Regions and Countries

	Table of Contents
p. 11 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Development 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 : III. Sector Strategies

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C. Social Infrastructure and Environment

1. Health

59. Owing to increased public expenditure (from 0.7 percent of GDP in 1991 to 1.5 percent in 1999) and substantial external assistance to the health sector, health conditions in Lao PDR have improved. However, Lao PDR’s health condition still remains among the lowest in the world. The infant mortality rate is around 96 per 1,000 and the maternal mortality rate is around 650 per 100,000 in 1998. Child malnutrition rates remain high at 43 percent. The overall morbidity and mortality profile in Lao PDR is still characterized by diseases that could be substantially reduced by better preventative care, basic health care, and education. There is a clear need to increase spending on health, but there are also concerns that impact of the past health expenditures have been limited. The focus during the next few years will be on ensuring that public spending in health care is used more efficiently.

60. Key problems with the current health care system include:

1. uneven geographical distribution of health care; the public health network still does not extend to the poor in many rural, remote, and isolated areas;

2. imbalance between capital and recurrent expenditures; recurrent expenditures have declined from 57 percent of total health expenditure in 1991 to 40 percent in 1999;

3. poor quality of care and low utilization of services;

4. weak capacity of Ministry of Health in health care policymaking, management, and administration, including developing measures to optimize utilization of existing facilities and to take account of local realities;

5. underdeveloped drugs management and distribution system: medical supplies are in considerably short supply in most rural areas; and

6. too many administrators relative to nursing and medical staff.

61. Preventive health care and family planning must be of the highest priority in the health sector. This can be achieved through partnership with other donors including the World Bank, Australia, Germany, Japan, Sweden, UNDP, United Nations Children’s Fund (UNICEF), and NGOs, targeting disadvantaged regions and minority groups. ADB has assisted the Government in preparing the Primary Heath Care Policy and Development Plan. This will provide the strategic framework for the Government and donors’ involvement in this subsector. ADB assistance in this area will continue and be expanded.

62. ADB will build on its interventions in the health sector over the program period with the Primary Health Care Expansion Project in 2000. The focus will be on expanding access to quality primary health care provision for the poor and ethnic minority communities in the northern rural area. An ADTA, Capacity Building for Primary Health Care Management in 2000, will focus on strengthening capacity of health services provision in provinces and districts. The proposed Health Sector Efficiency and Management, a standby project in 2003 (PPTA in 2002), will target the need for increased efficiency in the management and provision of health services.

2. Education

63. There has been progress in extending the primary school system in Lao PDR over the past five years. However, Lao PDR still lags behind its neighboring countries in terms of key education indicators. While the gross enrolment rate for primary education is around 116 percent, the net enrolment rate is about 76 percent (only 72 percent for girls). The net enrolment rate for lower secondary is only 15–20 percent. The net enrolment rates for primary and secondary education are much lower in rural areas due to barriers to access and cost constraints. Females are underrepresented at every level of education, especially in rural areas. There is a serious gap in the quality of education between urban and rural areas. In rural primary schools, only 60 percent of students have books. Most primary school teachers in rural areas are untrained since trained teachers (only 60 percent of teachers) are mainly concentrated in urban and peri-urban areas. Posting and retaining better-qualified staff in rural areas is problematic. The regional, rural/urban and gender disparities weaken the education system.

64. Low efficiency of public expenditure seriously pervades the education system. While public expenditures on education have marginally increased from 1.9 percent of GDP in 1991 to about 2.0 percent in 1999, recurrent expenditures have rapidly declined from 80 percent of total education expenditures in 1991 to 46 percent in 1999. As a result, repetition rates and dropout rates are as high as 25 percent and 12 percent per annum, respectively. Primary completion rates are only around 60-65 percent and estimated at 55 percent in rural areas. To achieve the Government’s goal of universal primary education by 2012, there is an urgent need to address critical issues of the education sector including insufficient access to complete primary education, weak planning and management capabilities, inadequate financing, especially recurrent costs, and poor quality.

