Impact of decree no 135 2005 nd cp on production and business results of dong bac forestry company, lang son

MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT VIETNAM FORESTRY UNIVERSITY STUDENT THESIS IMPACT OF DECREE NO 135/2005/ND-CP ON PRODUCTION AND BUSINESS RESULTS OF DONG BAC FORESTRY COMPANY, LANG SON Major: Advanced Curriculum in Natural Resources Management Code: D850101 Faculty: Forest Resources and Environmental Management Student: Do Nhu Trung Duc Student ID:0953010142 Class: K55 Natural Resources Management Course: 2010 – 2014 Advanced Education Program Developed in Collaboration with Colorado State University, USA Supervisor: Dr Do Anh Tuan Hanoi, October 2014 LIST OF TABLES, CHARTS Table Name of table Summary of annual land use (forest produce in the first year) of the Company in Huu Lung district period 2007-2013 Summary of land use (forest status) of the Company in Huu Lung district period 2006-2013 Summary the illegal encroached area of Company in Huu Lung district period 2003-2012 Summary the labor situation in attached units of the Company in Huu Lung district period 2006-2013 Summary of forest harvested area in attached unit of the Company in Huu Lung district 2006-2013 LIST OF CHARTS Chart Name of chart Current status of Company’s forests in Huu Lung district in 2006 Current status of Company’s forests in Huu Lung district in 2013 Proportion of land use structure of Company in Huu Lung district period 2007-2013 Total illegal encroached area of Company period 2003 – 2012 Ratio of direct labor and indirect labor of Company in Huu Lung district period 2006 – 2013 The result of newly annual forest of Company in Huu Lung district period 2007 – 2013 Average forest productivity of Company in Huu Lung district period 2007 – 2013 LIST OF DIAGRAM Diagram Name of diagram The steps to implement Decree No 135/2005/ND-CP LIST OF PICTURE Picture Name of picture Research area LIST OF ABBREVIATIONS SFE State-owned Forestry Enterprise Co., Ltd Company Limited MARD Ministry of Agriculture and Rural Development DNRE Department of Natural Resources and Environmental ACKNOWLEDGEMENTS I would never have been able to finish my thesis without help from friends, and support from my family and girlfriend I would like to express my deepest gratitude to my supervisor, Dr Do Anh Tuan, for his excellent guidance, caring, patience, and providing me with an excellent atmosphere for doing research I would like to thank my classmates, who always willing to help and give their best suggestions Many thanks to officer in the Dong Bac Forestry Company for helping me collect the data My research wouldn't have been completed without their helps I would like to thank my girlfriend She was always there cheering me up and stood by me through the good times and bad Finally,I would also like to thank my parents and younger brother They were always supporting me and encouraging me with their best wishes TABLE OF CONTENTS LIST OF TABLES, CHARTS LIST OF CHARTS LIST OF DIAGRAM LIST OF PICTURE LIST OF ABBREVIATIONS ACKNOWLEDGEMENTS TABLE OF CONTENTS CHAPTER I INTRODUCTION 1.1 Problem 1.2 Limitation of topics CHAPTER II OBJECTIVES AND METHODS 2.1 Objectives 2.1.1 Overall objectives 2.1.2 Specific objectives 2.2 Research Methodology 2.2.1 Survey methods to collect data 2.2.2 Method of processing and data analysis CHAPTER III RESEARCH AREA 3.1 Natural conditions, socio-economic of research area 3.2 Formation history and the main manufacturing jobs, business of the Company 3.2.1 Formation history 3.2.2 Functions and duties and business lines of the Company: Chapter IV RESULTS 10 4.1 Results of implementing the Decree No 135/2005/ND-CP 10 4.1.1 The organizational structure of the Company and current use of land in Huu Lung district before implementing Decree No 135/2005/ND-CP 10 4.1.2 Time for implementation of Decree No 135/2005/ND-CP 11 4.1.3 The sequence of steps to implement Decree No 135/2005/ND-CP 11 4.1.4 Results of implement the Decree No 135/2005/ND-CP 13 4.2 Impact assessment 20 4.2.1 Impact on the density of land use structure 20 4.2.2 Impact on the management and land use of Company in Huu Lung district period 2006 - 2013 21 4.2.3 Impact on structure management and labor structure 21 4.2.4 Impact on business efficiency 22 4.3 Advantages, difficulties and challenges after yearsimplementation of Decree 135/2005 / ND-CP 24 4.3.1 Advantages 24 4.3.2 Difficulties and challenges 25 CHAPTER V CONCLUSIONS, SUGGESTIONS AND RECOMMENDATIONS 27 5.1 Conclusions 27 5.2 Suggestions to the Company 28 5.3 Recommendations to the State agencies in competency 29 REFERENCE CHAPTER I INTRODUCTION 1.1 Problem To improve the efficiency in business of enterprises in general and businesses operating in the forestry sector in particular, the Party and State have issued a number of mechanisms and policies in the fields of: Organization, management enterprises, management of production materials, forest business management, financial