VIENTIANE (Laotian Times): Micro, Small, and Medium Enterprises (MSMEs) in Laos face ongoing challenges, including limited access to finance, complex administrative procedures, and poor business documentation, according to Vice President Pany Yathotou.
The vice president addressed the issue on 28 October at the 6th Party Congress of the Ministry of Industry and Commerce, stressing that MSMEs must be prioritized in national development, calling for simplified procedures, greater transparency, and expanded access to capital.
Without concrete support measures, she warned, Laos risks stifling a sector crucial for job creation, competitiveness, and sustainable economic growth.
Among the obstacles MSMEs face, access to finance remains the most pressing.
The May 2025 Lao Economic Monitor shows that Laos’ bank-dominated financial sector is vulnerable to economic ups and downs.
High government borrowing limits credit for private firms, while inflation, currency depreciation, and dollarization make loans for small businesses riskier and more expensive.
Many MSMEs therefore rely on internal funds for day-to-day expenses and investments. A lack of collateral, irregular income, low financial literacy, and poor financial management further restrict access to formal financing.
MSMEs, which employ over 80 percent of the workforce, also face administrative hurdles. A 2018 World Bank report found that complex procedures, unclear regulations, and inconsistent enforcement keep many MSMEs informal, limiting their growth and contribution to the economy.
Nyoby Bank Deputy Director Bounxord Fongsanith highlighted in an interview with Vientiane Times the financing challenges facing MSMEs, saying banks increasingly favor government projects and large corporations, leaving many small businesses reliant on self-funding.
High collateral requirements, often more than twice the value of the loan, combined with weak accounting records and poorly prepared business plans, make formal financing nearly impossible.
He added that many small business owners also lack systematic tax, VAT, and financial documentation, further discouraging banks from providing loans.
Without urgent action to address these financing gaps and bureaucratic hurdles, Laos’s most vital job creators will continue to struggle, putting the country’s broader economic future at risk. - Laotian Times
