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Lao SME development gets 16b kip injection
The government has injected an initial 16 billion kip (US$2 million) into the small and medium size enterprise development fund, hoping to set up a concrete national economic base, according to a senior official from the Ministry of Industry and Commerce.
Small and Medium Size Enterprise Promotion Office Deputy Director General Mr Bountheung Duangsavanh said on Friday that the office received the funding from the government at the end of last month.
About 80 percent of the money will be given to a commercial bank to distribute as low interest loans to SMEs, particularly those operating in the agriculture processing industry.
Mr Bountheung said the rest of the money will be used for capacity building activities for local SMEs so that they can expand and operate more professionally, creating jobs and boosting incomes for Lao people so they can rise above poverty.
Through this assistance, SME owners, managers and workers will receive training on how to access investment loans, improve their products and access markets, he said.
The SME Promotion Office is currently discussing with the bank how to inject the SME loans into the economy, with the first funding package to be distributed to SME owners early next year.
The office will cooperate with the commercial bank to set up concrete measures for the issue of loans to SMEs. Mr Bountheung said he could not quote an interest rate, but expected it would be quite low.
He said the office expects to receive an additional US$2 million from the government next fiscal year, and China and Vietnam will also provide funding for SME development projects over the next five years.
The government established a prime ministerial decree on SME promotion in 2004, aiming to facilitate the establishment of SMEs to provide a firm economic base for the country.
Many developed nations have SMEs as their economic base, and the expansion of SMEs also supports the operations of big industries.
In Japan, several thousand SMEs provide spare parts to the automotive industry. Meanwhile, India has one of the largest numbers of SMEs in the world.
Economists have said that countries with a large number of SMEs would find it easier to go through a world economic crisis than countries with large industries. The collapse of a major industry would mean the lay-off of several thousand workers, putting strong pressure on the government to support them in some way.
vientiane times
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