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NEWS UPDATES 29 September 2010

Lao government to facilitate loans for SMEs

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The Lao National Chamber of Commerce and Industry members will find it easier to obtain investment capital under the government's new funding policy to boost productivity.

The government has assigned the Ministry of Industry and Commerce to work with the Chamber of Commerce and Industry and commercial banks to look into setting up the project next fiscal year, so chamber members can more easily obtain loans.

The project will identify small and medium sized enterprises that have the potential to produce goods for domestic and foreign markets but have difficulty accessing investment due to insufficient assets to guarantee a loan. The project will provide these companies with loans so they can boost output.

The chamber has more than 1,000 members nationwide, most of which are small and medium sized enterprises.

The chamber's Vice President, Mr. Sanan Chounlamany, said yesterday this was the first time the government, commercial banks and the chamber had combined forces in this way. It would enable businesses in Laos to boost the production of goods for domestic and foreign markets.

"At present, we don't cooperate with each other so it's difficult for companies to get loans and for commercial banks to release loans to businesses," he said.

Many of the chamber's members had the capacity and potential to produce goods for domestic and foreign markets but were unable to boost output due to a lack of investment, he said.

He expressed confidence that if cooperative projects between the government, chamber and commercial banks were set up, it would benefit all of the sectors concerned.

He said commercial banks would find it easier to release loans since the project would provide them with companies' business data as a reference for deciding whether to issue a loan. If companies could obtain loans more easily, the government would benefit from increased productivity.

At present, although Laos has seen robust growth of the economy of above 7.5 percent over the past five years thanks to growing investment and output in the resource sector, the government is facing challenges in ensuring sustainable economic growth.

Economists have urged the government to boost the non resource sector as a basis for sustained growth.

They also said the government had to use earnings from the sale of its natural resources to develop the non resource sector.

Officials at the Ministry of Industry and Commerce said they could not reveal the amount of the loans that state commercial banks might provide for chamber members until a study has been made.

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