SME Development Plans in the Light of the ASEAN Economic Community and Their Implementation in Lao PDR

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Southiseng, Nittana and John Walsh, “SME Development Plans in the Light of the ASEAN Economic Community and Their Implementation in Lao PDR,” paper to be presented at the International Conference on Commerce, Financial Markets and Corporate Governance/2nd International Conference on Research Methods in Management and Social Sciences (Shinawatra University, Thailand: February 7th, 2015).

Abstract:

Small and medium-sized enterprises (SMEs) are integral to the regional economic development and growth of the ASEAN because they account for more than 96% of all enterprises and some 50-85% of domestic employment in ASEAN member states is provided by SMEs. SMEs contribute some 30-53% of regional GDP and 19-31% of exports. For this reason, SME development of ASEAN is embedded in the third pillar of the ASEAN Economic Community (AEC) Blueprint, namely, equitable economic development, and its development would directly contribute towards achieving the implementation of the third pillar. SMEs not only contribute to income and employment generation of the region, therefore, but also reinforce gender and youth empowerment through business participation, as well as their widespread presence in non-urban and poorer domestic regions. In the Lao context, the 7th National Social-Economic Development Plan recognized that growth in SMEs is also essential for poverty reduction and the graduation of Laos from least developed country (LDC) status as SMEs contribute to raising standards of living for people and are the foundations of industrialization and modernization of the Lao economy. This is shown in the fact that, in 126,913 enterprises nationwide which had 345,138 employees in the private sector of the country, 99.8% of them were SMEs and employed 83% of the workforce. Most, 64.5%, belonged to the trade sector, followed by the processing industry sector at 19%. They were mainly located in the capital Vientiane (22.7%), Savannakhet province (11.4%) and Vientiane province (10%). For this reason, the integration of SMEs in Laos into the international market economy and increasing their competitiveness and resilience are priorities for the long-term SME development policy, which should create favourable conditions for the establishment of the AEC in 2015. This study is based on recent secondary policy frameworks and reports available at the institutions with mandates to promote the development of SMEs and facilitate their access to finance, information, technology and markets. The development plan of SMEs from 2011-2015 aimed to address the obstacles faced by SMEs and to enhance their competitiveness in six prioritized areas: improve regulatory conditions; access to finance; formation of new entrepreneurs; increase provision of business development services (BDS); enhance business linkages and increase productivity and access to markets. To achieve these goals requires constant efforts to improve human resources, provision of access to finance, technology, innovation and markets as well as internationalization through policy support measures, supplementary activities and appropriate communication.

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