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2015 (1) (2) (3) (4) (5) (6) (7) (8) (1)-(6) (1)+(3) (5)+(6) (4)-(8) Net Interest Income Non Interest Income Total Income Operational Expense Loan Loss Provision Total Expense ROA BCEL 1.01% 0.57% 1.48% 2.49% 1.49% 0.44% 1.92% 0.57% Joint State Bank 3.29% 2.41% 1.99% 5.28% 3.34% 0.88% 4.22% 1.06% Privaet Bank 3.25% 2.5... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Expense by Bank Type Note: The scale of vertical axis for ICBC is smaller than in the other charts.
4.
Concluding Remarks In this chapter, we discussed the reality of the banking sector associated with possible policy agendas from various angles.
As a reality of the sector, there are two kinds of key challenges: (1)... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Needless to say, these two factors are interlinked with each other.
Int.
Income 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Total Income Total Expense BCEL Operational Expense Loan Loss Non Int.
Income 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Total Income Total Expense Joint State Bank Operational Expense Loan Loss N... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Income Int.
Income 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Total Income Total Expense Foreign Subsidiary Bank Operational Expense Loan Loss Non Int.
Income Int.
Income 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% Total Income Total Expense ICBC Operational Expense Loan Loss Non Int.
Income Int.
Income 0.00% 1.00% 2... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Income Int.
Income ๏ผ124 ๏ผ 125 Chapter 3 Microfinance and Credit Saving Union Survey 1.
Introduction 2.
Regulated MFIs 2.1 Rapidly growing ND-MFIs 2.2 Accumulated assets and savings mobilization 2.3 Loan to deposit ratio 3.
Two leading credit union systems 3.1 Village Savings Groups 3.2 Village Banks 3.3 Loan to dep... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Introduction Microfinance is broadly defined in Lao PDR.
According to Microfinance Institutions or MFIs No.
460/GoL67, it means provision of financial services in varied forms.
For instance, provision of loans, taking deposits, provision of security and others in the form of cash transactions to the poor, low income... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
deposit-taking, non-deposit-taking microfinance institutions and microfinance projects.
Deposit-taking MFIs (DT-MFIs) are allowed to mobilize deposits from the general public, while Non- Deposit-taking MFIs (NDMFIs) can do that in the form of loans and grants. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Microfinance projects (MFPs) means village development funds, village banks or other similar projects undertaking business operations similar to micro finance established by groups of people, entities that have organizations or individuals to provide funding.
In addition, BoL also supervises micro-financial enterprise... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
However, in this short paper we will concentrate on MFIs that mobilize savings.
2.
Regulated MFIs 2.1 Rapidly growing ND-MFIs The first MFI was established in 2006 based on the governmentโs Microfinance regulations.
According to administrative data from BoL, the number of DT-MFIs and SCUs have been gradually increas... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
460/GoL was signed by Prime Minister of Lao PDR on 03 October 2012 ๏ผ125 ๏ผ 126 rapidly from 10 establishments to 77 establishments during this period; however, the average amount of total assets of this type is relatively small compared to DT-MFIs and SCUs (3.4 billion kip vs. 61.4 billion and 5.3 billion respectively).... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 3-1 Number of Regulated MFIs Source: BoL 2.2 Accumulated assets and savings mobilization Based on the BoLโs administrative data, aggregated total assets of regulated MFIs is recorded at 1,632 billion LAK in 2018.
Of this, DT-MFIs is the largest model sharing 75% of total assets in the regulated MFIs sector.
9 ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Assets of Regulated MFIs in 2019:1,632 billion LAK Source: BoL Amongst the regulated MFIs, only DT-MFIs are allowed to mobilize savings from the general public.
ND-MFIs and SCUs can only take deposits from their shareholders.
However, more than 40% of their total assets are from peopleโs savings.
