Government to Spend Over USD 100 Million to Boost Domestic Production in Laos

Garment factory in Laos (Photo: ILO)
Garment factory in Laos (Photo: ILO)

The government of Laos plans to spend over USD 100 million to promote domestic production in the country and boost exports.

A loan from China’s National Development Bank (CDB) will be used to fund select enterprises amid the government’s efforts to increase domestic production and exports to foreign countries, according to KPL.

Governor of the Bank of Laos, Mr. Sonexay Sitphaxay, spoke at a recent National Assembly session, saying that the Lao economy is under a lot of pressure as a result of major foreign currency appreciation, rising crude oil costs, inflation, and international interest rates, saying it will take some time to recover.

“The government will use funds from China’s National Development Bank (CDB), expecting to draw the first USD 100 million in installments until March 2022,” said Governor Sonexay.

The government will also receive funding from the World Bank, as well as the Lao Access to Finance Fund (LAFF), and commercial bank deposits, which are expected to increase following the launching of the Lao-China Railway project.

“The government will provide some financial policies for small business projects and small and medium-sized enterprises (SMEs),” said Mr. Sonexay Sitphaxay.

“Authorities will coordinate between the public and private sectors to collect information on genuine producers and the need for real finance, particularly for the Power Generating-Export Credit Project, Export Production Credit Project, Production Credit Substitute for Import Scheme, and others,” Mr. Sonexay Sitphaxay added.

The government has set inflation at 5-7 percent in 2022 and established a new exchange rate mechanism to avoid discrepancies in currency values between the official and unofficial exchanges rates.

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