IFC promotes movable-asset finance
IFC promotes movable-asset finance
The IFC, a member of the World Bank Group, is promoting movable-asset finance to support businesses, especially small and medium enterprises (SMEs), to play a bigger role in the Lao economy.
An International Symposium on Movables Finance took place yesterday in Vientiane with the participation of around 100 representatives, including government officials, managers of local financial institutions, academics, and legal professionals.
The symposium was co-organised by the IFC and the Ministry of Finance with aims of discussing concepts and practices in movables lending.
Senior international and domestic speakers introduced established industry practices, latest trends, and experiences from other countries and discussed the changing environment for movables finance in Laos and the roles of government and financial institutions.
According to a press release from the IFC, SMEs make up more than 98 percent of the private sector in Laos, but most have difficulties in obtaining loans from formal financial institutions as they do not own adequate land or buildings that banks demand as security.
Finance against movable assets will help SMEs tap their potential by providing them with the necessary liquidity to run and grow their operations. The implementation decree on the Secured Transactions Law was issued and the collateral registry was operational in late 2013 with support from the IFC.
Since then, more than 300 business loans have been financed based on movable assets.
SMEs are a crucial part of the Lao economy. Promoting access to finance for SMEs has been a priority for the Ministry of Finance and other government authorities, said Mr Somboun Inthapattha, Head of Cabinet, Ministry of Finance.
Movables finance will increase financial inclusion and benefit the whole economy.
Developing a movables-finance market requires understanding and active participation from various stakeholders, said Mr Phongsavanh Phomkong, Head of the IFC Office in Vientiane.
In addition to a sound secured-transactions legal framework, a supportive environment is necessary where lenders are fully aware that evaluating and monitoring movable assets enables them to better identify and control the cash-flows of business borrowers. This can be a safer way to scale up credit to SMEs.
The IFC and the World Bank have supported secured-transactions reform in Laos over the past years. The objective is to develop a dynamic market for movable-asset finance in the country.
An ongoing advisory project funded by Switzerland, Canada, and Japan is working to build the necessary elements for the market to function properly. The symposium followed a two-day technical training session on movables finance offered by the IFC and the Ministry of Finance as part of efforts to strengthen lender capacity in this new business area.
