SMEs to benefit from greater incentives: Minister
SMEs to benefit from greater incentives: Minister
Small and medium enterprises (SMEs) are set to enjoy stronger incentives under the government's policy to promote this sector, which is fundamental to the country's economy, a minister has said.
Speaking at press conference last week, Minister of Industry and Commerce Ms Khemmani Pholsena said the government is committed to improving the business environment so that SMEs, including micro, small and medium enterprises (MSMEs), can grow.
We are focusing on doing whatever we can for the development of SMEs and MSMEs, she said, adding that the government was exploring ways to enable businesses to more easily access financing.
She said SMEs are the foundation of the Asean economy and in Laos 99.8 percent of the business units registered fall within this category.
Given their vital importance to driving the region's macroeconomy, Laos, which chairs Asean this year, has included SMEs and MSMEs in the eight priority deliverables named under Laos' Asean Chairmanship 2016.
The move represents the Asean leaders' commitment to ease access to financing by SMEs and MSMEs. Focus is also placed on creating an environment that makes it easier for SMEs t o set up business.
Director General of the Department of SME Promotion under the Ministry of Industry and Commerce, Mr Somdy Inmixay, said the department was backing the SME promotion drive. An SME promotion fund was being set up such that banks would issue loans at lower interest rates than normal. The normal annual interest rate charged on loans varies from 7 to 10 percent.
Under the scheme, which is being supported by the World Bank, businesses can obtain long-term loans for up to seven years. Mr Somdy said officials in charge are mulling the new incentive, including expanding credit schemes f or smaller businesses.
The director said more than 100 billion kip has been transferred to three banks so they can issue loans to SMEs.
He added that officials will also look into ways to further improve the procedures and regulations concerning business licences so as to streamline the process.
We have detailed plans. We are trying to [improve the environment], he said.
In addition, programmes have been carried out to help businesses improve their operating capacity along with other relate d activities.
But Mr Somdy admitted that although the interest rate offered under the scheme was lower than the normal rate, it was high compared to the rates offered in other countries in the region.
Regarding complaints by some businesses that they had found it difficult to access financing under the scheme, the director explained that if officials judged that a proposed business was unlikely to make a profit or could encounter risks, credit would not be released.
About 50 to 60 percent of all requests for financing have been rejected, he said.