investment, tax policy, credit policy, land use management, etc.Decree No 135/2005/ND-CP of November 8, 2005 of the Government on the contractual assignment agricultural land, forest land and produce water surface for aquaculture in State Farm, SFE is one of the main goals of this order: i, Use effective and sustainable land, forest and water resources ii, To raise capital, labor of contracted party, in order to improve production efficiency, the business of the State Farm, SFE iii, Ensure harmony of interests between contracted party, the contracting party and the State; create jobs for workers, contributing to hunger poverty reduction, security and defense in the locality Thus, the contractual assignment agricultural land, forest land and produce water surface for aquaculture followDecree No 135/2005/ND-CP, which affect many objects, many social sectors, particularly directly impact on business results of enterprises Dong Bac Forestry Co., Ltd Single member (hereinafter referred to as Dong Bac Forestry Company) is enterprises that 100% charter capital belong to State, is a member unit of the Forestry Corporation Vietnam Production area of the Company are located in provinces: Thai Nguyen, Lang Son and Bac Giang Main manufacturing jobs of 4.1.4.3 Encroachment situation of the Company in Huu Lung district period 2007 - 2013 Based on data collected from the Company which has been evaluated through inspection results management, land use by the inspection teams’ DNRE of Lang Son Province (the inspection conclusions No 851/KL-STNMT August 29, 2014), the encroached forest area of the Company in Huu Lung district are summarized in Table Table 3: Summary the encroached area of Company in Huu Lung district period 2003-2012 (Unit: ha) Year Encroached area per year (ha) Before 2003 701,21 2003 85,67 2004 56,71 2005 264,51 2006 257,43 2007 354,59 2008 150,82 2009 121,03 2010 95,7 2011 71,49 2012 7,67 Total 2.166,83 From the above data show that the encroached area of the Company in Huu Lung district are complicated 3.759,46 of encroached area in total 13.256,13 of forest land for production of the Company (Accounting for 28,36%) Only years in the most recent (2010, 2011, 2012, 2013) has 1767.49 encroached are, on average 441 ha/year, the Company has statistics 174.86 (2010: 95.7 ha; 2011: 71.49 ha; 2012: 7.67 ha) remaining 1592.63 no specific statistics This implies that the encroached area of the Company is still very complex and growing trend 16 4.1.4.4 Organizational structure management Company period 2006 - 2013 Before 2007 the Company has forestry farms attached which direct charge of the organization of production forestry business, after the contracting of land use is increasing, in 2010 the Company was dissolved forestry farms to establish the production team attached, while downgrade accounting of forestry farms become dependent accounting units to reduce indirect labor force 4.1.4.5 Labor situation in attached units of the Company in Huu Lung district period 2006-2013 Based on the list of workers involved compulsory social insurance, the number of workers and labor structure in the attached units of Company in Huu Lung district are summarized in Table Table 4: Summary the labor situation in attached units of the Company in Huu Lung district period 2006-2013 (Unit: people) Number of direct labor Proportion of indirect labor per total labor Proportion of direct labor per total labor No Year Total labor Number of indirect labor 2006 268 103 165 0,38 0,62 2007 218 96 112 0,44 0,56 2008 197 80 117 0,41 0,59 2009 174 56 118 0,32 0,68 2010 138 45 93 0,33 0,67 2011 127 39 88 0,31 0,69 2012 116 40 76 0,34 0,66 2013 110 41 69 0,37 0,63 Note Total number of employees decreased from 268 (in 2006) to 110 (2013), meaning that the number of direct labor and indirect decrease But looking at the data in Table 4, the proportion of direct labor and indirect labor to the total labor virtually unchanged during the implementation of Decree No 135/2005/ND-CP So the purposes when allocation, contracting to contractor is reduce the proportion of indirect labor involved in the 17 Company's management in order to reduce the management costs, improve production efficiency business hasn’t achieved as desired According to Company officials said that the cause of this problem is due to contractor encroachment the area of the Company so the Company can’t further reduce indirect workforce 4.1.4.6 Current status of the current land use of the Company At December 31, 2013, the total forested area of the Company in Huu Lung district is 1.769,75 ha, in which: State-owned Forest Area: 389,57 ha, accounting for 22%; contracting forests follow Decree 01 / ND-CP: 74,53 ha, accounting for 4,2%; contracting forests follow Decree No 135/2005/ND-CP: 1.305,65 ha, accounting for 73,8% Current status of Company's forests 2013 4.200% 22.00% State-owned Forest Contracting forests under Decree 135/2005/ND-CP 73.800% Contracting