The number of depos... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 3-3 Deposit to Asset Ratio Source: BoL DT-MFIs 75% ND-MFIs 16% SCUs 9% 78% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 DT-MFIs ND-MFIs SCUs ๏ผ127 ๏ผ 128 We are not able to obtain information on interest rates provided for deposit of shareholders in ND- MFIs... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
However, by taking cases of the largest DT-MFIs, Ekphatthana Microfinance Institution (EMI), we observe that deposit interest rate at regulated MFIs is quite attractive compared to that of the largest commercial banks like BCEL. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Table 3-1 Interest Rate: MF vs. Commercial Bank Type of financial institutions Cases Deposit interest rate (Kip) Saving deposit 1 year term deposit DT-MFIs Ekphatthana 5% 12% Commercial banks BCEL 1.89% 5.59% Source: EMI and BCELโs websites 2.3 Loan to deposit ratio Before 2012, loan to deposit ratio of the DT-MFIs was... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The 2018 loan to deposit ratio of the DT-MFIs is relatively low (84%), and itโs lower than that of the commercial banks (96.24%).
This indicates a similar situation of surplus fund or underutilization as happened in the banking sector.
Figure 3-4 Loan to Deposit of the DT-MFIs Source: BoL 3. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Two leading credit union systems In the hist ory of rural and microfinance in Laos, village or community based microfinance has been 109%104%102% 86% 96% 71% 82% 81% 84% 0% 20% 40% 60% 80% 100% 120% 2008 2010 2012 2014 2016 2018 2020 Loan to deposits ๏ผ128 ๏ผ 129 introduced as a component and/or standalone activity in ma... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
With the communityโs social capital, a peer monitoring/screening mechanism can be applied to reduce information asymmetry between lending agencies and their borrowers.
The well-known model is Village Credit Union68 which is called by two different names i.e.
Village Banks and Village Savings Groups. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Village Banks and Village Savings Groups.
Village Banks are village credit unions supervised by BoL and counterparts (such as GIZ and Australian Aid), and Village Savings Groups are village credit unions supervised by Lao Womenโs Union and counterparts (such as FIAM and CODI)69. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Table 3-2 Village Savings Groups and Village Banks Starte d Current supervision 2019 data Number Depositor s Combined savings Village Savings Groups 1997 LWU network 3,648 236,081 512 billion kip Village Banks 2009 AFP project (BoL, GIZ) 670 153,000 269 billion kip Source: AFP and LWU 3.1 Village Savings Groups The Vil... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
FIAM (Foundation for Integrated Agricultural and Environmental Management) and CODI (the Community Organizations Development Institute) since 1997 in peri-urban areas of Vientiane Capital70.
During 1997-2011, the VSG movement went well under FIAM and CODI.
The project provided technical and monitoring support through... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
By 2004, VSGs under FIAM in Xaythany district started reaching maturity where savings they mobilized exceed the demand for borrowing.
Many VSGs with surplus money lent out to people or groups outside the village in order to manage the idle 68 Credit unions follow a basic business model: Members pool their moneyโtechni... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Any income generated is used to fund projects and services that will benefit the community and interests of its members.
69 Grameen model or group guarantee used to be piloted by a French project in the northern province (Phongsaly) for remote villagers and by Agriculture Promotion Bank (APB) for the farmer groups.
H... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
70 For more information please find 2004 paper โSaving Group and Credit Markets in Rural Laosโ by Akihiko OHNO and Yutaka ARIMOTO ๏ผ129 ๏ผ 130 fund.
In order to reduce risks, they set up Centre of Saving groups at district level to manage cross- group borrowing.
It seemed to go well until the withdrawal of both FIAM an... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Seeing that local LWU have limited capacity to manage the increasing amount of surplus, central LWU advised setting up a ceiling for saving to screen out big investors and therefore limit ability to mobilize local financial resources.
