribute more than half of family income.

Forests contributed 3.2 % of GDP by log production in 2003 and its share would be higher if subsistent use and processing of wood and NTFP are counted. Wood products also contributed some 19 % of total export earnings in 2003 and log royalties make up some 9% of the total government revenue for the year 2003/04. At the same time, they are habitat for the nation’s rich natural biodiversity, and protect its soils, watersheds, and water resources.

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Of the total national area, forests with more than 20% crown cover occupied some 41.5 % in 2002 down from some 47% in 1992. Direct causes for the loss are forest clearing and burning by unsustainable shifting cultivation, unsustainable logging and conversion to agriculture and other land uses with the underlying causes of wide spread poverty, rapid population increase and weak law enforcement. Forest change, which encompasses decreases in stocking and size of trees and loss of wildlife and plant habitats, is also a serious problem in addition to the physical deforestation.

There is growing concern with the adverse social, economic, and environmental impacts of such trends including natural disasters such as severe floods and droughts. Moreover, deforestation and forest degradation affects most severely the poorest segments of the population, and particularly women and ethnic groups whose livelihood depends on the health of the national forest resources.

11-2. Status of forestry sector management and performance

Recognizing the rapidly deteriorating forest resource situation and changing socio-economic conditions the Government of Lao PDR (GOL) organized the National Conference on Forest in 1989, which called for establishment of a comprehensive forestry legal system, urgent actions for ecosystem/wildlife conservation and strengthening of forest institutions and human resource development. GOL has taken a series of actions mainly through legislation, institutional strengthening and human resource development to realize these resolutions including;

- Establishment of 20 National Conservation Forests (or National Biodiversity Conservation Areas) covering more than 12% of the total land area.

- Strengthening of forestry legal framework by promulgation of the Forestry Law and related laws, and issuance of implementing regulations.

- Issuance of several Prime Minister Orders and Decrees to regulate harvesting and sales of forest products and reduction of annual harvest of logs from 734,000 m3 in 1999 to some 270,000 m3 in 2003/04 and further down to 150,000 m3 in 2004/05.

- Implementation of land and forest allocation program aiming at sustainable cash crop production, provision of alternative farming systems to replace shifting cultivation and forest conservation in more than a half of the total villages.

- Remarkable increase in tree plantation from some 1500 ha/year in early 1990s to some 17,000 ha/year in 2000s.

In spite of these efforts and achievements, the sector management remains weak and forest resources are not used efficiently and sustainably leading to an accelerated reduction. Management of NBCAs is still at an initial stage due to lack of resources and long term support. Many of them lack clear boundaries and integrated management plans/practices and resource depletion continues. Operational capacity of saw mills is still far above the harvesting levels set by the Government and continues to put pressure on natural forests.

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Growth and quality of planted trees are very low compared to other regional countries. Maintenance of young stands is insufficient and thinning is rarely done, especially in small stands established by farmers, who in general lack experiences and knowledge in tree plantation management.

Various laws and regulations are not well understood by local people as well as local officers and other stakeholders due to inadequate public awareness campaign and dissemination, thus their enforcement is weak. In general, institutional and human capacity in the forestry sector are still developing and lack of fund and facilities exacerbate the sector performance. For example, the land and forest allocation exercise has been done in a hastily way without participation of other sectors concerned and sufficient training of concerned officers and villagers.

11-3. Formulation of Forestry Strategy 2020

Facing challenging tasks to maximize forestry’s contribution to national socio-economic development and environmental conservation on a long term base with rapidly dwindling resource base, GOL decided to formulate a comprehensive strategy with a thorough review of the resource situation and past and ongoing policy and programs.

Formulation of FS 2020 was initiated in September 2000 as one of policy dialogue activities in the 7th Round Table Meeting process. MAF was assigned as the lead agency and the cross ministerial steering committee established to guide the strategy development by the President of the Committee for Planning and Cooperation (CPC) in April 2001. Since then, with assistance from Sida and JICA several consultations and workshops were organized for review of the status and issues of the sector and at the same time a land use and forest cover survey was conducted to understand resource situation and to analyze causes for changes in land use and forest cover.

A first draft of FS 2020 was discussed at a meeting in July 2003 with participation of a wide range of stakeholders both national and international and many useful comments for improvement were made. A second draft was distributed to national and international stakeholders in November 2003 for further improvement. MAF organized a meeting of the Science and Technology Council on a final draft in May 2004 for finalization.

After consultation with the Committee of Planning and Investment (formerly CPC), MAF submitted a FS 2020 final draft to the Prime Minister’s Office on Feb 24, 05 together with a report on Forest Cover and Land Use Survey for government endorsement at a government meeting. The Government Meeting in July 05 endorsed the draft in principle and after fine tuning the Prime Minister Decree on Endorsement and Declaration of FS 2020 on Aug 9th 05 was issued for implementation.

