LDB to provide loans to 70 SMEs
LDB to provide loans to 70 SMEs
The Lao Development Bank expects to release loans to about 70 small and medium enterprises (SMEs), drawing from a 14 billion kip fund.
The SME Fund provides 14 billion kip to the bank for five years at an interest rate of 5 percent per year. The two parties signed an agreement recently.
“Small enterprises can receive a loan of not more than 250 million kip,” the Deputy Managing Director, Mr Sengpheth Manivong, said at the SME Promotion and Development Fund opening and signing ceremonies last week in Vientiane. “Medium enterprises can have loans of not more than 500 million kip,” Mr Sengpheth said.
The bank will release loans to SMEs with interest rates of 9 percent per year for a loan of a year or less and 10 percent per year for loans of more than one to three years.
“They can obtain a loan without assets,” Mr Sengpheth said.
The government approved funds of 16 billion kip for the SME Fund in order to encourage banks to loan money to SMEs.
Such low interest rates facilitate the development and investment of SMEs and push the growth of the sector by providing easy access to funds.
The SME sector is the basis of the national economy and the backbone of economic growth, involving 99.8 percent of all businesses. For this reason, the government has sought to encourage growth by improving the legal framework that regulates their establishment.
Promotion of SMEs has become important to socio-economic development, particularly in the production of commodities, trades and services. These create new employment opportunities which contribute to the improvement of Lao people's living standards, paving the way for industrialisation and modernisation of Laos to lead to a more diversified economy with higher productivity and more advanced technology.
Laos still needs additional funding to promote the growth of SMEs through added financial and technical support.
According to the government's initial SME development plan for 2011 to 2015, the sector needs financial support of about 3,700 billion kip to push the SME sector growth to around 13 percent per year. The money will include about 3,200 billion kip for the SMEs' financial support. The rest will be for technical support or promotional activities.
LDB officially opened in April 2003 to provide funds to small and medium- enterprises and is a state-owned commercial bank with capital supplied by the Ministry of Finance. It was created by the merger of two previously state-owned commercial banks: Lao May Bank and Lane Xang Bank.
vientiane times
