However, although it became clear these economic policies were preventing growth, no substantive reform was introduced until 1986. Initially narrow in its scope, the NEM was expanded to include a range of reforms designed to create conditions conducive to private sector activity. The collapse of the former Soviet Union and its allied communist regimes in Eastern Europe, with which Vientiane had enjoyed close relations and economic assistance, forced Laos to develop cooperative relations with a broader range of countries, irrespective of their political, social or economic systems. It still maintains a strong relationship with China. Laos has a limited infrastructure, no railroads, a poor road system and limited telecommunications.
Electricity is available in only a few urban areas.
Laos also suffers from a severe shortage of tertiary-trained personnel and lacks sufficient officials with English language skills to interact effectively with donors and investors and undertake its Asean commitments. On the plus side, Laos shares borders and many common interests with Thailand, Vietnam, Cambodia and China, forming a natural economic growth area. While the small size of the domestic market limits opportunities for trade with Laos, the more than 100 million people who live within 100 kilometers of its borders can generate market opportunities. Laos also has the potential to become an important overland transit point for trade in the Mekong region. The communist leaders of Laos, where foreign grants and loans account for 20 percent of gross domestic product, have assured international donors that they will push ahead with new measures to promote the private sector and curb red tape and corruption.