Food processing plants in Laos face financing problem

Reading Time: 2 minutes

food factoryAgricultural processing plants in Laos are facing financial difficulties because they are unable to obtain bank loans to boost their capital, Agriculture and Forestry Minister Vilayvanh Phomkhe said at a press conference in Vientiane on September 19.

He said the lack of funds had delayed the expansion of processing factories, which play a significant role in realising the government’s policy to bolster commercial production for export purposes.

“Processing factories try to get funding from banks but they cannot get a loan,” he said. “The root cause of the problem is that our government is not rich.”

He said the banks themselves did not have large reserves as most of their money came from cash deposits, so the business sector needed to provide alternatives to borrow money. The minister mentioned several tapioca plants that lack revolving funds to expand their businesses. As a result, the number of cassava plantations has declined in 2013.

Many people began planting other crops after factories started buying less cassava from local growers.

The Dao Instant Coffee Factory has encountered a similar problem. Opened in 2012 after racking up construction costs worth $128 million, the plant is considered one of the most modern in Laos. Though farmers have offered between 70,000 and 80,000 tonnes of coffee beans to the factory, the company has only been able to buy 30,000-40,000 tonnes and is seeking help from the government. The company is also seeking to set up partnerships with foreign companies.

The minister also referred to modern sawmills in Khammuan and Savannakhet provinces that are currently experiencing a lack of funds. Farmers usually have between 50,000 and 60,000 tonnes of wood to sell to a sawmill, but one of the factory owners only has enough money to buy 14,000-15,000 tonnes annually.

The government has been promoting commercial production for decades but in many instances it has yet to materialise. Laos imports more than it exports. According to a government report, in the past six months of the 2012-13 fiscal year the export value reached $880 million, while the value of imports exceeded $1.16 billion. The main items imported included processed foods.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 2 minutes

Agricultural processing plants in Laos are facing financial difficulties because they are unable to obtain bank loans to boost their capital, Agriculture and Forestry Minister Vilayvanh Phomkhe said at a press conference in Vientiane on September 19.

Reading Time: 2 minutes

food factoryAgricultural processing plants in Laos are facing financial difficulties because they are unable to obtain bank loans to boost their capital, Agriculture and Forestry Minister Vilayvanh Phomkhe said at a press conference in Vientiane on September 19.

He said the lack of funds had delayed the expansion of processing factories, which play a significant role in realising the government’s policy to bolster commercial production for export purposes.

“Processing factories try to get funding from banks but they cannot get a loan,” he said. “The root cause of the problem is that our government is not rich.”

He said the banks themselves did not have large reserves as most of their money came from cash deposits, so the business sector needed to provide alternatives to borrow money. The minister mentioned several tapioca plants that lack revolving funds to expand their businesses. As a result, the number of cassava plantations has declined in 2013.

Many people began planting other crops after factories started buying less cassava from local growers.

The Dao Instant Coffee Factory has encountered a similar problem. Opened in 2012 after racking up construction costs worth $128 million, the plant is considered one of the most modern in Laos. Though farmers have offered between 70,000 and 80,000 tonnes of coffee beans to the factory, the company has only been able to buy 30,000-40,000 tonnes and is seeking help from the government. The company is also seeking to set up partnerships with foreign companies.

The minister also referred to modern sawmills in Khammuan and Savannakhet provinces that are currently experiencing a lack of funds. Farmers usually have between 50,000 and 60,000 tonnes of wood to sell to a sawmill, but one of the factory owners only has enough money to buy 14,000-15,000 tonnes annually.

The government has been promoting commercial production for decades but in many instances it has yet to materialise. Laos imports more than it exports. According to a government report, in the past six months of the 2012-13 fiscal year the export value reached $880 million, while the value of imports exceeded $1.16 billion. The main items imported included processed foods.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid