Pawnshops down while credit leasing companies on the rise
Pawnshops down while credit leasing companies on the rise
Pawnshop businesses in the country are on the decline while credit leasing services have increased according to the Bank of the Lao PDR.
Laos had 27 pawnshops last year, one fewer than in 2015, Financial Institution Supervision Department Deputy Director General, Mr Vilaymith Ackhavong, reported at the annual meeting of the sector.
Pawnshops have stopped offering some of their services citing a lack of personnel, administration and capacity as some of their difficulties, he said.
Profits earned by pawnshops last year reached almost 1.70 billion kip which compared to 2015 was a decrease of 16 million kip while the number of customers using their services fell by 204 people to 685 people.
But some pawnshops are not following proper regulatory and technical systems, which is a major problem for management and is currently being investigated by the Department for Development and Improvement, said Mr Vilaymith.
Credit leasing businesses have expanded as their administration committees have stressed different types of popular product services as well as risk management services to customer groups, he explained.
In 2015, Laos had 21 credit leasing companies which then increased to 29 companies last year with total assets reaching767 billion kip in 2015 and increasing to 1.9 trillion kip, Mr Vilaymith noted.
Credit leasing services saw unprecedented growth last year; in the first and second quarters most companies stressed leasing to SMEs averaging 14 million kip per person which then increased to 28 million kip a person by the third and fourth quarters, he explained.
In 2015 credit leasing companies focused on providing credit only to retail customers.
Last year, credit companies released a total of 941.7 billion kip which compared to 2015 was an increase of 403.3 billion kip or 75 percent. They also supplied 36,842 customers which is a 109 percent increase (19,210 people) on 2015, with an interest average of 1.6 percent per month.
Most credit leasing companies should pay more attention to their businesses and comply with the regulations and rules, Deputy Governor Mr Sonexay Sithphaxay advised.
They should also focus on training their staff, especially in administration, financial management and product development so they can attract more customers and boost confidence, he said.
The suggested improvements and development would also help these businesses to expand, perhaps in providing more services to rural people which could contribute to poverty reduction.