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11-4. FS 2020 and poverty eradication

11-4.1. FS 2020 and NGPES

FS 2020 presents objectives of the forestry sector development, and a set of policies, programs and actions (in total 146) with identification of responsible agency and main stakeholders for each proposed action. It also presents a comprehensive review of the status of Lao forestry sector including resource situation, use and management, and past and on-going policy and programs.

Form a national development point of view FS 2020 is considered one of sector plans for implementation of NGPES in which the agriculture and forestry is recognized as one of the four most important sectors for poverty eradication. In line with this in FS 2020 poverty eradication is identified as the overall goal of forestry sector development. However, mainly due to limited data forestry’s contribution to poverty eradication or rural livelihoods at the national level is difficult to quantify at this moment.

11-4.2. FS 2020 implementation and poverty eradication

According to the preliminary analysis of LECS 3 (Lao Expenditure and Consumption Survey for 2002/03), the nation-wide poverty ratio fell to 32.7% for 2003/03 from 39.1% for 1997/98 mainly due to the steady economic growth during that phase. However, the ratio in rural areas without road access, where most forest dependent people live, remains high at 47.8% and that for highland areas at 56.5%.

FS 2020 calls for implementation of 146 Actions and many of them are directly or indirectly related to livelihood of rural forest dependent poor. Some of them are policy related actions encompassing their rights and duties concerning natural resource use for their long term benefits and commitment, land use planning, review of on-going programs and so on and some others calling for institutional strengthening including villages and extension system. Many others are field-oriented actions such as promotion of agro-forestry and NTFP management/cultivation/processing, provision of technical support and rural finance and so on.

Implementation of these Actions in concert with development programs of other sectors including agriculture, processing and marketing of farm products, infrastructure, education and health service will contribute to improvement of rural livelihood on a long term basis through establishment of clear legal framework, implementation of government programs with rural poor at their focus and strengthening of support systems. It is expected that the 47 poorest Districts, which are identified and targeted in NGPES and mostly mountainous and forest dependent, will benefit from FS 2020 implementation.

11-5. GOL commitment for implementation of Forestry Strategy 2020

2-5.3. GOL actions taken to implement Forestry Strategy 2020

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Even before FS 2020 was officially endorsed by GOL, its draft was taken as a guiding document for forestry sector development and many of the proposed Actions were or are being implemented either directly or indirectly. Most notable ones are listed below;

Production Forestry

- Several technical guidelines and instructions have been issued and applied for management of Production Forests, especially those in the SUFORD project area including Technical Guidelines on Participatory Forest Inventory and Instruction on Roles of Forest Management Unit.

- 8 Production Forests are close to official establishment by a PM order. - Dong Phousoi Production Forest (Khammuan Province) has been certified by Smartwood. - Logging quota for 2005/06 is 370,000 m3. Most of this are from the NTII reservoir area and other

infrastructure areas. Logging in natural forest is 31,700 m3 and limited to Production Forests with sustainable management plans.

- Bidding has been re-introduced for sales of logs and benefit sharing with participating villages is started.

Land and Forest Use

- the National Land Management Authority is going to be established combining land related departments of the Finance Ministry and Prime Minister Office, and it will start formulation of national land use policy and land use planning system, in which MAF is well represented.

- MAF Regulations of Agriculture Land, Forest Land and Water Bodies are being drafted as part of national land use planning framework.

- MAF Regulation on Forest Regeneration was issued in August 2005.

Biodiversity Conservation - Lao PDR joined CITES in May 2004. - The National Biodiversity Strategy and Action Plan has been approved by GOL and some project

proposals for management of NBCAs are submitted to GEF. - Law on Protection of Wildlife is in preparation.

Village Land and Forest Management

- NAFES has been restructured and the Division of Rural Development is created, under which shifting cultivation stabilization and tree plantation promotion are placed.

- District Agriculture and Forestry Offices have been converted to District Agriculture and Forestry Extension Offices with clear roles of providing technical services to farmers and production groups aiming for capacity building at the villagers’ level.

- A guidebook on rights and duties on land and forest resources at village level is in preparation. - Several projects are now in operation to support villagers in better use of their natural resources with

assistance from Sida, EU, GTZ, JICA and so on.

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Law Enforcement and Governance - The National Assembly in Nov 05 approved amendment of the Forest Law in two aspects. One is to make

clear that Ministry of Industry has authority to approve establishment of wood processing factories with endorsement from MAF from the point of view of sustainable log supply. The other is to add a clause that commercial logging is allowed only in areas and volumes in annual plans approved by the National Assembly for strict control of logging.

Funding

- The Forest and Forest Resource Development Fund (FDF) was established by PM Decree No. 38/05 and the Regulations on use and management of the Fund are now in place.

- The Environment Protection Fund (EPF) is also established and to be in operation soon. - Village Development Fund has been established in targeted villages by GOL.

