麻豆传媒

Excellencies
Distinguished Colleagues and Partners
Ladies and Gentlemen

It’s an honour to be here with you today.  I thank you for this opportunity to have this meeting with you on the important subject of Lao PDR's transformative journey towards graduation from the Least Developed Country status. 

Yesterday, we had an excellent meeting with the national steering committee chaired by the Minister of Foreign Affairs, where the Government of Lao PDR shared its comprehensive preparations, strategic priorities, and long-term vision for graduation from LDC status. I was also happy to hear of the Government’s commitment to graduate.  

I congratulate and commend the Government and the people of Lao PDR for this remarkable achievement.  This milestone is not only a recognition of your sustained efforts over decades, but a tremendous opportunity to build a more inclusive, resilient, and prosperous future.  

I take this opportunity to thank all development partners present here for your unwavering support and commitment to this process.

I would also like to acknowledge the UN Resident Coordinator Mr. Bakhodir Burkanov, the United Nations Country Team, for their deep engagement and excellent support throughout this process.    
 
As the country moves toward graduation in 2026, this milestone represents far more than just a statistical achievement. 

It is rather a steppingstone towards a more inclusive, resilient, and sustained development.

Navigating this journey requires addressing both opportunities and challenges with strategic foresight.

Let me begin by recalling the words of the United Nations Secretary-General:

“Graduation from the LDC category must be a reward, not a punishment.”

This principle lies at the heart of the Doha Programme of Action and underscores our collective commitment to ensuring that graduation is not a disruption, but a launchpad for deeper, broader, and irreversible development gains.

As we engage in today’s discussion, let us keep this guiding principle at the forefront. 

While it is incumbent upon the graduating country to consolidate progress and build on the gains achieved, it is equally essential that development and trading partners step forward with strengthened support to ensure that graduation is a catalyst in Lao PDR’s continued development journey.

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[Overview of the LDC Graduation Process]

麻豆传媒 Committee for Development Policy (CDP) first recognized Lao PDR’s progress towards graduation in 2018, when the country met two of the three graduation criteria, namely: Gross National Income per capita and the Human Assets Index. 

By 2021, Lao PDR fulfilled all three thresholds for graduation - GNI per capita, Human Assets Index, and the Economic and Environmental Vulnerability Index.   

Following its achievement of graduation thresholds for the second consecutive triennial review, the United Nations Committee for Development Policy (CDP) recommended Lao PDR’s graduation in 2021.

This recommendation was endorsed by the UN General Assembly, initiating a five-year preparatory period until 2026.

During the 2021 Triennial Review, the country achieved a GNI per capita of $2,408, far surpassing the income threshold of $1,230. 

The Human Assets Index (HAI - the other important criteria) reached 72.6, exceeding the required threshold of 66; while the third criterion, Economic Vulnerability Index (EVI), improved to 29.8, below the threshold of 32.

Recent monitoring by CDP (in 2024) under the Enhanced Monitoring Mechanism, confirms sustained progress, with GNI per capita rising to $2,503; HAI improving further to 74.8; and EVI remaining stable at 29.8. 

These figures underscore significant structural advancements made by the country, despite macroeconomic challenges, including currency depreciation and public debt exceeding 108% of GDP.

Lao PDR is the second country, after Bangladesh, to qualify for graduation by meeting all three criteria. 

The extended five-year preparatory period, rather than the standard three years, was provided in view of the unique challenges posed by COVID-19, which provided the much-needed time to prepare for this transition.  

[Implications of LDC graduation for trade, investment and development, Finance]

Trade Relations

Graduation will have an impact on Lao PDR's trade preferences and market access conditions. 

With graduation, LDC-specific preferences, including duty-free and quota-free access to major markets, will gradually be phased out. 

However, several positive developments provide cushioning effects:

First: in 2023, the WTO General Council adopted a decision encouraging preference-granting members to provide smooth transition periods before withdrawing preferences. 

Then, at the 13th Ministerial Conference in 2024, WTO members agreed that LDC graduates would continue to access LDC-specific technical assistance for three years post-graduation.

Second: Lao PDR's regional trade relationships remain insulated from graduation impacts. 

