The government and the World Bank Group have signed two new agreements, with the international financier to extend funding of almost US million to the small enterprise, mining and hydropower sectors.
The signing ceremony took place in Vientiane yesterday between Deputy Minister of Finance Ms Thipphakone Chanthavongsa and the World Bank Country Director for South East Asia Mr Ulrich Zachau.
The new support includes a US million grant Small and Medium Enterprise Access to Finance Project, which will also receive US million in credit from the International Development Association and at least US million from the International Finance Corporation in risk sharing funds.
The project will provide long term credit to small firms and help them to grow and create more jobs in the economy.
The government of Laos and the World Bank Group also signed an agreement to continue technical assistance to Laos in managing its hydropower and mining resources.
This support comes in the form of US.8 million, to fund the ‘Additional Financing to the Technical Assistance for Capacity Building in the Hydropower and Mining Sectors Project’.
The hydropower and mining sectors are core drivers of economic growth for Laos, Ms Thipphakone noted, and the government realises the importance of enhancing institutional capacity in planning, management, monitoring and revenue management for these sectors.
“SMEs, hydropower and mining form an important part of the Lao economy. The two projects will contribute to the socioeconomic development and environmental sustainability of Laos.”
Enhancing management capacities will help optimise the utilisation of natural resources by maximising revenue, minimising environmental and social costs, improving efficiency and transparency in the sector’s development and attracting high quality investments.
Thus, the government has been working with the World Bank to implement the Hydropower and Mining Sectors Project since 2010 to strengthen abilities to address key challenges in these sectors. As a result of the progress made during phase I, the World Bank provides additional financing to scale up and extend the impact of the institutional and human capacity development efforts.
“ Financing for small firms is vital for the Lao economy. It will help create more jobs, increase family incomes and reduce poverty. Equally important will be the sustainable use of Laos’ wealth of hydropower and mining resources. The World Bank Group is pleased to offer its strong support for these two projects and looks forward to continuing our close partnership with Laos,” Mr Ulrich Zachau said.
The government of Laos recognises that private sector development is very important for economic growth and accelerating the development of SMEs will expand the nation’s economic base, create more jobs and contribute to poverty reduction but the most challenging issue hindering the development of sound and competitive SMEs is access to finance.
The World Bank’s support through the SMEs Access to Finance Project will provide funding sources for commercial banks to support long term credit to SMEs and strengthen the capacity of the SME management authority to formulate and implement public policies that promote the development of SMEs.
“The ceremony today reaffirms the commitment and cooperation between the Government of Laos and the World Bank in supporting government priorities as outlined in our National Socio-Economic Development Plan,” Ms Thipphakone said.
By Keoviengkhone Bounviseth
(Latest Update August 15, 2014)