Industry Spotlight - Lao National Chamber of Commerce and Industry (LNCCI)

HELPING SMES IN LAO REALISE THEIR POTENTIAL

INDUSTRY SPOTLIGHT

LAO’S SME SECTOR

SMEs are the backbone of Lao’s economy, and the government is aiming to reduce the obstacles that inhibit their potential

INTRODUCTION

A

ccording to a 2019 report from the World Bank, small and medium-sized enterprises (SMEs) account for 99 percent of all registered firms in Lao, and around 82 percent of employment. These SMEs have played a vital role in Lao’s economic development, especially in the trade, manufacturing and service sectors.

Unlocking the potential of the country’s SMEs is vital to ensure Lao’s continuing economic development and its cultural wellbeing. This is something that both public and private stakeholders are aware of. The Government of Lao’s 8th National Social Economic Development Plan (8th NSEDP 2016-2020) incorporates the SME Development Plan 2016-2020 to help promote SMEs. The government wants to promote a non-resource exploitation based economy, with agriculture, tourism and manufacturing, the private sector and SMEs at the centre of socio-economic development.

loans with far higher interest rates.

Not all SME owners and entrepreneurs have had training in management and financial planning – low financial literacy can inhibit growth. Furthermore, informal sector SMEs may indulge in poor practices (such as low compliance levels) which can unfairly impact upon more compliant firms.

Another problem SMEs face is access to a consistent supply of electricity. Although electrification in Lao is improving, SMEs – especially those in rural areas – have reported delays and difficulties establishing a connection, and a consistent electricity supply.

FACTS & FIGURES SMES IN LAO

Constraints

Registered SMEs: 124,567 (2013 census)

Despite the proliferation of SMEs in Lao, many small companies are hindered by various factors that inhibit growth. The first of these is access to finance, which had become a more acute constraint even before the pandemic. The World Bank suggests that this is the result of a variety of factors, such as the banking sector’s caution in loaning money to SMEs (believing it to be high-risk), that there is a lack of variety of finances offered to SMEs (especially in rural locations). Many SMEs end up turning to microfinance institutions instead, which results in

Percentage of total registered businesses: 99.8

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SME sector concentration: Trade, manufacturing, food and hospitality Geographical concentration: Vientiane prefecture (28 %), Savannakhet province (11 %), Champasak province (9.2%)

Solutions Improving SMEs’ access to finance is vital. The World Bank suggests: diversifying financial products and services offered to SMEs by banks and other institutions; improving SME capacity in financial management and accounting practices; and improving credit information coverage to financial institutions to better assess lending risks.

Lao National Chamber of Commerce and Industry (LNCCI) recently collaborated with Sacombank to

provide loans intended to catalyse the growth of SMEs in Lao. At present, business owners and farmers who apply for a loan must offer land or house as collateral before they are eligible for a loan.

But under the new Nang Fa Fund, LNCCI will authorise the loan and act as guarantor, meaning that SMEs will not have to offer land or house to the bank.

Eleveted, night view Improving infrastructure within the country will of Makati, the business also be beneficial to SMEs. Investmentdistrict into the of Metro Manila energy distribution network and grid connections would be particularly valuable.

I INNTTRROODDUUCCTTI IOONN

THE LAO NATIONAL CHAMBER OF COMMERCE AND INDUSTRY (LNCCI)

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INDUSTRY SPOTLIGHT

Industry Insights: The Lao National Chamber of Commerce and Industry (LNCCI)

A S S O C I AT I O N

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ao National Chamber of Commerce and Industry (LNCCI) is an independent body which represents the business community in Lao. It has more than 4,000 members represented across 18 provinces, business associations and groups.

LNCCI functions as the nexus between state and private enterprises, and its key responsibility is to identify the problems and concerns of its members and ensure that they are presented to the government. This advocacy ensures that business policies and legislation is developed with Lao’s business community in mind; its SME sector in particular.

LNCCI believes it is vital for private businesses in Lao to work hand in hand with the government in enabling SMEs to move faster in adopting new technologies and business models; responding to new value chains and market opportunities. Its Strategic Private Sector Development Plan 20182020 consists of four main pillars, one of which is ‘Service Provision for Lao Businesses (incl. SMEs) and the development of SME Service Centres.

In 2017, LNCCI worked with the Ministry of Industry and Commerce (MOIC) to create the SME Service Centre (SSC) – an independent organisation to help SMEs access training, information and support.

The first office was located within the capital of Vientiane (within the LNCCI). Since then, the SSC has opened branches in Luang Prabang, Champasak and Savannakhet. Over time, it is looking to expand into other provinces.

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The SME Centre offers a comprehensive and vital package of services to would-be entrepreneurs. This includes training and workshops on everything from digital marketing to developing a business strategy, as well as advice on book keeping and finances. Each centre has a dynamic co-working space where SMEs can establish networks and contacts. Crucially, SSC also helps SMEs access financial opportunities, such as bank loans.

