Introduction Frontier markets, characterized by underdeveloped capital markets, limited institutional capacity, and elevated investment risks, often face challenges in attracting private capital for climate-aligned innovation. However, localized solutions led by agile enterprises are increasingly demonstrating their ability to address key development constraints, ranging from infrastructure gaps to environmental externalities. In Lao PDR, one such enterprise is LOCA, a Vientiane-based transport technology company that has rapidly scaled to become the country’s first and largest electric vehicle (EV) ride-hailing platform. LOCA illustrates how climate-positive, digitally enabled business models can emerge and succeed in resource-constrained environments, given appropriate policy signals, financing instruments, and institutional support. How LOCA is Changing Urban Transport in Lao PDR Since its launch in 2018, LOCA has formalized over 1,000 drivers, introduced cashless payment systems, and deployed more than 100 electric vehicles—supported by a technology stack developed entirely in-country. As of mid-2025, the company has facilitated over 400,000 trips, with international tourists accounting for approximately 60% of its user base. LOCA’s business model generates several positive spillover effects. It reduces carbon emissions, supports employment formalization, promotes financial inclusion through digital transactions, and contributes to domestic revenue mobilization through improved tax compliance. Affordable and green EV service. In 2024, LOCA introduced the LOCA MINI—a low-cost, fully electric urban micro-taxi service. Each vehicle is equipped with modern safety features, onboard PM2.5 air filtration, and comprehensive accident insurance. Base fares start at 29,500 LAK (USD 1.35) for the first three kilometers, with dynamic pricing adjusted based on demand and utilization. The service is accessible exclusively through the LOCA app, reflecting the growing digital adoption in urban areas of Lao PDR. Built-in EV infrastructure. Recognizing infrastructure as a critical enabler, LOCA made early investments in EV charging, beginning with nine fast-charging stations in 2023. By mid-2025, this network had expanded to 47 stations across key urban corridors, with plans to reach 200 stations by the end of the year. Notably, LOCA is also repurposing underutilized petroleum assets by converting defunct fuel stations into EV charging nodes—leveraging existing real estate for climate-aligned infrastructure adaptation. Green bonds and institutional backing. In late 2025, LOCA will issue Lao PDR’s first green bond, raising USD 2.5 million to expand its fleet and charging network. Denominated in both USD and LAK, the bond is backed by licensed local securities intermediaries. Reducing carbon, one EV ride at a time. LOCA’s fleet has surpassed 11 million kilometers in service, resulting in an estimated reduction of over 2 million kilograms CO₂ emissions. Women now make up 20% of LOCA’s 1,000+ EV drivers, bringing gender inclusion to green mobility. Photo credit: LOCA. Scale, reach, and gender in the workforce. LOCA employs over 1,000 drivers, with 90% operating EVs. Women represent 20% of its drivers—above national averages in the transport sector. Drivers also benefit from significant fuel savings, boosting earnings and making operations more sustainable. Economic and environmental impact. From a macroeconomic standpoint, LOCA has displaced over 1.5 million liters of imported fuel, contributing positively to Lao PDR’s balance of payments and supporting the country’s Nationally Determined Contributions (NDCs) under the Paris Agreement. The reduction in tailpipe emissions and localized air pollution also generates environmental benefits and promotes public health and urban productivity benefits often overlooked in GDP. Tax compliance and trust-building. LOCA strengthens public trust by ensuring compliance and protection. Drivers pay a 5% personal income tax, while the company contributes 10% VAT and 20% corporate profit tax—important in a context of low domestic revenue mobilization. Every ride also comes with accident insurance of up to LAK 500 million (USD 53,000) for passengers and drivers. Bridging the Capital Gap for Frontier Innovators LOCA’s growth highlights a persistent challenge in frontier markets: the lack of fit-for-purpose capital for early-stage, growth-oriented enterprises. Despite strong fundamentals, LOCA and similar firms remain underbanked, constrained by limited collateral, short track records, and unfamiliarity among lenders. Development finance institutions are stepping in with risk-tolerant capital and technical support to bridge this gap. One example is the Asian Development Bank’s Frontier initiative, which provides early-stage financing and advisory services to businesses aligned with climate and development goals. LOCA fits squarely within this investment thesis: operates in a frontier market; demonstrates