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Lao govt supports SMEs ahead of Asean integration
Publication Date : 14-01-2014
Policies and measures have been introduced to help Lao small and medium enterprises (SMEs) access finance, technical assistance and market advice, a senior government official has said.
The SME Promotion Department's Deputy Director General, Keomolakod Sitlakone, told a meeting yesterday the government set up a promotion fund in 2010 to make it easier for SMEs to access finance. More than 100 representatives from line ministries met at the annual meeting held to review Laos' Asean activities over the past year ahead of the arrival of the Asean Economic Community in 2015.
The Finance Ministry has provided 16 billion kip to the Lao Development Bank since the fund was established in 2010. The government has worked with the bank to release lower interest-rate loans for SMEs.
Last November, the Asian Development Bank provided the fund with low interest-rate loans amounting to more than 120 billion kip (US$15 million. The loans came with a 1 percent interest rate and a repayment period of 30 years.
Laos is also expected to receive low interest-rate loans from the World Bank amounting to more than 160 billion kip (US$ 20 million) with 30-year repayment periods that will go to the SME fund, Dr Keomolakod said. Targeted SMEs will receive 50-percent subsidised consultancy
services thanks to assistance from the government's Business Assistance Facility fund supported by the World Bank.
The government has also begun the process of establishing a credit fund that will guarantee bank loans for businesses with good profit forecasts but insufficient property to offer as a guarantee, in line with Asean policy.
It is expected more than 240 billion kip (US$30 million) will be allocated to the fund, Keomolakod said.
“We have initiated discussions with the World Bank and the bank was pleased to offer support,” he told the meeting.
He said the US$30 million would come from a variety of sources, including the World Bank, the SMEs themselves and other financial sources.
Seven SME centres have been established to improve SME operational knowledge, which are being run by both state bodies and business sectors to provide consultation and training.
The SME promotion fund will also contribute some money to help cover consultation and training expenses, Keomolakod said.
He said various trade fairs had been organised to give SMEs a chance to display their products to the market. The government has recognised the importance of SMEs to the country's development, given they represent around 90 percent of businesses in Laos.
Deputy Minister of Foreign Affairs and Head of Asean Senior Officials for Laos, Alounkeo Kittikhoun, presided over the meeting and called on participants to discuss what Laos needs to achieve in preparation for regional integration.
In particular he stressed the need to identify missing regulations and find solutions, while ensuring there were sufficient personnel to provide service to business sectors.