THIRD DRAFT for review MID-TERM REVIEW OF THE EIGHTH ... · • The opportunities and challenges associated with regional and global integration. ... PDR’s potential role in the

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THIRDDRAFTforreview

MID-TERMREVIEWOFTHEEIGHTHNATIONALSOCIO-

ECONOMICDEVELOPMENTPLAN,2016—2020

19October2018

Vientiane

MinistryofPlanningandInvestment

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Contents

ChapterI. ContextfortheEighthNationalSocio-EconomicDevelopmentPlan(2016-2020)..............1

1. MainDirectionsandTargets..................................................................................................1

2. Contextual Analysis: the First Half of the Implementation of the Eighth National Socio-

EconomicDevelopmentPlan,2016tomid-2018...............................................................................4

2.1. OverviewofChanges................................................................................................................4

2.2. InternationalCommitmentsandCooperation.........................................................................5

2.3. GraduationfromtheLDCcategory..........................................................................................1

2.4. GreenGrowthandtheEighthNSEDP.......................................................................................6

ChapterII. ImplementationoftheEighthNationalSocio-EconomicDevelopmentPlan(2016tomid-2018)16

1. Outcome1:InclusiveEconomicGrowth..............................................................................16

1.1. Outcome1,Output1:Sustainedandinclusiveeconomicgrowth.........................................16

1.2. Outcome1,Output2:Macro-economicstabilityachieved...................................................27

1.3. Outcome1,Output3:Integrateddevelopmentplanningandbudgeting.............................32

1.4. Outcome1,Output4:Balancedregionalandlocaldevelopmentachieved..........................38

1.5. Outcome1,Output5:Public/privatelabourforcecapacityimproved..................................52

1.6. Outcome1,Output6:Localentrepreneursarecompetitiveindomestic&globalmarkets.57

1.7. Outcome1,Output7:Regionalandinternationalcooperationandintegrationachieved....59

2. Outcome 2:EnhancedHumanDevelopment.......................................................................67

2.1. Outcome2,Output1:ImprovedlivingstandardsthroughpovertyreductionusingtheThree

BuildsDirections.................................................................................................................................67

2.2. Outcome2,Output2:Foodsecurityensuredandmalnutritionreduced..............................71

2.3. Outcome2,Output3:Universalaccesstoqualityeducationachieved.................................76

2.4. Outcome2,Output4:Universalaccesstoqualityhealthcareservicesachieved.................90

2.5. Outcome2,Output5:Improvementofandaccesstosocialprotectionachieved..............101

2.6. Outcome2,Output6:Nationaltraditionsandcultureprotected.......................................104

2.7. Outcome 2, Output 7: Political stability, social peace, order, justice and transparency

maintained.......................................................................................................................................105

3. Outcome3:ImprovedEnvironmentalProtection...............................................................108

3.1. Outcome 3, Output 1: Environmental protection and sustainable natural resources

managementachieved.....................................................................................................................108

3.2. Outcome3,Output2:Preparednessfornaturaldisastersandriskmitigationachieved....116

3.3. Outcome3,Output3:Instabilityofagriculturalproductionreduced..................................117

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4. Cross-CuttingOutputs.......................................................................................................119

4.1. Cross-CuttingOutput1:Publicgovernanceandadministrationenhanced.........................119

4.2. Cross-Cutting Output 2: Local innovation and use of science, technology and

telecommunicationspromoted,informationandcommunicationtechnologies(ICT)enhanced...124

4.3. Cross-CuttingOutput3:Genderequalityandempowermentofwomenandyouth...........128

4.4. Crosscuttingissuesforspecialconsideration......................................................................132

5. PolicyRecommendations..................................................................................................134

5.1. Outcome1............................................................................................................................134

5.2. Outcome2............................................................................................................................135

5.3. Outcome3............................................................................................................................137

5.4. Crosscuttingoutputs...........................................................................................................137

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Chapter I. Context for the Eighth National Socio-Economic Development Plan (2016-2020)

1. Main Directions and Targets

Planningframework.Theyear2016wasuniquefordevelopmentplanningintheLaoPeople’sDemocratic

Republic(LaoPDR).InadditiontotheEighthFiveYearNationalSocio-EconomicDevelopmentPlan(NSEPD,

2016–2020), the Government of Lao PDR presented the longer-term Vision 2030 and the Ten Year

DevelopmentStrategy(2016–2025),whichwereapprovedbytheNationalAssemblyon22April2016.Vision

2030andthe10YearDevelopmentStrategywillprovidecomprehensiveguidanceforthe8thFiveYearNSEDP

andbeyond.Themediumandlonger-termdevelopmentplansrelyheavilyoninvestmentfromandtradewith

neighbouring countries and other international partners. Domestic, regional, and international economic

environmentsare,therefore,crucialtothesuccessoftheseplans.

Planningcontext.Theplanstook intoconsiderationthetrendsand issuesrelevant tothecountry’ssocio-economicprogress,includingthefollowing:

• Thenatureandsustainabilityofgrowth:LaoPDRhasachievedremarkableeconomicgrowthinrecent

years,leadingtoimprovedlivingstandardsandsharplyrisingpercapitaincome.Thegrossnational

incomepercapitaincomeahasincreasedsince2000by2.5times.However,theLaoPDRgovernment

has become concerned that growth has been resource-based and does not generate sufficient

employmentrequiredforinclusivegrowth.Therecentdeclineofcommoditypricesalsohighlighted

therisksofover-relianceontheminingsector.TheGovernmentrecognizestheneedfortheeconomy

todiversifybeyondrelianceontheenergyandnaturalresourcessector,duetotheseconcerns.

• Thecontinuingdisparitiesindevelopmentbetweenandwithinregionsinthecountry.Thisisshownbyeconomicandsocialindicators:forexample,In2012/13,consumptionoftherichestquintilewas6.4

timesthatof thepoorest,while twodecadesago, thedifferencewas4.7times.bStunting inrural

areaswithoutroadaccessistwicethatinurbanareas.c

• Theopportunitiesandchallengesassociatedwithregionalandglobalintegration.TheseincludetheentryintotheASEANEconomicCommunity(AEC),theemergenceofstrongSouth–Southpartners,

thedevelopmentofnewfinancialinstitutionsandvariousSouth-Southinitiatives.ItalsoincludesLao

PDR’s potential role in the development of the economic corridors within the Greater Mekong

Subregion:thecountry’sSavan–SenoSpecialEconomicZoneandBotenSpecialEconomicZonewillbe

crucial for the East-West Economic Corridor and the North–South Economic Corridor. While the

countryneedstoprepare itself tooptimizethenewopportunities, itwillalsoneedtoaddressthe

challengesarisingfromgreateropennessandcompetition.

aConstant2010data,WorldBank.

bPimhidzai,etal.,2014andLindelowetal.,2010.

c2017MICSresults.

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Vision 2030Goal.TheultimategoaloftheVision2030istotransformLaoPDRintoanuppermiddle-incomecountryby

2030byquadruplingthecountry’spercapitaGDPandGNI.Vision2030recognizesthatsincethe1990s,the

country’seconomyhasgrownrapidlybytransitioningintoamarketeconomy,withfurtheraccelerationofthe

growthsincethebeginningofthiscenturybroughtaboutbythecommercializationofexport-orientedlarge-

scalemines,installationofhydro-electricdams,anddeeperregionalintegrationwithneighbouringcountries.

Growth characteristics.Vision 2030 further aims to achieve innovative, green and sustainable economic

growth,withthefollowingcharacteristics:

• Strongbasicinfrastructureandsystemstosupportindustrializationandmodernization

• Protectionoftheenvironmentandsustainableandefficientutilizationofnaturalresources

• Enhanced human development, social justice, peace and order, brought about by improved

livelihoodsandbetterlivingstandards,reduceddisparitiesindevelopmentoutcomesbetweenurban

andruralareas,universalaccesstoqualitysocialservices,People’srightsprotectedunderthe,andan

enhancedadministrativesystemfollowingtheprinciplesofthe3-buildsdirective,

• Afoundationofpoliticalstabilityandstrength,

• Enhancedcompetitiveness,connectivity,andintegrationwiththeregionalandglobaleconomies.

Ten-YearDevelopmentStrategy(2016–2025)Goalsandstrategies.TheTen-YearDevelopmentStrategyaimstodoublepercapitagrossnationalincome

(GNI)ofLaoPDRby2020.TheTen-YearStrategyiscomposedofsevensub-strategiesasfollows:(i)pursuing

quality, inclusive, stable, sustainable and green economic growth; (ii) graduating from Least Developed

Country(LDC)statusby2020,andmakingprogresstowardstheSustainableDevelopmentGoals(SDGs);(iii)

enhancinghumanresourcesdevelopment;(iv)promotingsustainabilityandenvironmentalprotection,with

effectiveandefficientuseofnaturalresources;(v)enhancinggovernment’sroleinsocialmanagementunder

the effective rule of law; (vi) improving global and regional integration; and (vii) Industrializing and

modernisingthecountry.

TheEighthNSEDP(2016�2020) Keydirections.The factorsunderpinning theEighthNSEDPand the formulationof itsoutcomes,outputs,

targetsandindicatorsaretheanalysisofthelessonslearntfromtheimplementationoftheSeventhNSEDP,

theassessmentoftrends,theguidelinesprovidedinthePrimeMinistersInstructionNo.24/PM,dated7May

2014,aandthekeydirectionsoftheEighthNSEDPasindicatedbytheGovernment,asfollows:

(i) Toachievecontinuedeconomicgrowthwithqualityandmacro-stability;andwithbudgetingthat

goes hand in hand with development targets and is consistent with the new directions of

industrializationandmodernization;

(ii) Toensure sustainabledevelopmentbasedon the threeharmonized componentsofeconomic

development,socio-culturaldevelopmentandenvironmentalprotection;preparednesstohandle

naturaldisastersinatimelymanner;integratedruraldevelopmentwithstronglinkstopoverty

reductionthroughtheimplementationoftheThreeBuildsDirective;

aThePrimeMinister’sInstructionNo.24/PM,dated7May2014,concernstheformulationof2030Vision,theTen-Year

Socio-EconomicDevelopmentStrategy(2016–2025)andtheEighthNationalSocio-EconomicDevelopmentPlan(2016–2025).

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(iii) Tostrengthenhumanresourcecapacitybyimprovingworkforceskills,encouragingworkerstobe

moredisciplinedand tolerant, increasing thenumberof technical experts and specialists, and

enhancing the technical and professional capacity of civil servants, the private sector and

entrepreneurstoenablethemtocompetewithinthecountryandinternationally;

(iv) Tomaintain political stability, peace and social order, with solidarity, democracy, justice and

civilizationembeddedwithinLaosociety;and

(v) To enhance and expand international cooperation with country ownership oriented towards

benefitforthepeoplesofLaoPDR,andenhanceregionalandinternationalintegration.

OverallObjective.theoverallobjectiveoftheEighthNSEDPistoensurepoliticalstability,peaceandorderinsociety;significantlyreducedpovertyofthepopulationinallareas,theachievementofgraduationfromLDC

statusby2020throughcontinuous,inclusiveandsustainablegrowth,theeffectivemanagementandefficient

utilizationofnaturalresources;enhanceddevelopmentusingnationalpotentialandthecountry’sadvantages;

andtheparticipationofLaoPDRinregionalandinternationalintegrationwithnationalownership.

Dimensions.TheEighthNSEDPreflectsthethreedimensionsofsustainabledevelopment,asarticulatedin

the global 2030 Agenda.a The NSEDP reflects the economic, social, and environmental dimensions in its

Outcomeareas,whileNSEDPoutputsrelatetooneormoreof theSDGs, in its targetand indicatorareas.

Cross-cutting components – such as governance, innovation and technology, gender equality, youth and

women’s empowerment, and Green Growth targets and indicators – foster integration across the three

dimensions of the NSEDP. The integration is also fostered by having Green Growth indicators and LDCgraduationcriteriathatextendacrossallthreepillarsoftheNSEDP.

aUnitedNations,2015a.Resolution70/1.

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2. Contextual Analysis: the First Half of the Implementation of the Eighth National Socio-Economic Development Plan, 2016 to mid-2018

2.1. Overview of Changes InternationalContext.Implementationofthe8

thNSEDPhastakenplaceinarelativelychallengingregional

and international environment that directly and indirectly affects progress towards key plan targets. This

includes: (i) politicaluncertainty in several largeworldeconomies; (ii) fluctuations in global fuel and food

prices; (iii)growing trend towards tradeprotectionismandpossible retaliation, including inChinaand the

UnitedStates;and(iv)increasedincidenceofnaturaldisastersacrosstheregion.

Unevenglobalgrowthandcommoditypriceshocks.Worldeconomicgrowthfellto3.2percentin2016(from

3.5percentin2015)butrecoveredto3.8percentin2017.aTheIMFfurtherforecasts3.9percentworldgrowth

in2018andasimilarratefortherestofthe8thNSEDPperiod(3.9percentin2019and3.8percentin2020).

Globalcommoditypricesalsodroppedsharplyduringthefirsthalfofthe8thNSEDPbutrecoveredin2017-

18.bForexample,theglobalcopperpricefellby30percentfrom2014-16(from$6,863permetrictonneto

$4,808)butrecoveredtonearlyits2014levelby2018.WorldBankforecastssuggestitwillremaininasimilar

rangeovertherestofthe8thNSEDPperiod($6,816permetrictonnein2019and$6,833in2020).Theglobal

oilpricealsofellsharplyduringthefirsthalfoftheNSEDP,losingoverhalfitsvaluefrom2014-16(from$96

perbarrelto$43perbarrel).Butoilpricesalsorecovered,reaching$65perbarrel2018andforecasttostay

inasimilarrangethrough2020.

ContinuedstronggrowthinmostofAsia.GrowthindevelopingAsiahas,meanwhile,continuedtooutpace

worldgrowth.TheIMF’s“EmergingandDevelopingAsia”groupofcountriessawaverageannualgrowthof

6.6percentfrom2015-17.Growthisexpectedtostayat6.5percentovertherestoftheplanperiod(2018-

20), inpartspurredbytherecovery inglobalcommoditypricesthatwillcontinuetosupportexportersof

primarygoods.Givenitsdependenceonasmallnumberofneighbouringcountriesfortradeandfinance—

especiallyChina, Thailand, andVietnam--LaoPDR’sdevelopmentprogress is affectedby continued strong

performance in thoseeconomies.Growth inChina isexpectedtoslowover therestof theNSEDPperiod,

falling from 6.8 percent annual average growth in 2016-17 to 6.4 percent from 2018-20. A significant

slowdowninChinawouldimpactmanyaspectsofLaoPDR’seconomicprospects,includingexports,tourist

arrivals,andFDI.Growth inThailand,meanwhile,has laggedmanyof itsASEANneighbours,averaging3.6

percentperyearin2016-17(withanexpectedriseto3.8percentfrom2018-20).Vietnam,finally,isexpected

togrowatarelativelystablerateoverthefullplanperiod(6.5percentonaverageacrossallyears).

DomesticContext.LaoPDRremainssusceptibletodisasters,mostclearlyevidencedbytheJuly2018flooding

thataffected13provincesacross thenorthern,central,andsouthernpartsof thecountry.Thisespecially

affectedAttapeuProvincethroughthebreachedsaddledamoftheXePien-XeNamNoyhydropowerdam.

Overall, three flooding incidents in the summerof 2018 affected 17out of 18 provinces, 90 districts and

aAllgrowthestimatesoutsideofLaoPDRarefromtheIMFWorldEconomicOutlookdatabase.

bAllcommoditypricedataisinnominalUSdollarsandistakenfromWorldBankCommoditiesPriceForecast(April24,2018).

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268,000people.Theseeventswillaffectdramaticallyprogress towards8thNSEDPtargets (SeeOutcome3

Output2).a

Vulnerability to natural disasters. The recent flooding is not the only disaster that has affected planimplementation.Therewerealsofloodsincertainprovincesduringthefirstsixmonthsperiodof2017andan

outbreakofcropdestructionfrominsects(e.g.,epidemicofgrasshoppersinNorthernprovinces).Ingeneral,

climate change-linkednatural disasters such as droughts and floods are still occurring and remain critical

developmentchallenges.Withthecountrylargelyagrarianandnatural-resourcebasedindustriestheprime

sourcesofgrowth,extremeweathershocksdamagesocio-economicdevelopmentprospectsandmayreverse

gainsinpovertyreduction

ChairofASEANandincreasedregionalintegration.Meanwhile,LaoPDRhasseenpoliticalstability,peace,

andsocialorderthroughoutthe8thNSEDPperiod.Ithasalsobroadenedinternationalcooperation,notably

through its role as ASEANChair in 2016. Amongmany accomplishments, this included completion of the

Master Plan for ASEAN Connectivity 2025 and the Vientiane Declaration on Promoting Infrastructure

DevelopmentCooperationinEastAsia.OtheragreementsincludedtheASEANTradeFacilitationFramework

in2016;theASEANTradeRepository;andtheAEC2025TradeFacilitationStrategicActionPlan(ATF-SAP).All

of these have underpinned Lao PDR’s growing role within a more closely integrated ASEAN region and

supporteditseffortstoexpandtradeandincreaseforeigninvestment.

2.2. International Commitments and Cooperation Active engagement. Lao PDR is committed to its international commitments, as shown by the following

examples:

(i) LaoPDRwasamongtheearliestcountriestoLaoPDRwasamongtheearliestcountriestolocalize

the Sustainable Development Goals (SDGs) and integrate them into its national planning

framework.Furtherdetailsaregiveninsection1.2.1,chapterI.

(ii) LaoPDRhasaccededtoorratifiedsevenoutofninekeyinternationalhumanrightsinstruments.b

The country continues to incorporate these obligations into its national laws, policies, and

programmes.

(iii) TheGovernmenthasaccepted116ofthe196recommendationsmadebytheWorkingGroupon

theUniversalPeriodicReviewin2015andisaddressingimplementationgapsinthehumanrights

instruments.

(iv) LaoPDRbecamethefirstcountryinASEANtoratifytheParisAgreementonClimateChangeby

passing a national law on its Intended Nationally Determined Contribution. While Lao PDR’s

contributiontoglobalgreenhousegasemissionsisstillnegligible,thegovernmentisdetermined

aTermsofReference,PostDisasterNeedsAssessment:July2018LaoPDRFloods(September2018).

bThesevenare:1)CAT:ConventionagainstTortureandOtherCruelInhumanorDegradingTreatmentorPunishment,2)CCPR-

InternationalCovenantonCivilandPoliticalRights,3)CEDAW-ConventionontheEliminationofAllFormsofDiscrimination

againstWomen,4)CERD-InternationalConventionontheEliminationofAllFormsofRacialDiscrimination,5)CESCR-

InternationalCovenantonEconomic,SocialandCulturalRights,6)CRC-ConventionontheRightsoftheChildanditsOptional

Protocolsontheinvolvementofchildreninarmedconflict,andonthesaleofchildrenchildprostitutionandchildpornography,

and7)CRPD-ConventionontheRightsofPersonswithDisabilities.

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tosubstantiallyincreasethecountry’sforestcoverto70percentby2020,enhancetheresilience

ofagriculture,andconserveandrestorevaluableterrestrialandfreshwaterecosystems.a

(v) Lao PDR’s leadership role in implementing the Convention on Cluster Munitionsb is widely

acknowledged.c

Developmentcooperationframework.TheVientianeDeclarationonPartnershipforEffectiveDevelopment

Cooperation (2016-2025) is the overarching framework for development cooperation in Lao PDR. The

Declaration aligns Lao PDR’s cooperation principles with the global agenda on effective development

cooperation,includingthe2012BusanPartnershipforEffectiveDevelopmentCo-operation,the2014Mexico

HighLevelMeetingCommuniqué,the2015AddisAbabaActionAgenda,andtheSDGs.Atthenationallevel,

the Government, together with its partners, has developed a monitoring framework called Vientiane

Declaration Country Action Plan (VDCAP), which is in line with the global partnership for effective

developmentcooperation.Thiswillguidehoweffectivedevelopmentcooperationismonitoredandreported

on.Inaddition,tosupportmulti-stakeholderpartnershipsforsustainabledevelopment,LaoPDRhasrecently

reviewedandreconfirmedthecommitmenttofurtherenhancethenationaldevelopmentcooperationforum,

the‘RoundTableProcess,includingSectorWorkingGroups.”TheRoundTableProcessisguidedbygloballyagreed principles on effective development cooperation such as government ownership of development

priorities and plans, a focus on results, inclusive development partnerships and transparency and

accountabilitytooneanother.

FrameworkforUNsupport.TheLaoPDR–UnitedNationsPartnershipFramework(2017-2021)articulatesthe

collectiveresponseoftheUNsystemtonationaldevelopmentpriorities.ThePartnershipFrameworkaimsto

identify strategic focus areas, promote synergy, improve coordination, and ensure transparency and

predictabilityofresources.ItalsoaimstomaketheknowledgenetworksandexpertiseoftheUNsystemmore

systematicallyaccessibletotheGovernmentofLaoPDR.

2.2.1. SustainableDevelopmentGoals

Lao PDR’s engagement. Lao PDR actively participated in the design of the new global agenda 2030. Thenationalconsultationsthatprovidedinputs intothesustainabledevelopmentagendabuiltonnotonlythe

viewsofGovernment,butalsothoseofcivilsociety,privatesector,andcitizensfromacrossthecountry.In

September2015,theLaodelegation ledbythePresidentparticipated intheUNSustainableDevelopment

Summit, where the world adopted the 2030 Agenda for Sustainable Development, the 17 Sustainable

DevelopmentGoals(SDGs)and169targets.

Institutionalmechanisms.Thegovernment’s institutionalmechanisms showhighpriority accorded to the

implementation of the SDGs through national development plans. The President issued a Decree on 20

September 2017 appointing the Prime Minister to chair the National Steering Committee for SDG

implementation,withmembersoftheCommitteedrawnfromallconcernedministries,ministry-equivalent

agencies, and mass organizations. The National Steering Committee will oversee the coordination and

aUnitedNationsinLaoPDR,2017.WhatdoestheinternationalClimateConferenceCOP23meanforLaoPDR?Vientiane,11December2017.Availablefrom:http://www.la.one.un.org/media-center/news-and-features/361-what-does-the-international-

climate-conference-cop-23-mean-for-lao-pdrAccessed21May2018.

bRatifiedbyLaoPDRsince18March2009.

cUNDP,2015:NorwayRenewsItsSupporttoreducetheimpactofClusterMunitionsinLaos.Jan22,2015.Availablefrom:

http://www.la.undp.org/content/lao_pdr/en/home/presscenter/pressreleases/2015/01/22/norway-renews-its-support-to-

reduce-the-impact-of-cluster-munitions-in-laos.htmlAccessed21May2018.

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implementationoftheSDGsthroughtheNSEDPandthesectoraldevelopmentplansofvariousministriesup

to2030,includingthemonitoringandevaluationoftheimplementationresults.TheDecreemandatesSDG

implementationbyeveryministryandsector,andatdifferentlevelsthroughoutthecountry.The26National

SteeringCommitteemembersallhaveministerialorvice-ministerialstatus.TheCommitteethenappointed

theNationalSDGSecretariatintheMinistryofForeignAffairsandSDGfocalpointsinrelevantlineministries

to lead and take ownership of each SDG. a The National SDG Secretariat (Ministry of Foreign Affairs and

MinistryofPlanningandInvestment)workswithlineministriestotracktheprogressofSDGimplementation.

Also in coordinationwith lineministries, the National SDG Secretariatworks closelywith United Nations

agenciesandotherdevelopmentpartnerstoensurethesupportnecessaryforthe2030Agenda.

Convergencewithnationalplanning.LaoPDRisimplementingtheSDGsthroughtheNSEDPsandthesector

development plans of each ministry. Lao PDR has incorporated the SDGs into its national planning

frameworks.The lessons learned from the implementationof theSeventhNSEDP (2011-2015),especiallywith regard to the unfinishedMillenniumDevelopment Goals (MDGs), informed the development of the

Eighth NSEDP. By 2016, the government had localized and integrated the SDGs into theMonitoring and

EvaluationFrameworkoftheEighthNSEDP,witharound60percentofthe160NSEDPindicatorslinkedtothe

SDGs (Table 1) and taking into account the unfinished business ofMDGs (Table 2). Thismeans that data

collectedforthoseNSEDPindicatorswillalsoprovideabasisforSDGreporting.Thesectordevelopmentplans

oflineministriesincludeadditionalSDGindicators.TheGovernmentwillincorporatethe2030Agendainto

thecountry’sNinthNSEDP(2021-2025),theTenthNSEDP(2026-2030)andaccompanyingsectoralstrategies.

Thesesuccessivemedium-termplansfitintothecountry’slonger-termplans,notablytheTen-YearStrategy

(2016-2025)andthe2030Vision.ThisfacilitatesthecontinuedimplementationoftheSDGsthroughnational

planningframeworksupto2030.Successfulimplementationofthesenationalplanswilladdressunfinished

businessrelatingtotheMDGs,deliverearlyprogressontheSDGs,anddrivethecountry’sgraduationfrom

theranksofLDCs.

Lao-specific SDG. Lao PDR has adopted its own SDG 18 on unexploded ordnance (UXO). UXO remains a

dauntingbarriertotheprogressofdevelopmentinLaoPDR.From1964to1973,duringtheIndochinawar,

morethan500,000bombingmissionsdroppedovertwomilliontonsofbombs,ornearlyonetonforevery

man,womanandchildinthepopulationatthetime.Morethan40yearsaftertheendofwar,anestimated

80million cluster sub-munitions remain unexploded, affecting 15 of 18 provinces in the country and 25

percentofallvillages.UXOscauseacrosscuttingimpactonSDGs,sinceUXOslimitsafeaccesstoagricultural

andlandfordevelopmentprojects,andalsomaketheconstructionoftransportandpowerinfrastructure,

schools, hospitals, andwater supply facilitiesmuchmore costly and dangerous. Consequently, the Prime

Minister of Lao PDR H.E. Mr. Thongloun Sisoulith and UN Secretary-General Mr. Ban Ki-moon formally

launchedthecountry’sSDG18called,“LivesSafefromUXO”on7September2016inVientiane.

aPresidentialDecreeNo206/PSD,Dated20September2017ontheNationalSteeringCommittee,toimplementtheSustainable

DevelopmentGoalsintheLaoPDR.

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Table1.IntegrationoftheSDGs,GreenGrowth,andLDCgraduationcriteriaintotheEighthNationalSocio-EconomicDevelopmentPlan

NSEDP Outcome/ Output Linkages with SDGs Linked to LDC

graduation criteria

Includes Green

Growth Indicator

Outcome 1: Sustained, inclusive economic growth, strong economic foundations & reduced economic vulnerability

Output 1 –Sustained and inclusive economic growth

ü ü

Output 2 – Macroeconomic stability

ü -

Output 3 – Integrated development planning and budgeting

ü

Output 4 – Balanced regional and local development

-

Output 5 – Improved public/private labour force capacity

ü ü

Output 6 – Local entrepreneurs are competitive in domestic and global markets

-

Output 7 – Regional and international cooperation and integration

ü -

Outcome 2: Human resources developed, public/private workforce capacity upgraded, poverty in all ethnic groups reduced, equal access by female/male/all ethnic groups to quality education and health services, the unique Lao culture promoted, protected and developed, political stability maintained with social peace and order, justice and transparency

Output 1 – Improved living standards through poverty reduction

Output 2 – Ensured food security and reduced incidence of malnutrition

ü

Output 3 – Access to high quality education

ü

Часть рисунка с идентификатором отношения rId10 не найдена в файле.





9

NSEDP Outcome/ Output Linkages with SDGs Linked to LDC

graduation criteria

Includes Green

Growth Indicator

Output 4 – Access to high quality health care and preventative medicine

ü ü

Output 5 – Enhanced Social Protection

Output 6 – Protection of traditions and culture

ü Output 7 – Maintain political stability, social peace, order, justice and transparency

Outcome 3: Natural resources and the environment protected and sustainably managed, green growth promoted, disaster preparedness enhanced and climate resilience developed

Output 1 – Environmental Protection and Sustainable Natural Resources Management

ü

Output 2 – Preparedness for Natural Disasters and Risk Reduction

ü ü

Output 3 – Reduced Instability of Agricultural Production

ü ü

NSEDP Cross-Cutting Outputs contributing to all Outcomes

Output 1 -- Public governance and administration enhanced

Output 2 -- Local innovation and use of science, technology and telecommunications promoted, Information and communication technologies (ICT) enhanced

Output 3--Gender equality and empowerment of women and youth



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Table2.Summaryreview:progresstowardsMDGtargetsandselectedindicators

Goal 1: Eradicate extreme poverty and hunger

Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day

Target 1.B: Achieve full and productive employment and decent work for all, including women and young people

Growth of GDP per person employed Vulnerable employment

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

Hunger/Undernourished population Child undernutrition: stunting Goal 2: Achieve universal primary education

Target 2.A: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling

Primary net enrolment Secondary gross enrolment Primary survival/completion Youth literacy Goal 3: Promote gender equality and empower women

Target 3.A: Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later than 2015

Gender parity in education Women in employment Women in National Parliament Goal 4: Reduce child mortality

Target 4.A: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate

Under five and infant mortality Immunization Goal 5: Improve maternal health

Target 5.A: Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio

Maternal mortality ratio Delivery care coverage

Target 5.B: Achieve, by 2015, universal access to reproductive health Contraceptive prevalence & unmet needs Adolescent birth rate Antenatal care coverage

Goal 6: Combat HIV/AIDS, malaria and other diseases

Target 6.A: Have halted by 2015 and begun to reverse the spread of HIV/AIDS

Target 6.B: Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it

Target 6.C: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

Malaria Tuberculosis

Goal 7: Ensure environmental sustainability

Target 7.A: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources

Land area covered by forest

Target 7.B: Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate of loss

Target 7.C: Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

Improved drinking water source Improved sanitation facility Goal 9: Reduce the impact of UXO in Lao PDR

Target 9A: Ensure the complete clearance of UXO from priority / high value agricultural land by 2020 Target 9B: Reduce substantially the number of casualties as a result of UXO incidents Target 9C: Ensure that medical & rehabilitation needs of all UXO survivors are met in line with treaty obligations under the Convention on Cluster Munitions

Key Achieved

Notyetachieved,butprogressing

Notyetachieved,offtrack

Noinformation/notmeasured

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2.3. Graduation from the LDC category

2.3.1. LDCgraduationstatusLaoPDRandthe2018LDCreview.Duringthe2018triennialreviewoftheCommitteeforDevelopmentPolicy (CDP), Lao PDR reached the threshold for graduation from the LDC category for the first time.Specifically, according to theCDP, “the LaoPeople’sDemocraticRepublicmeetsbothGNIandhumanassetsindexcriteria….andwillbeconsideredforgraduationatthenexttriennialreviewin2021”14(Table3).WhilegraduationfromtheLDCcategorywillmarkanimportantmilestone,itisalsonecessarytolookbeyond.Meeting the criteria for graduation does notmean a country is necessarily on a sustainabledevelopment pathway. As Lao PDR continues its path towards 8th NSEDP implementation, continuedemphasis on building the competitiveness of domestic industries, including through increasing valueadded inproductionand reductionofnatural resourcedependency, canhelp reduce its vulnerable toexternaleconomicshocksandcontributetothelikelihoodofachievingasustainablegraduation.

Table3.LaoPDRdatafrom2018CDPTriennialReview GNIpercapita,2014-

2016average(USD)HumanAssetIndex(HAI) EconomicVulnerability

Index(EVI)

LaoPDR2018data $1,996 72.8 33.7

LDCindicatorthresholds

Inclusionthreshold:>1,035Graduationthreshold:>1,242

Inclusionthreshold:>60Graduationthreshold:>66

Inclusionthreshold:<36Graduationthreshold:<32

Source:UnitedNations,DepartmentofEconomicandSocialAffairs(DESA),CDPSecretariat.

Countries need to pass the threshold for graduation for two successive CDP reviews and graduationnormally takesplacethreeyearsafter that.ThenextCDPreviewwillbe in2021so,under thenormalschedule, Lao PDR could reach full graduation in 2024. This accomplishment relies, however, onmaintainingcurrentdevelopmentmomentumfortherestofthe8thNSEDPperiodandbeyond.

2.3.2. BreakdownofLDCcriteriaLao PDR and progress on the LDC criteria.While they do notmark the end of a development path,improvementsintheLDCindicatorsrepresentsmeaningfulchange.TheLDCcategoryanditsindicatorsaimtocapturestructuralchallengesthatcanmakebothachievingdevelopmentprogressandsustainingitoverthelongtermdifficult.ProgressacrosstheLDCindicatorssignifyimprovedlivingstandardsformanyLaocitizens(Table4).Forexample,GNIpercapitagrewfrom$510to$1,996betweenthe2009and2018reviews.15

Table4.LaoPDRLDCgraduationdataovertime

LDCreviewperiodGNIpercapita,3-yearaverage(USD)

HumanAssetIndex(HAI) EconomicVulnerabilityIndex(EVI)

2006 $350 54.0 57.92009 $510 62.3 59.92012 $913 61.4 37.1

14CDP(2018),“ReportontheTwentiethSessionoftheCommitteeforDevelopmentPolicy”,12-16March,2018(E/2018/33,SupplementNo.13).

15ThecriteriaforLDCgraduationincludesGNIpercapitaaveragedacrossthreeyearstohelpsmoothannualfluctuations.The2018CDPreview,forexample,measuredaverageGNIpercapitafrom2014-16.

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2015 $1,232 60.8 36.22018 $1,996 72.8 33.7


HAIoverview.TheHumanAssetIndex(HAI),meanwhile,measuresacountry’shumancapitalformationand is intended to capture thedegree towhich a country has developed the supply of human assetsnecessarytomaintainadurablegrowthtrajectory.16This includesmeasurementsofmalnutrition,childmortality,maternalmortality,literacy,andsecondaryschoolenrolment.MostoftheseindicatorsarealsoincludedintheSDGglobalindicatorframework.

Theindexitselfdependsonperformancerelativetothatofothercountriessothefinalscorealonedoesnotnecessarily represent the levelofhumanassets ina society.Butbreakingdown the index into itscomponentpartscanhelpillustrateprogressandidentifyremainingchallengesforhumancapitalbuilding(Table5).

Table5.ComponentsoftheHAI

Health Education

LDCreviewperiod

Prevalenceofundernourishmentintotalpopulation(%)

Under5mortality(per

1000)

Literacyrate

Grosssecondaryenrolmentratio

2006 22.0 140.6 68.7 44.0

2009 19.0 84.4 73.2 43.5

2012 22.0 56.8 72.7 44.7

2015 21.8 71.4 72.7 50.5

2018 17.1 63.9 84.7 61.7Source:UnitedNations,DepartmentofEconomicandSocialAffairs(DESA),CDPSecretariat.

Progressoneducationindicators.TheHumanAssetIndex(HAI)assessesthehumancapitalofacountry.It is an aggregated index of four equallyweighted criteria. Accordingly, the HAI is a value comprisedbetween0and100andthehighertheindex,thebetter.LaoPDRhasmadeprogressacrossalldimensionsoftheHAI,especiallythoserelatedtoeducation.Since2006,forexample,adultliteracyincreasedfrom69to85percentofthepopulationandgrosssecondaryenrolmentratiorosefrom44to62. Increasesbetweenthe2015and2018reviewshavebeenparticularlysignificant,includingforundernourishment,literacyandsecondaryschoolenrolment.17

Challenges for improving nutrition and health. But challenges remain for ensuring most of the Laopopulationhasthenutritionandhealthservicesneededtoensureopportunitiesforpersonalgrowthanddevelopment. This is illustratedwhen comparing human capital indicatorswith neighboring countries(Table 6). The 2018 CDP review found that 17 percent of the Lao population is undernourished—thehighestrateinASEAN.LaoPDRalsotrailsotherASEANcountries(includingotherASEANLDCs)inmeasuresofchildandmaternalmortality.ThesearealsobothSDGglobalindicators.LaoPDRstillrequiressignificantprogresstoreachthe2030targetformaternalmortalityof lessthan70deathsper100,000livebirths16Theindexconstructiondoesnotincludeallcomponentsofhumancapitalbutaimsrathertocaptureaselectedsamplethat,takentogether,providesaproxyofhumanassetformationinacountry.

17ItshouldbenotedthattheCDPreviewdatesdonotdirectlyalignwithdataforthatspecificyear.Theytypicallyrefertothemostrecentlyavailabledatapointforeachindicator.Thismeansthattheincreasesbetweenthe2015and2018reviewsarenotnecessarilyrepresentativeofchangesduringthe8thNSEDPperiod.Forexample,theliteracyratemeasuredduringthe2018reviewforLaoPDRisfrom2015.Assuchchangesfrom2015to2018referencedheredonotdirectlyalignwithchangesduringthe8thNSEDPperiod.

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(SDGTarget3.1)andforunder-5mortalityoflessthan25deathsper1,000livebirths(SDGTarget3.2).18LaoPDRfaresmorefavorablyregionallyontheeducationindicators.

Table6.HAIindicatorsinASEANcountriesfromthe2018CDPreview HAIindicators HAI Prevalenceof

undernourishment(%)

Under5mortality(per1000)

Maternalmortality(per100,000live

birth)

Literacyrate(%)

Grosssecondaryenrolmentratio

Cambodia 68.9 15.3 30.6 160.5 73.9 45.1

Indonesia 90.4 7.9 26.4 126.2 95.4 85.8

LaoPDR 72.8 17.1 63.9 197.4 84.7 61.7

Malaysia 91.0 2.5 8.3 39.8 93.1 77.6

Myanmar 68.5 16.9 50.8 178.5 75.6 51.3

Philippines 89.9 13.8 27.1 114.1 96.4 88.4

Thailand 95.9 9.5 12.2 20.3 92.9 129.0

VietNam 89.3 10.7 21.6 54.1 93.5 81.6

LDCaverage 53.1 26.4 67.5 432.5 57.2 45.7

ASEANaverage 83.3 11.7 30.1 111.4 88.2 77.6

Source:UnitedNations,DepartmentofEconomicandSocialAffairs(DESA),CDPSecretariat.EVIoverview.TheEconomicVulnerabilityIndex(EVI),meanwhile,aimstocapturethevulnerabilityofacountrytoexternalshocksandcansignalthedurabilityandlikelyresilienceofaneconomy.Atthe2018CDPreview,LaoPDRfellshortofthethresholdforgraduationonEVI,suggestingthatcontinuedeffortstoincreaseeconomicresilienceareneededasitconsidersplansfortheremainderofthe8thNSEDPperiodandbeyond.

Measuringvulnerabilitytoshocks.SomecomponentsoftheEVIarestructuralandoutsideofthecontrolof the government (e.g., population, remoteness). These fixed factors nevertheless capture importantstructural challenges facing a country to be considered when developing strategies and plans. Forexample,whileacountrycannotnecessarilycontrol its remoteness level fromothermarkets,distancefromkeytradingpartnersisstillafactorformakingdecisionsaboutinfrastructureinvestmentsorspecificvaluechaindevelopment.ButseveralEVIindicatorsdescribeelementsoftheeconomicstructurethatarerelevant to resilience and affect long-term sustainable development prospects (Table 7). These relateprincipallytoexports(boththeirdiversityandstability)andtheagriculturalsector(bothitsshareoftotalGDPandstabilityofproduction).

Table7.KeycomponentsoftheEVI

Exports Agricultural

LDCreviewperiod

ExportConcentration(HHI)

Exportstability AgricultureshareofGDP(%)

Agriculturestability

2006 0.3 18.8 48.1 8.22009 0.4 24.8 44.8 7.82012 0.3 10.2 31.7 6.42015 0.3 12.3 25.7 5.32018 0.2 12.2 19.6 5.1

18TheSDGsalsotargetzerohungerandfullaccesstosafe,nutritiousandsufficientfoodallyearround(SDG2.1).

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ComparisonofvulnerabilityacrossASEAN.ComparedtoitsASEANneighbours,LaoPDRalsostilltrailsinsomeimportantmeasuresofeconomicvulnerability(Table8).Its2018EVIscoreplacesitaheadofonlyCambodia.Nevertheless,thestabilityofbothexportsandagriculturalproductionhaveincreasedoverthelastdecade.Exportsarealso lessconcentrated inLaoPDRthan inmostotherLDCs, includingthose inASEAN.19Thissuggeststhatthe8thNSEDPemphasisonexportdiversification,includingshiftingtowardsnon-resourceindustrialization,isalignedwithkeyelementsrelevanttoLDCgraduation.

Table8.EVIindicatorsinASEANcountriesfromthe2018CDPReview EVIindicators EVI Exportconcentration

(HHI)GDPshareofagriculture(%)

Agriculturalinstability

Exportinstability

Cambodia 34.8 0.31 28.40 6.98 9.05Indonesia 24.2 0.14 13.85 2.77 10.60LaoPDR 33.7 0.22 19.60 5.09 12.20Malaysia 21.4 0.17 8.82 3.30 5.95Myanmar 31.7 0.35 26.62 4.21 13.69Philippines 25.1 0.27 10.41 2.71 7.36Thailand 23.7 0.08 9.05 3.12 5.49VietNam 30.1 0.18 18.90 1.47 2.73LDCaverage 41.3 0.47 26.46 6.26 17.11ASEANaverage 28.1 0.21 16.96 3.71 8.38


2.3.3. Implications of graduation: LDC special treatment and preparation forwithdrawal

SpecialtreatmentforLDCs.TheLDCcategoryincludesspecialprovisionsrelatedtodevelopmentfinanceand preferential trade arrangements to help countries overcome structural challenges. As Lao PDRcontinues to progress towards graduation, the Government is committed to developing a transitionstrategythattakesadvantageofLDCbenefitswhiletheyarestillavailableandpreparesforthewithdrawalofsupportwithminimalnegativeimpacts.20

OverallimpactofLDCgraduationforLaoPDRlikelypositive.AccordingtoanalysisbytheGovernmentand development partners, the positive effects of graduation likely outweigh potential negative (orunintended)consequencesaslossesfromthephasingoutofLDC-specificsupportaremostlikelytobelimited.AsanLDC,LaoPDRreceivespreferentialmarketaccessfortrade.ThisincludesWTOprovisionsforSpecialandDifferentialTreatment,andautonomous,non-reciprocal initiativesthroughGeneralizedSystem of Preferences (GSP) schemes. For example, as an LDC and WTO member, Lao PDR enjoyspreferentialtreatmentintheEuropeanUnion(EU)underthe“EverythingbutArms”(EBA)initiative.

19ExportconcentrationismeasuredbytheHerfindahl-Hirschmannindex.Thisiscalculatedonanormalizedscalefrom0-1where1reflectsmaximumexportproductconcentration(i.e.,whenacountryonlyexportsoneproduct).

20Afteracountryhasbeenrecommendedforgraduationitcompletesanationaltransitionstrategythatincludesasetofspecificmeasurestohelpitplanforthechange.Thedevelopmentofanex-anteimpactassessmentofLDCgraduationbytheCDPwastriggeredafterthecriteriawasmetforthefirsttime.ThisaimstocapturethelikelyconsequencesofgraduationandwillbeavailableatthenextCDPreview.

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Implicationsofgraduationfortrade.Animportantmitigatingfactoroftheimpactofgraduationisthatalargemajorityof its international tradetakesplacewithneighbouringcountries (especiallyASEANandChina)thatdonotuseLDCstatusasacriterionforpreferentialmarketaccess.LaoPDRwillalsocontinueto benefit from LDC-specific Special and Differential measures during a transition period followinggraduationandLDCgraduateshaveaccesstonon-LDC-specificsupportmeasures(e.g.,differentfinancingwindows,othertypesofpreferentialtreatmentfordevelopingcountries)that,thoughlessgenerousthanthoseavailablebeforegraduation,stillprovidesupport.

Strategyforcopingwithchangesinmarketaccess.Still,LaoPDRcanstillputinplacemeasurestobettertakeadvantageofLDC-specifictradeprovisionsbeforegraduation,absorbtheimpactoftheirwithdrawal,andincreasecapacitytoproduceproductscompetitiveinworldmarketsregardlessofLao’sLDCstatus.

• Increaseexportcompetitiveness.First,LaoPDRcanimproveitscompetitivenessbyenhancingthesupply of human capital and upgrading the infrastructure needed for trade. Investments ineducation,health,andskillsarecriticalforexpandingtradeopportunities,asareastablesupplyofelectricityandadependabletransportnetwork.

• RemoveNTBs.Second,non-tariffbarriersareobstaclesfortradeandLaoPDRcanfocusontheirremoval, such as by continuing initiatives to simplify and harmonize customs procedures andstandards,especiallyinthecontextofAECintegration.

• Structural reform. Third, Lao PDR’s long-term goals require continued structural reforms,including for improving the regulatory and business environment such as through increasedtransparencyandstreamliningprocedurestohelplowertransactionscosts.

• Explorenon-LDCtradeagreements.Fourth,LaoPDRcanexplorefurthernon-LDCspecifictradingarrangements such as the variousGSP schemes for developing countries or seek to negotiateregionalorbilateraltradeagreements.

Implications of graduation for development finance. There is also LDC-specific support related todevelopmentfinance,suchasvoluntaryconcessional lendingarrangements,multilateralearmarkingofresources,andLDC-specificfinancingrelatedtoclimatechange.21Butthemajorsourcesofdevelopmentfinance in Lao PDR are unlikely be influenced by LDC graduation itself. This includes financing frommultilateralagencies(e.g.,WorldBankandADB)whodonotuseLDCstatusasacriterionforallocation.Norwill it affect possible finance from theAsia Infrastructure Investment Bank or the BRICS Bank. Ingeneral,theloantermsofferedbybilateralpartners(e.g.,Thailand,Vietnam,andChina)arealsodrivenbyfactorsotherLDCstatus.22

TraditionalODAisdecliningwithorwithoutLDCgraduation.Inanycase,LaoPDR’sconcessionallendingterms may likely change independent of its LDC status as its income continues to grow, thoughconcessionalratesarestillavailableformiddle-incomecountries.Traditionaldevelopmentassistanceisalsolikelytodeclineincomingyearsduetothecountry’soverallgrowthregardlessofitsLDCstatusandthemodalityofODAmayshiftawayfromgrants(possiblyinresponsetoLDCgraduation).

Strategyforcopingwithchangestodevelopmentfinance.Aswithtrade,thereareactionsinthecomingyearsrelatedtodevelopmentfinancethatcanhelpLaoPDRprogresstowardsgraduationandbeyond.First,intheyearspriortograduation,itcanprioritizeinstitutionalandhumanresourcedevelopmenttoenhanceself-sufficiency,includingassistancefrommultilateralpartnersthattargetLDCs.Second,whileLao PDR will still be eligible to access climate funds that are open to all developing countries aftergraduation,itisimportanttotakeadvantageofavailableclimatefinancingmechanismsthatprivilegeLDCs

21Therearealsonon-country-specificmeasuressuchasnon-bindingtargetsforbilateralODAallocationtoLDCsandrecommendationstoallocateahighergrantportionoftotalODA.

22JapanusesLDCstatusasacriterionwhendeterminingconcessionalloanterms.

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(e.g., Least Developed Country Fund (LDCF) before that, including for technical training and capacitybuilding. Third, Lao PDR will require increased levels of domestic finance to meet its aspirations. Toincreasepublicrevenue,continuedtaxandpublicfinancereformeffortsareneeded.Finally,LaoPDRcanmakeuseof concessional financing arrangements andadoptprudent approaches tonon-concessionalborrowingtoensuredebtsustainability—bothbeforeandaftergraduation.

2.3.4. FromLDCGraduationtothe2030Agenda:AplatformforthefutureEnsuringasustainablegraduation.Asstatedattheoutset,LaoPDR’spotentialgraduationfromtheLDCcategorywillmarkanimportantmilestoneforthecountrybutitisonlyastep.MeetingthecriteriaforgraduationdoesnotmeanLaoPDRhasachievedirreversiblesustainabledevelopment.Itcangraduate,forexample,withoutmeetingtheEVIthreshold.Tosustaindevelopmentmomentum,tomovetoanevenhigherpathway,andtobroadentheimpactacrosssociety,LaoPDRneedscontinuedfocusonstructuraltransformationastargetedinthe8thNSEDP,includingthroughexpandingproductivecapacity,diversifyingtheeconomy,andbuildingresiliencetoshocks.

Aligning strategies. LaoPDR’s key LDC graduationpriorities have alreadybeen integrated into the 8thNSEDP.As itconsiderstheremainderofthatplan’s implementationperiodandbeginsanewplanningcycleforthe9thNSEDP,theGovernmentofLaoPDRwillcontinueitseffortstofurtherintegratethe2030Agendaintonationalprocesses.Itiscommittedtobuildingontheworkalreadyaccomplishedtodevelopfollowupcomprehensive strategies thatalignLDCgraduationwith theprinciplesof the2030Agenda,especially thoseareaswheretherehasbeenslowerprogress.Thiseffortaimsto furthercontribute toacceleratedprogresstowardsLDCgraduation,preparationfortheremovalofLDCsupportmeasures,andalonger-termsustainabledevelopmentpathwaypost-graduation.

Prioritiesforthe8thNSEDPandbeyond.InthecontextofLDCgraduation,strategicprioritiescaninclude:commercial production growth and diversification; leveraging AEC integration for opportunities tointegrate into regional value chains (includingmeeting internationalmarket standards); improving theinvestment climate and promoting private investment in non-resource sectors; human resourcedevelopmentlinkedtolabourmarketdemands;andhumandevelopmentsupportrelatedtonutritionandmaternalhealth.Progressinthesepriorityareasandspecificpolicyoptionsfortheremainderofthe8thNSEDPperiodandbeyondareexploredinmoredepthinthesubsequentsections.

2.4. Green Growth and the Eighth NSEDP

2.4.1. ContextLaoPDR’svisionofenvironmentalsustainability.TheGovernmentofLaoPDRiscommittedtoputtinginplaceadevelopmentapproachthatissustainableanddeliversforallLaopeople.Thisaimdrovethedesignofthe8thNSEDPanditsclosealignmentwiththeprinciplesandsubstanceofthe2030AgendaandtheSDGs,analignmentmostexplicitintheoverlapbetweenthethreedimensionsofsustainabledevelopmentthatunderliethe2030Agenda—economic,social,andenvironmental—andthe8thNSEDP’sthreemainoutcomeareas.Theconceptofgreengrowth.LaoPDR’svisionofsustainabledevelopmentcapturedbythe8thNSEDP,DevelopmentStrategy2025,andVision2030isalsofurtherinfluencedbytheconceptof“GreenGrowth”.Whiletherearedifferentdefinitionsof“GreenGrowth”,itcanrefertoanapproachtoeconomicgrowth

7

that is drivenbypublic andprivate investments that reduce carbonemissions andpollution, enhanceenergyandresourceefficiency,andpreventthelossofbiodiversityandecosystemservices.23Greengrowthandthe8thNSEDP.The8thNSEDP’sconnectionstogreengrowthprinciplesareevidentacrossitsobjectives,outcomes,andoutputs.Theplanfurtherincludestargetsandindicatorsthatfosterintegration across the three dimensions sustainable development along with specific green growth-related indicators in each of the threeNSEDPoutcome areas. Examples include the use of social andenvironmental criteria for public infrastructure investment projects, diversification away from theresourcesector,labourproductivityinresourceandnon-resourcesectors,useofcleanenergy,andforestcoverageandthesustainablemanagementofforestproduction.Movingfromplanningtoaction.Draftingplansthatincludegreengrowth-relatedelementsisnecessaryto help push the shift to new development approaches and to hold government accountable tosustainabilityprinciples.Butadoptingeffectivegreengrowthstrategiesalsorequiresthatdecision-makingaccountfortheimpactofpoliciesandinitiativesacrossthedimensionsofdevelopment.Inpractice,thismeansthatoutputsdescribedbythe8thNSEDParenotthedomainofspecificministriesordepartmentsbutrathertheresponsibilityofmultipleministriesanddepartmentsworkingcloselytogether.Achievingthe 8th NSEDP targets for growth, for example, will require extensive collaboration between, amongothers,theMinistriesofFinance,PublicWorksandTransportation,AgricultureandForestry,andIndustryandCommerce.

2.4.2. GreengrowthandsustainabledevelopmentEvolutionofgreengrowthapproachesaroundtheworld.Manycountriesaroundtheworldacceleratedtheireconomicdevelopmentprimarily through theexploitationofnatural resources.Thisapproach todevelopment, however, has brought with it environmental degradation and contributed to climatechange.Theseresource-basedgrowthmodelsarenolongerviewedasviablesolutions,andasaresultthedesire formore “green” approaches to growth has become a central part of the international policydialogue.Atthenationallevel,manycountrieshavefollowedsuitandputgreengrowthatthecenteroftheirnationaldevelopmentstrategies.Thishasincludedeffortstoconsiderthesocialandenvironmentalconsequenceswhenmaking decisions and investments related to development. It has alsomeant nolongersettinggrowthtargetsalonebutintegratingthemwithmeasuresofenvironmentalimpact.Inotherwords, a country’s growth objectives are not considered met if that growth comes with undesiredenvironmentalconsequences.Asupport rather thana constraintongrowth. Thereare furtherdimensions to the conceptof greengrowth.Itcanalsohelpre-frametheconceptofsustainabilityandenvironmentalprotectionfrombeingseenonlyasalimittogrowthtoanopportunitytopromoteit.Sustainability,inotherwords,isnotjustastopongrowthbutalsoamechanismtoachieveit.GreengrowthandtheSDGs. Intermsofthe2030AgendaandtheSDGs,greengrowthasaconceptismost closely linked to the environmentally-focused SDGs, especially Goal 12 that aims to ensuresustainableconsumptionandproduction.Itisalsorelevanttootherenvironmentalgoals,suchasGoal13onclimatechangeandGoal15onprotectingandrestoringecosystems.Butgreengrowth,asaprinciple,isnot limitedtotheenvironmentally-centricgoalsandtargets.Analyseshaveshownthat it is relevant

23UNEnvironmentProgramme.www.unep.org/greeneconomy.

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acrosstheentireSDGframework(e.g.,to14goalsandatleast52SDGtargets).24Greengrowth,therefore,representsafullyintegrativepolicygoal.

2.4.3. NationalGreenGrowthStrategyofLaoPDRGreengrowthandLDCs.AdoptingenhancedgreengrowthmodelsisimportantfordevelopingcountriessuchasLaoPDRthathavebeenreliantonnaturalresourcestodrivetheirdevelopment.LaoPDRhasmadesignificant achievements in socio-economic development, including during the first half of 8th NSEDPimplementation,butthecountry’seconomicexpansionhasbeenachievedlargelythroughtheuseofitsnaturalresources,especiallyfrommining,forestry,andwaterresourceuse.Thepotentialeconomicandsocial impacts of continued environmental degradation are significant and Lao PDR is growing morevulnerable to the effects of climate change. Social and ecological threats to energy, food and watersecurityfromclimatechangeandweatherrisksimpactagriculturalproduction,livelihoods,andhealth—keyelementsofLao’slong-termdevelopmentaspirations.Strategiesforthefuturewillneedtoaccountfortheserisksandincludestrategiestoadaptandmanagethem.LaoPDRinstitutionalsupportforgreengrowth.LaoPDRaimstoforgeanewdevelopmentpathanchoredintheconceptofgreengrowth.Tosupportthis,theGovernmentestablishedaGreenGrowthNationalSteering Committee in December 2016. The committee is responsible for determining the direction,targets,and implementationmechanisms thatguideand leadgreengrowthactivitiesnationwide.Thisincludes,importantly,developingaNationalGreenGrowthStrategyandestablishingtheGreenGrowthPromotionCentre.NationalGreenGrowthStrategyoftheLaoPDR.Thecountry’sapproachtogreengrowthhasnowbeencapturedbytheNationalGreenGrowthStrategyoftheLaoPDR,whichisexpectedtobecompletedbyend2018.ThisisthetranslationoftheResolutionofthe10thPartyCongress,Vision2030,10-YearStrategy(2016-2025) and the 8th NSEDP (2016-2020). The strategy is the result of consensus and extensiveconsultationsacrosssociety.Specifically, itaimstohighlightpriorities,identifyactivities,anddevelopamonitoringframeworktosupportthecountry’svisionofgreengrowth.ItalsoaimstohelpmainstreamgreengrowthintoLaoPDR’splanningsystems.Planalignment.Withthelatterparticularlyinmind,theGreenGrowthStrategyisnotintendedtoreplaceotherplansbutrathertoserveasasupplementarystrategytosupportimplementationofgreengrowthprioritiesinnationalplansandthoseofindividualsectorsandlocalgovernmentunits.Itfurtherservestohighlightpriorityissuesrelatedtogreengrowththatcanbestressedin8thNSEDPimplementation(andreflectedbytheMTRofthe8thNSEDP)andinthedesignofthe9thNSEDP.

