SMEs still struggling to access finance
SMEs still struggling to access finance
Small and Medium Enterprises (SMEs) in developing countries including Laos are facing challenges to access finance to develop their businesses, according to financial experts.
SMEs are considered the backbone of most developing countries and their development is essential to achieving long-run and sustainable economic growth, but more than half of SMEs lack access to finance, which hinders their growth, according to a press release from the Lao Chamber of Professional Accountants and Auditors (LCPAA).
The press release distributed during a conference on the challenges and opportunities for SME growth in the Asean Economic Community (AEC) said many small firms in Asean countries were still facing issues when it came to accessing funding sources.
In response, the Lao government has focused on SME development as a priority by creating an enabling environment for them, including improving accessibility to financing.
This would also create opportunities for improving their capacities in the region to enable them to be more competitive, innovative, and to utilise regional economic initiatives and incentives for their sustainable growth.
However, anecdotal evidence a nd studies suggest that many enterprises lack the skills to survive and grow in a changing and competitive environment with many SMEs not even having a bookkeeping system. This indicates a decline in accounting standards.
Deputy Minister of Finance Mr Bounchom Ubonpaseuth said bookk eeping played an important role in helping SMEs to obtain bank loans as lenders liked to see a financial track record.
As almost 90 percent of each nation, SMEs were a key part of driving economic growth as well as creating an income for local people, he added.
Accessing finance would also be important for Lao SMEs to develop further sustainable products from agriculture to industry, aiming to increase competition with the AEC.
According to a recent Young Entrepreneurs Association of Laos (YEAL) report, Lao SMEs were expanding at a rate lower than other countries in the region.
This has led to Lao enterprises missing chances to export within the region and increased competition in the domestic market from Vietnamese, Chinese and Thai investors.
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.
