Lao PDR.
BLUE BUILDER
Building Capacity and Building Momentum
BLUE BUILDER
Building Capacity and Building Momentum
National Snapshot.
Lao PDR has taken meaningful steps to align its water resource management with principles of sustainability, economic growth, and social equity. As a landlocked country, its blue economy potential lies in freshwater systems, inland fisheries, hydropower, and sustainable agriculture.
Integrating blue economy principles into existing development frameworks, particularly in energy, natural resource management, and inland aquatic systems, can support inclusive and sustainable growth.
Based on its growing commitment and capacity-building efforts, Lao PDR is profiled as a Blue Builder, reflecting its momentum in laying the foundations for a resilient and adaptive blue economy model tailored to its national context
Implementation Progress
Implementation Progress
Building momentum
Lao People’s Democratic Republic (Lao PDR), the only landlocked country in ASEAN, has demonstrated a strong commitment to sustainable development by signing both the 2012 Changwon Declaration and the 2021 ASEAN Leaders’ Declaration on the Blue Economy. While a dedicated Blue Economy policy has yet to be formalised, Lao PDR’s approach to water resource management already aligns with the core Blue Economy principles of sustainability, economic growth, and social equity. The concept is integrated into national planning frameworks, including the 9th Five-Year National Socio-Economic Development Plan (2021–2025) and the National Green Growth Strategy to 2030 (Ramli & Waskitho, 2023).
Key opportunities lie in strengthening value creation, inclusiveness, and sustainability across three priority sectors: energy (hydropower), natural resource and environmental management, and agriculture (including inland fisheries) (Phonvisay, 2023). These areas connect meaningfully with ASEAN-wide blue economy initiatives, including carbon markets, ecotourism, and renewable energy.
Explore how Lao PDR is positioned for each of the
Blue Economy Capitals.
Financial
Capital.
Financial Capital.
Following three decades of sustained growth, Lao PDR is transitioning into a new phase of development that presents opportunities to strengthen the foundations of its economic model. While debt-financed investments have supported expansion, government revenue growth has been more modest, creating fiscal pressures and highlighting the need for strategies to enhance long-term economic stability. Much of the past growth was concentrated in a few sectors and state-owned enterprises (OECD, 2024), and funding for the 9th Five-Year National Socio-Economic Development Plan (NSEDP) has encountered funding constraints.
Efforts to improve the integration of planning, financing, and budgeting have gained increasing attention, alongside broader public financial management reforms. Strengthening the alignment between budget allocations and development priorities, and ensuring expenditures are guided by available revenue, are seen as important factors in enhancing accountability and implementation outcomes (Ministry of Planning and Investment [MPI], 2020).
Currently, there is no dedicated blue finance mechanism in Lao PDR. However, the country has taken promising steps under the NSEDP and Green Growth Strategy. The Financing Strategy for the 9th NSEDP, developed with strong support from the UN as part of the Integrated National Financing Framework (INFF), aims to align national budgeting with the Sustainable Development Goals. Lao PDR is among the first countries to publish a financing strategy based on the INFF approach (OECD, 2024). While its release midway through the NSEDP’s timeframe leaves limited time for implementation, it provides a valuable platform for prioritising sustainable and inclusive financing, including future blue economy initiatives tailored to the country’s inland water systems.
Physical
Capital.
Physical Capital.
Lao PDR’s landlocked geography contributes to high transportation costs, with most freight and passenger movement relying heavily on road networks. Infrastructure limitations remain a key constraint, as only 22.4% of the country’s roadways are paved, well below the ASEAN average of 56.6%. Lao PDR also ranks low on the Logistics Performance Index (LPI), with a score of 2.4 in 2023, rank 119 globally.
Historically, public investment has focused on expanding the road network, with less emphasis on maintenance and upgrades.
Enhancing connectivity, reducing logistics costs, and supporting economic diversification have been identified as key development objectives. In this context, investment in multimodal transport infrastructure, including road, rail, and inland waterways, has been highlighted as an important area of focus (OECD, 2024). Improved infrastructure has been recognised as an important factor in expanding access to tourism destinations and facilitating the movement of goods for export. Strengthening these systems is also viewed as a way to enhance competitiveness and contribute to more inclusive and sustainable development across the country.
Human
Capital.
Human Capital.
Lao PDR has made important strides in human capital development, recognising its central role in driving inclusive socio-economic growth. The government has established national skill standards, issued certifications, and supported vocational training institutions while fostering collaboration with employment agencies to connect workers with domestic and international labour markets. As of 2021, 25 public vocational institutions, including colleges, technical-vocational schools, and development centres, are helping to expand access to skills training in key fields such as electrical and mechanical technology, civil engineering, agriculture, and construction (Ministry of Planning and Investment [MPI], 2020). These efforts reflect progress toward the targets set in the Five-Year National Socio-Economic Development Plan.
The labour force, estimated at 1.75 million, is concentrated in agriculture, forestry, and fisheries (35.8%), trade (21.4%), and manufacturing (9%). However, over 90% of employment remains informal, with agriculture accounting for more than half of this figure (OECD, 2024). While the government has prioritised skills development, challenges remain. Labour efficiency has remained relatively unchanged, and training programs often lack alignment with the needs of key sectors and large-scale investment projects. There appears to be limited evidence of dedicated education and training support for inland aquatic development sectors.
Social
Capital.
Social Capital.
Lao PDR is working to strengthen institutional coordination in support of sustainable development. In the context of the blue economy, the country is in the early stages of clarifying roles and responsibilities across ministries and departments. There remains a valuable opportunity to foster greater collaboration, improve information sharing, and build a more integrated governance approach.
Support will be required to assist Lao PDR to enhance institutional capacity, particularly in monitoring, compliance, and cross-sectoral planning, as well as investments in technical expertise, inter-agency coordination, and resource mobilisation (Ramli & Waskitho, 2023). . These foundational steps are essential for developing a tailored blue economy model that reflects the country’s unique context and long-term development aspirations.
Natural
Capital.
Natural Capital.
Lao PDR is richly endowed with natural resources, particularly in agriculture, tourism, mining, and hydropower, which have historically underpinned the country’s economic growth. Among these, water and water resources are especially vital, playing a central role in national development. Recognising this, the National Green Growth Strategy places strong emphasis on the efficient, effective, and sustainable management of water resources to support long-term prosperity.
As the country continues to grow, there is increasing awareness of the need to balance economic development with environmental stewardship, including sustainable land and water use (OECD, 2024; World Bank, 2020, 2021).
Implementation Capacity
Implementation Capacity
building capacity
Lao PDR holds remarkable potential to harness its abundant inland water resources, particularly the Mekong River, to drive a thriving freshwater-based blue economy.
Opportunities in hydropower, inland fisheries, aquaculture, and sustainable agriculture are central to livelihoods, food security, and renewable energy generation.
By leveraging its unique geography and focusing on capacity development in governance, transparency, and cross-border trade, Lao PDR can transform these natural advantages into sustainable growth that balances economic progress with ecological integrity and community well-being.
