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Banking sector sees strong growth, expects more to come
The government has made strong progress in its plans to strengthen and modernise banking and financial institutions to boost economic growth over the past five years, according to a recent report from the Bank of the Lao PDR.
Since 2006 the banking sector has gradually developed to the point where numerous state and private sector banks are flourishing, providing more choice and better services to the people of Laos.
The increase in the number of banks in Laos has taken place side by side with the gradual expansion and liberalisation of the national economy, allowing the banking sector to gain ground and become a pillar of development in Laos.
There are now 24 commercial banks in Laos after the government promoted investment in the sector to open up more opportunities for Lao people to access banking services.
Banks based in Thailand, Australia, Cambodia, Vietnam and France now have branches in Laos. Chinese investment has seen a major increase over the past five years and last month a Chinese company expressed interest in a joint venture with the Lao Development Bank.
The report said many banks were offering competitive interest rates on loans to attract more customers, adding that stronger competition will also force banks to improve their performance or go under.
Some banks have already made improvements, such as BCEL, which has made a strong commitment to lead the way in modernising banking.
Banking services have also increased, especially ATM machines which major banks have expanded over a widening area.
Private currency exchange services have also opened and there are now many such services available in Laos.
Technology has been introduced in banks to increase competition and encourage better and faster services.
The growing banking sector is also benefiting Lao businesses seeking funding to expand.
Governor of the Bank of the Lao PDR Mr. Phouphet Khamphouvong said during a recent interview that banking has seen strong expansion in Laos recently, encouraged by government policy to open up the sector.
“Even though we have seen more banks setting up in Laos recently, it is not enough, and we expect it will continue to grow.” Once the Asean free trade area commences in 2015 it is expected that all Asean nations will remove trade restrictions in the commercial banking sector, allowing more foreign banks to set up and deliver banking services in the country; a situation that should lead to intense competition within the sector.
vientiane times
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