Construction firms face shutdown as govt fails to pay debts
Construction firms face shutdown as govt fails to pay debts
A number of construction firms are in a difficult position with some facing closure after the government failed to pay debts it owed to them on time.
In the face of a revenue shortage, the government is delaying debt repayments to construction firms that have completed infrastructure projects under the policy of allowing the private sector to do the work first before being paid back by the governme nt later.
A representative of the construction businesses told a meeting of government and business leaders on Monday the firms were facing shutdown because they were left without enough money to run their businesses after completing the projects.
Some of the firms have laid off workers to reduce operating costs, the representative said.
He said some of the firms were under pressure from commercial banks that lent them the money to invest in the projects in the first place.
The banks have seized some of the businesses' assets and land that were offered as guarantees for the loans after some of the firms failed to make their repayments on time.
The representative urged the government to help the construction firms survive and address their business problems.
Prime Minister Thongsing Thammavong said the government was facing a revenue shortfall and urged the business leaders to join together to make it through this difficult time.
Governor of the Bank of the Lao PDR Mr Somphao Phaysith said the banks acknowledged the reality of the situation and had decided to introduce some measures to help the struggling businesses stay afloat.
The banks have decided not to penalise construction firms that have failed to pay off loans on time, after learning they were not able to collect the debt from the government, he said.
The bank will extend loan repayment periods for the construction firms until the government can pay off its debt to the firms.
Mr Somphao also said the banks will not sell the seized assets and land. The construction firms are free to trade their assets and land any time after they complete their loan repayments.
Economists said the banks had to seize the assets as part of efforts to prevent an increase of non-performing loans and ensure the financial security of commercial banks, adding that these banks should maintain a strong financial position to prevent bankruptcy.
vientiane times