According to LWU, cross-group lending still exists but we are not sure if technical ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 3-5 Structure of Village Savings Group Source: by author 3.2 Village Banks The current movement of Village Banks in Laos is led by Access to Finance for the Poor (AFP) which is a German development cooperation project that is jointly implemented by BoL and GIZ and financially supported by the German and Australi... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The AFP project was started in around 2009, now itโs on the fifth phase (end in 2021).
By learning from VSGโs experiences, AFP developed a training manual and operating system, the so called Village Bank (VB).
At village level, VSG and VB models are very similar in terms of organization structure, format of the by-la... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
AFP developed โMeso levelโ approach, that links VBs to a formal financial system in a more sound and sustainable manner.
The Meso Level consists of Network Support Organization (NSO).
This NSO is licensed as MFI for supporting 40-100 VBs.
Beside provision of MF services for retail clients, NSO provides monthly techn... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
By 2019, AFP reports 7 NSOs/MFIs to support 707 VBs operating in 6 provinces (see Annex C FIAM CODI projects Centre of Saving Groups at district level Khet/network VSG VSG Khet/network VSG VSG Khet/network VSG VSG ๏ผ130 ๏ผ 131 for the geographic location of the VBs).
Figure 3-6 Structure of Village Banks Source: by auth... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
However, we manage to calculate the loan to deposit ratios using aggregated data of VBs under AFP project and data of Ban Somsavanh Savings Group โthe largest VSG in Laos with total assets of 7.8 billion kip in 2019.
We observe decreasing trend of savings utilization: the ratios went down to 95% for VBs and even worse... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Remaining Agendas for upgrading and connecting non-bank sector 4.1 Filling gap of long term demand 112% 95% 104% 86% 0% 20% 40% 60% 80% 100% 120% 2014 2019 2014 2019 BoL's VBs LWU's Somsavanh SG BoLโs regulation and supervision AFP project Network Support Organization (NSO) (MFI) VB VB Network Support Organization (NSO... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
To the author, such positioning makes sense in the way that micro-savings mobilized by MFIs are smaller in size (about 3% of what CBs did) compared to demand from the development projects.
In addition, savings products provided by MFIs are mostly short-term (less than 1 year).
Particularly in credit union type-MFIs s... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
4.2 Linking domestic savings into whole financial system via MFIs Current total number of depositors in MFIs (DT-MFIs, ND-MFIs, SCUs, VBs and VSGs) in 2019 is approximately 600,000 people which is equivalent to 12% of the working population.
There is a possibility to increase number of depositors by developing saving ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
saving, smart kids saver, and one-year fixed deposit, and a life insurance.
When LWU discuss transforming the VSGs into formal MFIs, the two key difficulties frequently cited are about ownership of the fund (which belong to the community) and technical capacity of the management committee.
If the VB system pilot proj... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
In fact, the non- bank sector is still very small in terms of total asset size.
As shown in Table 3-3, the average total assets of DT-MFI are less than 3% of private banks.
Individual village banks are much smaller.
Their advantage, on the other hand, seems to be their facility is already set in rural areas.
The BO... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Although village banks are segmented with each other, it seems that potential capacity to collect deposits in rural areas can be utilized under an appropriate policy design.
71 The Possibility for Establishing a Development Financial Institution in the Lao PDR, by Dethphouvang MOUNLARAT et al.
MAPSII report, March 20... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
MAPSII report, March 2005.
๏ผ132 ๏ผ 133 Table 3-3 Size and Share of Total Financial System including Non-Bank Sector Source: Various Materials from LWU, BOL by Author 4.3 Transforming VSGs into VBs It is certain that AFP is able to develop the VB model based on experiences of VGSs.
Therefore, LWUโs VGSs should be seen ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
In order to do that, more and close collaboration between BOL and LWU is needed.
4.4 Savings underutilization One of the issues we found across the financial institutions (commercial banks, MFIs and semi-formal MFIs) is underutilization of the fund they mobilized-idle fund.
