Regions and Countries

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p. 5 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Lao People's Democratic Republic : I. Country Performance Assessment

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D. Governance: Sound Development Management

26. There is an urgent need to increase the efficiency of public services in Lao PDR. It is critical to strengthen the structure and capability of public services, which is currently inadequate to keep pace with the demand from the changing society. Practice of the rule of law should be enhanced. There is growing recognition in Lao PDR that governance needs to be improved to effectively implement market-oriented economic policies and appropriately respond to the challenge of reducing poverty. The major concerns include: inadequate regulatory frameworks; importance of informal networks; highly centralized, top-down decision-making procedures; insufficient institutionalized coordinating channels; unclear roles and responsibilities of agencies; lack of sound competition within civil society; and a weak human resource base. Insufficient transparency and accountability in decision making, together with significantly low salary of government officials, heighten the potential for corruption. The Prime Minister recently issued a decree on anti-corruption. This is widely viewed as an important first step by the Government in controlling corruption.

27. Public Administration Reform (PAR) was identified as one of the five national strategic priorities at the 6th Party Congress in 1996. Recently, the Prime Minister established a high-level Leading Committee for PAR to oversee the Government’s wide-ranging PAR Program. The Government also created the Department of Public Administration under the Prime Minister’s Office, which is responsible for central guidelines and policy issues regarding the organization of government at the central and local levels.

28. Lao PDR is currently in the process of decentralization. In the Prime Minister’s order dated 11 March 2000, provincial governments are to become strategic development units; district governments are to become budgetary and planning units; and village councils are to become implementing units. This is a direct attempt to devolve strategic planning and budgeting to subnational levels of government. However, the decentralization initiatives should fully reflect the reality of a country which has a small population and a large number of ethnic groups, and faces a major constraint of weak institutional capacity. Institutional weaknesses are particularly pronounced at the local level. Attempts to decentralize planning and implementation need to be coordinated, and substantive efforts should be extended to improve local level institutional capacity.

29. The role of mass organizations and nongovernment organizations (NGOs) in sound development management activities is becoming more important. NGOs are increasingly involved in many externally funded projects including multilateral development institutions. With the Government's stated objective of devolving greater decentralization to subnational levels of government, the role of NGOs in support of service provision is expected to increase. However, the relationship between the Government and NGOs requires a clearer and more transparent operating framework.

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