2-5.4. Establishment of FS 2020 implementation mechanism

Taking into consideration the importance of timely and balanced implementation of FS 2020 for sustainable forest management and poverty eradication, MAF has issues instructions to establish the Secretariat for FS 2020 Implementation (FS Secretariat) and to appoint the executive members of FS Secretariat. (Annex 1: Instruction on Secretariat for FS 2020 Implementation, No. 0041/MAF.06 and Annex 2: Instruction on Appointment of Executive Members of the Secretariat for FS 2020 Implementation, No. 0042/MAF.06)

Main duties of the FS Secretariat can be summarized as following; 1) To monitor and disseminate FS 2020 implementation status 2) To draft a 5 year and annual plans and reports for FS 2020 implementation for MAF approval 3) To compile project proposals in consultation with concerned organizations for submission to interested

donors and the newly established Funds. 4) To coordinate with stakeholders both national and international for implementation of the priority

Actions

As clearly seen in its duties, this FS Secretariat consisting of core members of the Department of Forestry (DOF) is the key office to play various catalytic roles for smooth implementation of FS 2020. A main focus of FSIP is to strengthen FS Secretariat capacity in fulfilling their duties.

Another key element of the FS 2020 implementation mechanism is the 5 year Implementation Plan (5 year IP) for the 5-year period of 2005/06-2009/10 synchronized with the GOL and MAF 5year development plans and the Annual Implementation Plans (Annual IP), and Reports on implementation of these plans, for all of which MAF approval is required. The MAF Instruction No. ---/06 gives main items of these plans and reports as follows; Plans

- Priority actions for implementation during the five-year period

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- Coordination/facilitation means and measures necessary for implementation of the priority actions - Monitoring of FS 2020 implementation - Mobilization of international assistance for FS 2020 implementation - Others

Reports- Implementation status of the priority actions - Evaluation of progress in FS 2020 implementation - Recommendations on means and measures for future FS 2020 implementation to achieve higher results - Preparation of reports on results of FS implementation for the Round Table Meetings or consultations

between GOL and donors concerning implementation of the National Growth and Poverty Eradication Strategy or other consultations, if necessary.

It can be said that FSIP is to assist MAF and FS Secretariat in drafting and implementing these plans and reports for FS 2020 implementation and most, if not all, of its activities are closely related to the contents of these plans and reports. (see Annex 3: Planning and Monitoring System of FS 2020 Implementation)

The first task of FS Secretariat is to prepare draft 5 year and 1st year IPs and FSIP will assist FS Secretariat in doing this. However, it is foreseen that preparation of the 5 year IP and its MAF approval will require some time and consultation with stakeholders is necessary to for their understanding, comments and support.

12. CHALLENGES AND OPPORTUNITIES TO BE ADDRESSED

With its comprehensive coverage and detailed proposals for Action among others, FS 2020 can be said the first of this kind in the history of Lao forestry and it is well suited to be an integral part of NGPES and so recognized in NGPES. The Annex 2 of FS 2020, which presents a responsible agency, stakeholders, timeframe, priority and necessity of external assistance for each proposed Action, clearly indicates what should be done by whom and by which year.

With limited human, institutional and financial resources, GOL, especially MAF as the lead agency, faces the challenge of implementing FS 2020 in a timely and balanced manner. Some part can be implemented as usual work with existing resources and there will be private sector investments as expected, especially in tree plantations. But, the quality and quantity of resources required to implement FS 2020 far exceed existing ones.

On the other hand there are also opportunities to tap. They are lessons, experiences and capacity learned or being gained through various GOL programs and cooperation activities, newly established funds including FDF and EPF, ever increasing interest of international investors in the Lao forestry and continued intension of donors, international NGOs and research institutes to support sound development of the forestry sector of Lao PDR.

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What is most needed for smooth implementation FS 2020 is to use these opportunities in an efficient and effective way. That is to find out existing expertise, financial resources and interest available inside and outside the country, to link them to FS 2020 and to align them for timely and balanced implementation of FS 2020. The ultimate task of FSIP is to facilitate this process by strengthening institutional and human capacity of the concerned stakeholders with FS Secretariat at the center by providing auxiliary and catalytic inputs in the following areas.

12-1. Resource mobilization and alignment

There are nine sub-sector programs from the land use to the village land and forest management as well as seven thematic programs including the law enforcement and the funding/allocation with total 146 proposed Actions. Although the proposed Actions should not be taken as golden rules but be reviewed from time to time, it would be the first time for MAF to handle such a comprehensive and detailed program and there is a sequence of challenges for mobilizing resources for implementation.

12-1.1. Monitoring and dissemination of FS 2020 implementation

The first challenge for resource mobilization is to let stakeholders know and understand how FS 2020 is implemented and close monitoring and wide distribution of FS 2020 implementation status is indispensable for this to happen. Given numerous players of FS 2020, MAF needs to define an efficient monitoring method in 5 year IP, which is likely to go beyond regular administrative systems, and to build up institutional capacity to carry out this monitoring. FSIP will assist FS Secretariat in drafting this.

