Micro, small and medium-sized enterprises (MSMEs) will be required to come up with accurate business plans and details of their performance before they can obtain funding from the SMEs Promotion Fund.

Govt allocates almost 300 bn kip for MSMEs for 2020-21

The government-backed SMEs Promotion Fund has allocated nearly 300 billion kip to micro, small and medium-sized enterprises (MSMEs) through commercial banks over the past few years.
According to the latest update from the SMEs Promotion Fund, it made the allocations through four commercial banks and the Xaysomboun Development Fund. Currently, 286 billion kip out of the total allocation of 300 billion kip has been loaned to MSMEs with an interest rate of 3 percent per year.
In August, the commercial banks and the Xaysomboun Development Fund provided loans to more than 200 business units, and signed 253 agreements worth 301.56 billion kip or 105.44 percent of the 286 billion kip.
The banks also provided loans to new customers using 15.56 billion kip that was repaid by previous borrowers. Different sectors have accessed the loans, especially the Agriculture, agricultural processing, tourism and handicrafts sectors.
Firms in the agricultural sector signed 154 agreements valued at 174.84 billion kip, or 57.08 percent of the total loans, units in the tourism sector signed 29 agreements worth 57.70 billion kip, or 19.13 percent of the total loans, firms in the handicrafts sector accounted for 8.71 percent of the total loans with 28 agreements valued at 26.28 billion kip, and the agricultural processing sector accounted for 42 agreements worth 42.74 billion kip or 14.17 percent of the total loans.
The MSMEs sectors in 16 provinces and Vientiane have access to the SMEs Promotion Fund, and only Bokeo province was unable to access the fund, according to the latest report.
A total of 171 fund recipients (or 86.80 percent) have already been trained for business planning, financial planning and accounting management. The remaining 26 business units have not yet received the training.
A total of 130 business units have accounting systems and the remaining 67 units have not yet managed to do the accounting.
The MSMEs Promotion Fund is working hard to inspect the assigned commercial banks to ensure that they provide loans with 3 percent interest to business units based on the measures announced by the MSMEs Promotion Fund.
More than 83 units were inspected by the fund and found to have significant performance. These firms also managed to properly use the loans for their business operations. The fund will continue to regularly monitor commercial banks and borrowers to ensure the loans are properly used for business operations based on proper business planning.
The loans with an interest rate of 3 percent helped the business units to earn attractive revenues and profits because they could expand their operations by using the funds.
The MSMEs Promotion Fund will continue to help the business units with technical advice and marketing. It also plans to organise a MSMEs fair to provide a platform for business dialogue and sharing of experiences. 
Despite facing several challenges, the fund encouraged business units to do their own accounting in order to ensure the accuracy of operations, especially for payments and expenditures.
It is believed that access to loans is not as difficult as a majority of business units have said, but the firms will have to frame precise business plans and furnish other necessary information before any loan is approved.

By Times Reporters
(Latest Update October 11, 2022)