“There would be more and more applications for establishing finance companies in the time to come,” said Tran Xuan Chau, Deputy Director of the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam SBV).

How many finance companies are there in Vietnam?

SBV has licensed nine finance companies, seven of which belong to Vietnamese big groups and general corporations, and the other two are 100% foreign owned, specializing in consumer credit.

We have received some 10 applications for establishing finance joint stock companies and six applications for setting up 100% foreign owned companies

The six operational finance companies and the big number of companies awaiting licenses may remind you about the new wave of finance company establishment. What would you say about this?

We do not think that the number of registered companies is big. There would be more companies in Vietnam if the existing companies can make profit and the business climate is favourable for investors.

The fact that many investors apply for the establishment of finance companies at this moment show the confidence and high expectation of investors on Vietnam’s national economy in general, and in the banking sector in particular.

Why do you think so many investors apply for setting up finance companies at this moment?

There are several reasons. First, Vietnam’s economy keeps growing fast and stably. Second, the legal framework has been completed and perfected, paving the way for finance companies to operate in a safe and effective way. Third, the demand for finance services is increasingly high. Vietnamese enterprises have grown enough to need finance companies which can serve their demand for capital and other services. Fourth, the existing finance companies have been performing well, which reported the high profitability and low risk, if compared to other business fields.

Statistics showed that the percentage of people who can access finance services in Vietnam remains low (less than 10%).

Some experts said that foreign investors now try to establish finance companies, going this the roundabout way to access the Vietnam’s finance and monetary market when Vietnam tightens the establishment of banks. Do you agree with the viewpoint?

The fact that many investors want to bank on finance companies shows that the demand for capital of the national economy is very big.

I can say that the central bank always keeps cautious when considering licensing new finance companies, both domestic owned and foreign invested.

Foreign institutions, when applying for setting up finance companies in Vietnam, always have to commit to focus on the fields that remain open in Vietnam or the fields Vietnam’s banks have not paid much attention, such as providing consumer credit to individuals, funding house purchasing deals, or issuing cards.

I don’t think that foreign investors are taking the roundabout way to access Vietnam’s monetary market.

Source: TBKTVN