The Lao People's Democratic Republic
The Lao PDR has a land area of 236,800 square kilometres and a population of 4.6 million giving it the lowest population density in East Asia.  A landlocked country, Lao PDR is bordered by Vietnam, Cambodia, China, Myanmar and Thailand with the Mekong River serving as much of the border with Thailand.   About two-thirds of the country is mountainous which creates transportation difficulties while at the same time producing many rivers and vast hydro power potential.  Lao PDR is a tropical country, whose climate is affected by monsoon rains from May to September alternating with a dry season from October to April.
Eighty percent of the population live in rural areas of the 17 provinces and single special administrative zone. 
The provinces are further subdivided into 129 districts and 11, 935 villages.  There are up to 68 ethnic groups (the official census counted 47 main groups) generally categorised into three groupings: the Lao Loum, who occupy the lowland plains and the Mekong river valley, and constitute some 60 percent of the total population; the Lao Theung, who occupy the mountain slopes, comprise about 30 percent of the population; and the Lao Soung, who live in the mountain areas at altitudes over 1,000 meters and constitute about 10 percent of the total population.
The Lao People's Revolutionary Party, which assumed power in 1975, is the only political party.  It is governed
by a Central Committee and headed by a Politbureau of 9.  The Party organisation extends downward to the province, district and village levels, in parallel with the government administrative structure and at senior levels is synonymous with the government administration.  Lao PDR is a unitary state so the local government is an extension of central government.  Each province is administered by an appointed Governor who is also head of the Party in his province.
The Lao constitution was adopted in August 1991.  It separates legislative, executive and judicial powers and
provides the legal framework for a market-based economy.  It guarantees equal rights of minority groups and
women both as employees and as clients of the public service.  An important clause is the one which makes
primary education compulsory.
The people exercise their power through an elected national assembly.  The national assembly approves the
annual state budget and plan and all laws.  Four new laws are vital to the country's transition to a market
economy: revised foreign investment law, budget law, taxation law, and the law on business operations.  The
President is the Head of State, and the main organ of the government is the Prime Minister's Office headed by
the Prime Minister.  The Cabinet or Council of Ministers is composed of eighteen members including heads of the
ministries, the State Bank, and the State Planning Committee.
Lao PDR is one of the world's least developed nations.   In 1995, it ranked 138 out of 173 countries in the
Human Development Index of the United Nations Development Programme (UNDP), with a per capita income of
around US$ 350, a literacy rate of fifty percent and life expectancy of 57 years.
Government's long term development objective is to "free the country from the state of underdevelopment by
the year 2020," i.e. to graduate from a least developed to developing country status.   The country's official
plan for the period 1997 to the year 2000 is:
Official State Plan For the period 1997 to the year 2000
The economic objectives are:
achieve and maintain high growth rates with specific targets for different industries, inflation and the state and external trade deficits
strengthening of macro-economic management, specifically:
improve performance of the banking sector

fiscal discipline through improvement of revenue collection and expenditure rationalisation

continue modernisation of the legal and regulatory framework

strengthen organisation structures

strengthen local government and decentralise

establish planning and evaluation departments in a number of major ministries

upgrade civil service managers

accelerate preparations in integrating with ASEAN and
The education objective is to realise universal primary education The health objectives are:
reduce major diseases, such as malaria, diarrhoea and respiratory infections with targets

water for 70 percent of villages and sanitary latrines for 50 percent

reduction of infant and maternal mortality and malnutrition with targets

promotion of breast feeding, birth spacing and child delivery under supervision

encouragement of private sector to provide health services

improved capacity building, coordination and health management
The labour and welfare objectives are:
improve the quality of the labour force, especially youth

improve labour law and regulations

develop the civil service social security fund

design a social security system for the private sector

provide assistance to stabilised or re-settled populations, to veterans, returning refugees, victims of natural disasters and orphans

