Laos Streamlines Bureaucracy to Make it More Efficient | FULCRUM (2025)

In mid-March, the Lao People’s Revolutionary Party’s (LPRP) central committee issued a resolution on the need to restructure the government. This followed an extraordinary session of the committee in late February to discuss how to make the 47 party and state bodies “lean, streamlined, efficient, and robust”. The aim: to reduce “bureaucratic layers, inefficiencies, and dependencies previously caused by excessive fragmentation” and more clearly assign specific responsibilities to a “single ministry, agency or department”. The goal is admirable, but whether there will be real gains can only be evaluated once this plan is implemented.

The changes, approved by the National Congress in mid-March, echo similar restructuring recently announced in Vietnam.In the case of Laos, this includes merging the Ministry for Planning and Investment with the Ministry of Finance, combining the Ministry of Energy and Mines and the Ministry of Industry and Commerce, joining the Ministry of Natural Resources and Environment and the Ministry of Agriculture and Forestry, and dissolving the Ministry of Home Affairs (with its various functions shifted to other agencies). Changes are also expected in the functions of the Prime Minister’s Office as well as a new streamlined Ministry of Culture and Tourism.

The primary driver for these reforms is the need for greater governmental efficiency.In 2024, there were just under 170,000 civil servants, equivalent to almost 2.2 per cent of the population, with an aggregate salary bill equivalent to 6.3 per cent of Laos’ GDP. This is more than double the 2.7 per cent of GDP spent on health in Laos (the lowest proportion in Southeast Asia) and the 1.2 per cent of GDP spent on education.

Given recent concerns about Laos’s external debt obligations, a more streamlined governmental apparatus that can stretch the budget is desirable.

Laos has also been experiencing elevated levels of consumer inflation in recent years, which has put pressure on employers, including the government, to raise salaries. But the government has found it virtually impossible to match the salary increases in the private sector (or overseas jobs). As a result, some of the more capable individuals opt not to join the public sector, with the attendant risk that the civil service will have more mediocre staff. There are also anecdotal stories of civil servants taking on second jobs to boost inadequate incomes.

The restructuring is expected to incur voluntary and mandatory redundancies, and it is conceivable that some modest compensation will be provided to those asked to leave or leave early. For this reason, the resolution says it is “essential to ensure party members and civil servants clearly understand and unanimously support these changes”. The LPRP wants a government that is a “mechanism capable of effectively translating party guidelines, policies, plans, and laws into practice; demonstrate ownership and proactive implementation with competence, following the direction of ‘professionalisation’”.

Apart from the anticipated gains from streamlining and consolidating tasks, clarifying roles and responsibilities, and fostering a more “can-do” ethos, one desirable goal not touched on in the resolution is the need for a more ” joined-up” government. Public sector agencies tend to work strictly in their own silos and hesitate to collaborate on any issues that do not fit neatly and exclusively under their respective mandate for fear of causing friction. While clarity on “who does what” is desirable, so is the flexibility to work as a single entity on complex topics that require a multi-agency approach. Getting that balance right is something that the Lao government has yet to achieve.

Crucially, the restructuring is not expected to change the power dynamics in Laos nor have a major impact on preparations for the all-important LPRP Congress, scheduled for early 2026. This is not part of a factional power grab by certain elements within the top-tier government but simply a need to get the aggregate government spending bill down. To enact some aspects of the restructuring will entail amendments to the 2015 Constitution. The process to revise the Constitution commenced in mid-2024, when the LPRP’s Politburo established a drafting committee, well before the government restructuring was unveiled.

Given recent concerns about Laos’s external debt obligations, a more streamlined governmental apparatus that can stretch the budget is desirable.

The changes envisaged in the new Constitution include a shift from having individuals in charge of provinces, districts, and villages to governing committees at each of these levels, re-introducing an administrative level of government sub-districts (ta saeng) that sit between the existing village and district levels, clear reference to the development of a Lao “independent economy” that is less exposed to external forces, and beefing up aspects of the judicial system as well as a formal recognition of the Lao diaspora.

It is unclear how the reintroduction of no less than 950 sub-districts — a whole tier of local governance — will fit with the aim of streamlining the bureaucracy. Not only does this appear contrary to the spirit of the cost-cutting exercise, but it also runs counter to Vietnam’s decision to remove its district-level governance.

Will this government restructuring bring about the efficiency gains that the leadership in Laos desires? It is too early to tell as the deadline to complete the reorganisation plans at the national level is May 2025, and at the sub-national level, in July 2025.

But a key indicator will be the aggregate number of deputy ministers and directors-general of departments (of which there were over 450 in 2024). A cut in officers at this senior level would be a good gauge that the restructuring is meaningful and actually resulting in efficiency gains — and that it is not an exercise on paper only. A drop in this figure will reveal whether the government has a decent chance of achieving its stated goals.

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Laos Laos Politics

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