forests under Decree 01/ND-CP Chart 2: Current status of Company’s forests in Huu Lung district, 2013 18 4.1.4.7 Forest business results Based on the records of forest exploitation in the structure state and records contracting forest plantation liquidation based on structure obtained, data about exploitation output and average output/ha of the structure are summarized in Table Table 5: Summary of forest exploitation area in attached unit of the Company in Huu Lung district period 2007-2013 In which Total No Year State-owned forests exploitation area Contract forests Average Exploitation Area (ha) Average Area Exploitation (ha) (m3) exploitation (m3) exploitation (m3/ha) (m3/ha) 2007 618,47 570,92 38.474,53 67 47,55 1.222,3 26 2008 434,91 388,02 25.966,84 67 46,89 774,81 16,5 2009 239,3 239,3 16.777,98 70 - - - 2010 171,56 132,6 6.788,34 51 38,96 832,64 21 2011 129 129 11.196,43 86,79 - - - 2012 318 98,09 6.007,06 61 219,91 7.331,69 33,34 2013 149,57 88,66 6.315,57 70 60,91 2.117,41 34,76 Total 2.060,81 1.646,59 - - 414.22 - - 235,23 - 67,54 82,84 - 26,32 Average From the above data, can be clearly seen that average output per of forest contracting structure is very low (Highest is 34.76m3/ha; the lowest is 16.52m3/ha), while the average output of State-owned forest structure is quite high (the highest 86.79m3/ha and lowest 51.19m3/ha) This suggests that the efficiency of land use by contracting structure for contractor is very low In the opinion of the Company officials, the cause of this problem is that people don’t abide by the instructions of the officials, not comply with 19 the technical process of production when making plans to plant and care for annual forest of the Company, seasonal factors of production are hardly interested for contractor that perform arbitrarily when their families has free time.In many cases, the contractor has arbitrarily exploit forests so the output of forest in exploit cycle is very low 4.2 Impact assessment 4.2.1 Impact on the density of land use structure After years implementation of Decree No 135/2005/ND-CP of guided in Circular 102/2006/TT-BNN dated on November 13, 2006 of the MARD Structure between another land use structure have shifted significantly downward for State-owned forest area, increased for contracting forest area, namely: Area land use of State-owned structure have shifted from 76.7% in 2006 to 22% in 2013; area land use of contracting structure follow Decree 01/ND-CP shift from 23.7% in 2006 to 4.2% in 2013; area land use of contracting structure followDecree No 135/2005/ND-CP of moving from 0% in 2006 to 73.8% in 2013 Proportion of land use period 2007 - 2013 Area (ha) 3500 3000 Contracting forest under Decree 01 2500 2000 Contracting forest under Decree 135 1500 State-owned forest 1000 500 Year 2006 2007 2008 2009 2010 2011 2012 2013 Chart 3: Proportion of land use structure of Company in Huu Lung district period 20072013 20 4.2.2 Impact on the management and land use of Company in Huu Lung district period 2006 - 2013 After 07 years of implementation of the decree, the management of the Company's land use developments is extremely complex, forested area of the Company is increasingly shrinking, in Huu Lung district from 3.017,41 forest land in 2006 dropped to 1.769,75 in 2013, while the encroached area increased significantly from 701.21 in 2003 increased to 3.759,46 in 2013, separate period 2010 - 2013 encroached area up to 1767.49 Encroachment area period 2003 - 2013 Area (ha) 4000 3500 3000 2500 2000 1500 1000 500 Year Before 2003 2003 2004 2005 2006 2007 2008 Total encroached area in previous years 2009 From 2010 to 2013 New encroached area Chart 4: Total encroached area of Company period 2003 - 2013 4.2.3 Impact on structure management and labor structure 4.2.3.1 Management structure The land use contracting follow Decree 135/2005 / ND-CP has changed the basic structure of Company management, from Company direction management and production through an intermediate level is forest farm to direct management and direction to employees, thereby capturing and processing problems is performed more quickly and timely 21 4.2.3.2 Labor structure After receiving the land, the contractor shall initiative in arranging labor to perform the work steps, in principle, will be significantly reduce the arrange officials to direct the production However, through data on the number of labor and annual labor that statistics in Table 5, although in December 31, 2013, the area that contracting by Company in Huu Lung district up to 78%, but the percentage of indirect labor aren’t significantly change over the years Thus the land use contracting doesn’t reduce the ratio of indirect labor in the Company Ratio of direct labor and indirect labor period 2006 - 2013 Number of labor 300 250 200 150 Indirect labor 100 Direct labor 50 Year 2006 2007 2008 2009 2010 2011 2012 2013 Chart 5: Ratio of direct labor and indirect labor of Company in Huu Lung district