Evaluation of Japan’s ODA to Lao People’s Democratic Republic

Link to the full report

Background, Objectives, and Scope of the Evaluation

Laos, located in the center of the Indochina Peninsula, is an important country in the Mekong region. Its stability and development are directly linked to the prosperity of the Mekong region and to the Association of Southeast Asian Nations (ASEAN) as a whole. Laos has achieved steady economic development by strengthening its economic power through the import and export of mineral resources and electricity from hydropower. However, many issues related to social and economic development remain unresolved.

Based on a review of Japan’s aid policies and assistance to Laos in recent years, this evaluation aims to obtain recommendations and lessons learned for the formulation and implementation of the Country Development Cooperation Policy for Laos, which is scheduled for FY2024, and fulfill accountability to the public through the publication of the evaluation results.

Summary of Evaluation Results

● Development Viewpoints

(1) Relevance of Policies

Japan’s aid policy for Laos is consistent with Laos’s development policies and needs, Japan’s high-level policies, and international priorities. It was also confirmed that major donors, including Japan, have formulated their assistance policies in line with the National Socio-Economic Development Plan (NSEDP) of the Government of Laos and are partners in working together to achieve the country’s national goal of exiting the Least Developed Country (LDC) status. Furthermore, Japan’s aid policy for Laos reflects its comparative advantage by combining various aid modalities and planning a wide range of activities from soft to hard infrastructure, from the policy formulation level to the community level and by creating support that makes use of the experience and know-how Japan has accumulated through providing long-term support in a variety of sectors. Based on these factors, it was determined that the Relevance of Policies in Japan’s aid policy for Laos was “Highly Satisfactory.”
(Evaluation Result: Highly Satisfactory)

(2) Effectiveness of Results

It can be evaluated that the inputs and activities of each project planned in line with the Country Development Cooperation Policy for Laos have generated goods and services generally as initially planned. Secondly, regarding the extent to which “development issues (sub-targets)” were achieved through Japan’s inputs and the extent to which they contributed to the achievement of “priority areas (medium-term targets),” it can be evaluated that significant achievements were made. In particular, we can evaluate that significant direct contributions were made in the areas of strengthening governance (mainly in the legal capacity development support), transportation and transport networks, electricity supply, basic education, urban environmental improvement (waste management), and health and medical services. It was also confirmed that relevant projects were highly appreciated by Laos government officials. Through these activities, the projects have contributed to the achievement of the four medium-term targets set forth in the Country Development Cooperation Policy for Laos. Finally, in terms of the “final outcome” (at the level of major goals), Japan has contributed to some extent to the major objective of “developing economic and social infrastructure aimed at exiting the LDCs category.”

The following points should be noted. Although the future economic effects of the development of the transportation network (Laos-China Railway and Vientiane-Bauten Expressway (under construction)) by China, which is considered the largest donor, are expected to be significant, the effects are still limited at the time of the evaluation due to the movement restrictions caused by the COVID-19 pandemic. The Laotian side suggested that Japan should maximize synergies with such Chinese assistance in the future by providing assistance for human resource development, social infrastructure improvement, and promotion of private investment. On the other hand, the rapid increase in external debt due to borrowing from the Chinese government has become a major issue.
(Evaluation Result: Highly Satisfactory)

(3) Appropriateness of Processes

Japan’s aid policies for Laos were appropriately formulated in line with established procedures, fully reflecting the development needs of Laos. In terms of implementation, the Embassy of Japan in Laos and the JICA Laos Office have various structures in place to respond to various sectors, and close communication between the two countries and development partners has been promoted through policy dialogue, round table processes, and sector working group meetings. In addition, it was confirmed that efforts are being made to increase aid effectiveness by combining various modalities, including technical cooperation, grant aid, and ODA loans as well as volunteer programs. During the COVID-19 pandemic, flexible measures were taken, such as establishing an online environment, securing means of communication with counterparts in Laos, and utilizing local staff, and monitoring of each project was continued. Furthermore, in addition to coordination with other donors and aid agencies, cooperation with various aid actors, including private companies and NGOs, was confirmed in a wide range of areas. The above indicates that the process is appropriately implemented to ensure the relevance of the policies and effectiveness of the results. On the other hand, as pointed out in the evaluation from diplomatic viewpoints, public relations activities to inform the international community about the effective results of Japan’s ODA are limited, and there is room for improvement in order to utilize the results of ODA for diplomatic power.
(Evaluation Result: Satisfactory)

*Ratings: Highly Satisfactory; Satisfactory; Partially Satisfactory; Unsatisfactory

● Diplomatic Viewpoints

(1) Diplomatic Importance

It can be said that Japan’s ODA to Laos is important from the following perspectives; (a) Laos is an important country in the connectivity of the Mekong region because it is located in the center of the region; (b) At international meetings, Laos often supports Japan’s position and candidates in elections and votes; (c) Since Laos has friendly relations with many bordering countries such as Vietnam and China, Laos may play an important role in the international community and the ASEAN region. In addition, Japan’s assistance to Laos is consistent with the “Free and Open Indo-Pacific” (FOIP), which is positioned as one of Japan’s current foreign policies, and various action plans have been formulated and agreed upon. Furthermore, following Japan’s philosophy of the “Rule of Law,” Laos has developed laws and institutions with Japan’s assistance.

(2) Diplomatic Impact

The impact on Japanese diplomacy in the international community includes (a) impacts of gaining support for Japan in the international community, (b) impacts of countering the influences of China and Russia on international affairs, (c) impacts of promoting universal values and rules that Japan aims for, and (d) impacts in contributing to the evolution and development of relations among ASEAN member countries. As for the impacts on bilateral relations between Japan and Laos, the following can be pointed out: (a) the expansion of pro-Japanese groups and experts on Japan and the increase in the number of Laotians visiting Japan, (b) support for Japan in times of crisis (e.g., in times of emergency disasters), (c) impacts on economic relations (priming effect), and (d) public relations (from Laos to the international community) to generate impacts.

Recommendations Based on Evaluation Results

(1) Strengthen Public Relations to Leverage the Results of Japan’s ODA Projects as Diplomatic Power

(2) Strengthen Intellectual Support for Fiscal Stability

(3) Rather than Competing with Chinese Aid, Strategically Pursue Substantial Synergies by Strengthening Industrial and Educational Support

The Second Friendship Bridge, a 1,600-meter international bridge, connects Laos and Thailand on the Mekong River and contributes to the smooth transportation of people and goods, as well as economic development in the areas around the East-West Economic Corridor.