SME growth could suffer if financing remains difficult
SME growth could suffer if financing remains difficult
Small and Medium Enterprises (SMEs) are asking the government encourage banks to ease their loan processes to provide them with easier access to financing.
A representative of SMEs, Ms Bounvilay, said recently that banks require several steps that have forced small businesses to get loans from microfinance institutions even though they might have to pay higher interest rates.
She added that even though there has been significant growth in SMEs in Laos, the country still trails its neighbours in terms of small business growth.
Ms Bounvilay hopes that if the government can ask banks to consider improving the loan issuing process it will make things easier and lead to more rapid development.
The Ministry of Industry and Commerce should encourage its business section to create a loan association aimed at helping start-up businesses to access different sources of financing to drive growth.
The Lao Chamber of Professional Accountants and Auditors (LCPAA) reported that half of SMEs lack access to finance, which directly hinders their growth and sustainability.
The Chamber said the government should focus on SME development by setting up priorities to create an enabling environment for them, including improved access to financing.
This would also create opportunities in the region for SMEs to be more competitive, innovative and able to utilise the regional economic initiatives and incentives that would add to their sustainable growth.
However, the actual SME situation and supporting studies suggest the business environment for SMEs still doesn't facilitate growth in a changing, competitive environment.
SMEs still encounter serious problems which often pose difficult questions for their stakeholders, who are trying to understand how SMEs can better access finance especially in an increasingly single Asean market, the LCPAA observed.
According to a recent report by the Young Entrepreneurs Association of Laos (YEAL), Lao SMEs are continuing to expand at a lower rate than in other countries in the region which also is worrisome to the same stakeholders.
This has led to Lao enterprises missing out on export opportunities and stiffer competition in the domestic market from Vietnamese, Chinese and Thai investors, the report continued.
The report also pointed out that membership in the association was continuing to grow annually, up from 208 companies in 2010 to 500 companies last year.
