The Lao People’s Democratic Republic is a small and least developed country in South East Asia. The New Economic Mechanism was introduced since 1986 and the Lao Government has adopted market economy encouraged private sector and decentralized management authority. The agriculture and forestry sector is backbone of the Lao economy development. Lao PDR has an average of GDP growth rate of 8 % and an average economic growth rate of 7 %. The GoL is employing a two pronged socio-economic development approach, one for upland and other one for low land. With the former case the thrust is put for toward self-sufficiency in food emphasizing on agricultural diversification taking adequate conservation consideration into account, while for later case the focus is directed toward commercialized agriculture production using agricultural intensification to support the already existing market momentum as well as to trigger the industrial sector development particularly agro-industry. In realizing the development goal, the area-based approach strategy is employed. For the early stage of this millenium the GoL is committing itself to address the poverty issue so as to get the country rid of LDC status by the year 2020. Lao PDR has joined an Association of South East Asian Nations and has become an observer of WTO since 1997 and 1998 respectively. Nowadays, the country faces many problems and constraints during its economic transition in the areas of institution setting and legal framework, infrastructure, human resource development and financial capability.