P2P firms in Vietnam waiting for a sandbox

Peer-to-peer (P2P) lending companies expect that the sandbox for fintech would eliminate unscrupulous businesses and help the market grow significantly.

The peer-to-peer lending market in Viet Nam has high potential for development. — Photo ndh.vn

A regulatory sandbox is a framework set up by a regulator that allows FinTech startups and other innovators to conduct live experiments in a controlled environment under a regulator’s supervision.

Prime Minister Nguyen Xuan Phuc has requested the State Bank of Viet Nam (SBV) to develop a regulatory sandbox for P2P lending to help SMEs gain access to loans.

The information was welcomed by fintech firms operating in the sector.

Nguyen Hoa Binh, chairman of NextTech Group, which is operating vaymuon.vn in the P2P lending sector, told Viet Nam News that the nature of the P2P model was very good.

However, due to the absence of a regulatory framework while many Vietnamese start-ups operating in this field have crept up, foreign loan applications have jumped in, hiding under P2P and boosting black credit lending.

“A lack of a legal framework has made Viet Nam a fertile environment for malicious and disguised P2P models, while genuine P2P companies are overwhelmed. Therefore, having a legal corridor, even a piloted one, is essential to protect both borrowers and the P2P businesses,” Binh said.

Statistics from the SBV showed that the country now has 40 P2P companies. However, in reality, there are more than 100 apps operating under the P2P model. Of which, 70 per cent are operated by foreign firms.

These apps advertise to operate under the P2P model, but are actually offering ‘black’ credit, like the Cashwagon app that was discovered by police in early June.

“The potential for development of the P2P market in Viet Nam is huge due to high demand of borrowers. In fact, this model is not new, but has existed for thousands of years in the form of borrowing from relatives and friends.

"P2P is just the “digitalisation” of this relationship. The introduction of this model, if well managed, would promote comprehensive finance, giving people, households and SMEs more opportunities to access financial services at low cost and with less procedures,” he added.

 

However, he said each model has its own risks. For P2P, the biggest risk comes to investors or lenders.

“The sandbox should be soon promulgated to screen the market. P2P companies also need to improve their clients' appraisal and credit rating before transferring that opportunity to investors. P2P businesses with good appraisals would be able to control investors' risks,” he added.

Economist Nguyen Tri Hieu said a lack of a legal corridor is causing turmoil in the P2P market. Many online loan applications impersonate P2P and disruptive activities, causing consequences for this form of lending.

“It is necessary to introduce a sandbox for the P2P model. However, in my opinion, it should only be tested for one year, instead of extending to two years as in the current draft of the central bank.”

He added the issuance of the sandbox would help purify the P2P market, provide authorities with the basis to handle dozens of disguised black credit apps and firms impersonating P2P.

He also agreed that the P2P market in Viet Nam has big potential because there are many people who do not have access to formal credit. With the advantage of quick disbursement and no mortgage required, P2P is an effective capital channel for low-income people.

Economist Can Van Luc said P2P is vital trend of a digital economy and would strongly develop in Viet Nam. P2P is socialising credit services. This was the reason why the sandbox would help better protect investors and borrowers while increasing opportunities to access loans.

P2P in Viet Nam still has a lot of room for development, which is necessary to complement credit and financial companies.

The banking system would be extended to remote areas thanks to the agent network. However, this system of agents only performs a limited number of operations and cannot replace banks for credit development. In other words, with nearly 100 million people in Viet Nam, the P2P market is still very attractive. — VNS

Central bank plans to pilot fintech regulatory sandbox

Central bank plans to pilot fintech regulatory sandbox

The State Bank of Viet Nam is planning to pilot a regulatory sandbox which would allow fintech companies to participate in providing some banking services starting from 2021.  

Regulatory sandbox: the key to fintech success

Regulatory sandbox: the key to fintech success

The Vietnamese fintech startup ecosystem is now home to more than 150 companies and brands, covering a broad range of services from digital payments and alternative finance to wealth management and blockchain.  

 
 

Other News

.
Plans afoot to push production ahead
Plans afoot to push production ahead
BUSINESSicon  08/09/2021 

Domestic production has been hit hard this year, with numerous enterprises facing greater woes and leaving the market. However, the situation could be eased by a new special taskforce established by the prime minister.

Jan-Aug period sees 24 wind power plants commissioned
Jan-Aug period sees 24 wind power plants commissioned
BUSINESSicon  08/09/2021 

Twenty-four wind power plants with a combined capacity of 963 MW began commercial operations in the year to August, according to the Vietnam Electricity Group (EVN).

Local auto industry needs support amid pandemic
Local auto industry needs support amid pandemic
BUSINESSicon  08/09/2021 

Domestic automobile manufacturers have urged the Ministry of Finance to revise criteria for production capacity so as to enjoy a preferential tax incentive policy for imported automobile parts.