PrioritygreengrowthsectorsLaoPDRhasfollowedaholisticapproachtogreengrowthindesigningitsstrategy.Thismeansthat,intheLao context, greengrowthdoesnot “belong”only to SDG12,nor to any singleministryor8thNSEDPoutcome area. Instead, green growth is related and relevant to multiple SDGs, sectors, and planned

24SeeLeBlanc(2015),“Towardsintegrationatlast?Thesustainabledevelopmentgoalsasanetworkoftargets”,DESAWorkingPaperNo.141ST/ESA/2015/DWP/141.

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activities.Nevertheless,theGreenGrowthStrategyidentifiessixprioritysectors/areasforfocusoverthecomingperiod:agriculture,forestry,urbandevelopment,transport,energy,andtourism.25Agriculture.AgricultureprovidesthemajorityofjobstotheLaopeopleandiscriticalformeetingmultiplenationaldevelopmentgoals,includingthoserelatedtopovertyreductionandfoodsecurity.Thesectorisalsoathighrisktotheeffectsofclimatechangeanditspracticeaffectsforests,ecosystems,soilsandwaterresources.Anygreengrowthstrategywilllikelyincludeactivitiesandplansfortheagriculturalsectoratitscenter.Withthisinmind,theGreenGrowthStrategyofLaoPDRincludesarangeoftargetedactivitiestosupportgreenagriculturaldevelopment,includingto:

• Increaseproductionefficiencyand lessen theoverspendof labourandnatural resources (e.g.,throughresearch,importingexternalexamples,andtraining).

• Decrease the practice of slash-and-burn cultivation by creating conditions for farmers to earnhigherincomesfromalternativelivelihoods.

• Endtheuseofharmfulchemicalsthataffectsoilquality,watersources,biodiversity,andhumanandanimalhealth(e.g.,legalandregulatoryreformandstrengtheningenforcement).

• Promotecleanagriculturalproduction(i.e.,organicfarming).Forestry.TheforestsofLaoPDRarethesourceoffood,water,andlivelihoodsforvariousethnicgroups.More broadly, forests are the source of carbon retention and critical for strategies aimed tomitigateclimatechange.ForestqualityandcoverageinLaoPDRhasbeendecliningandtheNationalGreenGrowthStrategyidentifiedtheforestsectorasapriority.Thisisalignedcloselywiththeobjectivesandactivitiesinthe8thNSEDP.Forest-relatedpriorityactionsaimto:

• Restricttheconcessionoflargeareasoflandforindustrialtreeplantation.• Restrict/endtheexportoflow-valuewoodandsemi-finishedwoodproductswithlowvalue.• Promote investment to increase forest coverage to70percentby2020 (as targeted in the8th

NSEDP).• Expand national and local conservation forests by improving the laws and regulations and

strengtheningmanagement.• Developfinancialmechanismsforprotectingnationalandlocalconservationforests.

UrbanDevelopment.LikeothercountriesinSoutheastAsia,LaoPDRhasseensubstantialmigrationfromrural to urban communities. While it helps the government to reach out to larger population moreeffectivelytoprovidepublicservicesthantheywerescattered inruralareas,whichwillacceleratetheachievementoftheSustainableDevelopmentGoalsandTargets,increasingpressuresareexpectedonthepublicinfrastructureandsocialservicesandappropriatepolicymeasuresneedtobetakentoabsorbsuchmovementofpeopletoensuretheirwell-being.TownsinLaoPDRwillneedtoadaptandmanagethisgrowingpopulation.TheNationalGreenGrowthStrategysetsoutactivitiestosupportthismanagementandtohelpensurethesustainabilityofurbanlivingconditions,includingthoseto:

• Improve urbanwastemanagement systems, especially in large urban areaswhere re-use andproperdisposalofwasteislow.26

• Increasegreenareas(e.g.,publicparks).

25Thiswasbasedondatacollectionandconsultationmeetingsin3regionscovering17provincesand1CapitalCity.ItwasfurthersupportedbyanalysisfromtheGlobalGreenGrowthInstitute(GGGI),theWorldBankandotherresearchinstitutesbothinsideandoutsidethecountry.

26AccordingtotheMinistryofNaturalResourcesandEnvironmentandMinistryofPublicWorksandTransport,only40-50percentofwasteinlargeLaoPDRtownsarecollectedforre-useoraredisposedbyusingpropermethods.

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• Improvethequalityofurbanpublictransportsystemstopromotetheirusage(andhelpdecreasetrafficcongestion,importoffuel,andgreenhousegasemissions).

• Improveurbaninfrastructure,includingfootpaths,wastewatertreatmentsystems,andelectriclines.

• Increasegreenjoboptionsfornewlyarrivedmigrantsandenhancetheiraccesstosocialservices(includingfortheirfamiliesrelatedtokeyhumandevelopmentandpublichealthperspectives).

Transport. Lao PDR is dependent on the import of fuel for its transport needs and the sector is thecountry’s leadingcontributorofgreenhousegasemissions.Trafficsafety isalsoagrowingconcern. 2728The National Green Growth Strategy sets out to strengthen the transport sector and support moresustainableapproaches,suchasthroughplansto:

• Improvethequalityandcostofpublictransportinurbanareas(asmentionedabove),aswellasbetweenprovincesanddistricts.

• Promoteproduction,importanduseoftransportvehiclesthatusecleanenergy(e.g.,bicyclesandelectricvehicles).

• Restrictimportanduseofpersonalvehiclesthatusefuel,aswellasraiseenvironmentalstandardsonvehicleimports.

Energy. Lao PDR’s development has been strongly supported by the hydropower sector. However,accordingtotheMinistryofEnergyandMining,thesector’spotentialisstillunder-utilized.Meanwhile,personalenergyconsumptionremainsdominatedbynon-cleansources,suchasbio-mass,fuel,charcoaland coal. The Green Growth Strategy points to the energy sector as critical to support the country’ssustainabledevelopmentaspirations.Specificplanstorelatedtogreengrowthincludethoseto:

• Encourageandpromotereasonable/orderlyinvestmentsinhydro-electricity,solar,andwind.• Encourageandpromoteexpansionofelectrictransmissionlines.• Raise awareness and introduce incentives (e.g., pricemechanisms and/or taxes) to encourage

efficientenergyusage.• Encourageandfacilitatetheproduction,importanduseofenergy-savingmaterials,production

equipment,andtransportvehicles.Tourism.The8thNSEDPemphasizesthepotentialofthetourismsectortobeanengineofgrowthinLaoPDR. But this potential depends on maintaining natural landscapes, preserving historical sites, andsupportingthetraditionsandlifestylesofdifferentgroupsofpeople.Capitalizingonthegrowthpotentialof the tourism sector, therefore, requires that its development remain environmentally and socially-friendly.TheNationalGreenGrowthStrategyincludesactivitiestosupportthoseinthe8thNSEDPrelatedtotourism,suchasto:

• Buildoutsideawarenessofnatural,historicalandculturaltourismsitesinLaoPDR.• Enhanceprotectionanddevelopmentofnatural,historicalandculturaltourismsites,especially

waterfalls,forests,caves,temples,andtraditionalareas.• Improvethequalityoftourismservices(e.g.,transport,hotels,restaurants),suchasbyupgrading

staffskills.• Preventnon-environmentallyandnon-sociallyfriendlytourism.

27Over80percentofimportedfuelsareusedinthetransportsector,especiallyforhouseholdtransportorpersonalvehicles.28AccordingtotheMinistryofPublicWorksandTransport,therearemorethan6,000casesofaccidentscausingmorethan1,000deathsand16,000casesofinjuryperyear.

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Cross-cuttingpolicyprioritiesMeetingtheobjectivesoftheplanrequiressignificantcoordinationacrossgovernmentagencies,aswellas collaborationwith relevant stakeholders outside government, includingdevelopmentpartners, civilsociety,andtheprivatesector.Alignedwithanecessaryholisticapproachtosustainabledevelopmentthatthissuggests,theNationalGreenGrowthStrategyincludesfivecross-cuttingprioritypolicyareas.Strengthening the investment management system. This refers to putting in place the necessarystandardsandlegalandregulatoryframeworkstosupportgreeninvestments(publicandprivate).Thisincludes, for example, reviewing and revising as necessary laws and regulations for environmentalprotection,pesticideusage,forestmanagement,waterresources,agriculture,andprocurement.Italsoincludes strengthening the framework and requirements for Environmental Impact Assessments.Recognizingthatstrengthenedlawsandregulationsalonewillnotbeenough,thestrategyalsoaimstobuildcapacityfortheUnitofEnvironmentalandSocial ImpactAssessmentandtheMinistryofNaturalResourcesandEnvironment.Scientific,policyandtechnologicalresearch.TheStrategyrecognizestheroleofresearchandinnovationin supportingeffectivegreengrowthpolicy implementation. Support for technological research in LaoPDR,however,canbestrengthened.ThiscanincludebuildingaresearchnetworkledbytheGreenGrowthPromotion Centre. It can also include learning lessons from external partners and adopting newtechnologiesthatsupportgreaterefficiency.LaoPDRcanalsolaunchitsownresearchinitiativesrelatedtogreengrowth,sustainabledevelopment,andgreenhousegasemissions.

Strengthening the environmentalmanagement system. The Green Growth Strategy aims to supportenvironmental management in Lao PDR to make it more systematic and efficient. To help addressidentifiedgapsinenvironmentalmanagement,theStrategyincludesactivitiestoreviserelevantlawsandregulations related to environmental protection, increase environment management skills of staff(especially at theprovincial level), andprovide appropriateenvironmentalmeasurementmaterial andequipment.Promoting green lifestyle and consumption. SDG 12 aims to promote sustainable production andconsumptionpatterns.Thisrepresentsashiftfrommoretraditionaldevelopmentapproaches,includingits highlighting of the role of the individual. This further supports the adoption of awhole of societyapproach to development. While lifestyle choices are, at heart, individual, the government can stillpromotesustainabledecisions,suchasbyraisingawarenessoftheneedtoadoptsimple,self-sufficient,nature-related,andnon-extravagantlifestylestodecreaseuseofthecountry’slimitednaturalresources.Itcanalsohighlighttheimportanceofchoosinggreenandenvironmentally-andsocially-friendlyproducts.Gender equality. The Green Growth Strategy further recognizes the differential gender impacts ofenvironmental factors, as well as the different needs of genders to support deeper participation inpolitical,social,andeconomicsystems.Assuch,theStrategysupportsthe8thNSEDP’seffortsforgenderequalitybypromotingeducationalparity,especiallyatthesecondarylevelandhigher.Italsopromotesvocationaltrainingandskillsdevelopment,particularlyforwomeninthegreeneconomicsectors.

2.4.4. GreenGrowth,the8thNSEDP,andtheSDGsMonitoringandevaluation.TheGreenGrowthStrategyincludesamonitoringandevaluationframeworktoassessprogressandsupportaccountability.Thisincludesasetofdetailedtargetsforboth2025and

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2030,withfivecategoriesthatmeasureoutcomesacrosstheidentifiedprioritysectorsandcross-cuttingactivities:efficiencyofproductionandutilizationofresources,greenhousegasemissionsandwaste,greenareas,greenlifestyleandconsumption,andpovertyandgenderequality.Alignmentwiththe8thNSEDPandSDGs.Analysisoftheindicatorsshowshighoverlapwithboththe8thNSEDPandtheSDGs(Table9).Ofthe25keydraft indicators intheGreenGrowthStrategy,21canbeconsidered to have relatively direct parallels among SDG targets. At least 14,meanwhile, are closelyalignedwithindicatorsinthe8thNSEDP.

Table9.GreenGrowthStrategy,8thNSEDP,andtheSDGs

LaoPDRGreenGrowthStrategy 8thNSEDP SDGs

1

EfficiencyofProductionandUtilizationofResources

AverageproductivityofriceproductionOutcome1.1:sufficientfoodproductionandincreasedagriculturalproductivity

SDG2.4:sustainablefoodproductionandincreasedproductivity

AverageproductivityofmaizeproductionOutcome1.1:sufficientfoodproductionandincreasedagriculturalproductivity

SDG2.4:sustainablefoodproductionandincreasedproductivity

Laborefficiency .. SDG2.3:doublingagricultureproductivity EfficiencyofenergyusetoGDP .. SDG7.3:increasingenergyefficiency

Percentageoftheexportvalueofnaturalresources

Outcome1.1:shiftinginthedirectionofindustrializationand

modernization..

2

Greenhousegasemissionsandwastes

QuantityofgreenhousegasemissionsOutcome6.3:minimizeGHG

emissionsSDG13.2:fosteringclimateresilienceand

loweremissions

Average greenhouse gas emissions perperson

Outcome6.3:minimizeGHGemissions

SDG13.2:fosteringclimateresilienceandloweremissions

Importanduseoffuel .. ..

PercentageofuseofcleanenergyOutcome1.7:supportthe

developmentandgreateruseofcleanenergy

SDG7.2:increaseshareofrenewableenergyintheenergymix

Percentageofurbanwastescollectedforreuseanddisposal

.. SDG11.6:shareofurbanwastecollection

3

Greenareas

NaturalforestcoveragerateOutcome3.1:increaseforest

coverageSDG15.1:protectandrestoreforests

ConservationforestareasOutcome3.1:increaseforest

coverageSDG15.1:protectandrestoreforests

4

Povertyrate,socialequalityandgenderroles

PovertyrateOutcome2.1:improvelivingstandardsthroughpoverty

reduction

SDG1.2:reduceshareofpeoplebelownationalpovertyline

GINIOutcome1.4:balanced

developmentSDG10.1:increaseincomesofpoorat

higherrate

Enrolment proportion of girls to boys:primarylevel

..SDG4.5:eliminategenderdisparitiesin

educationatalllevels

Enrolmentproportionoffemaletomale:lowersecondarylevel



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LaoPDRGreenGrowthStrategy 8thNSEDP SDGs Enrolmentproportionoffemaletomale:uppersecondary



Enrolmentproportionoffemaletomale:tertiary



Percentage of female members of theNationalAssembly

Outcome4.3:increasewomen’sleadershipandrepresentationin

decision-making

SDG5.5:5.5ensureequalopportunitiesforleadershipatallpoliticallevels

Percentage of female members in theGovernment(Min/ViceMin)

Outcome4.3:increasewomen’sleadershipandrepresentationin

decision-making

SDG5.5:5.5ensureequalopportunitiesforleadershipatallpoliticallevels

5

GreenlifestyleandconsumptionAverageproductionofwastesperpersonintheurbanareas

..SDG11.6:reducetheadversepercapita

environmentalimpactofcities

Slash-and-burn/uplandcultivationareasOutcome3.1:reduceslash-and-

burnpractices..

Average electricity consumption perperson

.. ..

Percentage of revenue from tourismsectorinGDP

Outcome1.1:increaserevenuefromtourism

SDG8.9:promotesustainabletourism

Averagealcoholicdrinkconsumptionperperson

.. SDG3.5:reduceharmfuluseofalcohol

Source:NationalGreenGrowthStrategyoftheLaoPDR,8thNSEDP,andthe2030AgendaforSustainableDevelopment.*DenotesdirectoverlapbetweentheSDGindicatorandGreenGrowthindicator.GreengrowthintheLaoPDRcontext.Inseveralimportantrespects,therehasalsobeenanattemptbytheGreenGrowthStrategytogoevenfurtherthantheSDGsinmeasuringcriticalaspectsofgreengrowth.Forexample,onsocialelementstheframeworksarewellaligned,includingforpovertyandinequality.ButwhiletheSDGsandtheLaostrategybothincludemeasuresofgenderequalityrelatedtoeducationalleveland representation in parliament, the Lao approach goes further and targets representation at theministerialandvice-ministeriallevel.Similarly,boththeSDGsandtheLaostrategyemphasizeenergyefficiencyandthereductionandrecyclingofwaste.But theLaoPDR framework includeshard targets foraverageperpersonwasteproduction,averageelectricityconsumption,greenhousegasemissions(totalandperperson),importanduseoffuel,and natural resource exports. This expanded focus on sustainable consumption and production alsorepresentsanimportantsupplementtotheNSEDP’sinclusionofenvironmental-relatedtargets.TheSDGs,meanwhile, primarily promote the concept of sustainable lifestyles as a general principle, leaving theidentification of more tangible approaches open to Governments to determine based on their owncontext.ForLaoPDR,thishasfurtherbeendefinedtoincludemeasurementofslash-and-burncultivation,personalelectricityconsumption,andalcoholicdrinkconsumption.Atthesametime,theimportanceofsustainableeconomictransformationtoLao’sdevelopmentvisionrepresentedbyhardtargetsonexportofnaturalresourcesisalsopartoftheoverarchingvisionputforthbythe8thNSEDP.

2.4.5. ImplementationandnextstepsAdoptinganimplementationplan.TheGreenGrowthStrategylaysoutavisionoftransformationthatsupports Lao’s longer-term sustainable development ambitions. It also includes a draft plan forimplementation.Moving forward, theGovernmentof LaoPDR can further validate theGreenGrowth

14

Strategyandputinplaceaplanforoperationalizingitatthenational,sector,andlocallevels.Thisincludesfollowing(oradaptingasnecessary)theimplementationplanoutlinedbytheStrategythatincludeshighlevelauthorizationandtheoperationalizationoftheGreenGrowthPromotionCentre.Greengrowthfinancing.MeetingLaoPDR’sgreengrowthobjectiveswillrequiresuitablefinancing—anareaalso includedaspartof theStrategy’s implementationplan.TheNationalGreenGrowthStrategydoesnotcallforaspecificbudgetallocation,asitsimplementationisexpectedtoderivelargelyfromtheregularbudgetsofeachsectorandlocalgovernmentalignedwiththeplansofstrategiesofthoseentities.The implementing organization will also be the sector and local level department. For this reason,collaborationandintegrationofprioritygreengrowthprojectsandactivitiesintosectorandlocalplansiscritical.Thecentralgovernmentmayconsider,meanwhile,allocatingsomebudgettosectorsandthelocallevelthroughtheGreenGrowthPromotionCentre,particularlyforupgradingcapacityorimplementingspecificactivities.Resource mobilization. Green Growth principles can also be supported through the mobilization ofrevenuefromnewtaxes/dutiesorfeestosupportrelevantactivities.Theseactionscanalsosupporttheobjectives of green growth and achievement of many strategic aims, especially as they supportenvironmental protection, promote sustainability, and raise the efficiency of resource utilization.Examplesofthesetaxesandfeesincludeincreasingtheconcessionroyaltyforraisingtheefficiencyoflanduse; increasing the duty for the import of vehicles; increasing the duty on low-efficiency orenvironmentally-unfriendly technologies; or creating financial mechanisms to protect forests orbiodiversity(e.g.,paymentforenvironmentalservices(PES)).International support for green growth in Lao PDR. Lao PDR can also strengthen its green growthobjectives by taking advantage of relevant international support that is available, especially thosemechanismsthatprivilegeLDCsbeforeitgraduatesfromthatcategory.AssuggestedbytheGreenGrowthStrategy, theGreenGrowthPromotionCentrecan take the lead inpreparinga strategy formobilizinginternationalgreengrowth-relatedassistanceandconcessionalfinancing.Strengthening partnerships with businesses. The Government will finally further aim to support theconditions for businesses to contribute to green growthactivities andprogrammes, including throughenhanced support for Public Private Partnerships. It is also envisaged that Green Growth programs,projectsandactivitiescanbecomeenginesofgrowththemselvesbyevolvingintosustainablebusinesses.Thiscanincludethoserelatedtogreenresidentialareadevelopment,cleanagriculturalproduction,solarenergy investment installation, eco-tourism development and services, and businesses related tosustainablewastemanagement.

Ensuringflexibilitytochangingcircumstances.TheGovernment’sapproachtogreengrowthasembodiedinitsstrategycanalsobemadeflexibletoadaptationinresponsetochangingconditionsandneeds.Theprioritiesitlaysoutalsodonotaimtocaptureallthenecessaryelementsofanewgrowthmodel,astheapproachisspecificallydesignedtosupplementthecountry’smorecomprehensivestrategies(e.g.,8thNSEDP).Nevertheless,thegovernmentwillcontinuethroughouttheremainderofthe8thNSEDPperiodand,critically,intheformulationofthe9thNSEDP,toensurecoreprinciplesrelatedtogreengrowthcanbeadvancedandfurtherintegratedintocorenationalstrategies.

Considerationsforfutureplanning.Itwillalsoconsiderasnecessaryelementsmissingfromorneedingenhancementinthecurrentstrategy.Thismayinclude,butisnotlimitedto,severalthematicareas.Forexample,thereisvalueinconsideringhowthestrategymightenhanceitsfocusonemploymentrelated

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tothegreeneconomysothatitstrengthenssupportforimprovementsinlabourforceproductivityandincreasedjobopportunities.Second,whiletheextractiveandenergysectorsarecriticaltogreengrowth,thestrategymightexplorestrengtheningitstargetedsupportinterventionsandmonitoringtofacilitateinvestment and implementation of new approaches in the agriculture and manufacturing sectors,includinghowtointegratemorefullyintoglobalandregionalvaluechains.Third,subsequentiterationsofthestrategymightconsiderexpandingtheagricultureactivitiestargeted,suchasbyincludingtargetsandactivitiesrelatedtoimprovedaccesstonutritiousfoods;equitableaccesstomarkets,finance,andriskmanagementforallfarmingcommunities;andequityofcommercializationthroughfarmerorganizationsandothermarketgovernancemechanisms.Fourth,thestrategycanconsiderasit isfurtherdevelopedintroducingnewprioritiesrelatedtopromotingresponsiblebusinesspracticesinallsectors.Finally,thegreen growth implementation planmay include developing specific activities related to, for example,reducingenvironmentalwaste(e.g.,plasticbaginterventions),promotingrecycling,controllingchemicalproductionanduse.

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Chapter II. Implementation of the Eighth National Socio-Economic Development Plan (2016 to mid-2018)

1. Outcome 1: Inclusive Economic Growth

“Continued,firmandinclusivegrowthachieved,strongeconomicfoundationsconsolidated,andeconomicvulnerabilityreduced”

1.1. Outcome 1, Output 1: Sustained and inclusive economic growth

1.1.1. Context

Avisionofeconomictransformation.Structuraleconomictransformationiscentraltothevisionofthe8thNSEDPandanchorstheGovernmentofLaoPDR’slong-termsustainablegrowthstrategytargetingnon-resourcebasedindustrialization,productivecapacitybuilding,andreducedeconomicvulnerabilities.Thisstrategy further aims to introduce a balanced and inclusive growthpattern that ensures asmany Laocitizensaspossibleparticipate inandbenefit fromthegainsofdevelopment.Eachof theseobjectivessupportLaoPDR’sfurthertwinambitionsofforgingadurableLDCgraduationpathandsustainingprogressthereaftertoachievetheSDGs.

Growthperformance.LaoPDRmadeimportantprogresstowardsthistransformativevisionduringthefirsthalfof8thNSEDP implementation.AverageannualGDPgrowthhasbeenaround6.8percent (7.0percentin2016,6.9percentin2017,andanestimated6.5percentin2018),arobustratejustbelowtheplan target.29 This stronggrowthperformancewasdrivenmainlyby thehydropowerandconstructionsectors butwas also bolstered by opening up and further steps toward regional integration.Notably,industrialsectorgrowthfarsurpassed8thNSEDPtargets,posting11.8percentaverageannualgrowthoverthefirsttwoplanyears.Estimatesfor2018,however,pointtoasharpdropinindustrialsectorgrowthlargelyrelatedtothe2018floods.

Challengesforagricultureandservices.Butchallengestomeetingtheambitionsofthe8thNSEDPremain.BoththeagricultureandservicessectorsfellshortofoverallsectorNSEDPgrowthtargets in2016and2017.30ThemajorityofLaopeoplecontinuetoderivetheirlivelihoodsfromagriculture,thesectorwhereproductivityhasoveralllaggedmost.31Jobcreationoutsidetheagriculturesectorremainslimitedandthestrongeconomy-widegrowthhasnotsignificantlyalteredthecompositionofemployment.Servicesectoremployment, meanwhile, has increased though its overall contribution to employment remains low.Recentnaturaldisasterswillputfurtherstrainonagriculturaloutput.

Resource-based growth. Industry in Lao PDR is still dominated by resource-based products and thesector’sshareoftotalemploymenthasdeclinedovertime.Exportsareconcentratedbothintermsoftheirsourceandtradingpartner.Resource-basedproductsaccountedfornearly75percentoftotalexportsin29TheSDGsalsoincludeatargetofatleast7percentGDPgrowthperyearinLDCs(SDGTarget8.1).30Performanceacrosssub-sectorsranged(withhighergrowthinsome).Butoverallsectorgrowthhasbeenbelowthe8thNSEDPtarget.

31TheGovernmentrecognizesthatGDPcalculationsinLaoPDRmightundervaluetheagriculturalsectorbecauseprocessingofprimaryproductsisattributedtoindustryinGDPcalculationsthoughitisreliantontheagriculturalsector.Inanycase,theoutputgapissignificantandgrowthofthesectorlikelylagsothers.

17

2015-16—asharethathasremainedlargelysteadyovertime—whilemosttradeiswithThailand,China,andVietNam.TheNSEDP-targetedshiftfromresource-basedexportstohighervalue-addedproductshasbeenslowandrecenteconomicgrowthhascomewitharelativelylargeenvironmentalimpact.Therateofdepletionofnaturalresources,forexample, ismorethandoublecomparedtocountriesatasimilarlevelofdevelopment.32TheGovernmentofLaoPDRrecognizesthesechallengestothesustainabilityofits current growthmodel. This includes considering the social, environmental, and economic costs ofnaturaldisastersandfloods.Lookingforward,continuedeffortstoremovegrowthconstraintsofthenon-resource industrial sector, improve the business environment, increase agricultural productivity, andunlock thepotentialof theservicessectorwillbecriticalpriorities for theremainderof the8thNSEDPperiodandbeyond.Furtherstocktakingandassessmentofhydropowerinvestmentsandprojectswillalsobeanimportantpriority.

1.1.2. Progressandachievements

Economicgrowthbysector.AverageannualGDPgrowthwas6.8percentovertheplanperiod.Growthacrosssectors,however,variedsharply(Table1.1).Theagricultureandforestrysector—themainsourceoflivelihoods—grewatanaveragerateofonly2.7percentoverthisperiod,belowthe8thNSEDPtargetof3.4percent.Servicessectorgrowthalso fell shortof theplan target,postinganannualaverageof5.6percent compared to the targeted rate of 8.1 percent per year. The strong economy-wide growthperformance has instead been driven primarily by expansion of the industrial sector, which grew anaverage of 10.4 percent per year from 2016-18.While thiswell exceeds the 8thNSEDP target of 9.3percentitalsoincludesasharpdeclinein2018to7.7percent(from11.6percentin2017).

Industrial growthexceededplan targets. Industrial growthwas ledbyhigherproductionoutput fromhydropower,especiallytheNamThuen2HydroPowerDamandHongsaLignitPowerPlantmega-projects.But other smaller hydropower dams also started generating electricity in 2016 and 2017. The 2018floodingrelatedtothedambreechinAttapeuProvince,however,hascontributedtoasharpdecreaseingrowthandthegovernmenthasrespondedwitheffortstoensurethestabilityandsafetyofhydropowerprojectsthatwillhaveanimpactonoutputthroughouttherestofthe8thNSEDPperiod.Outputoverthefirsthalfofthe8thNSEDPwasalsogeneratedbyongoinglargeconstructionprojects,includingtheLao-ChinaRailway,specialeconomiczones,andrealestatedevelopmentprojectsinlargeurbancities.Growthofthemanufacturingsector,meanwhile,hasbeenlimited,withthemostproductivesectorsthosethatarebetterintegratedintoregionalvaluechains(e.g.,partsandcomponents)andmostlyanchoredinSEZs.

Servicessectoroverview.Servicessectorexpansionhascontinuedtobeconcentratedintraditional,lowvalue-addedactivities.Thefailureofthesectortomeet8thNSEDPgrowthtargetsduringthefirsttwoyearsoftheplanisalsolinkedintoareductioninthenumberoftouristarrivals(especiallyinternationaltourists)andthesubsequentdeclineinrelatedeconomicactivity.Meanwhile,theretailingandwholesaleandthefinanceand insurancesub-sectorsbothgrewduring the firsthalfof theplanperiodbut their sizeandcontributiontothebroadereconomy(includingemployment)remainsmall.

Importantchallengestoagriculturalproductivity.Asnotedabove,agriculturegrowthlaggedtheothersectorsduringthefirsthalfof8thNSEDPimplementation.Riceproductionduring2016-17fellshortofplantargets,anoutcomelinkedtothenegativeeffectsofclimatechange,naturaldisasters,andpestoutbreaks.Early2016,forexample,sawflashflooding,droughtsandotherweathereventsinseveralprovinceswithsignificant consequences for agricultural production. Output from the forestry sector was also

32WorldBank(2017),LaoPDRSystematicCountryDiagnostic.

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constrained,includingasaresultofPrimeMinister’sOrderNumber15thatputcontrolsonillegalloggingandstrengthenedtimbermanagementandregulation.

Table1.1.GDPgrowthand8thNSEDPtargets(2016-2020)

Description Annualtarget

(2016-20)

Achievementin2016

Achievementin2017

Estimate2018

Average2016-18

TotalGDP >7.2%1/ 7.02% 6.90% 6.50% 6.80%

- Agricultureandforestry 3.4% 2.76% 2.90% 2.50% 2.73%

- Industry 9.3% 12.00% 11.60% 7.70% 10.43%

- Services 8.1% 4.65% 4.50% 7.60% 5.60%

- Taxesandcustomsdutyongoodsandimports

5.0% 7. 84% 7.0% 3.70% 6.17%

Source:8thNSEDPandestimatesofLSB.1/ Revisedgrowthtargetsincethedraftingofthe8thNSEDP

Structureoftheeconomy.Thefirsthalfof8thNSEDPimplementationsawprogresstowardstheplan’stargeted industry-ledeconomic structure (Table1.2).Asa shareof totalGDP,agricultureand forestrydeclinedfrom17.2percentin2016,to16.2percentin2017,and15.7percentin2018.TheindustryshareofGDPalsoincreasedto31.7percentin2018,thoughthisremainsbelowtheplantargetof39percentby2020.TheservicessectoraccountsforthelargestshareofGDP,with41.7percentin2018.Thedistributionoflabourwasmuchdifferent,asservicesaccountfor48percent,agricultureandforestry36percent,andindustryonly16percent. 33

Table1.2.StructureoftheLaoPDReconomy

Description TargetshareoftotalGDP(by

2020)

Achievementin2016

Achievementin2017

Estimate2018

Overalleconomy(%) 100% 100% 100% 100%

-AgricultureandForestry 16.80% 17.23% 16.20% 15.70%

-Industry 39.00% 28.76% 30.90% 31.70%

-Services 35.40% 42.48% 41.50% 41.70%

-Taxesandcustomsdutiesongoodsandimports 5.00% 11.53% 11.40%

10.90%

Source:Annual8thNSEDPupdateandestimatesofLSBandMPI.

Selecteddevelopmentsin8thNSEDPprioritysectors

Industry

Industrial production and handicrafts. The 8th NSEDP targets modernization of industry processingactivitieswiththeaimofpromotinghigheroutput,greatervalue-added,anddiversificationofproductsforexport.TheplanobjectivesalsoalignwiththeSDGs,especiallythetargettoincreaseaccessofsmall-scale industrial andother enterprises to financial services and integrate themmore closely into valuechainsandmarkets(SDGTarget9.3).

Overthepasttwoyears(2016-17),grossindustrialproductionreachedLAK11,527.93billion.Theaverageannualgrowthratewas4.15percent.Withinthesector,thefoodprocessingindustryaccountedforthe33AsfurtherdetailedinOutcome1:Output5,thesefiguresexcludesubsistencefarmersandonlyrefertowagedemployees.

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highestshareofoutputwith33.8percent,followedbybeverageswith25.6percent,andprocessedwoodandwoodproductswith14percent.

Electricity. The 8th NSEDP aims to increase the number of and output from hydropower projects topromote higher domestic consumption, increased population access to electricity, and growth ofelectricityexports.Significantprogresswasachievedtowardsreachingkeyplantargets.Prioritiesfortheelectricitysectorincludedatargetforincreasingaccesstoelectricityto 95 percentofthepopulation.Duringthe first half ofNSEDP implementation, the share of householdswith access to electricity reached 92percent (1,088,770households).Thehighesthouseholdelectrificationratio is inVientianeCapital (100percent)andthelowest inSekong(74percent).Eveninruralareaswithoutroadaccess,37percentofhouseholdshadaccesstoelectricity.

The first half of the 8th NSEDP period also saw total electricity generation of 56,616.22million kWh,representinganaverageannualincreaseof26percent.Thecountryhas53hydro-electricityprojectswithagenerationcapacityofatleast1MW.Theseinclude49hydro-electricitydams,onecoalligniteplant,two bio-power plants from sugarcane molasses, and one solar panel facility. Given the 2018 floods,however,theGovernmentiscommittedtoassessinghydropowerprojectstoensuretheirstability.Thismayhaveconsequencesonspecificsectortargetsandgrowth.

Mining. WhiletheGovernmentofLaoPDRiscommittedtotransformingitseconomyawayfromover-reliance on natural-resource based products, it still recognizes the critical role for current and futureeconomicdevelopmentthatwillbeplayedbytheminingsector.TheGovernment’saiminthe8thNSEDPisnottoabandonminingbutto introducepoliciesandregulationsto increasethevalueofprocessing,ensurethatthebenefitsofminingaresharedbymoreofpopulation,andthatthesectormaximizes itcontributiontosocio-economicdevelopmentinasustainablewaywithminimalnegativeconsequencesforthenaturalenvironment.

Overthepasttwoyears,despiteimprovementsinglobalcommodityprices,thevalueofgrossproductionoutputwasLAK20,470billionandaverageannualgrowthwas7.29percent.CoppercontinuedtobetheprimaryminedmineralinLaoPDRfollowedbygold.34Miningoutputvolumeoveralldecreasedduringtheplan period, including gold ore fromPhoubiaMining (where output reached 88.4 percent of targets).CopperoutputfromSeponMiningsimilarlyfellshortofplannedtargets,reaching73.2percentoftargetedratesfrom2016-17.

The 8th NSEDP period also saw further mining development and expansion. In 2017, the Lao PDRgovernmentapprovedconcessionalagreementsforminingto219companiescovering372operations,anearlythreefoldincreasecomparedto2016(whenagreementswith80companieswerereachedfor141mining operations). These agreements included 26 companies for 40 exploration operations; 64companies for 117 surveying operations; and 52 companies for 77 technical and economic feasibilitystudies.Another15companieswith35operationswereattheconstructionstageand62companieswith103operationswereatthestageofminingandprocessingminerals.

Construction/infrastructure development.The 8thNSEDP emphasizes building newand strengtheningexisting transport infrastructure as critical support for reachingmany plan targets across all outcomeareas. This includes expanding and enhancing connectivity through roads, railways, waterways, andaviation.Theplan’sinfrastructurefocusfurtheralignswithSDGtarget9.1thatcallsfordevelopingquality,34Otherminingproducts includenickel, cobalt, lead,magnesium, koban, tin, zinc, boxite, iron, coal, potassium,preciousstones(sapphiregems,amethyst),gypsum,limestone,clay,petroleumandnaturalgas.

20

reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, tosupporteconomicdevelopmentandhumanwell-being.

InLaoPDR,the infrastructureconstructionsectoroverallremainschallenged,however,especiallybyasignificantgapbetweeninfrastructureneedsandavailablefinancing,thebuild-upofsignificantarrears,and an increase in the intensity and frequency of natural disasters affecting infrastructure. TheGovernment also aims to strengthen understanding and balancing of economic and social impacts ofconstruction/infrastructuredevelopmentaffectedpopulationgroups.

• Road expansion. The Government of Lao PDR has prioritized in recent years expansion andimprovementoftheroadnetworkand,asaresult,mostpartsofthecountryarenowconnected.However, road density is still low compared to other countries in the region andmany roadsections, especially in remote areas, are in poor condition and require upgrading andmaintenance.Ongoingprojectstoimprovethequalityofexistingroadsinclude:FeasibilityStudiesforNationalRoadNo. 8 (Ban Lao-Lakxao-VNborder),No. 12 (Thakhek-VNborder) andNo. 13(Vientiane-Phon Hong); and Feasibility Studies for the Boten-Huaixay, Boten-Vientiane, andVientiane-Hanoiexpressways.

• Railways.Railwayconstructionalsopickedupoverthelasttwoyears,includingontheLao-Chinarailway project. Efforts are also underway to ensure that the project maximizes its potentialbenefit for the population and that connectivity between the railway and road network atdifferentlevelsareimproved(i.e.,nationalandlocal).TheLao-ThairailwayprojectphaseIIhasalsobeenlaunchedandafeasibilitystudyfortheVientiane-Thakhek-Mugia-TunUp-VungAng(thespurlineofASEANSingaporeKunmingRailLink)hasbeenconducted.

• Aviation. The Vientiane International Airport Terminal Expansion Project is ongoing (withcompletion aimed for July 2018). Feasibility studies for improvingHouaysay and XiengkhoungAirportsarealsounderconsideration.

ServicesThelargestsectoroftheeconomyintermsshareofGDP.TheservicesshareofGDPhassteadilyincreasedovertimeand,bythatmeasure,nowrepresentsthelargestsectoroftheeconomy.MostserviceindustriesinLaoPDRare,however,stillintheirearlystageofdevelopmentandthereremainsmuchpotentialforincreasing the contribution to growth and employment through upgrading and modernization. Butdevelopment of the sector has been constrained in recent years byweaknesses in infrastructure andlogistics(e.g.,poorqualityandhighcost)andlimitedaccesstofinance.Growthoftheservicessectorisalsosignificantlyaffectedbythebusinessenvironment,andLaoPDR’scommitmenttoreform(reflectedmostprominentlyinthePrimeMinister’saimofreducingLaoPDR’srankingintheWorldBank’sDoingBusinessIndex)isexpectedtopaydividendsovertherestofthe8thNSEDPperiodandbeyond.

Sustainabletourismasadriverofgrowth.The8thNSEDPprioritizesstrengtheningthetourismsectorasa key driver of development.Moreover, implementation of a sustainable tourismmodel is critical toincreasetourism-relatedincomeandemploymentinthetourismindustry(aswellasspilloverstoothersectors)whilesimultaneouslylimitingenvironmentaldegradation.TheSDGsechothisapproach,callingfor countries to devise and implement policies to promote sustainable tourism that creates jobs andpromoteslocalcultureandproducts(SDGTarget8.9).

Declineintouristarrivals.Withthisinmind,the8thNSEDPtargetedanincreaseinthenumberoftouriststo6millionannuallyby2020alongwithanincreaseinnumberofdayspertripto10.ButthetotalnumberoftouristarrivalsinLaoPDRin2016-17averaged4million(4.2millionin2016and3.9millionin2017).

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TourismalsogeneratedanapproximateincomeofUS$724millionandUS$648millionin2016and2017,respectively. Thiswas also below the 8thNSEDP target that aims for $953million in annual revenue.Meanwhile,theaveragedurationofstaywasonly4.78daysin2017,wellbelowtheplantargetof10days.(Theaveragelengthofstayforinternationaltouristswas8.39days.)Theseresults,however,representadeclinefrom2015levels,whentherewere4.7millionarrivalsforrevenueofUS$725million.

Atourismdevelopmentstrategy.TheGovernmentexpectstourismtopickupin2018-19,includingfromthe domestic and international campaigns focused on “Visit Laos Year 2018”. Tackling constraints totourism developmentwill require further private sector investment and government support. Privateinvestment (local and foreign) has, to a large extent, driven tourismgrowth, but the government canfurther support facilitating development of the industry. Looking beyond the current plan period, thegrowthofthesectorwilllikelydependonimprovingphysicalconnectivitytoregionalandglobalmarkets,strengthening information and communication technology, streamlining visa and other regulatoryprocedures, and improving other ease of doing business factors (e.g., restrictions in ownership andbusiness permits, land use, and competition policy). Ongoing transport-related projects, including tosupport better regional connectivity through road, rail and aviation upgrading, are likely to increasetourismarrivalsandrevenuewhentheycomeonline,especiallyfromotherASEANcountriesandChina.

Technologyandcommunicationstosupporttourism.TheGovernmentisalsotargetingenhancedhotelandothertourism-relatedfacilitiesdevelopmentandaccessanduseofcommunicationstechnologies.Forexample, Government has already strengthened the tourism website and improved informationdissemination.As laidout in theNSEDP, theOneDistrictOneProduct (ODOP) initiativehasalsobeenintroducedinLaoPDRtopromoteuniqueproductsofdifferentareasofthecountrytosimultaneouslyappealtotouristsandhelpenhancelivelihoodsofcommunities.

AgricultureandForestry

Agriculture is central to the LaoPDReconomy.While the8thNSEDPaims fornon-resource industrialgrowthasakeytothecountry’sfuturedevelopmentmodel,theagriculturalsectorwillremaincriticalformeetingthecountry’saspirationsrelatedtopovertyreductionandinclusivegrowth.Thesectoraccountsfornearly70percentoftotalemploymentover60percentofexpenditureforlow-incomegroups.35Forthenear future,agriculturewill stillbe theprimarysourceof incomeand livelihoods foramajorityofpeople—manyofwhomremainatasubsistencelevel.Reducingpovertyandmorewidelysharingthegainsof development requires measures to help this population increase productivity, become morecommercially-oriented,andbetterconnecttomarkets.

Opportunities and challenges for agricultural growth. There is great potential for strengthening theagriculturalsectorinLaoPDR.Thecountryislessdensethanmostofitsneighboursandenjoysarelativelylargeareaforcultivation.Bysomemeasures,agro-ecologicalconditionsintheLaoPDRarealsoamongthemost favourable inAsia.But the sector isalsoconstrainedby limited investment,bothpublicandprivate.Meanwhile,althoughLaoPDRhasthehighestlevelofrenewablewaterresourcesavailableperunitofagriculturallandinAsia,irrigationcoverageislow.Inputandoutputmarketsremainfragmentedand underdeveloped and access to credit limited. Investment in research and extension to underpinagriculturalinnovationcouldalsobeincreased.Mostfarmersoperatewithoutlegallyrecognizedland-userightsandwidespreadurbanizationandtheruralexodustocitiesofyoungpeoplehascreatedpossiblelabourshortages.

35ADBCountryDiagnostic(2018).

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Actions to promote agricultural productivity. During the first half of the 8th NSEDP, theGovernmentlaunched important actions that have positively affected the sector. It has targeted, for example,commodityproductionandcommercializationalongwithmoresustainablepracticesguidedbytheGreenExtension.Recentyearshavealsoseenincreasedprivatesectorinvolvementthathasmademanyfarmingcommunities more food secure through investment in new products and value chains. But privateinvestment(includingintheagricultureandforestrybutalsoothersectorswithrelevantspilloverssuchasminingandhydropower)hasalsoattimesbroughtnegativeenvironmentalandsocialimpactsonruralcommunities.Theseincludepossiblelossofaccesstoresourcesbylocalcommunities(e.g.,encroachmentsinto cultivated areas or forests)36 and damages to the environment. Intensivemono-cropping with aconsiderablelevelofchemicaluse,forexample,ofcassava,maize,banana,eucalyptus,rubber,aswellasintensive livestock pig/poultry production) can affect soil fertility pollute water sources. The policyframeworkofMAFhasbeenconsequentlyreinforcedinordertoaddresstheseissues.Role of infrastructure and information. Critical economic infrastructure improvements have helpedincreasedvaluechaindevelopmentandeconomicopportunities,includingstrengthenedinformationandcommunication technologies and improved transport networks. Though, as mentioned, furtherinvestmentandattention is critical in this area. Similarly, the lackofaccess to rural advisory services,relevantanduptodate informationandmicro-andsmall-scalecreditoptionscontinuestohinder thegrowthofsmallholderfarmersintomodernfarmers.

Naturaldisastersandfarming.Progressduringthe8thNSEDPperiodhasalsobeenaffectedbynaturaldisasters,andtheimpactofthesehasbeenworsenedbypoorly-functioningearly-warningsystemsandresponsemechanisms,includingtheavailabilityaccesstocropinsurance.Forexample,alocustoutbreakseriouslyaffected402villagesin24districtsacross5provinces,withalossestimatedat53billionkip.Late2017alsosawanAvianInfluenzaoutbreakin4districtsof3provinces(VientianeCapital,Xaysomboun,andChampasak)andalossofatleast22,000chickens.Flashfloodsandlandslideshavealsobeenontherise,eventsexacerbatedbyintensivemono-cropping.

Other challenges to increased production. Finally, flora depletion remains a high risk due tooverharvesting,unregulatedexport toneighbouring countries, and improperagrochemical importanduse.Thesepracticesimpactproducers’health(especiallywomen),reduceproductivity(assoilsandotherecosystem services are compromised), and pollute the natural environment (especially down-streamripariansystems).Ethnicgroupsmostlylivingintheuplandsarestillstrugglingwithstaplefoodshortageandrelyonforestandwaterstomeettheirfoodneeds.

Rice production overview. Rice production is essential to basic food security in Lao PDR. Total riceproductionoutputoverthepasttwoyearsaveraged4.2milliontonsperyear(4.2milliontonsin2016and4.1milliontonsin2017).Estimatedproductionfor2018is3.9milliontons,adeclineresultingfromtheheavyfloodsinJuly.Thisfallsbelowtheplannedtargetof4.7milliontonsperyear(currentproductionrepresents83percentofthetarget).Wetseasonriceproductionaccountedforalargemajorityoftotalproduction(about80percent).Dryseasonfarmingmadeupabout12percentanduplandricecultivationabout8percent.

National rice production targets to ensure consumptionmet. Importantly, however, rice productionexceedednationalconsumptiontargetsbysomemargin(The8thNSEDPhighlightedaproductionlevelof2.5milliontonsperyearasnecessaryforsufficiency.)Withvegetableandfruitproductionalsoexceedingconsumptiontargetstherehasbeensufficientquantityanddiversityoffoodsforgoodnutrition.

36See“LinkingFoodandLandTenureSecurityintheLaoPDR”bytheMAFDepartmentofAgriculturalLandManagement(DALaM)andtheLandIssuesWorkingGroup(LIWG)

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Challengesformeetingotherricetargets.Butthelowerthanplannedproductionlevelscanbeattributedprimarily to climate and pest-related factors (e.g., outbreaks of bamboo grasshoppers in northernprovincesandpestoutbreaksduringaparticularlycoldJanuary).TheMekongRiveranditstributariesandwater reservoirs also experienced lower water levels than expected with knock-on consequences foragricultural production as irrigation systems could not respond and supply adequate water. Ricecultivationwasalsoreducedbytheincreaseduseofagriculturallandforotheractivities.Atthesametimericepricesfluctuatedwhileproductioncostsstayedhighduetothecostofelectricity,labour,seedsandfertilizers. This left farmers with small profitmargins and incentives to transition toward othermoreprofitable crop farming. Rice production has also been affected by a labour shortage related to thecontinuedmigrationoflargenumbersofruraldwellerstocitiesinsearchofemploymentopportunities.

• Wet-season rice farming. Wet-season rice farming remained the primary source of riceproduction.Thecultivationareawas769,050hawithayieldof3.4milliontonsofricein2016.Thecultivationareain2017wasslightlylower(762,482ha)buttheyieldwasslightlyhigher(3.5milliontons).

• Dry-seasonricefarming.Inboth2016and2017,thecultivatedareawas98,678hawithayieldof505,000tonsofriceperyear.37

• Uplandricecultivation.The8thNSEDPtargetedadecreaseinuplandricecultivationinresponsetothepolicyoftheGovernmenttopromoteconstantfarmingjobsandstopslashandburnshiftingcultivation.Theaimedtransitionistowardmoresubstitutionalcropsandareductioninuplandricecultivationareas.Thesetargetswerereachedduringthefirsthalfoftheplanperiod.Uplandrice cultivation was mostly practiced in the northern provinces, including Luang Prabang,Houaphanh,OudomxayandXayaboulyprovinces.In2016,thetotalcultivatedareawas104,656haandtheyield205,000tonsofrice.In2017,thecultivatedareafellto78,267haandtheyieldto158,930tons.

Foodcropfarming.Inadditiontorice,the8thNSEDPsettargetsforotherfoodcropstohelpmeetgrowingconsumerdemandandtohelpsubstituteimportsfromneighbouringcountries , includingsweetcorn,taroandsweetpotatoes,fruittrees,andvegetables.Productionofmostofthesecropsexceededplantargets. In2016,forexample,thecultivatedareaforsweetcornwas30,350hawithayieldof283,000tons.Thisincreasedslightlyin2017to31,350haand285,540tonsyield.38SweetcornoutputexceededtheNSEDPtargetof228,000tonsbyasubstantialmargin(approximately25percentin2017).

Annual taro and sweet potato output,meanwhile, increased 15 percent during the plan period, from338,900tonsin2016to389,705tonsin2017.Thisrepresentedoutput28percentabovetheNSEDPtarget(304,000tons).Fruitproductionalsoeasilyexceededthe8thNSEDPtarget.From2016-17,yieldincreasedfrom1,333,800tonsto1,390,000tons.39Thisexceedstheplantargetof800,000tonsbynearly75percent.Vegetableproductionwasstableovertheplanperiodat1,700,400tons,exceedingthetargetof1,500,000tonsinthe8thNSEDPby13percent.Thiswasdriveninpartbygrowthindemandfororganicvegetables.

Livestockandfisheries. The8thNSEDPincludesobjectivesforincreasinglivestockandfisheryproductionascritical inputstonationalfoodsecurity. Insupportofthisaim, livestockraisinghasmovedgraduallytowards stall-based production, technical extension services have increased, and in-time veterinary

37Thefirsthalfof2018isestimatedtoseeproductionon76,459hawithayieldofabout400,000tons.38Itisestimatedthattherewillbe5,880haincultivationwithayieldof50,800tonsinthefirsthalfof2018.39Itisestimatedthattherewillbe17,335haofcultivationareawithayieldofabout320,400tonsinthefirsthalfof2018.

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servicesbecomemoreaccessible. Inaddition,farmershavebeenencouragedtogrowfeedinggrassesandcropsandtousethewastefromagricultureandagro-processingfactoriestoconservefeedforlivestockduringthedryseason.

• Fisherymanagement.Meanwhile, the network for producing fish fingerlings has expanded toprovinces, districts and households in order to adequately supply farmers nationwide. Themanagementofreservoirs,rivers,streamsandpondshasalsobeenpromotedthrougheffortstoorganizeandestablishcommunityfishmanagementgroupsandfishconservationzonestoprotectwaterecosystemsandensurefishforconsumption.

• Meatandpoultry.Theresultoftheseeffortswasmeatandeggproductionlevelsabove8thNSEDPtargets—an important contribution to LaoPDR’s food security strategy. Total output grew5.2percentperyearduringthefirsthalfoftheplan(thetargetratewas6percentperyear).Thetotalvolumeofoutputwas398,100tons in2016and385,330tons in2017.Thissurpassedtheplantargetof258,000tonsby49percent.

Forestrymanagement.The8thNSEDPaimstopromotethesustainablemanagementanduseoftimberresources.Thefirsthalfoftheplanperiodhasseensomenotableprogresstowardsthisobjective.Forexample,50outof51ProductionForestAreas(PFAs)havedevelopeddetailedmanagementplans.PrimeMinister’sOrderNumber15hasalsobeencritical forclosingun-licensedtimberprocessingbusinessesandstrengtheningforestmanagement.TheLao-EUFLEGTVPAprocessisfurtherexpectedtorectifythevalue-chainoftimberandwoodproducts.Closecooperationoncross-bordertradeofwoodbetweenLaosandVietnamisalsounderway,aimingtocontributetomoreeffectiveimplementationofPrimeMinister’sOrderNumber15.Theseeffortshaveallcontributedtoimprovingthefoundationforthemoresustainabledevelopmentoftheforestryindustry.

• Internationalsupportforforests.LaoPDRalsohasalsoparticipatedininternationalschemestopromote sustainable forestry. This includes REDD+ results-based payment (UNFCCC/GCF,FCPF/CarbonFund)thatprovidesincentivesforbetterprotectionandmanagementofforests.LaoPDR officially submitted both its national FREL/FRL to the UNFCCC in January 2018 (currentlyunderUNFCCCassessment)andaprogramdocument(ERPD)fortheFCPF/CarbonFundinMay2018.Bothactionsopenwaystoaccess‘REDD+results-basedpayment’.

• Forestconservation.Intermsofforestconservation,HinNamNorProtectedAreawasproposedtoUNESCO as a potentialWorld Heritage Site. The PrimeMinister’s Decree onNam Theun 2WatershedManagementwasalsocompletedandaproposal for theNamTheun2WatershedManagementProjectwaspresentedtotheWorldBankforreview.ThisaimsforaUS$3milliongranttoreviewtheallocationplansandprotectedareacontext(e.g.,databaseofbiodiversityofplants,wildlife,andlanduseplanning).DatacollectionwasconductedjointlywiththeNationalBiodiversityResourceInstituteforPhouKhaoKhouayNationalProtectedAreaandPhousabod-PoungChongNationalProtectedArea.NakaiNamtheunNationalProtectedAreaandNamEtPhouLeuyNationalProtectedAreawillalsocontinuetobeupgradedasNationalParksbyimprovingvarious conditions to meet the standards of IUCN. Mono-cropped plantations, meanwhile,continuetoaffectthequalityanddiversityofnaturalforests.

Promotion of agriculture commercialization and diversified services. Commercial farming increasedduringthefirsthalfofthe8thNSEDP,oftenaccompaniedbyadditionalincomeandfoodsecurityformanycommunities.Commercializationhasbeenmostprominent infarmingforcoffee,cassava,maize,sugar

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cane,rubberandbeans.Demandforthesecropsisrisingandpricesareincreasinglyattractivetofarmers.Higherdomesticandforeignprivateinvestmenthassupportedthisshift.

• Challenges to commercial farming. But increased commercial farming has also broughtchallenges. Access to and availability of traditional and nutritious foods has declined in somecommunitieswherecommercial farminghasexpanded.Commercialopportunitiesarealsonotequallyavailable,and insomeareasnon-commercial farmershavefewerproductiveresourcesdue to competition fromcommercial ventures.Many commercial cropsarealso vulnerable tosharpprice fluctuations (e.g.,boom-bustcropssuchasrubber,maize,cassava, rice) thatmakefarmerswholackstrategiestoinformandsupportthemanagementofmarketcyclesvulnerable.

• Organizationandcoordinationoffarmers.Meanwhile,therehasalsobeengrowthinfarmers’organizations(e.g.,coffeecooperatives,rubberassociations,andcattleproducers’groups)thathavehelpedimprovetheefficiencyandequityofmarkettransactions.Forexample,ricefarmers’groups have expanded to cooperatives and machinery groups also support post-harvestprocessing services more systematically. But in some cases, a lack of clarity and inconsistentsupportforfarmers’organizationshashinderedtheirgrowthandeffectiveness.

• Balancingproductionandnutrition.Duringthe8thNSEDPperiod, theGovernmentofLaoPDRaimstocontinuetofocusonbalancingcommercialdevelopmentandnationalfoodsecuritywithsupportforsubsistencefarmersandfoodproductionthatmeetslocalnutritionalneeds.This isrelated to improving production for local consumption and to pursuing efforts for nutrition-sensitiveagriculture.Forexample,MAF’sGreenRiceLandscapesapproachillustratesthisbalancebyincreasingsustainableproductivitywhilepreservingeco-systemservicesforfoodsecurityandnutrition.

• Financingandextensionservices.TheGovernmentalsoaimstostrengthenanddiversifyfinancingmechanisms and extension services for both farmers and micro/small enterprises to enableinvestments to modernize small-holder farming and agro-processing. It also will continue tosupportmaximizingthecommercialvalueofLaoproducts,bothinternationallyanddomestically,byemphasizingqualityproduction thatbuildsonLao’suniqueassetsandthroughcertification(e.g.,organic,fairtrade,geographicalindication).

Valuechainintegrationbetweenlarge,mediumandsmallenterprises.Sincethelaunchofthe8thNSEDP,theGovernmentofLaoPDRhascontinuedtoadvancereformsforcreatinganenablingenvironmentforSMEs, especially to support their closer integration into key value chains. This strategy seeks to takeadvantageofLaoPDR’sincreasinglyopenapproachtointernationaltradeandthelonger-termdynamicstructuralchangestargetedintheeconomy.TheGovernmenthasdraftedaroadmap,forexamplethataims to improve firm and sector-level competitiveness through provision of quality and productivityimprovementsupport.

