The pace of development of regulation in the water supply sector accelerated in 2002. Without any legal powers of enforcement for most of the time it has been operating, Water Supply Authority (WASA), Lao PDR has had to rely on other mechanisms principally comparative competition. This involves the publication of the WASA Annual Report containing the performance, both technical and financial, of the operators. Although the OFWAT comparative competition concept is applied with great effect to a privatised industry there is no reason why it cannot be applied to a state-owned one. The only difference is that the maximisation of profit incentive inherent in a privatised structure is not as strong. Furthermore, any failure to meet efficiency expectations determined through comparative competition will not result in reduced profits for shareholders but will actually deprive the company of much needed cash for further investment, which may, in turn, lead to lower level of service. Notwithstanding the above shortcomings it is still possible to generate improved performance though comparative competition, the driver being psychological more than financial i.e. a manager of a water operator will have a desire to be amongst the best performing, or at least not to be amongst the worst. This is especially strong in Asia where ‘loss of face’ is a powerful force.