More finance institutions, more profit for SMEs
More finance institutions, more profit for SMEs
The existence of more banks and finance institutions for use by small business operators will help to spur growth and competition in the financial services sector, a bank executive has said.
“It will be good if there are more financial service operators in Laos because it will benefit local communities and businesses, especially in remote areas,” ACLEDA Bank Lao Ltd Chief Executive Officer and Managing Director Narin Phon said.
Speaking at an event in Vientiane last Saturday to celebrate Lao New Year, Mr Narin said “The presence of more financial service operators means there will be more financing available to drive the growth of the small business sector and remote area development.”
“I see that competition among financial services for people in remote areas is not extensive enough.”
“There are many banks in Laos but they are mostly medium and large scale operations that provide services for larger projects.”
Mr Narin said the financial services market is wide open, and the presence of more banking and finance institutions will mean more development and growth for Laos.
For example, Singapore is a small country but it has a huge finance sector that drives economic growth and it has become a financial powerhouse, he said.
ACLEDA Bank Lao disburses loans mainly to households, and micro, small and medium enterprises in both towns and rural areas.
“Currently loan amounts are averaging about 80 billion kip (US$10 million) per month which is fast growth,” Mr Narin said, adding that the bank has almost 50,000 deposit accounts.
Small businesses can become the backbone of a powerful economy and ACLEDA Bank Lao is confident that its loan programme will support further economic growth in Laos.
Small businesses now have better access to loans and the formal banking sector, which will definitely stimulate the economy, although on a small scale to begin with.
There are currently more than 30 banks in Laos, including branches of foreign banks. However, the Bank of the Lao PDR (BOL) has temporarily ceased issuing licences for new banks in the private sector or for business operators from now until 2016.
It has done this because it wants to use this time to monitor existing banks to see if they are up to standard in terms of both services and management.
ACLEDA Bank Lao has experienced fast growth after opening for business in 2008. Its assets are now worth more than one trillion kip and it has 45 ATMs and 41 service and branch offices. By next year it expects to have installed an additional 15 ATMs.
Last month the bank increased its registered capital to 300 billion kip, from the previous amount of 220 billion kip.
It had 977 employees as of last October and expects to have at least 1,500 by the end of this year. Staff are currently undergoing training in Laos and overseas.
The bank opened for business in July 2008 and was the first Cambodia-based commercial bank to operate in Laos.
Its shareholders comprise ACLEDA Bank Plc, the International Finance Corporation (operated by the World Bank Group) and Triodos-Doen and Triodos Fair Share Fund, the Netherlands' development finance company.
It recently received a certificate of congratulations from the government indicating that ACLEDA Bank Lao is enjoying excellent business operations and has made a significant contribution to economic development over the last five years (2008-2013).
