ASEAN to bolster financial inclusion in region

LAO PDR (Vientiane Times) - Members of the ASEAN Working Committee on Financial Inclusion are gathering in Vientiane for a two-day meeting that will assess the implementation of financial inclusion plans of member states.

The Deputy Governor of the Bank of the Lao PDR, Mrs Vatthana Dalaloy (seated, centre), seen with other members of the Asean Working Committee on Financial Inclusion in Vientiane yesterday

The eighth meeting of the committee on August 20-21 will also discuss the experiences of member states in achieving financial inclusion. In her keynote remarks at the meeting, the Deputy Governor of the Bank of the Lao PDR (BOL), Mrs Vatthana Dalaloy, said financial inclusion is widely recognised as an important enabler for social and economic development, which is in turn an important enabler for nine of the 17 Sustainable Development Goals (SDGs).

She said the government has aligned the SDGs plus with its National Socioeconomic Development Pan and created an intergovernmental task force to develop a framework to measure progress towards achieving the goals. “The Bank of the Lao PDR, as assigned by the government, is the key organisation to work on SDGs 1, 8, 9, 10 and 17,” Mrs Vatthana said.

BOL is mandated by the government to lead the development of the Financial Inclusion Roadmap for 2018- 25, which will be endorsed by the bank’s Governor during this quarter. The roadmap outlines priority areas to develop financial inclusion ecosystems in Laos with the vision of improving household economic efficiency, supporting national growth, reducing the number of people excluded, and increasing the depth of access to financial services.

Mrs Vatthana said financial inclusion is a broad term but to achieve the above mentioned vision, authorities need to tackle the issue from a holistic point of view. They need to address the whole eco-system, which encompasses savings, productive credit, insurance, consumer protection and empowerment, and support for village-level semi-formal financial institutions, known as village funds.

“It’s important to ensure strong and sustainable growth, develop a payment landscape and improved financial inclusion outreach, especially to rural areas, through regulatory improvement, private sector promotion and real economic activities to meet general demand,” she said.

Financial literacy is gaining increased importance as a policy objective in many countries, including Laos. Both financial literacy and general education levels are positively and significantly related to financial inclusion, she added. Therefore, increased financial inclusion holds the prospect of making increased savings more readily available for investments in these countries.

Access to financial services by poor households remains a challenge in developing countries. This, in part, results from the limited outreach of financial institutions (commercial banks and microfinance institutions). “In Laos, one way to expand financial outreach to poor households is the development of semi-formal microfinance institutions such as village funds,” she said.

Digital technologies redefine the conditions of access and usage of financial services, removing barriers for remote populations. Through a mobile app or a banking agent, rural populations can actively participate in the economy with payments, savings and credit at hand.

This is also a new opportunity to link different tiers of the financial system. For instance, in Laos, BOL has encouraged with success microfinance institutions to become agents of banks. “This revolution requires us regulators to assess objectively the risks entailed in order to mitigate them, and to educate customers on their journey of adoption and informed use,” Mrs Vatthana said.

She said financial inclusion cannot be achieved without resources, cooperation and collaboration with different sectors in the Lao economy, development partners, and regional and international bodies, such as the ASEAN Working Committee on Financial Inclusion.

The two-day meeting is hosted by the BOL and co-chaired by the Managing Director of Bangko Sentral ng Pilipinas (BSP), Ms Pia Bernadette Roman Tayag, and the Executive Director of Autoriti Monetari Brunei Darussalam (AMBD), Dr Irene Yap Tsue Ing.