Many SMEs operate in the tourism and hospitality space. The SSC wants to help these businesses reduce their environmental footprint, and to do so has launched an ambitious programme, ‘Plastic Free Laos’, to help the amount of single-use plastics used in hotels and restaurants.

The SSC represents LNCCI’s promise to its members to promote the interests of SMEs. It continues to advocate for smaller businesses, providing an increasingly fertile environment for entrepreneurship within the company.

SERVICE PROVISION FOR LAO SMES LNCCI’s pillar for developing and improving services for SMEs in Lao consists of seven fields of activity: • Improving the competitiveness of Lao companies in priority sectors • Supporting SMEs access to finance • Market access and trade facilitation • Reward local companies and SMEs under the Lao Business Awards • Developing an ecosystem for start-up and business incubation in Lao PDR • Assisting and attracting MNCs to Incorporate Business in Lao PDR • Capacity building for SME Service Centres

THE LAO NATIONAL CHAMBER OF COMMERCE AND INDUSTRY (LNCCI)

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OUR COVID-19 COMMUNITY PROTECTION PLANS

A SUCCESS STORY

How the Vientiane International School navigated a global crisis, safely reopened campus, and continued to offer instruction to 100% of learners, without a critical impact on enrollment, staffing, or operations.

COVID-19: A GLOBAL CRISIS The COVID-19 pandemic has had a significant impact on health systems and countries’ economies on a global scale. It has also impacted people’s mobility, which has critical repercussions on international schools’ operating model and their approach to teaching and learning.

As a consequence of an unprecedented worldwide crisis, enrollment in international schools has decreased. Some of these schools in regions that are highly dependent on the tourism industry have already lost 30% of their enrollment (Informa Connect Singapore, 2020). In addition to complying with high-order mandates, international teachers’ recruitment and retention are some of the organizational challenges faced by international schools thus impacting business continuity.

At VIS, we have respected the Lao government measures to protect the country during the pandemic and followed its guidelines. At the same time, we developed Our Covid-19 Community Protection Plans, a strategic document linked to our Road Map to Our Destiny to guided our actions.

Despite the challenging times we are living in, we have protected our core assets and met all critical deadlines to resume operations safely. We have recruited and retained key talent while offering our student body a blended learning experience, on-campus and online. Our operations –including enrollment– have not been compromised. We continue working and improving our community protection plans daily. We are committed to safeguarding our community by practicing the best standards to keep the learning happening.

COMMUNICATION IS KEY We have broadly shared Our COVID-19 Community Protection Plans: • •

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With our school community across different channels.

With government agencies of Laos PDR, both in digital and printed and they are using it as a reference for the local educational system With the international school community in relevant publications like AAIE’s COVID-19 Weekend Brief Through our Social Media Channels.

We have also created educational media to share with the VIS community, and that you can check out here: • Our COVID-19 Community Protection Videos • Entry and Exit on Campus • Using the Cafeteria

THE FACTS: WHAT MAKES IT ASUCCESS STORY • • • •

Met Critical Deadlines Students Received Instruction Staff On Campus New Staff Contracts Honored

• Staff retention • Students on campus first day • Drop in enrollment • Impact on budget

Our COVID-19 Community Protection Plans had a positive impact on the school community and have transformed teaching and learning by: • Ensuring the safe re-opening of the VIS campus for the 2020-21 school year.

• Successfully integrating a long-term blended learning model, partnering with Global Online Academy, a well received approach by our distance-learning families.

• Promoting practices to reduce the risk of virus transmission and being responsive when facing changing health circumstances.

We recognized that we are dealing with different cultural norms in terms of aversion to or acceptance of risk, but we all shared a common goal: to safeguard our children and the people who care for them.

LIVING OUR VALUES: HOW WE TURNED A GLOBAL CRISIS INTO A SUCCESS STORY OUR CORE PRINCIPLES

We Guided Our Actions by Our Core Principles Balance, Repect, Resilience, Innovation, and Courage while adhering Laos’ Government guidelines and expectations.

BALANCE

COURAGE

We Brought Our Community Together We made key decisions to protect our families while finding ways of keeping a sustainable learning plan in place.

INNOVATION

We had Support Our VIS Friends, VIS Board of Trustees, Parents, NGO Leaders, Ambassadors, and other collaborators played a critical role. We benefited from their resourcefulness and support at every step of the journey.

We Planned Collaboratively We had a plan and relied on the expertise of a multidisciplinary team for its development and execution. This group helped us to communicate the needs and to stakeholders in innovative ways.

RESILIENCE

We Remained Flexible We faced challenges and uncertainty with courage and resilience. In a rapidly changing environment, being flexible allowed us to adapt to the circumstances as needed.

