The experience of Asian indigenous peoples with the finance lending policies of international financial institutions: A select overview

Woman living on the Nakai Plateau, Laos. More than 120,000 people are directly affected by the Nam Theun 2 financed by the ADB
Virginia Morris & Clive Hills/ International Rivers

The experience of Asian indigenous peoples with the finance lending policies of international financial institutions: A select overview

Projects and programme interventions of multilateral development banks have a record of systematic and widespread human rights violations for indigenous peoples in Asia. In many countries, indigenous peoples have been subjected to widespread displacement and irreversible loss of traditional livelihoods. Behind these human rights violations is the denial of indigenous peoples’ rights to their lands, territories and resources and to their right to give their free, prior and informed consent (FPIC) to projects and programme interventions, including those in the name of sustainable development and human development. Among them, the large infrastructure (dams and highway construction) and environmental “conservation” projects have had the most detrimental adverse impacts on indigenous peoples. There are a good number of examples of such projects that have negatively impacted indigenous peoples’ communities in Asian countries, some of which follow below.

While both the World Bank and the Asian Development Bank (ADB) have their own mandatory environmental as well as social safeguard operational policies, the requirements for respecting the human rights and collective rights of indigenous peoples are weak and implementation has proved problematic. While there are projects today that are better designed from the perspective of indigenous peoples, compared to those implemented in the 1960s and 70s, the desired positive impacts of the implementation of these safeguards in ensuring environmental protection and in avoiding adverse social consequences have not been achieved.

The ADB undertook a review of its environmental and social safeguard operational policies in 2008-2009 and issued a revised Safeguard Policy Statement that includes a more progressive Indigenous Peoples (IP) Policy. The ADB IP Policy now requires the application of the free, prior and informed consent of indigenous peoples on projects and programme interventions that affect their land, territories and resources, their cultural heritage and on their potential displacement. However, the operational policy remains weak in respecting the collective decision-making process of indigenous peoples. It is also weak in its definition of consent as “broad community support.” Furthermore, the commitment of the ADB Management and the responsible counterpart agencies in borrower governments to implement the IP Policy still remains to be tested. 

The World Bank (WB) continues to apply an outdated policy on indigenous peoples, Operational Policy 4.10 (although this is under review). This policy is the only policy of the multilateral development banks that does not recognise the right of indigenous peoples to free, prior and informed consent (FPIC). The Bank has yet to effectively respond to the findings of a 2011 internal review of the implementation of Operational Policy (OP) 4.10.[1] This review was damning, with findings including the following:

  • Although most projects did identify benefits for indigenous peoples, in many projects they did not address potentially negative impacts on indigenous peoples, especially the long-term or indirect ones;
  • Significant disregard of the protection or promotion of indigenous peoples rights to lands and resources;
  • Lack of appropriate grievance mechanisms established by projects;
  • Where resource rights are not recognised, projects that affect land and water rights often did not consider measures to address the land and resource rights which are essential for the long-term wellbeing and sustainability of indigenous peoples‘ societies and cultures;
  • Project information and documentation of project processes is substantially lacking.                                     

The review found that evidence of broad community and verifiable information on how the process of obtaining support was done had been limited and is another area that needs substantial improvement.

The following cases exemplify the experiences of indigenous peoples impacted by projects and programme interventions financed by international financial institutions.


Khammouane Province, Vientiane and Xieng Khouang Provinces

The government of Laos PDR (GoL) considers hydro energy to be the main thrust of growth and economic development. It aims to transform the country into “the battery of Southeast Asia” by harnessing the power of rivers. To achieve this goal, GoL is receiving financing from major International Finance Institutions (IFIs) including the World Bank and the Asian Development Bank. In its power sector development plan, GoL includes 72 new large dams, 12 of which are under construction and nearly 25 more are at advanced stages of planning.[2] In the case of large dams such as Nam Theun 2 (NT2) and Nam Ngum 3 (NN3), indigenous peoples in the affected communities have suffered serious economic and social dislocations in addition to loss of biodiversity.

The NT2 dam in Khammouane Province directly affected more than 120,000 people downstream by destroying livelihood options and fisheries, flooding riverbank gardens and affecting water quality. 6,300 Indigenous persons in the Nakai Plateau were resettled to make way for the reservoir. The numerically small Vietic people, the most vulnerable of the indigenous peoples in Laos, were forcibly relocated to resettlement villages in violation of both the WB and ADB operational policies on indigenous peoples. It has been reported that many of them have died as a result of living in a resettled village, for both psychological and physical reasons. As of today, affected indigenous peoples in the resettlement villages have not been provided with land and have not received compensations for the loss of their properties.