Trade figures from February this year shows that the major share of trade was with countries in the region, namely, Thailand, Vietnam and China.   These trade flows benefitted from preferential access under ASEAN Free Trade Agreements and the ASEAN-China FTA, covering 90% of regional trade.

However, there will be challenges with other markets. 

The EU, which accounts for approximately 7% of Lao exports, will implement changes after a three-year transition period (2026-2029) that EU provides to all graduating countries.

Lao exports will shift from the EBA - Everything but Arms -initiative to the EU's Generalized System of Preferences (or GSP+), with tariffs going up by up to 11.9% on key products like garments. [This could potentially reduce total exports to the EU by 20.9% with estimated annual losses of $66.3 million.]

Likewise, recent announcements of reciprocal tariffs on US trade may disrupt market access further. Lao PDR exports to the US were valued at $306 million in 2023 and may be heavily affected by a revised effective tariff rate of 58%, although the share of total exports to the U.S. is 1.7%. 

The 90-day suspension of the U.S. reciprocal tariffs provides a temporary respite for Lao PDR, easing immediate trade pressures. This also allows time for negotiations to mitigate long-term impacts on key export sectors.

Intellectual Property Rights

Graduation will require full compliance with the WTO's TRIPS Agreement, ending Lao PDR's exemption under Article 66.1. 

While currently benefiting from a compliance deadline extension until July 2034, graduation in 2026 would necessitate accelerated alignment with international patent, copyright, and trademark regulations.

This could potentially impact the public health sector, as Lao PDR imports 80% of pharmaceuticals as generics from India and Thailand. 

Post-graduation, the country could lose access to the WTO's 2001 Doha Declaration waiver, potentially increasing medicine costs [by 15-20% in a sector where healthcare spending constitutes just 1.2% of GDP].

Development Finance

While bilateral and multilateral donors generally do not condition assistance on LDC status, Lao PDR may face challenges accessing certain LDC-specific funds. 

The country will lose for instance, ceilings and discounts applied to LDCs in determining contributions to some of the UN system budgets and cost sharing on the ground (although graduation is not likely to have any impact on Laos PDR’s contribution to the regular budget).

The recent suspension of USAID funding, and overall contraction in development funding may also have significant implications, especially in the operations of UN funds and programmes and NGOs on the ground.

Investment Landscape

Despite these impending challenges, foreign direct investment – FDI- shows encouraging growth, increasing by 162.37% in 2024 to reach $1.67 billion. 

This suggests growing investor confidence, a trend that graduation can reinforce by enhancing Lao PDR's international credibility.

[Key Transitions for Sustainable Graduation]

The Government, with UN support, has adopted a Smooth Transition Strategy, outlining specific measures to ensuring soft landing for Lao PDR after graduation. 

Let me highlight four strategic pillars for a smooth transition towards sustainable graduation:
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1.    Macroeconomic Stability and Financial Sustainability

This remains fundamental for sustainable graduation. 

As of 2024, Lao PDR's total public and publicly guaranteed debt was approximately $15.8 billion, equivalent to 108% of GDP. 

External debt constituted 82.5% of this total (around $13.1 billion), while domestic debt stood at $2.8 billion (20.2% of GDP). 

Despite some improvements, Lao PDR remains in a state of external and overall debt burden, with ongoing challenges related to currency depreciation and limited international capital market access.

[Thus], strengthening fiscal management, enhancing domestic resource mobilization, and ensuring debt sustainability must remain priorities.
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2.    Quality Trade and Investments

As LDC-specific trade preferences phase out, enhancing export competitiveness through quality improvement, value addition, and diversification becomes essential. 

Lao PDR's strategic location offers significant regional integration opportunities through the WTO and ASEAN Economic Community.

Improving the business environment to attract quality investments, creating decent jobs and facilitating technology transfer will be vital during this transition.

Further bilateral trade agreements could also be explored. [For instance, Vietnam has 17 FTAs and many more are under negotiations.  Bangladesh, the other country slated to also graduate in 2026, is now actively pursuing FTAs with more bilateral trading partners.]
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3.    Structural Economic Transformation

Lao PDR's economy remains characterized by high agricultural employment, indicating limited transformation on the overall employment structure. 

