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IFC promotes movable-asset finance to support SMEs in Laos

Xinhua, December 17, 2016 Adjust font size:

The International Finance Corporation (IFC), a member of the World Bank Group, is promoting movable-asset finance to support businesses, especially small and medium enterprises (SMEs), to play a bigger role in the Lao economy.

SMEs make up more than 98 percent of the private sector in Laos, but most have difficulties in obtaining loans from formal financial institutions as they do not own adequate land or buildings that banks demand as security, reads a press release by the IFC on Friday.

Finance against movable assets will help SMEs tap their potential by providing them with the necessary liquidity to run and grow their operations. The implementation decree on the Secured Transactions Law was issued and the collateral registry was operational in late 2013 with support from IFC. Since then, more than 300 business loans have been financed based on movable assets.

Around 100 representatives, including government officials, managers of local financial institutions, academics, and legal professionals, attended an International Symposium on Movables Finance in Lao capital Vientiane on Friday to discuss concepts and practices in movables lending.

Senior international and domestic speakers introduced established industry practices, latest trends, and experiences from other countries and discussed the changing environment for movables finance in Laos and the roles of government and financial institutions.

"SMEs are a crucial part of the Lao economy. Promoting access to finance for SMEs has been a priority for Lao Ministry of Finance and other government authorities," said Somboun Inthapattha, head of Cabinet at Lao Ministry of Finance. "Movables finance will increase financial inclusion and benefit the whole economy."

"Developing a movables-finance market requires understanding and active participation from various stakeholders," according to Phongsavanh Phomkong, head of IFC Office in Vientiane.

"In addition to a sound secured-transactions legal framework, a supportive environment is necessary where lenders are fully aware that evaluating and monitoring movable assets enable them to better identify and control the cash-flows of business borrowers. This can be a safer way to scale up credit to SMEs"

The symposium followed a two-day technical training on movables finance offered by IFC and the Ministry of Finance as part of the effort to strengthen lender capacity in this new business area. Endit