period 2006 – 2013 4.2.4 Impact on business efficiency 4.2.4.1 Impact on proactive, stability in production Base on the new first-year area of forest that create annual summarized in Table 1, existing forest area per year summarized in Table 2, encroached area per year in Table and interviews with Company officials, while the rate of land contracting increases, the 22 proactive in production of Company is decrease because another contractors has another conditions about labor and economic led to the implementation of work according to the conditions of contractors, so many contractors can’t compliance seasonal produce as well as manufacturing processes because of difficult economic conditions, contractors received land but not to organize production according to plan, the forest reached the age to exploit but not exploited, many other contractor cause economic hardship so they exploited the forest but not reached the age to exploit due to reduce the effectiveness of forestry business, simultaneously breaking the production plans of the Company 800 700 600 500 Area of design 400 Area of acceptance 300 200 100 2007 2008 2009 2010 2011 2012 2013 Chart 6: The result of newly annual forest of Company in Huu Lung district period 2007 – 2013 4.2.4.2 Impact on forest productivity Based on data that summarized in Table 5, we can see the average of forest productivity/ha for State-owned forest structure is higher than the contracting forest structure 23 Forest productivity of Company period 20072013 80 70 60 50 State-owned forest 40 Contracting forest 30 20 10 2007 2008 2010 2012 2013 Chart 7: Average of forest productivity of Company in Huu Lung district period 2007– 2013 4.3 Advantages, difficulties and challenges after yearsimplementation of Decree 135/2005 / ND-CP 4.3.1 Advantages The implementation of Decree 135/2005 / ND-CP has created considerable advantages for Company, namely: - Remove the intermediate level of direction, Company direct to laborers, directly grasp the difficulties arising in the manufacture and directly solve these difficulties - The contractor disposition labor to produce by themselves so reduce pressure on labor to the Company during the seasonal, because production forest is seasonal deeply - The contractor self-sufficient in labor’s cost on some stages of the work, which should reduce the pressure on capital to the Company 24 4.3.2 Difficulties and challenges 4.3.2.1 Difficulties After years of implementing decree, although obtained the fundamental advantages as mentioned above, but the Company also encountered difficulties: - The contractor performing work on contracted land isn’t at the same time so that the Company has to dispose more staff to guide, supervise and direct the manufacturing and unpredictable in time to complete the production plan - Due to the conditions on labor as well as different economic conditions, many contractors didn’t complete the volume of the contract, or breach of contract was signed leading to the production plan of the Company unstable - Many contractors don’t adhere to the technical procedures follow the guidance of the Company, so the quality of forest is not good, due to significant impact on business performance forests, reducing the income of the contractors and the Company 4.3.2.2 Challenges Over the years, contractor breach of contract, don’t pay enough product of contract, the Company's forest land has been encroached was very complex, in production area of the Company in Huu Lung district from 2002 to 2013, about 3,700 has been encroached Although PPC, DPC and the authorities concerned and direct the settlement, but so far the cases encroached, occupy the land of the Company hasn’t been resolved definitively and faced to many difficulties, because former State allocates to the Company used mainly on paper, don’t allocation in the field, not clearly defined boundaries, specific landmarks, the review and planning of land use details, measurements surveying, demarcation, land boundaries of the Company now also unfulfilled Contractor take advantage of this reason and policy land use contracting by the State to encroach the land of Company, many contractors after the liquidation of the contract the first cycle doesn’t 25 sign the contract for next cycle, but doesn’t return land for Company The Company didn’t eviction land and contracting to other contractor, the Company can’t give the workers to manufacture because it clashed; sometimes encroachment cases have become harsh due to stagnating production and security disorderly in this area Land production of Company is increasingly shrinking, without effective to preventive measures, the Company is no longer in danger of land for production 26 CHAPTER V CONCLUSIONS, SUGGESTIONS AND RECOMMENDATIONS 5.1 Conclusions - Contracting land use general manufacturing and forestry production land in particular is a major policy of the State and the contractual assignment of land under Decree No 