Keen on digitally transforming the country’s economy and banking systems, the Bank of Lao PDR (BOL) successfully trialed the “Digital Lao Kip,” and implemented Cambodia’s ACLEDA Bank cross-border QR payment last week.
The Lao Central Bank, with the support of Japanese finance tech (Fintech) firm SORAMITSU, successfully conducted a trial of the “Digital Lao Kip” by utilizing a blockchain system. If implemented, this would potentially allow the government to make its banking system accessible to about 70 percent of its citizens (7 million people) who don’t have a bank account yet.
According to ASEAN Briefing, the digital currency will allow people in Laos to pay or transfer money through the QR code regardless of whether they own a bank account or not. Despite the existing reliance on cash, digital currency is positioned to serve as the emerging cornerstone for conducting transactions in the country.
Digital tools, like the Digital Lao Kip can also help to improve the digitization of local businesses, especially SMEs, which dominate the Lao economy. Such tools will also enable cross-border settlement and improve trade with neighboring markets, such as Cambodia.
Furthermore, Cambodia’s ACLEDA Bank launched the first phase of its cross-border payment via QR code in Laos, to encourage the use of the Khmer Riel (KHR) for payment settlement in ASEAN, and to support economic integration, following successful launches in Thailand and Vietnam.
In Channy, President and Group Managing Director of the public-listed bank, says, “ACLEDA Bank Plc and ACLEDA Bank Lao Ltd have been selected to be the settlement banks for cross-border payments between the two nations for the acceptance of payments in local currencies [KHR and LAK].”
In the first phase, ACLEDA customers will be able to scan the QR code and pay in Laos. Following that, customers of Cambodia’s first digital currency, the Bakong, would also be able to pay in KHR from their mobile app in Laos. Customers of ACLEDA Laos will not be able to conduct transactions in Cambodia during this first phase but will be able to after the rollout of the second phase, early next year.
According to Mr. Channy, “The digital system will make payments more convenient for tourists and firms while also strengthening the local currency of both countries, streamlining payment transactions, and reducing operation costs.”
Amidst the transformation of the digital economy in Laos, a governing body has also been appointed by the President of Laos, Thongloun Sisoulith, to oversee its progress.
The National Committee to implement the Digital Transformation consists of 22 senior government officials, including Prime Minister Sonexay Siphandone, who will be president of the committee, Deputy Prime Minister and Minister of Public Security, Mr. Saleumxay Kommasith, and Deputy Prime Minister and Minister of Foreign Affairs and Minister of Communications and Technology Mr. Boviengkham Vongdara.
The new committee will set policies, and mechanisms in place to implement the transformation of the digital economy at central and local government levels, along with monitoring the National Digital Economic Development Vision for 2021-2040, the National Digital Economic Development Strategy for 2021-2030, and the National Digital Economic Development Plan for 2021-2025.
