📋 Tender Overview
Project Name
Greater Mekong Subregion Smart and Sustainable Tourism Infrastructure for Inclusive Growth Project
Project Number
59070-001
Country / Economy
Lao People's Democratic Republic
Project Status
Proposed
Project Type / Modality of Assistance
Grant
Loan
Source of Funding / Amount
Loan: Greater Mekong Subregion Smart and Sustainable Tourism Infrastructure for Inclusive Growth
Asian Development Fund US$ 5.00 million
Concessional ordinary capital resources lending US$ 20.00 million
Sector / Subsector
Water and other urban infrastructure and services / Other urban services - Urban flood protection - Urban policy, institutional and capacity development - Urban sanitation - Urban solid waste management
Gender
Effective gender mainstreaming
Description
The proposed project adopts a multi-pronged approach to building a more sustainable, resilient, inclusive, and competitive tourism sector. This will be achieved through three key outputs. Output 1 focuses on infrastructure improvements in Meuang Feuang while Outputs 2 and 3 will promote the adoption of digital technology and will provide institutional capacity support in Meuang Feuang and select provinces where ADB has previously invested, aiming to build and strengthen tourism management capacity and ensure the sustainability of those investments.
Project Rationale and Linkage to Country/Regional Strategy
Macroeconomic vulnerabilities. The Lao People's Democratic Republic (Lao PDR) is a small, landlocked country, classified by the Asian Development Bank (ADB) as a fragile and conflict-affected situation. The Lao PDR, a lower middle-income country in the Greater Mekong Subregion (GMS), has been driven by debt-financed investment in natural resource extraction, largely hydropower and mining, and transport. These investments contributed to robust economic growth averaging 8% annually from 2007 to 2016, but macroeconomic imbalances, external shocks, and the coronavirus disease (COVID-19) pandemic disrupted this progress. The pandemic triggered a recession. Tourism plummeted, unemployment surged, and poverty increased. Gross domestic product dropped to 0.5% in 2020, and the country's poverty level increased from 18.3% in 2018 to 23.5% in 2020. Although growth resumed in 2022 (reaching 2.5%) and 2023 (reaching 3.7%), the country remains vulnerable to macroeconomic instability, high public debt, currency depreciation, and inflation. These challenges eroded purchasing power and household savings and pushed more people below the poverty line.
Tourism sector. The Lao PDR's rich natural resources, diverse cultural heritage, and its strategic location within the GMS position tourism as a key economic driver. The sector showed strong pre-pandemic growth, with international tourist arrivals rising from 2.5 million in 2010 to 4.8 million in 2019 and revenue from tourism increasing by 144% to $934.7 million, contributing 2.7% to the country's GDP growth during that year. The COVID-19 pa
