Having achieved remarkable economic and social progress, Laos now faces the challenge of transitioning from commodity-driven growth to a more inclusive prosperity model prioritizing human capital development and green sustainability, according to a new report by the Organisation for Economic Cooperation and Development (OECD).

The report, launched in Vientiane on Thursday, highlights Laos' significant development progress, including sustained economic growth of over 7 percent annually between 2000 and 2019, driven by booming commodity exports and substantial foreign direct investment inflows, which rose from 187.4 million US Dollars in 2006 to 1.69 billion US Dollars in 2017.

Despite these gains, the report titled ‘Multi-dimensional Country Review’ points out the shortcomings of Laos' current development model, especially exacerbated by the COVID-19 pandemic. Challenges include a high debt burden, slow government revenue growth, and a concentration of growth and investment in a few sectors, with up to 90 percent of workers in informal sectors.

The report emphasizes the need for Laos to focus on human capital development, green sustainability, and public finance reform. Key recommendations include:

1. **Reduce Debt Burden:** Free up fiscal space by improving spending efficiency and managing fiscal risks related to public-private partnerships (PPPs) and state-owned enterprises (SOEs).

2. **Reform Tax System:** Boost revenue by removing distortions and shifting to expenditure-based investment incentives. Implement a consistent international taxation framework to reduce revenue leakages.

3. **Sustainable Investment:** Improve access to land, transport infrastructure, and the financial sector to attract more sustainable investment.

4. **Invest in Human Capital:** Increase investment in education, skills, healthcare, and social services.

5. **Green Finance:** Improve data collection and institutional capacity for green and climate finance.

6. **Enhance Coordination:** Strengthen implementation capacity by overcoming fragmentation and improving coordination among government and development stakeholders.

The OECD report underscores the importance of these reforms for Laos to achieve sustainable and inclusive economic growth in the future.