Source: Vientiane Times
The government has asked the National Assembly to approve an amendment to the Law on Enterprise Bankruptcy, hoping that the change will improve the business climate in Laos.
Minister of Justice Mr Xaysy Santivong on Tuesday presented a draft of the revised Law on Enterprise Bankruptcy for lawmakers to consider and approve.
Among the changes proposed, it is suggested that the name of the law be changed to the Law on Enterprise Bankruptcy and Rehabilitation. It is thought this would create a sense of confidence among business operators when applying the law.
Presenting the law, Mr Xaysy stressed the need for amendments, saying the recommended changes would make a significant contribution to the improvement of the business climate, especially in obtaining finance for business operations.
The Law on Enterprise Bankruptcy was promulgated in 1994. Unfortunately, over the past 25 years, no cases of enterprise bankruptcy have been brought before the courts because the rules and legal procedures to be taken against bankrupt businesses are unclear, Mr Xaysy said.
He also said that because of the ineffective enforcement of the law, many businesses that had gone bankrupt had failed to fulfill their financial obligations to their contacting parties. As a result, many banks were reluctant to give loans to businesses.
Another result was that, because of the high risk, many commercial banks would only issue loans at high interest rates, Mr Xaysy said, adding that improvement of the law should help to lower the interest rate.
The most important reason for the government wanting to revise the law was to create a strong legal platform that business operators could use if they faced bankruptcy, he added.
Mr Xaysy said amendments to the law had been made in close consultation with the Ministry of Justice, Ministry of Industry and Commerce, the Bank of the Lao PDR, and other stakeholders.
The World Bank also provided assistance with the amendment. The Bank was of the opinion that ineffective enforcement of the bankruptcy law was a problem that Laos needed to address in order to improve its ranking in the Ease of Doing Business Index.
Assembly members welcomed the amendment, but some asked the law drafters to make the content more clear and specific, saying this would make the law enforceable.
Assembly member for Champassak province, Mr Saythong Xayavong, said the revised law should include a specific statement that it was the state’s policy to protect the interests of money lenders and borrowers, not only business operators, to make things fair for all concerned.