VIENTIANE: The government is stepping up preparations to leave the United Nations’ Least Developed Country (LDC) list in 2026, urging a shift from reliance on aid to investment-driven growth.
The Ministry of Foreign Affairs recently briefed the private sector, international non-governmental organisations, and civil society groups in Vientiane on plans for transition to a higher development category, as determined by the United Nations.
Talks centred on the opportunities and risks linked to graduation from LDC status and on how different sectors can support the transition period from 2026 to 2029.
Director General of the Department of International Organisations at the Ministry of Foreign Affairs, Moukdavanh Sisoulith (pic), said the United Nations assesses whether countries are eligible to rise above LDC status based on three criteria including Gross National Income (GNI) per capita, Human Asset Index, and Economic and Environmental Vulnerability Index.
She said Laos has met all three of these and has been recommended for graduation at the end of 2026, to be followed by a three-year transition period.
Moukdavanh said Laos will begin the transition in 2026 and will be treated in the same way as other developing countries from 2030.
The years after 2026 will be a turning point as the country moves from low-income and lower-middle-income status towards middle-income and, in the long term, high-income status.
Moukdavanh said Official Development Assistance is declining worldwide, not only for Laos, and future support will focus more on co-financing and sourcing other resources and low-interest loans.
She said the private sector must prepare to produce high-quality Lao goods that can compete in regional and international markets, while development partners will continue to provide technical support during the transition period.
Under the Strategic Transition Plan, Laos will pursue green growth and sustainability based on four pillars and 22 priority tasks.
The plan seeks to stabilise the macroeconomy by tackling public debt and reviewing tax reform, including the possible reintroduction of a 10 percent Value Added Tax to boost revenue for government coffers.
It also aims to strengthen trade and investment as Laos prepares to lose “Everything But Arms” trade preferences, with plans to speed up talks on Generalised Scheme of Preferences Plus status with the European Union and to pursue new free trade agreements.
Human resource development will focus on strengthening education after the setbacks caused by the Covid-19 pandemic, and on building a stronger social security system.
Climate action measures include promoting green growth, suspending approval for new mining operations, and shifting production towards higher-value semi-finished products.
Moukdavanh said the transition from LDC status should be viewed as a chance to build confidence among investors and funding partners.
She stressed that Laos’ new development status does not mean poverty reduction efforts will end or that people will become wealthy overnight. Rather, it is the first step away from heavy dependence towards a more self-reliant economy.
Meeting participants supported the overall direction of the Smooth Transition Strategy and agreed to hold further discussions after the readiness assessment is completed in early 2026. - Vientiane Times/ANN
