Vietnam Government Drafts Decree on Debt Collection Firms

The Vietnam Chamber of Commerce and Industry (VCCI) in co-operation with the Finance Ministry’s Department of Finance and Banking met last week to discuss a draft decree concerning debt collection businesses.

Director of VCCI’s Legal Department, Tran Huu Huynh, said some 70 enterprises nationwide are currently engaging in debt collection. In addition, a number of law firms provide consulting services on this issue.

Huynh said that debt collection has become a ‘commodity’ in today’s society and a real demand exists for this kind of service, especially for companies in the telecom, electricity and water supply sectors with large networks of customers.

According to the draft decree, debt collection businesses are required to possess a minimum of VND5bil (US$310,000) in registered capital and hold no outstanding debts itself.

It does not, however, apply to disputed debts or those settled by the judicial system but rather those arising from legally recorded civil transactions. Businesses in this sector are also prohibited from cheating clients or using violence to collect overdue debts, under the decree.

Many at the conference, however, pointed out the vagueness of the draft decree. It is unclear if debt collection businesses need special licences to open. Lawyer, Nguyen Ngoc Thach, said the drafting committee failed to justify the reason behind the minimum charter capital of VND5bil.

He also stated that the decree has not yet laid out penalties or measures for companies who fail to return the money to the creditor, after collecting the debt.