135/2005/ND-CP of the Government has given the Company significant advantages in mobilizing capital and labor of the contracting parties However, through the research result show that the implementation process has generated major challenges: - The Company gradually lost the initiative and stability in production because dependent on compliance with the terms agreement of the contractor, but this is the most essential for businesses From data of design and acceptance of new first-year area of forest that create annual in Huu Lung district has been compiled from 2007 to 2013 in Table showed that annual forest area was accepted averaged 66,1% (2.073 ha/3.137 ha) compared with area was designed; annual forest volume instability, lowest year 38,1% compare with the best (144,53ha/379,53ha) Cause: The conditions of employment, family circumstances of different contractor, leading to job execution time, completion time and workload completed are different - Effective use of production materials (forest productivity per unit area) is low, not only reduces the income of the contractor but also a great influence to produce and business results of the Company The data in Table shows the average output per unit of cultivated area of contracting structures only 26,32 m3/ha, while the centralized production structure achieved 67,54 m3/ha 27 Cause: Contractual non-compliance with the manufacturing process and guidelines of the Company (contracting party), specific work steps in planting, tending isn’t guarantee the quality, seasonal produce isn’t strictly adhere leads to quality of forests isn’t guaranteed, many cases of contractor cut forest leads to forest production declined when exploit - Status of Company land encroached complex developments, the scale of production is increasingly shrinking, without effective to preventive measures, the Company must be dissolved because no material (land) production The data in Table show that the encroached area is up to 28,36% of the total forest area was allocated by the Company in Huu Lung district (3.759,46 ha/13.256,13 ha) and up to 212,42% compare with the existing forest area of the Company in Huu Lung district in December 31, 2013 (3759.46 ha/1769.75 ha) 5.2 Suggestions to the Company - Strengthening the legal basis for the assigned area by: Urgently shall organize the review, identified the area of demand, measurement, boundary demarcation in the field and repeat the allocation record in prescribed - Work closely with the Party Committees, local government and relevant agencies to promote the legal advocacy to raise awareness,and sense of law observance for contractor to adhere the terms of the contract, the provisions of the law when in contracting land use - Select the contractor who qualified to perform the contract - Create favorable conditions to the contractor to participate in the construction contracting regulations, mechanisms and contracts on the basis of compliance with the law and ensure harmony between the rights and obligations on both sides 28 - Arranging reasonable percentage of contracting land and State-owned land to produce to autonomy and stability in production, specifically to arrange about 60% of the area of State-owned land and 40% area of the contracting 5.3 Recommendations to the State agencies in competency - Provisions on the standards of the contracting parties must have the capacity for labor and other capacity as the object of the contract other basic construction, to ensure that the contracting parties have the ability to perform the contract in accordance with the terms of commitments - Handling timely and strictly the infringement case, because forests and forest land is the property of the enterprise, but enterprise can’t organize to management, protection merely as another property 29 REFERENCE Công ty Lâm nghiệp Đông Bắc (2013) Thuyết minh dự án trồng rừng Công ty Đông Bắc giai đoạn 2013-2020 Tô Xuân Phúc Trần Hữu Nghị (2014) Giao đất giao rừng bối cảnh tái cấu ngành lâm nghiệp: Cơ hội thách thức Hoàng Ngọc Hà (2008) Nghiên cứu trạng đề xuất giải pháp sử dụng đất lâm nghiệp sau giao xã Hịa Bình – huyện Đồng Hỷ – tỉnh Thái Nguyên Tạp chí khoa học, Đại học Huế, số 62A (2010) Đánh giá công tác giao đất giao rừng địa bàn huyện Nam Đông, tỉnh Thừa Thiên Huế Thủ tướng Chính phủ (2005) Quyết định phê duyệt đề án thí điểm giao rừng, khốn bảo vệ rừng cho hộ gia đình cộng đồng bn, làng đồng bào dân tộc thiểu số chỗ tỉnh Tây Nguyên Bộ NN&PTNT (2012) Báo cáo tóm tắt kết rà sốt chế, sách liên quan đến triển khai kế hoạch bảo vệ phát triển rừng giai đoạn 2012 – 2020 Dương Văn Hùng Luận văn đánh giá hiệu công tác giao đất, giao rừng nhằm đề xuất biện pháp quản lý đất rừng địa bàn thị trấn Nông trường Lệ Ninh – huyện Lệ Thủy – tỉnh Quảng Bình Cục Kiểm lâm, Bộ NN&PTNT (2013) Tổng quan giao đất giao rừng Việt Nam http://vi.scribd.com/doc/187809626/file-1359983442 Bộ NN&PTNT (2007) Đề án giao rừng, cho thuê rừng giai đoạn 2007 – 2010