DEVELOPMENT OF THE OPIUM GROWING SUBSTITUTION

 IN THE NEIGHBORING BORDER AREAS

Department of Commerce of Yunnan Province

Ladies and gentlemen,Friends,

Today, my colleagues and I feel very happy to have the honour to be here to participate this forum, and to exchange with our friends the experiences in the reduction of poppy growing and the development of poppy substitution economy.  We are extending herewith our warm congratulations to the successful convening of this forum.

Yunnan province is situated in the southwestern part of China, with a population of 42 million. There are 26 minority nationality groups in the province, whose population is 12 million. The total land area of the whole province is 394,000 km², about 94% of which is mountainous, and the highest mountain peak is 6700 meters above sea level and the lowest land level is 76 meters above sea level. Yunnan province is neighboring Tibet Autonomous Region and Sichuan province to the north, Guizhou province and Guangxi Zhuang Autonomous Region to the east, and Myanmar, Lao PDR, and Vietnam to the south and west. The total border line with the neighboring three countries is 4061 km. Alone the border line, there are 13 ethnic minority groups living across the border, and there are 25 counties and cities from 8 prefectures of Yunnan scattered alone the border line. The province has 20 ports of entry opened up to the outside along its boredr, and, in addition, opened up over 90 paths and border trading markets for the people living in the border areas.

Because of historical reasons, the largest opium growing area the Golden Triangle neighbors Yunnan province. Yunnan is located at the forefront of the anti-drug campaign in China, and the task the province faces is tremendous and difficult. For a long time, the drug problem seriously hinders the bilateral trade and economic development and the development of local economy. Since 1990, according to the state anti-drug principleS of “stop the source and flow of illicit drugs”, “developing opium growing substitution” and “green anti-drug campaign”, the border prefectures of Yunnan province neighboring the opium growing areas outside have started the implementation of opium growing substitution in the neighboring areas outside the border. Various functional departments have closely cooperated with the business sector, and encouraged enterprises to developing poppy growing plantation in the neighboring areas outside the border. They have helped the other side to develop grains, sugar cane, tea, rubber, longan, and other economic fruits and crops, which have actively explored and contributed to the eradication of drug growing at the source, the reduction of the drug production and the prevention of the drug coming into market place. The implementation of substitution projects has helped the increase of local employment in the project areas and the income generation of local residents, and stabilized the development of local economy and social progress.

Over a decade of practice by the border prefectures in Yunnan province, it has proved that, by utilizing economic means of developing the opium growing substitution and implementing substitution development projects, it is an effective way in stopping the opium growing problem from the source.

Next, I am going to give you some information about how our province has conducted the opium growing substitution plantation outside of the border and some experiences from the implementation of the substitution projects.

Actively developing the agricultural substitution growing

The cooperation on the agricultural substitution growing between Yunnan, Lao PDR, and Myanmar was started from the early nineties of last century. In reply to requests from the Laos and Myanmar to our border areas for promoting economic cooperation in the border areas and transferring labor and land resources from opium growing to new industries so as to solve the  problem of grain shortage, the governments of Xishuangbana, Simao, Lincang, Baoshan, and Dehong prefectures of Yunnan province actively grasped the orpotunity and positively replied to the requests. The local bureaus of foreign trade and economic cooperation mobilized the local agricultural and business sectors to conduct study tours outside the border, and selected possible projects for the cooperation, which could fully utilize our techniques, seeds, and fertilizers, etc. to cooperate with the other side for grain production like the rice growing. After having basically solved the grain problem for the local people, our enterprises moved on to develop the growing of other various agricultural economic crops like rubber, sugar cane, tea, and fruits etc. to substitute the local traditional opium growing. In principle with the principles of independent management and accounting, self responsible for losses, profits, and risks, enterprises have experimented the new mode of combining drug prevention with economic development to eradicate the danger of drugs by economic means, and have achieved visible success.