• SupportforSMEdevelopment.Meanwhile,theGovernmentalsoendorsedtheamendedLawonInvestment Promotion No. 14/NA and established an Investment Management CommitteechairedbytheDeputyPrimeMinister.Afurther initiative includedthecreationofaOne-Stop-Service Office under the Investment Promotion Department of the Ministry of Planning andInvestment. These are all steps to support SME development, especially through streamliningbusiness start-up procedures. Additional initiatives include the website launch that allowsinvestorstodownloadallapplicationformsandcarrysearchenterprisenamesfromadatabaseandan initiativetomergetheTaxRegistrationSystemandtheEnterpriseRegistrationSystem.

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Important progress is also being made to map the enterprise registration process anddevelopmentandmappingofbusinesslicenses/permits.

• Directassistanceandoversight.OthersupportinitiativesduringthefirstplanperiodincludetheBusinessAssistanceFacility(BAF),amatchinggrantprogramstartedin2013thatclosedin2017.At the timeof its closure, theBAFhad assisted208 firms, ofwhich 34percentwerewoman-owned.BAF-assisted firmsachievedaveragegrowthrates21percenthigher thannon-assistedcompanies.TheGovernmentalso launchedaLabourProductivity ImprovementSchemewherelabour inspectorsundertake factoryvisits toconductassessmentsagainstnational labour lawsandstandardsandprovidedtrainingwhereneeded.Finally,theGovernmentalsocontinuedtosupporttheGarmentSkillsDevelopmentCentre(GSDC),aproviderofservicessuchastrainingforsewing,management,andindustryengineering.

• Enhancing training and information services. Other Government activities to support SMEs,includethelaunchofanSMEServiceCentreunderLNCCItoprovidetrainingandadvisoryservicesto SMEs, organizational developmentof LNCCI, training courseson value additionwithinAEC-relatedvaluechains,studiesontheimpactoftheAEConprioritysectors(e.g.,tourism,transportandlogistics),Public-PrivatedialoguesandinformationeventsonAEC,technicaltrainingsonTotalQualityManagementmeasuresforCoffeePost-HarvestProcesses,strategiesforgreeningtheLaoTourismValueChain,andsupportforvariousLaoproductpromotionalactivitiesabroad(e.g.,FirstLao Coffee Festival, World of Coffee Asia Exhibition, and International Tourism ExhibitionSingapore).

1.1.3. ChallengesandlessonslearnedJobcreationoutsidetheagriculturesectorremainslimitedandthestrongeconomy-widegrowthhasnotsignificantlyalteredthestructureofemployment.Mostserviceindustriesremainintheearlystagesofdevelopmentandcouldbestrengthenedthroughupgradingandmodernization.

IndustryinLaoPDR,meanwhile,isstilldominatedbyresource-basedproducts.Exportsareconcentratedbothintermsoftheirsourceandtradingpartner.TheNSEDP-targetedshiftfromresource-basedexportstohighervalue-addedproductshasbeenslowandrecenteconomicgrowthhascomewitharelativelylargeenvironmentalimpact.Progressduringthe8thNSEDPperiodhasalsobeenaffectedbynaturalanddisastersandhuman-drivenshocks,andthe impactof thesehasbeenworsenedbypoorly-functioningearly-warningsystemsandresponsemechanisms.Finally,thegrowthofSMEsacrossdifferentsectorshasbeenconstrainedinrecentyearsbyweaknessesininfrastructureandlogistics(e.g.,poorqualityandhighcost),limitedaccesstofinance,andbusinessenvironment.

1.1.4. Nextsteps

TheGovernmentofLaoPDRrecognizesthechallengestothesustainabilityofitscurrentgrowthmodel.Continued efforts to remove growth constraints of the non-resource industrial sector, improve thebusinessenvironment,increaseagriculturalproductivity,andunlockthepotentialoftheservicessectorwillbecriticalpriorities for theremainderof the8thNSEDPperiodandbeyond.Critically,Governmentassessmentofhydropowerinvestmentsandprojectswillalsobeneededtoensurecontinuedsafetyandstability.Specificactivitiesinclude,inparticular:

• Ensuringbetterdisasterpreparednessandpost-impactrecovery(SeeOutcome3,Output2),sincetheearlywarningsystemsestablishedpreviouslyhaveclearlybeeninadequatetocopewiththe2018floods.

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• Developing a comprehensive national plan on electricity generation - including hydroelectricdams.

• Continuingtheshifttotowardagreenerandmoreresilientgrowthmodel,asoutlinedinthenewGreenGrowthStrategy,andmainstreaminggreengrowthprioritiesandtargetsintonationalandsectorstrategies.

• Strengtheningnon-farmrural jobcreationandproductivity(e.g.,eco-tourism),suchasthroughenhancingwatershedmanagement, transport infrastructure, and investing in cultural heritagesites.

• SupportingthedevelopmentofstrongerandmorecompetitiveSMEs(e.g.,inhandicrafts,artisanalwares, higher value-added agriculture products) through increasing access and provision ofcapital,training,andinfrastructure,andthroughimplementationoftheSMEroadmaptoimprovefirmandsector-levelcompetitiveness.

• Acceleratingproductivityintheagriculturesector, includingthroughfurtherimplementationofthe Agricultural Development Strategy 2020. Specific initiatives include improving agriculturalproductioninfrastructure,upgradingtechnology,strengtheningfarmers’associations,improvingirrigationsystems,andimprovingaccesstoinputs.

• Developmentandimplementationofthenationalruralemploymentstrategytopromotedecentlivelihoodandruralproductivity.

• Continuedemphasisonbuildingnewandstrengtheningexistingtransportinfrastructureascriticalsupport for reaching many plan targets across all outcome areas, including expanding andenhancingconnectivitythroughroads,railways,waterways,andaviation.

• Balancingsupporttocommercializationwithensuringfoodsecurityandaccesstonutritiousfoodsforallcommunities(e.g.,ashighlightedinthe8th5YearAgricultureandForestryDevelopmentPlan(2016-2020)).

• Continuesupportforfarmers’organizations,ruralfinance,andinsurancemechanismsasawaytoimproveproductivity,equity,andresiliencethroughmodernization.

• Implementstrategiesforstrengtheningyouthparticipationinagricultureactivities.• Intensify efforts in implementation of trade and private sector reforms, including through

implementation of Prime Ministerial Order No 2 on the Ease of Doing Business, and speedregulatoryreformsrelatingtotradeandthebusinessenablingenvironment(e.g.,reducingnon-tariff barriers and streamlining regulatory and administrative procedures for businessregistrationsandinvestmentapprovals).

1.2. Outcome 1, Output 2: Macro-economic stability achieved

1.2.1. ContextMacroeconomicoverview.The8thNSEDPprioritizesastablemacroeconomicframeworkasanessentialrequirement for achieving theplan’s vision, including its ambitious targets for sustainablegrowthandgreaterinclusivity.Attheplan’smid-point,LaoPDRisontracktomeetmanyofitsmacroeconomicNSEDPtargets(Table1.3).GDPgrowthaveraged6.8percentfrom2016-18,justbelowtheplan’sboldtargetof7.2percent.40Inflationhasbeencontainedwellwithinthetargetedband.Thegovernmentalsoimprovedits fiscalposition in2017and2018,maintainingabudgetdeficitclosetotheNSEDP’s5percenttargetrange—though revenue has fallen short of plan targets in 2017 and 2018 (estimated). Continued

40TheGovernmentrevisedtheGDPgrowthtargetattheendof2017to7.2percent(fromtheoriginal7.5atthelaunchofthe8thNSEDP).ThiswasendorsedbytheNationalAssembly.

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improvements in tax administration and collection would support sustained implementation of theNSEDP.

Table1.3.Macroeconomicachievementsandtargets

KeyMacroeconomicindicators

2014/2015(baseline)

2016 2017

2018(estimated)

2020Target

GDPpercapita $1,970 $2,408 $2,468 $2,609 $2,978GDPGrowthrate 7.5% 7.0% 6.9% 6.5% 7.2%

(annual)Budgetdeficit(%ofGDP) -4.6% -7.6% -5.3% -4.9% >-5%

Revenuecollection(%ofGDP)

23.9% 20.5% 16.4%

17.0% 18.6%

Expenditure(%ofGDP) 28.4%

28.1%

21.7%

21.2%

23.3%

Source:8thNSEDP,BankofLao,LSB,andMPI.(MPIpleaseconfirmdata?Especiallydeficit?)Macroeconomicrisksandchallenges.AtthesametimetheGovernmentofLaoPDRisawareofexistingrisksandvulnerabilities.BoththeWorldBankandIMFpointtogrowingpublicdebt,risksinthefinancialsector, and lowbuffers to shocks aspossible threats to sustainedmacroeconomic stability. Increasingpublic debt, in particular, poses a threat to stability and futuredevelopmentprogress. Total debthasgrownoverthepastdecadeandnowapproaches65percentofGDP.Meanwhile,foreignexchangereservecoverageislowerthanthe8thNSEDPtargetof5monthsofimports.Manybanks,especiallystate-owned,alsohavelowcapitalbuffersandanincreasingnumberofnon-performingloans.

1.2.2. ProgressandachievementsFiscalpolicy.TheGovernmentcontinueditsstrategyoffiscalconsolidationduringthefirsthalfofthe8thNSEDP, emphasizing especially improved revenue collection and administration and continuedrationalizationofexpenditure.Theseeffortshaveresultedinasignificantlyreduceddeficitsince2016neartheplantargetof5percentinboth2017(5.3percent)and2018(4.9percentin2017).

• Revenueperformance.Revenueasa shareofGDP,however, fell shortduring the firsthalfofNSEDPimplementationoftheplantargetsof18.6percentperyear.Afterpostingrevenueof23.9percentofGDPin2015,thesharefellto20.5percentin2016and16.4in2017.Thearlyestimatefor 2018 revenue is 17.0percentofGDP. The revenue shortfallswere related in part topricefluctuationsofkeycommodities.

• Taxreform.TheGovernmentofLaoPDRhasrespondedpro-actively,especiallywithinitiativestoimprovetaxcollectionandadministration.Forexample,duringtheplanperiodtheGovernmentlaunchedeffortstoeliminateexemptionsforoil importsinpublicprojects,reviewexcisetaxes,andbetteradministertheValue-AddedTax(VAT).Closingtaxexemptionshasbeenaparticularfocus,includingassessingtheapplicationofexemptionsforvehiclesandconstructionmaterials.Regardingtaxpolicy,theGovernmentplanstointroducealandtaxandreviseratesonexistingtaxes.Technical administrativeeffortshavealsobeenongoingduring theplanperiod, suchasintroducing point-of-sale (POS) recording of transactions for retail businesses, requiringstrengthenedbookkeepingforpresumptivetaxpayers,andmanaginglargetaxpayerscentrally.

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• Emphasis on expenditure reform.Meanwhile, theGovernment has also continued efforts forexpenditure reform. This includes continued implementation of measures to end off-budgetexpenditure and enforcement of the PrimeMinister’s Order on economizing and eliminatingnonessentialoutlays.TheGovernmentwillalsointhecomingperiodprioritizeinvestmentprojectswith high rates of return and continue to reorient spending towards improvements in health,education,andsocialassistance.The8thNSEDPalsotargetsapublicsectorwagebillof45percentofexpenditurebytheendoftheplanperiodandtheGovernmentremainscommittedtoreachingthisgoal.Therewas,though,anincreasefrom44percentin2016to48percentin2017.Fortherestofthe8thNSEDPperiod,continuedemphasisonfiscalconsolidationwillremainapriority.

Exchangerate.TheBankofLaoPDR(BOL)continueditspolicyofmaintainingthestabilityoftheLaoKipbytightlymanagingtheexchangerateoftheKipagainsttheUSDollarandThaiBahtduringthefirsthalfofthe8thNSEDPimplementationperiod(Table1.4).Asdiscussedwithdevelopmentpartners,theBOLwilllikelymaintainthisapproachinthenextperiodandwillallowtheexchangeratetomoveonlygraduallywithinitsband.TheGovernmentviewsthisarrangementastemporaryandwillcontinuetoputinplacepreconditions for greaterexchange rate flexibilityover themedium-term, suchasenhancing the legalframework(e.g.,lawsgoverningtheCentralBankandCommercialBanksandthePaymentsSystem)andpaymentssysteminfrastructure.

Table1.4.Foreignexchangerate

Currency 2016 2017 Estimate2018(first6months)

LAKagainstUSdollars(LAK/US$)RateofChange(appreciated/depreciated)

Depreciatedby0.36% Depreciatedby2.03%

Appreciatedby0.03%

LAKagainstThaiBaht(LAK/THB)RateofChange(appreciated/depreciated)

Appreciatedby3.27% Depreciatedby5.68%

Depreciatedby6.62%

Source:DepartmentofMonetaryPolicy,BOL.

Inflation.Inflationstayedwellwithinthedefinedtargetoflessthan5percentduringthefirsthalfof8thNSEDPimplementation(Table1.5).Specifically,theinflationratewas1.6percentin2016,0.8percentin2017,and2.57percentinthefirsteightmonthsof2018.Thiswasrelatedtolowerglobalfuelpricesandalsofallingfoodandnon-alcoholicbeverageprices—driversofhighinflationinpreviousyears—especiallyin2017dueto the lowerpriceof ricecoupledwithenforcementofpricemeasures formeats in freshmarkets.

Table1.5. Changesininflationrate

Descriptionofeachgoodbasket 2016 2017 2018 Average(firsteightmonths)

1. Foodandnon-alcoholicbeverages 4.29 -0.11 1.03 1.74

2. Alcoholbeverageandtobacco 1.70 0.65 0.85 1.07

3. Clothesandfootwear 2.01 2.41 5.05 3.16

4. Residence,electricity, watersupplyandfuel 1.42 0.60 2.07 1.36

5. Householditemsandappliances 0.58 1.07 1.34 0.99

6. Healthcare 2.59 0.96 1.15 1.57

30

7. Communicationsandtransport -3.49 2.86 4.27 1.21

8. Telecommunicationsandpost 0.08 -0.07 1.61 0.54

9. Entertainmentandleisure 0.28 0.14 -0.02 0.14

10. Education 0.18 0.45 0.53 0.38

11. Restaurantsandhotels 1.44 1.15 2.73 1.77

12. Goodsandservices 0.99 1.36 1.82 1.39

Inflationrate(%) 1.60 0.83 1.96 1.46

Source:EstimatesofLSBandMPI.

Moneysupply(M2). Overthepasttwoyears,M2quantityincreasedcontinuouslyinlinewiththemarketmechanism andwithin the 8th NSEDP target range. Specifically,M2 increased 10.9 in 2016 and 12.23percent 2017. This increase was driven largely by high growth of commercial credit in the domesticeconomyaswellasincreasedinflowsofforeigninvestments.M2forthefirstsixmonthsof2018isabout7.92percent.

Foreignreserves.Internationalreserveshavebeenslightlybelowtargetedlevelsthroughthefirsthalfofthe8thNSEDPimplementationperiodaccordingtogovernmentfigures.41Reservelevelshavealsobeendecliningannually,from5.3monthsofimportcoveragein2016,to4.4monthsin2017,andto3.57monthsduringthefirstsixmonthsof2018.TheGovernmentofLaoPDRisawareofthepotentialriskfromshocksandisprioritizingincreasingthelevelofreservesinthecomingyears.Challengestoreserveaccumulation,however,remain,includingascarcityofforeignexchangeintheeconomy,partlyrelatedtothefactthatlargeFDIprojectsinhydropowerandminingwereallowedtokeeptheirforeignexchangeearningsoutsidethecountry.

Financialsector.TheGovernmentofLaoPDRhasputinplacestrengthenedeffortstoimprovebankingsupervisionanddetectriskssincethelaunchofthe8thNSEDP.TheBOLisamendingitslegalframeworktostrengthen risk-based supervision and move towards Basel core principles for effective bankingsupervision. TheBOLhasalsobeenworkingonupgrading thepayment systemandother informationrequirementsforthesecuritiesmarkets.

AccordingtoIMFassessments,whiletheoverallbankingsectorremainssound,risksremaintocontinuedfinancialstability.Manybanks,especiallystate-ownedbanks,areplaguedbyNPLs,andmanyalsohaveinsufficientcapitaladequacyratios.Theserisksposethreatstotheoveralleconomy, includingpossibleslowdownsincredit,capitaloutflows,andpressureontheexchangerate.

OvertheremainderoftheplanperiodtheGovernmentofLaoPDRaimstocontinueenhancingeffortstoaddress these risks and reducepossibilityof external shocks amplifiedbybanking system failure. Thisincludes continued restructuring of state-owned commercial banks along with plans to eliminateforbearance,ensurethatallbanksmeetthemandatoryminimumcapitaladequacyratios,andintroduceregulationstobettermanageNPLs.

Enhancedbankingsupervisionwillalsoremainapriority.Plansincludecontinuingthemoratoriumonnewbanklicensesandstrongerrisk-basedsupervision.PublicdisclosureofauditedstatementsofbanksinLaoPDR will also continue to be enforced to ensure greater banking sector transparency. In the area ofaccounting,BOLisupgradingrequirementsinlinewithInternationalFinancialReportingStandards(IFRS)

41TheIMFmethodologypointstoalowerlevelofreservecoverage.

31

along with criteria to safeguard against Anti-Money Laundering and Counter Financing of Terrorism(AML/CFT).

Debtmanagement.LaoPDR’sriskofexternaldebtdistresshasbeenreclassifiedfrommoderatetohighbytheIMFandWorldBank.Accordingtothe2017DebtSustainabilityAnalysis42,externaldebtdistressindicatorsforLaoPDRhaveincreasedduringtheplanperiod,includingitsdebtstockandprojecteddebtflowstosupportpublicinvestment.Thepresentvalueofpublicsectordebt-to-GDPratiohasbreachedthebenchmarkforsomeyears.Meanwhile,asignificantexchangeratedepreciationcouldputfurtherstressonthepublicdebtposition.

TheGovernment,however,seessomemitigatingfactors.Whilepublicdebtisrelativelyhighmuchofitislong-term and concessional. The Government also expects ongoing and planned energy projects willgeneratehighandstableeconomicreturnsuponcompletiontohelpsupplyenoughforeignexchangefordebtservice.

Critical need to focus on debt sustainability. Nevertheless, prudent debtmanagementwill be a highpriorityfortheGovernmentovertheremainderofthe8thNSEDPperiod.Itaimstoachieveadebtratioof40–45percentofGDPby2020.Thiswould representa significant reduction from the current levelofnearly 65 percent of GDP43. Public debt as a share of GDP has also risen each year of 8th NSEDPimplementation(from57.7percentin2015).Tomovetowardsmoremanageablepublicdebtlevels,theGovernment will put greater emphasis on tightening fiscal policy and consideration of building fiscalbuffers, strengthening public financial management, and forging a plan for a comprehensive debtmanagementstrategy,includingthroughimplementationoftheLawonPublicDebtManagement.Itscoreelements are the statutory public debt ceiling of 65 percent of GDP and a requirement for NationalAssemblyapprovalofinvestmentprojectsaboveUSD$50million.TheGovernmentaimsingeneraltolimitexternalborrowingprojectstothosewithconcessionaltermstoreducefurtherdebtaccumulation.TheMinistryofFinancehasalsobeenreorganizedtomergethemanagementofalldebt(domesticandforeign)intoonedepartmentandthecontractingofcentralbankingfinancingofoff-budgetinvestmentshasalsobeeneliminated.

1.2.3. ChallengesandlessonslearnedDespiteitssuccessrelatedtobuildingastrongmacroeconomicframework,theGovernmentofLaoPDRisawareofexistingrisksandvulnerabilities.Thisincludesgrowingpublicdebt,revenueshortfalls,risksinthefinancialsector,andlowbufferstoshocksaspossiblethreatstosustainedmacroeconomicstability.Onthefiscalside,revenuemobilizationhasfallenbelowNSEDPtargetsthroughoutthefirsthalfoftheplan period and efforts are needed to improve tax collection and implementation. Prudent debtmanagementwillalsoneedtobeapriorityfortheGovernmentovertheremainderofthe8thNSEDPperiodandbeyond.Thelowlevelofforeignexchangereserves,meanwhile,andputthecountryatrisktoexternalshocks.Manybanksalsohavelowcapitalbuffersandanincreasingnumberofnon-performingloans.

1.2.4. NextstepsRecognizingthesevulnerabilities,theGovernmentiscommittedovertherestofthe8thNSEDPperiodtostrengthening resilience to potential shocks and creating suitable conditions for growth. Lao PDR’smacroeconomicprioritiesfortheremainderofNSEDPimplementationandbeyondwillinclude:managingpublic debt sustainably, increasing the inclusivenessof the financial sector, strengthening thebanking

42IMFStaffReportForthe2017ArticleIVConsultation—DebtSustainabilityAnalysis.43IMFCountryReportNo.18/84.

32

sector, improving tax administration and collection, and enhancing the environment for business andinvestment.Specifically,prioritiesinclude:

• Managingpublicdebtsustainably,suchasthroughthenewPublicDebtManagementLawandthePublicProcurementLaw,especiallyemphasizingborrowingonconcessionalterms.

• Reducing foreign currency lending risks, identifying non-performing loans, and strengtheningcapitalbuffers.

• Strengtheningmanagementofstate-ownedbanks.• Improvingtaxadministrationandcollection,suchasbyclosingtaxexemptions,introducingnew

excisetaxes,andreviewingthecapitalgainstax.• Reviewingandstrengtheningtheregulatoryframeworkforbusinesstohelpfacilitateinvestments.• Improvinginclusivenessofthefinancialsectortoimproveaccesstocreditandlowerrisks.• Continued efforts for expenditure reform, includingmeasures to end off-budget expenditure,

eliminate nonessential outlays, and reorient spending towards improvements in health,education,andsocialassistance.

• Maintainingapproachtomanagingtheexchangeratebyallowingmovementgraduallywithinthebandwhileputtinginplaceconditionsforgreaterexchangerateflexibilityoverthemedium-term.

1.3. Outcome 1, Output 3: Integrated development planning and budgeting

1.3.1. ContextCommitment to integrated planning and budgeting. The Government of Lao PDR recognizes thechallenges ithasexperienced inpastcycleswithaligningdevelopmentplanningandfinancing.Forthisreason,the8thNSEDPincludedasanexplicitobjectiveandoutputprogresstowardsbetterharmonizingplanningandfinancing.AsLaoPDRconsidersprogressduringthe8thNSEDPanddevelopsstrategiesforthenextplanningcycle,itiscommittedtoensuringthatfundingallocationistimelyandalignedwiththecountry’soveralldevelopmentpriorities.

Institutionalsupportforharmonization.TheNSEDP’sgoalsforharmonizingplanningandbudgetingarefurthersupportedbythePublicFinanceDevelopmentStrategyto2025,akeystrategyapprovedin2017thatgivespolicydirectionsandaframeworkthroughwhichtostrengthenthelinksbetweenthenationalplan and the development budget. It also sets forth a plan for improved coordination between thedevelopmentandrecurrentbudgets.BoththePublicFinanceDevelopmentStrategyandthe8thNSEDPincludetargetsforgrowth,centralgovernmentrevenuecollection,expenditure,anddebtmanagement(progressoneachisdiscussedprimarilyinthecontextofOutcome1:Output2relatedtomacroeconomicstabilization)

Priorities for 8thNSEDPandbeyond. Strengthening the linkagesbetweenplanningandbudgetingarecritical both for 8th NSEDP implementation and for the subsequent 9th NSEDP design. This includes,importantly,strongertrackingofbudgetplans,allocationandexpenditure(national/sectoral,provinciallevel) againstNSEDPobjectives. This also supports identificationof financing gapsnecessary formoreeffectiveplanningandresourcemobilization.

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1.3.2. ProgressandachievementsDomesticpublicresources.Domesticpublicresourcesgrewsignificantlybetween2000and2015,fromaround$570millionto$2.2billion.44Thiscamebothfromcontinuedhighlevelsofeconomicgrowthandfromhigherrevenue(frombothnaturalresource-andnon-resource-basedsources).Asnotedabove,thefirstyearofthe8thNSEDPsawafallinrevenuebothinrealtermsandasapercentageofGDP(from17.9to15.8percentbetween2015and2016),duetolowerglobalmineralpricesandshortfallsinexpectednon-resourcesrevenue(especiallyVATandexciseduty).

• Spaceforincreasingdomesticresources.WhiletheGovernmentstillneedstomakeprogresstomeet the capital requirements of the 8th NSEDP, it still sees significant potential to expanddomesticpublicresources,especiallythroughnewhydropowerplantscomingonlineandreformsrelatedtoVAT,excise,andtradetaxes.ThePublicFinanceDevelopmentStrategytargetsdomesticpublic resource mobilization in the 2016–2020 period of 16–18 percent of GDP, based oneconomicgrowthof7.2percentperyear.Totaltaxrevenuewas13.1percentofGDPin2015and12.4percentin2016.45Nevertheless,the2015/2016centralgovernmentbudgetallocatedaroundLAK1.4billionagainstthestatedbenchmarkthegovernmenthassetofLAK4.5billionperannum.46

International public resources. International assistance has played an important role in financingdevelopmentinLaoPDR.Itcontinuedtodosoduringthefirsthalfofthe8thNSEDPimplementationperiod.Since2000,thelevelofinternationalpublicresourceshasremainedrelativelystableinrealtermsmeaningthatitnowmakesupasmallerproportionofdevelopmentfinancingoverall.Withintheoverallresourcemix,ODAhasuntilrecentlybeenthemajorsourceof internationalpublicfinance,althoughsince2013increased government borrowing—especially from Thailand and China to support infrastructuredevelopment—haseclipsedit.

• Vientiane Declaration. To guide implementation of the eight principles of the VientianeDeclarationand for strategicmonitoringand reporting, theGovernmentand itspartnershavedevelopedaCountryActionPlan(CAP2016-2025).Thisisanimportantdocumentforstakeholdersat all levels as it outlines action areas needed to achieve effective development cooperationalignedwiththe8thNSEDPandSDGs.

• ODAtrends.In2015-16,grossODAaveragedUSD$508millionperyear,withJapan,Korea,andtheADBtheleadingproviders(Figure1.1).47About75percentofthiscameintheformofgrants.The8thNSEDPtargetsinternationalresourcestobedirectedprimarilytowardthesocialsectorsandODAtrendsgenerallytoalignwiththisobjective.Onaverage,thesocialsectorswerethemainrecipientofODAin2015-16(61percentofthetwo-yeartotal),especiallytheeducation,health,andwatersectors(Table1.6).48OftheremainingODAin2015-16,economicsectorsreceived18percent(mostlytotransportandenergy),productivesectors11percent(mostlytoagriculture),and multi-sector 8 percent (including environmental and non-agriculture rural developmentsupport).MostODAloansweredirectedatinfrastructure.AccordingtoOECDdata,therewasalsoagapofapproximately$359millionbetweencommitmentsanddisbursementsoverthetwo-yearperiod.

44Theinvestmentandfinancingprofileisguidedbytheanalysiscontainedinthe2017LaoPDRDevelopmentFinanceAssessment.

45IMFCountryReportNo.18/84.462017LaoPDRDevelopmentFinanceAssessment.47OECD.stat.AverageannualnetODAoverthesameperiodwasUSD$435million.48DatafromtheCreditorReportingSystem(CRS)databaseonOECD.stat.TheCRSdatabasereflectsODAcommitments.

34

Figure1.1.LeadingprovidersofGrossODA,2015-16average

Source:OECD.stat.

Table1.6.ODAbysector,2015-16

Total2015-16(USDmn) Shareoftotal

Social Infrastructure & Services 841 61% Education 200 15% Health 203 15% Population/Reproductive Health 35 3% Water Supply & Sanitation 233 17% Government & Civil Society 125 9% Other Social Infrastructure & Services 45 3% Economic Infrastructure & Services 247 18% Transport & Storage 125 9% Communications 2 0% Energy 115 8% Banking & Financial Services 2 0% Business & Other Services 4 0% Production Sectors 152 11% Agriculture, Forestry, Fishing 137 10% Industry, Mining, Construction 4 0% Trade Policies & Regulations 6 0% Multi-Sector / Cross-Cutting 134 10% General Environment Protection 31 2% Other Multisector 104 8% Total commitments (2015-16) 1,375

Notes:Datarepresentscommitmentsonly.Sharesareoftotalsectorallocableflows.Source:OECD.stat.

• ODAandthe8thNSEDP.Lookingforward,totalinvestmentrequiredfortheNSEDPin2018was42,145billionkip,ofwhichODAisexpectedtocoverapproximately8,052billionkip(about19

85,5

62,9 60,8

41,137,2

32,828,9 28,7

21,2 19,5

0

10

20

30

40

50

60

70

80

90

USDmillion

35

percentoftotalinvestment).ButtheestimateofODAtobedisbursedin2018(calculatedbylineministries,equivalentagenciesandprovincial)totalsaround6.752billionkip.49

• ODAdistributionacrossministriesandprovinces.ThelargestrecipientsofthisODA(Table1.7)weretheMinistryofPublicWorks(USD$225.3,33percent),MinistryofEducation(USD$192.5,28percent), andMinistryofHealth (USD$83.4, 12percent). Together these threeMinistriesaccounted for 73 percent of ODA allocation. Meanwhile, at the provincial level (Table 1.8),LouangthamthareceivedthehighestamountofODA(USD$28million,27percent),followedbySavannakhet(USD$16million,16percent),andSaravanh(USD$14million,13percent).

Table1.7.EstimateddistributionofODAtoMinistries,2018

Ministry #projects USDtotalMinofPublicWorkandTransportation 39 225.3MinofEducationandSports 15 192.5MinofHealth 0 83.4MinofPostandTele-communication 6 34.5MinofAgricultureandForestry 52 33.6MinofPublicSafety 14 29.5MinofInformation,CultureandTourism 4 19.6MinofLabourandSocialWelfare 5 15.5MinofEnergyandMines 5 12.7MinofNaturalResourcesandEnvironment 29 10.1MinofIndustrialandCommerce 2 8.2MinofHomeAffairs 5 7.8MinofPlanningandInvestment 5 7.6BankofLaoPDR 2 3.1LaoYouthRevolutionUnion 1 1.5MinofJustice 1 0.2MinofFinance 0 0.0MinofForeignAffairs 0 0.0LaoWomenUnion 0 0.0Total 185 685.0

Source:ForeignAidImplementationReport2017.

Table1.8.EstimateddistributionofODAtoProvinces,2018

Provinces #projects USDtotalLouangthamtha 6 28.0Savannakhet 144 16.3Saravanh 30 13.5XiengKhuang 7 11.1LouangPrabang 5 7.9Oudomxay 57 6.4Sayyabouly 25 4.4Vientiane 7 3.8

49ForeignAidImplementationReport,2017.ThisrepresentsUSD$770million.

36

Sekong 15 3.7Khammouane 5 1.6Bokeo 27 1.4Bolikhamxay 31 1.3Champasak 20 1.3Xaysomboune 3 0.7Huaphane 6 0.6Phongsaly 1 0.4VientianeCapital 17 0.0Attapeua 0 0.0Total 406 102.4

Source:ForeignAidImplementationReport2017.

International private resources. Since 2000, inflows of international private resources have grownsignificantlyinrealterms,toanestimated$2.3billionin2015.Duringthisperiod,FDIhasbeenstronglydominated by investment in hydropower and mining. In 2016, the FDI stock was US $5.6 billion,representing41percentofGDP.FDIflows,however,fellin2016fromUSD$1.1billionin2015to$889millionin2016.50ThegovernmenthashighlightedFDIasoneofthekeyformsoftheprivatesectorfinancethatistargetedtoprovide57percentofthefundingrequiredunderthe8thNSEDP.TheIMFestimatestheFDIasashareofGDPfellfrom14.5percentto13.3percentfrom2015to2016.

Domestic private resources. Like international private financing, private domestic investment hasincreasedsignificantlyovertime,risinginrealtermsfromanestimated$300millionin2000to$2.7billionin 2015.51 Like FDI inflows, large domestic investments are concentrated in mining and electricitygeneration.

An increase in the availability of credit to the private sector has been a key factor in the increase indomesticprivateinvestment.Thistrendcontinuedin2016,withincreasesseenineveryquarteralthoughthe focus is stillonmore formalsectorsandaccess to financing forSMEsremainsan issue.Aswellasincreasingtheavailabilityofcredit,theBankoftheLaoPDRhasbeenworkingwithcommercialbankstoreduceinterestratestolevelssimilartothoseseeninothercountriesintheregion.ImprovedaccesstocreditisimportantbutitisofcoursenottheonlychallengefacingdomesticSMEs.EnhancingtheroleofSMEsinsupportingdevelopmentprioritiescanbesupportedbypositiveincentivestructurestargetinganimproved business environment, facilitating entrepreneurship, or increasing firm competitiveness.Effectivelytargetedsupporttoenterpriseswithhighergrowthpotentialisequallycritical.BOLalsoissueda new policy to encourage commercial banks to utilize funding sources from deposits. It also allowscommercialbankstousetheirregisteredcapitalsasfundingsourcetoprovidecommerciallending.

Strengtheninglinksbetweenplans,budgetsandpolicyimplementation.Whilethe8thNSEDPprovidesan overall development framework challenges remain for coordinating government-wide and sectoralplansandensuringbudgetallocationtoprioritizeddevelopmentprioritiesandprogrammes.Duringthefirsthalfofthe8thNSEDPperiod,theGovernmenthasundertakenanumberofmeasurestostrengthenthelinksbetweentheplanandthedevelopmentbudget,andtoimprovecoordinationbetweenthelatterand the recurrent budget. This includes, for example, approving Budget Preparation InstructionsstipulatingthatpublicexpendituremustadheretothebudgetplanapprovedbytheNationalAssembly(NA).ThisinstructionrepresentsGovernment’scommitmenttocurbspendingbeyondtheNA’sapproval

50UNCTAD.stat.512017LaoPDRDevelopmentFinanceAssessment.

37

parametersthatmaydilutethefocusonnationalpriorities.TheGovernmentalsointroducedyetanotherimportantmeasuretoensurethattheimplementationofthePublicInvestmentPlan(PIP)isimplementedin compliance with the Law on Public Investment. Specifically, sectors and local authorities are onlyallowedtoimplementinvestmentprojectsendorsedbytheNationalAssembly(NA).

• Operational reforms.Meanwhile,at theoperational level, theGovernmentwithsupport frompartnershasbeenreviewingGovernmentFinanceInformationSystem(GFIS)anddevelopingintoFinancial Management Information System (FMIS). Another review which has been currentlyconductedTaxpolicyandAdministration.WiththeintroductionofValueAddedTax(VAT),largebusinesseshavebeenencouragedtoadheretotheVATsystem.ThegovernmenthasalsocarriedoutPublicExpenditureFinancialAccountabilityAssessment(PEFA).

• PublicFinanceDevelopmentStrategy.ThePublicFinanceDevelopmentStrategyto2025isalsoacritical effort to promote better budgeting and planning processes. Key targets toward 2025include: maintain prudent PFM by strictly adhering to the State Budget Law, develop acomprehensivemodernlegalframework, implementtheStateBudgetPlanasapprovedbytheNA, apply modern systems in line with international standards, limit revenue leakages andexpenditure loopholestoensuresoundplanningandfiscaldisciplines,andmanagepublicdebtprudentially.

• Enhancingandstandardizingsectorbudgetreporting.Butcurrentplanningandbudgetingarenotyetsystematicsuchthatclosetrackingofspendingagainstprioritiesispossible.Somesectorsandministriesarereportinginawaythatcanpromotetransparencyandbettermatchingofneedswith resources. For example,MoES has reported (See Table 2.8 under Outcome 2 Output 3)financialrequirementsandapprovedbudgets,allowingittoestimatethefinancinggapinsupportofmobilizingresources,prioritizingexpenditures/projects,andincreasingefficiency.Ingeneral,standardization of reporting to include needs, budgeting allocation, delivered budget, andexpenditurewouldbeanimportantstepandusingtheexamplefromsectorsthathavealreadyintroducedsuchreportingpracticescanbeuseful.

1.3.3. Challengesandopportunities

MeetingLaoPDR’sdevelopmentchallengeswillrequirebothsignificantincreasesinresourcesaswellascloser linking development plans and the allocation of finance needed to meet their priorities. Thisincludesgrowingavailablepublicfinancetoprovidepublicservicesandinfrastructure,especiallyinremoterural communities. Progress towards development targets have so far been constrained, however, byreducedrevenuecollectioninrecentyearsandlimitedfiscalspacelinkedtohighinterestpayments.FDI,meanwhile,isexpectedtodeclineincomingyearsashydropowerprojectsarefinalized.Domesticprivatefinancehasalsobeenconstrainedbyhighinterestratesoncommercialborrowingandbylackofaccessto financing, particularly for SMEs. Lao PDR remains dependent on international public resourcescomparedwith other ASEAN countries, particularly in certain social (e.g. health, education and socialwelfare)sectors.

1.3.4. NextstepsKeytargetsofThePublicFinanceDevelopmentStrategyandthe8thNSEDPincludeeffortstoensure:clarityof policy direction and institutional frameworks, budget allocations reflective of priorities, spendingconsistent with approved budget allocation and allotments, and monitoring results and ensuringimplementationfeedsbackintothepolicyprocess.Specifically,fortheremainderofthe8thplanperiodandbeyond,prioritieswillinclude:

38

• Emphasis on greater integration between planning, financing, andmonitoring and evaluation,buildingonongoingPFMreforminitiatives.

• Strengtheninglonger-termplanning,costing,andfinancingto2030tosupportSDGachievement.ThisincludesstrengtheningthemonitoringframeworkanditslinkstoLao’slocalizedSDGtargetsand ministerial plans, along with the development of cost estimates to help guide financingstrategies.

• StrengtheningtheconsistencyofministerialdevelopmentplansandtheirlinkageswitheachotherandtheNSEDP,suchasthepossibilityofstandardizingplansthatlinkactivitiestofinancing.

• Improving technical coordination and information sharing between ministries for greatercoherenceatbothnationalandprovinciallevels.

• Strengthening development and implementation of financing strategies, including theGovernment’s recently drafted public finance strategy. Such efforts include consolidating andproviding a clear implementationplan tohelp facilitate both increased andmore coordinatedsupportfromdevelopmentpartners.

• Continuinginitiativesforgreatertransparencyoffinancingactivitiesofgovernmentandnon-stateactorstohelpguideacoherentandinformedapproachtodevelopmentplanimplementation.

• Carryoutacomprehensivemappingexerciseofdevelopmentfinance,includingtohelpidentifyfinancinggaps.

• Developingclearbreakdownofpastandfutureexpendituresacrosssectorsandactorstosupportdevelopmentofafinancingstrategytoenableimplementationofprioritizedactivities.

• Re-invigorate the aid management platform to better track international commitments anddisbursements,ensurealignmentwithplanpriorities,andenforcepartneraccountability.

• Introducebettertrackingoffinancialneed,plannedandapprovedbudgets,andspending,takingadvantageofgoodpracticesinselectedministriestomodelpracticesinaphasedmanneracrossgovernment.

1.4. Outcome 1, Output 4: Balanced regional and local development achieved

1.4.1. ContextInclusivedevelopmentvisionforallregionsandprovinces.TheGovernmenthasputgreateremphasisonensuringbalancedregionalandlocaldevelopment.Thisisreflectedbythe8thNSEDP’stailoredtargetsandpriorities fordifferentregions.Theaim is todevelopregionsandprovincesbasedontheiruniquepotentialandcharacteristics.Atthesametime,theGovernment iscommittedtoprioritizingeconomicandsocialdevelopmentinareasthathavelaggedbehindandwherepeoplehavenotbenefitedasmuchfromthegainsofdevelopment.

Criticalinputsforachievingmorebalancedgrowth.Oneimportantareaofconcernduringthe8thNSEDPperiodhasbeentheconstructionandmaintenanceofruralroads(indifferentpartsofthecountryinorderto better linkmarketswith the rural population). For example, the Government increased its relatedapprovalbudgetfromUS$56millionin2015/2016toUS$80millionin2017.Giventheneedtopromoterurallivelihoods,increasingagriculturaloutputandproductivityhasalsobeenencouragedthroughoutthecountry. The includes support fordevelopmentof commercializationand for increasing stable incomepossibilitiesforruralcommunities.Alleffortshavefurtherincludedconsiderationofspecificgeographicaldifferencesandadvantages.For instance, in theNorth, the focus ison riceproduction,economic treecultivation(e.g.,teakwood,rosewood,andpatternedhardwood),vegetableoilprocessing,sugarcane,andteaprocessing.IntheCentralRegion,keyareasforsupporthaveincludedriceproduction,cassava,

39

livestock,andnon-timberforestproducts.FortheSouth,thepriorityhasbeenplantationandproductionofcoffee,tea,cashewnuts,pepper,rice,fishfarming,andrubbertreeplantations.

1.4.2 NorthernRegion

GDPgrowth.AverageGDPgrowthacrosstheprovincesofthenortherregionrangedfrom7.23percentto8.99percentperyearduringthe8thNSEDPperiod,slightly lowerthanthetargetof8.5percentto11percent.VientianeandXayaboulyProvincesachievedthehighest levelsofgrowthoverthisperiodandwereclosesttoreachingplantargets.InVientiane,performancewasdrivenbyexpansionsintheindustrialsector, wholesaling and retailing, consumer goods, processed agricultural products, and services(especiallytourismandhospitality).Growth inXayaboulyProvincehasbeenmainlythroughexportsofagriculturalproducts.

Differencesacrossprovinces.Bycontrast,XaysombounandPhongsalyProvinceshaveseenthe lowestrate of GDP growth. In both provinces, NSEDP targets of 11 percent per year were possibly setunrealisticallyhighandeachhasproposedtolowerthetarget.Xaysombounisarelativelynewprovinceanditwashopeditcouldattractconsiderableprivatesectorinvestment,bothdomesticandinternational.However,investmenthasbeenslowduetosafetyissues.Asaresult,Xaysombounisproposingtolowerthetargetratetobettersuitthelocalcontext.ThesituationissimilarinPhongsaly.Thelocalgovernmenthasalsosubmittedaproposaltolowerthetargetratefrom11percentto7percentbutarestillawaitingauthorizationfromtheassemblythatwouldallowthemtochangethenumberofficially.

GDPpercapita.GDPpercapitainprovincesofthenorthernregionincreasedfromarangeof$856-$2,510in2015-16to$863-$2,596in2017.Thisrateneverthelessfallsbelowthe8thNSEDPtargetof$966-$3,710by2020.LuangnamthaandPhongsalycameclosesttotheGDPpercapitatarget,withprogressdrivenbythesizeoftheireconomiesandthenaturallandscape.InLuangnamtha,theservicessectorhasalsodrivenGDPpercapitagrowthwhileinPhongsalythemainincomesourcehasbeenfromagriculturalproductions.

Lowincomegrowthinseveralprovinces.Incontrast,GDPpercapitainHouaphanhandXaysombounismuchlowerthanthetarget.Houaphanhexpectedmorerevenuefromvariouseventshappeninginthearea such as the Ghost Release Festival in 2018, the preparation for the 50th anniversary of theindependenceofPhaxaytownin2018,andthemeetingofministersin2018.Actualrevenuecollection,however,turnedouttobelowerthanexpected.Mostofthelocalpopulationalsostillmakesalivingintheagriculturesector(whichaccountsfor58percentofGDP).

With regards to Xaysomboun, the economic structure is focused on developing the industrial sector(currentlycovering40percentofGDP),especiallyminingastheprovincehasalargeendowmentofnaturalresources.Nevertheless,mininggrowthhasbeenslowandthemainincomesourceremainsagriculturalproducts.

Table1.9.EconomicperformanceintheNorthernRegion

Provinces

GDPgrowth GDPpercapita

5-yearplantarget

2016 2017 Average5-yearplan

target2016 2017

1 Phongsaly 11.00 7.33 7.13 7.23 966.00 856.00 862.59

2 Luangnamtha 10.50 9.01 8.96 8.99 1,800.00 1,565.00 1,656.00

3 Oudomxay 8.50 7.50 7.60 7.55 1,758.00 1,397.00 1,393.57

4 Bokeo 10.00 9.70 7.70 8.70 2,375.00 1,679.93 1,776.21

40

Source:MPI

5 Luangprabang 9.00 8.40 8.20 8.30 2,400.00 1,764.00 1,887.00

6 Xayaboury 9.00 8.20 8.50 8.35 3,710.00 2,510.00 2,596.00

7 Xiengkhouang 9.00 8.13 8.02 8.08 2,000.00 1,491.28 1,534.17

8 Houaphanh 9.00 8.20 8.39 8.30 1,675.15 919.66 1,031.93

9 Xaysomboun 11.00 8.13 8.04 8.09 1,933.00 1,210.00 1,209.00

10 Vientiane 8.50 8.17 8.21 8.19 2,400.00 1,660.00 1,670.00

41

EconomicStructureandGrowthAcrossSectors

Agriculture.Thenorthernregionspansalargegeographicarea,mostlycomposedofmountainsandhills.There are also, however, flat lowlands that are suitable for rice production and other consumableagriculturalgoodsandtheregionprimarilyconcentratesonproducingagriculturalproducts.

TheagriculturalsectorshareofGDPinXayabouryistargetedat26percent,thesmallestrateamongalltheprovincesinthenorthernregion.This isduetothelocalpolicythataimstomodernizeagriculturalproduction and develop into industrial processed products. Actual figures in the past two years haveshownthattheagriculturalshareofGDPis36percent,stillhigherthanthetarget.

Figure1.2.NorthernregionagriculturalshareofGDP:NSEDPtargetversusperformance

Source:MPI.

Rice production. Total area for rice production increased from 284,668.9 hectares in 2015-16 to298,198.88hectares in2017.Thetotalamountofriceproducedoverthissameperiod increasedfrom1,108,857.94tonsto1,116,326.93tons.Thelowincreaseinriceproductionisrelatedtochallengesofanatural landscapemostly comprised of hills andmountains. In addition, there have been incidents offloods,irrigationsystemdamage,andpestoutbreak.

• Seasonalrice.Theproducingareaincreasedfrom178,516.88hectaresin2015-16to187,546.65hectaresin2017.Totalproductionincreasedfrom840,443.13tonsin2015-16to844,775.46tonsin2017.Seasonalriceproductionisthelargestofthethreevarietiesofrice,aresultalignedwiththeplan.Inthepasttwoyears,theproductionareainXayaboury,XiengkhouangandVientianeexpandedat the fastest ratecompared tootherprovinces.Oudomxay,meanwhile,has seenadecreaseinproductionarea.Xaysombounisnotabletoapproximatetheproductionareaduetoeffectsofnaturaldisasters.Regardingtheamountofproduction,XaysombounandHouaphanhare performing at the highest rate while Luangnamtha and Oudomxay have experienced adecreaseinproductionmostlyasaresultofnaturaldisasters.

• Irrigativerice.Theproducingareadecreasedfrom15,911.96hectares in2015-16to15,451.01hectaresin2017.Totalproductiondecreasedfrom79,981.87tonsin2015-16to70,272.96tons

0,0010,0020,0030,0040,0050,0060,0070,00

Percentage

Agricultural sector share of GDP

ຄາດໝາຍ 5 ປ' (2016-20) 2016 2017

42

in2017. Irrigativericeareaand levelofproductioncomprisesonlyasmallportionoftotalriceproductioninthenorthernregionbecausethenaturallandscapeisnotsuitableforthisvariety.

• Upland rice. The producing area increased from 90,240.06 hectares in 2015-16 to 95,201.22

hectaresin2017.Productionincreasedfrom1880432.94tonsin2015-16to201,278.51tonsin2017.52Althoughtherearemeasuresputinplacetoreducethiskindofriceproduction,uplandricewill remaina sourceof livelihoods in the foreseeable futuredue to its suitabilitywith thenaturallandscape.

Industry.AsseeninFigure1.3,thetargetfor industrialshareofGDPishighest inXaysombounat39.9percent. The characteristicsofXaysombounarewell suited for industrial development suchas timberprocessing, steelmining, and Phubia goldmine. But over the plan period so far, the industrial sectorcovered38.4percentoftotalGDP.

Figure1.3.NorthernregionindustrialshareofGDP:NSEDPtargetversusperformance

Source:MPI

Production inVientianeversusotherprovinces.VientianeProvince’sprocessed industrial goodshavebeencontinuingtogrow.Localpopulationsareintegratingtechnologyandmodernmachineryintotheproductionofgoodstoenhancetheireffectiveness,efficiency,andvalue.ThepromotionofODOP(OneDistrict One Product) in Vientiane Province has also been successful, as seen through the increasedproductionandvalueofButter-roastedBananafromSanakham,CuminshampoofromTulakhomDistrict,andMulberry-leaf tea from KeohOudomDistrict. By contrast, Houaphanh Province’s industrial sectormakes up only 11.6 percent of GDP because unlike other provinces it has not had any exports andprocessingofagriculturalproductsoftheirown.

Services.53 The northern region is famous for its tourism because of itsmany historical, natural, andculturaldestinations.ThesehaveattractedtouristsfromChina,Vietnam,Cambodia,Thailandandmanyotherplacesaroundtheworld.Thishasledtotheexpansionofthetourismindustryandtheimprovement

52MPItochecknumbers53UnabletocollectdataforallprovincesforthepercentageoffamiliesandvillagesdefinedaspoorbyNCRDPE.

0,005,00

10,0015,0020,0025,0030,0035,0040,00

Percentage

Industrial sector share of GDP

Target 2016 2017

43

ofpeople’slivelihoods.ThisisespeciallytrueinLuangprabang,aworldheritagecityfamousallovertheworldwheretheservicesectorcovers45.2oftotalGDP.

Figure1.4.NorthernregionservicesshareofGDP:NSEDPtargetversusperformance

Source:MPI.

Infrastructure Development.The government prioritizes the new railway in the northern region as aflagshipnationalproject.Specifically,therailwaywillrunthroughfourprovincesinthenorthernregion:Luangnamtha, Luangprabang, Oudomxay and Vientiane. It is expected that in the long term theseprovinceswillseesignificanteconomicimprovementsasaresultoftherailwaythoughtherearecostsintheshorttermtolocalpopulationsandthegovernmentisdevelopingsystemsforcompensation.

SocialDevelopment. In thepast twoyears, the livelihoodsof thepeople in thenorthern regionhaveimproved.Accesstocleanwater,educationandhealthcarehasincreased.Schoolshavebeenbuiltinruralareaswhilehospitalsandfirstaidarenowreadilyavailablethroughouttheregion.Atthesametime,socialdevelopmenthasincreasedtotalpopulationandplacedastrainonservicesandprovisionofjobs.

1.4.3. CentralRegionGDP growth overview.Average GDP growth of the provinces in the central region ranged from 7.86percentto10.27percentperyear,slightlylowerthanthetargetof7.8percentto12percent.GrowthwashighestinVientianeCapital,thoughitdecreasedslightlyfrom10.91percentin2015-16to9.63percentin2017duetoslowgrowthintheindustrialsector.Growth,meanwhile,wasmostlysteadyinBolikhamxayProvince (8.01percent in2015-16to8.03percent in2017),wheretheservicessectorbeenexpanding(includingthenumberofretailersandhotels).

Unevengrowthacrossprovinces.KhammouanProvince,meanwhile,sawaslightGDPgrowthdeclinefrom7.95percentin2015-16to7.78percentin2017largelyduetoadecreaseinthepriceofrareearthelements.Agriculturalproductsintheprovincewerealsoaffectedbynaturaldisasterssuchasfloodsandthe‘Doksouly’storm.SavannakhetProvincealsosawadecreaseinGDPgrowththoughtherate

0,0010,0020,0030,0040,0050,0060,00

Percentage

Service sector share of GDP

Target 2016 2017

44

remainedquitehigh(10.31percentin2015-16to9.52percentin2017).Thedeclinecameasaresultofthediscontinuationofvariousindustrialactivitiessuchasminingandloggingaswellastheimpactoffloodsandstormsonagriculturalproduction.

GDPpercapita.Acrossallprovinces,GDPpercapita in thenorthernregion increased fromarangeof$1,799-$4,784in2015-16to$1,952-$5,028in2017.The8thNSEDPsetatargetof$2,681-$6,500.TheriseinGDPpercapitainthecentralregionwasrelatedtoanexpansionintheservicesector,mainlyretailsandtourism,thoughtheagriculturalsectorremainsakeydriver.

Figure1.11.EconomicperformanceintheCentralRegion

Source:MPI

EconomicStructureandGrowthinEachSector

Agriculture.Therateofgrowthintheagriculturalsectorhasbeenaffectedbynaturaldisasters,changingclimatesandpestoutbreaks.Thesehaveparticularlyaffectedriceproduction.Additionally,maintenanceandrepairingofirrigationsystemshavealsobeenchallengingwhilesomeareasforagriculturalproductionwereturnedintoconstructionsites.

Figure1.5.CentralregionagriculturalshareofGDP:NSEDPtargetversusperformance

Source:MPI.

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

Vientiane Capital Bolikhamxay Khammouane Savannakhet


Target 2016 2017

Provinces

GDPgrowth GDPpercapita

Target 2016 2017 Average Target 2016 2017

1 VientianeCapital 11% 10.92% 9.63% 10.27% 6,500.00 4,784.00 5,028.00

2 Bolikhamxay 7.80% 8.01% 8.03% 8.02% 2,730.00 1,981.60 2,150.00

3 Khammouane 8.03% 7.95% 7.78% 7.86% 2,681.00 1,922.00 2,098.00

4 Savannakhet 12% 10.31% 9.52% 9.91% 2,780.00 1,799.00 1,952.00

45

Riceproduction.Thetotalareaforriceproductionareadecreasedfrom415,226hectaresin2015-16to390,282hectaresin2017.Thetotalamountofriceproduceddecreasedfrom1,780,668tonsin2015-16to1,480,871.75tonsin2017.

• Seasonal rice. The producing area increased from 354,646 hectares in 2015-16 to 360,121hectaresin2017.Totalproductiondecreasedfrom1,489,561tonsin2015-16to1,340,097.34tonsin2017.Thedecreaseinoutputdespitetheriseinproductionareawaslargelyduetochangingclimatethataffectedthequalityoftherice.

• Irrigativerice.Theproducingareadecreasedfrom58,068hectaresin2015-16to27,414hectaresin2017.Totalproductiondecreasedfrom286,227tonsin2015-16to135,868.53tonsin2017.Again,outputwasaffectedbynaturaldisastersanddamagedirrigationsystems.

• Uplandrice.Theproducingareaincreasedfrom2,512hectaresin2015-16to2,747hectaresin

2017.Production,meanwhile, increased from4,880 tons in2015-16 to4,907.88 tons in2017.UplandriceproductionwasmostlyconcentratedinBolikhamxayandKhammouanbecauselocalpopulationssettledinareassuitableforuplandriceandhavebeenproducingthisvarietyforanextendedperiodoftime.Therehavenotbeenanyarrangementsyetforlocalpeopletomoveorswitchtootherkindsofproduction.

• Commercial rice. Commercial rice production for domestic and international markets can be

foundmostly inSavannakhetandVientianeCapital.Organic riceproduced inVientianeCapitaltotaled1,773.50tonsperyear.“HomSaWan”riceproducedinSavannakhetforexporttotaled16,894.75tons.

Organicvegetables.AssociationsfororganicvegetablesfarmersandsellersinBolikhamxayandVientianeCapitalhavealsobeenorganized. Livestock farming, includingof cows,pigs, chickens,and fish, isalsobecomingmorepopularintheregion.

Industry.Industrialgrowthintheregionhasbeenlargelysatisfactory.Exports,however,insomeareasarestilllowerthanplanned(especiallyintimberprocessing)andsignificantnumbersofbusinesseshaveclosedinBolikhamxay,SavannakhetandVientianeCapital.AsforKhammouane,growthoftheindustrialsectorhasfallensignificantlyfrom9.38percentin2015-16to7.18percentlinkedtothedecreaseinrareearthelements.

46

Figure1.6.CentralregionindustrialshareofGDP:NSEDPtargetversusperformance

Source:MPI.

Special Economic Zones. Industrial modernization has been promoted to better serve domestic andinternational markets and help in growing the economy. Special economic zones have also beenintroducedtoattractforeigninvestments,especiallyforSMEsintheclothingandelectronicsindustry.

Examplesofspecialeconomiczonesinclude:

• Savan-XenoSpecialEconomicZone:initiallyattractedinvestmentsfrom9companiestotallingUSD$14.5million.Thezonehasnowgrownto105companiesandtotalinvestmentofUSD$341.94million.

