Overview of Australia's aid program to Laos

How we are helping

2014/15 Bilateral Outcome
$37.6 million

2015/16 Bilateral Budget Estimate
$20.6 million

2015/16 Total Australian ODA Estimate
$37.9 million

The Australian Government will provide an estimated $37.9 million in total ODA to Laos in 2015-16. This will include an estimated $20.6 million in bilateral funding to Laos managed by DFAT.

Australia and Laos are long-standing regional partners and share a strong and diverse relationship underpinned by deepening economic ties, community links and development cooperation. Australia has a strong interest in ensuring Laos continues to develop as a stable neighbour that is increasingly well-positioned to contribute to regional security and economic growth. Our aid to Laos aims to build prosperity and reduce poverty, while helping Laos to take advantage of economic integration with the region.

Laos has made good economic progress since the introduction of market-based economic reforms in the 1980s. Standards of living have improved for many people but the country still faces significant development challenges. The benefits of economic growth have not been shared equally and some social development indicators remain very weak. Educational opportunities diverge significantly depending on geography, gender, and ethnicity. The resources sector, led by mining and hydropower, will remain an important engine of growth and trade. However to ensure economic opportunities are more broadly shared in the future, Laos’ economic base will need to widen and greater investment in sectors, such as agriculture, small and medium enterprise development and tourism encouraged.

Laos’ National Socio Economic Development Plan (NSEDP) 2016-20 provides the country’s overarching policy for responding to Laos’ development challenges. It places emphasis on graduating from least developed country status by 2020, developing human resources, furthering economic development, diversification and integration and maintaining economic and fiscal stability. 

Australia is committed to supporting Laos’ continued development and is targeting our investments in areas where Australian aid will contribute to development that is inclusive and sustainable.

Our program directions are outlined in the Aid Investment Plan.

Objective 1: More disadvantaged girls and boys complete a quality basic education

An inadequately educated workforce is a central obstacle to development, employment, and investment in Laos.  Implementation of ASEAN Economic Community obligations in relation to freer movement of trade, investment and labour will further increase competitive pressures facing Laos. Education is therefore a priority for the Lao Government and for Australia’s aid program.

Building on Australia’s longstanding investments, and leadership in the sector, the first phase of Australia’s new Basic Education Quality and Access in Laos (BEQUAL) program 2015-19 will be delivered in 66 of the most educationally disadvantaged districts to: increase student participation; improve learning environments (e.g. by building new classrooms); and improve the availability of quality teaching (e.g. by training 360 ethnic minority women to become teachers). The program will draw on the skills of multilateral agencies, managing contractors and non-government organisations.

Investments improving basic education participation and quality

Objective 2: Improving Laos’ human resources through scholarships, training and organisational capacity building

Strengthened human resources are essential to Laos’ future economic growth and competitiveness and its ability to provide its citizens with the social services required for equitable development. Australian aid will support a human resource development program which will build on the positive results of our longstanding scholarships program (for study in Australia and in Laos) and the opportunities presented by the New Colombo Plan.

To meet existing gaps in human resource capacity, our focus will be on both development for individuals and institutional strengthening for targeted Lao organisations. We will work with institutions responsible for promoting gender equality and disability inclusion to ensure our investments support inclusive human development policies.

Investments improving human resources in Laos

Objective 3: A stronger trade regime and more competitive private sector

Australia’s aid program will continue to help Laos integrate into the regional and multilateral trading system. After supporting Laos’ accession to the WTO in 2013, future work will focus on improving the quality and sustainability of Laos’ trade and investment growth. We will do this through targeted efforts to: support Laos to implement its WTO commitments; reduce the costs of trade by simplifying procedures at the borders; improve labour standards and skills in export industries such as garments manufacturing; and help Laos effectively manage ASEAN’s economic integration agenda during its 2016 ASEAN chairmanship. We will also provide financial and advisory support to businesses operating in Laos to improve their competiveness and ability to export, with a particular focus on women entrepreneurs.

Investments strengthening the trade regime and private sector competitiveness

Legacy rural development investments

We will continue to support a number of existing rural development investments under our new Aid Investment Plan until those investments conclude.  These investments will provide better access to financial services, increase household productivity and incomes and reduce unexploded ordnance contamination.

Investments supporting rural development

Our results

  • In 2014 we helped 51,832 additional poor women and men increase their access to financial services in support of higher incomes and greater resilience to adverse shocks.
  • In 2014 we cleared 1,152 hectares of productive land from unexploded ordnance contamination to reduce the risk facing rural communities and to increase household productivity and incomes.
  • In 2014 we constructed 73 kms of rural roads to provide rural communities with better access to essential government services and markets.
  • In 2014 we provided 9,747 men and women with increased access to safe water.
  • In 2014-15 we awarded 50 students (25 men and 25 women) with tertiary scholarships to study in Australia.
  • In 2014-15 we awarded 74 disadvantage students (36 men and 38 women) with scholarships to study a bachelor degree in Lao public universities.
  • Between October 2014 and June 2015 we approved 40 businesses to receive support under the Business Assistance Facility to improve their trade growth strategies.

Our changing program

Australian aid to Laos has changed to reflect current Australian aid and Lao Government development priorities and the 2015-16 aid budget.  Following the release of the 2015-16 aid budget and consultations with program partners, we have consolidated investments to focus on three main areas – basic education, human resource development and trade and business environment reform.  We propose to lift the proportion of the program devoted to basic education and trade and business environment reform in recognition of development needs and Australian aid policy priorities.  We will not renew our investments in rural development but still expect to achieve some significant outcomes before they conclude.  These include increasing financial inclusion, lifting household productivity and incomes and reducing unexploded ordnance contamination.  We will scale back the number of Australia Awards that will be offered from 50 to 30 per year.

A group of women plant paddy rice seedlings in a field near Sekong, Laos
A group of women plant paddy rice seedlings in a field near Sekong, Laos (credit: DFAT).
A young boy receives physiotherapy
A young boy receives physiotherapy following an accident that resulted in severe spinal injuries (credit: DFAT).
A man in a canoe, with a bridge in the background
The Friendship bridge built with Australian funding and completed and opened in 1994, crossing the Mekong River and connecting Thailand to Laos (credit: DFAT).