Trade officials, finance providers seek better ways for SMEs
Trade officials, finance providers seek better ways for SMEs
Representatives of small and medium d enterprises in Laos and the government sector as a promotional advisor are now discussing the difficulties of procedures to access finance, aiming to minimise the obstacles for entrepreneurs.
The Small and Medium Enterprise (SME) Promotion Department under the Ministry of Industry and Commerce launched a discussion panel for financial providers and the SME sector, aiming to identify the exact difficulties.
As part of the government's promotion priority, representatives of various public and private banks, financial institutes and other financial providers, and the SME sector are invited to meet at an executive consultation meeting.
In his opening remarks, Deputy Minister of Industry and Commerce Mr Siewsavath Savengseuksa, said the SME sector will be a frontier when it comes to business competition after Laos officially joins the Asean Economic Community.
“SMEs play a significant role in socio-economic development and also boost job recruitment, providing better living conditions and generating incomes for the people,” he said.
According to a survey of the National Statistics Bureau in 2006, Laos' SME sector had more than 126,000 units or equivalent to 99.8 percent. However it is still a small number of businesses if compared to the density of the population.
Meanwhile, a survey of the World Bank in 2011 also unveiled that the funds to start up businesses in Laos, at around 70 percent, came from their own a ssets, those of relatives and those borrowed from cousins.
Some 15-16 percent of funds came from commercial banks, financial in stitutes and private financial providers and about 20 percent of funds were granted by governmental organisations, the senior ministry official said.
This year, the World Bank granted the business promotion and development fund to provide greater access to funds for the SME sector in Laos through the provision of low interest loans.
The provision of the fund is an extension project to the SME Promotion and Development Fund, with a total of 300 small and medium enterpri ses (SMEs) targeted to benefit from the SME Promotion and Development Fund.
The SME Promotion Department under the Ministry of Industry and Commerce is in charge of managing the fund.
The grant and soft loan of US$20 million was originally provided by the World Bank under a cooper ation agreement between itself and the Lao government.
The government approved loans and assistance from the International Development Association (IDA) and World Bank for a total amount of US$20 million to improve access to funding for SMEs.
The entire amount is to be divided up for different purposes with US$12 million to be used for the provision of SME funding through lines of credit and US$5 million set aside for building capacity and the provision of technical assistance to the SME sector.
The balance of U S$3 million shall be used to create a risk sharing facility to minimise the risks inherent in the provision of loans by the commercial banks that are involved in the project.