65. ADB has assisted the Government in preparing the Education Sector Development Plan, providing a policy and strategic framework to guide future programs and investments. Discussions with donors active in the education sector including the World Bank, Australia, France, Germany, Japan, Sweden, UNDP, and UNICEF are ongoing. ADB will continue to assist the Government to improve the efficiency of resource utilization in education, particularly in basic education. ADB will process the Second Education Quality Improvement Project in 2001 (PPTA in 1999). The project aims at enhancing quality in the basic education system through teacher training. An ADTA, Strengthening Decentralized Education Management in 2002, will assist the Government in its decentralization efforts in education services provision. A PPTA in 2003, Education Sector Development, will focus on the Government's education policy and structural reforms including institutional strengthening to enhance effectiveness and efficiency in the sector.

3. Urban Development

66. While accounting for only 15 percent of the population, urban areas play not only an important role as markets for rural areas, but also as conduits for higher productivity employment. Urban areas are currently experiencing 3.8 percent annual population growth, much higher than the national average. It is projected that the urban population will increase to 26 percent of the country’s total population by 2020. Appropriate development of urban areas will be required to absorb the increasing population. In Lao PDR, urban development should closely link with adjacent rural area development to provide economic opportunities and nonfarm employment in rural areas. In this context, small towns development is considered of strategic importance.

67. In the small towns subsector there are a number of overarching concerns. The subsector still requires strengthening of the legislative, institutional, operational, and enabling policy environment. This is critical if urban development administration authorities are to evolve into fully functional local governments or municipalities. A coherent policy and regulatory framework at the central level is essential if they are to operate as planned. Training of central government staff in managing decentralized structures is also needed.

68. Despite the progress so far made in water supply and sanitation, there are still some key strategic constraints that need to be addressed:

1. decentralizing water authority to the provinces with clear regulatory authority;

2. strengthening provincial water authorities and establishing operational frameworks;

3. expanding the absorptive capacity of the local municipal authorities; and

4. increasing tariffs to assist financial sustainability.

69. ADB has been the lead donor in urban development and water supply and sanitation sectors. ADB will continue to help Vientiane through a follow-up project, Vientiane Urban Development II Project in 2001 (PPTA in 1999) with possible cofinancing with the French Government. In the future, ADB's assistance in urban development will focus on small towns improvement and small towns/rural water supply and sanitation. ADB will process the proposed Small Towns Development Project in 2003 (PPTA in 2000). This project aims to improve small towns infrastructure as well as institutional capacity in the urban development planning area. Recognizing the need to continue to increase the institutional capacity of local authorities, two ADTAs are programmed: Local Resource Mobilization for Municipal Authorities in 2001, and Capacity Building for Local Governments II in 2003. ADB will also process the PPTA for Northern and Central Water Supply and Sanitation Sector Project in 2002. The project will expand coverage under the sector-wide approach developed in the ongoing Water Supply and Sanitation Sector Project approved in 1999.

4. Environment

70. Given the importance of natural resources to the country’s economy, there are a number of priority areas that require urgent action. They include:

1. strengthening of environmental impact assessment process and national environment action plan;

2. introduction of improved agricultural systems in the uplands and lowlands;

3. establishing and strengthening integrated watershed management;

4. strengthening of the management of natural resource protecting areas;

5. reforming institutional arrangements to effectively address environmental concerns; and

6. capacity building at the central and local levels.

There is also a critical need to establish institutional mechanisms to increase the Government’s monitoring and enforcement capabilities as regards logging activities related to infrastructure development.

71. ADB's operational thrust in the environment sector over the medium term will focus on:

1. capacity building for environmental planning and management, with a particular emphasis on hydropower development;

2. supporting activities in improving agricultural systems in upland and lowlands; and

3. building management capacity for sustainable river basin development. ADB will process the Energy and Transport Environmental Management Program in 2001 (PPTA in 2000) to help the Government develop a policy and regulatory framework, as well as effective monitoring, enforcement and coordination mechanisms to ensure that social and environmental concerns are appropriately taken into account in major infrastructure development. ADB will also process the Nam Ngum River Basin Development project in 2002 (PPTA in 2000) with a focus on environmental and sustainable river basin development. Regional technical assistance (RETA) for Strategic Environment Framework for the GMS (1998), Protection and Management of Critical Wetlands (1999), and Subregional Environmental Monitoring and Information System II (1999) are under implementation.

72. ADB will also explore potential feasibility for mini-hydro schemes, through PPTA, Renewable Energy Development in 2002, which are environmentally friendly, and could draw upon the Global Environment Facility. ADB is also finalizing an Environmental Strategy which will provide ADB, the Government and other donor agencies with a prioritized environmental action plan over the medium-term.

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