Lao SMEs facing mixed fortunes
Lao SMEs facing mixed fortunes
Small and Medium Enterprises (SMEs) in Laos are facing significant challenges with increased competition from foreign investors, but there are improved future export opportunities in the region, an industry report has found.
According to a recent Young Entrepreneurs Association of Laos (YEAL) report and strategic plan for SME development, the sector was expanding at a rate lower than other countries in the region.
This has led to Lao enterprises missing chances to export to the region and increased competition in the domestic market from Vietnamese, Chinese and Thai investors.
With Laos becoming a WTO member and soon to be part of the Asean Economic Community (AEC), YEAL is hastening efforts to improve its members' capacity to develop their products to better standards.
The report acknowledged the problems faced by SME including low technology levels, lack of administration skills, regulations and state management still hindering Lao enterprises, and access to funding sources was especially limiting.
For example, the Lao banking system still can't issue loans to meet local enterprises' requests, with the main source of SME capital coming from relatives, friends and suppliers.
As part of SME promotion the association will also, in cooperation with the authorities, establish a dedicated fund for SMEs which will provide low interest loans to eligible businesses.
Currently, Laos still has a small percentage of SMEs compared to its population so to aid development of the sector the association is hosting business start-up courses including learning about business analysis and planning.
However, the report pointed out that members of the association were continuing to grow annually from 208 companies in 2010 to 500 companies this year.
The report was more optimistic about the future, hig hlighting growth opportunities for Lao enterprises and their ability to compete within the region if they improved the quality of their output.
In particular, Lao enterprises should work together to expand their production base for the single AEC market, which will assist their capacity to compete in the region.
