PM Urges Central Bank To Facilitate Access To Finance
Source: Vientiane Times
Prime Minister Thongloun Sisoulith has urged the Bank of the Lao PDR (BOL), the nation’s central bank, to pay serious attention to implementing Order No. 02/PM on improving the climate for doing business.
He issued this instruction while attending a gathering to celebrate the 50th anniversary of the founding of the central bank, at the National Convention Centre in Vientiane earlier this month.The premier took the opportunity to call on the leadership of the bank and its staff to pay close attention to the practical implementation of Prime Minister’s order No. 02 as part of efforts to improve the business climate in Laos.
One of the most important measures for improving the business environment is access to finance, and this has a direct connection to the bank.
“As we all know, Laos was ranked by the World Bank at 141 out of 190 countries worldwide for ease-of-doing-business in 2017, while its ranking in 2016 was 139. The government is speeding up efforts to improve the ranking from three to two digits in the years ahead,” he said.
Mr Thongloun told the gathering a recent World Bank survey identified that Laos has to improve in seven areas in order to improve its ranking.
“It [the survey] indicates that if Laos is able to tackle these seven outstanding issues, it could be ranked at 88, not just 99. On the other hand, if it fails to do so, its ranking will be lower than 141,” he said.
Meanwhile, the bank leadership also pledged to do it best to ease access to finance for the business sector including microbusinesses and small and medium-sized enterprises (SMEs).
In a bid to support SMEs’ access to finance, the SME Promotion and Development Fund was set up in 2011 with US$4 million provided by the Asian Development Bank.
In 2014, the World Bank provided a loan of more than 166.4 billion kip (US$20 million) to the Fund to promote SMEs, including through a capacity-building project.
The SME Promotion and Development Fund releases loans to SMEs through commercial banks with interest rates ranging from 7 percent to 9 percent a year.
Lack of access to finance is a key obstacle to business growth and detracts from economic expansion. Fewer than 20 percent of SMEs can obtain long-term credit which makes it difficult for them to grow and compete against their counterparts in the region.
In recognition of this, the government is developing a policy to promote SMEs and provide entrepreneurs with access to finance, business planning and other facilities.