According to our statistics, by the end of 2003, the total number of opium growing substitution planting areas outside the border assisted by enterprises from Yunnan province has exceeded 620,000 mu (41,333 hectares), including 550,000 mu (36,666 hectares) in nortern Myanmar, and 71000 mu (4,733 hectares) in northern Laos.

Various ways have been adopted to implement the substitution growing projects. For instance, the sugar plant of Mengla county has been cooperating with Yao Wu county, Phong Sali, the Laos, to implement the northern Laos sugar cane growing project. From 1995 to 2002, 428 hectares of sugar cane have been planted accumulatively. The Chinese enterprise has provided seedlings, techniques, pesticide, fertilizer, and production tools, and the Lao side provided land and moved people to valleys and places along the road to engage in agricultural production. This project has not only promoted the local economic development, and helped the employment and increased the income of local people, but has also satisfied the raw materials provision for our sugar plant inside border, which has won the high praises of both the Chinese and the Laos governments.

Since 1993, Menglian Farm of Simao prefecture has started the 1,733-hectare rubber tree growing project in northern Myanmar. The rubber trees are now ready for rubber tapping and the products have been sold back to China. In this project, the Myanmar side is responsible for providing land, and the Chinese enterprise is the sole investor of the development.

With the support of local government of Myanmar, Lin Ben company of Baoshan prefecture invested 4.86 million yuan (586,000 USD) to jointly grow 11,800 mu (786 hectares) of walnut trees with the Myanmar side, which has successfully achieved the results of economic fruit tree substituting opium growing.

Government’s Active Support

(1). The related local governments of Yunnan province have always regarded the work to help neighboring countries in their opium growing substitution and promoting local economic development as the basis for anti-drug campaign, and have established the Outside-border Opium Growing Substitution Project Office formed by the local Development and Restructuring Committee, the Drug Prevention Bureau, and Bureau of Commerce. The local governments have provided active policy, financial, and technical supports to the enterprises and projects. Since 1991, the total funds accumulated by various local governments and enterprises of Yunnan province used in the outside-border substitution work have exceeded RMB500 million yuan (60 million USD). In the human resources development, the six border prefectures of Yunnan have provided free training for 37,000 persons on related technical issues for the neighboring countries, and also helped building up some drug prevention demonstration primary schools for some local areas. Lincang and Dehong prefectures have also provided seeds, fertilizers, and pesticides for the outside-border drug substitution projects. The Provincial Department of Agriculture has provided subsidies to the technology promotion and seeds purchasing for the drug substitution projects.

(2). The outside-border opium growing areas are mostly located in the remote mountainous regions, which are economically impoverished and having greater difficulty in selling their agricultural products. Products from outside into China will pose competition on the similar domestic products, increase the market pressure, and cause reaction from the domestic enterprises. In consideration of the overall interests of the situation, in order to solve the problem of selling markets of the outside-border drug substitution agricultural products, our central government has agreed to give special favorable policy to the import of agricultural products from the outside-border opium growing substation projects, which will be enjoying the exemption from the import tariff and VAT. From the implementation of this policy in 2000 to 2003, the three-year total commodity value which had enjoyed the exempt amounted to 18.3 million USD, and the total exempt value of tariff and VAT reached RMB 62.3 million yuan (7.5 million USD).The special policy has greatly mobilized the enthusiasm of enterprises engaged in import and export trade of Yunnan province, and partly solved the market problem of the agricultural products of the opium growing substitution projects, which has further promoted the development of substitution work.

(3). The concerned governmental institutions such as the Customs, the Bureau of Inspection and Quarantine, the Frontier Inspection, and the Bureau of Foreign Trade and Economic Cooperation, etc., have all actively supported the import and export of the products, materials, and personnel related to the substitution growing projects, and facilitation measures have been adopted, which have formed strong support to the development of drug growing substitution work.

Some Major Measures and Approaches

In the outside-border opium growing substitution planting work, the following approaches have been adopted by various local governments of Yunnan province in their services to the enterprises and the drug substitution projects.

