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IFC Helps Improve Financing for Smaller Businesses in Lao PDR

Vientiane, Lao PDR, January 28, 2014 —IFC, a member of the World Bank Group, is helping improve access to finance for Lao micro, small and medium businesses by assisting the Ministry of Finance in introducing “movable-asset” financing in the country.  
In Lao People’s Democratic Republic, small and medium enterprises often do not own land or buildings that can be offered as security for loans. If banks accept movable assets such as machinery, crops, inventory, or livestock as collateral, smaller businesses will find it much easier to obtain credit.
“Getting loans is one of the top challenges faced by Lao small and medium enterprises,” said Chanthanom Phithasone, Director General of the State Assets Management Department under the Ministry of Finance. “Introducing movable-asset lending will unlock significant and affordable financing for these businesses, marking a milestone in the development of Lao’s financial infrastructure.”
With support from IFC, the ministry held a workshop today to introduce movable-asset financing to banks, lending institutions, business associations, and regulators. The participants discussed ways to overcome the challenges that Lao PDR will likely encounter in introducing the financing method and shared lessons learned from other countries.  
IFC has previously helped China and Vietnam set up centralized online registries for movable assets so that banks can more easily gauge the creditworthiness of borrowers and make quicker lending decisions, thus expanding financing for small and medium enterprises. This helps smaller businesses grow and create more jobs, benefitting the local economy.
“Movable-asset lending can be a profitable way for banks and other lending institutions to tap into the small business market in Lao PDR,” said Jinchang Lai, IFC Principal Operations Officer and Lead for Financial Infrastructure, East Asia & Pacific Advisory Services. “While most small and medium businesses do not have real estate to offer as collateral, they do have some movable assets. IFC and the Ministry of Finance are helping lenders increase their understanding of the benefits of lending based on movable assets. Using the online registries for movable assets will make it easier for lenders to obtain reliable information about their clients and also incentivize clients to repay.”
IFC has been working with Lao PDR’s Ministry of Finance to establish an online registry for secured transactions involving movable assets and provide training to officials. The project is carried out in partnership with the Swiss government and the US Agency for International Development.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit .
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