RESPECT

We Opened Communication Channels We had clear and regular communications with VIS parents, teachers, local schools, government agencies, and international organizations.

BACK ON CAMPUS: THE NEW TEACHING & LEARNING EXPERIENCE I would also like to thank you and your team for all of the support and guidance that you have been giving our parents over the last 8 months.

As was mentioned in the meeting, the parents were very pleased with how VIS handled Covid-19 and online learning with keeping the safety of our children as top priority.

- Community Liaison Office , US Embassy, Vientiane

VIS welcomed our learners back to campus on August 10 as per schedule. We stayed true to our values by: • Prioritizing our community health, safety and wellbeing, • Ensuring hygiene and health policies are research-based, clearly communicated, effectively implemented and diligently enforced, We developed the #ProtectOurBubbles campaign by promoting the creation of safe classrooms and social bubbles. Families played their part mainly by: • Developing safe habits at home by creating “safe home bubbles”.

• Creating “safe social bubbles” between families where agreed protocols were maintained.

Blended Learning We recognized that some students were not able to return to campus at the start of the new school year or had to self-isolate at some point due to Laos quarantine measures. We have accommodated all students through our blended learning model.

The last ten months have been a real test to our mission, vision, and values. As we respond to “our changing world”, we continue to embrace the idea of keeping our learners safe while maintaining our focus on quality instruction.

INDUSTRY SPOTLIGHT

Focus on: Training and Empowerment of SMEs in Lao Training and support will help uplift and improve the SME sector in Lao, providing a solid foundation for sustainable development

INSIGHT T R A I N IBUSINESS NG & EMPOW ERMENT

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he Lao government’s new SME Service Centre provides training in book-keeping, writing business plans and much more. It holds regular workshops and events, including an annual Entrepreneurship Day (in partnership with the International Labour Organization) to promote startups and entrepreneurial creativity with discussions and networking sessions. The most recent event was held in Luang Prabang, and was attended by 500 guests.

The government has also recently founded the Department of Small and Medium Enterprises Promotion, which has been established to promote SMEs while improving their access to funds. It also works with other stakeholders – such as banks, government officials and industry officials – on outreach programmes to make them aware of the importance of SMEs, and how they can be helped via loans and technical scholarships.

Many SMEs end up borrowing money from one of the country’s 200 microfinance institutions – as banks won’t release funds to them – which have interest rates up to four times higher than banks. The Ministry of Finance has hired expert researchers to help develop micro-credit provisioning programmes via micro-finance institutions, thereby providing loans for a fixed term at a low interest rate. This will help boost the sector.

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‘...delegates from the Department of Small and Medium Enterprises, the Ministry of Trade and United States Agency for International Development (USAID) met to discuss how digital tools could help SMEs in Laos’ Recently, delegates from the Department of Small and Medium Enterprises, the Ministry of Trade and United States Agency for International Development (USAID) met to discuss how digital tools could help SMEs in Laos, especially during COVID-19. Representatives of the Ministry of Telecommunications and Communications, as well as successful entrepreneurs, shared knowledge and ideas on adapting to the digital economy. Solutions established included the introduction of real-world digital products and services onto the market, as well as establishing a forum for emerging SMEs in Lao, Cambodia and Myanmar to facilitate knowledge transfer.

THE LAO NATIONAL CHAMBER OF COMMERCE AND INDUSTRY (LNCCI)

www.mekongtimberplantations.com

Mekong Timber Plantations Co., Ltd is the largest private entity Forest Stewardship Council® certificate holder in Laos.

FSC is dedicated to the promotion of responsible forest management worldwide. As an FSC certified forest manager, MTP aims to be a leading sustainable plantation forestry business in Asia. MTP holds license code FSC® C140421.

Key Players MEKONG TIMBER PLANTATIONS CO. Mekong Timber Plantations has goals to become a leading sustainable forestry plantations in Asia. It manages a 24,000 hectare plantation estate in Lao and ensures best practices in forest management, producing high-value hardwood timber for regional markets.

Xao Ban Group Healthy food products, from yoghurt to jam, made with local ingredients.

Tokyo Sushi A Japanese sushi and sashimi bar in Vientiane.

Phutawen Farm

VIENTIANE INTERNATIONAL SCHOOL Vientiane International School is an independent, not-for profit day school offering the International Baccalaureate (IB) programme for students aged three and up – the only school in the country to do so.

The school is accredited by both the Council of International Schools (CIS) and Western Association of Schools and Colleges (WASC), demonstrating its high standards of professional performance. Through its CIS/ WASC accreditation programme, continual improvement is encouraged through self-study and peer-to-peer evaluation.

Vientiane International School has a diverse community of students and teachers from over 50 countries, and empowers its students to become engaged, open-minded and critical thinkers.

A hub for sustainable and agritourism, offering cycle tours and gardening experiences, located a 90-minute drive from Vientiane.

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