Government is taking the right track on inc... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
So far, most of the loans taken from MFIs are for consumption, therefore creation of demand for production loans is also another important way to meaningfully utilize the idle fund.
Therefore, MFIs and stakeholders might need to provide the clients services and supports other than savings and loans but also promotion ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Billion LAK % Average 1 Commercial Bank Total 36 130,387.3 98.3% 3,621.9 (1) State Bank 4 46,281.4 34.9% 11,570.4 (2) Joint State and Private Bank 10 25,805.1 19.5% 2,580.5 (3) Foreign Bank 22 39,694.6 29.9% 1,804.3 2 Non Bank Financial Intuitions 124 1,631.0 1.2% 13.2 (1) Deposit Taking MFI 20 1,228.0 0.9% 61.4 (2) No... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
size of MFIs by total assets (billion kip) Deposit to asset ratio Loan to deposit ratio Loan to asset ratio DT- MFIs ND- MFIs SCUs DT- MFIs ND- MFIs SCUs DT-MFIs ND- MFIs SCUs DT- MFIs ND- MFIs SCUs 2010 3.17 2.28 3.55 65% 9% 1.09 3.57 0.71 0.51 0.32 2011 5.97 2.46 1.92 59% 24% 1.04 3.24 0.61 0.69 0.77 2012 6.03 1.75 1... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
2005, in Macroeconomic Policy Support for Socio- Economic Development in the Lao PDR.
Phase 2, main report P.249.
๏ผ137 ๏ผ 138 Chapter 4 Corporate Fundraising Survey 1.
Introduction 2.
Major Companies and Their Ownership in Laos 3.
Corporate Fundraising Survey 3.1.
Design 3.2.
65 Samples โ Sector and Size 3.3.
Ow... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Going Public at LSX and its Effect on Firmsโ Performance Appendix Table.
65 Sample Firms 1.
Introduction This chapter reports the survey conducted as a part of the research program focusing on the present situation of firms in the leading large firm class, particularly on State-own Enterprises (SOEs), and their fundr... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Two appendixes add a preliminary estimation on determinants of firmsโ fundraising and capital structure, and a rough observation on the function of Lao Securities Exchange (LSX) for company performance.
2.
Major Companies and Their Ownership in Laos According to the government record, the number of enterprise registr... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Particularly โindividual enterprisesโ and โsole limited companiesโ are mostly located in the capital.
Among them, โlimited companiesโ occupy only 3.56% in terms of number, but a large percentage in terms of registered capital73.
The wholesale, retail trade, for which repair of motor vehicles and motorcycles is the to... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
72 โVientiane Cityโ usually refers the areas of the central districts in โVientiane Capitalโ 73 Enterprise registration data is retrieved from National Enterprise Database of Enterprise Registration and Management Department, Ministry of Industry and Commerce, dated 25th June 2019. http://www.erm.gov.la/index.php/explo... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
In this year, 640 state-owned enterprises existed, 200 of which were controlled under the central level (Quang et al.
1999)75.
This number of SOEs has been steadily reduced by closing down, leasing, merging and sell-offs.
Based on the data from Ministry of Finance, as of the end of 2018, the Lao government has capit... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
There are 133 SOEs that government has shares more than 51% (60 under the central government, and 76 under local authority), 54 SOEs with less than 50% share (35 under central government, and 15 under local authority).
Figure 4-1. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 4-1.
Share of Govโt Majority and Minority SOEs Source: SOE Management, Development and Insurance Department, Ministry of Finance According to the interview at Ministry of Finance76, the joint venture enterprises tend to be better in corporate governance, thus to perform better than the full state-owned.
The in... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The interview 75 Quang, T. & Thavisay, C. (1999).
Privatization and Human Resource Development Issue: A Preliminary Study of State-Owned Enterprises in the Lao Peopleโs Democratic Republic, Research and Practice in Human Resource Management, 7(1), 101-123.