• Luang Swamp Economic Zone: the government of Lao PDR signed a contract with a ChinesecompanyWanFerng(inaccuratetransliteration)todevelopthe365hectarearea intoaspecialeconomiczone. Investment isvaluedatUSD$1,600millionandhasconcessiondurationof99years.

• Tha Kaek economic zone: attracted domestic and foreign investors to invest in a total of 22projectsvaluedatUSD$12,930.72million.

• There are ongoing efforts to develop industrial zones in Vientiane Capital into green(environmentally-friendly) industrial zones.Preliminary researchwith thehelpofPhongsavanhGroupisunderwaytohelpdevelopthe300hectarearea.

Services.Regionalservicesectorgrowthisconsideredtoberelativelystrong.Infrastructureinthetourismandhospitalityindustryhasbeendevelopingrapidlyandtrainingsinservice-relatedareasaremorewidelyavailable.Businessesarealsomorethoroughlyinspectedtoensuremaximumqualityfortourists.In2018,atotalof5,858,514touristscametotheregion,especiallytoKhammouaneandBolikhamxay,followedbyVientianeCapitalandSavannakhet.

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%



Target 2016 2017

47

Figure1.7.CentralregionservicesshareofGDP:NSEDPtargetversusperformance

Source:MPI

Percentageoffamiliesandvillagesdefinedaspoor.54Overall,povertyhasgonedowninmostcentralregion provinces. It is reported that poverty has been essentially eradicated in Vientiane Capital. Thenumberofpoorfamiliesalsodecreasedfrom7,970in2015-16to5,733in2017inSavannakhetandfrom1,151to894overthesameperiodinKhammouane.OnlyinBolikhamxaydidthenumberofpoorfamiliesincreaseslightly,from1,705in2015-16to1,711in2017.

Infrastructure development. In order to promote industrialization and closer regional integration,infrastructurehasbeenwidelyimprovedacrossthecentralregion,especiallybuildingroadsconnectingprovinces and districts. This includes the 3 districts (Adsaphone, Sonnabury and Tha Pang Thong) inSavannakhetthatdonotyethaveasphaltroadsthroughthem.Constructionsofroadsinruralareashasalsobeenemphasizedandhasbeenanimportantsupportforhelpingpeopletogetoutofpoverty.Someprojectsinclude:2-levelasphaltroadNo.10(estimatedcurrentcompletion7.42percent);2-levelasphaltroad1G(fromRoadNo.9intersectioninPhinDistricttoSaravanhborder,estimatedcurrentcompletion27percent);2-levelasphaltroadfromRoadNo.9BanDongtoNongDistrict(estimatedcurrentcompletion100percent);roadprojectfromSisaathtoNakhaoLomtoNaYang(PaksanDistrict,BolikhamxayProvinceandvaluedat79.87billionkipwithestimatedcurrentcompletion53percent);7concreteandasphaltroadprojects inPaksanMunicipalityvaluedat60billionkip (currentcompletion49.19percent) ; roadproject from Pakkading Tai to Na Nam Bolikhamxay province valued at 109.35 billion kip (currentcompletion28.39percent).

SocialDevelopment.Therehavebeenanincreasingnumberofschoolsinruralareasconstructedtoallowmorepeopletohaveaccesstoeducationatalllevelssuchaskindergarten,primary,secondary,tertiaryandvocationalstudies.Furthermore,healthcareservicesarealsoimprovedintermsoftechnicalexpertiseandaccessibility.

54AccordingtoNCRDPE.

0,00%5,00%

10,00%15,00%20,00%25,00%30,00%35,00%40,00%



Target 2016 2017

48

1.4.4 SouthernRegion

GDPgrowthoverview.AverageGDPgrowth intheprovincesofthesouthernregionrangedfrom7.71percent to 9.19 percent per year, lower than the NSEDP target of 8 percent to 11 percent growth.Champasak,however,mettheplangrowthtarget,averaging8.08percentgrowthoverthepasttwoyears,(slightlyhigher than targetof8percent). Theother southernprovinces,however, fell shortofgrowthtargets.InSaravan,GDPgrowthaveraged7.71percentin2016-17,representingalargedecrease.ItisalsoprojectedthatGDPgrowthtargetsfortheremainingperiodwillnotbeachievedbecauseproductionareashavebeenheavilyaffectedbynaturaldisastersandpestoutbreaks.GDPgrowthinSekongaveraged9.10overthisperiod,alsobelowthetargetrateof11percent.

Potentialimpactof2018flooding.Finally,inAttapeuGDPgrowthaveraged9.19percentfrom2016-17,justslightlylowerthantargetof10percent.However,futuregrowthislikelytobelimitedduetothedamincidents that caused losses of lives, assets, and infrastructure. Sanamxay district, for example, wasprominently affected and is a plateau located along Xepian riverwith high agricultural potentials andservesasamainfoodsourceforlocalpopulations.

Table1.10.EconomicperformanceintheSouthernRegion

Source:MPI.

Economicstructureandgrowthineachsector.ChampasakandSaravanhaveemphasizedmodernizationandindustrialization.Asaresult,agricultureandforestryshareofGDPinChampasakdroppedfrom26.10percentin2016to24.34percentin2017.Itisfurtherestimatedtofallto21percentin2018.Industry,meanwhile,hasgoneupasashareoftheeconomy(from34.5percentin2016,34.97percentin2017),ashas services (39.4 percent in 2016 to 40.06 percent in 2017). A similar pattern is seen in Saravan.AgricultureandforestryshareofGDPfellfrom45.21percentin2016to42.28percentin2017.Industrystayedlargelystable(21.38percentin2016to21.49percentin2017)whileservicesgrewasashareofthetotal(33.41percentin2016to36.23percentin2017).

Bycontrast,inSekongandAttapeuagricultureisstillpredominantandthistrendwilllikelycontinue.Theseprovinces rely on agricultural production and commercial manufacturing production is limited.Meanwhile,theservicessectorhasalsodeclinedduetodecreasedtouristarrivals.

Agricultural Sector.Agriculturalproduction in the southern region isprimarily focusedon rice thoughothercropsarealsocultivatedforlocalconsumptionandexport.

No. Province

(%) GDP growth rate GDP per Capita (USD/Person)

Target

(2016-2020) 2016 2017

Average2 years

Target

(2016-2020)

2016 2017 Average

2 years

1 Champasak 8.00 8.04 8.12 8.08 3,581.00 2,224.00 2,468.00 2,356.00

2 Saravan 11.00 7.90 7.51 7.71 1,950.00 1,180.00 1,197.00 1,188.50

3 Sekong 11.00 9.10 9.10 9.10 2,230.00 1,524.00 1,580.00 1,552.00

4 Attapeu 10.00 10.88 7.50 9.19 2,900.00 1,876.00 1,980.00 1,928.00

49

Figure1.8.SouthernregionagriculturalshareofGDP:NSEDPtargetversusperformance

Source:MPI.

Riceproduction.Riceproductionreachedover2milliontonsinthepasttwoyears,representingabout33percentofthePlan’stargetof6milliontons.Itisprojectedthatby2020,however,seasonalandirrigativericeproductionmaynotreachplantargetduetounfavorableclimateconditions,productionloss,pestoutbreaksanduntimely irrigation repairsdue to insufficientbudget. Furthermore,official supportandtrainingsarenotyetavailableeverywhereandsomeproductionareashavebeenturnedintoconstructionsites.Therehasalsobeenadecreaseinthemarketpriceofricethatleadsfarmerstoswitchtootherkindsofcropswithahighervalue.

• Seasonal rice. The producing area decreased from 223,298 hectares in 2015-16 to 216,061hectaresin2017.Totalproductionamountdecreasedfrom946,069tonsin2015-16to865,577tonsin2017.

• Irrigativerice.Theproducingareadecreasedfrom24,879hectaresin2015-16to17,190hectaresin2017.Productiondecreasedfrom121,112tonsin2015-16to80,754tonsin2017.

• Uplandrice.Theproducingareaincreasedfrom2,859hectaresin2015-16to3,537hectaresin

2017.Productionincreasedfrom5,752tonsin2015-16to6,302tonsin2017.

AreasthataremostwellknownforriceproductioninthesouthernregionaretheflatlowlandsalongtheMekong River in Phonthong, Sanasomboun, Mounlapamoke, Soukoumma Districts in ChampasakProvince;theflatlowlandsinSaravanandSekong;andSanamxayDistrictinAttapeu.

Industry.Over thepast fewyears, industry sectorhasbeenan increasingly important sector that hasgenerated revenue for the government, created value-added products, and increased exports tointernational markets. However, the drop in agricultural production and the introduction of tightregulationshavenegativelyaffectedindustrialsectorperformanceandmayconstrainachievementofthe8thNSEDPtarget.

Figure1.9.SouthernregionindustrialshareofGDP:NSEDPtargetversusperformance

0,00

10,00

20,00

30,00

40,00

50,00

Champasak Saravan Sekong Attapeu

Percentage


Target 2016 2017

50

Source:MPI.

Industrialproduction.Industrialproductsgenerated8,141.48billionkipintotalrevenuein2016and2017,representing43percentofthetargetsetinthe8thNSEDP.Thereasonfortheresultwasthedecreaseofthepriceofagricultural goods, limitedproductionof cement, and lowernumberof timberprocessingbusinesses.Withintheindustrialsector,thefoodandbeverageindustryisthemostprominent,creating3,688.03billionkipandcovering45percentofthetotalrevenuegenerated.

Industrial zones. Like inother regions, thedevelopmentof industrial zoneshasalsoproceeded in thesouth. For example, during the NSEDP period various industrial zones have been developed such asindustrialzoneKM16inBaJiengDistrict;industrialzoneKM30inSanasombounDistrict;andindustrialzoneKM12inPhonthongDistrict.

Services.Manyretailingandservicessub-sectorshaveseen impressivegrowth in thesouthernregion.Cities have increased access to modern technology that enables them to distribute products morethoroughlyacrosstheregion.Butthetourismandhospitalityindustryhasnotbeenabletoattractasmanytouristsasplanned.Thenumberoftouristswas756,425in2016,881,830in2017,and448,390in2018,totalling2,086,645overthepasttwoyears.Thisnumberrepresentsonly27percentofthetarget. It isforecastedthatby2020,theplan’stargetwouldnotbemetduetovolatileglobaleconomicsituationsandunstablepoliticalsituationinseveralneighbouringcountrieswhichledtoadecreaseintouristspending.Moreover,promotionandadvertisinghavenotbeenabletoreachthetargetaudienceandneedfurtherimprovements.

Figure1.19.SouthernregionservicesshareofGDP:NSEDPtargetversusperformance

0,005,00

10,0015,0020,0025,0030,0035,0040,00


Percentage


Target 2016 2017

51

Source:MPI

Percentageoffamiliesandvillagesdefinedaspoor.55AccordingtotheNCRDPE,povertyhasdecreasedin most southern region provinces. In Champasak, the number of poor families in 2016 was 743(representingonly0.6percentofthetotal).In2017,thisnumberwasreducedto222families(0.4percentofthetotal).By2018,itisprojectedthatthenumberofpoorfamilieswillessentiallybereducedtozero.

Thenumberofpoor familieshasalsodecreased inSaravan. In2016, thenumberofpoor familieswas4,719(representing6percentofthetoal).In2017,thiswasreducedto4,285families(5.9percent)andby2020itisprojectedthatthenumberofpoorfamilieswillbeatmost3,631(5percent).PovertyratesinSekongandAttapeu,however,arehigher.InSekong,thetotalnumberofpoorfamilieswas6,015in2016.Thisrepresents25.0percentofthetotal,thehighestshareintheregion.In2017,thisnumberwasreducedto5,556families(23.1percent).

• Poverty in Attapeu. In Attapeu, meanwhile, the number of poor families was 2,973 in 2015(representing10.9percentofthetotal).Dataisnotavailablefor2016butin2017thisnumberwasreducedto2,481families(8.8percent).FurtherprogressinreducingpovertyinAttapeuwillbeaffectedbytherecentfloodingandfurtherprojectionswillcomefollowingpost-disasterneedsassessment.

Infrastructuredevelopment.The southern regionhasmade improvements in theareaof irrigation toensure sufficient food supply and in building road networks to ease transportation between villages,districts,provincesandregion.Forexample,thesouthernregionhas543irrigationsystemsinplacetosupplywater to seasonal and irrigative rice fields and other crops, though some places are unusablebecausewater pumps are brokenor there is not sufficient fund to repair them.Altogether, irrigationsystemsinthesouthernregioncansupplywatertoatotalof49,946hectare.Meanwhilethelengthsofallroadsinthesouthernregioncollectivelyaddupto8,174.8kilometers.

SocialDevelopment.During thepast fewyears, the governmenthas invested17percentof availablepublicfundsineducationandsportsand9percentinhealthcare.However,resultsintheseareasindicatethatkeysocialtargetswillnotbemetby2020.

55AccordingtotheNCRDPE.

0,00

10,00

20,00

30,00

40,00

50,00


Percentage


Target 2016 2017

52

• Education.Sekongneedstocontinueto improvetherateofstudentsgraduatingfromprimaryschool.AsforChampasak,SaravanandAttapeu,itprojectedthattheywillnotmeetthetargettoachieve at least 85 percent of students attending lower-secondary school and 60 percent ofstudentsattendingupper-secondaryschool.Progresshasbeenaffectedbythespecificeconomicsituation intheregionandthetargetsset in the8thNSEDPcouldbereconsidered inthis light.Manystudentsinthisagegroupchoosetoworkandearnmoneytohelpprovidefortheirfamilies.Moreover,schoolsinruralareasarestilllackingandinaccessibleforstudents.

• Health.itisforecastedthatvarioustargetssetforSaravan,SekongandAttapeuintheplanwillnot bemet including the target to achieve at least a 20 percent reduction in the number ofunderweightchildrenundertheageof5;a32percentinthenumberofshortstatureinchildren;and75percentaccessforpeopletousepropertoiletsandhavepropersanitation.Targetstobechecked.

1.5. Outcome 1, Output 5: Public/private labour force capacity improved

1.5.1. ContextThelabourforceandLaoPDR’sdevelopmentvision.Creatingadiverse,well-trained,andhighly-skilledlabourforceisanessentialpieceoftheGovernment’sambitionstograduatefromtheLDCcategoryandreachtheobjectivesofthe8thNSEDP.Withoutastronglabourforce,progresstowardsdevelopmentgoalsrelatedtoeconomicdiversification,povertyreduction,structuraltransformation,andinclusivegrowthwilllikely be limited. A priority for the 8th NSEDP period was to enhance understanding of employmentpatterns andneeds in the country, includingdifferences acrossdemographic groups andgeographicalareas.Forthisreason,theGovernmentplacedapremiumonreleasingthenewLabourForceSurvey—oneofthe8thNSEDPtargetsforthisoutput.

1.5.2. ProgressandachievementsNew labour forcedata. The2017LabourForceSurveywas released in July2018. It introducedanewconceptofwork,employmentandlabourunderutilizationadoptedbythe19thInternationalConferenceofLabourStatisticians(ICLS)in2013.Itisimportanttonotethatthenewdataisnotdirectlycomparabletounemploymentdatafromthe2010survey.ThismeansassessingprogresstowardsNSEDPtargetsisnotpossible. Specifically, according to the new international standards, employment includes only thosepeople working for pay or profit and excludes those engaged wholly or mostly in subsistence foodproduction. The effect of this is to lower the count of employment and to increase the count ofunemploymentbecausesubsistenceproducersareclassifiedasunemployed.

Overviewofthelabourmarket.Withthisinmind,Table1.11giveskeylabourmarketindicatorsfromthenewLFS.In2017,theworkingagepopulationwasestimatedtobe4.8millionandthelabourforce1.9million. This results in a labour force participation rate of 40.8 percent. The unemployment rate(proportion of the unemployed in the total labour force) is estimated to be 9.4 percent.56 Youthunemploymentisalsorelativelyhighat18.2percent.

56Theseestimatesareverydifferentfromtheestimatedindicatorsin2010,whenthelaborforceparticipationratewasestimatedtobearound79percentandtheunemploymentratearound2percent.

53

Table1.11.Keylabourmarketindicators 2017Workingagepopulation 4,758,031Laborforce 1,940,230Employment 1,757,733Laborforceparticipationrate(%) 40.8Unemploymentrate(%) 9.4Compositerateoflaborunderutilization(%) 25.8Youthunemploymentrate,aged15-24(%) 18.2Shareofwageworkersintotalemployment(%) 32.4Averagegrossmonthlyincome,employees(Kip) 2,481,000

Source:LabourForceSurvey(2017)

Demographicdifferences in labourforceparticipation. Ingeneral, laborforceparticipationrateswerehigherinurbanareas,formen,andforthosewithhighereducationalattainment.Informalemploymentaccountedfor83percentofworkers,withhigherratesamongwomenandintheruralareas.Ingeneral,youngerandolderpeopleweremorelikelytobeaffectedby informality.57Thegendergapin informalemployment rate was the highest in Sekong (20.1 percentage points) and Attapeu (14.9 percentagepoints).

Employmentacrosssectors.Thelargestshareofworkers,meanwhile,wereintheagriculture,forestry,andfishingsectors,(35.8percentofallemployed)followedbywholesaleandretailtrade(21.4percent).Themanufacturingsectoronlymadeup9percentofemployedpeople.Notably,despitetheirimportancetothelargereconomyandcontributiontoGDP,theelectricityandgassectormadeup0.7percentofjobsand mining only 0.5 percent. There were also gender differences. Larger shares of women work inwholesaleandretailtradeandmanufacturingwhilelargersharesofmenworkinpublicadministrationandconstruction.

Table1.12.Distributionofemploymentbysector Total Male FemaleAgriculture,forestry,andfishing 35.8 34.7 37.1Miningandquarrying 0.5 0.9 0.2Manufacturing 9.1 7.0 11.5Electricityandgas 0.7 1.0 0.2Water 0.4 0.6 0.2Construction 5.4 9.1 1.1Wholesaleandretailtrade 21.4 17.1 26.4Transportation 2.5 4.3 0.6Accommodationandfoodservice 2.6 1.9 3.6Informationandcommunication 0.5 0.5 0.5Financialandinsurance 0.7 0.4 1Publicadministration 10.2 14.2 5.5Education 5.5 5.0 6.1Healthandsocialwork 1.5 0.9 2.1

57ThehighestinformalemploymentrateoccurredinHuaphanh(94.2percent)andinLuangprabang(93.4percent).ThelowestrateswerefoundinSekong(68.0percent)andSavannakhet(69.1percent).

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Otherservices 3.2 2.4 3.9Total 100 100 100


Governmentsupportfordevelopingthelabourforce.Manyactivitieswerecarriedoutduringthefirsthalfofthe8thNSEDPimplementationperiodthathavecontributedtoplanobjectives.TheGovernment,with development partner support, has been working on developing high-quality labour marketinformationandhasbeenfacilitatingemploymentshiftsacrossandwithinsectors.Forexample,labourmarketfairshavebeenorganizedthroughouttheNSEDPperiodtoprovideinformationtojobseekers.TheGovernmenthasalsobeenworkingwithpartnerstocompileup-to-dateinformationabouttheLaoPDRlabourmarket.Thefindingsandthenewstatisticalinformationfromtheseeffortswillbecriticalassupporttoplanners,policymakers,researchers,studentsandotherusers.Inadditiontothis,theGovernmenthasprovidedneededtoolsandequipmenttoskilled labourdevelopmentcentres inOudomxay,BokeoandSavannakhet.Asaresultofvariouspartnershipandinitiatives,thesectorhasbeenabletoproduceabout270,042 skilled labourers, of which agriculture sector accounts for 70,258 persons (female 28,671),industry70,232persons(18,030)andservice129,552persons(female73,416).

SeveralstrategieshavealsobeenlaunchedtosupporttheGovernment’sgoalofdevelopingahighly-skilledlabourforce.ThisincludestheNationalHumanResourceDevelopmentStrategy(NHRDS)to2025,theLawof Education (amended version, July 2015), the TVET Development Plan 2016-2020, and the HigherEducationDevelopmentPlan2016-2020.

IncreasingskillsandtheperformanceofTVET.SpecificemphasisduringtheplanperiodhasbeenplacedonenhancingTVET.TheGovernmentviewsTVETasacriticaldriverofastrengthenednationalworkforce.PublicandprivateTVET Instituteshaveexpanded tooffera rangeof vocationaland technical trainingcoursesforthosewhohavecompletedlowersecondaryschool.TheGovernmentofLaoPDRrecognizes,however,thelimitationsoftheTVETsystemsofarinplayingitsessentialrole—despitetheeffortsandresourcesexpendedtodevelopthesub-sector.Specifically,thequalityofTVETprogrammesstillrangeswidely,therelevanceofthecurriculumtothejobmarketisoftenlimited,andcoordinationwithprivatesectorneedsremainsrelativelyweak.Trainingsystemsalsoneedtobereorientedandmademoreflexibletotheneedsofdifferenttypesofworkers(includingthoseintheinformalsector).

Table1.13.Distributionworkingagepopulationandlabourforcebylevelofeducation

Workingagepopulation Labourforce

Total Male Female Total Male FemaleNotenrolled 20.0 13.1 26.5 9.3 6.5 12.7Lessthanprimary 33.7 34.4 33.0 33.9 32.8 35.3Primarycompleted 18.3 20.4 16.2 20.4 21.6 18.9Lowersecondary 12.9 14.5 11.3 13.4 14.5 12.3Uppersecondary 4.4 5.0 3.8 3.5 3.8 3.1Vocationalfirst 1.0 1.3 0.8 1.7 2.1 1.3Vocationalmiddle 2.8 3.3 2.4 4.9 5.2 4.6Vocationalhigh 3.8 4.2 3.5 6.9 7.2 6.6Universityandupper 3.1 3.7 2.5 5.9 6.4 5.2 100 100 100 100 100 100


Lowparticipationratesinvocationalandhighereducation.Butoverallparticipationinvocationaltrainingremainsrelativelysmall,bothintermsofthesharetheworkingagepopulationandofthelabourforce.

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About7.6percentoftheworkingagepopulationhadcompletedsomeformofvocationaltraining.Another3.1percenthadcompleteduniversityeducationorabove.Meanwhile,13.5percentofthelabourforcehad completed vocational training and 5.9 percent university level or higher. Those who had notcompletedprimaryschoolstillmakeup53.7percentoftheworkingagepopulationand43.2percentofthelabourforce.

Growthofhighereducationbutsignificantchallenges.HigherEducationInstitutes,meanwhile,nowofferseveralstudycourseprogramsincludingDiploma,Bachelor,Master,andDoctoralcourses.Thereareatleast 99 Higher Education institutes (28 of which are private). Approximately 1,711 governmentscholarshiprecipientsand6,216privatelyfundedstudentsarestudyingatthe4publicuniversities.Thesub-sectoris,however,continuingtofacesignificantchallenges.Theseincludethecapacityofstaffandinstructors, limited courses on subject areas to meet the needs of the national socio-economicdevelopmentstrategy,andscientificresearchthatisnotwellalignedtoprioritydevelopmentsectors.

Broadening the vision of education and skills training. Non-Formal Education (NFE) has also beenprioritized by the Government as part of its ‘education for all’ policy. Youth and adult educationcontributes to the growing workforce and are also pre-requisites for LDC graduation. NFE initiativesincludeliteracytrainingprograms,primaryeducationequivalencyprograms,lowersecondaryeducationequivalencyprograms,uppersecondaryeducationequivalencyprograms,andbasicvocationaltrainingprogram.Inaddition,withDPsupport,theNFEsubsectorhasdevelopedaconceptofLifeLongLearning(LLL),subsequentlyfeaturedinaPrimeMinisterDecree.Likeothereffortsrelatedtoenhancingthepoolof labour, the NFE sector has challenges still to be addressed, including the effective operation andfunction of the NFE centres at provincial and district level, budget constraints, limited supply ofexperiencedteachers,andinsufficientsupplyoflearningandteachingmaterials.

Developmentof sector standards.Meanwhile,otherGovernment initiativeshave resulted inprogressrelatedtothelabourmarket.AsprescribedbytheNSEDP,labourskillsstandardshavebeenimprovedandclarifiedforseveraloccupations,includingsixintheICTsector,fourinindustry,andfourintourism.ThesestandardsarenowbeingproposedtotheNationalConsultativeCouncilonVocationalTrainingandSkillsDevelopment.Efforts to furtherdevelopskills standardswill continueover the restof theplanperiodalignedwiththeNSEDPtargetofdevelopingstandardsfor25occupations.58AlsoalignedwiththeNSEDPhavebeeneffortstoenhancedskillsdevelopmentcentres.Theseaimtopromotingtoprovidevocationalandotherskillstrainingopportunities.

Signsofprogressbutcriticalneed foremploymentgeneration.Whilecompletedataonemploymentopportunities generated during the first half of the 8th NSEDP are not yet fully available, some initialestimates are available that point to progress in providing job opportunities in targeted sectors.Nevertheless,thisremainsacriticalareaforincreasedfocusandprioritizationoverthecomingperiodasemploymentgenerationstillappearsoff-tracktoreachNSEDPtargets.Mega-projectsandemployment.Largemega-projectsarealsoimpactingthelabourmarketinLaoPDR.Forexample,theLaos-ChinarailwayprojectwasallowedtoemployforeignworkersforconstructionandtohelpLaoworkersaccesssomeofthesepositions,theMinistryofLabourandSocialWelfarecoordinatedwithemploymentservicescenters,employmentservicecompaniesandlabourandsocialwelfaredivisionsofprovincesandVientianeCapitalnationwidetoregisterworkersbeforesendingtheavailableworkerstoworkfortheproject.Oncecompleted,therewillbeasignificantincreaseinhumanmobilityacrossthe

58Similarly,laborskillsstandardsforbuildersandforelectricalinstallationhavebeenpilotedatthelabourskillsdevelopmentcentersinOudomxayandChampasackprovinces.

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countrydueto increasedconnectivitythroughthosemega- infrastructureprojects,whichwillenhancepeople’soptionsindeterminingthelocationandthetypesofjobsthanbefore.Labourmigration.AccordingtotheLFS,amajorityofthosewhohadmovedfromtheirbirthplacenowresideinVientianeCapitalandVientianeprovince.Ofthisgroup,womenweremuchmorelikelytomovefor family-related reasons thanmen andmenweremore likely tomove for job-related reasons. Thissituation was quite different for international migrants, as 87 per cent were abroad for job-relatedreasons59andnearlythesamesharesentfundshome(88percent),withtheaverageremittanceamountbeingUSD$177permonth.About60percentofinternationalmigrantswerewomen.60EvidencesuggestsLaomigrantscontinuetofacesignificantchallenges.AccordingtoILOanalysis,61mostinternationalmigrationtakesplacethroughirregularchannelsandmigrantsoftenfacelimitedaccesstoinformation,training,andresources(especiallywomen).SkillmatchingwhenabroadisalsodifficultforLaomigrantworkersasarechancesformobilityandsocialprotectionsupport.UponreturntoLaoPDR,asubstantialportionofmigrantworkersalsotendtohavetroublere-integrating,includingfindingjobsoraccessingintegrationservices.

1.5.3. ChallengesandlessonslearnedAccelerating progress in providing job opportunities in targeted sectors will be a critical area forprioritizationoverthecomingperiod.Employmentgenerationremainsoff-tracktoreachseveralNSEDPtargets.Thereremainshortagesoftrainedprofessionalsforkeysectorsandlimitedon-the-jobtrainingopportunities.WhiletheGovernmenthasundertakeninitiativestouseTVETasadriverofastrengthenednationalworkforceinlinewiththevisionofthe8thNSEDP,limitationsremainintheabilityofthissystemtoplayitsessentialrolecoordinateamongdifferentskillsdevelopmentcentresbydifferentministriesandorganizations and TVET under the Ministry education. Cooperation with private sector firms requirefurtherstrengthening.Specifically,thequalityofTVETprogrammesrangeswidely,therelevanceofthecurriculumtothejobmarketisoftenlimited,andcoordinationwithprivatesectorneedsremainsrelativelyweak. The development of stronger higher education institutes to support structural transformation,meanwhile, is also challenged by the capacity of staff and instructors, limited alignment of availablecoursesandtheneedsofthenationalsocio-economicdevelopmentstrategy,andscientificresearchthatisnotwellalignedtodevelopmentpriorities.Finally,thenon-formaleducationsectoralsofacesbudgetconstraints, limited supply of experienced teachers, and insufficient supply of learning and teachingmaterials.

1.5.4. NextstepsTheoverarchingaimoftheGovernment’sapproachistodevelopthehumanresourcesnecessarytodrivesustainable socio-economic development and to compete with ASEAN countries and others. Movingforwardfortheremainderofthe8thNSEDPandbeyond,thiscanincludeaspriorities:

• StrengtheningTVETandskillsdevelopmentcoordinationmechanismandprogrammestodevelopthe human capital required to increase the ability of people to take on new opportunities,especially throughpartnershipswith the private sector tomatchdemand and supply of skills.Nationalqualificationofskillsmechanismrequiresfurtherstrengthening.

59LabourForceSurvey2017.60ILOMigrationStudy.61ILOMigrationStudy.

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• Improvingthequalityofeducationacrossdifferentlevels,includingprimaryandsecondary,non-formal,andhigher.Thisincludesthroughteacherrecruitment,training,andretention;curriculumreview;andintroducingassessmentsofstudentcomprehensionandmastery.

• Enhancing understanding of employment patterns in the country, including differences acrossdemographicgroupsandgeographicalareas,aswellasthroughcontinuingthesystematicconductoflabourforcesurveysinordertomonitorprogressinlabourforcecapacity.

• Implementingandenhancing linkagesbetweenkeyGovernment initiativestohelpdevelopthelabourforce,includingtheNationalHumanResourceDevelopmentStrategy(NHRDS)to2025,theLawofEducation,theTVETDevelopmentPlan2016-2020,andtheHigherEducationDevelopmentPlan2016-2020.

• Increasingcollaborationbetweentraininginstitutionsandprivatesectorfirms,suchasthroughinternshipprogramsandon-the-jobtraining.

• ExploringfurtherthehumancapitaltrainingprogramsstipulatedininternationalagreementswithASEANandothercountries.

• Increaseaccesstoinformationforpotentialmigrantstosupportinformeddecision-makingaboutgoingabroadforwork.

• Developregularmigrationchannelsthatarelesscostly,timeconsumingandcomplex.• Expandtheservicesprovidedtomigrantworkerstoassistwithreturnandreintegration.• Encouragethedevelopmentofaffordableandmigrant-friendlyremittanceandbankingservices.

1.6. Outcome 1, Output 6: Local entrepreneurs are competitive in domestic &

global markets

1.6.1. ContextBuildinganenablingenvironmentforentrepreneurship.The8thNSEDPfurtheraimstosupportbuildinganentrepreneurialclassthatcanhelpleadtheLaoeconomyinitseconomictransformation.Suchapoolof business leaders is needed to drive growth, employment, and innovation. Also important is thedevelopmentofstronghumanresources inprioritytechnicalprofessions,suchasengineers,scientists,economists,andlawyers.Ahighly-skilledsetoftechnicalprofessionalsiscriticaltoachievingthelong-termvisionoftheGovernment.

1.6.2. ProgressandachievementsGovernmentinitiativestosupportnewentrepreneurs.Tosupporttheseaims,eachprovincenowhasatleastonevocationalschoolwithanemphasisonaligningtrainingwithprioritytechnicalskillsneededfortheeconomicandindustrialshiftstrategylaidoutbythe8thNSEDP.Studentshavetraditionallyenrolledinvocationaltrainingforvocationssuchasaccountingorhospitality,andtheGovernmenthasadoptedinitiativestoshiftenrolmenttotechnical fieldssuchasengineeringwherethere isa largeskillsgaporunmetdemand for labour.TVETprogramsarealsoundergoing reformtosupport thedevelopmentofthesetechnicalexperts.Thisincludeseffortstoimprovethequalityofeducationandhands-ontraining,thesupplyofqualifiedandtrainedteachers,andthedesignofcurricula,teachingandlearningmaterials,andother facilities.Onereformisanattempttoshift toskills rewarded inthemodern labourmarket,includingcriticalthinking,problemsolving,behaviouralskills,andinformationtechnology.MorepathwaystomovefromTVETprogramstohighereducation.Finally,theGovernmentisconductingacomprehensive,multi-sectoral analysis of the demand for education in the labourmarket. This includes, critically, anattempttoidentifylabour,trade,andindustrialpoliciesthatcancreateddemandfortechnically-skilledworkers.

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Information,education,andcapacity.Ingeneral,SMEsupporttoenhanceentrepreneurshipanddevelopstrong small businesses has been considerable. For example, PrimeMinister’sDecree 42 aims for the“PromotionofSmallandMediumEnterprises”whiletheMOIC’sDOSMEPhasbeenactiveinpromotingSMEscapacityandaccesstofinance.TheMoEShasalsointegrated“KnowAboutBusiness” intoseniorsecondaryschools toequip learnerswithentrepreneurial skillsandattitudesaimedatenhancing theiremployment opportunities and improve their business skills. In the long-term, the aim is to cultivateentrepreneurialcultureinLaoPDRandincreasetheproductivityandcompetitivenessamongcurrentandfutureentrepreneurs.EnhancingentrepreneurshipopportunitiesandcapacitylinkstotheGovernment’scomprehensive strategy fordeveloping theprivate sector, including through targeted interventions toenhancethebusinessenvironment.

1.6.3. ChallengesandlessonslearnedPromoting a stronger culture of entrepreneurship and enhancing the enabling environment for SMEdevelopmentarekeychallengestothe8thNSEDP’svisionofavibrantprivatesectorasanengineofgrowth.WhiletheGovernmenthasadoptedimportantinitiativestosupportSMEsandbusinessowners,manystilllack access to business services, technology, and finance. In general, the environment for capitalinvestmentneedsstrengthening.

Inparticular,SMEsfaceconstraintsinaccessingcreditanddifficultyobtainingloanswithoutfixedassets.ManySMEscanalsobenefitfromimprovedaccountingandfinancialreportingpractices,anissuebothfortheefficiencyofbusinessesandfortheirabilitytoaccessbankfinancingandinvestment.Ingeneral,morecan be done to help Lao firms take advantage of the country’s opening up and regional and globalintegration.

1.6.4. NextstepsMovingforwardfortheremainderofthe8thNSEDPandbeyond,supportfordevelopingentrepreneursandstrongerSMEscaninclude:

• Strengthening skills development initiatives to include business training and entrepreneurshipdevelopment-relatedcourses.

• EnhancingunderstandingofthelimitationstoentrepreneurialdevelopmentandSMEgrowthinLaoPDR, including through research andparticipatory consultations, anddeveloping targetingresponsestoremoveconstraintsandpromotingacultureofentrepreneurship.

• StrengtheningSMEsupportservicecentresbothfrominsideandoutsidegovernment,suchastheSMEServiceCentreatLNCCI.

• ReviewingandstreamliningasappropriatesystemsandcostforregisteringandoperatingSMEs.• ImprovingavailabilityofSMEfinanceandsupportingeffortstoincreaseaccess,includingthrough

non-bankfinancialproducts.• DevelopingtargetedsupportinitiativesforSMEaccountingandfinancialmanagement,including

throughprovisionofadvisoryservices,training,andtechnology.• Introducingmeasures to assist SMEs to take advantageof increased tradeopenness andnew

opportunitiesarisingfromWTOaccessionandAECintegration.

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1.7. Outcome 1, Output 7: Regional and international cooperation and integration

achieved

1.7.1. ContextDeepening Lao PDR’s engagement with the world. The 8th NSEDP sets out a strategy for furtherintegrating Lao PDR regionally and globally, especially by strengthening trade linkages and deepeningpartnershipswith traditional andnewdevelopment partners.Development cooperation in Lao PDR isevolvingtowardsgreaterandmorediversepartnershipstoachievethegoalsofthe8thNSEDPandtheSDGs,especially through theRoundTableProcessandSectorWorkingGroups.ThesemechanismsarecriticaltoensuringalignedsupportaroundtheGovernment’skeyprioritiesandstrategies.

LaoPDR’sdevelopmentprioritiesarealsosupportedbyfurtherregionalintegration.ThisincludesthroughASEANEconomicCommunity(AEC),GreaterMekongSub-region(GMS),andtheLowerMekongInitiative(LMI).Theseeffortsalongwithotherregionalconnectivityandtransportnetworkeffortsallpromotethegovernment’stransitionfroma“landlocked”to“land-linked”developingcountry.62

Governmentsupportfor increasingLaoPDR’sinvolvementininternationaltrade,meanwhile,hasbeenfocusedonthreekeypillars.First,itincludesdevelopingthenecessarylinkagestosupportbetteraccessto markets and more efficient trade, including by providing suitable infrastructure (e.g., energy andtelecommunications)andtransportlinkages(e.g.,road,rail,andwater).Second,itincludesinitiativestostrengthenthedesignandenforcementoflegalframeworksandprocedurestohelpfacilitatetrade.Theseinclude, for example, multilateral and regional economic cooperation frameworks and commitmentsrelatedtoAECandWTOmembership.Finally,itincludesstrengtheningthecapacityofdomesticindustriesandfirmstodevelopandtradeproductsthatareinternationallycompetitiveanddemandedbyregionalandglobalmarkets.

1.7.2. ProgressandachievementsBilateralandmultilateralcooperation.TheGovernmenthascontinuedtoleadandstrengthenarangeofmechanismsforpolicydialogueanddiscussions,includingespeciallytheRoundTableProcessandSectorWorkingGroups.ThesedialoguesarecriticaltoensuringalignedsupportaroundtheGovernment’skeypriorities and strategies. Importantly, participation in these mechanisms has also been expanding toincludenotonlythecentralgovernmentandtraditionaldevelopmentpartnersbutalsoNationalAssemblymembers,provincialauthorities,regionalbilateralpartners,privatesectorentities,andcivilsociety.

• DevelopmentcooperationandtheVientianeDeclaration.LaoPDR’sapproachtodevelopmentcooperationwascodifiedintheVientianeDeclarationonPartnershipforEffectiveDevelopmentCooperation Country Action Plan (VDCAP 2016-2025). Drafted together with partners, thedeclarationidentified14keyactionareastoenrichandenhancedevelopmenteffectiveness.TheGovernmentanditspartnershavefurtherestablishedamonitoringframeworkandwillcontinuejointassessmentsofimplementationoftheDeclarationthroughoutthe8thNSEDPimplementationperiod.

62RefertotheADBpublicationMrShunsukeBandohandedoutattheconsultation:Frielink,B.,andBando,S.,2018.‘IncreasingBenefitsthroughEconomicCorridorDevelopmentintheLaoPeople’sDemocraticRepublic’.ADBSoutheastAsiaWorkingPaperSeries.(Availablefrom:https://www.adb.org/sites/default/files/publication/422031/sewp-017-lao-pdr-economic-corridor-development.pdf

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• ARoundTableProcesstosupportLaoPDR’smoderndevelopmentvision.TheGovernmentofLaoPDRanditspartnerscontinuetobroadlyperceiveoftheRoundTableProcessasasignificantcontribution tomore effective partnership. Its positive characteristics include frank and opendiscussions, inclusive participation, and focus on concrete outcomes. Results from RTPmechanisms have consistently been translated into directives from the PrimeMinister to lineministries, provinces and concerned agencies. Nevertheless, the Government recognizes theimportanceofcontinuallyassessingandadaptingasnecessarytheapproach.Whileithasledtosuccess,thereareelementsofthepartnershipthatrequirefurtherstrengthening.Overtherestof theplanperiod, forexample, thecontributionandmobilizationofsupport fromtheprivatesector to accelerate NSEDP achievement will be a highly pressing objective. More broadly,Governmentalsoaimstocontinueshiftingthedevelopmentdialoguefurtherintodiscussionandagreementonimplementationmechanisms,capacities,andresources.

Regional integration. Deeper regional integration can also support many of Lao PDR’s developmentpriorities,includingthoserelatedtoLDCgraduation,8thNSEDPimplementation,andthe2030Agenda.The Government’s aim to transform into a ‘land-linked’ rather than a land-locked’’ country supportsgreateraccesstomarketsfortrade,deeperintegrationintoregionalandglobalvaluechains,enhancedcompetitivenessofLaoenterprisesrelativetoforeignfirms,strongertourismopportunities,andexpandedaccesstotechnologiesandhumanresourceexpertise.

Deeper regional integration moved ahead in Lao PDR during the first half of the 8th NSEDP period,including through important regional groupings and frameworks. Many of these efforts supportstrengtheningpolicyreformandinfrastructureconnectivityalignedwithcloserregionalcooperation.ThisincludesthetransformativeregionalrailwaycurrentlyunderwayfromChinatoVientianeandbeyond.Italsoincludesimportanteffortsrelatedtoregionalgroupings,especiallytheAECandGMS.

• ASEANEconomicCommunity.TheformalestablishmentoftheAECattheendof2015coincidedwiththelaunchofthe8thNSEDPinLaoPDR.Integrationactivitieshavesincecontinuedapace,includingimportanteffortsduringLaoPDR’sASEANChairmanshipin2016.Under Lao PDR leadership, key accomplishments included completion of theMaster Plan forASEAN Connectivity 2025 and the Vientiane Declaration on Promoting InfrastructureDevelopmentCooperationinEastAsia.OtheragreementsincludedtheASEANTradeFacilitationFrameworkin2016(settingatargettoreduce10%oftradetransactioncostsby2020);theASEANTradeRepository(one-stoponlinedatabaseonASEANtrade-andcustoms-relatedinformation);ASEANSeamlessTradeFacilitationIndicators(ASTFI);AEC2025TradeFacilitationStrategicActionPlan (ATF-SAP). These efforts all support the key ASEAN-wide objectives of reducing tradetransactioncostsintheregionby10%by2020anddoublingintra-ASEANtradebetween2017and2025.TheimplementationoftheAECBlueprint2025anditscorrespondingsectoralworkplanwillalsobesupportedbytheAEC2025MonitoringandEvaluationFramework,whichreplacedtheAEC2015Scorecard.AlsofinalisedinSeptember2016,theFrameworkimprovesonthepreviousAECmonitoringsystembyincorporatingoutcomesmonitoringandimpactevaluation.TheAEC2025Consolidated Strategic Action Plan (CSAP) was later endorsed in 2017 and provides acomprehensivepictureofkeyactionsdrawnfromthesectoralworkplans.Meanwhile,LaoPDRhasbeenmakingprogressinimplementingitsAECcommitments,includingforcutting tariffsandcreating theASEANtrade repository throughanonline tradeportal.ButadditionalreformsandtechnicalassistantarerequiredtohelpmeettheAECgoalofanational

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singlewindowandeliminatingothernon-tariffbarriers.Theregulatoryandproceduralchangesneededwillrequireincreasedcoordinationofgovernmentactorsfrommanydifferentsectorsandagencies.

• GreaterMekongSubregion.TheGMSProgramcontinues tosupporthigh-priority sub-regionalprojectsinawiderangeofsectorsacrossthesixGMScountries.Intotal,around$19billionhaseither been completed or started implementation in the region. These all aim to increaseconnectivity, competitiveness, and community in the sub-region. Lao PDR has specificallybenefitedfromprograminvestmentsininfrastructuresupplementedbycapacitybuildingsupport.ThelargemajorityofprojectsinLaoPDRwerefortheconstructionofassetsinenergy,transport,and other infrastructure (about 94 percent). An analysis by the ADB,meanwhile, of the GMSprogramatthesectorandproject levelpointsto itsclosealignmentwiththe8thNSEDP.GMSprojectsarealreadydiscussedandprioritizedwithrelevantsectorministriesandcoordinatedbyMPIforinclusioninGMSactionplans,annualplans,andtheNSEDP.Butthisformalalignmentcanbebetterstrengthened,especiallytoensurecomplementaritywithotherinitiatives,supportfornational objectives, and benefit maximization from GMS.63 Further GMS coordination andalignmentcanbeasupporttotheaimofdevelopingeconomiccorridorsintheregion.Thesecaninclude specific policies, institutional arrangements, complementary projects, and capacitydevelopmentinitiatives.

Internationaltrade.Althoughtotalexportshavegrownsteadilyinrecentyears(includingduringthefirsthalfofthe8thNSEDP),exportcompositionhasnotchangedsignificantlyandremainsheavilyconcentratedonresource-basedproducts.LaoPDR’stoptradingpartnershavealsoremainedsteadyovertimeandaresimilarly concentrated among a few countries. Thailand, China, andVietNam collectively received 82percentLaoPDR’sexports in2016.64Theconcentrationofproduct linesandtradingpartners increasesvulnerabilitytoexternalshocks,suchasglobalcommoditypricedecreasesandeconomicslowdownsinthemaintradingpartners.

Exports.Thetotalvalueofexportedmerchandisegoodsforthefirsttwoyearsofthe8thNSEDPwasUS$5.6billion.65Naturalresource-basedproductscontinuetoaccountforalargemajorityofLaoPDR’sexports(Table1.14).In2016,forexample,primarycommoditiesmadeup78percentofthetotal,anincreasefrom69 percent in 2015. The leading exportswere ores andmetals, accounting for 31 percent (especiallycopper,whichalonemadeup26percentofthetotal).Thesewerefollowedbyagriculturalrawmaterials(primarilywood-based)with16percentandelectricitywith10percent.66

Table1.14.Resource-basedversusnon-resource-basedexports,2015-16

Shareoftotalexports(%)

Exportvalue(USDmn)

Exportproduct 2015 2016 2015 2016Primarycommodities 69% 78% 1,824 2,273 Non-fuel 52% 63% 1,365 1,832

63SeeADBpaper.64UNCTADstat.65IMFfiguresareslightlyhigher—9.4million(4.3for2016and5.0for2017).Growthratealsoslightlyhigher(17and16.1respectively).IMFCountryReportNo.18/84.

66UNCTADstat.AccordingtoUNCTAD,merchandiseexportstotaledUSD$3,352millionin2016.ThiswasanincreasefromUSD$2,769millionin2015,representing21percentannualgrowththefirstyearoftheNSEDP.

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Food 11% 16% 284 461 Rawmaterials 21% 16% 539 475 Ores/metals 21% 31% 541 896 Fuels 16% 11% 432 310 Electricity 13% 10% 352 302 Petroleum 3% 0% 75 3Manufacturedgoods 31% 22% 804 656

Source:UNCTADstat.

Concentration of trading partners. Lao PDR’s leading main export destinations continue to be theneighbouring countries of Thailand, China, and Viet Nam (Table 1.15). In 2016, exports to Thailandaccountedfor40percentofthetotal,followedbyChinawith28percent,andVietNamwith14percent.Thesethreecountriestogetheraccountedfor82percentofallexportsin2016(nearlyunchangedfrom83percentin2015).

Table1.15.LeadingdestinationsforLaoPDRexports

Partner Shareoftotalexports(%) Exportvalue(USDmn)

2015 2016 2015 2016Thailand 36% 40% 1,382 1,780

China 32% 28% 1,225 1,268

VietNam 15% 14% 553 627

India 4% 4% 135 162

Japan 2% 2% 92 109

Germany 2% 2% 76 75

UK 1% 1% 48 48

USA 1% 1% 43 52

Netherlands 1% 0% 23 17

Australia 0% 0% 3 8

Source:UNCTADstatandADBKeyIndicatorsforAsiaandPacific2017.

Imports.Totalgrossimportvaluesatthemid-termofthe8thNSEDPwereatUS$9.9billion.Approximately2/3oftheseweremanufacturedgoods,especiallyelectricalmachinery(e.g.,appliances)androadvehicles.Lao PDR also imported significant amounts of food and petroleum. Aswith exports, Lao PDR importsprimarilyfromasmallnumberofneighboringcountries.Thailandaloneaccountedfor65percentofimportstoLaoPDRin2016—anincreasefrom61percentin2015.Moreover,Thailand,China,andVietNam,togethermadeup90percentoftotalimportstoLaoin2016.

Table1.16.LeadingimportingcountriestoLaoPDR

Partner Shareoftotalimports(%) Importvalue(USDmn)

2015 2016 2015 2016Thailand 61% 65% 4,419 4,204

China 19% 16% 1,352 1,071

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VietNam 8% 9% 555 608

Korea 2% 2% 181 137

Japan 2% 2% 111 124

Singapore 4% 1% 260 47

Germany 1% 1% 48 37

India 1% 0% 55 25

France 0% 0% 13 13

Australia 0% 0% 21 18

Source:UNCTADstatandADBKeyIndicatorsforAsiaandPacific2017.

Trade concentration and LDC graduation. This concentration of trading partners has some positiveimplicationsrelatedtoLDCgraduationasnoneofthekeypartnersgivepreferentialaccessspecificallytoLDCssoaccesswillnotbeaffectedbygraduationspecifically.InthecasesofThailandandVietNam,openaccesswillcontinueinthecontextofAFTAandAECintegration.Butthenarrowrangeofpartnersalsosuggests that the continued expansion of Lao exports depends on healthy growth in these threeeconomiesandondemandforLaoproductsremaininghigh.

Slowprogress in tradediversification.While the8thNSEDPaimedtodiversify thecountry’seconomicstructure (including the range of exports), this objective has seenmixed results. This is illustrated byindicatorsofexportconcentration(Table1.17).LaoPDR’sbaseofexportsremainsnarrowrelativelytocomparatorgroups,thoughithasgrowninrecentyears.In2010,forexample,Laoexported117productscomparedtoover250forbothLDCsandASEANcountries.In2016Lao’sexportbasehadincreasedto141products though this is still far smaller than LDCs and ASEAN countries. Meanwhile, Lao’s exportconcentration indexalsodecreasedsharplysince2010(andwas largelyunchangedbetween2015and2016),butexportsremainmoreconcentratedinLaoPDRthanintheASEAN.

Table1.17.Measuresofexportconcentrationanddiversification

LaoPDR LDCs ASEAN

2010

Numberofproducts 117 255 258ConcentrationIndex 0.31 0.45 0.13DiversificationIndex 0.77 0.69 0.32

2015


2016


Source:UNCTADstat.

Frameworksforenhancingtradeintegration.OneofthepillarsoftheGovernmentofLaoPDR’sstrategyfor increasing economic integration is continuedemphasis on strengthening the implementation legalframeworks and procedures that govern and allow for efficient trade. This includes the adoption andimplementationof commitments related tomembership in theWTO,AECandCross-BorderTransportFacilitationAgreementundertheGMS.AspartofitsWTOmembership,theGovernmentintroducednewlegislation in several areas, including for regulating tax, trade, and intellectual property policy. For

64

example,ithasdevelopedregulationsfortheIPRLawonunfaircompetitionandplantvariety,enhancedtechnical capacity to fully implement IPR border protection measures, and developed detailed draftguidelinesonIPRadjudication.

ProgresswithAECcommitments.LaoPDRalsocontinuestomoveforwardwithitsAECcommitments,suchasreducingits importtariffstozeroongoodsimportedfromotherASEANcountriesby2018andcontinuingeffortstoremovenon-tariffbarriers(NTBs).Ithasalsodevelopedregulationsandstrengthenedthe capacity for the professional body of accountancy as required by the ASEANMutual RecognitionAgreements.TheGovernmenthasalsolaunchedtheLaoServicesPortalthatcontainsinformationrelatedto tradeand investment in country, including legal documents,measures, procedures, forms, servicescommitments,news,andpublications.

Keyaccomplishmentstopromotetrade.Oneofthekeyinitiativesofthe8thNSEDPperiodhasbeenthelaunchofaTradeFacilitationRoadmapcovering2017-2020.TheRoadmaplaysoutapathtowardsmoredeeplyintegratingLaoPDRintointernationaltrade.Itincludes,forexample,actionplansforimplementingcategoryBandCmeasuresoftheWTOTradeFacilitationAgreement.Inadditiontotheglobalandregionalagreements, LaoPDRhas signeda series of bilateral trade-related agreementswithCambodia, China,Japan,theRepublicofKoreaandtheUnitedState(amongothercountries).

The Lao Business Forum. To further business development related to trading opportunities, theGovernmentcontinuedtoholdtheLaoBusinessForum(LBF).Intherun-uptothe2017forum,theLaoNational Chamber of Commerce and Industry (LNCCI) andMinistry of Industry andCommerce (MoIC)identified32priorityissuesraisedduringroughly150workinggroupmeetings.Solutionsweredevelopedandimplementedfor4oftheissuespresented.

ProgressinreducingtariffsandNTBs.Lao’sprogressinpromotingtradeintegrationisillustratedbyitsreductionoftariffsandNTBs.Importtariffsonnon-agriculturalandnon-fuelproducts,forexample,havegonedownduringtheplanperiod(Table1.18).Nevertheless,challengesremainforLaoPDRtomeetitstrade-relatedNSEDPobjectives.TheOECDratesLaoPDRashavinglowtradefacilitationsupportrelativeto ASEAN counterparts.67 According to the OECD trade facilitation indicators, performance improvedbetween2015and2017 in theareasof informationavailability, involvementof the tradecommunity,appealprocedures,feesandcharges,documents,andautomation.Performanceintheotherareashasbeen relatively stable with the exception of procedures (which decreased). But there is space forimprovement across all the indicators. In particular, this includes simplification and harmonisation ofdocuments,automationandstreamliningofprocedures,andinformationavailability.

This is particularly true in agricultural trade, as there has been difficulty coordinating the centralauthoritiesthatgrantlicensesandtheprovincialagenciesthatenforcethematbordercrossings.Thishasresultedinthelattersometimesappendingadditionalnonstandardrequirementsanddelaytrade.Therelativecostofpermits required foragricultural trade remainsamong thehighest in the region.Morebroadly,importandexportprocedureshavetendedtoadverselyaffectagriculturaltrade,evenifformaltariffsandtheburdenofofficialnontariffmeasuresarenotparticularlyhigh.68

67OECDTradeFacilitationIndicators.68ADB(2017),LaoPDRCountryDiagnosticStudy.

65

Table1.18.Importtariffratesonnon-agriculturalandnon-fuelproducts 2014 2015 2016Manufacturedgoods,oresandmetals 5.53 8.83 2.36Oresandmetals 2.36 4.88 1.14Manufacturedgoods 5.57 8.86 2.38Chemicalproducts 5.52 9.33 3.13Machineryandtransportequipment 6.25 9.23 2.33Othermanufacturedgoods 4.55 8.05 2.22

Source:UNCTADstat.

1.7.3. ChallengesandlessonslearnedProgress diversifying LaoPDR’s economic structurehas been relatively slow.While total exports havegrowntheircompositionhasnotchangedsignificantlyandhaveremainconcentratedonlow-valueaddedresource-basedproducts.LaoPDR’stoptradingpartnershavealsoremainedsteadyovertimeandaresimilarly concentrated among a few countries. The concentration of product line and trading partnerincreases vulnerability to external shocks, such as global commodity price decreases and economicslowdownsinkeypartnereconomies.TradefacilitationeffortsinthecontextofAECintegrationhavealsobeensomewhatslowrelativetoothercountrieseventhoughofficialtariffrateshavedeclinedinmanyinstances.69

Meanwhile, though external public finance will remain an important contributor to Lao PDR’sdevelopmentprogress,theavailabilityoftraditionalODA,accesstoconcessionalloans,andtheshareofgrantsinthemixoftotalexternalfinancemaydeclineastheLaoPDReconomycontinuestogrow.TheGovernmentofLaoPDRanditspartnerswillalsocontinueeffortstostrengthentheirpartnerships,suchas by widening the range of stakeholder participants in the Round Table Process and enhancingpartnershipdiscussionsonimplementationmechanisms,capacities,andresources.LaoPDRwillalsoworkmorecloselywithalldevelopmentpartners,includingregionalneighbours,tobroadenpartnershipsandensurealignmentandlackofduplicationinsupport.Thereisalsoroomformoresystematicallydevelopingcomprehensivestrategieswhenitcomestoregionalintegration,includingthealignmentandcoherenceof activities related to different regional groupings (e.g., AEC, GMS) and other regional initiatives tosupportthe8thNSEDPandthe2030Agenda.

1.7.4. NextstepsTheGovernmentof LaoPDRhas identifieddeeper international integrationasan importantmeansofpromoting domestic socio-economic development and reducing the development gap with othercountries.Overtheremainderofthe8thNSEDPperiodandbeyond,theGovernmentofLaoPDRaimstoprioritize:

• Strengthening the necessary linkages to support better access tomarkets andmore efficienttrade, including prioritizing suitable infrastructure (e.g., energy and telecommunications) andtransportlinkages(e.g.,road,rail,andwater).

