A Study on SME Development in Laos: The Case of Commerce Sector in Vientiane Capital

This study attempts to illustrate the current development situation of SMEs in Laos. The particular concentration has been put on the investigation of SMEs’ performance in Laos, especially in Vientiane Capital. The paper employs the nation-wide SME survey conducted by GIZ (former GTZ) in 2007 and 2009. The result shows that number of SMEs in commercial sector has been sharply growing over the past few years. However, a large number of SMEs in this research are experiencing difficulties in access to finance and in adaptation to high competition. In addition, the finding indicates that most of Lao SMEs in commerce sector are not ready for the regional and international integration. From the result, firm’s asset, number of laborer, experience (age of entrepreneur), and commercial district location have statistically significant positive effect on firm’s turnover, While an operating years, joint – venture company, gender, being Lao ethnic, and entrepreneur with higher education are not statistically significant. The finding suggests that the government shall tailor suitable policy to support SME in commercial sector.