The government is preparing legislation aimed at ensuring tighter control over the nation’s pawnshops to ensure professionalism in a sector that has grown rapidly and lacks a supervisory framework.
Mey Vann, director of the Department of Industry and Finance at the Ministry of Economy and Finance (MEF), said at the release of the government’s 10-year financial sector development strategy last week that there has been a proliferation of pawnshops in recent years and it was now time to establish clearer laws to regulate the sector.
“Despite the sector developing rapidly, we have seen challenges emerge because we don’t yet have a law to manage the industry,” he said.
Vann could not provide details on the regulations under consideration, nor a timeline for when the legislation would be finalised. However, he announced that the government would increase data collection to monitor and analyse the activities of pawnshops nationwide.
“The MEF will establish an information and communication technology system that will collect data and information needed to regulate pawnshops and provide an early warning system [for the regulator],” he said.
The government first issued regulations in 2010 that allowed pawnshops to operate as licensed businesses, granting them the authority to buy and sell goods as well as use land and property titles for collateral. In late 2016, the MEF issued a warning that all pawnshops needed to conform to the existing licensing procedures.
According to the financial sector development strategy for 2016 to 2025, since 2010 to the middle of last year, a total of 328 licensed pawnshops loaned a combined $37 million to customers.
Kuch Setha, director-general of Cash-U-Up Pawnshop, which has 12 branches across the Cambodia, said he welcomes further regulation of the industry to ensure the sector maintains a positive reputation.
He urged the government to strengthen its ability to inspect pawnshop operations and follow through with doling out penalties for those businesses that accept land titles as collateral or take personal property, such as cars or motorbikes, without having adequate legal documents to demonstrate ownership.
“I fully support any initiative that strictly regulates the sector,” he said. “There are suspicions in the industry that there are an increasing number of pawnshops that will just accept and take valuable goods that could be stolen or have come from a robbery.
Setha said that Cash-U-Up Pawnshop runs its services professionally, charges reasonable interest rates and requires clients to provide documentation that verifies that they are indeed the legal owners of personal property.
“We are committed to operating responsibly because we want people to know that our pawnshop is a place where they can access funds immediately if they are having financial difficulties,” he said.
Lim Heng, vice-president of the Cambodia Chamber of Commerce, said pawnshops can be viewed as a beneficial business for consumers as long as they are regulated. He added that the sooner the MEF finalises regulations, the better.
“A pawnshop is a good place to get short-term funds,” he said. “However, the law must regulate pawnshops not only to stop businesses from accepting stolen property, but also to stop them from charging overly high interest rates.”