📋 Tender Overview
Project Name
Skills Enhancement for Inclusive and Green Economic Development Project
Project Number
57206-001
Country / Economy
Lao People's Democratic Republic
Project Status
Proposed
Project Type / Modality of Assistance
Grant
Loan
Source of Funding / Amount
Grant: Skills Enhancement for Inclusive Economic Development
Asian Development Fund US$ 3.00 million
Japan Fund for Prosperous and Resilient Asia and the Pacific US$ 3.00 million
Loan: Skills Enhancement for Inclusive Economic Development
Concessional ordinary capital resources lending US$ 30.00 million
Sector / Subsector
Education / Technical and vocational education and training
Gender
Description
The proposed project is aligned with the following impact: labor productivity enhanced, and economic competitiveness strengthened (TVET Development Plan 20212025). The project outcome is: TVET programs aligned with evolving labor market needs. The project outputs are: (i) quality and relevance of TVET for selected occupational areas enhanced, (ii) institutional capacity strengthened, (iii) access to quality TVET expanded, and (iv) TVET for female students improved.
Project Rationale and Linkage to Country/Regional Strategy
Macroeconomic challenges. The Lao PDR is a landlocked, lower middle-income country classified by ADB as a fragile and conflict-affected situation. The country's economic fragility stems from a narrow growth model and heavy investments in natural resources, particularly hydropower and mining. These sectors have not significantly contributed to job creation or the development of new industries. From 2006 to 2019, the economy experienced robust annual growth, averaging 7.4%. However, from 2017 to 2022, the country became increasingly vulnerable to climate and external shocks, exacerbated by growing macroeconomic imbalances. These included steep currency depreciation, high inflation, rising public debt, and the impacts of the coronavirus disease pandemic, all of which moderated growth. This economic slowdown, coupled with high debt service obligations, has limited fiscal space for investing in human development. Spending on education and health decreased from 4.4% of gross domestic product (GDP) in 2016 to 2.3% in 2023, making it one of the lowest levels globally. As average inflation surged from 23.0% in 2022 to 31.2% in 2023, prices have outpaced wages, resulting in a decline in real incomes. With household purchasing power diminishing, many families have resorted to negative coping strategies such as cutting education expenditure leading to children dropping out of school. Consequently, up to one in three lower secondary school-aged children are not attending school, which is twice the average for lower-middle-income economies.
Labor market constraints. Despite the high rate of population migration from rural to urban areas, diversification of the Lao PDR's economic structure has been slow. Agriculture continues to employ over 60% of the workforce bu