• Strengtheningthedesignandenforcementoflegalframeworksandprocedurestohelpfacilitatetrade,includingthecommitmentsrelatedtoAECandWTOmembership.Thisincludesreducing

69ADB(2017),LaoPDRCountryDiagnosticStudy.

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importtariffstozeroongoodsimportedfromotherASEANcountriesandcontinuingeffortstoremoveNTBs,suchasbysimplifyingandharmonizingcustomsproceduresandstandards.

• Strengtheningthecapacityofdomesticindustriesandfirmstodevelopandtradeproductsthatareinternationallycompetitiveanddemandedbyregionalandglobalmarkets(e.g.,integrationofSMEsintoglobalvaluechains,andthedevelopmentofaskilledlabourforce).

• ImplementingtheTradeFacilitationRoadmapcovering2017-2020thatlaysoutapathtowardsmoredeeplyintegratingLaoPDRintointernationaltrade.

• Continuing to explore bilateral trade-related arrangements in addition to regional and globalagreements.

• Continuing structural reforms related to the regulatory and business environment, such asthroughincreasedtransparencyandstreamliningprocedurestohelplowertransactionscosts.

• Prioritizinginstitutionalandhumanresourcedevelopmentsupportfromdevelopmentpartnerstoenhanceself-sufficiency,includingassistancefrommultilateralpartnersthattargetLDCs.

• Making use of concessional financing arrangements with development partners and adoptingprudentapproachestonon-concessionalborrowingtoensuredebtsustainability—bothbeforeandafterLDCgraduation.

• AdaptingasnecessarytheRoundTableMeetingmechanismtostrengtheneffectivedevelopmentpartnerships, including by enhancing the contribution of the private sector, shifting thedevelopmentdialogue further intodiscussionandagreementon implementationmechanisms,andstrengtheningmonitoringofcommitmentsinthecontextoftheVDCAPII.

• StrengtheninganalysisofdifferentregionalintegrationprogrammesintheLaoPDRtobetterdevelopcomprehensivestrategiesformaximizingthebenefitsofaregionalapproachatthenationallevel.

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2. Outcome 2: Enhanced Human Development

“Humanresourcesdeveloped,public/privateworkforcecapacityupgraded,povertyinallethnicgroupsreduced,equalaccessbyalltoqualityeducationandhealthservices,theunique

Laoculturepromoted,protectedanddeveloped,politicalstabilitymaintainedwithsocialpeaceandorder,justiceandtransparency”

2.1. Outcome 2, Output 1: Improved living standards through poverty reduction

using the Three Builds Directions

2.1.1. ContextAchievementsofthepastdecade.LaoPDRhasmadetremendousprogressinreducingpoverty.LaoPDRhadalreadyachievedtarget1AoftheMDGsby2013,aheadoftime,halvingthepovertyratefrom1992/93levels.Householdwelfareimprovedintermsofownershipofassets,conditionofhousing,andaccesstoservicesandmarkets.Thepooronaveragehavebecomelesspoor,asshownbythesteadyreductioninthepovertygapandpovertyseverityovertime.

Strategies.Thegovernment’sdrivetoexpandruralinfrastructure,roadsandserviceshaveledtopovertyreduction in these areas, enhancing market access for agricultural produce and improving livelihoodopportunities.Anotherstrategytoalleviateruralpovertyistopromoteentrepreneurshipandproductionfacilitiesinruralareas,encourageagglomerationeconomies,especiallythedevelopmentofsmalltownsinruralareas,andpromoteruralemploymentandincome-generatingactivitiesforpoorandvulnerablehouseholds. The strategy aims to strengthen local capacities through implementing the Three BuildsDirective,improveandstrengthenprovincial,districtandvillage-levelcapacities,promotetransparencyandstrongleadership,andstrengthensolidarityandharmonizationamongdifferentethnicgroups.SinceUXOs form a barrier to rural development, UXO clearance is required to free up areas for furtherdevelopment and productive use, such as for agriculture and livestock production, development ofresidential areas and potential tourism. The treatment, health, and rehabilitation of UXO victims andassistanceforthesevictimsarealsoaddressedunderthisoutput.

2.1.2. ProgressandachievementsRuralpovertyreduction.Theimplementationofruraldevelopmentandpovertyeradicationstrategyoverthepasttwoandahalfyearshasmadegoodprogress(Table2.1).Overall,sevendistricts,83villagesand6,646familiesformerlyclassifiedas“poor”bytheDepartmentofRuralDevelopmentandCooperatives70haveescapedfromthepovertycategory.Povertyisstillachallengeassomepreviouslynon-poordistrictshavefallenintopoverty.

Povertyreductionstrategies.Smalltownscreatedbytheagglomerationoflargevillagesaccordingtotheruraldevelopmentpolicyincreasedfrom11townsin2015to30inearly2018,meaninganincreaseof19new towns. In the agriculture sector, activities such as the creation of the Department of Rural

70FormerlyNationalCommitteeforRuralDevelopmentandPovertyEradication(NCRDPE)

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Development and Cooperatives, participatory land-use planning in villages, and support provided tofarmers’organizationscontributedtopovertyalleviation.

Table2.1.Statusofpoordistricts,villages,andfamiliesfrom2015toearly2018

2015baseline Early2018 ResultatMid-Term

Totalnumberofdistricts 148 148 Numberofpoordistrictsreducedby7Numberofpoordistricts 30 23

Percentageofpoordistricts 20.3percent 15.5percent

Totalnumberofvillages 8,50771 8,514 Anettotalof83villagesnolongerfallintothe“poor”categoryNumberofpoorvillages 1,736 1,530

Percentageofpoorvillages 20.4percent 18.07percent

Totalnumberoffamilies 1,162,388 1,190,792 Anettotalof6,646familiesnolongerfallintothe“poor”categoryNumberofpoorfamilies 76,418 65,059

Percentageofpoorfamilies 6.6percent 5.04percentSource:DepartmentofRuralDevelopmentandCooperatives,MinistryofAgricultureandForestry

Public investments. Public investments inrural development and poverty eradicationfromtheyears2016-2018amountedtoatotalofLAK3,469.51billion.Therewerethreemainsourcesoffunds:domesticfunds,foreignandthe Nayobai Bank. Figure 2.1.1 shows therelative proportions of the three sources.Thus far, investmentswerefor thefollowingactivities:72

(i) LAK 242.66 billion for 71 ruraldevelopment and poverty eradication focalsites73and20fundfacilities,(ii) LAK121.22billionforLao-Vietnamborder

developmentfocalsites,comprisingLAK98.68BillionfromdomesticsourcesandLAK22.54BillionfromVietnam;

(iii) LAK165.34billionfor145focalsitesacrossthecountry,amongthemfourcentralfocalpoints,for the implementation of the resettlement policy. This includes providing permanentlocations and livelihoods, and agglomerating small villages into larger ones to ensure thatresettledcommunities,includingethnicminorities,havestablehomesandjobs,and

(iv) LAK270.5billionforthecounterpartfundforpovertyreduction(CFPR),consistingofLAK43billiondomesticfundsandLAK227.51billionforeignfunds.

(v) NayobaiBank creditsof LAK2,343.21billion toprovide livelihoodopportunities toeligiblepoorhouseholds.SomeLAK1,258.29billionhavealreadybeenissuedandbytheendof2018,theremainder(LAK1,084.92billion)willhavebeenissued.

71FourthLaoPopulationandHousingCensus201572Figuresandtermstobechecked.73FocalSitesaredesignatedzoneswherelargenumbersofresettledorpoorcommunitiesareprovidedwithdevelopmentservices.FocalSitesinvolvesignificantinfrastructureinvestment.

Domestic funds546.8316%

Foreign funds424.0113%

Funds from Nayobai Bank

2,384.2071%

Funding sources of public investments in rural development and poverty eradication

Figure 2.1.1

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UnexplodedOrdnance(UXO).UXOcasualtiesreducedby85percentoverthelastdecade.LaoPDRhasrecordedmorethan53,000hectaresof landthathavebeenclearedofUXOandmorethan1.3millionUXOitemsthathavebeendestroyed.Ofthe50,000casualtiesreportedfrom1964-2008,anestimatedthat20,000UXOaccident survivors remain. In recentyears,a combinationofeffective riskeducation,clearanceofcontaminatedareasandwidereconomicopportunitiesthatreduceriskybehaviourhaveseenthenumbersofcasualtiesdroppingfrom302in2008to41in2017.

Anewmethodology to addressUXO. In recent years a results-focusedmethodology has evolved foridentifying, prioritizing and clearing confirmed contaminated areas. Continued development andexpansion of these processes has significantly increased the numbers of UXO being identified anddestroyed. A major national survey initiative focused on cluster munitions is underway to providegeographicareacontaminationdetailsintheformofConfirmedHazardousAreas(CHAs).Theresultsofthe survey will inform long-term resource planning, prioritization and clearance. Throughout theimplementationofthesurveyoverthepasttwoyears,7,068CHAswereestablishedbytheendof2017,equivalentto51,247.48hectaresofCHAsremainingtobecleared.

UXOsurvivorassistance.TohelpsurvivorsLaoPDRhasadoptedaUXOVictimAssistanceStrategyandhasalso sought to enhancemedical services, rehabilitation and socio-economic support regardless of thecauseofinjury.TheimplementationoftheUXOVictimAssistanceStrategyhasenabledsupporttosome1,400 UXO survivors, with medical care, physical rehabilitation, psycho-social support, economicreintegrationandvocationaltraining.

2.1.3. ChallengesandlessonslearnedInequities.Disparitiesremainandinequalityhasevenincreasedinsomecases.Thepovertyrateinruralareasis2.9timesthatoftheurbanareas.One-thirdofthepopulationinuplandareasisstillbelowthepovertyline,whileinlowlandareas,onlyaboutone-fifthofthepopulationispoor.Theethnicgroups,whotraditionallyliveinmountainousandremoteareasdifficulttoaccess,haveseenslowerprogressinpovertyreduction. The lowland groups, with the highest levels of education, have the lowest poverty rate.Inequalityhasgrown:in2012/13,consumptionoftherichestquintilewas6.4timesthatofthepoorest,whiletwodecadesago,thedifferencewas4.7times.74Moreover,thedeliveryofbasicservicesremainsunevenduetolackofresourcesandconstrainedimplementationcapacity.

Policychallenges.Effectivepolicieswillneedtobeputinplacetoensurethatimprovedeconomicgrowthtranslatesintopro-poorgrowthandthatthebenefitsfromgrowthareequallyredistributedtothepoorandvulnerablesectionsofsociety.Pro-poorgrowthalsoneedstobeunderpinnedbyimprovementsinthequalityofgovernance,throughgreatertransparencyandaccountabilityinpublicpolicy.

UXOchallenges.AddressingandevenquantifyingtheimpactofUnexplodedOrdnance(UXO)remainsachallenge.ThescaleandimpactoftheUXOproblemfarexceedstheresourcesavailabletodealwithit,particularlyintermsofalackofclearancecapacity.MillionsofUXOremainandthousandsofhectaresofCHAsremaintobecleared.SupporttoachievethethreeSDG18targets isnotbalanced, forexample,fundingforthesurveyiscurrentlyoutofbalancewithfundingallocatedforclearance,riskeducationandsupport to UXO victims. Inadequate capacities for coordination, planning, quality management andinformationmanagementinhibitoptimaloperationalperformance.OthersectorsarenotincludingUXOworkintheirstrategicplanning,budgetingoractionplans.

74Pimhidzai,etal.,2014andLindelowetal.,2010.

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Table2.2.ProgressinremovingtheUXOobstacletonationaldevelopmentandkeepinglivessafefromUXOSDG18Targets,summarized

Indicators Year Availablevalue

18.1:ZeroannualcasualtiesfromUXOaccidents.

***18.1.1NumberofreportedUXOcasualties(disaggregatedbyagegroupandsex):Total/male/female/boy/girl

20162017

T59/M51/F8/boy32/girl5T41/M23/F18/boy8/girl7

18.1.2.PercentageofcontaminatedvillageswherethepopulationhasreceivedinformationonUXO-ConfirmedHazardousAreas

2017 29

18.2:UXOcontaminationclearedfromhighpriorityareasandvillagesdefinedas‘poor’.

18.2.1.NumberofhectaresofhighpriorityConfirmedHazardousAreasinFocalDevelopmentAreashavingcompletedclearance.7576

20162017

539588

18.2.2.Numberofvillagesdefinedas‘poor’withConfirmedHazardousAreasremainingtobecleared.

20162017

2,3892,389

18.3:IdentifiedUXOsurvivors’healthandlivelihoodsneedsmet

18.3.1.Percentageofregisteredactive-ageUXOsurvivorsunabletoearnsufficientincomewithaccesstobasicincomesecurity

20162017

4.55

18.3.2.PercentageofregisteredUXOsurvivorsmainstreamedintohealth,educationandemploymentservices

20162017

13.416.5

Source:NationalRegulatoryAuthorityforUXO/MineActionintheLaoPDR

2.1.4. NextstepsPovertyalleviation.TheGovernmentofLaoPDRisprioritizingthefollowingstrategiestoreducepovertydirectlyandtoalleviatetheimpactofpovertyonthepoor:

(i) Targeting the poor in planning, budgeting, and programme delivery through appropriatetargetingbelow thedistrict level, andwithdifferent sectorsworking in a coordinatedandconvergentapproach

(ii) Accelerating interventions such as providing poor communities with access to services,education,andsupporttolivelihoods,allofwhichareknowndeterminantsofpovertylevels

(iii) Using innovativemeans to reach and educate communities in remote areas, such as thecommunityradioprogrammesinXiengKhouang,Sekong,Oudomxayandotherprovincesandrelevantdistricts,whichhavebeenabletoreachvulnerablegroups,especiallywomenandgirls,withradioinstalledinmobilephones

(iv) Strengtheningsocialprotectionsystemstocovervulnerablegroupsandwidenthescopeofsocial protection schemes, including through the implementation of the National SocialProtectionStrategy

(v) Tapping into domestic capital, through public-private partnerships in local economicdevelopment, and incentives for investments that do their sourcing from local firms andworkers.

UXO.TheGovernmentoftheLaoPDRisprioritizingthefollowingactionstoprogresstowardstheSDGandNSEDPgoalofLivessafefromUXO:

75Asthefullextentofcontaminationiscurrentlyunknown,theGovernmentofLaoPDRplanstoundertakeafullsurveyofcontaminationby2021.TheUXOsectorisnowintheprocessoftechnicalsurveytodefinetheboundariesoftheconfirmedhazardousareasacrossthecountry.Oncethesurveyiscompleted,thenthepercentageofhighpriorityhazardousareasremainingtobeclearedcanbecalculated.

76Thisindicatorisnotexhaustive,butshowstheprogresstowardstarget18.2duringthereportingperiod(2016-2017).

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(i) Strengtheningnationalcapacityforcoordinationandefficiency(ii) Ensuringthequalityofoperationaldatainthenationaldatabase,inordertoenableproper

dataanalysisandamorerobustevidence-basedreporting(iii) Developingpolicyandproceduresto“main-stream”UXOsurvivorsintohealth,educationand

employmentservices(iv) AssistinglineministriestoincorporateUXOintheirplanningandbudgeting(v) Developing a comprehensive funding mobilization strategy to expand beyond traditional

donors(vi) Continuing to strengthen the capacity of the Lao Army in humanitarianmine action; and

identifyingandpromotingemergingtechnologiestoimprovetheperformanceandefficiencyofoperations.

2.2. Outcome 2, Output 2: Food security ensured and malnutrition reduced

2.2.1. ContextFoodsecurityframework.TheGovernment’s2030Visiononagriculturaldevelopmentemphasizesfoodsecurity.77Thelong-termgoalistoensurethenutritionofthepopulationwiththerequirementsofdailyintakeofatleast2,600kilocaloriesperpersonperday,throughabalanceddietasdetailedintheplan.78Accordingly,the2016-2020FoodSecurityActionPlanoftheMinistryofAgricultureandForestryaimsatensuringpublicnutrition,withanintakeof2,600kilocalories(kcal)perpersonperday,andimprovingtheproductionofrice,vegetables,andfruitstomeetthestandardsofgoodagriculturalpracticeandorganicagriculture.TheActionPlansetsquantitativetargetsforriceproduction(forconsumption,reserves,seedandexport),othercrops,vegetable,fruit,meat,poultry,fishandotheraquaticproduce,andfoodfromforestresources.Forfoodsecurity,theActionPlanlaysoutthefollowingstrategies:(i)thedevelopmentof agricultural systems and supporting technologies and services to maximize food production andsecurity,(ii)thereliabilityandtimelinessoffoodproduction,transport,storageandprovision(includingin the context of earlywarning systems and disaster response), (iii) ensured access to food supply athouseholdlevel,eveninnon-foodgrowingareas,throughlivelihoodsupport,includingmanagementofnon-timberforestproducts,and(iv)foodsafety,throughensuringcleanagriculturalproductionsystems,foodhygieneandsafety,monitoringandinspectionoffoodproductionandhouseholdlevelconsumption,andincreasedsanitaryandphytosanitarymeasuresforASEANintegration.

Nutritionframework.The2016-2020NationalPlanofActiononNutrition(NPAN)79embodiesamulti-sectoralconvergentapproachwithallsectorsconvergingonthemostvulnerablecommunities.WithinthefirstprioritiesoftheNPAN,thevarioussectorshavethefollowingroles:

• Theagriculturalsectorhastherolesof(i)increasingcultivationofcropsofhighnutritionalvalueandhighnutrientlevels,(ii)producingandpromotinganimalproteinforhouseholdconsumption,suchasmeat,poultry,fish,andotheraquaticproducts,(iii)buildingfacilitiestocaterforpost-harvestproduce(includingfooddehydratorsandfoodstoragefacilities)and

77The2030Visionforagriculturaldevelopmentbeing:“Ensuringfoodsecurity,producingcomparativeandcompetitivepotentialagriculturalcommodities,developingclean,safeandsustainableagricultureandshiftgraduallytothemodernizationofaresilientandproductiveagricultureeconomy,linkingwithruraldevelopmentcontributingtothenationaleconomicbasis.”

78MinistryofAgricultureandForestry,2015.AgricultureDevelopmentStrategytotheyear2025andVisiontotheyear2030.Vientiane

79GovernmentoftheLaoPeople’sDemocraticRepublic:NationalNutritionCommittee,2015.TheNationalNutritionStrategyto2025and2016-2020PlanofAction,December2015.Vientiane.

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applyingtechnologyinfoodprocessingandpreservationtokeepfoodsafeandnutritiousandensurefoodsecurityallyearround,and(iv)promotingincomegeneratingactivities,suchasthecultivationofcrops,non-timberforestproducts(NTFPs),andtraditionalmedicinesandfoodstobuildhouseholdincomes.

• Thehealthsectorhastheroleof(i)providingintegratedmaternal,neonatalandchildhealthservices,(ii)distributingfoodsupplementsforpregnantandlactatingwomenandyoungchildren,(iii)providingmicronutrientsupplements,vitaminsanddewormingsupplies,(iv)ensuringimmunization,(v)promotingtheconsumptionofiodizedsalt,(vi)promotingexclusivebreastfeedingforchildrenfrombirthupuntiltheageofsixmonthsandcounsellingforinfantandchildcare,(vii)promotingfoodsafety,(viii)providingtherapeuticfoodsupplementsandtreatmenttomanageseveremalnutrition,(ix)implementingbehaviourchangeinterventionsrelatedtonutrition,and(x)promotingcleanwatersystemsinhealthcentres,communities,households,andschools.NPANalsocontainssecondpriorityinterventionsbyhealthandreproductivehealthservices.

• Theeducationsectorhastheroleof(i)promotingschoolfeeding,(ii)supportingvegetablegardensinschools,(iii)integratingnutritionintoschoolcurricula,and(iv)distributingdewormingtabletsandironsupplementsinschools.

2.2.2. ProgressandachievementsImplementationoftheAgriculturalDevelopmentStrategy.TheGovernmenthasbeenpromotingagro-ecological practices for sustainability and productivity. Irrigation schemes have been improved andexpanded to make agriculture less rainfall-dependent. The Government also contributed to inclusivegrowthbysupportingFarmersOrganizationsandprovidingextensionservicestoruralcommunities.Policyactionsundertakenincludethe“GreenRiceLandscapes”initiativeonmixingricecultivationandaquaticspecies,thePolicyBriefonthe‘RoleoftheAgriculturesectortopromoteFoodSecurityandNutritioninLaoPDR,’ theadoptionofaDecreeonpesticides, togetherwithawarenessraisingonthe issue,andastudyonfoodsafetywithregardtoE.Coli,SalmonellaandClostridium.

Strengtheningofprovincialanddistrictoffices.Provinceanddistrictlevelagricultureandforestryoffices(PAFOsandDAFOs)areundertakingtheplanning,designandimplementationofanincreasingnumberofprojects. Enhanced PAFO and DAFO participation is seen inmulti-sector nutrition committees, whichcoordinateservicedelivery inelevenprovinces throughan improvedmonitoringand reportingsystemdevelopedbytheMAFfornutrition-sensitiveagriculture.

Foodproductionoutcomes.LaoPDRisperformingwellinfoodproduction:farmproductionismeetingorexceedingallthenationalper-capitafoodproductiontargets.Evenwithfloodingandamajorpestinfestation,theproductionin2017wasstrong:riceproductionwasmorethandoublethenationalconsumptiontargetsfor2020,vegetableproductionwasnearlyfourtimes,andfruitproductionwasoverseventimestheconsumptiontargets.LaoPDRasacountryis,therefore,producingsufficientquantityanddiversityoffoodsforgoodnutrition.

Food security outcomes. Lao PDR has achieved theMDG target of halving the proportion of hungrypeople,80withtheproportionofundernourishedinthepopulation81havingfallenfrom42.8percentin1990 to around 18.5 percent in 2015.82 This is important for the country, since the percentage of

80FoodandAgriculturalOrganizationetal,201581TheFAOprevalenceofundernourishment(PoU)indicatormeasurestheprobabilitythatarandomlyselectedindividualfromthereferencepopulationisfoundtoconsumelessthanhis/hercalorierequirementforanactiveandhealthylife.Itisnotthesameasstuntingorchronicundernutrition.

82FAOprojectionfor2014-2016.

73

populationundernourishedisoneoffourHumanAssetIndex(HAI)indicatorsandwhenconvertedintoanindex,itaccountsfor25%weightintheoverallHAI.

ImplementationoftheNationalNutritionStrategy.

Processandtargeting.TheNationalNutritionCommitteeSecretariathasbeensetupandthepasttwoyearshave seengood coordinationbetween sectors and services.More than30projects, covering allprovinces,areactivelysupportingnutrition-sensitiveagricultureservicedeliveryin81districtswithatleastone of the four priority agriculture interventions. Specific stakeholder and action mapping has beenconductedannuallysince2015,whichhascapturedtheconvergenceofhealth,educationandagriculturesectors. TheMinistry of Agriculture and Forestry emphasizes the need for effective prioritization andtargeting of upland, remote communitieswith the following characteristics: only seasonal or no roadaccess,ethno-linguisticgroupsthatdonotspeakLaoastheirmothertongue,andhighpovertylevels.83

Nutrition-specific interventions. Nutrition interventions are aligned with national policies on freematernalandchildhealthandthefreechilddeliverypolicy.84Trainingoninfantandyoungchildfeeding(IYCF)practiceshasbeencarriedoutin8provincesand31districts.HoweverthecoverageofIYCFtrainingacross all districts remains a challenge and has not yet been achieved. Lao PDR needs to have acomprehensiveroadmapforscalingup IYCF,whichshouldbesupportedwiththe financialandhumanresourcesforscalingupandbuildingcapacity.Alsopartofthenationalpolicyonfreematernalandchildhealthcareistheprovisionoftreatmentofchildrenwithsevereacutemalnutrition.Currentcapacityofthehealthworkforcetodetect, treatandmanagecasesofsevereacutemalnutrition is inadequate. InadditiontoincreasingfinancialandhumanresourcesforscalingupIYCF,thereisanurgentneedtobuildthecapacitiesofhealthcareproviderstotreatacutemalnutritionasachildhoodillness.

Child nutrition outcomes.85 The recent 2017 survey (LSIS-2) shows thatmoderate or severe stuntingamongchildrenunderagefivehaddecreasedto33percentfromtheprevious2012levelof44percent.However,wastingamongchildreninthesameagegrouphasnotimproved;rather,moderateorseverewastinghasincreasedto9percentin2017,from5.9percentin2012.Underweighthasbeenreducedfromreducedfrom26.6%in2011/12to21.1%in2016-17.Altogether,LaoPDRisstilloff-trackonthetargetofreducingundernutrition.86

Multi-sectoreffortsarebeingimplementedtosupportconsumptionofmorediversefoods.Sucheffortsinclude the district offices of the MAF, MoH and Lao Women’s Union. These efforts are importantespeciallyforcommunitiesthattraditionallydonothavehealthydietsandforfamiliesthatarehavingtoadapttochangesinresources.Bettertargetingofservicesiscriticaltoaddressingnutritionchallenges.

2.2.3. ChallengesandlessonslearnedSlow progress and disparities. Undernutrition in Lao PDR is still significantly high, showing stronginequalities,associatedwithpovertypatterns.Whileallprovinceshaveseenreductionsinstuntingratesin2017comparedto2011/12levels,stuntinginruralareaswithoutroadaccess(43.3%)istwicethatinurbanareas (21.5%).Stunting inchildren fromsomehighlandethnicgroups (Hmong-Mien,50.2%)are

83DeputyMinisterofAgriculture’sspeech,NationalNutritionCommitteeMeeting,12July2018,DonChanPalace,Vientiane.84PrimeMinisterialdecree178/M201085Stuntingreflectsthecumulativeeffectsofpoordietsandrecurrentinfectionssinceandevenbeforebirth,whilewastingisaconsequenceofinsufficientfoodintakeorahighincidenceofinfectiousdiseases,especiallydiarrhoea.Ontheotherhand,‘underweight'isacompositeindicatorandmaythereforebedifficulttointerpret.WHO,2010.NutritionLandscapeInformationSystem(NLIS)countryprofileindicators:interpretationguide.Geneva:WHO.

86LaoStatisticsBureau:LSIS2011/12andLSIS2017.Moderatelyorseverelystunted(orwasted)meansmorethantwostandarddeviationsbelowthemedianofthereferencepopulationbasedontheWHOgrowthstandards,2006.

http://www.who.int/childgrowth/standards/technical_report/en/

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overdoublethoseofchildrenfromlowlandgroups(Lao-Tai,23.2%).Childrenfromthepooresthouseholdshavestuntingrates3.4timeshigherthanarechildrenfromtherichesthouseholds.Eveninhouseholdsofthe richest and fourth quintiles, some14 percent and 23 percent of children respectively suffer fromstunting.Theextremelyhighlevelsofstuntingandwastinginmanyprovinceshavebecomeapublichealthconcernaccordingtotheprevalencecut-offvaluesforpublichealthsignificanceasdefinedbytheWorldHealthOrganization(WHO).87Wastingisa‘serious’(10-14%)or‘critical’(15%andabove)publichealthproblem in five provinces. Stunting is high (30-39%) to very high (40% and above) in over half theprovinces(Table2.3).88

Table2.3.Percentageofchildrenunderage5bynutritionalstatusaccordingtotheanthropometricindicesofheightforage(stunting),andweightforheight(wasting),LaoPDR,2017

(inorderofstuntingprevalence)

Stunting Wasting

Moderate&severe SevereModerate&

severe Severe

VientianeCapital 13.8 5 5.5 1.8

Champasack 24.6 7.1 9 2.7

Xayabury 25.1 10.9 19.1 8.4

Savannakhet 28.4 11.2 10.4 2.9

Attapeu 29.6 12.5 15 4.2

Khammuane 29.7 8.8 9.8 2.3

Borikhamxay 29.9 9.6 5.6 1.6

Vientiane 33 12.1 6.6 2.3

LaoPDR 33 12.7 9 3

Luangnamtha 34.1 9.1 3 1.4

Bokeo 34.7 11.3 4 0.7

Huaphanh 40.7 18.1 16.4 8.3

Luangprabang 41.3 16.5 8.9 3.2

Oudomxay 42.7 17 6.2 1.6

Saravane 42.9 20 12.5 3

Xaysomboune 44 17.9 5.8 1.1

Xiengkhuang 46.3 14 5 1.8

Sekong 49.9 21.8 8 2.9

Phongsaly 54 28.9 8.9 4.5Source:LaoStatisticsBureau,2017.LaoSocialIndicatorsSurvey.Failuretoaddresscausesadequately.Thecausesofundernutritionhavenotbeenadequatelyaddressed.These are primarily poor infant and young child feeding practices (including low rates of exclusivebreastfeeding for children under the age of 6 months), cessation of breastfeeding before therecommended2yearsofage,poormaternalnutrition,highadolescentbirthratesinsomecommunities,andpoorsanitationandhygienepractices,includingopendefecation.Thepercentageofchildrenbelowtheageofsixmonthswhowereexclusivelybreastfedremainslow,althoughslightlyincreasedfrom40.4%in2011/12to44.9%in2017.Thepressureofbusiness lobbiesandthepromotionofbabyformulaare

87WHO,2010.NutritionLandscapeInformationSystem(NLIS)countryprofileindicators:interpretationguide.Geneva:WHO.88LaoStatisticsBureau,2017.LaoSocialIndicatorsSurvey.

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hugechallengesthatworkagainstinterventionstoensurethebestnutritionforyoungchildren,suchasearlyinitiation,andexclusiveandcontinuedbreastfeeding.

Linkageswithopendefecation.TheNationalPlanofActionforNutritiondoesnotsufficientlyemphasizethelinkbetweenpoorhygieneandsanitationandundernutrition.Theglobalevidenceidentifiesastrongcausal pathway between open defecation and stunting and wasting. The role of environmentalenteropathy as a cause of stunting needs to be recognized by the respective line ministries anddepartment,andmoreeffortsareneededforthewater,sanitationsectortojointlytargetareasofhighundernutritionwithWASHinterventions.

Significantthreatstofoodsecurity.Thethreatstofoodsecurityincludesoildegradationanddecreasingyields, linked to land pressure from population and large-scale investment projects, limited access toirrigation,rainfall-dependentagriculturalpractices,diseaseoutbreaksamonglivestock,thedifficultiesforfarmers to findeconomicallyattractive legalalternatives toopiumgrowing,89 low resilience tonaturaldisasters and climate change, and UXOs, which make farmland unsafe. Around 11 percent of ruralhouseholdshavepoorandborderlinefoodconsumption.90Insufficientfoodsupplyisstillaconcerninfourprovinces(Phongsaly,Bokeo,HouaphanhandSekong).91

Managingtheshifttocommercialization.Theagriculturesectorfaceschallengesinmanagingtheshifttocommercialization.Onechallengeistobetterintegratenutritionwithintheefforttopromoteequitablecommercialization.Unlessthisisdone,therapidcommercializationofagriculturecouldunderminelocalfoodsecurityandnutritionstrategies.Addressingthischallengerequirespromotingthelocalproductionof nutritious foods in quantities sufficient for local consumption, not just for export, and helpingcommunities that have shifted to commercial production to access nutritious foodsproducednearby.Another challenge is to address women’s workload and empowerment within the agriculture sector.Severalstudieshaveindicatedthataswomenareworkingmoreincommercialagriculture,makingmoremoneythanbefore,theyareawayfromhomeformorehours,andhavelesstimeforattendingtofamilynutritionneedsintraditionalways.Strategiesthatgenuinelyempowerwomenneedtoinvolvemen.

Implementation bottleneck. Strong partnerships between ministries are required to address multi-sectoral and cross-sectoral interventions. The main bottleneck related to the implementation of theNationalNutritionStrategyistheslowuptakeoftherecommendedstrategyon“convergence”amonglineministries at sub-national level, that is, the convergence of all interventions on certain agreed uponcommunities.BettertargetingisnecessarytoensureallLaocommunitieshaveaccesstodiverse,nutritiousfoods,andimprovedwaterandsanitationfacilities.Targetsforreducingundernutritionwillnotbemetunlesssanitationandhygieneconditionsimprove.Convergenceeffortsmusttakeintoconsiderationtheroleofthewaterandsanitationsector.

2.2.4. NextstepsTheconcernedministriesareundertakingamid-termreviewoftheNationalNutritionPlanofAction.Thisreviewwilllookcloselyatthemainchallengesandapplythelessonslearned.Inthepost-MTRperiod,theGovernmentofLaoPDRisprioritizingthefollowingstrategies:

(i) Balancingthesupporttocommercializationofagriculturewiththesupporttofoodsecurityandaccesstonutritiousfoodsforallcommunities.Thisisdiscussedintheprevioussectionon

89FoodandAgricultureOrganizationandMinistryofAgricultureandForestry,2013.90MinistryofAgricultureandForestry,2013.LaoPDRRiskandVulnerabilitySurvey2012/13:AnalysisReport.May2013.Vientiane:MinistryofAgricultureandForestryandFAO.

91GovernmentMTRdraft

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Challenges.ItisalsoreflectedintheEighthFive-YearAgricultureandForestryDevelopmentPlan(2016-2020).

(ii) Continuingsupporttofarmerorganizations,ruralfinanceandinsurancemechanismsasawaytoimproveproductivity,equity,andresiliencethroughmodernization.ThisisreflectedwithintheAgricultureDevelopmentStrategyto2025andVisionto2030,andwithinthe8thNSEDP’sOutcome1,Output1,whichcallsforsustainedandinclusiveeconomicgrowth.

(iii) Revisiting the Government’s Green Growth Strategy to include major themes within theagriculture sectors’ policy documents, such as improving access to nutritious foods for allcommunities,supportingequitableaccesstomarkets,finance,andriskmanagementforallfarming communities, and improving the equity of commercialization through farmerorganizationsandothermarketgovernancemechanisms.TheGovernment’sGreenGrowthStrategydoesnotcurrentlyreflectthetwomainprioritiesunder(i)and(ii).

(iv) AdjustingthemonitoringandevaluationindicatorsfortheGreenGrowthStrategytoreflectthechangesmade.

(v) AcceleratingtheimplementationoftheNationalNutritionStrategyto2025andPlanofAction2016-2020 throughbetter targetingand convergenceonhigh-riskdistricts, andpromotingbehaviour change interventions. The increased and high rates of wasting are a particularconcern,andcallforurgentreviewandactions.

(vi) Strengtheningeffortstoengagethewaterandsanitationsectorandincreasefocusonendingopendefecationandimprovingaccesstoimprovedwatersources

(vii) Strengtheningservicedeliverytothemostdeprived,usingparticipatorystrategies,suchasempoweringvillagehealthvolunteers, theLaoWomen’sUnion, farmergroups,andvillageextension workers with the required knowledge and support. The goals for health andnutritionwillonlybemet iftherearehumanresourcessuchascommunityhealthworkersbelowhealthcentreleveltosupportcaregiversandfamilies.

(viii) Building the capacity of institutions and universities to produce trained, skilled nutritionprofessionals.

(ix) Strengthening the legal framework for the protection, promotion and support ofbreastfeeding.

2.3. Outcome 2, Output 3: Universal access to quality education achieved

2.3.1. ContextSectordevelopmentplansandframeworks.2018representsthemid-pointofthefive-yearEducationandSportsDevelopmentPlan(ESDP)2016-2020,whichisalignedwiththe8thNSEDP.TheoverarchinggoalofESDP 2016-2020 is ‘’By the year 2020, the Education and Sports Sector in Lao PDR is appropriatelystructured and resourced to create opportunity for all Lao citizens to have equitable access to qualityeducationandsportsandtobenefitfromsocio-economicdevelopmentfortheLaoPDRtobeeligibletograduatefromtheleastdevelopedcountrystatus.’’TheESDP2016-2020drawsontheexperiencesandlessons learned from two previous sector planning documents: The Education Sector DevelopmentFramework(ESDF)2009-2015andtheEducationDevelopmentPlan(ESDP)2011-2015.Theover-archingoutcometobeachievedfromESDP2016-20is“Alllearnersareequippedwiththefiveprinciples(moral,intellectual,vocational,physicalandartisticdevelopment)ofLaoeducationandskills,bothcognitiveandnon-cognitivetodevelopthecapacitytoprogressandbenefitfromsocio-economicdevelopmentinorderfortheLaoPDRtobeeligibletograduatefromLeastDevelopedCountryStatusby2020.”Achievementof

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thisover-archingoutcomeisunderpinnedbyfivepolicyobjectivesand11operationallyfocusedoutcomestatements.

Policyobjectives.TheESDP2016-2020outlinestheoverallgoals,expectedoutcomes,policyandstrategicdirectionstogetherwithrequiredresourcesfortheperiod2016to2020,settingoutobjectives,targets,strategies and priority activities for each sub-sector. The ESDP policy objectives provide the basis formakingsoundprogresstowardstheachievementofthelonger-termgoalswithintheeducationsector.ThefivepolicyobjectivesESDP2016-2020are:

(x) Objective1: All learners are equipped with the foundation knowledge and skills needed,includingadequatesafeguardsfortheirhealth,toeitherjointhelabourmarketorcontinuetopost-basiceducation.

(xi) Objective2: Post-basic education that is relevant to the requirement of Lao PDRs’ socio-economicgrowthineachperiod,andthatcanbeintegratedintoandcompetewithlabourforceswithinASEANmembercountriesisprovided.

(xii) Objective3: Human Asset Index target for exit from LDC status is achievedwith reduceddisparity.

(xiii) Objective4: The education sector is planned, financed andmonitored toutilize resourceseffectively.

(xiv) Objective5: Laosportisgraduallyintegratedtoregionalandinternationalstandards.

Expected Outcomes: There are 11 outcomes to which the various sub-sectors contribute, eitherindividuallyorcombined.Thesesub-sectorsare:(i)earlychildhoodeducation;(ii)primaryeducation;(iii)lower secondary education; (iv) upper secondary education; (v) non-formal education; (vi) teachereducation;(vii)vocationaleducationandtraining;(viii)highereducation;(ix)educationadministrationandtraining;and(x)sports.92

2.3.2. ProgressandachievementsProgressandachievementsaresetoutintermsofthe11outcomesoftheESDP.

ESDPOutcome1The number of learners from ECE to lower secondary grade 9 increases, with special focus on thedisadvantagedandgenderequity.

Earlychildhoodeducation(ECE).Since2016theMinistry,supportedbylocalauthoritiesanddevelopmentpartners,hasdevelopedqualitystandardsforECE,revisedtheECEcurriculum,definedschoolreadinessprogramcompetencies,providedteachingandlearningmanualsandpromotedpre-primaryclasses.Theparticipationratefor3to5-year-oldchildrenhasincreasedfrom43percentin2015to56percentin2018.About75%oftheincreaseinthenumberofchildrenaccessingECEwasfromchildrenlivinginruralareaswith road access. However, children from the wealthiest households are still 6 times more likely toparticipateinECEthanchildrenfrompooresthouseholds.

Primaryeducation.Thegovernmentanddevelopmentpartnershaveinvestedagreatdealtoimprovetheprimaryschoolenvironment.Boththeprimaryandlowersecondarycurriculahavebeen(orarebeing)revisedtobeusedmoreeffectivelyforteaching,andtobemorerelevant,inordertoincreaseenrolmentrates,particularlyinruralareas.Sucheffortshavecontributedtoimprovedenrolment.Althoughuniversalaccess forprimaryeducationhas largelybeenachieved, completion ratescontinue to lagandgrade1

92Theseparateeducationsectormid-termreviewreportofESDP2016-20fortheEducationSectorWorkingGroup(ESWG)includesmoredetailedassessmentsofsub-sectorperformanceincontributingtothese11high-leveloutcomes.

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dropoutandrepetitionratescontinuetobehigh,contributingtorelativelylowcohortcompletionrates(80%).

Table2.4.Indicatorsonaccess,internalefficiencyandcompletion,primaryeducation,2015/16–2017/18Indicator 2015/16

baseline2017/18 2020target

Total Female MaleNetintakerate,firstgradeofprimary93(%)

97.2 97.8 97.6 97.9 99

Repetitionrate(%) 5.8 4 3.3 4.8 2Dropoutrate(%) 5.2 4.1 3.8 4.4 2Grossintakeratioingrade5(lastgradeofprimary)94(%)

N/A 104.5 104.3 104.8

Netenrolmentrate(%) 98.7 98.8 98.6 99.1 Survivalrate 79.6 82.2 83.5 81 Source:MoES-EMISandMoEScalculationsforthetheVNRreportsubmittedtotheUNGeneralAssembly.

Secondaryeducation.The2015amendmentoftheEducationLawhasmadelowersecondaryeducation compulsory.Since2015,MoES,developmentpartnersandlocalauthoritieshavepromotedinfrastructuredevelopment,includingdormitoriesforschoolsinremoteareas,sothatmorechildrenwouldhaveaccesstolowersecondaryeducation.Theministryhasalsomadeeffortstoimprovethequalityofteachingandlearning through curricula revision and teacher training for both primary and lower secondary levels.Access rates are on the rise for lower secondary education and the gross enrolment ratio has nearlyachievedthe2020targetforlowersecondary.Thecurrenttransitionratefromprimarytolowersecondaryisalreadyquitehigh(86%in2018)buthasdecreasedslightlyoverthepastthreeyears(91.7percentin2015,90.4percentin2016,and89.7percentin2017).Furtherincreasesinlowersecondaryenrolmentwillrequiremuchhigherprimarycompletionrates.

Table2.5.Indicatorsonlowersecondaryeducation,2015/16–2017/18Indicator 2015/16 2017/18 2020

targetTotal Female MaleTransitionrate,primarytolowersecondary(%) 91.7 89.7

Grossenrolmentratio,lowersecondary(%) 78.1 83.1 81.2 84.9 85

Grossintakeratioingrade9(%) N/A 71.8 70.3 73.3

Grossenrolmentratio,uppersecondary(%) 45.8 53.3 50.8 55.7 60

Grossintakeratioingrade12(%) N/A 44.9 43.1 46.6

Dropoutrate,grade6(%) 11.5 10.4 12.5

Dropoutrate,lowersecondary(%) 7.7 9.2 8.6 9.6

Dropoutrate,uppersecondary(%) 4.9 7.1 7.0 7.1

Source:MoES-EMIS.

Genderdisparities.Table2.6showsthegenderparityindices(GPI)calculatedforthedifferentindicators.GenderparityhasbeenachievedforECE.LaoPDRhasalsoachievedgenderparityatprimarylevel.Gender

93Newentrantsinthefirstgradeofprimaryeducationwhoareoftheofficialprimaryschool-entranceage,expressedasapercentageofthepopulationofthesameage.

94Grossintakeratioingrade5:Totalnumberofnewentrantsinthelastgradeofprimaryeducation,regardlessofage,expressedasapercentageofthepopulationatthetheoreticalentranceagetothelastgradeofprimary(UNESCO).

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parityhasnotyetbeenachievedatsecondarylevel,whichexplainswhytheGPIinliteracyisstilllow(thatis,infavourofmales)amongtheyouthandadultpopulation,especiallyamongtheoldergroups.

Table2.6.Genderparityindices,2017/18Level Genderparityindicescalculatedfor:

Netenrolmentrate Grossenrolmentratio Completionrate95Earlychildhoodeducation 1.00 1.00 1.00

Primaryeducation 1.00 0.98 1.00

Lowersecondaryeducation 1.04 0.95 0.939

Uppersecondaryeducation 1.04 0.91 0.905

Source:MoES-EMISandcalculationsbyMoESfortheVNRreportsubmittedtotheUNGeneralAssembly.

ESDPOutcome2Increasednumberofprimaryschoolchildrenwithfunctionalliteracyandnumeracyskills.

Rationale. Assessment of Student Learning Outcomes (ASLO) and Early Grade Reading Assessments(EGRA)priorto2015atGrades3and5havedemonstratedthatcurrentlevelsoffunctionalliteracyandnumeracyskillsareinsufficienttosupportqualitylearningathighergradesofprimaryandlowersecondaryeducation.

Measuring learning outcomes.MoES has invested in improved measurement of learning outcomesthroughdevelopinganationalprimarylearningoutcomesassessmentframework,conductingarevisedASLOatgrade3levelin2017,andparticipatingintheSoutheastAsiaPrimaryLearningMetricspilottoassess learning outcomes in grade 5. The 2017 Assessment for Student Learning Outcomes (ASLO)identifiedinadequatelearningoutcomesthroughasamplesurveyof17,000grade3studentsfromall148districtsacrossthecountryfor2subjects,mathematicsandLaolanguage.Thekeyresultsareasfollows:

(i) InLaolanguage,34percentofgrade3studentswerejudgedreadyforpromotiontoGrade4,while up to another 24 percent could be promoted if they received intensive remedialteachingduringtheschoolvacation.

(ii) Inmathematics,18percentofstudentswerequalifiedforpromotiontoGrade4,andanother19percentcouldbepromotediftheyreceivedintensiveremedialteachingduringtheschoolvacationperiod.

(iii) Ineightprovinces,only10percentorlessofallgrade3studentsweresufficientlyqualifiedinmathematicstomoveuptoGrade4.

Curriculaandteachingimprovements.Withtheassistanceofdevelopmentpartners,MoESisrevisinganddeveloping new primary curricula, with special attention to Lao language and mathematics. Spokenlanguage development underpins literacy development and the severely overcrowded grade 1 Laolanguagecurriculumisbeingreduced.Teacherguidesarebeingimprovedtobettersupportteacherstoimplementactivitieswithdescriptionsoftechniques,activities,assessmentapproachesandseveralmodellessons. The mathematics curriculum is also being revised by improving the scope and sequence,introducing teachingmethodsaccording to students’development stages, fosteringmathematical andlogicalthinkingskills,andintroducingexercisesforproblem-solvingskills.96AnewGrade1mathematicstextbookandteacherguideshavebeendevelopedfortheschoolyear2018/19.Implementationofthe

95UNESCOdefinitionofcompletionrate:Totalnumberofnewentrantsinthelastgradeofeachlevelofeducation,regardlessofage,asapercentageofthetotalpopulationofthetheoreticalentranceagetothelastgradeofprimaryeducation.

96Pleaseexplain“usingfigures/tablesandsemi-concretematerialsintextbooks”

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new curriculum will require initial training of primary teachers and follow-up support from DistrictEducation and Sports Bureau (DESB) pedagogical advisers.With support from development partners,MoESplanstoincreasetheoperatinggrantbudgetforDESBstoallowpedagogicaladviserstovisitprimaryschoolsmoreoften,aswellasprovidepedagogicaladviserswithtrainingtoupgradetheirownskills.

ESDPOutcome3IncreasednumberofqualifiedandcompetentteacherswithbetterstudentlearningoutcomesacrossallsubjectsofthenationalcurriculumfromECEtoprimaryandsecondaryeducation.

Pre-servicetraining.Withdevelopmentpartnersupport,MoESisrevisingthepre-serviceteachercurriculatobetteralignwiththeprimaryandlowersecondaryschoolcurricula,includingstrengtheningtheteachertraineepracticumbyincreasingtheamountoftimepracticingpedagogicalskillsandcontentknowledge.ThecapacityofTeacherTrainingCollege (TTC) lecturers isbeing strengthened to improvepedagogicalskills and content knowledge.MoES has designated the establishment of TTC demonstration schools,whichcooperatewithexistingnetworkschools.

In-servicetraining. In-servicetrainingforschool-basedteachers isalsoongoing,particularlyforEnglishlanguage,mathematics and science. The Department of Teacher Education has developed a NationalEducationQualificationsFrameworkforteacherdevelopmentandacomprehensiveframeworkofprimaryteachingstandards.MoESisdevelopinganimprovedprocessforin-serviceteachertrainingandsupport,by building teacher trainer skills and competencieswith the support of TTC lecturers.MoES has alsotrainedDESBandProvincialEducationandSportsService(PESS)staff(includingpedagogicaladvisors),TTClecturers,andGrade1teachersforthenewmathematicscurriculum(seeESDPOutcome2). In-servicetraining for Grade 1 teachers, principals and pedagogical advisers on the remaining new curriculumsubjects,includingLaolanguage,willbegininJuly2019.

ESDPOutcome4Allschoolshavefinancialandhumanresourcestoequitablyimprovestudentlearningoutcomes.

Rationale. In the context of budget constraints and to improve learning outcomes, it is necessary toprovideinfrastructureandhumanresourcestoallschoolsequallyandequitably.Severallegislativeandpolicydocumentsregulatetheprovisionofphysical,financialandhumanresourcestoschools.Decree177outlinestheprinciplesfordeploymentofteacherstoschoolsatdifferentlevelsandDecree306specifiestheper-capitaamountsforschool-blockgrantstoschoolsatdifferentlevels.

Infrastructure provision. TheMoES relies on development partners to improve school infrastructure,including dormitories for secondary education, since the education share of the domestic investmentbudgetisrelativelylowatlessthan10%.Developmentpartnersgenerallytargetdisadvantagedareasforinfrastructureprovision.

Teacherdeployment.TheDepartmentofOrganisationandPersonnelconductedateachersurveyin2017toidentifyschoolswithunder-supplyorover-supplyofteachersandtoquantifythenumbersofvolunteerteachers.Thesurvey indicatedthatabout8,600teacherswere inschoolswithover-supplyofteacherswhile schoolswith an under-supply of teachers needed about 19,600 extra teachers. There are some12,300volunteerteachersinschools,butthetotalannualquotaofcivilservicepositionsfromMoHAwasonly1,850for2018.

Schoolgrants.Schoolblockgrantsareprovidedinanequitablemanneracrossthecountryalthoughtheefficientdeliveryofgrantsisstillanissue,particularlytoveryremoteschoolswithoutroadaccess.Primaryschoolsreceive70,000kipperstudentperyear,while50,000kipperstudentperyearisprovidedforearlychildhood and secondary education.MoES has trainedVillage EducationDevelopment Committees tobetterutilizethesefundsforschooldevelopmentplanstoimprovethequalityofteachingandlearning.

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Despitethedeteriorationoftheeconomicandfiscaloutlook,theMoFhasquarantinedSchoolBlockGrantfundingfromfuturecuts.

Sectorbudgetingandplanning.MoEShasintroducedAnnualCostedSectorPlans(ACSEP)tostrengthenthe linkage between ESDP and sub-national plans and budgets. In 2018 the ACSEPs allowedMoES toanalyse the non-wage recurrent budget by province and identify significant imbalances in budgetallocationbetweenprovinces.Thisclearlyshowsthatthere isscopeforamoreefficientandequitableallocationpolicytosupportESDPimplementation,asopposedtothecurrentincrementalpractice,whichperpetuatestheseimbalances(SeealsoESDPOutcome8).

ESDPOutcome5Increasednumbersofbasiceducationgraduateswhohaveacquiredbasicskillsandknowledgeandcanapplyforworkinthelabourmarket,orcontinuepost-basiceducation,orbecomeentrepreneurs.

Rationale.Thereisconsensusthatskillsacquiredandotherlearningoutcomes,particularlyliteracyandnumeracy,of theprimaryand lower secondaryprogrammesdonotmeet thecurrentdemandsof thelabourmarket;andthattoofewlowersecondarygraduatesenterintoTVETprograms.97

ImprovingTVETenrolment.OnestrategyofESDP2016-20istoencouragelowersecondarygraduatestoenrolinTVETprograms.ThenewintakeinTVETinstitutionshasbeenincreasingeveryyearsince2015.Since2015, thetransitionrate fromlowertouppersecondaryhasdeclinedfrom93%to78% in2018.Currently,20%ofstudentswhoenrolinuppersecondaryeducationfollowtheacademicroutewhile60%enrolinTVETandanother20%gotolabourmarket.MoESalsoaimsatincreasingTVETenrolmentthrough(i)improvingtheteachingandlearningfacilitiesinTVETinstitutions,(ii)providingcertificatecourseslevel1,2and3forsecondarystudentswhodroppedoutfromschoolor/andtheoneswhodonotwanttotakeateotothreeyearcourse,and(ii)encouragingtheprivatesectortoinvestinTVET,suchasjointtrainingbyTVETcollegesandhydropower/miningcompanies.Currently,thereare23TVETinstitutionsoperatingunder the direct supervision of MoES, 73 private TVET colleges, andmore than 10 TVET institutionsoperatingunderotherministries.AmoduleonentrepreneurshiphasbeenintroducedintothecurriculaofuppersecondaryandTVETbutthisapproachishinderedbyalackoffinanceforgraduatestopursuetheirstart-upideas.

ESDPOutcome6Increasedadultliteracyratesandgenderparityforadultliteracy

Literacy rates anddisparities. A literate population is necessary to exit from least developed countrystatus, since adult literacy rate accounts for one-quarter of the weight in the HAI. According to thepopulationcensus,adult literacyhasincreasedfrom73%in2005to84.7%in2015;howeverthesearebasedonself-reporting.TheLSISreportsontestedliteracy.Among15-24-yearolds,LSISdataindicatesanimprovementinliteracyratesforbothmenandwomenbutthedifferencebetweenmenandwomenhasbarelyimproved.Therearealsosignificantdifferencesinliteracyratesamongethno-linguisticsgroups,asshowninTable2.7.Itisclearthatfemaleliteracylagswellbehindthatofmales,particularlyamongnonLao-Taigroups.Toeradicateilliteracy,MoEShasimplementedequivalenceprogrammesforyouthliteracy(out-of-schoolchildrenaged6to14yearsinruralandremoteareas)andforcontinuouseducation,withspecialprioritytoethnicgroupslivinginmountainousareas,disadvantagedgroups,womenandpeoplewithdisabilities.

Table2.7.Literacyrates

97“toomanylowersecondarygraduatestransitiontouppersecondary”shouldnotbea“concern”aslongasuppersecondaryalsoequipsitsgraduateswithemployableskills.

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2011/12LSISTestedliteracy

2017LSISTested98 literacy

Male Female Male Female

Literacyrate,age15yearsandabove,LaoPDR 78.0 62.9

Lao-Tai 78 63

Mon-Khmer 67 38

Hmong-LuMien 71 40

Tibeto-Chinese 50 35

Youthliteracyrate(15-24yearsold),LaoPDR 77.4 68.7 84.6 76.5

Lao-Tai 83.9 81.6

Mon-Khmer 62.8 45.3

Hmong-LuMien 81.2 48.6

Tibeto-Chinese 43.1 30.1

Source:LaoStatisticsBureau

ESDPOutcome7Thequalityandnumberofpost-basiceducationgraduatesfrompublicandprivateeducationisalignedwiththeneedsofthe8thNSEDP.

Addressing skills shortages. Employment in Lao PDR continues to be highly concentrated in theagriculturalsectoralthoughthissituationischanging(seeOutcome1,Output5).LaoPDRfacesmajorskillsshortages in key technical fields including for the construction, furniture, plumbing, electrical, andautomotiveindustries.ThenumberoffemalestudentsisincreasingatpublicTVETcolleges,withwomenaccountingfor43%ofallstudentsenrolledintheacademicyear2016-2017,butmostlyinprogramssuchas tailoring, basic business administration, and hospitality.With support from development partners,MoESisaddressingbarrierstowomen’sinvolvementinso-called“blue-collar”occupations.A20%quotaforfemaleparticipantsincoursescoveringpriorityskills(construction,furnituremaking,andautomotiveandmechanicalrepairs)hasbeenestablished.Inaddition,avoucherassistancesystem(40%forfemales)has been implemented to entice poorer students to take up short courses in priority skill areas.DormitorieshavebeenconstructedtoencouragestudentsfromremoteandpoorruralareastotakeupTVETeducationwith50%ofthespacesreservedforgirls.

Promotingadvancedresearchandteaching.TheGovernment is investing in infrastructureandhumanresources toestablish,by2021, centresof excellence for (i) agriculture inChampasack, (ii) logistics inSavannakhet, (iii) engineering and tourism in Luang Prabang, and (iv) engineering and environmentalstudiesattheNationalUniversityofLaos.

ESDPOutcome8TheEducationandSportssectorisappropriatelystructured,resourcedandmonitoredbyusingAnnualCostedSectorPlansthatarelinkedtoESDP2016-2020.

98Thosewhohaveeverattendedlowersecondaryorhighereducationareimmediatelyclassifiedasliterate,duetotheireducationlevelandarethereforenotaskedtoreadthestatement.Allotherswhosuccessfullyreadthestatementarealsoclassifiedasliterate.

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Reorganizationofstructureandroles.Toaddressboththeneedsforeducationdevelopment,andtheGovernment’saimtoreducethenumberofcivilservants,MoEShasrecentlyconductedareorganizationof itsstructureandrevisionofmandatesforpersonnelfromMoESdepartmentsandcentres,PESSandDESB.Moreworkisrequiredatsub-nationalleveltobettermatchactualstaffingtorequiredstaffing,giventhedifferentneedsandnumbersofschoolsacrossdistricts.ThereducedquotaofstaffsetbyMoHAmakesitdifficulttoincreasePESSandDESBstafftorequiredlevels.