While agricultural employment in Lao PDR accounts for 58-70% of the total workforce, its contribution to GDP represents 16-22% of the national economy [based on different estimates]. 

Accelerating shifts toward higher-productivity sectors, promoting industrialization, and fostering innovation will be critical for sustainable post-graduation growth. 

The country has rich natural resources – with over 570 identified mineral deposits, including an estimated 500 tons of gold reserves, 8 million tons of copper, and 2 million tons of zinc. 

Additionally, forests cover 62% of its land area, providing essential ecosystem services, while its vast hydropower potential makes it a key regional electricity exporter.

If managed sustainably, these resources offer immense opportunities for economic growth and sustainable development.

4.    Climate Change and Disaster Management

As a landlocked country with significant environmental vulnerabilities, Lao PDR faces acute climate challenges. 

In 2024, over 217,000 people were affected by natural disasters, with damages exceeding 6 trillion kip (about $279 million). 

The country experienced 69 extreme weather events, disrupting livelihoods and critical infrastructure.

Despite low per capita CO2 emissions, estimated at 0.3 metric tons against the global average of 4.69MT, the country remains highly exposed to climate risks. 

This is primarily due to its reliance on climate-sensitive sectors like agriculture. 

While progress has been made in securing climate finance (including a $28.2 million GCF-funded health resilience project and a $16 million payment from the Forest Carbon Partnership Facility), the $4.7 billion funding gap for conditional NDC targets underscores the urgent need for increased international support, and development of climate resilient agricultural practices, infrastructure and industries.
Beyond graduation, Lao PDR can also benefit from LLDC specific climate finance, which is being called for in the new LLDC Programme of Action. 

[Additional Policy Areas for Attention]

Several other policy areas warrant focus as Lao PDR prepares for graduation.

Human Capital Development must remain central, with continued investments in education, health, and skills development. 

This is essential not just for meeting HAI graduation criteria but for building productive capacities needed for economic diversification, industrialization and sustainable growth. 

The country has one of the youngest populations in Southeast Asia, with nearly 60% of its citizens under the age of 25. 

This young population presents a unique opportunity to harness this demographic dividend, provided the right investments are made in education, skills development, and youth employment.

As of 2023, the gross enrollment ratio at tertiary level was only 14.9%. 

Therefore, enhancing facilities for STEM education at tertiary level should be a priority for Lao PDR to prepare its young population to become a real agent for transformation. 

Building technological capacities, promoting digitalization, and fostering innovation ecosystems should be integral to Lao PDR's graduation strategy, particularly for helping businesses move up global value chains.

Infrastructure Development should be another priority, particularly transport and digital connectivity, which are vital for overcoming the challenges of land-lockedness. 

Internet access in Lao PDR has grown considerably with an internet penetration rate of 63.6%. Universal internet access should be a key priority now. 

[and] Governance and institutional capacity are key enablers for sustainable development. 

Strengthening public administration, enhancing transparency, and improving policy coordination are essential for effective STS implementation.

[UN support towards the LDC graduation process]

麻豆传媒 system remains fully committed to supporting Lao PDR throughout its graduation journey, guided by the principle that graduation should be smooth, sustainable, and irreversible.

The UN Country Team here, through the UN Sustainable Development Cooperation Framework 2022-2026, has aligned its support with Lao PDR's graduation timeline, with a dedicated joint output area on Smooth Transition Beyond LDC Graduation. 

This ensures coordinated UN support for STS implementation.

My Office will continue advocating for international support for graduating countries and through the graduation support facility (iGRAD), and extend tailored support based on a needs assessment and will need support from development partners. 

The iGRAD offers integrated services across 6 areas and supported Lao PDR's STS development.

The UN Inter-Agency Task Force on Graduation, led by my Office, will also ensure UN system-wide coordination to support graduation efforts through technical assistance and resource mobilization.

We are also organizing a high-level meeting on "Achieving the Doha Programme of Action: Sustainable Graduation for the LDCs", expectedly to be held later this year, in December, in Doha. 

This meeting will provide Lao PDR an opportunity to share its STS, learn from others' experiences, and secure enhanced global partnerships.

We will work with trading and development partners to ensure the gradual phasing out of international support measures rather than abruptly terminating them. 