12-1.2. Monitoring of sector performance and planning

The second is to align resource use in such a way that resources are used in a most efficient and effective way for sound development of the forestry sector. Accurate and timely monitoring of sector performance is the base for sound sector management with efficient and effective resource inputs including external assistance and a set of indicators for monitoring of sector performance need to be developed and included in 5 year IP for regular and official monitoring. However, due to the limited availability of reliable data and statistics it may be unavoidable to start with a sub-optimal set of indicators and analysis of them.

At the end of 5 year IP, which is also the end of FSIP, evaluation of FS 2020 implementation needs to be conducted in order to see how FS 2020 has been implemented, what kind of impacts it has made on the forestry sector, to what extent its goals and targets are achieved and to prepare recommendations on the next 5 year IP and on the management and planning of Lao forestry sector in general. Within this context FSIP will be also evaluated.

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12-1.3. Stakeholder consultation

Resources required for FS 2020 implementation are enormous and many of them are expected to come from non-GOL sources including donors, NGOs and private sector including forest dependent farmers in remote areas. Mobilization and alignment of these resources for FS 2020 implementation can only be possible when all information and data concerning the status of FS 2020 implementation including GOL actions and forestry sector are made known to the stakeholders. Strong leadership of MAF in this regard is essential and FSIP will assist MAF in organizing stakeholder consultation.

12-2. Addressing key policy related Actions and policy implementation/law enforcement

12-2.1. Policy related Actions

FS 2020 proposes many policy related Actions and among them urgent ones are listed in Annex 4. Some call for review or improvement of government programs, which have been implemented for some time including the land and forest allocation, some are related to national land use policy, harvesting of logs and NTFPs, legal framework of village land and forest, and several Actions for tree plantation establishment and management. Not only the number of the proposed urgent Actions but also their complexity and close relation to each other make this a great challenge to MAF and concerned Ministries.

MAF in consultation with concerned Ministries need to tackle these issues, come up with realistic and pro-poor policy frameworks, to translate these into necessary official documents including laws, regulations and instructions, and to enforce them on the ground. MAF will select most urgent policy related Actions to be addressed within 5 years and set a process including timeframe for addressing each Action in 5 year IP. FSIP will assist FS Secretariat in drafting 5 year IP and facilitate the process of policy review and formulation by provision of technical assistance and fund for necessary study, drafting, consultations, field test, printing and so on.

12-2.2. Policy implementation/Law enforcement

In the past GOL/MAF has issued many important forest related legislation and administrative instructions, but their field implementation/enforcement tends to be insufficient or ineffective due to lack of clear and detailed instruction on the central side and at the same time lack of understanding, qualified staff, equipment and others on the local side. If addressing policy related Actions means only issuing new PM Decrees or MAF regulations, it is most likely that they will not be implemented properly or sufficiently by PAFO or DAFEO.

MAF needs to strengthen its central and local level capacity in implementing/enforcing new policy, legislation or instructions. Activities for policy implementation may vary depending on nature and magnitude of policy or legislation from organizing seminars for local officers and other stakeholders to development and execution of

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training courses. FSIP will assist MAF in preparing and implementing activities necessary for implementation/enforcement of new policy or legislation according to 5 year and Annual IPs.

13. POJECT STRATEGY

13-1. Capacity building

FSIP is a very “soft” project and its activities are all geared to institutional and human capacity building to result in more and well aligned input into and better planning and management of the Lao forestry sector and in better policy formulation and its implementation with the ultimate goal of capacity building at villagers’ level for poverty eradication. A range of support including advice and studies by long and short-term advisers, organization of consultations, meetings and field trips, publications, trainings and so on will be provided according to annual work plans.

13-2. Contact and cooperation with stakeholders

As clearly stated in the section 4-1.3 active involvement and participation of stakeholders is indispensable for FS 2020 implementation. In addition to annual consultation meetings close contacts will be made with key stakeholders including donors, NGOs, wood/NTFP processing industries, tree plantation investors of both large and small scale, research institutes and so on for monitoring and dissemination purposes.

However, it is far beyond FSIP’s capacity to make a direct contact with all of these stakeholders. It will mainly draw on existing networks, associations and groups of these stakeholders including the NGPES donor group on agriculture, the Lao Chamber of Commerce and so on. Therefore, identification of and establishment of contact with these groups would be crucial for the success of the project and this needs to be done in an early stage of the project implementation.

13-3. Strong linkage with research and extension

In recent years research and extension of the Lao agriculture and forestry sector have been growing rapidly thanks to MAF’s stress on importance of them and the corresponding donor support, and consequently a wealth of knowledge and experiences are being accumulated and information systems with advanced IT are being developed in NAFRI and NAFES. In addressing policy related Actions it is essential for FSIP to tap these knowledge and experiences stored in NAFRI, NOUL and NAFES.

