The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) EAST ASIA AND PACIFIC | Lao People's Democratic Republic | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2014 | Seq No: 9 | ARCHIVED on 04-Dec-2018 | ISR34962 | Implementing Agencies: Ministry of Finance, Ministry of Industry and Commerce Key Dates Key Project Dates Bank Approval Date: 09-Jun-2014 Effectiveness Date: 15-Sep-2014 Planned Mid Term Review Date: 10-Jul-2017 Actual Mid-Term Review Date: 10-Jul-2017 Original Closing Date: 30-Jun-2019 Revised Closing Date: 30-Jun-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) This project aims at providing long-term funding sources for banks to provide long-term credit to SMEs. The project will support the growth of privately-owned SMEs by increasing the supply of long-term finance provided by commercial banks and by strengthening thecapability of the Department for Small and Medium Enterprise Promotion (DOSMEP) to formulate and implement public policies that promote access to finance for SMEs. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name 1. Line of Credit to Commercial Banks to Support SME Loans:(Cost $15.00 M) 3. Techical assistance:(Cost $5.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions For the past six months, the project has achieved significant implementation progress of both components supported by a functional project management team; and therefore the key ratings of project remain Moderately Satisfactory. Several notable achievements during this reporting period include: Project Component 1 – Line of Credit. Currently there are four banks selected as PFIs for the project and US$13.6 million had been transferred from DoSMEP to these PFIs. As of October 31, 2018 approved loans to SMEs by the three PFIs of the Project have cumulatively reached LAK86 billion or US$10.7 million to 124 SMEs. The fourth PFI has recently approved the first two sub-loans. The project management team at the MoIC is committed to providing additional support to the PFIs in achieving a more rapid disbursement of loans to the SMEs. 12/4/2018 Page 1 of 6 The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) Project Component 2 – Technical Assistance. Several activities agreed under the Work Plan for 2017/2018 have commenced and been completed. There has been major progress with the delivery of the project’s key training for the PFIs and SMEs. First, the hiring of the ILO, a consultant to deliver training for the SMEs, has been completed and the work commenced in August 2018. The training will target a minimum of 600 SMEs in Lao PDR. Secondly, a reputable international consulting firm (AFC) commenced training for the PFIs in September 2018. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Moderate Moderate Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Substantial Substantial Institutional Capacity for Implementation and Sustainability -- Moderate Moderate Fiduciary -- Substantial Substantial Environment and Social -- Moderate Moderate Stakeholders -- Substantial Substantial Other -- -- -- Overall -- Substantial Substantial Results PDO Indicators by Objectives / Outcomes increase in long-term financing available to SMEs in participating banks IN00586831 ►Volume of Bank Support: Lines of Credit - SME (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6,166,280.00 10,700,000.00 15,000,000.00 Date 30-Sep-2014 28-Feb-2018 31-Oct-2018 28-Jun-2019 As the end of February 2018, US$13.6 million had been transferred from DoSMEP to the four PFIs (ST Bank, Sacom Bank, Lao China Bank, and Lao Viet). The cumulative disbursement of loans from the PFIs to the SMEs reached LAK 86 billion or US$ 10.7 million (US$1= LAK 8,000) to 124 SMEs as of the end of October 2018. The (first three) PFIs expressed their optimism that they would be able to fully utilize the Comments: funds (approximately US$12 million) by the end of 2018. To date, Sacom Bank, ST Bank and Lao China Bank have disbursed almost 99%, 95% and 68% of the amount approved, respectively. The financing agreement with the fourth bank (Lao-Viet Bank) as the 4th PFI has been signed and funds of US$1.6 million has been transferred to the bank on July 6, 2018. Two first sub-loans from Lao-Viet 12/4/2018 Page 2 of 6 The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) Bank are expected to be submitted to the WB for NOL in mid October 2018 (first one is currently under review by WB). Lao-Viet Bank also expect to disburse all the funds by the end of 2018. Increase Department of SME Promotion's capacity to formulate and implement SME strategy IN00586832 ►SME Masterplan (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 1.00 Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 07-Sep-2018 The SME Master Plan was issued following the endorsement by the Prime Minister on 18 August 2017. A Comments: translated English version was made available in December 2017. Strengthen business skills of participating SMEs IN00586834 ►Increase in Sales by beneficiarySMEs (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.20 2.20 30.00 Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 30-Jun-2019 (figures are calculated on an annual basis; new data will be available in early 2019). The figure is an indicative percentage of annual increase of sales for the first year after receiving loans from the PFIs and it covers the period from September 2016 to March 2018. The data came from the PFIs and includes 34 SMEs. Currently, the DoSMEP's M&E specialist is working with the PFIs to refine the methodoly to get Comments: the data and to calculate the indictor more accurately going forward. Separately, the DoSMEP team conducted interviews with a sample of SMEs and they reported that in the year 2017, their annual net sales had increased on average by 35%. Intermediate Results Indicators by Components 1. Line of Credit to Commercial Banks to Support SME Loans IN00586790 ►Direct project beneficiaries (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 121.00 176.00 200.00 Date 30-Sep-2014 28-Feb-2018 31-Oct-2018 28-Jun-2019 This figure consists of 124 SMEs which have borrowed from the PFIs and 52 SMEs which received Comments: training on safeguards. IN00586839 Female beneficiaries (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target 12/4/2018 Page 3 of 6 The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) Value 0.00 62.00 62.00 20.00 IN00586833 ►Performance of SME loans (NPLs) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 5.00 Date 30-Sep-2014 28-Feb-2018 31-Oct-2018 28-Jun-2019 Based on data from the three PFIs, as of the end of February 2018 all loans to SMEs were current (no Comments: NPLs). 3. Techical assistance IN00586836 ►Number of DOSMEP Staff receiving training (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 75.00 75.00 30.00 Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 29-Sep-2017 From July 2017 to February 2018, an additional 30 DOSMEP staffs out of total 70 staffs of the Ministry of Industry and Commerce (MoIC) had received environment and social safeguard training. Adding Comments: this number to the previously reported number of DOSMEP's staffs receiving training of 45, the cumulative number increased to 75. IN00586837 ►Number of SMEs benefiting from Technical Assistance (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 52.00 52.00 70.00 Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 07-Sep-2018 Thus far 52 SMEs had received training on E&S safeguards in the Vientiane, Savannakhet and Comments: Luangphrabang provinces. IN00586835 ►Formulation of new SME Development Masterplan (2016-2020) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 1.00 Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 29-Sep-2017 The SME Master Plan has been issued following the endorsement by the Prime Minister on 18 August Comments: 2017. A translated English version was made available in December 2017. IN00586838 ►Formulation of SME Census Plan and Methodology (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 12/4/2018 Page 4 of 6 The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) The selection process The selection process continuous and the continuous and the Value 0.00 1.00 position is being position is being advertised. advertised. Date 30-Sep-2014 28-Feb-2018 28-Feb-2018 07-Sep-2018 The process of finalizing the ToR took longer time than expected due to internal coordination challenges. Comments: Currently the position is being advertised and work will commence soon. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P131201 IDA-54710 Effective USD 10.00 10.00 0.00 9.08 0.00 100% P131201 IDA-H9580 Effective USD 10.00 10.00 0.00 7.62 1.45 84% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P131201 IDA-54710 Effective 09-Jun-2014 14-Aug-2014 15-Sep-2014 30-Jun-2019 30-Jun-2019 P131201 IDA-H9580 Effective 09-Jun-2014 14-Aug-2014 15-Sep-2014 30-Jun-2019 30-Jun-2019 Cumulative Disbursements 12/4/2018 Page 5 of 6 The World Bank Implementation Status & Results Report Lao PDR - Small and Medium Enterprise Access to Finance Project (P131201) Restructuring History Level 2 Approved on 09-Sep-2016 Related Project(s) There are no related projects. 12/4/2018 Page 6 of 6