Lao authorities have adopted measures that will allow easier access to credit and give added protection to minority investors in moves set to improve the country’s overall business environment.
Accessing credit and protecting minority investors are two of the 11 indicators which the World Bank uses to assess ‘ease of doing business’ (EDB) in its worldwide survey.
Laos’ EDB ranking dropped 13 places to 154th this year out of a total of 190 national economies. The government is escalating efforts to improve the business environment to lift its ranking and make investment and trade as simple and transparent as possible.
In a meeting held last week chaired by the Minister of Planning and Investment, Dr Souphanh Keomixay, it was agreed that the Bank of the Lao PDR would work with key industry groups and relevant government sectors to make it easier for businesses to access credit.
A key aspect of the changes will centre on the central bank’s work with the Ministry of Justice to amend legislation on the guarantees needed to obtain credit and loans. The civil code, the law on agreement implementation guarantee, and the Law on Enterprise Bankruptcy will likely require amendments.
The relevant ministries and sectors were asked by the meeting to accelerate work in drawing up a prime ministerial decree on access to credit, a senior official from the Investment Promotion Department, Ministry of Planning and Investment.
The draft of the decree is expected to be submitted for the government’s consideration and promulgation during the fourth quarter of this year.
As a result of discussions around accessing loans, the central bank will work more closely with the relevant bodies so that the required information on utility payments for loans can be provided more quickly and with less administration.
To better protect minority investors, the Lao Securities Commission and the Bank of the Lao PDR will work with the Ministry of Industry and Commerce and the People’s Supreme Court to amend the Law on Enterprise, the Law on Civil Case Prosecutions, and the Law on Court Service Fees.
As a result of the meeting, the Lao Securities Commission will also work with industry professionals to draw up new guidelines for the administration of listed companies and will amend existing regulations relating to information disclosure.
The meeting also resolved to amend the Law on Securities Exchange. Formulations and amendments are expected to be adopted by regulatory authorities by the end of this year. The government is hoping that Laos’ EDB ranking will rise from 154th to double digits by 2020.
Prime Minister Thongloun Sisoulith has requested more urgency from ministries in their work to achieve better outcomes in the 11 indicators the World Bank uses to assess EDB. The 11 indicators are starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labour market regulations.
The Ministry of Industry and Commerce said in its report that trading across borders has improved considerably.
Laos’ trading across borders facilitation ranking climbed from 124th in 2018 to 76th this year – an improvement of 48 places.
This progress has put Laos fourth among the members of Asean, the 10-member regional bloc of which Laos is a member. Other Asean members – Singapore, Malaysia and Thailand – took the top three places.
The ministry’s Enterprise Registration Office said the time taken to complete the paperwork to start a new business has been cut to less than two months compared to almost six months previously.
The new, streamlined procedures came into effect last month.