No Longer Poor: Can Laos be Clean, Green and Great?

Laos will graduate from the UN’s Least Developed Country (LDC) category this year. Doing so not only achieves a national aspiration from the 2000s but also marks the end of a decades-long categorisation that has framed the country as “poor”. Laos will surpass three ASEAN Member States that remain as LDCs — Cambodia, Myanmar and Timor-Leste — and 44 countries that are still classified as such.

In January 2026, Laos set a long-term development goal to reach upper-middle income status by 2055. But this goal will have little value if the country is less liveable and sustainable.

Laos deserves credit for its graduation. From 2000 to 2020, its economy grew rapidly, with an average annual growth of 7 per cent — among one of the highest in the world. That expansion was driven by natural resource extraction and exports, especially hydropower, mining and plantations. This growth alongside added assistance from development partners, in turn, financed better infrastructure and reduced national poverty to 15 per cent by 2025.

However, resource-led development has come at environmental and health costs. The land, forests and the mighty Mekong have experienced major degradation and deforestation. Forest cover fell by 2.9 per cent between 2000 and 2015. Cities in Laos — like many others in the world — are facing a global waste crisis in which dumping, open burning and clogged drains have caused adverse health effects, flooding and environmental harm. In the national capital of Vientiane and UNESCO World Heritage City Luang Prabang, waste burdens have increased as a result of population and tourism growth. For example, only a third of an estimated 970 tons of waste produced per day in Vientiane is collected and properly disposed of. By 2030, the amount of waste produced could rise to 1,512 tons per day.

When the Covid-19 pandemic broke in 2021, its effects exposed the structural weaknesses of Laos’ resource-led development model. From 2021 to 2023, the economy faced unprecedented pressures, from high inflation and currency depreciation to low foreign reserves. Public debt rose to around 131 per cent of GDP in 2022. A Sri Lankan-style economic collapse was predicted. In July 2024, President Thongloun Sisoulith instructed the government to take new measures to stop the depreciation of the kip within one month. These measures included stronger capital flow management to increase foreign currency inflows into the banking system, the building up of gold reserves and the creation of a centralised foreign exchange (FX) platform. The kip has since stabilised, while inflation has eased, reserves have improved and public debt has been reduced to 88 per cent of GDP by the end of 2025.

To avoid a repeat of the 2022–2023 debt crisis, Laos’ development drive needs to better balance financially-sound growth with green prosperity. The strongest lesson comes from countries that undertook similar policies when they were “still poor” and developing. For example, upon independence in 1965, Singapore was burdened by issues of poverty, slums and poor sanitation. From the start, Singapore’s first Prime Minister Lee Kuan Yew envisioned “the cleanest and greenest city in South Asia” as the ultimate “hallmark of success”. That clarity of mission has been integral to Singapore’s development strategy. Since the 1960s, the city state’s leaders have rejected investment projects that were deemed highly pollutive. Although resources were scarce, Singapore’s early investment in waste management and urban greening, the enactment of new laws and successful sustainability campaigns have paid off.

Likewise, Laos can boost its economy and development without normalising waste and environmentally unfriendly resource extraction. To that end, the Lao government has already put in place laws and strategies that have successfully increased forest cover, advanced world-class mitigation measures for Mekong dams and implemented dam-safety standards nationwide.

The central challenge, however, remains uneven implementation. In general, regulatory agencies often lack the resources, technical capacity and independence needed to monitor compliance, and overlapping mandates between ministries dilute accountability. In addition, the effects of poor waste management on health, tourism and investor confidence will only undermine a country’s capacity to handle more complex development challenges.

To help make Laos cleaner and greener, four mutually reinforcing strategies are needed. First, there must be integrated visions and longer-term planning by the government and its partners. On waste management, ad hoc or donor efforts are not enough. Laos should adopt a country-wide cleanliness strategy that cities can adapt. It should also establish clear national targets (e.g. “make Vientiane the cleanest Mekong capital”), define institutional responsibilities, manage financing and fee models and implement monitoring systems, including protocols for festivals and tourist hotspots.  