76 State-owned Enterprise Development, (personal interview, 0... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total Asset Registered Capital Annual Revenue Staffs SOEs (Govt.<50%) SOEs (Govt.>50%) ๏ผ139 ๏ผ 140 also revealed that MOF has ceased to guarantee the SOEsโ bank borrowing, and encouraged them to be self-reliant in fundraising.
3.
Corporate Fundraising Survey 3.1.
Design The... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
We conducted the enterprise survey targeting mostly large enterprises and a few small and medium enterprises, including the SOEs, private companies and public (or listed) companies in the non-financial sector.
We collected the information on company profile, characteristics of corporate ownership, various financial si... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
At first we constructed a list of 237 major companies from the SOEs list of Ministry of Finance (MoF), the potential listing companies list of Lao Securities Exchange (LSX), 100 outstanding business people list from Japan External Trade Organization (JETRO) office in Laos, and the company list from the Lao National Cha... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
This list was then prioritized into a shortlist in accordance with their total assets, registered capital, eligible companies matching with LSXโs listing criteria and their reputation.
The corporate finance survey was conducted during a period from July to September 2018.
The research team visited the company headqua... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
65 of the 237 companies in the sample accepted the appointment request and accomplished the questionnaire, while 50 out of the 65 respondents completed the questionnaire with available data for balance sheet, and financial statement.
3.2.
65 Samples โ Sector and Size As listed in Appendix Table at the bottom of the c... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
As shown in Figure 4-2, 26.2% of them are registered as manufacturing and producing sector, the largest proportion of our respondents, followed by information and telecommunication 10.8%, transportation and postal service 9.2%, hotel and restaurant sectors 9.2%.
๏ผ140 ๏ผ 141 Figure 4- 2.
Sample Distribution by Business... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Concerning ownership, the private company is the largest number in this survey, accounting for 55.4%; The sample percentage of SOEs is 36.9% (State majority 29.2%, and minority 7.7%); that of public companies (listed companies) is 7.7%.
Figure 4-3. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 4-3.
Number of Companies and Number of Workers For the size distribution measured by number of employees, 58.4%, the majority of the sample is categorized as large firms, whereas the medium enterprises and small enterprises are counted ๏ผ141 ๏ผ 142 as 16.9% and 24.6% respectively.77 Notwithstanding, large firms a... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
3.3.
Ownership The firms in Laos are primarily launched by local investors either as a family business or jointly with friends.
At the same time, the trend of foreign investment is currently increasing in the form of joint venture, and foreign branch. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Based on the survey result, many of the local investors are independently running the business by themselves without shareholders; likewise, creating business partners among the family members, friends and foreign shareholders is the alternative model of business operation.
As shown in Table 4-1, the ownership distrib... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
(1) One owner: refers to the company that is operated and administrated by one independent owner, 24 sampled companies; (2) Family and other local shareholders: the company that has family members or other local investors as shareholders in current business operation, 6 companies; (3) foreign shareholders: refers to th... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
<50% and foreign>50%): refers to the company that is joint between government investing less than 50% and foreign investors investing more than 50%, there are 2 companies; (8) joint-venture (Govt.<50% and local>50%): the company that is joint between government investing less than 50% and local investor contributing gr... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Table 4-1.
Ownership Distribution of Sample Firms Company status Ownership detail No.
Percentage Private company (1) One owner 24 36.9 (2) Family and other local shareholders 6 9.2 (3) Foreign shareholders 1 1.5 (4) Foreign branch and company (100%) 5 7.7 SOEs (5) SOEs (Govt.
100%) 16 24.6 (6) Joint-venture (Govt.>5... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Fundraising (1) Initial Capital Table 4-2 clarifies the fund source for business establishment that sampled companies use during the initial stage of business operation.
Their own fund is the core method of initial capital that many companies utilize for establishing their businesses, counting at 61.5% of total, and t... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Under other conditions, there are some companies applying both self- financing and bank loan as their initial capital, amounting at 9.2% especially in the information and telecommunication sector.
