ລາວ 
English 
简体中文 
français 
ไทย Insight on Lao SMEs Business Environment
Jan. 12, 2021, 12:58 pm.
Micro, Small and Medium-Sized Enterprises in Lao PDR play a key role in developing the national economy, facilitating international business relations with production and trade mechanisms, and sustaining and creating local job employment.
As Lao MSMEs continue to be the majority business sector in Laos, businesses are looking for new ways to be sustainable, innovative, successful, and efficient. In recent years, various studies conducted showed that MSMEs struggle with access to finance, raw materials, technological advancement, and human resources.
Mr. Litthikay Phoummasak, President of Lao SME Association states that:
"The Year 2021 has many challenges for Lao MSMEs. We are not only facing the COVID19 pandemic but we are also facing the economic downturn from Lao KIP currency devaluation against Thai Baht, US Dollar, and Chinese Yuan. This is very important for our economy to stay focus on domestic production and increase exporting activities. Hence LAOSME association has set our medium-term goal to build an impactful ecosystem for Lao SMEs to become world-class. To achieve this goal, the LAOSME association cannot do it alone however it requests collaboration across the country among the business sectors, public sectors, and local communities.
We need support from donors and the government to fund our yearly event for MSME innovation and award in order to segment the made-in-Laos products and market. At the same time, this is to improve Lao products’ quality and varieties for domestic and international markets. We know for this year, access-to-finance is crucial for MSMEs but if businesses cannot access the large-scale market, they will not be able to pay back to lenders.
Therefore MSMEs’ adaptation abilities for digital transformation in particular social media platforms are essential these days. LAOSME association cannot exclude traditional and rural businesses on our map. We respect their local values and their contribution to the societies. In fact, by helping them we feel a big pride in ourselves to deliver our association’s core values to MSME entrepreneurs such as “Her Works” and “Infinity Club Vientiane”.
According to a GIZ study on MSMEs in Laos, MSMEs provided 63% of all jobs in 2013. Nevertheless, the framework conditions for the almost 80,000 companies in Laos, of which more than 97% are SME, are less developed than those of other ASEAN member states so far.
MSMEs in Laos are defined as independent enterprises that are legally registered and operate under the fundamental business and tax laws of the Lao PDR.
- Micro enterprises - those having an annual average number of employees from 1 to 5 people.
-
Small enterprises – those having an annual average number of employees from 1 to 19 people and total assets up to two hundred and fifty million kips or an annual turnover up to four hundred million kip.
-
Medium enterprises – those having an annual average number of employees from 20 to 99 people and total assets up to one billion two hundred kip or annual turnover up to one billion kip.
Micro, Small and Medium-sized enterprises are classified into three categories by sector:
-
MSMEs operating in the production of commercial goods,
-
MSMEs operating in the trade sector
-
MSMEs operating in the service sector.
In order to aid the majority market of MSMEs, public sector SMEs groups, chambers, and local to international projects work closely with MSMEs to develop key strategies to help them succeed.
There are 6 core directions and policies for SME Promotion and Development which include the following:
1. Creating a supporting regulatory and administrative environment
2. Enhancing competition in the local and international markets
3. Expanding throughout the domestic market and entering into international markets
4. Improving access to finance (public and private grant, donations, and loan opportunities)
5. Encouraging and creating attractive environments for business firms
6. Supporting entrepreneurial mindsets and attributes within the local community – with specific programs targeted to empower youth and women.
Enabling Opportunities for MSMEs
Get connected with Laos biggest MSMEs Association. The Small and Medium Enterprise Promotion Association of Lao PDR (LAOSME) is officially under the wing of the Ministry of Industry and Commerce Lao PDR. Their three-year plan is focused on building an impactful ecosystem for Lao SMEs to become leading enterprises on an international scale. Their core values highlight integrity, respect, inclusiveness, innovation, and professionalism in the business environment for MSMEs. Check out LAOSME Roadmap to 2023 below.
Another organization is the SME Service Center is an ASEAN program dedicate to supporting MSMEs in Laos by enabling them with opportunities to access finance, training workshops, business advisory, coworking spot (listed above), and more. Check out their website for full details.
Access to Finance
There are currently various programs that give MSMEs the opportunity to finance their company. Some programs require businesses to be operating for at least two years before they can be funded.
BAF under the LNCCI – Lao brand promotion services helps fund business activities by providing grants covering 50% of third party services. BAF objectives include the following:
For Business Advisory focus on: Supporting MSMEs to build their skills and expertise so that they can become locally, regionally, and internationally competitive. By providing matching grants that reduce the cost of hiring technical advisory services aimed at improving competitiveness.
“BAF provides matching grants to cover 50% of the cost of specific and tailored technical assistance – or ‘business development services’ – that a company needs to become more competitive and grow.”
You can find full information, details, and proposal requests on their website here.
MSMEs Loan Options
You can also check with local banks that offer business loans. Some of these banks include the following:
1. Maruhan Japan- Lao Bank (recently named as Strategic Partner to Lao SME Association)
Are you a small business and looking for a space to work?
We know as a small business one of the hardest assets to maintain and acquire is office space. Although many people opt to work from home or in a local café, having a consistent spot to work is important for achieving business goals and staying organized. If your team is small and you’re on a budget, you can consider working for a co-working space. In Laos, co-working spaces are trending and developing.
Some of the top places to look are:
Want a Myshop page? Watch the video below to learn how to create your own shop! Limited spaces available - Your shop will be reviewed before during the short application process. Inquire about Myshop today by contacting our team here.
