Political and Administrative Organization

The Constitution of the Lao PDR was adopted 'in August 199 1. It provides for the separation of legislative, executive and judicial powers. The people, with whom the political power ultimately resides according to the Constitution, exercise such power through an elected National Assembly. The members were directly elected by the people in December 1992, whose five-year term commenced in January 1993. Among the key functions of the National Assembly is the approval of annual state budget and plan. It recently passed four important legislation's which are vital to the country's transition into a market economy revised foreign investment law, budget organic law, taxation law, and the law on business operations.

The Constitution further defines the authorities and structure of the state and the fundamental rights of the citizens. It also provides a legal frame for a market-based economic system.

The President is the Head of State, and the main organ of the government is the Prime Minister's Office headed by the Prime Minister. The Government is composed of eighteen members including heads of the ministries, the State Bank of Lao, and the Committee for planning and Cooperation (CPC). The President of CPC is concurrently the Deputy Prime Minister.

The local government structure extends from provincial levels through district levels to village levels. The province is administered by a governor. Divisions of responsibilities within the provincial and district administrations are similar to those at the central level, covering the same fields as the central ministries except in the areas of national defense, foreign affairs and police. Decree 68 providing for the Fundamental Centralization of State Finance, Budget and Treasury, promulgated in August 1991, has reformed the administration from horizontal to vertical management, placing fiscal collection and budgetary allocation under the ministerial purview.

The Lao People's Revolutionary Party (LPRP) is the only political party. Its leading role in the political system is explicitly recognized in the Constitution. It is governed by a Central Committee and headed by an executive committee. The Party organization extends downward to the district and village levels, in parallel with the government administrative structure. In line with the NEM reform program, the administrative reform including further delineation of the responsibilities of the Party from those of the State and restructuring of the civil service to correspond with the implementation requirements of the NEM reforms.