China-funded bank solves financing problems as part of B&R Initiative

VIENTIANE - The Laos-China Bank is helping to solve financing problems for small and medium-sized enterprises, or SMEs, in Laos as part of the Belt and Road Initiative.

The lender was established in 2014 as a joint venture between Fudian Bank of China's Yunnan and Banque Pour Le Commerce Exterieur Lao or BCEL.

In terms of banking services, for large-scale projects funded by China in Laos, the LCNB has launched "supply chain financing products".

"For SME projects of the World Bank in Laos, the LCNB has also launched a special loan service," said Deng Yu, managing director of LCNB.

Despite the presence of more than 40 commercial banks in Laos, their products and services are basic.

Most of the capital is poured into big enterprises, leaving a "hole" when it comes to SME financial services, which is now being filled by the LCNB.

According to statistics by the Lao Ministry of Planning and Investment, China helped fund 764 projects in Laos last year, covering various fields including mining, agriculture, energy, handicrafts and tourism.

Up to 552 are 100 percent funded by China while 212 are China-Laos joint ventures. China is the biggest foreign investor in the country.

It had been reported that suppliers and subcontractors involved in China's investment projects there could not get credit support from large banks.

LCNB subsequently provided a variety of financial services to enterprises which solved the problem.

For the construction of the Saysettha Comprehensive Development Zone in Vientiane, a loan from LCNB for LJ Construction Co in Laos helped the contractor complete work on roads, water supply and drainage systems before the rainy season started.

At the same time, the LCNB has also actively participated in the World Bank's financing projects on promoting the development of SMEs in Laos.

In August, 2014, the World Bank and the Lao government signed an agreement on supporting financing for SMEs in Laos.

This helped to provide $20 million of preferential loans for Lao banks and provide long-term financing services through commercial lenders to qualified SMEs in the country.

Since then, LCNB has become an agent bank of the project and has overseen an SME loan for Lao MKE Electronics Co, which solved the company's capital shortage situation.

Lao MKE is an agent of the Chinese mobile phone maker, Huawei Technologies Co Ltd, in Laos and became the first SME to obtain a loan from the bank.

In addition, LCNB has also helped THIVA Co, which makes traditional Lao clothes, shawls and other silk products, to obtain funding.

As of December, 2016, the bank had approved nine loans for SMEs with a total amount of more than 11 billion Lao kip ($1.35 million).

The loans involved businesses in the sectors of trade, construction and handicrafts, and has provided strong support for their development.

Under the guidance of the Belt and Road Initiative, the LCNB has taken a strategy to help local SMEs solve their financing difficulties, becoming a solid bridge for economic and trade exchanges between China and Laos.

Xinhua