MICROCAPITAL BRIEF: Laos Launches $40m MSME Pandemic Relief Project with World Bank Loan Proceeds

The Ministry of Industry and Commerce of Lao People’s Democratic Republic (PDR) recently announced it is borrowing USD 40 million from the World Bank in an effort to help micro-, small and medium-sized enterprises (MSMEs) recover from the COVID-19 pandemic. The terms of the loan have not been released.

Viengsamay Srithirath, the World Bank operations manager for Laos, said, “This initiative will reinforce the stability of small businesses, which are vital to the Laos economy.”

The funds are to be on-lent to enterprises with fewer than 100 employees via credit lines extended by various banks, of which three have so far been identified: Lao China Bank; Maruhan Japan Bank Lao, which is controlled by the Mahuran Japan Group; and Vietnam-based Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank).

The project also includes technical support for participating MSMEs as well as the Bank of the Lao PDR, the central bank of Laos, which is supporting the participating banks by guaranteeing their lending under the program.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2021, it has 189 member nations. The group encompasses: (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) the International Finance Corporation; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the 12 months ending June 2020, the World Bank Group disbursed funds totaling USD 54 billion.

By Tejas Gumudavelly, Research Associate

Sources and Additional Resources

World Bank press February 2021
https://www.worldbank.org/en/news/press-release/2021/02/19/credit-to-small-firms-to-boost-economic-recovery

World Bank press release October 2020
https://www.worldbank.org/en/news/press-release/2020/10/22/lao-pdr-emergency-financing-for-small-businesses-expected-to-protect-livelihoods-boost-recovery

World Bank homepage
https://www.worldbank.org/en/home

Lao-China Bank homepage
https://www.laochinabank.com/

Sacombank homepage
https://www.sacombank.com.vn/

Maruhan Japan Bank Lao homepage
https://maruhanjapanbanklao.com/

Bank of Laos homepage
https://www.bol.gov.la/

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