continue the clearance of unexploded ordnance

eliminate commercial opium and cannabis cultivation, reduce and prevent drug abuse, eliminate
trafficking, refining and other drug-related crimes and enhance international drug control cooperation
Compared to its larger, more populated and more powerful neighbours, landlocked Lao PDR appears at a
disadvantage.  In fact, most of Lao history since the decline of the Lane Xang kingdom, which was the peak of
Lao influence and dominance in the region, can be seen as skilful management of relations with neighbours so as
not to anger them while playing one off against the other.  So while the Lao people may appear inferior in terms
of leverage and technical knowledge, they are consummate diplomats in maintaining harmonious relations with
their more powerful neighbours.
The 4.6 million Lao people are surrounded by more populous and more powerful China, Vietnam, Myanmar and
Thailand.  Lao PDR is at the nexus of Southeast Asia, the fastest growing regional economy in the world.  Lao PDR is in the midst of dramatic change begun in 1986, converting its economic and public administration affairs from a centrally-planned to a market economy.  An enviable annual growth rate averaging six percent in the 1990s signals the first steps forward in the economic and administrative transition.
Administrative reform has been closely linked to economic reform, including the long-term lease of most, and
outright sale of a few, of 155 state enterprises, cutting the public service by 20 percent to 70,000 (42,000 of
which are teachers), and creating an agency to handle the large aid budget.  The government is in the process of creating a national planning, budgeting, taxation and personnel management system.
Future reform will be more difficult to implement and assess.  This is because the next stage of reform is in "soft" areas of human resource development, for example, changing work habits of public servants, improving
transparency and accountability within ministries, and further mobilising of women and minorities in the public
service.  Careful planning, implementation and monitoring of these "soft" reforms is essential to their success.
It is important to remember they are the kinds of changes that can take decades, even a generation, to implement.
Rural Lao, who comprise 80 percent of the population, are still mostly subsistence farmers who earn the
equivalent of less than US $100 a year.  Many have not yet become a part of the cash economy and have little
access to schooling, medical care, or employment options.  Most urban economic development has not affected
them and the gap between urban and rural standards of living is growing.  On the other hand, they have been
cushioned from the current economic melt down to some extent precisely because they are outside the cash
One should not assume the Lao PDR's need for Western expertise, technology and capital resources extends to
an acceptance of Western cultural values.  History and the official prevailing attitudes may tend to resist
"cultural pollution."  But as the door opens ever wider, Western cultural values are influencing the Lao people.
Change is taking place.  Culturally, Lao people have more and more contact with foreigners and more foreign
ideas are flowing into the country.  An increasing number are travelling abroad to study or for diplomatic
purposes.  The behaviour of the urban Lao, especially those under 30 years of age, is undergoing major change as these people pick up the modern ways of Thai society over the television.
Economic change from 1990-96 was nothing short of sensational.  The free market began to take off, attracting talented and enterprising Lao people who would otherwise have worked in government jobs or state-owned or
state-managed industries.  Those who work in the private sector have none of the state benefits but their basic wage is often several times that of state employees.
Since 1997 economic development has stalled, some would say regressed, due to the East Asian economic crisis and a more difficult Lao policy environment and bureaucracy for domestic and foreign business.
A word about the world of work.  Lao offices are generally neat and orderly.  They are often maintained by the
staff themselves as part of their job.  Senior people have quite large and well appointed offices with a number of phones.  Sometimes you will meet in the office but larger meetings will often take place in a reception area or conference room.  Coffee, sometimes followed by tea with snacks are served for higher level meetings.
Work takes on a leisurely pace but when required, can go into high gear to meet a deadline or prepare for an
event.  The bureaucracy recently switched to a five day 35 hour work week with a one hour lunch from noon till
one o'clock.
Since the average civil service monthly wage is around US$30, many civil servants have been forced to find
other means of earning income outside their civil service job.  It is common to have one marriage partner,
frequently the wife, with a job outside the civil service to supplement the salary of the other partner working in
the civil service.


Foreword | Lao PDR | Introduction | What is a Partnership? | Working with a Lao Partner

Understanding Lao Culture | Communication | Working Effectively with Your Lao Partner
Social Conventions and Protocol | Conclusions