Boom time for pawnshops in S-E Asia
FACED with rising living costs and unable to wait until payday, growing numbers of South-east Asians are putting their gold jewellery and designer watches in hock, creating a boom in pawnshops across Singapore, Malaysia, Thailand and Vietnam. Pawnshop businesses are also in favour with investors.
These firms are trying to shake off their image as lenders of last resort to the desperate. But their newfound success may signal trouble for South-east Asian economies, as pawnshops and other similar businesses typically outperform when household budgets are strained.
Malaysia, Singapore and Thailand occupy three of the top four positions for household debt levels in Asia, according to a Credit Suisse report in late July, and people who do not qualify for bank loans are turning more and more to these alternative sources of finance.
Many pawnshops in South-east Asia have swopped the traditional grilled storefronts, which may be intimidating to customers, for a more modern, less forbidding look. Customers also cite the convenience and flexibility to redeem their items when their cash flow improves.
Thailand's largest private pawnshop operator, Easy Money, has seen a 15-20 per cent rise in the number of customers in recent months, especially in areas near Bangkok, said managing director Sittiwit Tangthanakiat.
The firm has posted an annual average growth rate of 50-60 per cent in the value of pawned assets since it opened in 2005.
It is not just individuals who are cash-strapped. Credit-starved firms in Vietnam are even selling cars and putting up their offices as collateral to stay afloat.
In Malaysia, pawnbrokers are typically run by ethnic Chinese families, but more government-linked firms have entered the business.
Pos Malaysia, the national postal service, branched into the Islamic pawnbroking business in July last year.