Moreover, as a landlocked developing country (LLDCs), Lao PDR will continue benefiting from the new Programme of Action for the LLDCs. 

The LLDC3 Conference to be held on August 4-8, 2025, in Awaja, Turkmenistan, offers important opportunities. 

As a landlocked country, Lao PDR can access various deliverables of the new POA namely on agricultural research, infrastructure investment, freedom of transit and climate support.

[Recommendations for Collective Action]

Excellencies, Distinguished Colleagues,

Based on our assessment of Lao PDR's graduation readiness, I would like to offer six concrete recommendations:

First, we need to have in place a coordinated whole-of-government graduation support programme bringing together all stakeholders to coordinate STS implementation – in the same manner the country has developed the STS. 

This would facilitate dialogue, information sharing, and joint programming while providing mechanisms for monitoring progress and adapting strategies.

Second, there should be targeted support and investment in trade diversification and value-chain development, including for businesses in improving product quality, meeting international standards, and accessing new markets.  Priority should be given to export sectors, and capacity building of trade institutions.

Third, it would be imperative to strengthen fiscal resilience and debt management.  There must be enhanced support and technical assistance for public finance management, domestic resource mobilization, and sustainable debt management. 

My Office will work with relevant UN agencies and other international partners in this regard, including by facilitating more support for tax reforms, automation, expenditure efficiency, and innovative financing mechanisms.

Fourth, it is important to accelerate investment to strengthen climate resilience and advance the green transition - particularly in climate adaptation, renewable energy, sustainable resource management, and green technologies. 

This will require mobilizing blended financing from climate funds, development partners, and private sector investors, with a strong focus on enabling SMEs to adopt and scale sustainable practices.

Fifth, there needs to be more targeted programme to accelerate human capital development and innovation, with a focus on building the skills, knowledge, and capacities essential for Lao PDR's future economy. 

This should include strengthening educational institutions and curriculum, investing in R&D in priority sectors, promoting digital skills, and nurturing vibrant entrepreneurship ecosystems.

Last but not the least, to ensure a smooth and sustainable transition beyond LDC graduation, Lao PDR will require strengthened and coordinated support from development partners, multilateral institutions, and the private sector. 

This must include scaling up Official Development Assistance (ODA), with a focus on concessional financing and extended transitional support in critical areas such as education, health, climate adaptation, and infrastructure development.

IFIs and bilateral creditors should consider innovative debt relief measures, including restructuring agreements or debt swaps for development projects, while maintaining concessional lending terms post-graduation to ease fiscal pressures. 

Targeted technical assistance will be essential to build institutional capacities in areas such as trade diversification, debt management, and climate resilience. 

The private sector also has a vital role to play.  Strategic investments in high-potential sectors - including renewable energy, agro-processing, and digital services - can drive job creation and economic diversification.

Public-private partnerships should be leveraged to expand infrastructure, enhance productivity, and enable technology transfer. 

Finally, establishing a multi-stakeholder platform for regular dialogue among the government, development partners, private sector stakeholders, and civil society will be key to aligning priorities, coordinating resources, and monitoring progress, during the post-graduation transition.

This collective and sustained engagement will be critical to ensure smooth and irreversible graduation; and transforming graduation into a catalyst for long-term, inclusive, and resilient development.

[Conclusion]
Excellencies, Distinguished Colleagues and Partners,

Lao PDR is on the threshold of a new development era. 

Graduation is not an endpoint, but the beginning of a journey to unlock new pathways to prosperity.

Through the implementation of the Smooth Transition Strategy and with strong collective commitment, we can ensure that graduation translates into lasting development gains, improving the lives and livelihoods of the people of Lao PDR.

As Lao PDR takes this next step, please rest assured that the United Nations remains a steadfast partner. Together, with Lao PDR and its development partners, we will ensure that Lao PDR’s graduation is not just the fulfillment of statistical benchmarks, but a meaningful transformation - one that delivers real and lasting improvements in the lives of all its people.

Let us seize this moment to build a future where no one is left behind, and where Lao PDR continues to thrive as a resilient, inclusive, and forward-looking member of the global community.

My Office, and the entire UN system, will be with Lao PDR on this exciting journey forward. 

I thank you.