The commitments for land and compensation described in detail in the project’s planning documents remain partly unfulfilled. Due to loss of land and natural resources, food security has remained a concern of the affected indigenous peoples. Although the material needs for housing, electricity, roads, schools, and health centres, are provided at the resettlement villages, there is serious doubt that indigenous peoples’ livelihoods will be restored to the pre-resettlement level, will be culturally appropriate and will be sustainable in the future. The poor quality of the land in the resettlement villages continues to pose severe problems for villagers, who are unable to grow sufficient food to feed their families, and to pay for the electric bills. The long-term production of the reservoir fisheries is also in doubt, and, as opposed to arrangements agreed in the project’s Indigenous Peoples Development Plan, outsiders are encroaching on the villagers’ community forest areas.[3] In the meantime, the Nam Ngum 3 dam (also proposed to be funded by ADB) in Vientiane and Xieng Khouang Provinces, which is expected to be completed by 2016, will submerge an area of 3,769 km² affecting Lao-Tai (42%), Khmu (33%), Hmong (25%) and Yao indigenous peoples.

North-East India

Meghalaya, Manipur, Nagaland

In North-East India, major IFIs including the WB, ADB and Japan Bank for International Cooperation (JBIC) are most active in providing support in the sectors of transportation, power and energy, trade and private sector participation, urban development, agribusiness and tourism. In most projects in North-East India, indigenous peoples have not been properly consulted before mega development projects are undertaken. One such example is the Lafarge Surma Cement (LSC) plant, the first project of the South Asia Subregional Economic Cooperation (SASEC), an initiative for borderless Asia being financed by ADB. The LSC plant, which is actually in Bangladesh but sources its raw materials from Meghalaya, India, has affected the indigenous Khasi people in Meghalaya. As of today, the affected families have been struggling to get compensation for loss of lands and livelihoods due to the LSC. As well as IFI projects, large transport and energy projects have been undertaken or are being initiated by private companies and government agencies in North-East India. For example, the Tipaimukh Multipurpose Hydroelectric Project (TMHEP) in Manipur, and Mapithel dam in Nagaland pose serious threats to Hmar, Naga and Kuki indigenous peoples. The TMHEP will flood around 311 sq. km. of land, permanently displacing 90 villages mostly of the indigenous Hmar and Zeliangrong peoples, and 7.8 million trees and 27,000 bamboo groves will be felled in the 25,822 ha forested area.             


In Nepal, apart from financing health and education projects, the WB and ADB are financing transport systems and hydropower dams. Current examples include two hydropower projects – ‘Kabeli A Hydropower’ and ‘Tanahu Hydropower Project’ - which are in the pipeline. The detailed impacts of these hydropower projects on indigenous peoples have not yet been ascertained. At the same time, the “do no harm” projects financed by the IFIs, e.g., agriculture development projects, do not necessarily bring good results to indigenous peoples either due to lack of adequate participation or wrongful assessments of the projects by the IFIs. A case study on a commercial agriculture development project financed by ADB, concluded that the high value crop provided by the project, despite the increase in income in the short-term, affected the traditional seeds, soil fertility and pest management systems of indigenous peoples.


Sarawak Province

The Batang Ai Hydro Electric Power (HEP) project in Sarawak was constructed between 1980 and 1985 in the heartland of the Iban traditional territory. It displaced about 3,000 Iban people from 21 longhouses and they were forcibly resettled in the Lemanak-Batang Ai area on land that was managed by the Sarawak Land Consolidation and Rehabilitation Authority. Funded partly by the ADB, this largest HEP in Malaysia occupies some 40,000 acres of land, 21,000 of which have now been flooded, destroying large areas of forests and lands held under customary tenure, including swidden farms, crops and ancestral lands.
The resettled Iban people face numerous problems and feel that they have been treated unfairly. The following is a long list of socio-economic woes that the 18,000 indigenous peoples in the Batang Ai state constituency still have today, even though the Batang Ai hydro electric dam has been operating for 25 years[4]:

  • Instead of the eleven acres of cleared land that they had been promised, each family received only one acre.
  • They did not receive any support for re-building as promised.
  • Many families were unprepared for this new way of living; so many could not cope.
  • Land certificates were only issued one per family and were issued to men; women were deprived from land ownership.
  • In 2009, not only the displaced families but the whole of the constituency of Batang Ai had no access to public transport, limited telecommunication, poor electricity supply, frequent water-supply interruptions, poor health and medical facilities, as well as limited job opportunities.

The ADB, on the other hand, has described the resettlement of 2,800 Iban by the dam as an example of a "culturally sensitive and economically sound programme" because "the policies and plans...were carefully investigated and prepared."[5] Others, however, are more sanguine. A review paper commissioned by the World Commission on Dams as part of its assessment of the impact of dams on indigenous peoples states: "The Iban were persuaded to move in exchange for promises of free housing, free water, free electricity and 11 acres of land per family. The reality has proved a bitter experience. Not only were they resettled on a government land scheme, but they were also forced to change their way of life radically. Rice cultivation proved impossible on the terraces prepared for them and they were obliged to set up as small-holders on a plantation scheme. Incomes fell to the point that, according to one study, 60% of households were below the State poverty line, with the majority of respondents reporting that lack of land was their main problem."[6]The State-owned Sarawak Land Consolidation and Rehabilitation Authority (SALCRA) ran the plantation on which the Iban were resettled. Women suffered disproportionately from the resettlement procedures. For example, compensation, which should have been paid to both men and women as co-owners of the land, was only paid to male "heads of household".


PT WEDA Bay Nickel, Halmahera island, North Maluku

The Forest Tobelo (Tugutil) are the nomadic people inhabiting the inland forests of Halmahera island whose subsistence is based on hunting, gathering, and foraging for sago in lower areas. The Tobelo Forest Community are broadly categorised into two groups. The first group are those who have been resettled in the villages, but may still return regularly to old use sites in the forest. The second group remain fully nomadic and identify themselves as O hongana ma nywa or ‘forest people’. Although total numbers are difficult to estimate, the latter group is composed of roughly 100 individuals[7].

In 2004, the government of Indonesia declared 167,300 hectares of this territory as the Aketajawe Nature Reserve and the Lalobata Protected Forest to protect at least 23 bird species; it was claimed that these bird species are found nowhere else in the world. However, PT Weda Bay Nickel (WBN) has been allowed to undertake exploration and other mining development activities inside these national parks. The WBN Project’s Contract of Work covers 54,874 hectares which are part of the proposed buffer zone for the parks. This area contains mangrove and fresh water swamp forest, various lowland forest habitat types, and lower montane forest. Less than half of the total area is designated Protected Forest by the Ministry of Forestry.

In this phase of WBN’s mining operations, it has asked the Multilateral Investment Guarantee Agency (MIGA), a specialised arm of the World Bank Group, to guarantee the project with respect to political risks. The MIGA board approved the insurance for the feasibility phase of the project on 13 July 2010 in the amount of USD207 million for three years.[8] This guarantee covers war, civil disturbance expropriation, non-transfer and breach of contract. However, in the Environmental and Social Review undertaken by the MIGA on due diligence conducted in mid-2010, key significant potential impacts of the project were identified that will occur during the construction and operations phases. These impacts include potential erosion of biodiversity, solid residues disposal and population influx. With respect to the forest dwellers, it states: “It is possible that Project activities may hamper their movements and cause changes to livelihood patterns and distress…. It may also be possible to discover heritage sites belonging to the local indigenous groups.” [9] The planned mining area is still part of the proposed buffer zone for the parks. The forests are also the lands of the Forest Tobelo indigenous peoples, and represent important habitats for a number of endemic and protected species.

Concerns have been expressed that the project will have numerous adverse impacts on biodiversity, such as the destruction of at least 4,000 - 11,000 ha of moist tropical forest, as well as the destruction of at least 2,000 -6,000 ha (30%) of the Protected Forest in the mine project area[10]. Most importantly, the sociocultural survival of the Forest Tobelo people is threatened due to the severe impact of this mining project in their territory.

To overcome this legacy of failed or damaging projects in indigenous peoples’ lands and territories, financial institutions working in Asia need to pay more than just lip-service to the safeguard standards they have set themselves. Financing institutions need to address the significant barriers to better implementation of their safeguard policies, including weak political will on the side of some Asian governments. Furthermore, the standards themselves need to be improved and brought into line with the international obligations of governments, including the obligation to implement the UN Declaration on the Rights of Indigenous Peoples.

This article has been provided by the Asia Indigenous Peoples Pact (AIPP). The Asia Indigenous Peoples Pact (AIPP) is a regional organisation founded in 1988 by indigenous peoples’ movements. AIPP is committed to the cause of promoting and defending indigenous peoples’ rights and human rights, including advocacy work on indigenous issues and concerns of indigenous peoples in Asia.

[1] World Bank, Implementation of the World Bank’s Indigenous Peoples Policy: A Learning Review (FY 2006-2008), August 2011

[2] International Rivers, data available at:

[3] The ADB Indigenous Peoples Policy current at the time of financing NT2 required an ‘Indigenous Peoples’ Development Plan (IPDP)’ to be established where indigenous peoples may be impacted. In some countries these IPDPs may be referred to by different terms due to political sensitivities, as is the case in Lao PDR where they are called ‘Ethnic Minorities Development Plans’. The requirements are identical.

[5] Asia Development Bank quoted in Colchester, M., 1999, http://www.the

[9] Information on the Forest Tobelo and the impacts of the mining operations of WEDA on them are sourced from

Children on the Nakai Plateau in Laos before the Nam Theun 2 Dam was built. This village is now flooded by the reservoir
International Rivers
The Lafarge Surma Cement plant, partly funded by the ADB, has affected the Khasi people in Meghala who have lost their lands
Ram Wangkheirakpam (AIPP)
3,000 Iban people were forcibly resettled due to the construction of the Batang Ai Hydro Electric Power in Sarawak, Malaysia
Iban Longhouse in Lemanak, Sarawak