These organizations need to be part of FSIP structure and activities on a regular basis. Moreover, in an early stage of FSIP, forest related activities of these institutes will be reviewed for identification of possible contact points for addressing policy related Actions.

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13-4. Two-phase project implementation

Taking into account the importance of MAF 5 year FS 2020 Implementation Plan and necessary time and resources for its preparation, FSIP will be divided into two phases, namely the first 6-month inception phase followed by the 4-year full implementation phase. During the inception phase FSIP will assist FS Secretariat in drafting MAF 5 year IP including studies for a monitoring method, a set of indicators of forestry sector performance and so on. It will also provide assistance in implementing urgent policy related Actions, which are identified in FS 2020, or actions closely related to those and at the same time considered of high priority. In the full implementation phase FSIP will mainly conduct regular monitoring of FS 2020 implementation and forestry sector performance and assist concerned organizations responsible for implementation of the Priority Actions selected from MAF 5 year IP.

14. PROJECT DESIGN

14-1. Super Goal

The Super Goal of the project is set as follows;

Forestry sector’s sustainable contribution to socio-economic development, especially poverty eradication, and environmental conservation in Lao PDR is promoted on a long term basis through facilitating FS 2020 implementation, and sound and efficient management of the Lao forestry sector.

A super goal is meant to present an ultimate goal and direction of project. Since this project is to promote implementation of FS 2020, the overall goal of the forestry sector development defined in FS 2020 is taken as the super goal of this project.

An indicator concerning contribution to poverty eradication for this is proposed below; Poverty eradication: Poverty ratio in forest dependent areas is decreased beyond GOL target

This indicator for poverty eradication does not distinguish the contribution of forestry and rather reflects economic development in rural areas in general. Definition of forest dependent areas also needs clear criteria. During the inception phase this indicator needs to be reviewed in the course of indicator development for forestry sector performance.

14-2. Development objective/Overall goal

The Development objective/Overall goal, which is to be achieved within 3 to 5 years after the project termination, is;

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Sustainable and productive forest use in Lao PDR through appropriate sector planning and management is promoted.

This Development objective/Overall goal is fairly straight forward in line with the objectives of FS 2020. The indicators to measure achievement level of this objective/goal need to correspond to each of poverty eradication, economic development and environmental conservation and ideally speaking they should distinguish “with project” and “without project”. However, due to lack of national level data, especially those related to socio-economic contribution of the forestry, it is difficult to find indicators, which perfectly meet these conditions. At this moment the following sub-optimal ones are proposed;

Economic contribution: Value-added per m3 of log from natural forest increases with a rate higher than GDP/capita increase

This indicator is proposed to measure progress in wood processing to higher levels. Since the harvest volume from natural forest is expected to decrease and that from tree plantation is not and will not be known, total volume or value of harvested logs either from natural or planted forest is not suitable as an indicator. The availability of this indicator also needs to be checked. Environmental conservation: Rate of forest loss/degradation between Year 2002 and 2012 is smaller than

between Year 1992 and 2002 Environmental conservation has many dimensions such as biodiversity conservation and soil/water protection. Forest cover and quality does not necessary directly represent each of these dimensions, but can be considered an all-in-one indicator for environmental conservation and there are past and latest data of this. However, a land use and forest cover survey, which is comparable to the one done in 2000, needs to be carried out.

Not only the above indicators but also those for Project purpose/Project objective and Outputs proposed in the following sections will be reviewed and if necessary others will be proposed after identification of indicators of forestry sector performance in the inception phase.

The Development objective/Overall goal is expected to be achieved about 5 years after the project termination and on top of the successful achievement of the project purpose/project objective there are some factors that are out of project control and will have major impacts on achievement of the objective/goal. These assumptions are identified below;

1) Support for FS 2020 implementation continues both nationally and internationally. 2) Off-farm job opportunities are created in rural areas in commensurate with population increase. 3) Infrastructure and social services are developed and expanded in rural areas.

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14-3. Project purpose/Project objective

More specific purpose/objective of the project, which is to be achieved by the end of project, is;

Capacity of forestry sector on planning and management is developed through formulation and monitoring of implementation plans, dialogues with stakeholders and addressing policy related priority Actions for the initial five year period of FS 2020 implementation.

This Project purpose/Project objective reflects the project approach and strategies mentioned above and it is expected that after the project termination planning and management of the Lao forestry sector can be done mostly by the Lao side with little or much less external support than the initial five year period.

Capacity in this Project purpose/Project objective refers to both of human and institutional capacity. Two indicators, both of them are concerning human and institutional capacity building, are proposed as follows;

1) 80% of Priority Actions listed in 5 year IP have been or being implemented according to schedule.

