Lao Govt Launches State-Owned Company to Boost Liquidity of Financial Institutions

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Lao Government Launches State-Owned Company to Boost Financial Liquidity for Banks, Debtors
Officials from the Bank of Lao PDR gather at the launch ceremony of "the state-owned Debt and Asset Administration Company Limited" (photo: Culture and Business News)

The Lao government is bolstering the financial stability of commercial banks and financial institutions by creating a state-owned entity, the Debt and Asset Administration Company Limited, which will acquire non-performing loans and unsold assets from these organizations.

In a ceremony held last week, the Bank of Lao PDR (BOL) officially inaugurated the state-owned Debt and Asset Administration Company Limited. The event was attended by Mr. Bounluea Sinxayvoravong, the Governor of BOL, and both deputy governors, Mrs. Vathana Dalaloy and Mrs. Khankeo Lamaningao.

Also in attendance were Phouthanouphet Saysombath, the Deputy Minister of Finance of Laos, and Ms. Khamlar Heuanmanivong, the Director General of BOL’s Commercial Bank Management Department.

During her address at the ceremony, Ms. Khamlar Heuanmanivong emphasized that this new state-owned company marks an advancement in the management of debt acquisition and debt deposits. She noted that the company had drawn insights from a feasibility study and lessons learned from neighboring countries like Thailand and Vietnam. The primary objective of the company is to efficiently handle non-performing loans and assets awaiting sale from financial institutions.

Ms. Khamlar further explained that the establishment of this company will provide crucial support to commercial banks and financial institutions in dealing with non-performing loans and assets.

By transferring debt ownership to the company through the sale of assets and non-performing loans, these institutions stand to benefit from improved financial liquidity. In addition to this, debtors will gain access to a range of policies designed to ease their financial burdens.

These policies encompass extended debt service durations, debt restructuring options, and reductions in interest rates, fines, and even the overall debt amount. Such measures are expected to empower debtors, enabling them to revive their businesses, foster job creation, and contribute to economic growth.

The establishment of the state-owned Debt and Asset Administration Company Limited represents a pivotal move by the Lao government to strengthen the financial stability of commercial banks, financial institutions, and debtors alike.

This initiative is poised to have a significant impact on the financial landscape, offering a lifeline to those grappling with non-performing loans while providing a valuable liquidity boost to the nation’s financial sector.