SMEs get more financial support
SMEs get more financial support
Small and medium d enterprises (SMEs) across the country will soon be able to obtain loans from the SME Fund through the Lao Development Bank (LDB)'s service offices.
“LDB is now under service preparation and expects that SMEs will be able to obtain the loans at the bank's service offices within this month,” LDB Deputy Managing Director Mr Sengpheth Manivong said yesterday.
“At present, they can only access the loans at the bank's headquarters in Chanthabouly district in Vientiane,” Mr Sengpheth said. “They can also ask for more details or information on the loans at the headquarters.”
The SME Fund has provided 14 billion kip to the LDB over five years at an interest rate of 5 percent per year. The two parties signed an agreement two weeks ago.
The LDB expects to release loans to about 70 SMEs, drawing from the 14 billion kip fund.
“However, so far no SME has come to the bank to ask for a loan,” Mr Sengpheth said.
An SME Fund official, Mr Kingxay Chounlamountry, said that recently a few small business operators had visited the SME Fund's office and shown interest in the loans. Mr Kingxay advised the operators – agricultural producers and tourism service operators – to visit the bank for more details.
Mr Kingxay said the fund is mainly focused on supporting SMEs in the agricultural processing, handicraft production and tourism services sectors.
Small enterprises can receive a loan of up to 250 million kip and medium enterprises can obtain a loan of up to 500 million kip.
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.
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 government approved the 16 billion kip for the SME Fund in order to encourage banks to loan money to SMEs.
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.
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 and promotional activities.
vientiane times