MAF Instruction No. 0041/06 gives main components of MAF 5 year and Annual FS 2020 Implementation Plan as follows;

- Priority actions for implementation during the five-year period and each year - Coordination/facilitation means and measures necessary for implementation of the priority actions - Plan of FS 2020 implementation monitoring - Mobilization of international assistance for FS 2020 implementation - Others

This indicator is to measure an achievement level of the main purpose of MAF 5 year IP, which is to implement the Priority Actions to be listed in the 5 year IP, through institutional and human capacity building.

Through the project activities, especially capacity building for dissemination of monitoring results of FS 2020 implementation status and sector performance as well as for addressing policy related Actions, it is expected that stakeholders including MAF departments, other Ministries, private sector, donors and so on will increase or realign their inputs into forestry activities so that most of Priority Actions can be implemented. However, they may not or cannot do so due to lack of interest, insufficient understanding, lack of resources and so on. Therefore, the following is a very important assumption for achieving this target.

Stakeholders including Ministries, donors and private sector increase or realign their inputs to implement Priority Actions.

2) Institutional framework for sector planning and management is established.

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Another indicator proposed is to have an improved sector planning and management framework in place at the end of project. Based on the evaluation of existing institutional framework for FS 2020 implementation, which mainly consists of FS Secretariat and 5 year and annual implementation plans, an improved institutional framework, which may be totally new or with some minor changes to the existing one, needs to be proposed and established.

14-4. Component Output and Main Activities

The development objective/overall goal and project purpose/project objective will be addressed through five project components as follows;

6) Preparation of MAF 5 year and annual FS 2020 Implementation Plans and Reports 7) Monitoring of FS 2020 implementation status and forestry sector performance 8) Establishment of institutional framework to promote effective inputs of stakeholders to FS 2020

implementation 9) Establishment of proper institutional framework of sector planning and management for the following

period after project termination 10) Addressing policy related Actions and policy implementation/law enforcement

Output (expected results) and main activities for each project component are given below.

Component 1: Preparation of 5 year and annual FS 2020 Implementation Plans/Reports Output 1MAF FS 2020 Implementation Plans and Reports are prepared in a timely manner.

Main Activities1-a. To draft 5 year and annual FS 2020 Implementation Plans for MAF approval 1-b. To draft annual Reports on FS 2020 implementation for MAF approval

Main components of MAF 5 year and Annual FS 2020 Implementation Plan stated in the MAF Instruction No. 0041/06 are as follows;

- Priority actions for implementation during the five-year period and each year - Coordination/facilitation means and measures necessary for implementation of the priority actions - Plan of FS 2020 implementation monitoring - Mobilization of international assistance for FS 2020 implementation - Others

Priority actions for implementation needs to be selected taking into account the priority set in FS 2020, existing and foreseeable main trends of the forestry sector and available and expected resources for implementation.

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Necessary steps and timeframe for implementation of each priority action also needs to be indicated. Coordination/facilitation means and measures mean studies, technical assistance, consultation and so on that the organization responsible for each priority action may need for implementation. In order for monitoring of FS 2020 an appropriate monitoring method needs to be defined in the 5 year IP based on the preparatory work for this to be done during the inception phase, too. Measures to mobilize international assistance for FS 2020 implementation may cover dialogue with donors on FS 2020 implementation in general and preparation of project profiles to be submitted to potential donors in particular. Others may include dissemination of FS 2020 implementation status to stakeholders, defining a set of indicators of forestry sector performance, which is to be studied during the inception phase, evaluation of MAF 5 year IP and so on.

In order to synchronize with the GOL fiscal year and other annual plans these plans and reports need to be prepared by early October of each year and this will be the indicator for this output as follows:

Plans and reports are prepared by early October of each year

Draft plans and reports prepared by the project are to be approved by MAF, therefore their timely approval is conceived as an assumption for this output as follows:

MAF approves 5 year and annual FS 2020 IP and reports in a timely manner.

Component 2: Monitoring of FS 2020 implementation status and forestry sector performance Output 2FS 2020 implementation status and forestry sector performance are monitored in a proper way.

Main Activities2-a. To establish a monitoring system of FS implementation 2-b.To conduct monitoring and analysis of monitoring results including recommendations for better

implementation 2-c. To improve monitoring system for better implementation monitoring 2-d. To develop a set of indicators of sector performance 2-e. To conduct monitoring of sector performance and analysis of monitoring results including

recommendations for better sector management 2-f. To improve indicators for better sector performance monitoring

This Output will be stated in annual reports of FS implementation and base for analysis of FS implementation situation and sector performance. Analysis of monitoring results is expected to lead to formulation of FS implementation plans, which reflect actual needs of the sector and proper directions of sector management.

An indicator for this output is as follows; Proper monitoring results are obtained.

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Stakeholders to whom monitoring results and other information concerning FS 2020 implementation will be distributed need to be defined. The Annex 2 of FS 2020 identifies the responsible agency and stakeholders for each proposed Action and they will be the core part of stakeholders. In addition to these, donors, NGOs, research institutes and others, who are active or interested in the Lao forestry, should be added.