economic, social, and environmental impact; scalable in other Mekong urban centers; and supports the transition toward low-carbon infrastructure. Such investments matter not only for firm growth but for their demonstration effect signaling that high-impact innovation can be financed and scaled even in capital-constrained contexts. ADB is also providing technical assistance to help LOCA develop a green finance framework that ensures use of proceeds from green bond issuance will be allocated to business activities aligned with the ASEAN green taxonomy standards. Through these initiatives, ADB's support will enable LOCA to expand its fleet and accelerate the shift to EV taxis in Lao PDR. What Policymakers Can Do to Help Green Mobility Scale Accelerate EV ecosystem development. Scaling EVs requires investment in charging networks, battery logistics, and technician training programs, which also open opportunities for local SMEs and workers. Institutionalize blended finance frameworks. Development finance can de-risk private capital through guarantees, concessional co-investment, and first-loss tranching—particularly relevant in markets where commercial investors face asymmetric information and risk aversion. Tailor financing products to foster innovation. Many early-stage companies lack sufficient collateral for bank loans. Venture capital is also limited in smaller frontier markets. Alternative financing, including self-liquidating instruments such as revenue-based financing as well as social impact bonds, could diversify capital markets and give innovative firms room to grow. Enable startup-friendly regulation. Simplifying licensing, tax registration, and transport sector permits for digital-first enterprises can improve formalization without stifling innovation. Strengthen green capital markets. Technical assistance to securities regulators, institutional investors, and corporate issuers can scale the local issuance of climate-linked instruments and improve SME investability. Implication LOCA shows that frontier economies can generate homegrown, climate-smart solutions when entrepreneurial drive meets catalytic support. With the right policy attention and tailored capital, firms like LOCA can help Lao PDR build a more inclusive and resilient growth path while offering lessons for other frontier markets. Unlocking this potential will require collaboration across governments, DFIs, investors, and local innovators. Ask the Experts Dominic Patrick Mellor Principal Investment Specialist, Private Sector Operations Department, Asian Development Bank Established a strong track record of turning ideas into tangible results. Experienced in formulating and executing strategic plans, creating ventures and investment vehicles, raising funds, and building teams. Played a key role in launching several flagship initiatives, including ADB Frontier, ADB Ventures, and the Mekong Business Initiative. Has extensive experience working in emerging and frontier markets across Southeast Asia, the Pacific, the Middle East, and Africa. Holds an MSc in Economics from Oxford University and a BSc in Mathematics from Warwick University. Soulinthone Leuangkhamsing Principal Economics Officer, Lao PDR Resident Mission, Asian Development Bank Soulinthone Leuangkhamsing contributes to the Lao PDR chapter of the Asian Development Outlook and the country partnership strategy. He has supported the processing and implementation of ADB-supported public sector management projects. Before joining ADB in 2008, he served as an economist at the Lao PDR Resident Representative Office of the International Monetary Fund. He holds a master’s degree in business administration from the School of Management at the Asian Institute of Technology in Thailand, and a bachelor’s degree in economics from Flinders University in South Australia. Kavita Iyengar Senior Country Economist, Southeast Asia Department, Asian Development Bank Kavita Iyengar is a senior country economist at the Southeast Asia Department. Previously, she was country economist at ADB’s Timor-Leste Resident Mission and focal for regional cooperation and knowledge management at the India Resident Mission. Her varied work experience includes teaching, environment consulting, and publishing. She has a PhD from Clark University in the United States. Michael Chon Investment Associate, Private Sector Operations Department, Asian Development Bank Investment professional with broad experience across venture capital, private equity, and asset management. Led transactions in diverse sectors, including electric mobility, pharmaceuticals, and agriculture. Previously served as Head of Business Development for a successful Korean media commerce company. Holds a Bachelor of Business Administration from the University of Michigan. Asian Development Bank (ADB) The Asian Development Bank is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—49 from the region. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.