Vientiane, Lao PDR, July 5, 2016—IFC,
a member of the World Bank Group, and the Ministry of Finance’s State
Assets Management Department signed a memorandum of understanding today
to boost moveable finance practices among Lao banks, which will increase
lending to micro, small, and medium enterprises to help them grow and contribute
to Lao economy.
The memorandum of understanding follows IFC’s support to the government
over the past six years in preparing the legal framework for secured transactions
and setting up a secured transactions registry system that allows smaller
businesses to use moveable assets, such as valuable materials, machineries,
vehicles, inventory or raw materials, account due, financial instruments,
agricultural crops, consumer goods, bank deposit accounts and intellectual
property, as collateral for obtaining loans. With the necessary infrastructure
now in place, IFC continues to help promote lending against moveable assets
among Lao banks by building their moveable finance capacity and developing
relevant financing products.
“Introducing a moveable assets-based lending framework helps unlock significant
financing for micro, small, and medium enterprises, who find access to
finance a key obstacle to doing business,” said Thipphakone Chanthavongsa,
Deputy Minister, Ministry of Finance.
Micro, small, and medium enterprises make up more than 98 percent of the
private sector in Lao PDR, but most have been unable to get a loan until
recently, as they do not own land or buildings that banks accept as security.
Since the launch of the registry system in late 2013, more than $1.2 billion
in loans has been granted with moveable assets as security, 99 percent
of which are for enterprises.
“In a country with a fast-developing economy
such as Lao PDR, the credit market for smaller businesses has great potential
to grow,” said Phongsavanh Phomkong, IFC Head of Office in Lao PDR. “As
soon as the financial infrastructure for lending against moveable assets
is ready, a whole new world of financing and growth opportunities opens
up for both enterprises and banks. By developing moveable finance products,
banks can expand SME lending portfolios, while enterprises can obtain much-needed
financing to grow business, expand production, and create more jobs.”
IFC’s support to the Lao government under this memorandum of understanding
is implemented in partnership with Canada, Japan, and Switzerland.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence, to create opportunity where it’s needed most. In FY15,
our long-term investments in developing countries rose to nearly $18 billion,
helping the private sector play an essential role in the global effort
to end extreme poverty and boost shared prosperity. For more information,