78 There are 9 public companies, as end of September 2018, listing in Lao Securities Exchange, but this study includes onl... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
๏ผ143 ๏ผ 144 Table 4-2.
Fund Source of Capital for Business Establishment By business sector Total Manufacturing & producing Information & Telecom.
Transportation & Postal Ser.
Hotel & restaurant No. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Hotel & restaurant No.
of companies 65.0 17 7 6 6 Own fund (%) 61.5 70.6 28.6 100.0 83.3 Bank borrowing (%) 1.5 0.0 14.3 0.0 0.0 Borrowing from family, relatives and friends (%) 3.1 0.0 0.0 0.0 0.0 Shareholders or related parties (%) 23.1 5.9 28.6 0.0 16.7 Bank borrowing, & own fund (%) 9.2 17.6 28.6 0.0 0.0 Bank borr... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
of companies 36 19 5 5 Own fund (%) 66.7 78.9 20.0 0.0 Bank borrowing (%) 0.0 5.3 0.0 0.0 Borrowing from family, relatives and friends (%) 2.8 0.0 0.0 20.0 Shareholders or related parties (%) 19.4 15.8 60.0 40.0 Bank borrowing, & own fund (%) 11.1 0.0 20.0 20.0 Bank borrowing, & borrowing from foreign partners (%) 0.0 ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
SOEs principally receive contribution from government as initial capital without accessing financial institutions.
For the public companies, obtaining the assistance from shareholders and related parties is commonly practiced in this business type.
(2) Recent Fund Mobilization for Working Capital and Investment Figur... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Self-financing is the main method of initial capital for establishing the business in Laos, while receiving equity from the shareholders and related parties is the alternative option.
The figure suggests that many companies changed their fundraising behavior; they firstly invested their own fund in the early stage, th... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 4- 4.
Fundraising Behavior from Initial Capital to Current Mobilization ๏ผ145 ๏ผ 146 The firm fundraising changes to be more dependent on bank loans in addition to self-finance.
The sum of bank borrowing and own fund accounts for 40% of total, and remarkably increases.
This change is remarkable in the sectors o... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
While the trend of self-finance is declining, there is a little change in using resources from shareholders or related parties.
(2) Bank Borrowing In our survey, 34 out of 65 firms, i.e.
52% in number have an experience of borrowing from banks; the private company covers the largest proportion in receiving the bank c... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The remaining 31 firms have not requested bank credit for the reason, according to the answer to our questionnaire, that they have sufficient cash flow within the firm.
They also point out the difficulties of collateral setting as an obstacle of loan access.
The situation is not different between private firms and SO... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 4-5.
Number of Credit Cases based on Bank Type From the five surveyed years (Table 4-3), 28 of 56 sampled firms have used bank credit for their working capital, and mostly received this from State-owned Commercial Banks and joint state commercial banks.
Other bank credit is moderately utilized in equipment inv... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Our sample firms mostly demand the medium term credit; three-year, counted at 35 % of total credit cases; five- year and one-year were partly covered at 27 % and 20 % accordingly.
Apart from bank borrowing, many firms recognize that collateral problem is the largest obstruction.
(3) Supplierโs Relation and Trade Cred... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Here we observe the relation between company and supplier, and examine if the role of trade credit plays a substantial role or not.
Many of our respondent firms answered that they keep a long relationship with their supplier.
61% of sample firms continue procurement transaction with the same suppliers for more than 1... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
As shown in Figure 4-6, the large portion (57%) of suppliers are largely located outside the country, the rest are located within the Vientiane capital at 3%, Vientiane city 17%, other areas in Laos 12%.
The large portion of imported materials suggests that the Lao economy largely depends on foreign Table 4-3.