Efficiencyoffinancialandhumanresourcing.MoEShasdevelopedAnnualCostedSectorPlansthatcanbeproducedatcentralandprovinciallevel.Apilotisunderwaytoinitiatetheseatdistrictlevel,whicharethentobeconsolidatedathigherlevels.However,fixedandlargeallocationstowageandwage-relatedexpendituremakeitdifficultforAnnualCostedSectorPlanstochangenon-wageexpendituretoimprovetheefficiencyofresourcing.MoEShasestablishedaPlanningandBudgetingCommitteeandaTeacherAllocationCommitteetoimprovebothhumanandfinancialresourcingofthesector,particularlyatthesub-nationallevel.OneofthetargetsistosignificantlyincreasetheoperatingbudgetsofDESBstoenableDESBstaff tobettersupportschools.99TheTeacherAllocationCommitteehas themandateto identifystrategiestoimprovetheefficiencyofteacherdeployment(ESDPOutcome3).

Monitoring.With support from development partners,MoES is developing a Planning and BudgetingManagementInformationSystem(PBMIS)thatwilldrawondatafromthePersonnelMIS(PMIS)andtheWagesMIS (WMIS) to improve planning andmonitoring of sector financing. ESDP implementation ismonitoredbyasetof34KeyPerformanceIndicators(KPIs)drawnfromallthemajorsub-sectors,butthereisnoKPI yet for tracking theeducationperformanceat sub-national level,but this isbeingaddressedthroughstrengtheningtheSectorPerformanceAssessmentFramework.100

ESDPOutcome9TheESDPfinancingplantakesintoaccounttheneedtoreducedisparitiesrelatedtogender,ethnicity,povertyandlocation.

Rationale.AlthoughthefinancingplanofESDP2011-15,describedaspro-poor, identifiedthe56mosteducationallydisadvantageddistricts,progress in reducingdisparitieshasbeen limited.Thus theESDP2016-2020hasmadedisparityreductiononeof itspriorities,whichwillrequirefocusingmoreonpoorareas.

FinancingtheESDP.Inthepasttwoyears,theNationalAssemblyhasconsecutivelyapprovedtheshareoftheeducationsectorat17percentoftotalgovernmentexpenditure.However,duetothegovernment’sbudget constraints, the education sector has accounted for only 13 to 14 percent of governmentexpenditure.Inactualamounts,theamountMoEShasreceivedincreased(Table2.8)from4,013billionkip in2016 to4,142billionkip in2018.Some60percentof theeducationbudgetgoes tosalaries,20percent goes to non-salary recurrent costs, and another 20 percent to investment costs. MoES nowensuresthatDESBsreceivelargeroperatingbudgets.

Table2.8.Approvedbudgetversusrequiredbudget(inbillionLAK)

2015/16 2016/17 2017/18

FinancialrequirementidentifiedinESDP 4,416 4,898 4,969

Approvedbudget 4,023 4,037 4,142

Percentageshareintotalgovernmentexpenditure 15.84% 13.40% 14.02%

99Thisisincludedamongthetargetstiedtobudgetsupportbydevelopmentpartners.100Toclarify:“DOIwillimprovetheirESDPresults-matrixthroughastrengthenedSectorPerformanceAssessmentFramework.”

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Financialgap -393 -861 -827

Source:MoES

Scholarshipsandstipends.ProvidingscholarshiptostudentsatethnicboardingschoolsisoneoftheMoESstrategiestoalleviatetheimpactofpovertyandreducedisparities.MoEShasalsoprovidedscholarshipstostudentsinTVETinstitutions,focusingongirlsandstudentsfrompoorfamilies.RecentlyMoESissuedadecreeonprovidingstipendstopoorstudents,whichwasimplementedin2018byprovidingstipendsof150,000kippermonthperstudenttoabout2,000secondarystudents.Disabledstudentsalsoreceivefinancialsupportfromthegovernment.

ESDPOutcome10Policydevelopmentisevidence-based.

Rationale. The use of evidence for policy development and decision-making will ensure effectiveutilisation of the sector’s limited resources. Relevant evidence comes from accurate and timelymanagement information systems (MIS) and relevant research studies that identify operationalinterventions for sector performance improvement. Evidence drawn from the effectivemonitoring ofpoliciesandstrategiesisalsorequired.

Management information systems. MoES already has a robust education MIS. With support fromdevelopmentpartners,MoESwillfurtherdevelopandimplementanoverarchingLaoEducationandSportsManagementInformationSystem(LESMIS)atcentral,province,districtandschoolmanagementlevels.Thestrategycallsforcollectedindividualdataandstatisticaldatatobelinked,tobefullyintegrated,andtoincludesportsdata.DevelopmentpartnersareassistingMoEStodevelopPBMIS(ESDPOutcome8)tobetterlinkexistingdatabasesonpersonnelandwages.

Research.BothMoESanddevelopmentpartnerscarryoutresearchstudiesacrossvarioussub-sectors.However,thereisnoeffectivemechanismtousetheresultsofsuchresearchtoinformpolicydevelopmentandplanning.Thereisa“ResearchFocalGroup”aspartoftheeducationsectorworkinggroup(ESWG),butitisaseparatefocalgroup,notagroupforinforminghigh-levelpolicymakers.

Policyandstrategymonitoring.Duringtheprevioussectorplan(2011-15)JointSectorReviewMissions(undertheESWG)wereimplementedtomonitorprogressagainstkeypolicies,strategiesandfinancing.This approach was not considered cost-effective or efficient. No replacement mechanism wasincorporatedintothe2016-2020ESDP.

ESDPOutcome11Thenumberofgeneralandprofessionalathletesmatchingregionalandinternationalqualitystandardsisincreasedandcontributetothenation’sartandculturepreservation.101

Rationale.SincethemergingoftheSportsCommitteewiththeMinistryofEducation.Thesectorhasbeenresponsible for improving the physical health of the population through exercise and increasing thecompetitivenessofLaoathletesparticularlyinregionalcompetitions.

Internationalandnationalsports.In2016,LaoPDRparticipatedforthefirsttimeintheOlympicGamesatRiodeJaneiro,Brazil.Atthe29thSEAgames,hostedbyMalaysiain2017,LaoPDRwon2gold,3silverand21bronzemedals.Withinthecountry,nationalandProvincialAthletesFoundationshaveorganised

101Pleaseexplainif/howartandculturepreservationhasbeenaddressedastheESDPhasnomentionofsuchactivitiesunderthisOutcome11.

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annual sports competitions aswell as football tournaments according to FIFA guidelines. Training forathletes,sportscoachesandrefereeshascontinuedatdifferentlevels.

Schoolgames.Sportsandgymnasticshavefocusedonfosteringahealthysportingspiritamongsecondaryschoolstudentsinnationalaswellasregionalcompetitions.TheSixthNationalSchoolGameswereheldinBorikhamxayProvinceinFebruary2017.Morethan250athletesandcoachescompetedfor428medalsin12categoriesofsports.Inregionalcompetitions,LaostudentsparticipatedintheEighthASEANSchoolsGames inChiangMai,Thailand, from21 to29 July2016,where theywononesilvermedalandsevenbronzemedals.Atthe2017NinthASEANSchoolsGamesheldinSingapore,Laostudentswontwobronzemedals.102

2.3.3. ChallengesandlessonslearnedDisparities.The last two LSIS (2012 and 2017) have confirmed the continuing inequities in educationaccess,survival,andoutcomes.Thedividesareprimarily(i)geographic(urbanandeasilyaccessibleruralareasversusremoteruralareashardtoaccess),(ii)mothers’education,(iii)language(thosewhospeaktheofficialLao-Tai languageastheirmothertongueandthosewhodonot),and(iv)householdwealth(children from the richer quintiles versus those from the poorer quintiles. The difference for a giveneducationindicatorintermsofpercentagepointsisgreatestbetweentherichestquintilesandthepoorestquintiles,andbetweenchildrenofmotherswithnoeducationandthoseofmothersofpost-secondaryorhighereducation(Table2.9).

102Inputsfromtheeducationsector”“In2016,theLaoSportsteamincollaborationwiththesportsteamsofBokeoProvincesuccessfullyparticipatedinaSportsCompetitioninChiangRaithatresultedin3silverand2bronzemedals,andledtotheimprovedreputationoftheLaodisabledsportsteam”.Pleaseclarify.ReferencetoBokeoanddisabledathletesunclear.

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Table2.9.EducationinequitiesasmeasuredbyLSIS2017

Nationalaverage

Geography/access Mother'seducation Language Wealthindexquintile Percentagepointdifferencebetweengroups

Urban

Rural

without

road

Post

secondary/

Nontertiary

noneorpre-

primary

Mother

tongue:

Lao-Tai

Mother

tongue:Non

Lao-Tai[1]

richest poorest GeographyMother's

education

Language/

mother

tongue

Wealth

quintile

1.Childrenage36-59monthswho

areattendingearlychildhood

education(%)

32.1 56.8 14.5 74.7 12.6 42 18.9 MK 69 12.6 42.3 62.1 23.1 56.4

2.Childrenofprimaryschoolentry

ageenteringgrade1(netintake

rate)(%)

73.1 81.8 65.2 77.2 59.5 80.2 61.3 MK 83.1 55.1 16.6 17.7 18.9 28.0

3.Primaryadjustednet

attendanceratio(%)89.6 95.5 84.4 96.8 80.8 93.9 82.8 MK 97 77.7 11.1 16.0 11.1 19.3

4.Childrenofprimaryschoolage

outofschool(%)8.2 2.8 13.4 1 16.5 4.1 14.9 MK 0.9 19.4 10.6 15.5 10.8 18.5

5.Lowersecondaryadjustednet

attendanceratio(%)60.5 82.8 41.5 91.1 38.7 71.3 43.2 CT 92 27.9 41.3 52.4 28.1 64.1

6.Childrenoflowersecondary

schoolageoutofschool(%)16.6 7.5 22.8 2.2 26.4 13.2 22.2 MK 2.8 31.2 15.3 24.2 9.0 28.4

7.Uppersecondaryadjustednet

attendanceratio(%)38.1 61 14.8 73.5 17.5 48.4 19.3 MK 74.4 7.9 46.2 56.0 29.1 66.5

8.Childrenofuppersecondary

schoolageoutofschool(%)38.1 19.1 56.5 12.5 54.5 31 50.8 MK 10.8 68.1 37.4 42.0 19.8 57.3

Notes [1]Fortheethnolinguisticgroups,thegroupswereselectedtoshowthegreatestdifferencewiththeLao-Taigroupforthegivenindicator.Thismaybethedifference

withtheMon–Khmer(MK),theChinese-Tibetan(CT),ortheHmong-Mien(HM)

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Challengesspecifictoeachofthe11ESDPOutcomesareasfollows:

(i) Participation rates.ECEaccesswillneed tobe improved,especially for children in remoteareaswithoutroadaccess.Innon-LaoTaiethniccommunities,thelargenumbersofout-of-schoolgirlsofprimaryschoolageremainachallenge.Whileprovidingsafedormitories forteachers and students have helped, the still-high dropout rates among lower secondarystudents(11.5%inthefirstyear)needtobeaddressed.Indistrictswithsharedbordersandinthe southernprovinces,male studentsdropoutatahigher rate thando female students,largelytoseekwork.

(ii) Learning outcomes. The challenges include (a) the limited support to teachers frompedagogicaladvisers,DESB,andPESS;(b)thepoorqualityofbothpre-andin-serviceteachertraining, and consequently, insufficient attention given by teachers to appropriatepedagogicalpractices;and(c)overloadedcurriculum,especiallyintheearlyprimarygrades,resultinginlessemphasisonreading,writingandnumericalskills.

(iii) Teacher supply and quality. The response to community demand for early childhoodeducationislimitedbythereducednumberofcivilservicepositionsavailable.Manyprimaryschoolssufferfromanunder-supplyofteachers,whileotherschoolshaveanover-supplyofteachers. Attempts to solve such deployment problems have led to engaging volunteerteachers.Manysecondaryschoolsfaceteachershortagesincertainsubjects.Consequently,some teachersmust teach subjects that theyhave little training in,or schoolsmay recruitvolunteerteacherstoteachthesesubjects.

(iv) Financial resources and cost barriers.The shortfall in budget allocation for the educationsectorinthelastfewyearsisachallenge.TheLaoExpenditureandConsumptionSurvey(LECSV)reportedaveragecoststofamiliesof580,000kipperstudentperyearagainstanationalaverageof830,000kipperstudentperyearforprimaryeducation.Thenationalaveragecostforsecondaryeducationismuchhigherwithanaverageof1,400,000kipperstudentperyear.Thus,significantcostbarriersremain,particularlyforruralfamiliestosendtheirchildrentoschool.

(v) Numbersandskillsofbasiceducationgraduates.Whileprimarycompletionexceeds80%,lowersecondarycohortcompletionisonlyaround50%(duetolowtransitionfromprimary,anddropoutwithin lower secondary) andupper secondary cohort completion is less than30%.Theprivate sector continues to report thatpost-basiceducationgraduatesenter theworkforcewithinadequateproblem-solvingskills,littlecriticalthinking,andlackofvocationalskills.ThebasicinfrastructureofsomeTVETinstitutionsremainunder-developed;thequalityofteaching-learningisstilllowwithnoqualityassuranceoftrainingprograms;andtechnicalequipmentandteaching-learningmaterialshavefailedtokeepupwithadvancesinscienceandtechnology.

(vi) Literacy.Thebarrierstoincreasingliteracyratesincludeweaknessesandlackofcomparabilityinsurveydataonliteracy;delaysinthereleaseandavailabilityofdata,ashortageoflearningresources thatare suitable foradult learners,especially those fromethnicgroups living inremote areas; and the lack of integration of literacy programs into life-long learningapproaches.

(vii) WorkforceneedsoftheNSEDP.A2018analysisofthelabourmarketshowedthatconstraintstodevelopingtheprivatesectorinLaoPDRincludelabourshortages,lowproductivityoftheworkforce,thelowlevelofeducationprovidedbypublicvocationalcollegesandschools,andlowwagesinLaoPDR,whichfuelsmigrationtoThailandwherewagesarehigher.

(viii) Educationbudgetallocationandexpenditure.Improvingthebalancebetweenwageandnon-wagebudgetallocations remainsa challenge,particularly at sub-national level.More than

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90% of the sub-national level budget is allocated to wage-and wage-related expenditure,althoughacrossthesectortherehasbeenagradualdecrease intheshareofthewagebillfrom 69 percent in 2015 to 62 percent in 2018, which has enabled more spending oneducationqualityimprovementandinvestmentspending.

(ix) Education financing. The budget for in-service teacher training and pedagogical advisers’support to teachers in low-performing schools has been reduced.MoES has analyzed thepotentialimpactofbudgetconstraints.Continuedcutstothebudgetwillleadtoreductionoreliminationofthefollowing:in-serviceteachertraining,monitoringandpedagogicaladvisors’school visits, equipment, building maintenance, scholarships for secondary educationstudents, and the installationof improvedwater and sanitation facilities in schools.Wageallocationsaredifficulttochange,asituationmadeworsebythelargenumberofvolunteerteachers waiting for a civil service position.MoES is currently testing a district allocationformulaforamoreequitableallocationoftheoperationalbudget.

(x) Evidencebasedpolicy.Policymakersmustreceiveevidenceinatimelymannertobeabletouseit.Timelyandefficientdatacollection,verification,analysisanddisseminationremainachallenge.ThePMISincludesdetailedinformationonallcivilservicestaffwithintheeducationsector,butnotthedetailsonvolunteerteachers.UpdatingthePMISisdifficultsinceitrequiresprovincialstafftotraveltoVientiane,andfundsareinsufficienttodothisonaregularandfrequentbasis.MoEShasbeenpilotinganapproachwherebythePMIScanbeupdatedfromtheprovinciallevel.

(xi) Sportsdevelopment.Investmentinthedevelopmentofsportsislimitedatalllevelsandnotcontinuous,whichdisrupttheimplementationoftheSportsDevelopmentPlan.

2.3.4. Nextsteps

Overallpriorities.Giventhelimitededucationbudget,theMoESwillnotbeabletosupportsomeofthecurrentlydonor-fundedinterventionsandwillneedtoprioritize.Theoverallprioritiesfortheeducationsector are to (i) consolidate andmore fully analyze data on education (e.g., disaggregated analysis ofenrolment,dropout,etc.)andanalyzelinkagesbetweeneducation,employmentandothersocioeconomicdevelopment dimensions to guide evidence-based planning; (ii) improve the efficiency of teacherdeploymentandplacement;and(iii)developastrategytoallocatethenon-wagebudgetallocation,withprioritytoaddressingkeychallenges.SpecificprioritiesforeachESDPOutcomefortheperiod2018-2020aresetoutbelow.

(i) Out-of-schoolchildren:EMISdataneedstobereconciledwithotherdatasets,includingtheinternationalOut-of-School-ChildrenStudyandthe2015populationcensus,toobtainmoreaccuratedataonout-of-schoolchildren.Dataislackingonchildrenwithdisabilities,bothinandoutofschool.

(ii) Learningoutcomes: a significant increase inoperatingbudgets is requiredatdistrict level,togetherwithfurtherupgradingofpedagogicaladvisers,tobettersupportteachers.

(iii) Teachersupplyandquality.Allnewsecondaryteachersareexpectedtobeabletoteachatleasttwosubjects.Astrategyneedstobeimplementedtoimprovetheefficiencyofteacherdeployment, reduce the number of volunteer teachers, and allow recruitment of newqualifiedgraduates.Apriorityforutilizingthenewcivil-servicequotasistorecruitspecialistsecondaryteachersinmathematics,scienceandIT.

(iv) Financial and human resources for education. The shortfall in budget allocation for theeducation sector in the last few years will need to be reversed. At the same time, theGovernmentwill need to reprioritize education sector interventions tomake sure limitedresources are used to address most critical needs. To this end, the priorities are to (a)

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strengthenlinkagesbetweenplanningandbudgeting,(b)increasetheoperationalbudgetatprovincial and district levels and allocate itmore equitably,with increased allocations forpedagogicaladvisersandschoolmonitoring,and(c)strengthenandmodernizetheplanningand budgeting capacity and the accounting capacity ofMoES. At the same time, teacherdeploymentefficiencyneedstobesignificantlyimproved

(v) Numbers and quality of basic education graduates. Increasing transition rates into andcompletionrateswithin loweranduppersecondaryeducationareessential. Improvingthequalityofpost-basicgraduateswillrequireimprovingthebasicskillsandknowledgeprovidedbyprimary and lower secondaryeducation, andequipping youngpeoplewith the skills tofunctioninamodernanddiversifyingeconomy.AminimumsetofcompetenciesshouldbeoutlinedastheprerequisiteforentryintoTVETprogrammes.

(vi) Literacy. Improving the completion rates for lower secondary education will be crucial.Equivalence programmes for youth literacy and for continuous education need to bestrengthenedandexpanded.

(vii) AlignmentofeducationwithNSEDPneeds.Improvingfundamentalcompetenciesandskillsofchildrenfromearlychildhoodeducationtolowersecondarywillbenecessary,ratherthanfocusingonlyon improvingTVETandhighereducation.Regular labourmarketsurveysandtracerstudiesofgraduatesareneeded.MoESneedstodevelopanoverallhumanresourcedevelopmentplanfortheeducationsector.Theexpandingcontributionoftheindustryandservice sectors to GDP also require improved quality of graduates from upper secondaryschools,collegesanduniversities

(viii) Education expenditure. The quality and efficiency of education spending needs to bedeveloped,including:(a)improvingtheefficiencyofteacherdeployment;(b)strengtheningthelinkagebetweenplanningandbudgeting;and(c)strengtheningthecoordinationbetweencentralandlocallevelsonfinancialdatacollection.Fiscalconstraintswillremainatleastuntil2020 therefore the sector needs todeterminehow tomoreefficiently use its humanandfinancialresourceswhilereducingdisparities.Genderequityamongadministrativestaffneedstobe improvedsince fewwomenholdseniorpositionsatPESS,DESBandschoolprincipallevels.

(ix) Education financing.Theprioritywillbetokeepongoing ‘protected’programmes,suchasschool block grants and textbook replenishment.MoEShas limited flexibility in theuseofdiscretionary funds. Themajor space for reducingdisparity is to improve the efficiencyofteacherdeployment.However,movingteachersfromonelocationtoanotherisverydifficultin the Lao context. Both the Teacher Allocation Committee and the Planning and BudgetCommitteewillexaminetherecommendationsfromtheESDP2016-20mid-termreviewtoidentifystrategiestousehumanandfinancialallocationstoreducedisparities.Considerationmightbegiventodifferentialuseofschoolblockgrants(largergrantstoareaslaggingbehind),formula-basedallocationofoperationalbudgets todistricts, and/or futureDESBoperatinggrants to target disadvantaged schools through use of an allocation formula designed toreducedisparities.

(x) Evidence-basedpolicy.There isaneedtoestablishamechanismtoconsolidateandmorefullyanalyzedatafromvarioussourcesoneducationandemployment,andsynthesizeresultsand implications for policy developers and in a way that is accessible to non-researchspecialists. Support is needed to institutionalise this approach across all provinces. Amechanism to better monitor sector performance, particularly at the policy and strategylevels,isneededtoenablegovernmentanddevelopmentpartnerstojointlyassessprogresstowards revised 2020 targets. An efficient Sector Performance Assessment Framework isrequiredthatalsomonitorssub-nationalimplementationofcentralpoliciesandstrategies.

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2.4. Outcome 2, Output 4: Universal access to quality health care services achieved

2.4.1. Context

Policycontext.Thehealthsectorhasaligneditsgoals,targetsandindicatorstoachieveLDCgraduationby2020,universalhealthcoverage(UHC)by2025,andtheremainingSDGsby2030.UHCisthehighestpriority of phase II of the Health Sector Reform, which has been integrated into the health sectordevelopmentplanandmonitoringframework.TherearethusfivepriorityareastopavethewayforUHCby 2025: (i) human resources for health; (ii) health financing; (iii) governance, organisation andmanagement;(iv)servicedeliveryandhospitalmanagement;and(v)healthinformationsystems.

Environmentalhealth.LaoPDRplaceshighpriorityon cleanwater as adaily life requirementandonproper sanitationasabasicbuildingblock in communicabledisease control.Onwater, sanitationandhygiene(WASH),theWASHoverarchingPolicyiswaitingfortheapprovalbythePrimeMinister.MoHisfinalizing the ruralWASH Strategy for achieving SDG6. ClimateChange,Gender, accessibility arewellreflectedinthisWASHStrategy.MoESisfinalizingtheNationalStandardforWASHinSchools.StandardOperatingProcedures arebeingdeveloped forCommunityWASHCommitteeswhichwill enhance thecommunityownershipof the facilities. TheMinistryofPublicWorksandTransporthasdeveloped theUrbanSanitationStrategy.Waterlawsandregulationsareineffect.


ThetargetssetforthisOutputintheNSEDPwereasfollows:

• Achieveanaveragelifespanof71years• Prevalenceofunderweightreducedto20%andprevalenceofstuntingreducedto32%among

under-fivechildren• Infantmortalityrateofchildrenunder1yearoldreducedto30/1,000livebirths• Under-fivemortalityratereducedto40/1,000livebirths• Maternalmortalityratereducedto160/100,000livebirths• 90%ofthepopulationusecleanwater• 75%ofthepopulationuselatrines• 90%ofchildrenhavereceivedmeaslesimmunization• 80%ofthepopulationiscoveredbyhealthinsurance.

ProgressonthetencoreindicatorsThereviewoftheHealthSectorDevelopmentPlan(HSDP)focusedonprogressandachievementsinthefollowingareas:

• Servicedeliveryandtheessentialservicespackage,• ExpansionoftheNationalHealthInsurance(NHI)schemeandtheimplementationoftheNHILaw,

and• AccelerationofHealthSectorReform,andimprovementsinplanningandbudgetinginthehealth

sector.Thehealthsectoradopted10corehealthindicatorsintheHSDPtomonitorhealthsectorprogress.Table2.10presentstheseindicatorsasexaminedbytheHSDPreview.Itappearsunlikelythatindicators6,7and10(safedeliverycoverage,accesstoanimprovedwatersource,andthevaccinationcoverage)willachievethe2020targets.

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Table2.10.ProgressonthetencoreindicatorsintheHealthSectorDevelopmentPlan Indicator 2015 Source 2017 Source 2020Target

1 Underweightprevalence 25.5 LCAAS 21.1 LSIS 20

2 Infantmortalityrate 51 UNestimation 40 LSIS 3057 Census

3 Stuntingprevalence 35.6 LCAAS 33 LSIS 32

4 Under-fivemortalityrate 67 UNestimation 46 LSIS 4086 Census

5 Maternalmortalityrate 197 UNestimation 160206 Census

6 Proportionofbirthsattendedbytrainedhealthpersonnel

54 MoH:NHSR2014-15

64.4 LSIS 80

7 Proportionofpopulationusinganimproveddrinkingwatersource

85.7 CEHWS 83.9 LSIS 90

8 Proportionofpopulationusinganimprovedsanitationfacility

69.3 CEHWS 73.8 LSIS 75

9 Vaccinationcoverage 79.5 MoH 66 LSIS 95

10 Healthinsurancecoveragerate 32 MoH 71 MoH 80

CEHWS:????Pleaseprovidethesourcebyitsfullname;LCAAS:LaoChildAnthropometryAssessmentSurvey(LCAAS),MoHandLSB;LSIS:LaoSocialIndicatorsSurvey,LSB;MoH:MinistryofHealthdata;NSHR:MinistryofHealthNationalHealthStatisticsReport,2014-2015.Indicator6was54accordingtopublishedMoHdata,not64%.Indicator9needsmorespecificity–agegroup?Antigens?HealthinfrastructureandexpansionTheGovernmentanddevelopmentpartnershavemadeconcertedeffortsto improvethefacilitiesandservicesatalllevels.Theseincludethefollowing:

(i) Villagelevel.ThenumberofHealthyVillages103hasgrownto5,676,representing67percentofallthevillagesacrossthecountry.Some84%ofthe1,020healthcentresacrossthecountryareequippedtoperformdeliveries.Some12percentor12ofthe103healthcentresintheThreeBuilddistrictshavebeenupgraded.Intotal,9percentofallhealthcentresinthecountryhavebeenupgradedto‘smallhospitals.

(ii) Districtlevel.Therearenow135districthospitalsin148districts,comparedto127in2010.Some21.5percentofthesehospitalsareabletoprovidecomprehensiveemergencyobstetricandneonatalcareservices,animprovementfrom14%in2015.

(iii) Provincial and central level.Of the 17 provincial hospitals (1,979 beds), twomeet healthreformrequirements(HouaphanhandXiengkhouangprovincehospitals).Provincialhospitalpersonnel across the country have had their capacity upgraded in the use of medicaltechnology.Certainprovincialhospitalsareabletoprovidequalityservicesequivalenttothatofsomecentrallevelhospitals.Atcentrallevel,therearefivehospitalsand3specialtreatmentcentres.

103TheModelHealthyVillagesprogramwasestablishedbytheLaoPDRMinistryofHealthin2011.Itcombineseightelementsofprimaryhealthcare,includingwatersupply,sanitation,villagehealthvolunteers,villagedrugkits,sleepingundermosquitonets,immunization,birthspacing,breastfeeding,antenatalcare,riskcasereferrals,andbirthanddeathreporting(MinistryofHealth2011.TheSeventhFive-YearHealthSectorDevelopmentPlan(2011-2015).

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Table2.11.Healthfacilitiesandinfrastructure 2015 Mid2018

Villagelevel

Totalnumberofhealthcentresincountry,ofwhich: 985 1,020

Numberofhealthcentresequippedtoperformdeliveries xx 859

Numberofhealthcentresupgradedtosmallhospitals xx 92

TotalnumberofhealthcentresintheThreeBuilddistricts,ofwhichNumberofhealthcentresupgradedtosmallhospitals

xx 10312

Districtlevel

Totalnumberofdistricthospitals,ofwhich: 135 135

Numberofdistricthospitalsupgradedtoprovidecomprehensiveemergencyobstetricandneonatalcare(CEONC)facilities

19 29

Provincialandcentrallevel

Totalnumberofprovincialhospitals,ofwhich: 17 17

Numberofprovincialhospitalsmeetinghealthreformrequirements xx 2

Numberofcentralhospitalsandspecialtreatmentcentres xx 8

Source:MinistryofHealthinputsfortheMTRoftheNSEDP.StatisticsareneededonGovernmenthealthfacilitiesprovidinginpatientandoutpatientrehabilitationservicesandrelatedassistiveproductstoenhancefunctionalcapabilitiesofindividualswithdisabilities.

MaternalandchildhealthSlowprogress.Thematernalandchildmortalityhavebeensginficantlyreduced,butLaoPDRstillhasthehighestratesinASEAN.Asignificantproportionofinterventionsrequiredtoreducematernalandchildmortality lie outside the health services sector, such as sparse populations in different geographicalregions,women’s education, livelihood and socio-economic status, culture and behaviour. The healthservicescoverageindicatorsshowsignificantimprovementfromthatin2011/12butnonethelessremainslow.Theratesfor immunization,antenatalcare,skilledattendantatdelivery,andinstitutionaldeliveryneedtobefurtherimproved.Indicatorsforreproductivehealthalsoshowimprovement,withincreaseduseofmoderncontraceptives,andareductioninadolescentbirthrate(Table2.12).

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Table2.12.Healthindicators

Indicatoranddefinition 2011/2012

2017

Maternalmortalityratio:Numberofwomenwhodiefrompregnancy-relatedcauseswhilepregnantorwithin42daysofpregnancytermination(per100,000livebirths)104

206(2015)

Under-fivemortalityrate:Probabilityofdyingbetweenbirthandthefifthbirthday(perthousandlivebirths)

79 46

Infantmortalityrate:Probabilityofdyingbetweenbirthandthefirstbirthday(perthousandlivebirths)

68 40

Neonatalmortalityrate:Probabilityofdyingwithinthefirstmonthoflife(perthousandlivebirths)

32 18

Fullimmunizationcoverage:Percentageofchildrenage12-23monthswhoreceivedallvaccinationsrecommendedinthenationalimmunizationscheduleatanytimebeforethesurvey105

42.9 48.1

Antenatalcarecoverage:Percentageofwomenage15-49yearswithalivebirthinthelast2yearsattendedbyskilledhealthpersonnelduringtheirlastpregnancythatledtoalivebirthAtleastonceAtleast4times

54.2

78.462.2

Skilledattendantatdelivery:Percentageofwomenage15-49yearswithalivebirthinthelast2yearsattendedbyskilledhealthpersonnelduringtheirmostrecentlivebirth

41.5

64.4

Institutionaldeliveries:Percentageofwomenage15-49yearswithalivebirthinthelast2yearswhosemostrecentlivebirthwasdeliveredinahealthfacility

37.5 64.5

Contraceptiveprevalencerate:Percentageofwomenage15-49yearscurrentlymarriedorinunionusing(orwhosepartnerisusing)a(modernortraditional)contraceptivemethodModerncontraceptivemethodsonly

49.842

54.149

Adolescentbirthrate:Age-specificfertilityrateforwomenage15-19years(perthousand)

94 83

Useofbasicdrinkingwaterservices:Percentageofhouseholdmembersusingimprovedsourcesofdrinkingwater

69.9

83.9

Percentageofhouseholdmembersusingimprovedsourcesofdrinkingwaterintheirdwelling/yard/plotorwithin30minutesroundtripcollectiontime.

68.6 78.1

Useofsafelymanageddrinkingwaterservices:Percentageofhouseholdmemberswithanimproveddrinkingwatersourceonpremises,whosesourcewaterwastestedandfreeofE.coliandavailablewhenneeded

15.3

Handwashingfacilitywithwaterandsoap:Percentageofhouseholdmemberswithahandwashingfacilitywherewaterandsoapordetergentarepresent

54.1

Useofbasicsanitationservices:Percentageofhouseholdmembersusingimprovedsanitationfacilitieswhicharenotshared

56.9 71.0

Opendefecation:Proportionofhouseholdpopulationpracticingopendefecation 37.9 23.9

Sources:LaoSocialIndicatorSurvey,LSIS2011/12andLSIS2017.Population&HousingCensus2015.LaoStatisticsBureau.

InfectiousdiseasesHIV/AIDS trends.HIV prevalence has been generally low in Lao PDR. The HIV prevalence among thereproductive-agedpopulation(15-49years)isestimatedas0.3%(AsianEpidemicModel2017).WhileHIVprevalenceamongfemalesexworkerremainsstable (1%), it is increasing inmenhavingsexwithmen104MMRin2011/12wasestimatedbytheLSISas357per100,000livebirths.105Forimmunization,the2011/12LSISincluded:BCG,3dosesoforalpoliovaccine,threedosesofthepentavalentvaccinecontainingDTP,HepatitisB,andHaemophilusinfluenzaetypeb(Hib)antigens,andmeaslesvaccination.In2017,thisincludedBCG,Polio3,DTP-Hib-HepB3,MeaslesandRubella(MR1).(LSIS,2011/12and2017)

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(MSM),from1.6%in2014to3.9%in2017.VientianecapitalhasthehighestHIVprevalenceamongMSM(9.6%). The overall knowledge on HIV remains low: comprehensive knowledge about HIV preventionamongwomen andmen has not improved and has even declined. Therewas an estimated 650 newinfectionsandlessthan500AIDS-relateddeathsin2017.

Table2.13.KnowledgeaboutHIVamongthegeneralpopulationinLaoPDR 2011/12 2017PercentagewithcomprehensiveknowledgeaboutHIVprevention

Womenage15-49years 22.7 18.6Menage15-49years 29.9 26.4Women,age15-24years 24 19.3Men,age15-24years 27.6 22.1

Sources:LaoSocialIndicatorSurvey,LSIS2011/12andLSIS2017.LaoStatisticsBureau.

HIV treatment and scale-up.Progress on the three global targets for HIV treatment scale-up beyond2015106isconstrainedbydifficultiesinreachingpeoplelivingwithHIV(PLHIV)andreferraltotreatment.In2017,around75%(11,876)oftheestimatedPLWHIVinLaoPDRknewtheirstatus;47%ofPLHIVwerereceivingantiretroviraltherapy;and75percentofthoseonantiretroviraltherapyhadsuppressedviralload. This means that the global targets for the HIV treatment scale-up beyond 2015 are still to bereached.107

Malaria,andTuberculosiscontrolMalaria.Theutilizationofinsecticide-treatedbed-nets(ITNs)isontrack:the2016surveyconductedbytheMinistryofHealthinthreehigh-malariaburdenprovincesshowed1.6peoplepernetagainstthetargetof1.5peoplepernet.Thepercentageofchildrenunderage5sleepingunderITNswas74.3%in2016(MoHdata).Themortalityratefrommalariaremainslow(0.03per100,000108in2015andxxx2018)andthetargetofxxxxislikelyachievablein2020(targetofWHOGlobaltechnicalstrategyformalaria2016–2030(GTS)ornationaltarget?Figuresneeded).

Tuberculosis.TreatmentrateforTBcuredunderDOTSandotherswas87%inthefirstsixmonthsof2018(in 2015 it was also 87%109) against the target of 90% in 2020. TB detection needs to be urgentlyimproved.110TBdetectionratehasimprovedfrom37percentin2015toanestimated50%in2017111butstillhassomewaytogo.

Denguehaemorrhagicfever.Thisisayear-roundnationwideriskinLaos,althoughtransmissionratesaregenerallyhighestduringtherainyseasonfromMaytoSeptembereachyear.Authoritiesreportedmorethan1,950casesin2015,andmorethan5,610casesin2016,with10deaths.Thesurgeinactivityduring2016was likelyduetotheexceptionallystrongEINinoweatherpattern,whichcausedprolongedhightemperaturesandhighhumidity.Suchconditionsprovidetheidealenvironmentformosquitobreedingandincreaseddenguefevertransmission.During2017,therewere5,584casesofdenguefever(including14deaths)recordedcountrywidein16outof18provinces.Inthefirst6monthsof2018,some1,089casesofdenguefeverhavebeenreported,with twodeaths.Mostof thecasesoccurred inthesouthof the

106 ThetargetsfortheHIVtreatmentscale-upbeyond2015are(i)by2020,90percentofallpeoplelivingwithHIVwillknowtheirHIVstatus,(ii)by2020,90percentofallpeoplewithdiagnosedHIVinfectionwillreceivesustainedantiretroviraltherapyand(iii)by2020,90percentofallpeoplereceivingantiretroviraltherapywillhaveviralsuppression.

107UpdatedstatisticsfromGlobalAIDSmonitoring,UNAIDS,2018.108FromMDGreporting.109MDGreporting.110dataneededontreatmentsuccessortreatmentoutcomes111WHOglobalTBdatabase.http://www.who.int/tb/country/data/download/en/

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country,withAttapeuprovincereporting477andtwodeaths,andChampasackprovincereporting164cases.OnASEANDengueDay,markedon15June2018,over100localpeopleandofficialsgatheredinVientianeforactivitiestosupportthecountry’sbattleagainstdengue.112

Non-communicablediseasesAgrowingthreat.Some59.6%ofalldeathsforallagesinthecountrywereduetonon-communicablediseases(NCD)in2016.CoronaryheartdiseaseinLaosreached5,769or13.5%oftotaldeaths,accordingtothelatestWHOdatapublishedin2017.WHOhasidentifiedadultriskfactorsinLaoPDR,amongthemahighrateoftobaccouse.Theage-standardizedNCDmortalityrateper100,000populationin2016was780.6(829.9formalesand739.4forfemales).113TheMinistryofHealthhasstartedNCDpreventionandcontrolwith an action plan for NCD 2014-2020, including through a holistic approach involving othersectorstoencouragephysicalactivitiesandreducetheriskfactorsforNCDsatcommunitylevel.

Deathfrominjury.Injuries,estimatedas9%oftotaldeathsintheLaoPDR,aremainlyfromroadaccidents.Roadaccidentstatisticsshowariseofthedeathratefromroadaccidents,from8.6per100,000in2006to15.3per100,000in2015and16.2per100,000in2017.114Theincreaseislargelyassociatedwithunsaferoadconditions,rapidexpansionofroads,thegrowthinthenumberofmotorbikesandvehicles,speeddrivingafterdrinking,andlimitedcapacitytoenforcetrafficlawsandregulations.

SafedrinkingwaterandimprovedsanitationProgress.Theuseofcleanwaterhasincreasedinthepast5years(Table2.12)from69.9%in2011/12to83.9%in2017.Thereremainmanymountainousandremoteprovinceswithlowercoverage,andwatersources may be prone to contamination from the increasingly frequent floods. The use of improvedsanitationfacilities(thosewhicharenotshared,accordingtoWHO/UNICEFJMPstandards)hasincreasedsignificantlyfrom56.9in2011/12to71percentin2017.Therateofopendefecationhasdecreasedfrom37.9percentin2011/12to23.9in2017,butthepracticeisstillasignificanthealthrisk.Floodingalsoposesriskstosanitationfacilitiesandsanitationingeneral.

HealthprotectionandexpenditureIncreased government spending. Many schemes have been introduced to support universal healthcoverage, including health equity funds, free maternal and child health services, and social healthprotectionschemes.Thetotalhealthexpenditure(THE)percapitahasincreasedfromUS$29(2010-11) toUS$59(2015-16).ThetotalhealthexpenditureasapercentageofGDPhasincreasedfrom2.4%(2010-11)

to 3% (2015-16). The general government health expenditure as a percentage of general governmentexpenditurehasnearlydoubledfrom3.7% (2010-11) to6.9% (2017), butstillnotyetreachedthe levelendorsedbytheNationalAssembly.Outofpocketspendingisstillaconcern,eventhough ithasdecreasedfrom 48.6%oftotalcurrenthealthexpendituresin2010-11 to 45.1%in 2015-16.

2.4.3. Challengesandlessonslearned

Challengesexternaltothehealthsector:

• Floodingthroughoutthecountry frequentlyaffects foodproductionareasanddamageshealthinfrastructure,includinghospitals,healthcentres,wellsandsanitationsystems.

• Problemslinkedtotheeconomyhaveincreasedcommoditypricesandothercosts.• Investmentinthehealthsectorhasbeenlimited,includingfromODA.

112https://aecnewstoday.com/2018/lao-morning-news-for-june-18/#axzz5Ri7aU4aj113WHOGlobalHealthObservatory.http://apps.who.int/gho/data/view.main.2490(Pleaseprovidemoreupdateddataifavailable.

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• Factorssuchaslivingstandardsofcommunities,andhealthseekingandcarebehaviour,dependonknowledge/education,poverty,traditionsandculture.

• Healthcareactivities,especiallypreventivecare,arenotprioritizedbyhouseholds,communities,societyandtheauthorities.

Challengeswithinthehealthsector:

• Whilethehealthcareservicenetworkhasbeenexpandedsignificantlyintobothurbanandremoteareas,coveragestillneedstoincrease,andthequalityofservicesathealthfacilitiesisstilllimited.Inmanydistricthospitalsandhealth carecentres in remoteareas,professional staff, vehicles,infrastructureandhealthequipmentareinadequate.Thesystemforreferralandtransportationofpatientsalsoneedsstrengthening.

• Health personnel is limited in quantity and quality, highlighting the need for capacitystrengtheningandcontinuingprofessionaldevelopment.Ensuringamoreequitabledeploymentof health staff, especially to remote areas, remains a challenge. Decisionmakerswill need todevelopandimplementahumanresourcespolicythatoffersIncentivesforgoodperformance,improvedskillsandfordedicatedworkinremoteareas.

• Whilethenationalhealthinsurancesystemhasexpandeditscoverage,accesstohealthfacilitiesremainsdifficultforpeoplewholiveinremoteareas,especiallyinrainyseason.Coveragebythenationalhealthinsurancesystemisonlyforsomehealthcareservicesonly,butnotall,suchasdiseasepreventionandhealthpromotion.

• Thebudgetforpublichealthhasbeenincreased,butonapercapitabasis, it isstillamongthelowest in the ASEAN region. The government budget for health insurance related activities isseverelylimited.

• Thecivilregistrationandvitalstatistics(CRVS)systemisstilllimited.Otherweaknesses,suchaslimitationsinthecapacitytoanalyzeandusedata,constrainthemonitoringofprogress.

Challengesandissuesrelatedtoimmunization:

• Healthservicesoftenhavestaffshortagesandpoorstaffcapacities;somestaffarenottrainedproperlyonmicroplanningforimmunizationservicedelivery,especiallyinremoteareas.

• Delaysinreceivingthebudgetcausedelaysdownthelinefromimplementationandmonitoringtoreporting.

• Local authorities andother stakeholders need to providemore support tomake communitiesunderstandtheimportanceofvaccination.

• Difficulties in physical access, the lack of equipment and the lack of vehicles, constrainimmunizationprogrammesinremoteareas.

• Monitoringandreportingarenotsystematicandcontinuous,manyprovinces/districtshavenotyetusedmonitoringtoolsandlackofappropriateworkplanandworkingmethodology.

• Discrepanciesinpopulationstatisticsandcoveragedataimpedeefficientmonitoring.Inequities.Manydevelopmentpartnershavemovedtoupstreamsupport,whilemanyessentialservicesstill do not reach children, as demonstrated by the outbreaks of diphtheria and polio. Inequities incoverage of health services aremanifested by poorer health outcomes amongst the poorest living inremoteareas,asshownbythe2017LSIS.Thedisparitiesinhealthstatusandservicecoverageare,asineducation,aredeterminedby(i)geographyandaccess,(ii)bythelevelofeducationofthemother(inthecaseofmaternalandchildhealth)orthehouseholdhead(inthecaseofwaterandsanitationfacilities),(iii) ethnolinguistic group (some groups are more remote than others or may have different culturalpracticesthataffecthealth),and(iv)thewealthofthehousehold.Anadditionalfactorinchild,infantandneonatalmortalityistheageofthemother:childrenbornofmotherswhoaretooyoung(belowage20)or older (above age 35) have a higher probability of dying before the age of five. The disparities aregreaterforcertainindicatorsthanothers,meaningthatforthoseindicators,thevulnerablegroupshave

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muchfurthertocatchup.Educationandhouseholdwealtharethetwofactorsthatmakethegreatestdifference.

Dependence on external funding. Lao PDR needs an exit strategy tomove away from support fromdevelopmentpartnersandotherexternalsources:immunizationisstilldependentonexternalfunds.ThedeclineinexternalfundinghasresultedinahugegapintheHIV/AIDSpreventionprogram.

Water contamination.New SDG definitions for safely managed water and sanitation show worryingresults.Whileaccessto“improved”sourcesofwatershowsprogress,ahighproportionofsamples(86.3%,with80.9%inurbanand88.9%inruralhouseholds)testedpositiveforE.coli(aproxyindicatorforfaecalcontamination).The testingproducedpositive results forE. coli in83.1%of samplesat source.115 Thismeansahighpercentageofpopulationareatriskbecauseofcontaminatedwaterinbothurbanandruralsettingsandatthesource.

Hygienechallenges.Despitegoodprogress,some23.9percentofthepopulationstilldefecateintheopen.Theburdeniscarriedbytheruralpoor(Table2.12).Amongthosewhopracticeopendefecation,71.8%arefromthepoorestquintile.Alittleoverhalfthehouseholdshaveaccesstofacilitiesforwashingtheirhandswithsoap.Evenamongtherichesthouseholds,some13%donothavesuchfacilities.

Challenges in combatting HIV. The past years have seenmany large infrastructure and developmentprojects spread across the country, such as the China-Lao high-speed railway, road construction, anddams.TheseprojectsbringininternalandexternalmigrantworkersthatheightenrisksandvulnerabilitiesforHIVamongtheLaopopulation.TheIntegratedBiologicalandBehaviouralAssessmentSurvey(IBBS)in2017highlightedasharpincreaseinHIVprevalenceamongMSMinVientianecapitalfrom3.6%in2014to7%in2017.StigmaanddiscriminationagainstPLHIVarestillhigh,largelyduetolimitedunderstanding.Theintegrationofantiretroviraltreatmentinthehealthcaresystemremainsachallenge,especiallysincethehealthcaresystemstilldoesnothaveuniversalcoverage.

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Table2.14.HealthinequitiesasmeasuredbyLSIS2017 National

averageGeography/access Educationof

mother/householdheadLanguage Wealthindex

quintileMother'sage Sex

Urban Ruralwithoutroad

Postsecondary/Nontertiary

noneorpre-primary

Mothertongue:Lao-Tai

Mothertongue:NonLao-Tai[1]

richest poorest <20 20-34 35-49 Male Female

Under-fivemortalityrate(%o) 46 24 62 5 54 35 72 CT 23 63 64 37 73 47 44Infantmortalityrate(%o) 40 20 56 4 49 30 57 MK 19 56 59 33 62 43 37Neonatalmortalityrate(%o) 18 14 24 0 17 15 22 MK 14 20 25 14 32 19 17Fullimmunizationcoverage(%)

48.1 53.4 40.7 61.9 30.6 58.8 27.4 CT 65.2 31.7 46.7 49.6

Antenatalcare,atleast1visit(%)

78.4 93.3 55.4 98.1 49.5 89.4 53.9 CT 97.3 51.7 74.7 80.3 69.2

Skilledattendantatdelivery(%)

64.4 89.7 34.1 91.2 36 78.2 42.5 CT 96.8 32.6 56.4 67 57.3

Institutionaldeliveryrate(%) 64.5 87.9 37.7 93.6 36.6 77.7 42.8 CT 95 33.9 57 67.1 56.8 Contraceptiveprevalencerate,modern(%)

49 45.8 46.3 43.8 43.2 52.6 25 HM 45.9 41.5 29.1(age15-19)

Adolescentbirthrate(%o) 83 42 136 8 176 54 192 HM 20 156 Useofimprovedsourcesofdrinkingwater(%)

83.9 96.7 65 95.1 69.7 91.5 67.5 MK 99.8 58.4

%ofhouseholdpopulationwithE.coliindrinkingwater(%)

86.3 80.5 86.7 81.7 90.3 86.2 77.6 HM 77.9 90.1

Handwashingfacilitywithwaterandsoap(%)

54.1 73.3 31 76.2 35.8 66.4 32.4 HM 86.6 20.9

Useofimprovedsanitationfacilities(notshared)(%)

71 91.2 50.8 90.3 47.3 82.3 50.1 MK 98.5 23.2

Opendefecation(%) 23.9 4.2 43.9 6.1 48 13.9 46.3 CT 0 71.8 Notes[1]Fortheethnolinguisticgroups,thegroupswereselectedtoshowthegreatestdifferencewiththeLao-Taigroupforthegivenindicator.ThismaybethedifferencewiththeMon-Khmer(MK),theChinese-Tibetan(CT),ortheHmong-Mien(HM)

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2.4.4. NextstepsTheHSDPreviewidentifiedthefollowingprioritiesforthepost-MTRperiod:

• Improving staff capacity andperformance,whichwill require continued strengtheningof staffcapacity tomeet requiredstandardsateach level, institutionalarrangements toensurebetterstaffdeployment,andthe implementationof incentivepoliciesforstaff,especiallyforthose inremoteareas.

• Improvinghealthfacilities,networksandreferralsystemsbyensuring implementationofthe5Goods, 1 Satisfactisfaction Policy (Good Reception; Cleanliness, Comfortability; Diagnosis;Treatment and Patient Satisfaction), in parallel with expanding the national health insurancesystem.

• Addressing the causes of maternal and child mortality and malnutrition through upgradingmaternal and child health services, including referral systems, basic emergency obstetric andneonatalcare(BEmONC)andcomprehensiveemergencyobstetricandneonatalcare(CEmONC)services,andpreventingmalnutritionthroughbehaviouralchangecommunicationinterventions,especiallyinremoteareas.

• Improvingthequalityoffoodanddrugmonitoringandanalysis,includingtraditionaldrugs.• Improvingthehealthmanagementinformationsystemandintegratingthemanysystems116into

onetoobtainrobustandtimelydataforuseinmonitoring,planning,andimprovingtheservicesatdifferentlevels.

• Strengthening health budget planning and management with priority to national healthprogrammes/projects.

• Mobilizing resources including private investment in health care and official developmentassistance.

• Enhancing programme/project management, especially effective monitoring, evaluation andreporting.

Communitybasedstrategies.Theinequitiesandchallengesoutlinedintheprevioussectioncallforfreshapproacheswithmoreattentiontothedemandsideandtothecapacityoffamiliesandcommunities.Thismeansincreasedemphasisonstrengtheningthecapacityof local levelserviceprovisionand improvingthe quality of care provided at the peripheral level: to address common childhood illnesses, improvevaccination coverage, provide parenting education and early childhood development, and facilitateelimination of open defecation. Community-based approaches are essential to improving nutritionalstatus andmanagement of children with pneumonia, diarrhoea and others. A community healthcarestrategywillalsostrengthenhealthpromotion,includingthroughtheuseoflocallanguages,toaddresssocialbehavioursthatareharmfultohealth.

KeymeasurestoaddressfoodandnutritionsecurityarehighlightedunderOutcome2,Output2.Theeliminationofopendefecationrequirestherigorous implementationofthealignmentbetweenWASHandtheHealthyModelVillages,sothattoqualifyasaHealthyModelVillage,allhouseholdsshouldhaveimprovedsanitationfacilitiesandbefreeofopendefecation.

Health financing. The Government is highly committed to increase its spending on health servicesprovision.Domesticrevenuesourcesarethekeytoreducethefinancialburdenonhouseholdsandthe

116DistrictHealthInformationSoftware(DHIS2),civilregistrationandvitalstatisticssystem(CRVS),the10threvisionoftheInternationalStatisticalClassificationofDiseasesandRelatedHealthProblems(ICD10)andeHealth,whichishealthinformationmadeaccessibleoncellularphones

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vulnerability associated with the uncertainty of external financing and external technical assistance.Phasing out of Gavi117 for immunization will require greater allocation of domestic resources andinnovativefinance,wherefeasible,tomeetthefundinggapforimmunizationprogrammes.Thereisalsoaneedtodecreaserelianceonout-of-pocketspending,andincreasepooledandpre-paidfinancing.

PrioritiesforcombattingHIV/AIDSareasfollows:(i) PreventHIVinfectionsbyfocusingonkeypopulationsathigherrisk.Thisrequiresachieving

global targetsonscalingupHIVpreventionandtreatment,especially for thoseengaged inhigh-riskbehaviour.Moreattention is requiredtoaddresstheweakcoordinationbetweencommunityworkersandserviceproviders.

(ii) Mobilize resources from private investors collaborating with the Government on largeinfrastructuredevelopmentprojects.LargeinfrastructureanddevelopmentprojectshaveledtoaninfluxinthousandsofmigrantworkerscomingintoLaos.Hence,itisimportantthattheprivate investorsare involved in theHIV response forprevention.Thiswillhelp lessen thesocio-economicimpactduetodevelopmentinthesurroundingareas.Inaddition,thereisalsoaneedtocollaboratewithneighbouringcountries to jointlyaddress theHIV issuesamongmigrantworkers.

(iii) MainstreamHIVintothehealthsystemandexistingworkwithalldevelopmentprogrammes.HIV/AIDSknowledge,preventionandresponseshouldbeincorporatedintoprogrammesonsexual and reproductivehealth,maternal and child health, gender equality, human rights,workplaceeducation,healthsystemstrengtheningandsocialsafetynets.

(iv) IntegrateHIVtreatmentintohealthservices,andintegratecareforPLHIVintosocialwelfareservices.TherearestillmanybarriersforintegrationofHIVtreatmentintohealthservicesduetothemanyverticalprograms,lackofcoordinationandlimitedcapacityofhealthstaff.Thereis a need to increase efforts onmainstreaming HIV/AIDS into appropriate entry points tohealth care services. This includes services for maternal and child health, TB/HIV, healthpromotion,foodanddrugs.

(v) Ensurepredictable levelsof resources for thenationalHIVActionPlan2016-2020.Currentfunding for theHIV/AIDS response ishighlydependentonexternal sources (nearly100%).Thus,allocationofmoreresourcesisrequiredfromthenationalbudget.

Cross-sectorstrategies.Whilethemid-termreviewshowsencouragingprogress,someremaininghealthchallengeswillrequireprogressinothersectors.Thedirectionandframeworksforsuchjointeffortsareprovidedbythesector-widecoordinationmechanism,HealthSectorReform,3BuildsPolicy,andtheLawonCommunicableDiseasesControlapprovedbytheNationalAssemblyon9November2017,whichsetsouttherolesandresponsibilitiesofthenationalcommunicablediseasescommitteesateachlevel(central,province, district and village). Close coordination and cooperation fromall sectors, stakeholders, localauthoritiesanddevelopmentpartnerswillberequiredtoachieveuniversalhealthcoverageby2020/25,withafirmbasisfortheachievementofSDGtargetsin2030.

117Gavi,aninternationalorganisationistheglobalVaccineAlliance,bringingtogetherpublicandprivatesectorswiththesharedgoalofcreatingequalaccesstonewandunderusedvaccinesforchildrenlivinginpoorcountries.https://www.gavi.org/

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2.5. Outcome 2, Output 5: Improvement of and access to social protection achieved

2.5.1. ContextGoals.Significantstepshavealreadybeentakentoachievethegoalsofanationalsocialprotectionfloor,suchasthecreationoftheNationalHealthInsuranceandtheNationalHealthInsuranceBureauthatwillhelptoaccomplishthegoalofUniversalHealthCoverageby2025.InitiativessuchastheHealthEquityFundschemesandFreeDeliveryofMaternal,NeonatalandChildHealthCare(“FreeMNCH”),representsignificantprogress.

Strategytoachieveanationalsocialprotectionfloor.TheGovernmenthasembarkedonastrategythataimsby2030toanationalsocialprotectionfloorthatprotectseverybodyinallthestagesoflife.Indoingso, theGovernment follows a two-fold approach.On the one hand, itwill increase funding for socialprotectionandexpandcurrentlyexistingsocialprotectionschemes.Ontheotherhand,itwilldevelopnewsocialprotectioninterventionstoguaranteeincomesecurityandhealthtotheLaotiansthroughouttheirlifecycle.

2.5.2. ProgressandachievementsLegalframework.BuildingonachievementsfromthepreviousFiveYearPlan,theGovernmenthascreatedlegal instruments to improve the basis for implementation. For example, the Labour Law has beenenhancedandalawonsocialsecurityapprovedwithadecreeonincreasingtheminimumwageforthelabourforceworkinginbusiness,productionandserviceunits(from626,000Kip/monthto900,000Kip).Adecreeonsocialreliefforthedisabledisalsoinaprocessoffinalization.Inaddition,coverageofsocialandhealthsecurityhasexpanded,includingforthedisasteraffected,elderly,anddisabled.

