In China, the low point was reached in February

April 20203 min readFinancial InclusionEmerging Markets, Microfinance

Working out of Ho Chi Minh City, Senior Investment Officer Quang Duy Bui is witnessing how Chinese financial institutions are returning to business as Covid-19-related restrictions are eased.

You manage debt financing to financial institutions in the Asia-Pacific region. What developments are you witnessing at this point?

My portfolio comprises 11 financial institutions in China, Cambodia, Myanmar and Vietnam and there are quite some differences as to how they are impacted by Covid-19. As for China, it looks as if the low point was reached in February. At that point, the microfinance institutions in our portfolio had to close most of their branches, which led to disbursements being disrupted. Starting from March, the Chinese government has begun to ease restrictions, and our portfolio companies have been getting back to work.

What does these institutions’ business look like following Covid-19?

Overall, throughout the crisis, our portfolio companies have done their best to remain operative and to provide basic financial services to micro-entrepreneurs, people in rural areas and SMEs. Now, they are continuing in the same spirit, helping their clients to resume their respective businesses. Particularly in the case of China, we see high work resumption rates of 90%-95% of the financial institutions’ borrowers. This is setting the stage for an early recovery of our Chinese portfolio companies’ business. These institutions now have new demand from existing clients and new prospective clients coming in. They are also actively collecting overdues from clients or restructuring loans and rescheduling payments as permitted by the regulators. Of course, there are delays with repayments – that was to be expected. With the government offering support with tax and social security payments, they are now working on programmes to ease the pressure on their clients over the coming months.

"Throughout the crisis, our portfolio companies have done their best to remain operative and to provide basic financial services to micro-entrepreneurs, people in rural areas and SMEs."

Quang Duy Bui

How are you supporting financial institutions at this point?

We are in very close contact with all of them to monitor the situation. At this point, indicators from our Chinese portfolio companies do not show a significant liquidity pressure, as disbursement activities have slowed down in the past months and local Chinese groups are also stepping in to provide financing. We are keeping in touch with our portfolio companies to identify any need for liquidity support early on. Our investment countries in the Mekong Delta appear to be coping with the Covid-19 outbreak relatively well. There are concerns about their healthcare infrastructure being able to handle large numbers of infected patients, but the respective governments are taking timely measures to control the outbreak.

Where are you working from during Covid-19?

I am using a rented office in a shared office space in Ho Chi Minh City, some five minutes from my home. With a five-year old son at home, this set-up allows me to concentrate on work while being close enough to him since his school has remained closed from late-January, as part of Vietnam’s Covid-19 outbreak control programme.