Pawn businesses report three month growth
Pawn businesses report three month growth
The pawn business has seen a growth rate of six percent in the first three months of this year even as the number of pawnshops in Laos decreased from 32 to 28 in 2015.
Four pawnshops closed down due to a lack of resources, finance and competitiveness.
Deputy Director of the Finance Institute Management Department, Mr Vilaymid Akkhavong explained recently that the number of pawnshop customers also increased by five percent in the first three months of this year.
Mr Vilaymid said the growth of the pawn business will continue to climb the same as last year at 10 percent, as the market still has plenty of room for competition compared to other financial services.
Pawn businesses are focused more on urban than rural areas so there are still good possibilities for growth, he noted.
Even though there are many financial institutes offering loan credit, pawnbrokers can still garner customers by offering lower rates of interest.
For example, in the first three months of this year, the pawnbrokers granted loan credits of more than 3.9 billion kip to 1,344 customers, compared to the same period last year when they granted 3.6 billion kip in credit to 1,284 customers.
Mr Vilaymid stressed that pawn shops under the management of the Bank of the Lao PDR would face will face further competition from other finance institutes, so pawnbrokers should increase their investment, aiming to expand their share of the credit market.
At present, microfinance providers regulated by the Bank of the Lao PDR are serving about 170,000 clients, according to the Microfinance Association.
This shows the growth of microfinance providers as they have greater access to people in rural areas but the pawn business won't be affected going forward as it has a different market and offers convenient services to clients.
Mr Vilaymid reminded members that the majority of pawnbrokers loan credit is in urban areas, so they should be careful with their finance management because customers' overdue debts always have the potential to grow.