Achievement of this output largely depends on whether an appropriate monitoring system for FS 2020 implementation and a set of indicators of sector performance can be created. The monitoring system should cover who does what with what kind of or how much input in relation to FS 2020. However, it would be impossible for FSIP to ask all stakeholders about their activities. More efficient way of monitoring needs to be identified during the inception phase. The sector performance indicators should cover main aspects of forestry sector including socio-economic dimensions, but at the same time they need to be cost effective and developed from existing data stored in related organizations. This will be also attempted during the inception period. Even if the monitoring system and indicators are sub-optimal at the beginning of full implementation phase, they can be improved with stakeholders’ cooperation in the course of project implementation.

An assumption for this output reflects the above mentioned concern as follows; There exist groups and/or associations of stakeholders representing fairly well the whole forestry sector, which can provide information and data in full and in a timely manner for monitoring.

Component 3: Establishment of institutional framework to promote effective inputs of stakeholders to FS 2020 implementation

Output 3An institutional framework to promote effective inputs to FS 2020 implementation by stakeholders is established.

Main Activities3-a. To study and analyze coordination situation among Lao stakeholders concerning inputs to FS 2020

implementation. 3-b.To study and propose a better way of coordination to ensure FS 2020 implementation 3-c. To organize annual dialogue on FS implementation plans, implementation status and sector performance with stakeholders including donors

This component is a highlight of the project attempting to mobilizing and realigning stakeholder input so as to implement Priority Actions defined in MAF 5 year and annual plans.

Activities 3-a and b are mostly concerned with coordination between Lao stakeholders for both national and international inputs. These will activities take place after the first cycle of implementation mechanism namely implementation of Priority Actions for the year 2006/07.

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Annual dialogues intend to facilitate information exchange concerning FS 2020 implementation status and various activities of stakeholders and to create common understanding of what has been done and should be done in coming years. Latest issues or achievements in the forestry sector or specific programs/projects for sharing up-to-date situation of the sector will be also highlighted in these dialogues.

Two indicators are proposed for this output as follows; 1. Annual dialogues with stakeholders are organized. 2. A better way of coordination is in place

Component 4: Establishment of proper institutional framework of sector planning and management for the following period after project termination

Output 4Proper institutional framework of sector planning and management after the initial 5 year period is in place.

Main Activities4-a. To evaluate FS 2020 implementation and its impacts on sector performance 4-b.To propose an institutional framework of sector planning and management based on analysis of FS 2020 and its implementation framework.

After repeating the annual cycle of planning – monitoring – analysis for 3 years the implementation mechanism of FS 2020 consisting of FS Secretariat and plans/reports needs to be evaluated for its effectiveness and efficiency in terms of achieving the outputs, purposes and goals set out in the above sections. However, a main focus of this evaluation will be on mobilization and realignment of stakeholder inputs for implementation of Priority Actions because it will take time to see recognizable changes in sector’s contributions to the national economy, society, poverty eradication and environmental concerns. Based on the evaluation, a new implementation framework will be proposed for the following years.

Two indicators are proposed for this output; 1. Clear evaluation results are obtained 2. Plan for institutional framework for sector planning and management is proposed.

Component 5: Addressing policy related Actions and policy implementation/law enforcement Output 5-1A set of urgent policy related Actions planned in the Plan of Operation are addressed with clear conclusions and institutionalized as policy or program.

Main Activities5-1-a. To provide necessary studies, study tour, resource persons, workshops, technical advice and so on with organizations or agencies responsible for addressing policy related Actions to come up with clear conclusions.

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5-1-b. To assist GOL/MAF in institutionalizing the conclusions as policy or program.

Urgent policy related Actions, which FSIP will assist addressing, will be selected from MAF 5 year IP and identified in the Plan of Operation (PO) for the full implementation phase. Necessary activities for addressing these Actions may vary depending on complexity and magnitude of Actions. Some may need extensive field studies and a couple of years to come up with conclusions, and on the other hand there will be Actions which need relatively simple procedure and short time for conclusion and implementation.

Policy and program to be institutionalized based on Activities 5-1-a and b may take various forms including legislation such as laws, PM decrees and MAF regulations, and annual instructions on forest related programs and official policy/program papers. Necessary activities, timeframe and resources for addressing each Action will be indicated in the Plan of Operation. However, some most urgent Actions will be addressed in the Inception phase according to its work plan.

An indicator for this output 5-1 is proposed as below; 80% of Actions identified in PO are addressed with clear conclusions and in the form of official documents.

There are a couple of assumptions for this output as follows; 1. Organizations and agencies identified responsible for addressing selected policy related Actions commit

themselves to doing so in a timely manner. 2. GOL/MAF institutionalizes the conclusions as policy in a timely manner.

Output 5-2 Appropriate activities for field implementation/law enforcement are carried out.

Main Activities5-2-a. To assist GOL/MAF in preparing and carrying out necessary activities including dissemination, training and seminars for field implementation/enforcement of policy or program.