Export outlook depends on virus control
Export outlook depends on virus control
BUSINESSicon  08/09/2021 

Vietnam's exports may reach as high as US$313 billion by the end of 2021, a 10.7 per cent increase year-on-year, only if the country manages to stop the spread of the novel coronavirus, according to a report by the Ministry of Industry and Trade. 

VIETNAM BUSINESS NEWS SEPTEMBER 8
VIETNAM BUSINESS NEWS SEPTEMBER 8
BUSINESSicon  08/09/2021 

Deputy PM heads State Steering Committee for Key Petroleum Projects

Authority warns about consumer lending amid pandemic
Authority warns about consumer lending amid pandemic
BUSINESSicon  08/09/2021 

The Ministry of Industry and Trade’s Department of Competition and Consumer Protection has recently warned consumers about signing consumer loan contracts.

Vietnamese may be allowed to bet on foreign football leagues
Vietnamese may be allowed to bet on foreign football leagues
BUSINESSicon  08/09/2021 

Vietnamese people will be able to legally bet on many foreign football leagues if a draft decree on football betting is passed.

State Securities Commission punishes violators for share price manipulation
State Securities Commission punishes violators for share price manipulation
BUSINESSicon  08/09/2021 

The State Securities Commission (SSC) has issued a notice on sanctions on two individuals for manipulating the price of FTM shares of the Duc Quan Investment and Development Joint Stock Company. 

Instant noodles recalled in Europe, manufacturers told to be cautious about use of ethylene oxide
Instant noodles recalled in Europe, manufacturers told to be cautious about use of ethylene oxide
BUSINESSicon  08/09/2021 

Vietnam does not have regulations about the use of ethylene oxide (EO) in agriculture production or limits on EO residue in food.

VN businesses need new measures for long-term fight against pandemic
VN businesses need new measures for long-term fight against pandemic
FEATUREicon  08/09/2021 

Businesses are bearing severe impacts from Covid-19 developments and social distancing campaigns.

Vietnam Chamber of Commerce and Industry has new Chairman
Vietnam Chamber of Commerce and Industry has new Chairman
BUSINESSicon  08/09/2021 

Pham Tan Cong was elected as Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) for the term 2021-2026 at the 14th meeting of the Executive Committee of the VCCI on September 8, replacing Vu Tien Loc.

Overseas Vietnamese firms are suppliers of Vietnamese goods to foreign markets
Overseas Vietnamese firms are suppliers of Vietnamese goods to foreign markets
BUSINESSicon  07/09/2021 

The overseas Vietnamese business community is an important distribution channel to bring Vietnamese goods to the world market, said Minister of Industry and Trade Nguyen Hong Dien.

Welcoming the 'upgraded' CAEXPO
Welcoming the 'upgraded' CAEXPO
BUSINESSicon  07/09/2021 

The 18th China-ASEAN Expo (CAEXPO) will kick off in Nanning, China as scheduled, and here comes the "CAEXPO Moment" again.

Bank stocks decline sharply during pandemic
Bank stocks decline sharply during pandemic
BUSINESSicon  07/09/2021 

Banking stocks have continuously corrected since the beginning of July, with market analysts forecasting the decline in bank asset quality as due to the COVID-19 pandemic.

VIETNAM BUSINESS NEWS SEPTEMBER 7
VIETNAM BUSINESS NEWS SEPTEMBER 7
BUSINESSicon  07/09/2021 

Market extends rally after long holiday on pillar stocks

Deposit interest rates fall, deposits drop to 10-year low
Deposit interest rates fall, deposits drop to 10-year low
BUSINESSicon  06/09/2021 

Commercial banks continued easing deposit interest rates in late August, causing deposits at banks to fall to a 10-year low.

45-day social distancing has hurt Hanoi's economy but public health has been protected
45-day social distancing has hurt Hanoi's economy but public health has been protected
FEATUREicon  07/09/2021 

Hanoi’s economy has suffered heavily from social distancing and travel restrictions over the last 45 days, but in exchange the Covid-19 outbreak has been under control.

All-round report on Vietnam’s startup ecosystem to be unveiled
All-round report on Vietnam’s startup ecosystem to be unveiled
BUSINESSicon  06/09/2021 

The Vietnam Open Innovation Landscape Report 2021, the most comprehensive and up-to-date overview of the local startup and innovation ecosystem so far, is set to be released in December.

Vietnam's steel sales increase due to exports
Vietnam's steel sales increase due to exports
BUSINESSicon  06/09/2021 

Steel enterprises have boosted exports while facing difficulties in domestic consumption due to the COVID-19 outbreak, according to the Vietnam Steel Association (VSA).

Pro-competitive policies in logistics sector can help Vietnam recover from the pandemic
Pro-competitive policies in logistics sector can help Vietnam recover from the pandemic
BUSINESSicon  06/09/2021 

Pro-competitive policies can help Vietnam continue its progress in logistics sector and help the country recover quickly from the impacts of the pandemic, the Organisation of Economic Co-operation and Development said in its two latest reports.

 
 
 
Leave your comment on an article

OR QUICK LOGIN