Limitedcoverage.Accesstosocialprotectionremainslimitedandwelfareprogrammesfragmented.Therecent Labour Force Survey (2017) has shown that 996,000 people or 14.4 percent of the country’spopulationarecoveredbysocialprotection.Socialprotectionextendslargelytothoseemployedinformalsectors.Thus,ofthecountry’s4.8millionworkingagepopulation,only752,000(or15.8%:16.7%maleand 15% female) are covered by a social protection scheme (Table 2.15). Of those covered by socialprotection,theNationalSocialSecurityFundconstitutedthebiggestshareofcoverage(72percentofthecoveredpopulation),followedbyNationalHealthInsuranceFund(21percent).118

Benefits.Socialprotectionbenefitsincludethosefromhealthinsurance(84%ofallbenefits),maternitybenefits, employment/occupational health benefits, old age/retirement benefits, death and survivorbenefits.Ofthosewhoreportedtheycurrentlyreceivebenefits(259,000),thebulkweremainlybenefitingfromhealthinsurancecoverage,followedbymaternitybenefitsandsurvivors’pensionbenefits.119

Informalsector.Themajorityofworkersarenotcoveredbysocialprotectionareininformalemployment,whichconsistsoftwotypesofemployment.Thefirstcomprisesthosewhoareemployedintheinformalsectorenterprisesthatarenotregisteredanddonotkeepaccountsoftheirbusiness,andtheworkersdonotbenefitfromsocialprotectionandwork-relatedbenefits.Thesecondsegmentconsistsofthosewhoareinformallyemployedandinhouseholds.Theiremployersdonotcontributetosocialprotection,andthey do not receivework-related benefits such as paid leave and paid sick leave. Contributing familyworkersareconsideredtobeinformalemploymentregardlessoftheirinstitutionalsectorofwork.Outof1.8millionemployedpersons,1.5millionwereestimatedtobe in informalemployment.Own-account

1182017LabourForceSurvey1192017LabourForceSurvey

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workersaccountedfor33.5percent,or485,000persons,ofinformalemployment,andcontributingfamilyworkersaccountedforanother46.3percent,or673,000. 120

Table2.15.Socialprotectioncoverage

(thousandpeopleandpercentage)

LaoPDR Urban Rural

Total Male female Total Male female Total Male femaleTotal population estimated byLFS2017forLaoPDR

6,916 3,410 3,507 2,038 993 1,045 4,878 2,416 2,462

Populationcoveredbysocialprotection:numbers

996 510 485 523 268 254 473 242 231

Percentageoftotalpopulation 14.4% 15.0% 13.8% 25.7% 27.0% 24.3% 9.7% 10.0% 9.4%Working-agepopulation(15+), 4,758 2,328 2,430 1,530 738 792 3,228 1,590 1,638Workingagepopulationcoveredbysocialprotection

752 388 364 410 209 201 342 179 164

%ofworkingagepopulationwhoarecoveredbysocialprotection

15.8% 16.7% 15.0% 26.8% 28.3% 25.4% 10.6% 11.3% 10.0%

Source:LabourForceSurvey,2017.LaoStatisticsBureau

Improvementofandaccesstosocialprotection:Aspartofthegovernment’sconsistentefforttosupportthesocialworkprofessioninLaoPDR,theMinistryofLabourandSocialWelfareindevelopingthetrainingmanualforparasocialworkersincollaborationwiththeNationalUniversityofLao.ThetrainingmanualwasusedtotrainthestaffoftheMinistryofLabourandSocialWelfareMOLSWandparasocialworkersatalllevels.

TheNationalSocialProtectionStrategy.Oneofthekeyachievementsin2018isthefinalizationoftheNationalSocialProtectionStrategy(NSPS),whichisnowunderconsiderationforadoptionbytheCabinet.TheNSPS is theresultof theeffortsof theGovernmentofLaoPDRand itsdevelopmentpartnersandprovidesaclearframeworkforthedevelopmentofanationalsocialprotectionfloor(SPF).TheNSPSisinspiredbytheLaoConstitutionandthe8thNationalSocio-EconomicDevelopmentPlan(2016-2020)andbenefitedfromtheworkpreviouslydone inLaoPDRthroughtheAssessment-BasedNationalDialogue(ABND)onSocialProtection.

Strategicobjectivesandstrategies.TheNSPShasdefinedtwomajorgoalsinaimingtoensureeffectiveuniversalaccesstosocialprotectionservices,andhigherlevelsofprotectionforthosemoreinneed.EachgoalisdisaggregatedintotheStrategicObjectivesonhealthinsurance,socialsecurityandsocialwelfare.

(i) TheHealthInsurancesectionoftheNSPSaimstoensurethateveryonehasaccesstohealthservices, including promotion, preventive, treatment, rehabilitation and palliative care ofsufficientqualitytobeeffective,andthattheuseoftheseservicesdoesnotresultinfinancialhardshipfortheindividuals.ThesearethegoalsofUHC.

(ii) TheSocialSecurityobjectiveoftheNSPSaimstocoverallworkersandself-employedworkersin the formal sector with contributory social protection schemes, and help unprotectedworkersintheinformalsectortoaccessahigherlevelofprotection.

(iii) The Social Welfare objective of the NSPS aims to expand coverage and services of non-contributoryschemestomeettheneedsoftargetgroups.Theseincludecashtransferstothe

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most vulnerable groups, such as child cash grant, disability grant, non-contributory socialpensions,schoolmealsandsecondarylevelscholarships.Thisobjectivealsoincludesasub-objectiveonprovidingtheworking-agepopulationwithaccesstodecentemployment,skillsandvocationaltraining,andlabourmarketinformation.

2.5.3. ChallengesandlessonslearnedInvestmentsrequired.Sufficient,predictableandsustainedinvestmentwillberequiredtoimprovethequalityandaccesstoqualitysocialprotection.Greatermeasuresareneededtoaddressimportantissuesrelatedtothecoverageandscopeofsocialprotection,aswellashealthcareservicefortheelderly,thedisabled, homeless and underprivileged. A mechanism needs to be put in place for managing andprotecting child benefits, and encouragingworkers and people in all professions to contribute to thehealthinsurancefund.Administrativedataonsocialprotectionhasmanygaps,andsignificantinvestmentisneededinaManagementInformationSystem,whichthegovernmentisaddressingwithsupportfromdevelopmentpartners.

ResourcemobilizationandfinancialsustainabilityarethebiggestchallengeinimplementingtheNSPS.TheNSPSreliesontheuseofinternalandexternalfundingsourcesfortherealizationofitsactivities.LaoPDR´seconomyisforecastedtocontinuegrowingatagoodpace,thereforeallowingtheGovernmenttoinvestinsocialprotectionservicesandbenefits.Withthisinmind,theGovernment’sbudgetwillneedtoincorporateNSPSrequirements.Socialprotectioninterventionswillbeintroducedgraduallyintwophases-2018-2024and2025-2030-toallowforanaccommodativebudgetplanning.InterventionsandpackageshavebeencostedbasedontheILO’sRapidAssessmentProtocoltool.It isestimatedthatstartingfrom2019,implementationoftheSocialWelfarecomponentalonewouldrequire0.23percentofGDP,risingto0.95%ofGDP0.95%oftheGDP,ora4.78%oftheGeneralGovernmentExpenditure(GGE)by2030associalprotectionschemesareexpandedandmoreareadded.

2.5.4. NextstepsImplementationoftheNationalSocialProtectionStrategy.AtopprioritywillbetheimplementationoftheNSPS,expectedtobeintwophasesduring2018-2030.Thefirstphase(PhaseI)willtakeplacebetween2018and2024.Theon-goingimpactoftheNSPSwillbeevaluatedin2024(mid-termevaluation),beforethepreparationofthesecondphase(PhaseII)implementationplan,onthesecondhalfof2024.PhaseIIwilltakeplacebetween2025and2030.

Institutional roles.The implementationof theNSPSand theoverall coordinationof the implementingbodies(andwithdevelopmentpartners)willfallundertheresponsibilityoftheNationalSocialProtectionCommittee(NSPC).TheNSPCwillbeestablishedthroughPrimeMinisterialDecreeatthebeginningoftheNSPS implementation. An NSPS Secretariat will take the responsibility of monitoring NSPSimplementation.CooperationpartnerswillformacrucialpartoftheNSPSimplementation,fortechnicalassistance,capacitybuilding,budgetarysupport,monitoringoftheimplementationandevaluationoftheresults.TheLaoStatisticsBureauandtheNationalUniversityofLaosareexpectedtoprovideinputsonthetargetingofpoorhouseholdstoensureefficientallocationofresourcesandmaximizetheimpactofsocialprotectioninterventions.

AManagementInformationSystemonsocialprotectionisatoppriority.Thiswillbeessentialinplanning,coordinatingandsupervisingtheimplementationoftheNSPSandtheoverallsituationofsocialprotectioninthecountry.Thissystemwillalsobeofcentralimportanceincoordinatinginterventionsdecentralizedtotheprovincesanddistricts.

Disability.Forthenewdecreeonsocialreliefforpeoplelivingwithdisabilitiestobeeffective,clearrolesandresponsibilitieswillneedtobelaidoutintheimplementationplan.Healthcarecoverageshouldneeds

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toincluderehabilitationservicesaswellasassistiveproductsforpeoplewithdisability.Inaddition,themanagementinformationsystemoftheNSPSwillneedtohavedatadisaggregatedbydisabilitystatus,includingUXOsurvivors,suchthatitispossibletoconductlongitudinaltrackingofcases.

2.6. Outcome 2, Output 6: National traditions and culture protected

PromotionofLaoculture,traditionsandartsManyevents,shows,festivalsandseminarshavebeenheldtopromoteLaoculture,traditionandarts.These activities emphasized cultural identity, the use of national language and themobilization of allcitizenstoplayamoreactiveroleinallculturalfields.TheLaofilmindustryhasbeengivenaboostwiththefollowingactivities:

(i) Arts,literatureandculturepromotioneventsheldthroughoutthecountrywereaccompaniedbythepromotionanduseoftraditionalmusicinstrumentsandtheLaotraditionalorchestra.

(ii) AdocumentaryfilmwasmadeonLaoidentity,cultureandethnictraditionsandbroadcastontwotelevisionchannels(Laotelevisionchannel3andLaoStarTV).Thefilmhasbeenfollowedupextensivepublicadvertisements.

(iii) Filmsonnativeidentity,cultureandethnicminorities’traditionhavealsobeenpromoted.(iv) Acompetitiononshortmoviesbysecondaryschoolstudentswasheldtonurturechildren’s

creativeexpressionsandfostertheiroutgoingcompetitivespirit.(v) As a follow-up to the 40th Anniversary of the establishment of the People’s Republic in

December2015,shortmoviesanddocumentariesweresubmittedincompetitionsunderthetitleofFortyYearsofBelovedMotherland.

(vi) Thenumberofgovernment-designatedCulturalVillageshasincreasedto5,144oraround61percentoftotalvillages,or11percentofvillagegroups,whiledesignatedCulturalFamiliesnowtotal810,620orsome68percentofallfamiliesinthecountry.

PreservationofculturalandbiodiversityheritageHeritage sites and activities. Conferences and other preparations have been held with the aim ofproposingnationalprotectedareasandculturalheritageareasforinclusionthelistofUNESCO’sWorldHeritage Sites. The current Lao PDR sites inscribed on theWorldHeritage list are the Town of LuangPrabang (1995), and Vat Phou and Associated Ancient Settlements within the Champasak CulturalLandscape (2001). Sitesnot yet inscribedbutareproposed include thebiodiversity-rich,HinNamNorNationalConservationForestinKhammouaneProvince,thePlainofJarsonXiengKhouangplateau,andPhouHinNamNor(stonepillarmountain)incentralKhammouaneprovince.121OtheractivitiesreportedinthisperiodincludedagovernmentceremonyforthedeliveryofeightBuddhastatuesandancientsilksins,122agiftfromtheLaocommunitylivinginFrance,tobeplacedondisplayasnationalheritageartefactsintheNationalCulturalHallandtherenovationoftheancientwallmuralsandmuseuminSisakethTemple.AMemorandumofUnderstandinghasbeendevelopedwithVietnamforatrans-boundaryWorldHeritageSitebetweenHinNamNoandPhongNhaKeBangNationalPark.

PromotionofsustainabletourismTourismpromotion.Thecelebrationofthe20thanniversaryofLuangPrabang'sinscriptionontheWorldheritage list in December 2015 was followed by many tourist activities in 2016. The tourism sector

121MinistryofInformationCultureandTourismtoprovidealistofallsitesproposedtoUNESCO122Sin:silkskirtwornbyLaowomen.

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organizedacaravanoftouristsheadingtoViengxayinHouaphanhprovince.ViengxayisconsideredthebirthplaceandspiritualhomeoftheLaoPDR,wherethePathetLaotookshelterfromthebombsdroppedonthemduringtheIndochinawarinavastlabyrinthofcaves.Thecaveaudiotourthereisthefirstofitskindinthecountry.

Table2.16.IndicatorsforOutcome2Output6

NSEDPIndicator Baseline 2018 Target2020Numberofvillagesdevelopedinto“CulturalVillages” 4,821(2015) 5,144 Numberofestablishedtouristsites(greengrowthindicatorifdisaggregated):

NationalHeritageSites(cultural/historical/natural) xx/xx/xx xx/xx/xx Naturetourismsites xx xx InternationaltouristsenteringLaoPDR,person-trips 4.2million

persontrips(2016)

3.8millionpersontrips

(2017)

6millionperson-trips

Revenuefromtourismsector USD900million Xxxxx Source:MinistryofInformation,CultureandTourism

Lowertourismrevenues.ComparedtootherASEANcountriesin2017,LaoPDR’stourismrevenuewasthelowest.ThedeclineintouristsinLaoPDRmaybeexplainedbythefollowingfactors:(i)tourismcosts,whencomparedtoothercountries,arehigherinLao;(ii)unclearproceduresatborderswithregardtoentrypermit,obtainingorextendingvisahindertourism;and(iii)althoughtherearevarioustourismsites,onlyafewareinterestingandofferawiderangeofactivities.Therefore,mosttouriststendtovisitLaosonlyasatransit/secondarydestination,ratherthanaprimarydestination.

2.7. Outcome 2, Output 7: Political stability, social peace, order, justice and transparency maintained

2.7.1. ContextStrategies toaddresssocialproblems.Efforts toachievethisoutput focusedonmobilizing thepublic,improvingcoordinationbetweenauthoritiesatalllevelsandconcernedagenciestoprevent,mitigateandsolvesocialdrawbackswithinfamilyandsociety.TheGovernment,includinglocalauthorities,thesecurityforcesandmassorganisationsconductedintensivecampaignsandothereffortstoraiseawarenessaboutgovernmentpolicies,theobligationsofbothgovernmentandcitizens,thetraditionalcustomsandvaluesofLaosociety,andthesocialproblemsthatcurrentlythreatensociety.

2.7.2. ProgressandachievementsIssuestackled.Specialattentionwasgiventoeducatecitizensondrugs,sexworkers,robbery,gambling,HIV/AIDS,andothersocialissues.Localcampaignsandmechanismstoaddressproblemslinkedtosuchissueshavebeensetup.Theemphasisisonincreasingsocietalawarenessabouttheissuesandenablingpeopletobetakeagreaterresponsibilityinaddressingtheseproblemsthemselves.Theissuesfacingthedevelopmentofyouthwereprioritized.

Socializationof lawsand their implementation. Inaddition,activitiesatnationalandprovincial levelseducated,encouragedandmobilizedcitizenstounderstandandfollowthelawsrelatingtobuildingstrongfamilies,villagesandtowns.Todisseminateinformationonlawsandtheirimplementation,thefollowingmediachannelswereusedduringthereportingperiod:(i)989radiobroadcasts intheLaoandHmonglanguagesatcentraland local levels; (ii)78televisionbroadcasts; (iii)provincialstreetspeakers (1,745times),and(iv)domesticnewsbroadcastsbytheMinistryofJustice(126times).Writteninformationwas

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disseminatedthroughthefollowingchannels:(i)400articlesthroughtheofficialKhaoSanhPathetLao(Lao News Agency), 36 news articles in Ministry of Justice’s law newspapers, 619 times in the localnewspapers,and10articlesintheKhaoSanhPathetLaonewspapers.Disseminationaboutlawsalsotookplaceinvillagesthroughmeetingsandgroupsmorethan6,000timesandinclassrooms,aslessonsforatotalof1,614hours.Thegovernmentprovided2,241free-of-chargeconsultationsonlawsforthepeople.

Activitiesinthejusticesector.Thegovernmentalsoundertooktheprintinganddistributionoflawsandjusticemagazines,andtheprintingofbooksandmanualscompilinglaws.Lawsandlegalinstrumentshavebeen posted some 2,672 times on thewebsites of theOfficial Gazette and theMinistry of Justice. Inparallel,effortsalsofocusedonresearch,inspection,andassessmentoflawsandlegalinstruments,andthedraftingandimprovementoflaws.Asaresult,22newlawshavebeenapproved,23improvedand35decreesdrafted.ThepastyearsawprogressindevelopingandcertifyingtheinternalregulationsoftheLao Bar Association, disseminating these regulations and improving the laws on the Bar Associationregardingthequalificationsoflaws.Fourtrainingcourseswereheldtotrain94lawyers.Thegovernmentreceived 126 applications concerning applications for obtaining Lao citizenship, give up citizenship orresumptionofLaocitizenship,ofwhich100applicationshavebeenprocessed.

Capacity building of the justice system. The Government continues the capacity building of the lawenforcementofficers,socialwelfarestaffandconcernedofficialstoimplementthenewlyapprovedlaws,particularlylawsrelatedtochildren,especiallytheLawonJuvenileCriminalprocedure,andtheLawonPreventing and Combatting Violence against Women and Children. More than 400 judges, judgeassistants,prosecutors,policeofficialsandsocialwelfarestaff from17provincesandVientianeCapitalCityreceivedorientationontheConventionoftheRightsoftheChildandthenewLawonJuvenileCriminalProcedures.

Courtproceedings.Thegovernmentisalsomakingeffortstomakethecourtproceedingsmoreeffective.Thenumbersandoutcomesofcaseshandledbythecourts inthetwoandahalfyearssince2016areshowninTable2.17.Thecourtshandledthousandsoflegalcases,manyofthempendingfromyearspastandwereabletoresolve4,230cases.

Table2.17.Courtproceedings Period2016-June2018Totalnumberoflegalcases(includingpendingcasesfrombefore2016)

27,464

OfwhichNumberofcriminalcases

18,895

Numberofcivilcases 8,569 Numberoflegalcasesresolved,whetherthroughsettlementorverdict 4,230

OfwhichNumberofcriminalcases

2,321

Numberofcivilcases 1,909%oflegalcasesresolved 15.4%

Ofwhich%ofcriminalcases

12.28%

%ofcivilcases 22.28%Source:MinistryofJustice

Ongoingreformsforcasesinvolvingchildren.Newchildcourtproceedingshavebeenintroduced.Thesetakeplace inacourtroomdesignedtoavoidthe intimidationofchildren.Everyone– judges,children,

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parents,andprosecutor–sitsatthesamelevelaroundatable.Inaddition,judgesalsowearlessformalclothesandusesimple languageincases involvingchildren.Theatmosphereandenvironmentare lessformal,lessintimidatingand,ultimately,child-focused.

ModelFamiliesandModelVillagesobeyinglaws.Altogether,theGovernmentdesignated55,516ModelFamilies obeying laws,which amount to some4.7 percent of all families.123 Some325 villages (or 3.8percentofallvillagesinthecountry124)aredesignatedasModelVillagesobeyinglaws.Tosolveproblemsatvillagelevelbeforetheydevelopintolawsuitsandcases,theGovernmenthastrained2,264villages(or27%ofallvillagesinthecountry)onarbitrationstrategiesandtaskstosolvedisputesatvillagelevel.

2.7.3. NextstepsTheGovernmentisprioritizingthefollowingstrategies:

(i) Continuewithpubliceducationonsocialproblemsandlaws,givingprioritytoeducatingandmobilizingyouth.ThisstrategywillneedtobelinkedupwiththeNationalYouthPolicybeingdeveloped,sinceeducatingyouthalongwillnotworkwithoutaddressingother issuesthatimpedethedevelopmentoftheirfullpotential.

(ii) Continue strengthening and reforming the justice sector, with special attention toimplementingreformsinthejuvenilejusticesystemtominimizetheharmdonetochildrenfromcontactwiththelaw.ThiswillenablechildrenwhoareinconflictwiththelawtorecoverandrealizetheirfullpotentialasproductivemembersofLaosociety.

123Thedenominatorof1,190,792totalfamiliesisusedthroughoutthisreporttobeconsistentwithoutcome2output1124Similarly,thetotalnumberofvillages(8,514)istakenfromoutcome2output1,whichreflectstheadditional7villageshaveaddedonsincethe2015census.

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3. Outcome 3: Improved Environmental Protection

“Naturalresourcesandtheenvironmentprotectedandsustainablymanaged,greengrowthpromoted,disasterpreparednessenhanced,andclimateresiliencedeveloped”

3.1. Outcome 3, Output 1: Environmental protection and sustainable natural resources management achieved

3.1.1. ContextPolicyandplanningcontext.TheForestandForestResourceManagementActionPlanoftheMinistryofAgricultureandForestryaimsto(i)Improveforestrylegislationandstrategiesandraiseawarenessoftheimportanceof foreststhroughoutsociety; (ii)contributeto increasingforestcoverageto70%,throughproductionforestallocation,regenerationofdegradedforests,andthepromotionoftreeplanting,(iii)promote village level forest allocation andmanagement, (iv) contribute to the work of theReducingEmissionsfromDeforestationandForestDegradation(REDD+)throughtradeinforestcarboncredits,(v)improve legislation concerning the Forest and Forest Resource Development Fund (FFRDF) and (vi)strengthenmanagementmechanismsintheforestrysector.


Table3.1.ProgressagainsttheNSEDPindicatorsforOutcome3,Output1

Indicator Baseline Achievements2016-to6/2018

Target

%offorestareainthecountry[1] 58%(2018) 70%EVIcomponent:Shareofagriculture,forestryandfisheriesinGDP

EVIcomponent:DisasterVictims(DeathandInjuries) as%ofpopulation

Thenumberofpeopleaffectedbydisasters(per100,000people)

168per100,000125(year?)

No.ofprojectsthatuse IEEandEIA 399projects 54projects AllocationofLandUseattheProvincialLevel 0Provinces 1Province 18ProvincesAllocationofLandatDistrictLevel 55Districts 2Districts 92DistrictsNumberofdistrictsthatcompletedtheoperationalframeworkandmonitoringframeworkalongthe13thNationalRoadandalongtheMekongRivertocreategreenandcleancities

0 5Districts 10 districts

Agriculturalproductivitystabilizationindex(fromEVI) Note:[1]ForestcoveragefromNationalREDD+Strategy(DraftasofFeb2018)asreportedintheVNRreport.Sources:MinistryofAgricultureandForestryandMinistryofNaturalResourcesandEnvironment

125Derivedfrom10,928fromMoLSW.Populationdenominatorfromcensus(6,492,228).Needspecificyearbyyearreports.

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Successfactors.Thefactorssupportingtheprogressmadeinclude:(i)alargersectorworkinggroupfornatural resources and environment at MoNRE, which has made task completion more effective andefficient; (ii) skilled officials at MoNRE Department of Planning and Cooperation and other MoNREdepartments,whichledtohigherperformance;(iii)theestablishmentofanewDepartmentofLegislation,whichhasbeeninstrumentalindevelopingnewpoliciesmoreeffectivelyandinashortertime;(iv)theextensionofbilateralcooperationandmoreeffectivebilateralwork throughdetailedactionplansandclose follow-up; and (v) thedevelopmentof theDepartmentofNaturalResources andEnvironmentalPolicy for the more effective management of strategic environmental assessment (SEA) and ESIAprocesses.PartnershipswithotherAsiancountriessuchasChina,Singapore,andThailandhavealsoledtomorebilateralagreementsonenvironment,wastemanagementandotherissues.

WaterresourcesWaterandWaterResourcesLaw.TheWaterandWaterResourcesLawwasupdatedandapprovedbytheNationalAssemblyin2017.TheupdatedLawaimstoimprovethesustainabilityofLao’swaterresources.Thelawisexpectedtoinfluencethemonitoring,managementandplanningofthecountry’svastrivers.New provisions have been added on water rights and use, including waste-water discharge permits,wetlands and water-resources protection, ground-water management, and river-basin management.Additionally, the law expands the terms and conditions of large, medium, and small-scale uses andincludesarticlesonenvironmentalflowsforhydropoweraswellasstipulationsrelatedtoirrigationuse.The process benefitted fromextensive consultationswith awide range of stakeholders, including theprivatesector.

LandmanagementandlanduseLanduseplanningandtheLandLaw.MajorprogressontheimprovementoflandmanagementresultedintheadoptionoftheNationalLandUseMasterPlanandthepreparationsfortheupdateoftheLawonLand(LandLaw),whichisexpectedtobesubmittedtoNationalAssemblyby2018.Guidelinesforlanduseclassificationhavebeencompletedandarecurrentlyatthestageofapproval.KeyproposalsforthenewLandLaw(2016-2017)areto:i)clarifybetweenlandclassificationandlanduseplanning,ii)ensurethatland use plans are both bottom-up and top-down, iii) exclude land ceilings for agricultural land, iv)introducelegallybindinglanduseplansthatclarifylandownership,andv)introducelanduseplanningprinciplesinthelaw.RecommendationstotheLandSubsectorWorkingGrouparetoapproveandissuetheLandUsePlanasalegallybindingdocumentandtosimplifythesystemofLandClassificationandLandUse Planning according to administrative levels. These recommendations include: (a) classification atnational and district levels; and (b) participatory land use planning at village level. Furthermore, it issuggestedtoenhancethelegallybindingcharacterofLandUsePlanningintherevisionoftheLandLawandincludetheclarificationoflandownershipduringtheLandUsePlanningprocess.126

Communal Land Registration and Titling. At the end of 2016, a focus group was set up to work onguidelines for communal land registration and titling (CLRT). During 2017, the group developed anddiscussedadraftoftheCLRTguidelines.Thedraftguidelinesarebeingtested,improvedandfinalizedbytheMinistryofNaturalResourceandEnvironment(MONRE).

Land concessions, land investments and quality of land concessions. The Land Concession Inventoryincludes six steps: (i) gathering of concession data, (ii) provincial consultations, iii) district-levelparticipatory mapping of concession areas, (iv) data integration into computer programs (v) finalconsultationsatprovinciallevel,and(vi)finalizationofmaps.Thedatacollectiontookplacefrom2014-2017,andthefirstmapswereavailablesincelate2017.MostoftheconcessionsareforAsiancountries,

126PleaseclarifywhetherLUPisLandUsePlanningortheLandUsePlan(ifthelatter,shouldhaveonlyoneplan)

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such as China, Vietnam, Thailand, South Korea and Japan. Chinese concessions predominate in thenorthernregionofLaoPDR,whileVietnameseconcessionsaremostdominantinthesouthernpartofthecountry.Mostoftheagreementsareforminingactivities,followedbyagreementsforforestplantations.There are sometimes discrepancies between actual concession and final implementation area. Otherissuesincludeconcessionsthatarenotworkedandarenotproducinganybenefits.

Qualityof investments.Toassessthequalityof investments,amulti-stakeholderconsultationprocesswasused,involvinggovernmentagencies,companiesandaffectedvillages(oneforumforvillageheadsandoneforhouseholds).Inforestryplantations,mosthouseholdssaidthattheywerenotcompensatedforsubstantiallandloss.Thelossoflandtoplantationswasthehighestamongtheconcessionsforthreesectors (agriculture, forestry and mining). Concerning EIA, ESIA and IEE, impact assessments wereconducted by at least 55% of the mining companies, 42% of the forestry companies and 6% of theagricultureprojects.AgricultureandminingcompaniescarriedouttheEIAbeforetheconcessionsweregranted,whilethemajorityoflandconcessionsforplantationsweregrantedfirstandanEIAwasdoneafterthelandwascleared(65%).QualityassessmentinterviewshavebeenfinalizedinthesixprovincesoftheSouthandtwopilotprovincesofLuangPrabangandXiengkhouang.

ClimatechangeRatificationoftheParisAgreement.On7September2016,LaoPDRbecamethefirstASEANcountrytoratifytheParisAgreementonClimateChange.Onthatdate,LaoPDRpassedanationallawonitsIntendedNationally Determined Contribution, which became the basis of Lao PDR’s ratification of the ParisAgreement.127 Lao PDRwas the 26th country in theworld to ratify the Paris Agreement.128 Lao PDR’sNationally Determined Contribution129 was prepared through an inclusive stakeholder consultationprocess,andwasbasedonexistingnationalplansandstrategies.Atpresent,MoNREispreparingadraftMinisterialDecisiononClimateChangeImpactAdaptationandMitigation.

EnvironmentalprotectionEnvironmentalassessments.MoNREispreparingdraftguidelinesonStrategicEnvironmentalAssessment(SEA) and detailed regulations with a public participation chapter. The SEA Regulatory Guideline isexpected to be approved by aMONREMinisterial Decision and endorsed further by PrimeMinister’sDecision,Order,orInstructionin2018.InApril2018,theresponsibilityfordeliveringtheSEAGuidelineswaschangedfromMoNRE’sDepartmentofNaturalResourcesandEnvironmentPolicytotheDepartmentofEnvironmentalQualityPromotion.AllconcessionprojectsnowhavetoconductEIAassessmentsbeforebeingimplemented,whichhelpstoprotecttheenvironmentandtherightsoflocalpeople.EnvironmentalStandardshavebeendevelopedandapproved.ThiswillhelpintheimplementationoftheGreen,CleanandBeautiful Strategy for townsand cities in LaoPDRand thedevelopmentof awastemanagementsystem;

Pesticidemanagement.AnewpesticidesmanagementdecreewasapprovedinAugust2017.TheDecreedemonstratesstrongcommitmenttomanagingagriculturalpollutionandsupportingorganicproductsasavaluechainexportopportunity.AMinisterialDecisiononLicensingofPesticidesBusinessesandPost-RegistrationPesticidesControlandManagementisscheduledforapprovalin2018.

127GovernmentoftheLaoPeople’sDemocraticRepublic,2015.IntendedNationallyDeterminedContribution.30September2015.Availablefrom:http://www4.unfccc.int/submissions/INDC/Published%20Documents/Laos/1/Lao%20PDR%20INDC.pdf

128UNFCCC:ParisAgreement-StatusofRatification.Availablefrom:https://unfccc.int/process/the-paris-agreement/status-of-ratificationAccessed21May2018.

129AscountriesformallyratifytheParisAgreementandlookforwardtoimplementationoftheseclimateactions,the“intended”isdroppedandanIntendedNDCisconvertedintoaNationallyDeterminedContribution(NDC).https://www.wri.org/indc-definition

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ForestresourcesForestcoverageandmanagement.Thedatasourceforreportingonforestcoverhaschanged,leadingtoanewcoveragefigurethatisaccurateandconsistent.Thecurrentforestarea,accordingtothenewdatasource,is58percentofthelandareainLaoPDR.130Thiswasbasedonthenationalforestresourcesfieldsurvey in 18 provinces across the country, backed up by missions to inspect the accuracy and thecorrectnessof the field survey team.TheNationalREDD+Strategy isbeing finalized,and theNationalForestReferenceEmissionLevel/ForestReferenceLevel(FREL/FRL)131hasbeenconstructedbasedonLaoPDR’snationaldefinitionofforest.LaoPDRhassubmitteditsEmissionReductionsProgramDocument(ER-PD) totheForestCarbonPartnershipFacility (FCPF).Therevisionof theForestLaw is inprogress.Themanagement of all types of forests (production, protection and conservation) has come back to theMinistryofAgricultureandForestry.

Productionforests.ThePrimeMinister’sOrderNo.15,2016,whichimposedabanonillegallogging,logtransportation,andtheexportofunfinishedwoodproducts,hasbeenhighlyeffective.Ithasallowedtheforestsectortoshifttoamoresustainablebasisbyimplementingandtestingmoreparticipatorymodelsof forestmanagement, and introduce important forest governance reforms including certificationandtimber legality assurance systems. Certification model testing has started. Fifty out of 51 NationalProductionForestAreas(PFAs)nowhavedetailedmanagementplans.In40PFAs,theimplementationofmanagementplansisunderway,focusingonforestrestoration.Duetotheban,VietnameseimportsofroundwoodandsawntimberfromLaoswentdownby90percentin2017comparedto2015.AvoluntarypartnershipagreementforForestLawEnforcement,GovernanceandTrade(FLEGT)isundernegotiationwiththeEU.

Biodiversity.LaoPDRfinalizeditsSecondNationalBiodiversityStrategyandActionPlan(NBSAP)2016-2025132andFifthNationalReporttotheConventiononBiologicalDiversity.TheSixthNationalReporttotheConventiononBiologicalDiversityisunderpreparationforsubmissionin2018.TheNBSAP,preparedaspartofLaoPDR’scommitmenttobeingasignatoryoftheConventionofBiologicalDiversity,laysoutanactionplanandstrategy,whichconsistsofsixmainstrategies:(i)protectingecosystems,(ii)valuingbiodiversity, (iii) strengthening knowledge, (iv) enhancing communication, awareness and publicknowledge, (v) implementing effective plans, projects and programmes, and (vi) climate change anddisasterriskmanagement.TheFifthNationalReportpresentstheprogressthatLaohasmadetowardsimplementingthesestrategies.ThePrimeMinister’sOrderNo5onthemanagementandinspectionofprohibitedwildfaunaandflora,issuedon8May2018,wasasignificantstepforwardincombattingillegalwildlifetrafficking.

MineralsSectorLegislation,planningandmapping.ArevisedMineralLawwassubmittedtotheNationalAssemblyinthesecondhalfof2017.AMineralSectorStrategyImplementationPlanisbeingdevelopedandestablished.ThePlanwillfocusonsustainabilityinthemineralsectorandwillbeusedasatoolforcoordinationofdevelopment partners by theMinistry of Energy andMines. A new survey onmineral resourceswasconductedwithdevelopmentpartnersupport.Asaresult,geologicalmapsofLaoPDRhavebeenupdated,andmineralmapsweredevelopedforsomeregionsofthecountry.

130NationalREDD+Strategy(DraftasofFeb2018).Toclarifyifthe58%appliesto2015or2018.ThesourceisfromJICAprovidedfortheVNRreporttotheUNGeneralAssembly.

131DepartmentofForestry,MinistryofAgricultureandForestry,2018.LaoPDR’sForestReferenceEmissionLevelandForestReferenceLevelforREDD+ResultsPaymentundertheUNFCCC.January2018.

132https://www.iucn.org/content/validation-lao-pdrs-national-biodiversity-strategy-and-action-plan

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3.1.3. ChallengesandlessonslearnedCross-cutting challenges. Lao PDR has used its resources to advance the country’s growth anddevelopment.However,theGovernmentrecognizesthatexcessiveresourceusewillunderminefuturegrowthprospects.Thechallenges in theenvironmentandnatural resources sectoraredaunting.Theyinclude,amongothers,lowinstitutionalandlocalcapacities,andinadequatefinancialmeanstomanageprotected areas and forests, unmanaged use of chemicals, and weak implementation of IEE/ESIAprocedures.TheincreaseinforeigndirectinvestmentishavinganimpactonLaoPDR’senvironmentandnaturalresources,drawingattentiontotheurgentneedforbetterprotection.Oneoftheimpactsisthedeclineofbiodiversity.Thenumberofknownspeciesthreatenedwithextinctionhasincreasedfrom115in2008,to210in2017.133

Changingresponsibilities.TheprocessofchangingresponsibilitiesbetweenMoNRE,MAFandMEMhascomplicatedsomeprocesses,asoperatingprojects,projectproposalsandconventionshadtobeshiftedbetweenministries.FollowupontheNSEDPanditstargets,andmonitoringofactivitiesbecomedifficultasdifferentministriesareinvolved.ThemandatesofdepartmentsanddivisionswithinMoNRE(national,provincialanddistrictlevels)werealsoaffectedonsomeissues.TheprocessoffinalresponsibilitieswithinMoNREwasfinalizedonAugust2017,withtheassignmentanddistributionofnewdepartmentsandnewstaffinMoNRE.Communicationwithsub-sectorworkinggroupsandinternationalpartnersisstilldifficultandprocesseswithindifferentdepartmentsaretime-consuming.

M&Eindicators.TheindicatorsoftheEighthNSEDPanditsM&EFrameworkwillneedtobereviewedasthesearecurrentlynotadequatelyrepresentativeofMoNRE’swork.Anadditionalthreetofourindicatorsonwater,hydrology,pollutioncontrol,environmentalmanagementfromtheMoNREFive-YearPlanmaybeneeded.

PrivatesectorandNGOinvolvement.Public-PrivatePartnershipsandNGOdevelopmentinLaoPDRneedto be fostered, improved, and supported by the Government. In particular, the operation of privatebusinesseshastobesupported,togetherwithcreditfacilitiesandstructuredguidelinesnecessarytoopenabusiness.ThiswillallowLaoPDRtodevelopprocessedgoodsratherthansellonlyrawmaterials(wood,rice, etc.). Lao PDR needs its own companies to develop goods needed in the country and lessen itsdependenceonimportsfromVietnam,ThailandandChina.

Table3.2.PerformanceindicatorsmonitoredbyMinistryofNaturalResourcesandEnvironment# Indicator Achievement

asof6/2018Target2016-2020

LAND

1 No.ofProvincesthathavelanduseplans 1 18Provinces2 No.ofDistrictsthathavelanduseplans 0 92Districts3 No.ofVillagesthathavelanduseplans 112 3,334Villages4 No.oflandtitles 209491 400,000Titles5 No.oflandregistration 421877 5000006 Improvethemethodoflandmapdataforlandtitles 35213 300,000Titles7 Improvetheinformationsystemonlandrentingtitles 636 500Contracts8 Haveadigital/PC-basedsystemforlandtitleregistrationandland

registration311557 500000

9 Numberofdistrictsthathavepricemonitoringforland 15 100districts10 NationalLandLegislationisdeveloped FinalDraft finalized11 NationalLandUseMasterplan Draft finalized

133InternationalUnionforConservationofNature(IUCN),2016.TheIUCNRedListofThreatenedSpecies.14September2017.http://cmsdocs.s3.amazonaws.com/summarystats/2017-2_Summary_Stats_Page_Documents/2017_2_RL_Stats_Table_5.pdf

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12 LandLawandLandUseLawareimproved Draft finalized13 CentralCommitteeofthePoliticalPartyonLandAffairsisestablished Approval finalized WATER

1 NumberofWatershedsthathaveamanagementcommittee 2 10watersheds2 Reportsonwatersheds 3 10watersheds3 ManagementPlansforeveryWatershed 2.5 10watersheds4 NumberofWaterQualityCheckPoints 34 2005 NationalGroundWaterReport ? 16 ImplementationReportonManagementofWatershedsand

Groundwater? 12

7 Studyonproblemsinwaterquality(notinresponsibilityofMoNRE) 0 28 DevelopmentofregulationonManagementofWaterResources 0 79 GuidelineonIntegratedManagementofWaterResources 910 NationalStrategyonWaterResources FinalDraft Approval11 Improvethewaterresourceslaw Approved Approval12 NationalDemonstrationSiteaboutintegratedManagementofWater

Resources0.3 1

13 ResearchCenteronwaterresources 114 CenterforManagementandWaterQualityCheck-up 0 115 Haveasystemtoabsorbinformationonwaterresourcesinthe

medium-sizedcentresFinalized finalized

16 ReportonWatershedManagementPlanstobeincludedintoMoNRE5-YearPlansandNSEDPPlans

0.33 7 watersheds

17 Reportofclassificationofwaterwaysandreservoirsthroughoutthecountry

Approval

18 MappingofWaterQuality Approved Approval DISASTERMANAGEMENT

1 LawonHydrology,MeteorologyandEarthquakes 0.8 Finalized2 FinalizeLegislationsunderLaw 0 Finalized3 No.ofMeteorologystationsthathavebeenimprovedandareupto

date33 52 areas

DISASTERMANAGEMENT 4 No.ofnewMeteorologyStations 0 155 No.ofearthquakestationsthathavebeenimproved 2 26 No.ofnewearthquakestations 1 57 No.ofnewHydrologystations 0 58 No.ofhydrologystationsthathavebeenimproved 10 349 No.ofnewhydrologystationsREPEATWITH7 20 3610 FinalizedNationalWarningCenter 0.8 111 NumberofWarningCentersforFlooding 2 512 IntegrationoftheDepartmentofMeteorologyandHydrologyat

BachelorDegreeinHigherLevelandMiddleClassFinalized ?

13 No.ofStudentsthatfinalizethestudiesinHydrologyandMeteorologyonBSc.Level

68People

POLLUTIONCONTROL

1 AgreementonStrategicEnvironmentalImpactAssessment 1 Finalized2 Numberofprovincesthathavedevelopedacomprehensiveprovincial

environmentalmanagementplan6 6

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3 Numberofprovincesthathavedevelopedadistrict-levelenvironmentalmanagementplan

2 88districts

4 NumberofprovincesthathavebeenpromotedtouseISPinsocio-economicdevelopmentplan

2 7

5 ProvincialEnvironmentalManagementPlanImplementationReport(7targetprovinces)

0.17 18reports

6 StandardsonGreen,Clean,Beautifulconcept 0.5 Approval7 RecommendationsonGreen,Clean,BeautifulConcept 1 Approval8 NumberofdistrictsthathaveaGreen,CleanBeautifulConcept 1 109 NumberofdistrictsbeingapprovedasGreenCleanBeautifuldistricts 1 1010 EnvironmentalNewsletter 6 1011 ReportonWorldEnvironmentalDay 3 512 Thenumberofschoolsthathavebeendisseminatedandunderstood

inenvironmentalissuesinareasthatareatriskofenvironmentaldegradation(bydistrict)acrossthecountryornearprotectedareas.

1 118Schools

13 Thenumberofvillagesthathavebeendisseminatedandunderstoodinenvironmentalissuesinareasthatareatriskofenvironmentaldegradation(bydistrict)acrossthecountryornearprotectedareas.

1 104villages

14 Assessmentoftheuseofexperimentalmodelsforthebasiceducationofbasicenvironmentalkindergarten,primaryandsecondaryeducation

1 1

15 Improvebasiceducationforbasicenvironmentalkindergarten,primaryandsecondaryeducation,accordingtotheassessmentreport

1 Finalized

16 Thenumberofkindergartenbeingpilotedusingimprovedenvironmentalknowledge.

0 11

17 Thenumberofprimaryschoolsbeingpilotedusingimprovedenvironmentalknowledge

0 18

18 ThenumberoflowersecondaryschoolsbeingtestedusingamodifiedEnvironmentalKnowledgeBasemodel

0 2

19 TheMinistryofEducationapprovedtheuseofbasiceducationforkindergarten,primaryandsecondaryeducationacrossthecountry.

0 Approval

20 Recommendationsonenvironmentaltechnology 0.5 Approval21 FinalizedtheManagementPlanforWetlandsfollowingRAMSAR 1 2areas22 NationalReportonStateofEnvironment 0.5 2 ENVIRONMENTALPERFORMANCEOFINVESTMENTPROJECTS

1 ThenumberofdistrictsthatbuildanEnvironmentalMonitoringUnit(EMU)

3 28districts

2 Numberofreportsontheimplementationofthedevelopmentprojects

0 5reports

3 No.ofEIAcertificatesissued 56 80 projects4 Decree/LawonEnvironmentalandSocialImpactAssessments 1 Approval5 TechnicalGuidelinesforWritingEnvironmentalandSocialImpact

AssessmentReport(SPE)0.5 Approval

6 TechnicalGuidelinesforWritingaBaselineSurveyonEnvironmentalImpacts(BSWs)

0.5 Approval

7 TechnicalGuidelinesforReviewofEnvironmentalandSocialImpactAssessmentReport(SPE)

0.5 Approval

8 CreatetechnicalguidelinesforreviewingtheinitialEnvironmentalImpactAssessmentReport(BSS)

0.5 Approval

9 Standardsonenvironmental,socialandenvironmentalobligationsfordevelopmentprojectsinthefieldofagricultureandforestry

0.5 Approval

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10 Establishstandardsforenvironmental,socialandenvironmentalobligationsforenergysectorinvestmentprojects

0.5 Approval

11 Developguidelinesforassessingthesocialandenvironmentalimpactsofanenergysectorinvestmentproject

0.5 Approval

12 CreatetechnicalguidelinesonthewritingandreviewoftheinitialstudyreportonEnvironmentalImpactsandEnvironmentalandSocialImpactAssessmentforMiningProjects

1 Approval

13 CreatetechnicalguidelinesonthewritingandreviewoftheinitialstudyreportonEnvironmentalImpactsandEnvironmentalandSocialImpactAssessmentsfortheElectricityProject

1 Approval

14 Createtechnicalguidelinesforwritingandreviewingtheinitialeducationreportsonenvironmentalimpactsandenvironmentalandsocialimpactassessmentsforroadconstructionprojects

1 Approval

15 CreatetechnicalguidelinesonreviewingenvironmentalandsocialimpactassessmentsforAgricultureandForestryProjects

0.5 Approval

16 Handbookaboutmanagingaccountingandfinancialmanagementguidelinesfordevelopmentprojects

0.5 Approval

17 EnvironmentalCertificatesofInvestmentProjects(EIA)linkingMinistryofPlanningandInvestment,MinistryofEnergyandMines

Source:MinistryofNaturalResourcesandEnvironment

3.1.4. NextstepsTheGovernmentofLaoPDRisprioritizingthefollowingstrategies:

(i) Strengtheningthegovernanceofthenaturalresourcesectors.Reversingdeforestationandforest degradation, and reversing biodiversity loss are national priorities for Lao PDR. Thecapacity to manage forests needs to be strengthened, including for ensuring strongeroversight arrangements over salvage logging, enforcing the ban on illegal timber trade,combatingpoachingandwildlifetrafficking,andpreventingillegalmining.

(ii) Strengthening implementation of existing national policies and action plans relating toecosystemsandnaturalresources.TheseincludetheEighthNSEDP2016-2020,Vision2030,NationalClimateChangeStrategy(2010),ForestryStrategytotheYear2020oftheLaoPDR(2005),RenewableEnergyDevelopmentStrategy(2011),SustainableTransportDevelopmentStrategy (2010), Climate Change Action Plan of Lao PDR for 2013-2020 (2013), NationalAdaptationProgrammeofAction(2009),theSecondNationalCommunicationtotheUNFCCC(2013)andtheNationalREDD+Strategy(tobeapprovedbyJune2018).

(iii) Promoting private sector involvement and community benefit sharing. Projects affectingprotectionforestsarerequiredtocontributefundsfornaturalresourcemanagement.Theseincludehydropowerprojects,whicharerequiredtocontributeonepercentofthetotalvalueof the sale of the electricity per annum. TheGovernment has also established the ForestResource Development Fund from various sources, which needs to be made financiallysustainable.Equally,thegovernmentwithsupportfromdevelopmentpartnerswillneedtocontinue expanding existing initiatives, such as payment for environmental services andpaymentfrompreservingforestsforcarbonsequestration(e.g.,REDD+).

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3.2. Outcome 3, Output 2: Preparedness for natural disasters and risk mitigation achieved

3.2.1. ContextLaoPDRishighlyvulnerabletotheimpactsofnaturalhazardsandclimatechange.LaoPDRisexposedtoarangeofnaturalphenomena,includingtyphoons,floods,landslides,droughts,strongwinds,locustoutbreaks,aswellassmallscaleearthquakesinthenorthernpartsofthecountry.Thecountryisseeingan increased frequency and intensity of extreme weather events, such as droughts and floods. ThemajorityoffloodsoccurinthecentralandsouthernpartsofthecountryalongtheMekongplain.From1990 to 2015, Lao PDR had 21 floods and storms,with themore severe ones affecting over 500,000people.134 Reducing the impact of these disasters on the population will require effective disasterpreparednessandriskreduction.

DisasterManagementLawandClimateChangeDecree.ADisasterandClimateChangeLawwasdraftedin2016,andin2017thiswassplitintotwoseparatelegalinstruments–aDisasterManagementLawundertheMinistryofLabourandSocialWelfare,andaClimateChangeDecreeundertheMinistryofNaturalResourcesandEnvironment.Intheprocess,theresponsibilitiesandscopeofworkwillneedtobeclarifiedbetweenthetwoministriesofMoNREandMinistryofLabourandSocialWelfare.

3.2.2. ProgressandachievementsResilienceandearlywarning.ThemainachievementsunderthisOutputincludethepromotionofclimate-resilient farming practices, and greater attention to disaster risk management.135 The Government ispromoting136climateresilientfarmingsystemsforimprovedfoodandnutritionsecurityamongthemostvulnerable communities. The goal is to initially work with farmers of six provinces (Phongsali,LuangNamtha,Oudomxay,Houaphane,SavannakhetandSaravane)improvetheirproductionsystemsonthebasisofinformationonclimate,adapttheirtechniquesaccordingly,enhancevaluechains,andprovidethemwithbetteraccesstomarkets.

3.2.3. Challengesandlessonslearned2018disasters.LaoPDRremainshighlyvulnerabletoclimate-relateddisasters.Frommid-2018,LaoPDRwas hit by two tropical storms, Sontinh and Bebinca. Excessive precipitation from TropicalStormSontinhcontributedtothecollapseofXePian-XeNamnoyhydropowerdaminAttapeuprovinceon23 July, causing flash flooding and widespread damage. The sustained rainfalls from the stormshave resulted in widespread flooding. All provinces have been affected, including an estimated 116districtsand2,400villages.Asof21September2018,therewere55reporteddeaths,around100peoplemissing, and 647,000 affected. Around 17,000 people were evacuated and 1,772 houses destroyed.Approximately150kmofnationalandprovincialroads,aswellas133kmofdistrictand350kmofruralroadsand47bridgeshavebeendamaged.Moreover,around100,000hectaresofpaddyfieldhavebeendamaged,andalargenumberoflivestockhasbeenlost,including17,000largeanimalsand79,000poultry.Irrigationsystemshavebeenheavilydamaged.ThemostaffectedprovinceswereAttapeu,Khammouane,

134EmergencyEventsDatabaseEM-DAT,CentreforResearchontheEpidemiologyofDisasters(CRED),Availablefrom:http://www.emdat.be/Accessed21May2018.

135Needmorespecificdetails136ForpossiblefundingbytheGreenClimateFund.

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Savannakhet,ChampasackandOudomxay.137Thesefloodsof2018haveshownthatexistingearlywarningsystemsarenotadequateandstillneedtobestrengthened.

3.2.4. NextstepsPost-DisasterNeedsAssessment.APost-DisasterNeedsAssessment(PDNA)ledbytheGovernmentwaslaunchedon24September.ThePDNAprovidesaplatformfortheinternationalcommunitytoassist inrecovery and reconstruction. It comprises a Damage and Loss Assessment, a Human Recovery NeedsAssessment and a Recovery Framework. The findings, scheduled to be presented on 31October, areexpected to inform theNational Assembly, theMid-TermReview of 8thNSEDP and the Round TableMeeting.A PDNASecretariat has beenestablished at theMinistry of Labour and SocialWelfare,withMinistryofForeignAffairsandMinistryofPlanningandInvestmentasco-leads.138

Post-disasterrecovery.TheGovernmentwillneedtoprioritizepost-disasterrecoverytohelprestorelivesand livelihoods. The implementation of the PDNA recommendations will need to be supported bydevelopment partners. Information Bulletin No.2 (dated 21 September 2018) from the Lao PDRHumanitarianCountryTeamnotedthattheWorldBank,theUNTeamandtheEuropeanUniontogetherwithINGOswouldbesupportingtheGovernmentacrossseveralsectors,withcountry-widegeographicalscope.Clearidentificationofneedsshouldbepreparedwitharecoveryframeworkandstrategy.ThePDNAshouldalsoprovideanindicationofhowthedisasterhasaffecteddevelopmentgainsduringthisNSEDPperiod.ThePDNAreportshouldalsocontainrecommendationsonactionstoenhancepreparednessandresilience,giventhatfloodingnowaffectsLaoPDRfrequently.

3.3. Outcome 3, Output 3: Instability of agricultural production reduced

Strategies.Sincetheagriculturesectorishardesthitbyclimateevents,agriculturalstabilityislinkedtoclimatechangeadaptationanddisasterriskreduction.LaoPDRhasdevelopedandimplementedanumberofpoliciesandstrategiestoensurenationalfoodself-sufficiencyandstableagriculturalproduction.TheseincludetheAgricultureDevelopmentStrategyto2015andVisionto2030,139theNationalRiceProductionforNationalFoodSecurityStrategy,140andtheDevelopmentStrategyoftheCropSector2025andVision2030(adoptedMarch2015).Prioritiesinclude:

(i) Thepromotionofclimate-resilientagriculturalpractices(agroecology,participatoryland-useplanning),

(ii) ThepromotionofanAgricultureInnovationSystemtopromotesustainablenicheagricultureproductionforthenichemarkets,

(iii) The development of technological capacities to improve and maintain agriculturalproductivityandinnovate,includingresearchintoriceandplantseedsandanimalbreeds,andnewtechnologiestoupgradeproductivity,

(iv) Theallocationofagricultural landinthewholecountryandtheallocationof landareasforcultivationoffoodcropsandcashcrops,basedonlocalconditions,naturalresources,culturesandlocalknowledge,

137UnitedNations,2018.LaoPDR:Floods.HumanitarianCountryTeamInformationBulletinNo.2(asof21September2018).Vientiane:UnitedNationsOfficeoftheResidentCoordinator.

138UnitedNations,2018.LaoPDR:Floods.HumanitarianCountryTeamInformationBulletinNo.2(asof21September2018).Vientiane:UnitedNationsOfficeoftheResidentCoordinator.

139https://www.asean-agrifood.org/?wpfb_dl=81140FromtheRTMreport.Pleasegiveareference.

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(v) The sustainable management of farming systems, resources and water resources, andallocation,

(vi) Strategiessuchasricestorageorwarehousestoensurefoodsecurityintheeventofnaturaldisastersandfoodcrises,and

(vii) A risk reduction fund tohelp alleviate theburdensof production costs for farmersduringagriculturalproductpricefluctuations.

Private sector investments. Realizing quality private sector investment for agriculture is a priority.Dialoguehastakenplaceonimprovingthequalityofprivatesectorinvestmenttoalignthiswithnationalgoals,specifically intheareasofcontract farming,agro-biodiversity,pesticideuseandmono-cropping.Some civil societymembers of the SectorWorkingGrouphave publishedVoluntary Commitments forResponsible Agribusiness in Lao PDR,141 following the 2016 OECD-FAO Guidance for ResponsibleAgricultureSupplyChains.142

Investinginskills.Youngpeopleinvolvedinagricultureneedtobeprovidedwithgreateropportunitiesfor learningandapplyingadvancedskills.This is thekeytoaddressingrural tourbanmigrationandtopromotingmoreadvancedtechnologiesandmodernizationofagricultureinruralareas.

141http://www.laolandinfo.org/wp-content/uploads/2011/12/BOOKLET-ENG-1.pdf142OECD/FAO (2016), OECD-FAO Guidance for Responsible Agricultural Supply Chains. Paris: OECD Publishing. http://dx.doi.org/10.1787/9789264251052-en Available from: https://mneguidelines.oecd.org/oecd-fao-guidance.pdf

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4. Cross-Cutting Outputs

4.1. Cross-Cutting Output 1: Public governance and administration enhanced

Table4.1.ProgressagainstgovernanceindicatorsintheEighthNSEDPM&EFramework

8thNSEDPM&EFrameworkIndicators(Governance) NSEDP

Baseline(2015)

MTR(2018)

136 LawspassedbyNationalAssemblythathaveimplementationregulationsinplace

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137 Numberofgrievancesfromcitizensresolvedthroughcourtsandvillagemediationunitsusinglegalaidservices

138 PercentageofacceptedrecommendationsoftheSecondUniversalPeriodicReviewCyclethathavebeenimplemented

151 PercentageofDistrictsmeetingthecriteriaof3Builds(SamSang)District[1] 51 75152 PercentageofDistrictshavingcompletedtrainingfortherolloutofthe3

Build(SamSang)51 75

Notes:TheindicatorsonwomenarereportedunderOutcome3Output3.[1]Onthedistrictsmeetingthecriteriaof3Builds,informationontheextentofmeetingthesecriteriaisnotavailable

4.1.1. Governmentstructures,administrativeandlegalframeworks

ProgressandachievementsLegalandadministrativeframeworks.UpdatestotheConstitutionandlawspromulgatedin2016wereprogressively applied during 2017. These updated laws included (i) the Establishment of People’sProvincialAssemblies,(ii)theLawonGovernment,and(iii)theLawonLocalAdministration.Theseupdatestotheadministrativeframeworkandlegalframeworksreflectgovernmentpoliciesandthelessonslearnedfrom the piloting of Sam Sang policy, and help to clarify the roles, responsibilities and mandates ofgovernmentandsub-nationaladministration.TheLawonLocalAdministrationprovidesregulatoryand/orlegalframeworkforadministrativedecentralization.Thelawprovidesguidanceregardingthefunctionsthathavebeenassignedtolocaladministrations.Followingresearch,regulationswereimproved,suchasthoseongovernment,localadministration,thelawoncivilservants,theDecreeonreligionmanagementandprotectioninLaoPDR,theDecreeonnon-profitassociations,andthePrimeMinisterialOrdinanceonestablishmentofmunicipalities.

