The Lao government is stepping up preparations to leave the United Nations' list of least developed countries, or LDC, in 2026, urging a shift from reliance on aid to investment-driven growth.

The Ministry of Foreign Affairs of Laos recently briefed the private sector, international nongovernmental organizations, and civil society groups in Vientiane on plans for transition to a higher development category, as determined by the UN.

Talks centered 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.

Moukdavanh Sisoulith, director-general of the Department of International Organizations at the Ministry of Foreign Affairs, said the UN assesses whether countries are eligible to rise above LDC status based on three criteria, including gross national income per capita, human assets index, and economic and environmental vulnerability index.

She said Laos has met all three of these conditions 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 toward middle-income and, in the long term, high-income status.

Moukdavanh said the official development assistance is declining worldwide, not only for Laos, and future support will focus more on cofinancing and sourcing other resources and low-interest loans.

She said the private sector must prepare to produce high-quality goods that can compete in regional and international markets, while development partners will continue to provide technical support during the transition period.

Under the Smooth Transition Strategy plan, Laos will pursue green growth and sustainability based on four pillars and 22 priority tasks.

Reviewing reforms

The plan seeks to stabilize the macroeconomy by tackling public debt and reviewing tax reforms, 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 Generalized Scheme of Preferences Plus status with the European Union and to pursue new free trade agreements.

The human resources sector 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 approvals for new mining operations, and shifting production toward higher-value semifinished products.

Moukdavanh said the transition from LDC status should be viewed as an opportunity 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 toward a more self-reliant economy.

The participants of the meeting 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, LAOS