Small and Medium-Sized Enterprises (SMEs) Difficulties and Challenges in Lao PDR

Abstract

Although the Government of Lao PDR has implemented several mechanisms to promote both small- and medium-sized private sector enterprises since the private sector has emerged as a significant force in the economic development. In addition, the government has carried out a number of development projects involving several sectors such as credit and income generation, health care, education and infrastructure development, in order to increase the benefits of market reforms for domestic investors.Recently, the SMEs sector contributes significantly to economic activity in Lao PDR and accounts for substantial employment and business locally. According to latest available data from the 2013 Economic census, there are 178,557 enterprises of which 158,915 (89.9%) are small and medium-sized enterprises employing less than 10-99 workers. Moreover, it found that most enterprises are located in the urban areas at 65.9% and 34.1% in the rural areas in which had shown that most enterprises are doing businesses in the big cities that related to trade, merchandising, wholesaling, retailing, car and motorcycle repairing covered at 62.8%, industrial processing at 12.5% and services at 11.7%. However, most production of goods and services is for domestic consumption at 94.4%.