S&P Global: Microfinance In Southeast Asia

Jan 25, 2021

Southeast Asia may allow microlenders a relatively free run for longer as recovering from the COVID-19 pandemic remains at the top of the agenda, though it may become a breeding ground for risks in the coming years, analysts say.

Amid the pandemic, most governments are aware that microlenders play an essential part in providing capital to the unbanked segments of the population, said Johnson Chng, a partner at Oliver Wyman. "Times like this require the government to step in to kind of be fair to both sides. But whether and how much the government can step in depends on how much of a war chest they have in their treasury departments," Chng said.

Southeast Asia may still be behind the likes of China and India in terms of available data and technology to regulate such lenders, "and obviously COVID makes it doubly complex," he said.

For 2021, the regulators in the Southeast Asian markets will focus on the humongous tech firms that are providing financial services to make sure that they don't have a major risk underneath their noses, said Chng.

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