Laos is aspiring to leave the LDC status by 2020 which would require an average annual growth rate of GDP of above 8%. This goal can only be reached through development of the private sector. Moreover, it calls for the transition from a self-subsistent agrarian society to a modern agro-industrial economy and from a state-directed economic system to a market-oriented economy. In order to support of the Lao Government to reach these goals, Lao-German development cooperation is concentrating on two priority areas: the sustainable development of the economy and rural development in mountainous regions of the north and south. The central challenge for the development of the country is to break up the regions’ isolation, in order to facilitate linkages to the economic progress.

In the area of Rural Development, the provision of basic infrastructure (road construction and rural water supply), the development and implementation of village development plans, the sustainable use of natural resources, the creation of micro-finance institutions and access to clean water are the main focal points of Lao-German development cooperation.

In the priority area of Sustainable Development of the Economy, German development cooperation supports vocational education, as well as small and medium enterprises and the strengthening of local Chambers of Industry and Commerce.