5-2-b. To evaluate status of field implementation/law enforcement and its impacts on resource use and/or villagers’ livelihoods.

Necessary activities for field implementation/law enforcement may also vary from simple printing and distribution of official documents to development and execution of training courses for GOL officers or other stakeholders. These will be also indicated for each Action in PO.

Status of field implementation/law enforcement needs to be monitored and evaluated. Given a limited time frame of the project, this will be possible only for policy and/or program, which is institutionalized in the first half period of the project.

An indicator for this output is proposed as below;

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Activities for field implementation stated in PO and annual work plans are carried out for all of the addressed Actions.

14-5. Project duration

The project will last for 4 and half years and consist of two phases as follows;

The inception phase; 6 months from April 1 to September 30, 2006 The full operation phase; four years from October 1, 2006 to September 30, 2010

14-6. Plan of Operation and Project work plan

FSIP will operate on the following plans for each phase.

Inception phaseA work plan will prepared for the first 6 months. (Annex 5: Outline of WP for Inception Phase).

Full Implementation PhaseDuring the inception phase the Plan of Operation (PO) covering the 4 years of full operation phase will be developed based on MAF 5 year FS 2020 IP.

For the full operation phase the project will operate on annual work plan with detailed budget in line with PO and Annual FS 2020 IPs. Implementation of annual work plans will be reviewed at mid-year and revision including budget will be made if agreed necessary.

An indicative schedule of project implementation is presented in Annex 6 and Annex 7 shows relationship between various FS IPs and FSIP work plans.

14-7. Inputs

The participating parties, namely the Government of Lao PDR, Japanese Government and Swedish Government will contribute the following for implementation of the project.

14-7.1. Government of Lao PDR

1) Project Personnel (TOR in Annex 8) a) Project Director; Deputy Director General, Permanent Secretary Office, MAF b) Project Manager; Representative from FS Secretariat c) Project Staff; Executive Members, FS Secretariat d) Focal Points; 1) NAFES (minimum division director)

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2) NAFRI (minimum division director)

All project personnel will hold their own office concurrently reflecting the nature of the project that this project assists policy and planning works, which is regular work of GOL/MAF but requires a lot more resources for implementation of FS 2020.

2) Project Office Project office will be provided in the DOF premise.

3) Local expenses Utility costs of the project office and so on.

14-7.2. Government of Japan

1) Long-term Experts (TOR in Annex 9) a) Chief Adviser b) Tree Plantation Policy and Planning

2) Machinery and equipment Vehicles, equipment and stationeries for the project office

3) Othersa) Budget for tree plantation related project activities of the component 3 b) Budget for maintenance of the project office including some local project staff

6-4.3 Government of Sweden

Budget for the project activities of the three project components except tree plantation related ones including some local project staff on a temporary or part time basis.

14-8. Risks and risk management

Conceivable risks that could affect the project implementation and their mitigation measures are summarized below.

noitagitiM ksiR measure 1. GOL Project staff and FS Secretariat officers

responsible for project activities are all overloaded with regular works and/or other projects. Their time available for the project activities may be insufficient.

1. PO and Annual Work Plans should not be too tightly scheduled.

2. Local consultants/staff should be used to do basic works of the project activities in order to avoid too much burden on the project staff.

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3. Some kind of rewards for their project work outside of the regular office hours should be considered.

2. GOL/MAF internal procedures for approval of various project activities may hamper timely implementation of project activities.

1. A simplified procedure should be agreed upon and adopted according to types and nature of activities.

14-9. Project design matrix/Logical framework

Taking into account the above items of the project design, a Project design matrix/Logical framework has been developed in Annex 10.

15. BUDGET

The necessary external assistance budget for implementation of the project is estimated at approximately US$ 1.58 million excluding the two JICA advisers and short term training in Japan and its breakdown by component is presented in Annex 11.

16. ENVIROMENTAL AND GENDAR IMPLICATIONS

The project itself is quite neutral in terms of environment and gender because its support is at a macro level and has little direct impact on environment and gender. However, the results of the component 5 may have implications on environment and gender. Most of forest policy or legislation has environmental aspects and their field implementation inevitably affects gender to some extent.

FS 2020 clearly states that environmental conservation is one of main goals of the sector development and few, if none, of the proposed Actions have adverse impacts on environment if they are implemented or on the contrary most of them have aspects or objectives of environmental conservation. Therefore, at the commencement stage of the project there is no negative implications on environment. However, the project has to pay close attention to the outcome of addressing policy related Actions to check a new policy or legislation has any adverse impacts on environment.

Concerning the gender issue FS 2020 defines it as one of important programs and proposes several Actions for gender mainstreaming in the forestry sector. Therefore, at the commencement stage of the project there is no negative implications on gender. However, the project has to pay close attention to the outcome of addressing policy related Actions and their field implementation to check a new policy or legislation has any adverse impacts on gender.

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