Southeast Asia Information Port (www.dnyxxg.com) – The Lao government is accelerating preparations to remove itself from the UN's Least Developed Countries (LDC) list by 2026, while simultaneously shifting its development model from one reliant on foreign aid to one driven by investment.
Recently, the Lao Ministry of Foreign Affairs held a briefing in Vientiane, introducing the transition plan for development categories, developed according to UN standards, to the private sector, international NGOs, and civil society groups. The meeting focused on the opportunities and risks of leaving LDC status and how various departments can collaborate to support development during the transition period from 2026 to 2029.
Ms. Mukdavanh Sisoulith, Director-General of the Department of International Organizations at the Lao Ministry of Foreign Affairs, explained that the UN assesses a country's eligibility for LDC status using three core criteria: Gross National Income (GNI) per capita, the Human Capital Index, and the Economic Vulnerability Index. She clearly stated that Laos has fully met the criteria and is recommended to formally leave the list of least developed countries by the end of 2026, followed by a three-year transition period; the transformation process will begin in 2026, and from 2030 onwards, it will enjoy equal development treatment with other developing countries.
Mukdavan pointed out that 2026 will be a crucial turning point for Laos' development, as the country gradually moves from a low-to-middle-income country to a middle-income country, ultimately striving towards the goal of becoming a high-income country. Addressing the global trend of reduced official development assistance, she mentioned that Laos' foreign aid is also declining, with future aid focusing more on co-financing, diversifying resource development, and low-interest loan support.
Mukdavan emphasized that the private sector needs to prepare in advance, focusing on high-quality product development to enhance the competitiveness of Lao goods in regional and international markets; meanwhile, development partners will continue to provide technical support during the transition period. It is understood that Laos' Strategic Transformation Plan revolves around four pillars and 22 priority tasks, with the core objective of achieving green growth and sustainable development.
Specifically, the plan aims to stabilize the macroeconomy by addressing public debt issues and reviewing tax reforms (including considering the reintroduction of a 10% VAT to increase fiscal revenue). In response to the impending loss of preferential trade treatment for "all goods except weapons," the plan accelerates negotiations with the EU regarding an enhanced version of the Generalized System of Preferences (GSP) status, while actively seeking new free trade agreements to strengthen trade and investment cooperation.
In human resource development, the focus will be on mitigating losses in education caused by the COVID-19 pandemic and building a more comprehensive social security system. In climate action, the focus will be on promoting green growth, suspending approvals for new mining projects, and driving industrial transformation towards high-value-added semi-finished product manufacturing.
Mukdavan stated that moving away from least developed country status should be an opportunity for Laos to enhance the confidence of investors and financing partners. She clarified that the new development status does not mean the end of poverty reduction efforts, nor will it bring "overnight riches," but rather a crucial first step towards reducing over-reliance on foreign trade and moving towards a self-reliant economy.
The participating parties expressed support for the overall direction of Laos's smooth transition strategy and agreed to conduct further consultations after completing a readiness assessment in early 2026.