1. Enhancing the communication and coordination with the outside-border local governments to achieve common understanding on the issue of drug eradication. Because the implementation of the projects needs the coordination and cooperation by both sides, in order to help the other side fully realize the significance of the drug substitution work, the local governments of the border areas of Yunnan province personally took the lead to discuss and consult with the other side, and have reached consensus on the issues of the project progress and the content of substitution, which has provided good outside environment for the implementation the projects.

2. Increasing publicity and raise up participation of the activity by local residents outside border. By using multi-modal publicity campaign to the local people in the neighboring countries, Government institutions and enterprises from various local governments of the border areas of Yunnan province have stressed the importance and necessity of anti-drug campaign, the benefits of implementing substitution growing, as well as the favorable policies by the Chinese side in regard to the products of the substitution, so as to obtain the understanding and support of the local people and increase the participation by the local people.

3. Providing assistance and support on seeds, fertilizers, and planting techniques. In order to ensure the success of the projects, through the enterprises, local governments from Yunnan border areas have helped the enterprises to employ agricultural technical personnel to come down to the fields in the planting areas to provide technical assistance. Also, the local governments from Yunnan have actively coordinated related departments to provide the project needed materials like seeds, fertilizers, and pesticides, etc., with lower prices to reduce the costs of the enterprises.

4. Actively helping enterprise in market promotion to ensure the sales of the products of the substitution. The substitution growing projects are developing fast, and enterprises both from Yunnan and the neighboring countries and the farmers are active in participation. But for various reasons, the products of the substitution projects can not be sold out completely in the local markets outside border, which means some of the products will have to be exported to China or a third country. In order to keep a sustained development of the substitution projects, local governments of Yunnan province, on the one hand, are actively applying for products of the substitution projects be included in the import plan and enjoy the exempt of tariff, and, on the other hand, are consulting with the related governmental departments of the neighboring countries to allow the products to be sold in its interior markets.

Actively Promoting the Transfer from Substitution Planting to Substitution Development

Because outside-border drug growing areas are mostly located in the remote and inaccessible area, with poor natural conditions, inadequate infrastructure facilities of irrigation and transportation, and backward planting and growing techniques and high production costs, the local conditions for agricultural development are poor. Apart from a few products like rubber and fruits, the income from opium growing is generally higher than the income from other agricultural and economic planting. In addition, because of the shortage of market access and marketing channels, there is limitation by large scale development of opium substitution in fast income generation for the local people in the areas. Compared with substitution planting, the development of manufacturing, the service industry, and the improvement of infrastructure are of better and more visible opium substitution effect, which are of larger scale, better effects, and quicker economic returns, and can break up the reliance of the local to the drug economy. To this purpose, with the support of the local governments, the enterprises of foreign trade and economic cooperation of the border areas of Yunnan province have explored in the following two aspects.

1.         By gradually expanding the cooperation to outside-border road renovation, the construction of irrigation facilities, the processing of agricultural products, tourism, aquatic farming, various practical technical training, etc., the previous simple substitution planting has been developed into substitution development, which has aimed at the improvement of the infrastructure and living environment, raising up the quality and ability of the local people in the related outside-border areas, and thus effectively contained the traditional opium growing and provided the space for further development of the drug substitution development.

2.         By drawing up the experiences from the agricultural substitution work, utilizing fully the advantages of border links of neighboring countries, in consideration of the actual demand of economic development and domestic markets and the natural and human resources of the neighboring countries, local governments of the border areas in Yunnan province actively encourage enterprises of good reputation and high credibility to invest on industrial production and manufacturing in the neighboring countries, which has achieved good social and economic effects.

For instance, Ximeng County Foreign Trade Company Ltd. of Simao prefecture invested RMB1000 yuan (about 1.2 million USD) to set up a paper mill in No. 2 Special Zone of Shan State, Myanmar, in which the Myanmar local government has 25% shares. The mill has 250 local employees. The raw material for paper making is supplied by local people, and the income from growing bamboo alone for the local people is RMB 3.67 million yuan (440,000 USD) yearly. Meanwhile, the project helps also reduce 1000 mu (66 hectares) of opium growing area.