Corpor... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
of companies 18 28 10 State-Owned Commercial Bank (%) 38.9 42.9 80.0 Joint State Commercial Bank (%) 22.2 21.4 10.0 Subsidiary Bank (%) 11.1 17.9 10.0 Foreign Branch (%) 5.6 14.3 0.0 Private Bank (%) 5.6 3.6 0.0 Others (%) 16.7 0.0 0.0 ๏ผ147 ๏ผ 148 material due to low quality of local materials.
As many as 57% firms of ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Figure 4-6.
Location of Suppliers Table 4-4 summarizes the payment method of the sample firms.
As for the nature of trade credit in the process of procurement transaction, we found that 17 out of 65 companies settled their procurement by using deferred payment, which occupies 26% of total transactions.
There is litt... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
On the other hand, 21% of total procurement transactions are conveyed only with cash.
These transactions are rather common in the manufacturing and producing sector, and hotel and restaurant sector.
The average duration of procurement settlement is 1.97 months.
In more than half of sample firms, the difference in pr... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
While the default case is not frequent, the case of default of more than four times is observed in 14 firms.
๏ผ148 ๏ผ 149 Trade credit transaction is widely adopted in many firms probably as an alternative for bank borrowings and self-finance.
But since the price difference is not observed, it canโt be said that trade ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
4.
Capital Structure Among 65 sample firms, the balance sheet information is available for 50 firms (2015:44, 2016:50, 2017:49).
Table 4-5 shows the average balance sheet information by year focused on the capital structure (i.e.
liabilities & capital account side).
It shows the basic nature of corporate finance of... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
They rely largely on self-finance.
The firms are very slightly dependent on bank loans.
The average bank borrowing ratio is only 13-14% and only about one-third of the sample firms borrows from a bank.
It suggests that firms actively utilize non-bank debt for their fundraising.
The percentage of โAccounts and Notes... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
of companies Only Cash Only Deferred Total By company type Private Company 10 10 36 SOEs (Govt.>50%) 2 5 19 SOEs (Govt.<50%) 1 0 5 Public Company 1 2 5 By sector Manufacturing & producing 5 4 17 Transportation & postal service 0 3 6 Hotel & restaurant 4 2 6 ๏ผ149 ๏ผ 150 as that of bank borrowings (around 12%).
Likewise,... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Table 4-5 Capital Structure of Sample Firms Table 4-6 classifies the capital structure by ownership for the year of 2016, showing that the capital structures are heterogonous.
Firstly, the debt ratio is slightly higher in private companies than SOEs (SOEs govt.>50%, same hereinafter), and very low in public (listed) c... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
No.
of Sample 44 50 49 2015 2016 2017 Assets Accounts and Notes Receivable 44.9% 19.3% 20.3% Investment and Loans to Affiliated Companies 2.7% 3.4% 3.4% Premise & Equipment 37.6% 38.2% 33.5% Other Assets 20.5% 23.4% 27.0% Liabilities & Capital Total Liabilities (LAK) 45.2% 46.0% 48.7% Accounts and Notes Payable 12.1% ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
of Firms who Borrow from Banks 16 18 16 Percentage of Number 36.4% 36.0% 32.7% Bank Borrowing Ratio of Borrowing Firms 37.2% 38.8% 33.6% Borrowing from Affiliated Companies 0.7% 1.5% 3.9% Borrowing from Owners and Managers 4.5% 4.2% 4.3% Borrowing from Other Lenders 1.0% 0.4% 0.3% Other Liabilities 10.8% 9.0% 9.6% Tota... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The bank borrowing ratio is a little higher in SOEs.
Although a smaller portion of SOEs borrows from a bank than that of private companies, the average bank borrowing ratio of โborrowing SOEsโ is as high as 55% in total assets.
It suggests that a few particular SOEs are heavily dependent on banks for their fundraisin... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Public (listed) companies seem well constructed in their relationship with banks.
Thirdly, trade finance represented by โAccount and Note Payableโ is most active in private companies.
Likewise, private companies are highest in owner and managers credit.
Public companies also have a high position on them.
