Ministry promotes SME financing through commercial banks
Ministry promotes SME financing through commercial banks
The Ministry of Industry and Commerce has continued to boost small and medium-d enterprises' (SMEs) access to finance from commercial banks in Laos.
The Department for Small and Medium Enterprise Promotion organised a meeting yesterday to disseminate results on the provision of loans to SMEs through the commercial banks.
The meeting was co-chaired by Deputy Minister of Industry and Commerce, Mr Siewsavath Savengseuksa and Director General of the Department for Small and Medium Enterprise Promotion, Mr Somdy Inmixay.
Speaking in his opening remarks, Mr Siewsavath highlighted the significance of small and medium-d enterprises to national socio-economic development because SMEs drive national economic growth.
According to data from the Lao Statistics Bureau in 2013, SMEs represented 99.98 percent of the total number of businesses in Laos while large enterprises represented 0.2 percent. Therefore, financing for SMEs is a critical issue for business operation and expansion, he stressed.
The ministry, and especially the SME Promotion's Department, has cooperated with the Ministry of Planning and Investment, Ministry of Finance and the Government Office to seek funding to provide for SMEs.
In August 2014, the government approved the SME Access to Finance Project which was backed by the World Bank.
The project focused on providing a line of credit to commercial banks to enable them to provide medium and long-term credit to SMEs in local currency.
As part of this project, the IFC and the World Bank are also supporting the establishment of a risk-sharing facility to encourage commercial banks to lend to SMEs with limited collateral.
In addition, the project will provide technical assistance to strengthen the department's ability to formulate and implement public policies that promote access to finance for SMEs.
So far, three commercial banks, namely ST Bank, Saigon Thuong Tin Bank Lao Co., Ltd. (Sacombank Lao), and Lao China Bank, have received funding from the International Development Association (IDA), a member of the World Bank Group, Mr Siewsavath said.
According to the World Bank, SMEs are an important part of the Lao economy and employ a large section of the population.
But less than 20 percent of SMEs can access long-term credit, which makes it difficult for them to grow and compete against other SMEs in Asia.
The newly approved SME Access to Finance Project would provide long-term funds to enable SMEs to purchase new equipment, expand their business premises, upgrade their technology, and scale up their business operations, the World Bank stated.
This meeting aimed to present the findings in relation to previously implemented aspects of the project and introduce the three commercial banks participating to present their new products for SMEs operators, Mr Siewsavath said.