Another example. Mengliang county of Simao prefecture jointly invested with Myanmar side to set up an iron alloy factory, which can find jobs for 1000 local people.

The investment on industrial projects outside by our enterprises will not only quickly increase the economic income and production value of the local economy, and enhancing the local economic development and local people’s employment, and reducing their reliance on the illicit drugs, but also can fully utilize the abundant natural resources, produce the needed products and supply the markets home and abroad.

Major Difficulties and Problems

1.         Need for greater policy support and incentives on a larger scale. Because of the need for economic development, the substitution development is not merely limited to the production of agricultural products today, but extended to various needs concerning a series of industrial development and all aspects of social and economic live including agriculture, forestry, processing, services, and transportation, etc. Substitution development has become important content in the regional economic cooperation of building up China-ASEAN Free Trade Area, which requires more active policy support and greater incentives outside of traditional agricultural area by the whole international community to better promote the substitution development work.

2. Shortage of powerful funding in the substitution development. It has been over 10 years for Yunnan province to have conducted the outside-border substitution planting work. According to incomplete statistics, the total input by related prefectures and institutions from Yunnan into substitution development has exceeded RMB 500 million yuan (60 million USD). This input is basically the result of the efforts by various governments and enterprises from Yunnan overcoming the financial constrain and difficulty.

Compared with the needs of substitution planting and substitution development, there is a big shortage of funding: (1). A lack of special funding support for outside-border substitution development; (2). A lack of effective investment financing mechanism for outside-border substitution development; (3). A lack of investment for related infrastructure facilities necessary for the development of local economy in the neighboring outside-border areas; (4). Many outside-border substitution projects are long-term projects like rubber tree and longan tree planting, and are managed by enterprises themselves. The projects lack legal protection of the other side, and therefore have certain risks.

2.         Serious shortage of infrastructure facilities hinders the further development of substitution work. Because of the remote location and under-developed local economy, outside-border substitution project areas are mostly in the areas where there is serious shortage of infrastructure facilities, especially on transportation, energy, and telecommunication, etc. Although some Chinese enterprises have helped construct some simple road, but generally the roads are in poor conditions and funding is inadequate, which can not solve all problems completely. The lack of infrastructure facilities has great constrain on the development of outside-border substitution projects.

Three Suggestions

Yunnan province has made good achievements in its work on the outside-border opium growing substitution over the past 10 years. Because of various reasons and difficulties, the scale of substitution is not currently large enough. In order to stop the opium-growing completely and eradicate the harm of drugs, we need greater support and larger participation of the international community to exert joint efforts to draw up and implement the substitution development strategy in a planned and large-scale manner. To this purpose, we put forward the following three suggestions:

1.         To establish high-level dialogue and consultation mechanism on the substitution development in the region, exploring the issues related to substitution development strategy, recommended industries, market access, and legal protection of the substitution projects, so as to create a good environment for the management of the substitution development enterprises.

2.         To set up regional opium growing substitution development fund. Yunnan province is an under-developed province in the west of China, and the financial ability of Yunnan province alone is not enough to enable a large-scale sustained development of the outside-border substitution development work. In order to consolidate the achievements obtained already and to complete eradicate the harm brought in by opium growing, we suggest that there is a necessity to establish a special opium substitution development fund in the region. This fund will be used on infrastructure facilities like roads, power, irrigation, schools, and hospitals, etc., in the regional substitution development project areas, which will provide a good investment environment for the enterprises and individuals engaged in the substitution development projects.

3.         To start economic development planning of the substitution development areas and to implement human resources development projects. Because the need to improve the substitution development process, we suggest the international community pay attention to the economic development planning of the substitution development areas, provide technical and financial support and identify development objectives, assisting the areas to complete their regional economic planning. Also, because of long time engagement of opium growing, the local people are not familiar with other required work techniques and do not meet the basic requirements of substitution planting and economic development. We suggest that the international community provide active support and assistance to the local human resources development, which will help lay down solid basis for the local social and economic progress and the eradication of the illegal drugs.

Thank you.