No.
of Sa... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
>50%) SOEs (Govt.
<50%) Private Companies Public Companies Assets Accounts and Notes Receivable 16.4% 0.0% 20.7% 32.6% Investment and Loans to Affiliated Companies 7.5% 0.0% 2.0% 0.0% Premise & Equipment 41.2% 0.0% 40.1% 42.0% Other Assets 19.6% 0.0% 28.1% 25.4% Liabilities & Capital Total Liabilities (LAK) 48.9% 0.0%... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
of Firms who Borrow from Banks 5 0 10 3 Percentage of Number 31.3% 0.0% 38.5% 60.0% Bank Borrowing Ratio of Borrowing Firms 55.0% - 40.3% 6.8% Borrowing from Affiliated Companies 0.0% 0.0% 2.8% 0.2% Borrowing from Owners and Managers 0.0% 0.0% 7.0% 5.5% Borrowing from Other Lenders 1.2% 0.0% 0.1% 0.0% Other Liabilities... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Concluding Remarks Observing the situation of presence and distribution of large firms including SOEs as a survey preparation, we examined the fundraising nature of the large firms by analyzing 65 representative samples of companies we originally surveyed.
We found a few strong indications that large firms are general... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
We also found that trade credit was relatively active, not only domestically, but also in import processes, although its financial function was weak.
We should consider policy design based on the recognition that corporate finance in present Laos is still at a very primitive stage.
๏ผ152 ๏ผ 153 Appendix Appendix 1.
Es... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
As shown in Table 4-7, we adopt the factors of age of firms, ownership, and listed status as possible characteristics influencing the firmsโ fundraising and financial strategy.
Table 4-7 Variables The estimation model is as follows: ๐๐๐๐= ๐ถ๐ถ+ ๐ฝ๐ฝ1๐๐1๐๐+ ๐ฝ๐ฝ2๐๐2๐๐+ ๐ฝ๐ฝ3๐๐3๐๐+ ๐๐ (๐๐= 1, 2, 3, โฆ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
X1 is a vector of controlled variables consisting with control variables, and X2 is a vector of variables related to the characteristic we focus on.
And X3 presents the vector of variables related to the business operation. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Debt ratio Total liabilities/ total assets Bank borrowing ratio Bank borrowing/ total assets Other liabilities ratio (Debt - bank borrowing)/ total assets Controlled variables (X 1 ) Total assets Total assets Fixed assets ratio Fixed assets/ Total assets Retained earning Retained earning Age The firm's age from establi... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The descriptives of the variables are shown in Table 4-8.
The estimation includes 18 state- owned-enterprises (SOEs), 14 companies that have at least one foreign shareholder, and five listed companies.
The manufacturing and producing sector has the largest proportion of the business sector operated by samples (23%), ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
The result of Tobit and OLS model looks fairly reasonable, whereas that of Probit model contains inconsistency, particularity on the estimation of the debt case.
The parameters of control variables are generally consistent; firms with the larger total assets hold debt and bank borrowing in higher ratio, and cash flow ... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
As for the observation focus, roughly the estimation results show (1) debt ratio is relatively low in SOEs, (2) bank borrowing ratio is lower in foreign firms, while age of firms, and listing status are uncorrelated to firmsโ capital structure.
It can be noted that the Information & Mean Min Max Obs. | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
Unit Dependent variables Debt ratio 0.481 0 1.525 51 Proportion Bank borrowing ratio 0.157 0 1.03 51 Proportion Other liabilities ratio 0.324 -4.28E-05 1.147 51 Proportion Independent variables Total assets 379054.4 1141.294 3564038 51 Million LAK Fix assets ratio 0.363 0 0.859 51 Proportion Retained earning 24317.83 -... | https://transfered-docs-lawep.s3.amazonaws.com/thematic1e/pw_1/1725644155970.pdf | https://openjicareport.jica.go.jp/pdf/12355368.pdf | Japan |
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