On sustainability, Laos already has specific targets for conservation and development, but these goals are often in silos. For example, the 2020 Forestry Strategy aims to achieve 70 per cent forest cover, while the power plan has set targets of 20 gigawatts (GW) by 2030. If these targets are not coordinated, increased power outputs may inadvertently put more pressure on rivers, forests and food systems. Laos needs to formulate an integrated climate-water-energy-food vision that is climate resilient and adaptive to scenarios on future water availability, flood and drought risks. These strategies should also align with Mekong-wide planning, moving from project-by-project decisions toward coordinated dam operations and joint investments that produce multiple benefits. With more multi-sectoral developments in certain areas, Laos can save other areas of valuable ecosystems, such as free-flowing rivers and wetlands, from exploitation.

Second, waste and environmental policies should be implemented with a carrot-and-stick approach. Waste management solutions need to be accompanied by nationwide waste and public health laws that support implementation. Singapore’s Environmental Public Health Act (enacted over 50 years ago) is instructive. Inspections, punitive fines and Corrective Work Orders (CWOs) which require offenders to clean public areas, have reduced land pollution. In green development, Laos already has modern laws on land, water, forestry and environment, and a recently integrated Ministry of Agriculture and Environment with a stronger mandate for enforcement. What is needed is the consistent application of sustainability criteria when reviewing projects, stronger inspectorates, and stricter penalties for unauthorised development and Environmental Impact Assessment (EIA) violations.

Laos also needs incentives that can fund sustainable waste management solutions. Bhutan’s Sustainable Development Fee model could be an option for Luang Prabang, allowing Laos to mobilise additional revenue for clean and green efforts. Additionally, waste-to-energy schemes such as the Tuas South Incineration Plant demonstrate that waste can become productive infrastructure.

The rise of regional carbon markets offers Laos another opportunity for ASEAN cooperation: as hard-to-abate industries seek high-integrity carbon credits, Laos could generate new revenue by protecting forests and other carbon sinks, thereby creating financial incentives to implement clean and green development. Finally, eco-certification and tax or licensing incentives could encourage greener factories, hotels, restaurants and tourism operators.      

Third, authorities can draw on systematic civic mobilisation to cultivate environmentally conscious behaviours. Laos has had some campaigns in the past, but they lacked scale, regularity or social anchoring. Nationwide Total Cleanup or broader clean and green campaigns once or twice a year can be institutionalised to bring together ministries, organisations, schools and businesses in a synchronised effort. Leaders should roll up their sleeves and participate visibly and sustainably, not symbolically. A potential untapped resource is temples, already among the cleanest and most orderly public spaces in many Lao villages. If temples led monthly village clean-up efforts in cooperation with local authorities, spiritual values, community pride and environmental duty can be merged in ways that government slogans alone cannot achieve. 

Finally, policymakers and officials need to leverage modern technologies to build stronger monitoring systems and adaptation. Drones, for example, can lower the cost of monitoring systems, while AI-powered data systems can increase analytical prowess and options for decision making. A digital twin of Laos’ critical areas of cities, land and environments — with satellite and drone-generated imageries, data and tracking and modelling software — would allow policymakers to monitor city streets, forest cover, river systems, waste flows and infrastructure project footprints in near real time.

Being clean and green takes more than money and resources. It is a matter of mindset and leadership. Laos is on the verge of shedding its long-standing reputation as one of the world’s poorest countries. The question is no longer how Laos can become richer, but what development choices it will make to reach that goal responsibly. An extractive, higher income country with long-term environmental degradation would be a poor answer. A cleaner and greener Laos, however, would be a great one indeed.

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Editor’s Note:
ASEANFocus+ articles are timely critical insight pieces published by the ASEAN Studies Centre.