Decentralizationprocess.TheGovernmenthasestablishedanInter-MinistryCommittee(IMC),whichwillfurtherfacilitatethedecentralizationprocess(SamSang)andstrengthenamoreintegratedapproachtoplanning,financeandsub-nationaladministrationimprovementsthatunderpinbetterservicedeliverytolocalcitizens.TheIMCalsoprovidesanationallevelplatformtooverseetheimplementationoftheDistrictDevelopmentFundanditsfullalignmentintonationalsystems.Decentralizationisfurtherdiscussedinthenextsection.

Government structure reforms. An assessment was conducted by MoHA of the Government’sorganizationalstructureateachlevel.Basedonthis,changesweremade,suchastheestablishmentofnewministries,themergingofsimilarfunctionsacrossministries,andthereassignmenttolineministries

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of certain functions attached to thePrimeMinister’soffice (e.g. thePovertyReduction Fund intoTheMinistryforAgricultureandForestry).

OneDoorServiceCentres.Re-engineeringoftheOneDoorServiceCentreconceptisongoingwiththeaimof improving access, transparency and accountability of public service delivery.OneDoor ServiceCentresrepresentanopportunityforgovernmentagenciestorespondtocitizens’needsforpublicserviceswithacoordinated,holisticapproachtodelivery.TheCentresshouldfurtherfacilitatebothdomesticandinternational investments’ application processes, as well as services in the following sectors: (i)administration and civil registration (birth certificates, marriage certificates); (ii) public works andtransport(drivinglicense,vehicleregistration);(iii)landregistration;and(iv)tax.Wellimplemented,theseinitiativescantransformagenciesfromseparateorganizationsthatdeliveraccordingtoserviceboundariesintocitizen-centricagenciesthattakeastrategicapproachtosupportingpeople’slife.

ChallengesandlessonslearnedThe countrywide application of policies, regulations, roles and responsibilities relating to legal andadministrativeframeworks,isaformidableundertaking,whichisslowandpotentiallybudgetconsuming.Sustainedcapacitybuildingprogrammesareneededforlocalstafftobeabletounderstandandapplynewregulationsintheirwork.Thestatebudgetforactivitiessuchasdisseminationandworkshopsislimited.While administrative decentralization has taken place in an early stage of process; many assignedfunctions remain unfunded due to budget deficits faced by the Government. Reaching a commonunderstanding on Sam Sang/ decentralization/ devolution among differentministries requires furtherefforts. Theweakness in cross-sector collaboration is a systemic impediment to better and joined-upservices,asituationevidentintheoperatingchallengesintheOneDoorServiceCentremodel.

NextstepsLegalandadministrativeframeworks.Onlegalframeworks,aneffectiveandefficientprocessneedstobedevelopedforrapidandconsistentapplicationofnewlaws/regulationsandcompliancewithnationalpolicies, legal rights and duties. On administrative reform, a formal recourse or appealmechanism isrequired for citizens versus inadequate administrative practices. The low level of domestic revenuecollectionrestrictsthebudgetsavailableforlineministriestoimplementtheirrolesandresponsibilities.Continuedeffortsareneeded to strengthenpublic financialmanagement,with support toMOF,StateAuditOfficeandNationalAssemblyontheirbudgetoversightcapacity.

Decentralization process. Administrative decentralization will need to be linked with fiscaldecentralization.TheSamSangprocessrequiresenhancedfiscalrelationsandsimple,effectivefinancialmanagementprocessesbetweenthenationalgovernmentandlocaladministrations.

Organizationalrestructuringwillcontinuetobeapriority.Accordingly,effortswillcontinuetoencourageministriesandgovernmentalorganizationstoimprovetheirorganizationalstructurerelevanttotheirrolesandresponsibilityespeciallyatdepartmentlevel,accordingtothePrimeMinisterialDecreeNo.03/PMand to revise job descriptions, for example, through a gap analysis. Appropriate structures will bedevelopedforprovincialanddistrictlevels,moreinlinewiththeirrespectivemandatesandfunctions.

4.1.2. Decentralizationandlocalservicedelivery

ProgressandachievementsStrengthening districts. Under the Sam Sang devolution initiative, which was officially extendednationwidetoall148districts,localadministrationsarebeingassignedmoreresponsibilitiesandauthorityto be more proactive and self-reliant in local development and poverty reduction. The DistrictDevelopmentFund (DDF),whichwas introducedby theMinistryofHomeAffairs in2006,was initially

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designedasadistrictcapitalfinancingmechanism.Theobjectiveoftheup-dated(2018)DDFinvestmentfundistostrengthendistricts’owncapacitytodeliverkeybasicservices(asperSamSangnationalpolicy)andhelptoacceleratetheimplementationoftheSDGsincludedinProvincialandDistrictSocio-EconomicDevelopmentPlans.TheFundprovidesdistrictswithfinanceandtechnicalsupporttostrengthendistrict-level public financial management processes so that districts can achieve a “comprehensive district”effectivenessratinginaccordancewiththeSamSangpolicy.

ChallengesandlessonslearnedThe successful expansion of Sam Sang to all 148 districts presents formidable challenges relating toorganisationalefficiency,performanceofpublicservants,andbudget.

NextstepsContinued Sam Sang implementation. An action plan and indicative budget scenarios should bedevelopedforrollout/implementationofrelevantaspectsofSamSang.ThepositivelessonsinrelationtoDDF have been learned and are being applied, including a simple and effective public expenditureframework,amodelforblendedfinancingoflocalservices(co-financingfrommultiplesources),appliedcapacitydevelopmentinsupportofSamSangimplementation,aneffectivemodelforbudgetassignmentsystemtodistricts,andaccountabilitytolocalcitizensthroughcitizensurveys.

4.1.3. PublicPersonnel/humanresources

ProgressandachievementsCivilservicemanagementimprovements:

(i) Regulationsandimportantdocumentsrelatedtocivilservicemanagementwererevisedanddeveloped;forexample,thelawoncivilservantsapprovedbyNA2015andpromulgatedin2016.

(ii) Inorder todelegatemore responsibilities to sectorand local level, according toSamSangpolicy,MoHAproposedthatthegovernmentassigndirectresponsibilityforninetasksincivilservicemanagementtoministries-organizationsandlocallevelentities.

(iii) Thedecreeonadministrativepositions,thedecreeontechnicalpositionforstaff/civilservantsandtheinstructionfortheimplementationofthosedecreeswerecompleted.

(iv) ThePrimeMinisterialOrdinanceNo.55/PM(2016)onmanagementmeasuresandpaymentofsalary,allowanceandothersupport,especiallytheimplementationofthemechanismtocheck the number of public servants, was disseminated for implementation toministries,organizationsandlocallevels.

(v) ThePrimeMinisterialOrdinanceNo.09/PM(2017)regardingtheeffectiveuseandsavingsofthestatebudgetwasdisseminated,andisbeingapplied.Thisinvolvedanalyzingallrelevantregulationsregardingtheremunerationofstaff/civilservantsandrevisingtheremunerationtomatch with the actual conditions. A study was completed for the development of thesystemtolinkthenumberofcivilservantswiththepayrollsysteminthesameaccount.

(vi) PreparationofSMARTcardsforcivilservantswascarriedout,withlinkstothenationalpublicservices’ Personnel Information Management System (PIMS). The use of PIMS is beingexpandedtoprovinceanddistrictlevel.

Performanceappraisalanddevelopmentofcivilservants:(i) ThegovernmentissuedandpromulgatedtheDecreeoncivilserviceperformanceappraisal

andtheDecreeonstaff/civilservanttraininganddevelopment.(ii) Adraftstrategyhasbeeninitiatedoncivilservantdevelopment2016-2025.(iii) Draftinstructionshavebeenpreparedonplanningforcivilservantstraininganddevelopment.

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(iv) Adraftdecreewasdevelopedonthecodeofconductforstaffandcivilservants.(v) A training curriculumwas assessed and developed for each level, such the curriculum for

trainingofhighrankingofficialsattheDirectorGenerallevelandotherlevels.(vi) Trainings provided include those on public administration at central and local level; and

trainingonplanning,budgetingandfinancialmanagement.(vii) PreparationsweremadetoconductresearchonthegovernancesystemofLaosfrom1975-

2015.

ChallengesandlessonslearnedPerformanceofcivilservants.Giventhelimitedbudget,betterservicedeliverywillneedtobeachievedthroughgreaterproductivity. Inturn,thisneedseffectivemechanismsforaccountability,appraisalandcapacity development. An efficient and transparent system for effective performance appraisal isrequired,tiedtoaccountabilityandcodeofconductofpublicservants.

NextstepsCivilservicemanagement. Improvementstothecivil servicewillcontinueatcentraland local levelbyimplementingthelawoncivilservantsandbydevelopingbylawsandinstructionssuchasdecreesonjobdescription, codeof conduct,and themanual for civil servicemanagement.Thedraft strategyoncivilservant development 2016-2025 will be completed and implemented. The development of thecurriculum/trainingprogrammeforcivilservantswillcontinueandwillbeimplemented.

4.1.4. Legalsector,ruleoflawandtheUniversalPeriodicReview

ProgressandachievementsLegal sector. Important changes in the legal sector have been introduced following a Constitutionalamendment and new/revised laws approved by the National Assembly in December 2015 andpromulgatedin2016.ThesehavebeenimplementedbytheGovernmentandadministration.ManyoftheactivitiesenvisagedunderthenationalLegalSectorMasterPlan(LSMP)havebeen,orareintheprocessofbeing,implemented.Approximately109lawshavebeenadoptedbytheNationalAssembly.Courtsandprosecutors’officeshavebeenrestructuredorexpandedwithnewoffices.Inaddition,planstoestablishanadministrativecourtareunderwayandtheVillageMediationUnits(VMUs)havebeenestablishedinmostvillages.

Thecodifyingofthecriminalandcivilcodesisasignificantexercisethatmarksacriticaljunctureinthelegalsectorevolution,asthecodesareexpectedtointroducenewlegalprovisionsinbothspheresgivingrisetosignificantchanges inthe legal landscape. Importantly, internationalobligationswillneedtobeincorporatedintodomesticlaws.Remarkableprogresswasmadein2017includingtheadoptionofthepenal code; the amendment of the law on lawyers; the development of the legal aid and legal funddecrees;theadoptionofthelawontreaty;andtherevisionofthelawonjudgmentenforcement.Theselegislativedevelopmentsaresteadilymovingthecountry’slegalreformagendaforward.

Legalaid.Thelegalaiddecreewasinformedbythecitizens’surveyledbytheMinistryofJustice(MoJ),whichwasthefirstinthejusticesector.Thesurveyhassetapositivetrendinrecognizingtheneedtohavereliableandcurrentdatatodraftpragmaticlaws.Effortshavebeenmadetoexpandnationwidecoverageoflegalaidservices.TheLaoBarAssociation(LBA),whichleadstheamendmentofthelawonlawyersinLaoPDR,hascontinueditseffortstoexpandandstrengthenthelegalprofessioninthecountry.Therearenowsevenregionalprovincialbranches(Oudomxay,Xayabouly,Xiengkhuang,VientianeCapital,Xekong,SavannakhetandChampasak)withnine legalaidoffices. Severaladministrative reforms to strengthenaccountability, including the restructuring of the internal administrative frame work of the Lao BarAssociation,havebeencompleted.

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Tools.Thedatabaseinstalledtomonitorjudgmentenforcementsandthepilotcasemanagementsystembeingintroducedareexpectedtomakethedeliveryofjusticeservicesmoreefficientandeffectiveoncecompleted.Thecasemanagementsystem(CMS),inparticular, isexpectedtoreducethetimetakentotransferfilesfromcourthousesfromthesub-nationalleveltothecentrallevel.

Anti-corruption.LaoPDRhasinitiatedasuccessfulanti-corruptioncampaign.LaoPDRiswitnessinganewlevelof transparency.This isshownbythereleasedreportsof theState InspectionAuthority (SIA),aninternal government watchdog, on the use of state funds by ministries and provincial offices, bycorruption-relatedarrests,bytheSIAnationwideauditofassetsofofficials.

UniversalPeriodicReview.TheGovernmenthasaccepted116ofthe196recommendationsmadebytheWorkingGroupontheSecondUniversalPeriodicReview(UPR)in2015andisaddressingimplementationgaps in the human rights instruments. MOFA is leading the finalization of the action plan forimplementation of the UPR. Stakeholders’ consultations are ongoing. This included the Sub-sectorThematicWorkshopontheupdateoftheUPRactionplan,whichwasorganizedinJuly2017withvariousstakeholdersincludingdevelopmentpartners,civilsocietyandgovernmentofficials.

ChallengesandlessonslearnedTowards a Rule of Law state. Steady progress has beenmade towards establishing Rule of Law, butsignificant challenges remain. The expansion of legal services is constrained by human and financialfactors,suchasthecostsofrunninglegalaidfacilities,insufficientnumberofqualifiedlawyersandjudges,andlimitedunderstandingaboutaccesstojusticeamongmenandwomen.On-goingsectorchallengesincludethelimitedlegalawarenessandknowledgewithinthelegalsectorandadministration,andamongcitizensingeneral,especiallytounderstandthesignificanceofaRuleofLawstate.Accesstojustice,andfairanduniversalapplicationofthelaw(EqualitybeforetheLaw)requirespolitical leadership,culturalshifts,establishmentofethicallegalinstitutions,capacitydevelopment,transparentandethicalpractices,andaccountableprocessesandpersonnel.Abodyofinformedlegalanalysis,judgementsandprecedentcasesisnascent,andwillrequireongoingsupporttobecomeabodyofknowledge,whichisthefoundationstoneofaRuleofLawstate.LessonsfromthefirstUPRcyclerevealedtheneedtohaveawell-elaboratedactionplantofollowuponUPRimplementation.

NextstepsEnhancinglegalcapacity.Goingforward,thefollowingwillbeprioritized:

(i) Strengthening legal capacity and ethics amongst lawyers and establishing an accountablemechanismtoensureunbiasedjudgements,

(ii) Enhancing collaboration with stakeholders (Government agencies, development partners,INGOs/CSOs)intheimplementationandmonitoringofthelegalsectoractionplan,

(iii) ReviewingtheLegalSectorMasterPlan(LSMP)andproposeamendmentsalignedwiththecurrenttrendofthedevelopmentoftheruleoflaw,

(iv) OrganizingaNationalForumontheRuleofLawfordeepenedunderstandingandawarenessamongstakeholders,

(v) AligningtheRuleofLawwithinternationalstandards(e.g.InternationalLawonTreaties),(vi) Takingasystematicapproachtoaddressanti-corruption,(vii) Continuingtostrengthenthejudicialsystem,includingconsiderationoftheestablishmentof

administrativecourtanddevelopingtheadministrativecode,(viii) Developinganamendmenttothelawonjudgmentenforcementin2019,(ix) Systematicallydevelopingan insolvencymechanism to improve thebusinessenvironment,

and(x) Combattingtrans-nationalcrimeandstrengtheningthecriminaljusticesystem.

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4.1.5. People’sparticipationandrepresentation

ProgressandachievementsPoliticalparticipation.ConstitutionalamendmentprovidedfortheestablishmentofPeople’sProvincialAssemblies (PPAs). The first elections in March 2016 returned 360 PPA members; and 149 NationalAssembly (NA)members (41 females).TheNAcontinuestoprovide increasinglyproactiveoversightofpublicservicesandaspiredtoincreasepeople’sparticipationinthedecision-makingprocess,throughsuchtoolsasthehotline,petitions,andpublichearings.

ParticipationofINGOsandNPAs.TheVientianeDeclaration(VD)andtheVDIIhighlighttheimportanceofincreasedengagementofINGOsandNPAsinthecountry’ssocio-economicdevelopmentprogrammingprocess.Some152NPAsand11Foundationsareofficiallyregistered.AreviseddraftNPAdecree(No.238)wassignedin2017.TheintentionwithinthenewAssociationsDecree238includeclarifyingtheprocessandassignedresponsibilities insettingupanNPA.TheLaoNGOshaveproposedmeasurestopromoteunderstandinganduseofcommontoolsandproceduresamongststakeholdersatlocalandnationallevelaswellasamongstLineMinistries.TheMinistryofHomeAffairs(MoHA)continuestoserveasholderofthenationalRegisterforalltypesofAssociations.NPAs’andINGOs’participationintheGovernanceSectorWorkingGroupandRoundTableMeetingshasbecomethenorm.Thevaluableinvolvementbycivilsocietyanddevelopmentpartners in thePenalCodedrafting iswell recognizedby thegovernment.A regularmechanismisestablishedtodiscusstheimplementationofINGOguidelinesamongstINGOs,developmentpartnersandMinistryofForeignAffairs(MoFA)atthenationallevel.Additionally,provincialvenueswillneedtobeestablishedtodiscusstheimplementationofINGOguidelines.

ChallengesandlessonslearnedPeople’sProvincialAssemblies.Capacitydevelopmentandbudgetsupportareneeded,especiallyforthenewly established PPAs. There is still a limited understanding of themandate and role of PPAs. Theresolutionofthecomplaintsstillneedsimprovements.

NextstepsStrengtheningProvincialandNationalAssemblies.TheprioritywillbetostrengthenthecapacitiesoftheNationalAssemblyandthePPAs,andensurebudgetsupportfortheseinstitutions.SincePPAshaveanindependentroleandoversightovertheExecutive,clearerseparationofPPAsfromtheExecutivewillbeneededandthisrequiresashiftawayfromthedependenceontheExecutiveforoffice,budgetandotherfunctions.Thepublicandtheprivatesectorwillneededucationonthemandate,rolesandresponsibilitiesof PPA. The system for the resolution of complaints should be formalized, with reporting backrequirementstotheNationalAssemblyandPPAsbytheExecutive.TheNPAdecreewillneedtobeclarifiedfurther; the related guidelines, the formulation and implementation of the legal framework, and thecollaborationandpartnershipwillneedtobeconsistentwiththeVientianeDeclaration.

4.2. Cross-Cutting Output 2: Local innovation and use of science, technology and telecommunications promoted, information and communication technologies

(ICT) enhanced

Legislationandpolicy.Anumberoflegislativeandpolicyactionshavebeenenactedtoimprovescientificinnovation, such as the Law on Intellectual Property and associated implementation of trademarks,copyrights, and industrial patents. The Law on Science and Technology has been completed andwaspresentedtotheNationalAssemblyforapproval.TheNationalScienceandTechnologyStrategy2013-2020andVision2030havebeendevelopedandfinalized.

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Progressandachievements.TheSubSectorWorkingGrouponFarmersandAgribusinessprovidesthebiggestonlineinformationservicesfordevelopmentworkersinLaos(LaoFABandLao44).OtherusesofICTintheagriculturesectorincludeLaoPDR’sparticipationintheAgroecologyLearningallianceinSouthEastAsia(ALiSEA)networkandthenewAgro-BiodiversityWebPortal–“PhaKhaoLao,”TheGovernmentis using technology advances in a number of other areas, such as in cultivation of orchids and theinspectionof fuelcargotrucks.ThePostalCounterAutomationSystemhasbeen installed in63pointsnationwide.Fiveministries’systemshavebeenlinked(MONRE,MOHA,MAF,MPIandMEM),andthisisalsothesameforfourhospitals(Friendshiphospital,LuangPrabanghospital,ParkdistricthospitalandSavannakhethospital).AcentralvideoconferencehasalsobeensetupcoveringtheMinistryofScienceandTechnology(MOST),CentralCommitteeforPropagandaandTraining,and18districtdepartments.The.LAdomainisnowmanagedlocallyandtherearemorethan47,500users.

ICT survey results. The first ICT survey in 2017 indicates that computer users account for 36%whileinternetusersaccountfor45%ofthetotalpopulation.Some37%ofthepopulationhaveaccesstohighspeed,27%ofhouseholdshaveaccesstotheinternet.54%ofthepopulationarelandlinetelephoneusersand92%ofthepopulationaremobilephoneusers.

Cooperation with other countries.Work is progressing on a South-South Cooperation Plan with theMinistry of Science and Technology of Viet Nam. Other initiatives with neighbouring countries anddevelopmentpartnersinscienceandtechnologyhavealsotakenplace.Someinitiativesunderdiscussioninclude:(i)ICTineducation,(ii)privatesectorpartnershipsforICTdevelopment,(iii)accesstoICTbyruralcommunities,suchastheuseofICTtoreachremotecommunitieswithhealthinterventionsandexpandruralhealthserviceaccess,(iv)theuseofICTtolinkresearchandfarmers,and(v)theuseofmobilephonesandon-lineearlywarningsystemsindisastermanagement.

Challenges.Thenationalbudgetforinnovation,science,technologyandtelecommunicationsandICTisstillminimal.

Nextsteps.LaoPDRaimstoenhancetechnologicalcapabilities,includinginnovation,askeyforsustainedgrowththroughfosteringstructuraleconomictransformationandbuildingproductivecapacities.Thiswillbecarriedoutbyimprovinglinkagesbetweenandamongfirmsandsectorsaswellaspromotingscience,technologyandinnovationsystems,includingR&Dcentres.Supportivepolicesandincentivesneedtobeput inplacetoensurethatFDIbringswith itnotonlycapitalandmachinerybutknowledge,skillsandmodernmanagement techniques as well as technological benefits and technology transfers. Lao PDRcouldalsolearnfromothercountries,suchassettingupaninnovationandknowledgehubtofosterITandnon-ITbasedinnovativethinkingtoaddressissuesandsolveproblems.143

143Forexample,BangladeshhassuchahubunderthePrimeMinister’sOffice.https://bangladesh.ifpri.info/2017/10/12/knowledge-innovation-hub-on-the-cards/andhttps://avpn.asia/organisation/access-to-information-a2i-programme-prime-ministers-office/

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Table4.2.ImplementationofCross-CuttingOutputonInnovationscienceandtechnologies

No. Target Implementation

Status2016 2017 2018

1 Promoteknowledge andresearch,anddevelopScience,TechnologyandInnovation

Completedin2sectors:Vientianecapital(Sangthongdistrict)RicecultivationVientianeProvince(Thoulakhomdistrict)Gingertea(producing,packaging,andadvertising)

Advertisingproduction

2 Increasefundsspentonresearchanddevelopment(target:from1%to2%ofGovernmentinvestmentsby2020)

LAK33Billion LAK33Billion LAK28Billion TotalLAK94Billion

3 Encouragebusinesssectortoinvestinresearchanddevelopment(target:atleast 30%ofGovernmentinvestmentinresearchandscienceby2020)

MOUwithSpaceeyesChinacompanyonCooperationforScienceandTechnology

MOUswithLinanetworkjointstockcompanyonBlockchaintechnologyresearchanddevelopment,InvestmentandHydropowerCo,LaoNetcommunicationCo,LaotechnologydevelopmentCo,

Processingtheproposals

4 PromoteconstructionareaforScienceandTechnologydevelopment,constructionbeginningfrom2018

Completed100%(atHuayangdistrict,BorikhamxayProvince,)

5 ImproveandupgradeInstituteofResearchunderMinistryofScienceandTechnologytoglobalstandardsby2020

CompletedInstituteofEcologyandBiotechnology

Completed100%

6 PromotetransferofTechnology CompletedBiotechnologyResearchCentre

Processingprojectproposals:BlockchainTechnologySatelliteremotesensingandunmannedaerialvehicles(UAV)Hi-techparkSoftwareindustryMetrologyCentreStandardandqualitycontrolcentre

50%achievedsofar.

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No. Target Implementation

Status2016 2017 2018

7 ConstructionScienceandTechnologyDataCentre

CompletedprojectsofLaoPDREnergyEfficientDataCentre(LEED)

100%

8 Developresearchers(target:11researchersper10,000populationby2020)

2011-2016(591Ph.DsinthefieldofEducation)

2017-2018Nosurveyconducted

9 Encouragedevelopmentofresearchersinuniversitiesnationwidebyallocatingtheresearchbudgetforatargetof50projectsin2020

25projects 25projects(50%)

10 Promotepublication:sciencemagazines,researchchapterstosciencemagazinesandglobalmagazines(targetto250papersby2020)

151papersinprocess

11 ConstructionoftrainingcenterforScienceandTechnologymanagementtargetbeginningin2016

Completed(InstituteofScienceandTechnologyManagement)

100%

12 Allocationofatleast25%ofbudgettoresearchprojectsrelatedtosustainabledevelopmenteveryyear

ProcessingdecreeeditionofdevelopmentonScienceandTechnologyFund

13 LawonTransferofScienceandTechnology

TheLawonTransferofScienceandTechnologydrafted/approved?

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4.3. Cross-Cutting Output 3: Gender equality and empowerment of women and youth


GenderEducation.GenderparityhassteadilyimprovedineducationinLaoPDR.Thecountryiswellontracktoachieve parity between boys and girls in primary education. Progress is also seen at higher levels ofeducation,althoughthereisasignificantgendergapinliteracythatisgenerallyassociatedwithpoverty.

Inemployment,sectorscharacterizedbyvulnerableemploymenthavethegreatestproportionofwomen,eitherself-employedorengagedinunpaidworkforthefamily.Thevulnerabilityofwomenworkersisduetopooreducation,andlimitedaccesstoresourcesandemployment.Themostprevalentformofgenderdiscriminationinlabourmarketsisthewagegapbetweenmaleandfemaleworkers.

Table4.3.ProgressagainstindicatorsintheEighthNSEDPM&EFramework

2015 2017Percentageofwomenintopdecisionmakingpositions/leadershippositions:

Civilservantsinadministrativepositiontype1(Minister&equivalent)

19.1%

12.3%

NationalAssembly 27.5% 27.5%

Decisionmaking.Increasingly,itisbeingrealisedthatinadditiontoaspiringforequalrightsequalrightsand the empowerment ofwomen, it is also amatter of efficiency and enhancedoutcomes ifwomenparticipatetogetherwithmenatalllevelsofdecision-makingingovernmentstructures,inthecommunity,in private sector enterprises and in thehome.At thedecision-making level LaoPDRhas amongst thehighestproportionsofwomeninnationalparliamentsintheregion.Inthecivilservice,theproportionofwomenamongthetopcivilservantsinadministrativepositiontype1hasdecreasedfrom19percentin2015 to12.3percent in2017 (Table4.3). Table4.4 shows theproportionofwomen inotherdecisionmakingpositionsinthenationalcivilservice.Overall,fromtheDeputyHeadofSectorlevelup,womenaccountfor31percent,butmainlyoccupythelowerpositions.Theproportionofwomeninotherdecision-makinginstitutionsisstilllow.Thetotalshareofwomeninleadershipandmanagement-levelpositionsisaround5percent(2012).144In2017,womenrepresentedabout45percentofthe183,680civilservantsoverall. 145 In 2015, 1.7 and 7.2 percent respectively of village chiefs and deputy village chiefs werefemale.146

Targetsongenderequality.AnumberoftargetsongenderequalityareoutlinedintheEighthNSEDP.Theseinclude:

(i) Promotingwomentotakeup20percentofleadingmanagement-levelpositions:10percentat village level, 20 percent at district level, and 20 percent at provincial and capital level;encouragingwomentotakeupto30percentofthemanagement-levelpositionsatcentrallevel, especially in organizations wherewomen officials account formore than half of allofficials;

144MinistryofHomeAffairsdataprovidedtoLaoWomen’sUnion.FromtheVNRreport.145MinistryofHomeAffairsdataprovidedtoLaoWomen’sUnion.FromtheVNRreport.146DatafromthePrimeMinister’sOffice,asprovidedbyLaoWomen’sUnion.FromtheVNRreport.

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(ii) Increasing theproportionof femalemembersof the8thNationalAssembly to30percent,althoughLaoPDRisalreadydoingwellforwomenparliamentariansat27.5percent,abovetheworldaverageof23.5percent;

(iii) Increasingtheproportionoffemalestudentsgraduatingfromsecondaryschoolto85percent;and

(iv) Increasingtheproportionofpoorwomenwithvocationaleducationandstableemployment.

Institutionalchanges.Changesininstitutionalsetupstookplacein2017.TheLaoWomen’sUnion(LWU)stated that their responsibilitieswere toupgradeknowledge to improve the implementationof socio-

economicdevelopmentandpovertyreduction,contributetotheachievementofthegender-relatedSDGsin Lao PDR, and promote gender equality, especially within the family structure. The Lao NationalCommissionfortheAdvancementofWomen,MothersandChildren(NCAWMC) hasbeenmergedwithLWU since 2017. They keep their mandate and are still the operational arm of the government inpromoting gender equality within all the ministries and other government structures. NCAWMC isresponsibleformonitoringtheimplementationofgender-relatednationalstrategiesandthefollow-uponthe implementationof theobligationsunderCEDAW. NCAWMC is also themain focalpointactiononeliminatingviolenceagainstwomenandchildren.

Table4.4.Femalerepresentationindecisionmakingpositions Male Female Total Male Female Total

Number PercentageMinisters 92 13 105 88 12 100Vice-Ministers 723 126 849 85 15 100DG 1,882 373 2,255 83 17 100DeputyDG 5,670 1,293 6,963 81 19 100HeadDivision 9,599 3,041 12,640 76 24 100Dep.HeadDiv. 14,482 5,665 20,147 72 28 100HeadSector 9,594 5,931 15,525 62 38 100Dep.HeadSector 4,009 4,330 8,339 48 52 100Total 46,051 20,772 66,823 69 31 100Source:LaoWomen’sUnion,LWU,February2018

Legalandpolicyframework.LaoPDRhasdevelopedalegalandpolicyframeworkforthepromotionofgender equality, which includes various gender-related laws, national strategies and internationalcommitments. TheNationalStrategyforAdvancementofWomen(2016-2025)andthefive-yearPlanofActionforGenderEquality(2016-2020)providetheguidingframeworkfortheimplementationofactivitiesby LWU and NCAWMC. In April 2016, the National Assembly approved the establishment andimprovementof55LawsincludinganewLawonGenderEquality,andNAWMChasbeenassignedtodraftthisnewLaw.

CEDAW.TheGovernment’scommitmenttoachievingtheobjectivesoftheCEDAWwasdemonstratedintheirgovernmentCEDAWreportsubmittedtotheCEDAWCommitteeinAugust2017.LaoPDR’spolicyframeworkforwomenandgenderequalityarealsogroundedinthecommitmentsundertheCEDAW.TheStrategyandPlanisquitecomprehensiveincontent,butdonotsufficientlyspecifytargetsandgoalsforeachMinistry.Ontheotherhand,MOHAhasdraftedStrategy2030ongenderequalityforstaffandcivilservants.Theobjective is toensure theequal rightsofmenandwomen,andpromotetheequalityof

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womenindecisionmaking.MAFhasconductedaCountryGenderAssessmentofAgricultureandtheRuralSector.

YouthYouth policy.More than half of the population are under the age of 25 years. To benefit from thedemographic dividend to the economy, the Government is prioritizing the enhancement of skills andknowledgeamongyouth.ThefirsteverNationalAdolescentandYouthPolicyisbeingdevelopedthrougha consultative process under the leadership of Lao Youth Union. The process involves a series ofconsultationswithadolescentsandyoungpeople,therelevantlineministries,andotherstakeholders.ThepolicyaimstoempoweralladolescentsandyouthinLaoPDR,includingthosewithdisability,toleadsafe,healthyandproductivelivesandrealizetheirpotentialthroughequitableopportunitiesandasupportiveenvironment.TheyouthpolicyisexpectedtobeendorsedbytheGovernmentbeforetheendof2018.This will help in developing and implementing programmes and strategies to address the variouschallengesfacingLaoyouthandadolescents.

4.3.2. ChallengesInstitutionalconstraintsforwomen’sempowerment.Rolloutandimplementationofgenderstrategiesacross the public service is a wide and long term undertaking. The LWU and NCAWMC require thecontinued and strengthened political support and the resources for their advocacy work to ensureMinistriesintegratetargetsandprioritiesintotheirsectoralstrategiesreflectingtheaimsandintentofthe SecondNational Strategy for the Advancement ofWomen (2016-2025) and the Five-year Plan ofAction for Gender Equality (2016-2020). The challenge will be to ensure women’s participation andleadershipinallaspectsofthecountry’ssocio-economicdevelopment,particularlyinareaswherethereislowerfemaleparticipation,suchasatthevillageanddistrictlevels,andinruralareas.

Challengesfacingyouth.LaoPDRneedstoaddressanumberofchallengesandprioritiesfacingyouthandadolescentstofullybenefitfromthedemographicdividendtoitseconomy:

(i) Alargeproportionofchildrendonotcontinueontosecondaryeducation.Inresponse,theGovernment has non-formal education programmes, and the numbers enrolled in theseclassesatlowersecondarylevelhaverapidlyincreased.However,thequalityandefficiencyoftheseprogramsarestillinadequate.

(ii) Overalluseofinformationcommunicationtechnologies(ICT)isstilllow,althoughthemajorityown amobile phone. Three-quarters of young women (75—77 percent) owned amobilephone,whileaslightlyhigherpercentageofyoungmen(76—84percent)did.In2017,only8.8percent(age15-19years)and12.9percent(age20-24years)ofyoungwomenhadusedacomputerduringthelastthreemonths,whilecorrespondingfiguresforyoungmenwere17.5percentand22.8percentrespectivelyfortheseagegroups.Thereappearstobenogenderdivideininternetuse.Some47percent(age15-19years)and40percent(age20-24years)ofyoung women had used the internet during the last 3 months, while the correspondingproportionsamongyoungmenwererespectively42and39percentrespectively.

(iii) Adolescent girls require special attention. Lao PDR is among countries with the highestproportionofearlymarriageandthehighestadolescentbirthrate intheregion.Foreverythousandadolescentwomen(aged15-19),thereare83births-thishasdeclinedfrom94in2011/12,butisstillthehighestrateamongASEANcountries.ThismeansthatadolescentgirlsinLaoPDRarefacingchallenges,suchasnotbeingabletodeveloptheirfullpotential.Oneinfiveadolescentgirlsdropoutofschool;oneinfourgirlsaged15-19aremarried,andfromthesameagegroup,one in tengirlshavebegunchildbearing. Investments inadolescentgirls’health,nutrition,andeducationcontributestoreducingearlypregnancy,maternalmortality,

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andchildstunting.Suchgainstranslatetoimprovedhealthandeducationoutcomes,whichcontributetoLDCgraduation.

4.3.3. NextstepsTheGovernmentofLaoPDRisprioritizingthefollowingstrategiesforgender:

(i) Improvingthe implementationandmonitoringofnationalgenderequality laws,policies,and instruments. These include enforcing the existing family law, which does not allowmarriagebeforetheageofconsent;thegenderoutputintheEighthNSEDP;the2016-2020Women’sDevelopmentPlan, theNationalGender EqualityDevelopmentPlan; the SecondNational Strategy on Gender Equality (2016-2025), the National Law on Preventing andCombattingViolenceagainstWomenandChildren,theNationalActionPlanonEliminatingViolence againstWomen andChildren, and the implementation of the Convention on theEliminationofallformsofDiscriminationAgainstWomen(CEDAW).

(ii) Strengtheningnationalcapacitytogenerategenderstatisticsandenablegender-sensitiveplanning.DirectivesandNotificationshavebeenissuedbythePrimeMinister’sOffice(InMay2000andJanuary2005)ontheinclusionofsex-disaggregatedstatisticsinpolicyandplanning,on gender-sensitive development programs/projects, and on the implementation of sex-disaggregatedstatisticsbyallsectors.Disaggregationofdatabysexandagehasimproved,but is still inconsistent. Moreover, many areas such as employment, migration, incomes,disability,domesticviolence,ethnicity,andresidenceneedrobustgenderstatistics.Dataonviolence againstwomen and girls need to be regularly collected andmonitoredwith dueconsiderationoftheprinciplestoensurewomen’ssafetyandconfidentiality.

(iii) Developingmeasurestocombatviolenceagainstwomen.Appropriatedetection,response,andprotectionmechanismsarerequiredaswellasstrengthened institutionalcapacities.Astrongcoordinatingbodyandaclearreferralsystemwithinandacrossthesectorsarealsorequired.

(iv) Harnessing the full potential of Lao women’s participation in the market economy asentrepreneurs,employees,andconsumers.Appropriatestrategiesandpoliciestoreducethegenderequalitygapinemploymentwillneedtobefurtherdeveloped,suchasspecificsupporttowomenSMEowners,andtotheexpansionofvocationaltrainingandcounsellingcentresforwomen.

Foryouth,theGovernmentisprioritizingthefollowingstrategies:(i) Addressingtheissuesthatpreventadolescentgirlsfromreachingtheirfullpotential.Afocus

ontheadolescentgirlwillhelptoaccelerateprogresstowardsallSDGs,andinparticularSDGs2,3,4,5and8.

(ii) Accelerating the progress towards targets for youth on literacy and employable skills,including the use of ICT. To this end, theMoES is expanding programmes on TVET, andenhancing the national base of fundamental competencies and skills among children andyoungpeople.Moreparticipationfromtheprivatesectorwillbeneeded.

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4.4. Cross cutting issues for special consideration UXOasCross-CuttingOutput4.CurrentlytheUXOprogramisplacedreportstotheMinistryofLabourandSocialWelfare(whoisresponsibleforOutcome1Output5onthelabourforce,andOutcome2,output5onsocialprotection).Ontheotherhand,withintheEighthNSEDP,theUXOprogrammeisplacedunderOutcome1,Output1onpovertyreduction,thegoalonpovertyreductionandthepovertyreductionfundisunderthemandateoftheMinistryofAgricultureandForestry.YettheEighthNSEDPshouldberesults-basedandnotinstitution-based.WhileitistruethatUXOclearancemustbepartofeffortstoreduceruralpoverty,givingtheUXOprogrammeitsownOutputwouldelevatetheUXOissueinnationalawarenessandproperlyreflectLaoPDR’sSpecialSDG18onUXO.

Peoplewithdisabilitiesareanothervulnerablegroup.DisabilitiesinLaoPDRareoftencausedbyUXO,roadtrafficaccidents,diseaseandcongenitalconditions.Theoverallprevalenceofdisabilitiesamongthepopulation5yearsandoveris2.8percent. 147LaoPDRratifiedtheConventionontheRightsofPersonswithDisabilities(CRPD)in2009andsubmittedtheStateParty’sReportin2016.148LaoPDRhassetuptheNational Commission for PersonswithDisabilities and the Elderly, andhas taken severalmeasures toimplementtheCRPDaslaidoutinitsReport,suchastheDecreeonPersonswithDisabilities(No.137)in2014,andadoptingaNationalStrategyandPlanofActiononInclusiveEducation(2011-2015).

Inclusion of the rights of peoplewith disability. The issue of disability and the rights of peoplewithdisabilitymaybeconsideredasacross-cuttingissueintheNSEDP.TheissuesthattheNSEDPwillneedtoconsiderincludethefollowing:

(i) Theeconomicempowermentofpersonswithdisabilities,particularlywomenwithdisabilities.For thosewhoown landorwork on family land, providing themeans and adaptations toengageinagriculturalworkcouldbeoneway.Forthosepeoplewithdisabilitieswhodonotownland,othermeansofeconomicempowermentwillneedtobeidentifiedinthecontextofLaoPDR.

(ii) Servicesforpeoplewithdisabilities,especiallyinruralareas,whereaccessibilityisanaddedchallenge.

(iii) Greaterinclusivenessoftheeducationsystem.Inthisregard,theInclusiveEducationCentreestablishedbytheGovernmentwithintheMinistryofEducationandSports(MoES)willneedtohaveanexpandedroleandmandatetofocusondisabilityissuesacrossalldepartments.

(iv) Greater awareness of disability.Most communities, parents and school personnel are notawareoftherighttoeducationofchildrenwithdisabilities.Awarenessraisingisthusthefirststep, andneeds to be done fromvillage level up, throughVillage EducationDevelopmentCommittees.

(v) Greateraccesstohealthandrehabilitationservicesforpeoplewithdisability, includingtheuseofrelatedassistiveproductstoincrease,maintain,orimprovefunctionalcapabilitiesofindividualswithdisabilities.ThisshouldformanintegralpartofUniversalHealthCoverage.

(vi) Systematic disaggregation of all statistics by disability status, and dedicated systems andregisters to monitor indicators for people with disabilities. The management informationsystemoftheNationalSocialProtectionSystem(NSPS)willneedtohavedatadisaggregatedbydisabilitystatus.

147Census2015.148GovernmentoftheLaoPeople’sDemocraticRepublic,2016.InitialreportsubmittedbytheLaoPeople’sDemocraticRepublicunderarticle35oftheConvention,duein2011.UCRPD/C/LAO/1.NewYork:UnitedNations.

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(vii) Systematic allocation of national, provincial and district budgets to programmes andstrategiestoimplementtheCRDP,whichLaoPDRhasratified.TheissueofUXOsurvivorswhohavedisabilitiesneedstobecoordinatedwiththeactionplantoachieveSDG18.

(viii) Clearrolesandresponsibilities intheimplementationplanforthe2014DecreeonPersonswithDisabilities(No.137).

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5. Policy Recommendations

5.1. Outcome 1 Structural economic transformation is central to the vision of the 8th NSEDP. It also anchors theGovernment of Lao PDR’s long-term sustainable growth strategy targeting non-resource basedindustrialization,productivecapacitybuilding,andreducedeconomicvulnerabilities.ThestrategyfurtheraimstointroduceabalancedandinclusivegrowthpatternthatensuresasmanyLaocitizensaspossibleparticipateinandbenefitfromthegainsofdevelopment.

EachoftheseobjectivessupportLaoPDR’sfurthertwinambitionsofforgingadurableLDCgraduationpathandsustainingprogressthereaftertoachievetheSDGs.Fortheremainderofthe8thNSEDPperiod,continued efforts to remove growth constraints of the non-resource industrial sector, improve thebusiness environment, and increaseagricultural productivitywill remainpriorities. TheGovernment isfurther committed to developing the human resources necessary to drive sustainable socio-economicdevelopmentandtocompetewithASEANcountriesandothers.Thesewillallbesupportedthroughitscontinuedefforts todeepenregionalandglobal integration, includingbystrengtheningtrade linkages,policyharmonization(especiallywithinASEAN),andpartnershipswithtraditionalandnewdevelopmentpartners.

Theseambitionsrequirecloserlinkagesbetweenplanning,financing,andmonitoringandevaluation,buildingonongoingPFMreforminitiatives.Fortheremainderofthe8thNSEDPperiodandbehind,LaoPDRwouldbenefitfromstrengtheningitslonger-termplanning,costing,andfinancingto2030tosupportSDGachievement.ThisincludesthemonitoringframeworkanditslinkstoLao’slocalizedSDGtargetsandministerialplans,alongwiththedevelopmentofcostestimatestohelpguidefinancingstrategies.

TheMTRdetailsspecificpolicyrecommendationsrelevanttoeachoutput.Amongthese,keyprioritiesinclude:

• Continuingtheshifttotowardagreenerandmoreresilientgrowthmodel,asoutlinedinthenewGreenGrowthStrategy,andmainstreaminggreengrowthprioritiesandtargetsintonationalandsectorstrategies.

• Strengthening non-farm rural job creation and productivity, such as through enhancingwatershedmanagement,transportinfrastructure,andinvestinginculturalheritagesites.

• Supporting the development of stronger and more competitive SMEs (e.g., in handicrafts,artisanalwares,highervalue-addedagricultureproducts)throughincreasingaccessandprovisionof capital, training, and infrastructure, and through implementation of the SME roadmap toimprovefirmandsector-levelcompetitiveness.

• Acceleratingproductivityintheagriculturesector,includingthroughfurtherimplementationofthe Agricultural Development Strategy 2020. Specific initiatives include improving agriculturalproductioninfrastructure,upgradingtechnology,strengtheningfarmers’associations,improvingirrigationsystems,andimprovingaccesstoinputs.

• Continued emphasis on building new and strengthening existing transport infrastructure ascriticalsupportforreachingmanyplantargetsacrossalloutcomeareas,includingexpandingandenhancingconnectivitythroughroads,railways,waterways,andaviation.

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• Intensifyingefforts in implementationof tradeandprivate sector reforms, including throughimplementation of Prime Ministerial Order No 2 on the Ease of Doing Business, and speedregulatoryreformsrelatingtotradeandthebusinessenablingenvironment.

• Managingpublicdebtsustainably,suchasthroughthenewPublicDebtManagementLawandthePublicProcurementLaw,especiallyemphasizingborrowingonconcessionalterms.

• Continuingefforts forexpenditure reform, includingmeasures toendoff-budgetexpenditure,eliminate nonessential outlays, and reorient spending towards improvements in health,education,andsocialassistance.

• Promoting development and implementation of financing strategies, including theGovernment’srecentlydraftedpublicfinancestrategy.

• Strengthening TVET and skills development, including the coordination mechanism andprogrammestodevelopthehumancapitalrequiredtoincreasetheabilityofpeopletotakeonnewopportunities,especiallythroughpartnershipswiththeprivatesectortomatchdemandandsupplyofskills.

• Further designing and enforcing legal frameworks and procedures to help facilitate trade,includingthecommitmentsrelatedtoAECandWTOmembership.ThisincludesreducingimporttariffstozeroongoodsimportedfromotherASEANcountriesandcontinuingeffortstoremoveNTBs.

• Adapting as necessary the Round Table Meeting mechanism to strengthen effectivedevelopmentpartnerships,includingbyenhancingthecontributionoftheprivatesector,shiftingthe development dialogue further into discussion and agreement on implementationmechanisms,andstrengtheningmonitoringofcommitmentsinthecontextoftheVDCAPII.

5.2. Outcome 2 Outcome2iscrucialforthecountrytoachieveallthegoalsintheotherOutcomeareas.Muchprogresshas been made, but disparities remain and inequality has even increased in some cases. The starkinequitiescallforfreshapproacheswithmoreattentiontothedemandsideandtothecapacityoffamiliesandcommunities.Thismeansanincreasedemphasisonstrengtheningthecapacityoflocallevelserviceprovision, improving the quality of services, strengthening local governance and ensuring that extraattention is placed on planning and coordination between sectors to reach the poorest and mostdisadvantagedgroups.Community-basedapproaches,areessentialtoaddresssocialbehavioursthatareharmfultofamiliesandcommunitiesandtoensuresustainabilityofthegainsmade.Strengtheningservicedelivery to the most deprived will require using participatory strategies, including the use of locallanguages, and empowerment village health volunteers, the LaoWomen’sUnion, farmer groups, andvillageextensionworkerswiththerequiredknowledgeandsupport.

Effectivepolicieswillneedtobeputinplacetoensurethatimprovedeconomicgrowthtranslatesintopro-poorgrowthandthatthebenefitsfromgrowthareequallyredistributedtothepoorandvulnerablesectionsof society.Pro-poorgrowthalsoneeds tobeunderpinnedby improvements in thequalityofgovernance,throughgreatertransparencyandaccountability.KeypolicyrecommendationscomingoutoftheMTRincludethefollowing:

• Improvingthetargetingofthepoorinplanning,budgeting,andprogrammedeliveryespeciallybelowthedistrictlevel.Differentsectorsmustworkinacoordinatedandconvergentapproach,and provide the targeted communities with access to services, education, and support tolivelihoods,allofwhichareknowndeterminantsofpovertylevels.

• Involvingtheprivatesectorthroughpublic-privatepartnershipsinlocaleconomicdevelopment,andincentivesforinvestmentsthatdotheirsourcingfromlocalfirmsandworkers.

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• StrengtheningnationalcapacitytoaddressUXOsthroughputtinginplacemeasurestoincreasecoordinationandefficiencyinplanning,targetingandclearanceoperations,improvethequalityanduseofoperationaldatainthenationaldatabase,andensurethemainstreamingUXOsurvivorsintohealth,educationandemploymentservices.

• Balancingthesupporttocommercializationofagriculturewithaccesstonutritiousfoodsforallcommunities, through continuing support to farmerorganizations, rural financeand insurancemechanismsasawaytoimproveproductivity,equity,andresiliencethroughmodernization

• Accelerating the implementation of nutrition-specific and nutrition-sensitive measures byensuingbettertargetingandconvergenceonhigh-riskdistricts,andpromotingbehaviourchangeinterventions,especiallyinthecaseofinfantandyoungchildfeedingandhouseholdhygiene.Atthesametime,thelegalframeworkneedstobestrengthenedandenforcedfortheprotection,promotionandsupportofbreastfeeding.

• Planning,prioritizingandincreasingbudgetallocationsforthemostcriticalneedsineducationandlife-savinginterventionsinhealth,sothatessential interventionsinthesetwosectorsareassuredofasustained,predictablecorebudget,independentofexternalfunding.Planningandbudgetingneedstobeimprovedtomakesurelimitedresourcesareusedtoaddressmostcriticalneeds. Reaching the poorest and most remote groups will require significantly increases inoperating budgets as well as the recruitment of greater numbers of peripheral-level serviceproviders,suchasmidwivesandschoolteachers.

• Liftingthenationalbaseoffundamentalcompetenciesandskillsofchildrenandyouth,startingfromECE/primarytolower-secondaryasabuildingblock,improvingtherelevanceandqualityofbasiceducationandstrengtheningofthelinkwithTVETandhighereducation.Itwillalsomeandeveloping and implementing a comprehensive evaluation framework on student learningoutcomeswithaccompanyingcorrectivemeasuresandinvolvingprivatesectormoreinTVET.

• Prioritizing theachievementofUHC as setout in thehealth sector reformplan.This includessxpandingtheskillsbase,sizeandequitabledistributionofhealthworkforceindistricts,healthcentresandatcommunitylevel,buildingtheircapacitytoaddresscommonchildhoodillnesses,improveservicescoverageformaternal,childandreproductivehealth,andfacilitateeliminationofopendefecation.Thesemustbecoordinatedtoconvergewithcommunitybasedapproachesoutlinedabove.

• PreventingHIVinfectionsbyfocusingonkeypopulationsathigherrisk.Thisrequiresreachingthose engaged in high-risk behaviour, and requiring private investors for large infrastructuredevelopmentprojectsandotherstakeholdersworkingwithhigh riskgroups tocoordinateandcollaborateinmitigatingHIVrisks.HIVtreatmentandcareofPLHIVwillneedtobeintegratedintohealthservicesandsocialwelfareservicestomakebestuseofdecreasingresourcesforthesector.

• Implementing the National Social Protection Strategy, starting from 2018. This will involveputting in place measures for technical assistance, capacity building, and budgetary support,establishmentofaManagementInformationSystemtomonitorandevaluatetheroll-outofNSPSas well as the situation of vulnerable groups in the country, including those with disabilities.Targetingofhouseholdsmustensureefficientallocationofresourcesandmaximizetheimpactofsocialprotectioninterventions.

• Enhancingthemanagement,protectionandpreservationofcurrentandpotentialheritagesites,improvingexistinginformationsystemstotrackthesebycultural,historicalandnaturalheritage

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categories, identifying and addressing the main bottlenecks constraining the growth of thetourismsector.

• Continuing to strengthen and reforming the justice sector, with special attention toimplementingreformsinthejuvenilejusticesystemtominimizetheharmdonetochildrenfromcontactwith the law, andeducating thepublic on social problemsand laws, givingpriority toeducatingandmobilizingyouthwithintheframeworkofthependingNationalYouthPolicy.

5.3. Outcome 3 Outcome3iscrucialforensuringthatprogresscanbesustainedunderOutcomes1and2,especiallyasLao PDR has used its resources to advance the country’s growth and development. The Governmentrecognizes that excessive resourceusewill undermine future growthprospects. The challenges in theenvironmentandnaturalresourcessectoraredaunting.KeypolicyrecommendationscomingoutoftheMTRincludethefollowing:

• Strengtheningthegovernanceofthenaturalresourcesectorstohaltandreversedeforestation,forest degradation, and biodiversity loss, through capacity building and stronger oversightarrangements. The implementation of existing national policies and action plans relating toecosystemsandnaturalresourcesneedtobemonitoredandenforced.Privatesectorinvolvementand community benefit sharingwill need tobe expandedandenhanced so that developmentprojects contribute funds for natural resource management and forest/local communities’developmentandparticipation.Thegovernmentwith support fromdevelopmentpartnerswillneedtocontinueexpandingexistinginitiatives,suchaspaymentforecosystemservices.

• Prioritizingpost-disasterrecoveryfromthe2018floodstohelprestorelivesandlivelihoods,andputtinginplacethemeasuresenhancingdisasterpreparednessandresilience,giventhatfloodingnowaffectsLaoPDRfrequently.

• Ensuring better disaster preparedness and post-impact recovery. The early warning systemsestablishedpreviouslyhaveclearlybeeninadequatetocopewiththe2018floods.Strengtheninginstitutional and individual capacity in disaster preparedness, response and recovery will benecessary.

• Developingacomprehensivenationalplanonelectricitygeneration– includinghydroelectricdams.TheNinthPlanwillneedtolookatthisinlightoftherecentcollapseofXePian-XeNamnoyhydropower dam in Attapeu province. The approach to be employedwill need support frompartnerstoensurepropermanagement.

5.4. Cross cutting outputs KeypolicyrecommendationscomingoutoftheMTRincludethefollowing:

• Improvinggovernancethroughrapidandconsistentapplicationofnewlaws/regulations,ongoingadministrativeandcivilservicereform,andcontinuedSamSangimplementation.AnactionplanandindicativebudgetscenariosshouldbedevelopedfortheexpansionandimplementationofSamSang.

• Enhancing legal and legislative capacity, developing a soundactionplan to followuponUPRimplementation and ensuring adequate capacity and budget support for People’s ProvincialAssemblies.

• Enhancingtechnologicalcapabilities,includinginnovation,throughimprovedlinkagesbetweenandamongfirmsandsectorsandpromotionofscience,technologyandinnovationsystemsand

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centres.ThisneedstobebackedupbysupportivepolicesandincentivestoensurethatFDIbringswith itnotonlycapitalandmachinerybutknowledge,skills,modernmanagementtechniques,andtechnologytransfers.

• Promotinggenderequalityandwomen’sempowermentbyimprovingtheimplementationandmonitoring of national gender equality laws, policies, and instruments, strengthening nationalcapacitytogenerategenderstatisticsandenablegender-sensitiveplanning,developingmeasurestocombatviolenceagainstwomenandharnessingthefullpotentialofLaowomen’sparticipationinthemarketeconomyasentrepreneurs,employees,andconsumers.

• AcceleratingtheadoptionandimplementationoftheNationalYouthPolicy.Specialemphasisisrequiredonmeasurestoempoweradolescentgirlstoreachtheirfullpotential,andacceleratetheprogresstowardstargetsforyouthonliteracyandemployableskills,includingtheuseofICT.

• EstablishingUXOasaCross-CuttingOutputonitsowntogiveitdueimportanceandattentionas Lao PDR’s Special SDG 18 on UXO. The Eighth NSEDP should be results-based and notinstitution-based.While it is true that UXO clearancemust be part of efforts to reduce ruralpoverty, giving the UXO programme its ownOutputwould elevate the UXO issue in nationalawarenessandintheinternationalcommunity.

• Establishing the issue of disability as another cross-cutting issue in the NSEDP. This Outputshould includemeasures topromote theeconomicempowermentofpersonswithdisabilities,servicesforpeoplewithdisabilitiesespeciallyinruralareas,greaterinclusivenessoftheeducationsystem,greaterawarenessofdisability,improvedinformationsystemsanddataonpeoplewithdisabilities,systematicallocationofnational,provincialanddistrictbudgetstoprogrammesandstrategiestoimplementtheCRDP,andclearrolesandresponsibilitiesintheimplementationplanforthe2014DecreeonPersonswithDisabilities.