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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
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About IFC
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, visit
www.ifc.org
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