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Lao People's Democratic Republic

Known in antiquity as the Kingdom of Lan Xang (“land of a million elephants”), and baptised the “land of a million contradictions” by journalists during the Indochina war, this sparsely-populated country is finally experiencing peace after three centuries of successive wars against the kingdom of Annam, China, Burma, Siam, France and the United States.

Laos, the least developed and most mysterious of the three former states of French Indochina, became the leader of the region’s economic and political reforms in the late 1980s. Since 1989, the country has opened up to free trade and foreign investment, with the hammer and sickle disappearing from the national flag for good in 1991.

Whilst Thailand is mired in political crises that are paralyzing its economy; whilst Cambodia is suffering from deep internal divisions; and whilst Vietnam is industrialising at full speed to create jobs for its teeming population, Laos seems keen to take its time to set up one of the most stable political and economic systems in the region.

A landlocked country, Laos spans more than 1 000 km from north to south in the heart of the Mekong sub-region, and has an area of 236 800 km2 (barely larger than Great Britain). The south and centre of the country are bordered to the east by the Annamite mountain range. Almost in parallel, the Mekong, the country’s major communication axis, defines most of the territory to the west over 1 865 km. The Mekong Valley and its fertile plains are the focus for almost all Laos’ rice fields and are the country’s leading agricultural region. At its narrowest point, in the central province of Khammouane, Laos is no more than 120 km wide.

With 6.8 million inhabitants, the population of this People’s Republic, although small, is very diverse with some 80 ethnicities. The population is also very young, with one in three Laotians aged under 15 years.

A quarter of the population currently lives on less than USD 2 a day per person, even though the country boasts numerous assets, including mineral (tin, gold, copper, zinc, bauxite, etc.) and energy resources. Thanks its powerful water network, Laos produces and mainly exports electricity to Thailand.

The tourism sector generates 6% of the Lao GDP and is the country’s third biggest earner of export revenue behind mining and hydropower. In 2013, the country hosted 3.7 million visitors (over 90 % of whom were border tourists), generating revenue of USD 596 million. Although tourist numbers are increasing significantly year on year (and the forecasts for 2014 and 2015 back this up), the fact that it continues to be characterised by border tourism with very short stays and low expenditure means that the country is not exploiting its potential to the full. Promoting a brand image based on sustainable community tourism should, in the long term (if the authorities provide the resources) attract larger numbers of international travellers.

In 2011, Laos posted a growth rate of 8%. According to OECD forecasts, the average annual growth will be 7.5 % over the period 2013-2017, i.e. the highest rate among members of the Association of Southeast Asian Nations. Gross national income per inhabitant rose from USD 310 in 2001 to over USD 1 000 in 2011. According to the World Bank’s classification, Laos belongs to the category of least developed countries. Its aim, however, is to join the category of middle-income countries by 2020. It hopes to achieve this status thanks to strong and steady economic growth based mainly on exporting its natural resources to neighbouring countries and by expanding its tourism sector.

In spite of the efforts made by the authorities to promote the country, Laos still suffers from a shortfall in tourist numbers compared to its Asian neighbours. This is due to a range of factors, chiefly the country’s poor image together with a lack of infrastructure and qualified personnel. The creation of a hotel school, LANITH (Lao National Institute of Tourism and Hospitality), which has been financed by the Luxembourg Development Cooperation from 2008, aims to fill this gap.

Despite the progress made to meet the MDGs, Laos still has much work to do in certain areas, especially health: 44% of children under five years suffer from stunted growth, and 27% are seriously underweight. Laos continues to have one of the highest maternal mortality ratios in the region, even if it is on track to reduce this gap and reach the MDG maternal mortality target. Laos could also do more to put gender equality at the centre of its plans for national development.

The government of Laos outlined its poverty reduction strategy and meeting the MDGs by 2015 in its seventh National Economic and Social Development Plan for 2011-2015. The plan aims to promote economic growth with equity; to develop and modernise the country’s social and economic infrastructure; and to expand human resources. The eighth National Economic and Social Development Plan for 2016-2020 is currently being drawn up.

The actions currently being implemented in Laos by the Luxembourg Development Cooperation form part of the third ICP established between the two countries for 2011-2015. A new ICP covering 2016-2020 is in the process of being prepared jointly with the national authorities. The main areas of intervention in Laos are as follows:

  • Education - training and vocational integration;
  • Local development;
  • Health.


Evolution of activities in Lao (in thousand EUR)

Distribution of the 2021 disbursements by sector

All projects in Lao