Natural resource development in Lao PDR, also known as Laos, has helped the country achieve consistently high economic growth rates throughout the last decade. This growth has been accompanied by reduced poverty. The macroeconomic environment is gradually improving, but remains fragile and needs careful management.  In the longer term, Laos’s key challenge is to ensure that natural resource wealth is transformed into investments in public infrastructure, services, and better health and educational outcomes for all, especially the poor.

Laos became a ‘lower-middle income economy’ in 2011 and, in 2013, Laos’ GNI per capita reached $1,460. If the country continues growing at this pace, and if human development outcomes improve as well, Laos will likely graduate from ‘Least Developed Country’ status by 2020.

Natural resources - forestry, agricultural land, hydropower, and minerals - comprise more than half of Laos’s total wealth. From 2005 to 2013, the hydropower and mining sectors combined generated about one third of the country’s economic growth. Developing these resource sectors to achieve long term development sustainability is one of the key focuses of the Government’s National Development Plan, to which the Country Partnership Strategy is aligned.

Laos, a member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community, is increasing its integration into the regional and global economy.  On February 2, 2013, Laos officially became a member of the World Trade Organization, the culmination of a 15-year process of reforms and negotiations.

Laos made good progress on many of the Millennium Development Goals but is off track in some areas. 44% of under-five children are stunted (too short for their age) and 27% are severely underweight.  Laos still has one of the highest maternal mortality ratios in the region, even while it is ‘on track’ to achieve the MDG target for maternal mortality.  Laos could also do more to place gender equality at the center of its national development plans.

In the Seventh National Social and Economic Development Plan (NSEDP) for 2011-2015, the Government laid out its poverty reduction strategy to meet the MDGs by 2015, aiming to foster economic growth with equity, develop and modernize the country’s social and economic infrastructure and enhance human resource development. The Eighth NSEDP for 2016-2020 is currently being drafted.

The World Bank Group (WBG) continues to work with the Government as it lays the foundations to graduate from Least Developed Country status. The WBG’s operations in the country are guided by the Country Partnership Strategy (CPS) for 2012 to 2016, designed to support the Government’s development strategy and build stronger institutions for sustainable and inclusive development.


Last Updated: Aug 05, 2015

The World Bank Group Country Program Strategy (CPS) for Laos 2012-2016 has three strategic objectives, with a cross-cutting theme of stronger public sector management.

Competitiveness and Connectivity. The WBG supports efforts towards improved trade facilitation, economic diversification and a better investment climate through project financing and analytical work. It also aims to help Government improve people’s access to transport and energy infrastructure services to facilitate regional connectivity.

Sustainable Natural Resource Management. Through project financing and advisory services, the WBG assists in strengthening Government capacity to make informed decisions on resource-based investments. It also supports the Government in strengthening and implementing institutional, legal and regulatory frameworks that aim for sustainable development of natural wealth – water resources, minerals, forests and biodiversity - and mitigate the environmental and social impacts of natural resource development.

Inclusive Development. The WBG continues to support the Government in providing essential maternal and child health services and access to quality primary education in targeted, disadvantaged districts. It also builds on successful community driven platforms to assist communities in remote and poor areas, particularly among ethnic groups and women, to benefit from increased opportunities to participate in and benefit from development and livelihood activities.

Overall, the World Bank Group CPS program has been implemented largely as anticipated. CPS Progress Report highlighted the mixed achievement of CPS outcomes—with concerns about macroeconomic policies and public financial management. Good progress in achieving the outcomes of the first three themes of the CPS has been supported by strong performance in the delivery of new financing, satisfactory performance of the overall IDA portfolio, a high disbursement rate, and successful completion of a range of important knowledge products.

The International Finance Corporation (IFC) supports small and medium enterprises and larger firms in Laos through innovative investments and advisory services that help create jobs, raise incomes, and reduce poverty. In Laos, this begins with helping business and consumers obtain financing by investing in financial institutions and advising them on commercially viable products and services. IFC also advises the Government on developing business-friendly laws and regulations to improve opportunity for investors. The World Bank and IFC have been working closely through joint projects in supporting the energy sector, improving access to finance, and introducing PPP in the transport sector.

Last Updated: Aug 05, 2015

The NT2 Multi-purpose Hydroelectric Project is jointly implemented by the Nam Theun 2 Power Company and the Government of Lao PDR. It is supported by financing from 27 parties including the World Bank, MIGA and Asian Development Bank. By 2035, the project is expected to generate around $2 billion in Government revenues for poverty reduction and environmental protection through the sale of electricity to Thailand and into the Lao grid. Project revenues from electricity sales are being used to finance Government efforts to enhance access to health care, education, roads and electricity in Lao PDR. The Nam Theun 2 Power Company is contributing $1 million per year to support the administration of the Nakai Nam Theun National Protected Area during the 30 year concession and operations period, and is also financing activities to improve service delivery and livelihoods for around 6,300 resettled people on the Nakai plateau.

Other ongoing projects related to Sustainable Natural Resource Management include the Scaling-Up Participatory Sustainable Forest Management (SUFORD SU) project, which is executing REDD+ (Reduce Emissions from Deforestation and Forest Degradation) activities through participatory sustainable forest management, and piloting forest landscape management. The Protected Area and Wildlife (PAW) Project is improving management of National Protected Areas and reducing the trade in illegal wildlife.

The Second Education Development Project helped increase enrollment, completion and improve the quality of education in Lao PDR’s six poorest provinces. Under this project, 781 primary schools were built, each offering a complete five grades of primary education. Approximately 4,000 teachers were trained, a range of teaching-learning tools was developed and more than three million textbooks were distributed. The Early Childhood Education Project is ongoing.

The Rural Electrification Project is extending the electricity grid to rural households in southern provinces and is also promoting off-grid renewable energy throughout the country. Today, 87% of households now have access to electricity, up from only 16% in 1995.

The Poverty Reduction Fund (PRF) is the largest multi-sector community-driven development project in the country, with total IDA financing amounting to $34.35 million. The PRF has benefited more than 450,000 rural poor in about 850 villages. In target villages, results include increases of 37% in the use of health services, 76% in access to safe water resources, and 30% in access to all weather roads.The Second Poverty Reduction Fund is ongoing.

The Customs and Trade Facilitation Project is helping to make border clearances faster and more efficient. A computerized customs management system, which has been introduced at 15 out of 24 official checkpoints, takes payments electronically and provides this information in real-time to the Government’s financial management system. More than 90% of formal trade at these checkpoints is covered by the new system, which also generates detailed foreign trade information which can be used for economic analysis and planning. Customs clearance procedures have also been modernized as part of the project.

The WBG also acted as the trust fund administrator for the Trade Development Facility Project. The project contributed towards substantial trade negotiating efforts which culminated in Lao PDR’s formal WTO accession in February 2013; the establishment of a permanent National Trade Facilitation Secretariat; and the launch of an electronic Trade Portal that puts all trade-related information on tariffs, licenses, measures, laws, regulations and import/export procedures into the public domain. The Second Trade Development Facility, a multi donor partnership, is supporting the next generation of priority trade and competitiveness reforms.

Last Updated: Aug 05, 2015


Lao PDR: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments