Germany provides EUR 20 million for forest law enforcement, trade

The German Federal Ministry for Economic Cooperation and Development is providing about EUR 20 million and the Lao government is contributing the equivalent of EUR 4 million as non-cash benefits for the Forest Law Enforcement, Governance and Trade (FLEGT) project from 2021 to 2026.
An agreement on the joint project funding was signed yesterday by representatives of the German and Lao governments, at the Ministry of Planning and Investment.
The agreement was signed by Deputy Minister of Planning and Investment, Dr Kikeo Chanthaboury, and the Ambassador of the Federal Republic of Germany, Mr Jens Luetkenherm.

The German contribution is provided as financial cooperation through the KfW Development Bank. The project will be implemented by the Ministry of Agriculture and Forestry and the Ministry of Industry and Commerce with technical support from an international consulting company.
The objective of FLEGT is to secure the livelihoods of populations dependent on forest products by introducing a Timber Legality Assurance System and strengthening the Lao wood processing industry.
The EU FLEGT Action Plan is an initiative of the European Union and is currently being implemented in nine countries based on Voluntary Partnership Agreements. The EU has also been negotiating with Laos on the scheme.
The Ministry of Agriculture and Forestry is leading the negotiations with the EU with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development.
The FLEGT financial cooperation will follow up with the implementation and is seen as a good example of the close integration of German commitments in Laos.
The forest sector is of great importance both for the Lao economy, especially the wood-processing industry, and for preserving biodiversity and reducing poverty.
Illegal logging can have devastating effects on the rural population, with many people’s survival based on the forest products they gather. Biodiversity and the global climate also suffer from the loss of forests. However, wooden products made from illegal timber or timber from unknown sources are often unknowingly purchased by consumers and companies, including in Germany.
The challenge is therefore to combat the root causes of illegality, which include non-transparent systems, lack of clarity about land rights and lack of transparency in the supply chain, from which the Lao forestry sector and wood processing industry have been suffering.
The German-financed project offers financial support to the Lao government in order to implement the reform efforts of the forestry sector in a consistent and sustainable manner.
Timber and wooden products with a FLEGT licence will be considered legal in the future, provided they are verified in accordance with FLEGT requirements.
The project also aims to support the creation of new jobs in the Lao wood processing industry, an objective contributing to the development of an important economic sector for Laos.
In the future, only timber and wooden products of legal origin from Laos will become part of the timber value chain and trade.

By Viengdavanh Banphahaksa
(Latest Update February 16, 2021)