Question: I am interested in the opening Pay Day Loan company in Vietnam issuing loans via Internet.
As I heard in this case the company should obtain Pawn Shop license and for foreigner investors it’s a problem. So usually, foreigners attract local partners.
I have the following questions about doing business in Vietnam:
- On which conditions usually local partner enters business to get necessary license
- How defaulted loans are courted (passed to court to withdraw the debt from the borrower) – how much does it cost
- Do you have any credit Bureaus in Vietnam (or other sources for client evaluation) and how new company can get access to it’s data.
Answer: This is a reference to your email below. Please find our answers hereunder:
1. On which conditions usually local partner enters business to get necessary license
Pawn Shop is considered as a conditional business sector in Vietnam. Some Vietnamese people may not feel very comfortable with the business of pawn shops. Then, foreign investors generally cooperate with persons who they have a good relationship with and this person should be experienced with a business of pawn shops. For the return, the local partner in Vietnam can earn some monetary benefit from this cooperation, for example, a minority share rate in the whole business.
2. How defaulted loans are courted (passed to court to withdraw the debt from the borrower) – how much does it cost
In Vietnam, in order to borrow money from a Pawn Shop, a customer shall have to pledge their own assets to the Pawn shop, for example, car, motorbike etc. If the Customer fails to pay back the loan and interest in due course, the Pawnshop is entitled to realization of any collateral in order to collect the debt. In case the lender does not require collateral, the lender must bring the case to court for collect debt and interest. The cost shall be very much depend on total value of the debt and complication of the case.
3. Do you have any credit Bureaus in Vietnam (or other sources for client evaluation) and how new company can get access to it’s data.
We have a Credit Information Center – a center duly established by the State Bank of Vietnam, from which a lender can search credit history of a customer. Unfortunately, only licensed credit organizations are allowed to access the database of this Credit Information Center.
We do hope that the above information is helpful for you. If you have any other inquiries, please feel free to contact us.