SMEs must show their books to access finance
SMEs must show their books to access finance
Small and Medium Enterprise (SMEs) will be required to be well-prepared for borrowing process arrangements to ensure they find it easy to access funds, according to a bank top official.
Governor of the Bank of the Lao PDR (BOL) Mr Somphao Phaysith spoke at a press conference in Vientiane on Wednesday, stressing that entrepreneurs are required to follow the bank's guidelines appropriately if they wish to receive a loan.
“Asset security is a key factor for clients that wish to borrow money from the bank, meanwhile some of them failed to show their warrants. That's why it remains a difficulty in terms of fund accessibility,” he said.
He explained that the entrepreneurs will be required to follow the guidelines of the bank in terms of allowing bank officials to check and scrutinise their business activities.
“It is dependent on the ability of entrepreneurs as to whether they meet the banks' requirements. There won't be any problems regarding financial accessibility if their affairs are in order,” Mr Somphao reaffirmed.
The SME sector has formed the basis of the national economy and the backbone of economic growth. It makes up 99.8 percent of all businesses, according to a recent report from the Ministry of Industry and Commerce.
According to the government's initial SME development plan for 2011 to 2015, the sector needs about 3,700 billion kip in financial support to push SME growth to 13 percent per annum.
This figure will include about 3,200 billion kip in financial backing for SMEs, while the remainder will be for technical support and promotional activities.
Over the past few years, the government approved the provision of 16 billion kip to the specially dedicated fund, which is designed to encourage banks to loan money to SMEs but as can be seen from the figure above much more will be required from the private sector.
The government's SME Fund provides 14 billion kip to the bank, while the rest of the money will go towards SME promotion and development projects as well as the management of the fund itself.
The banking sector has a clear policy on supporting the growth of the Lao economy, especially in the area of commercial production.
Meanwhile the Lao entrepreneurial sector still wants the government to consider lower interest rates attached to bank loans as well as supportive policies to facilitate business operations.
A representative of Lao business associations, who asked not to be named, has asked the government to provide specific guidelines and resolve remaining busin ess barriers.
“As the Asean Economic Community will come into effect in 2015, immediate implementation of the necessary policies by the government sector will be necessary to encourage local businesspeople to do their best in business operations and be ready for foreign competitors.”
vientiane times
