Hanoi (VNA) - Though Vietnam’s outstanding consumer creditalmost tripled over the last decade, its share of total outstanding loans isyet to keep pace with that of its regional nations. There is plenty room for improvementin the time to come, industry insiders have said.

According to the State Bank of Vietnam, total outstanding consumercredit stood at 1.8 quadrillion VND (78 billion USD) as of the end of 2020,accounting for about 20 percent of Vietnam’s total outstanding loans.

Consumer credit has grown at an annual average of 20 percent over thelast five years and 2.5-fold since 2012.

The consumer credit market has seen enormous development over the last 10years, according to Dr Can Van Luc, a member of the National Fiscal andMonetary Policy Advisory Council.

The sector has provided the economy with more capital to expandconsumption, boost domestic production, and prevent loan-sharking, he said,adding that it has also helped develop cashless payments and financialinclusion.

It has provided a necessary push to the production of consumer goods,economist Le Xuan Nghia said. Though domestic consumption is yet to be the maincontributor to economic growth, in the long run, it should be turned into amajor growth engine, he added.

Data from the BIDV Training and Research Institute shows that, excludingreal estate loans, consumer credit only represents around 8.7 percent of thecountry’s total outstanding loans, far below the 15-35 percent seen in regionalcountries such as Malaysia, China, Thailand, Indonesia, and the Republic ofKorea.

Consumer credit even accounts for as much as 40-47 percent of totaloutstanding loans in some countries, he said, emphasising the need for solutionsto further expand consumer credit in a bid to stimulate the domestic market.

Despite the market posting robust growth in recent years, it fails tomatch the potential in Vietnam with its population of nearly 100 million people,60 percent of whom are low- and middle-income earners. Annual growth should be doubleor triple the current rate, according to FE Credit CEO and Vice ChairmanKalidas Ghose.

There are five major opportunities for the market to thrive in the timeto come, Luc said, with the first being the economy’s bright outlook. Vietnam’sGDP growth is forecast at 6.5-7 percent annually and income per capita is likelyto rise 6 percent each year between 2021 and 2030.

Secondly, the government’s continued implementation of aid packages forpeople and businesses affected by COVID-19 is driving up consumption demand,providing room for the expansion of consumer credit.

Thirdly, lenders are paying more attention to developing retail bankingand individual borrowers, and fourthly, there has been a major change in theway people shop over recent years, coupled with Vietnam’s rising middle class.

Finally, the ongoing digital transformation process has facilitated thecreation of a wide range of new products for the consumer credit market,providing customers with a better experience./.