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Content

A. Microfinance definition B. Microfinance in the Southeast Asia I. 1. 2. The southeast over view of Microfinance The Southeast Asia economy Overall micronance statement in ASEAN countries

2 3 3 3 4 5 5 7 9 11 14 16

II. Country profiles 1. 2. 3. 4. 5. The Philippines Cambodia Indonesia Thailand Vietnam

C. Conclusion

Microfinance in the Southeast Asia (ASEAN)

Hai Nguyen Thi
Antwerp International Business School, MBA program Date 30 July 2012
A.

Microfinance definition

Microfinance is one provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. The main mechanisms for the delivery of financial services to such clients are: The relationship-based banking for individual entrepreneurs and small businesses The group-based models: Several entrepreneurs come together to apply for loans and other services as a group.

In some regions like Southeast Asia or Southern Africa, microfinance is understood as the supply of financial services to poor and near-poor households in order to help them establish and run their small businesses, build assets, smooth consumption, and manage risks. Generally, normal banks resist providing financial services, such as loans, to clients with little or no cash income. Meanwhile, microfinance offers those people access to basic financial services not only loans but also savings, insurance, money transfer services and microinsurance. Different types of financial services providers for poor people comprise: Commercial and state banks; Insurance and credit card companies; Non-government organizations (NGOs); Community-based development institutions like self-help groups and credit unions; Telecommunications and wire service groups; The post offices; and other points of sale - offering new possibilities; The cooperatives.

Microfinance has been proven to be a powerful weapon to fight against poverty, enabling poor people to build assets, increase incomes, and reduce their vulnerability to economic stress.

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B. Analysis of the microfinance statement in Southeast Asia.

I. Overview of Microfinance in Southeast Asia. 1. Southeast Asia economy Southeast Asia is a subregion of Asia, located in the South of China, East of India, West of New Guinea and North of Australiaeastern India and northern Australia's 4,494,047 km wide and includes 11 countries: Brunei, Cambodia, East Timor , Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Asia has a tropical and tropical savanna climate due to its location on/near the equator. Consequently, economic activities here are strongly based on farming, mining, harvesting timber, fishing and tourism.

Source: Wikipedia

Southeast Asias aggregate GDP topped US$2 trillion in 2011, and the region is home to a mostly young and dynamic population of nearly 600 million increasingly affluent consumers. Growth in the regions six largest economies is forecast to accelerate by, on average, 4.5% to 6.7% compounded annually through 2015. In addition, Microenterprises have an essential contribution to GDPs of ASEAN; it is considered as a safe and profitable area to set up and develop Microfinance industry here. Real GDP growth of 06 leading economies in Southeast Asia (Annual percentage changes)

Source: OECD Southeast Asia Economic Outlook 2011/12

2. Overall micronance statement in ASEAN countries According to the Global Microscope on the Micro finance Business Environment 2011 published by the Economist Intelligence Unit, there are 5 countries in Southeast Asia ranked in the list of 54 countries around the world in terms of its overall microfinance ranking and based on an evaluation of the countrys regulatory framework, investment climate, and institutional development. Rank 6 13 33 53 54 Country Philippines Cambodia Indonesia Thailand Vietnam Score 58.5 50.9 39.2 21.1 19.7

Weighted sum of category scores (0-100/100=most favorable)

SOUTHEAST ASIAN and BRAZIL (weighted sum of category scores)

EIU: Global Microscope on the Microfinance Business Environment 2011

II.
1.

Country Profiles
Philippines

Overview: The Philippines government and the central bank have played a key role in creating an stable and favorable environment for microfinance sector. Started formally in the late 1980s by NGOs replicating the Grameen model, microfinance in the Philippines has become a global leader in microfinance policies and regulations. There has been a steady growth in lending and MFIs from the Philippines have also been successful in mobilizing larger deposits. Deposits are the main source of funding for Philippine MFIs followed by Borrowings and Equity. Philippine funding is dominated by domestic sources, mostly the government, but a proposal to open up the equity of Rural Banks to foreign shareholders may change that. Loans: 447.3 million (USD, 2011) Active borrowers: 2.2 million (2011) Deposits: 304.0 million (USD, 2011) Depositors: 3.0 million (2011)

Source: http://www.mixmarket.org/mfi/country/Philippines#ixzz229yHFOlK

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Key characteristics of the micronance business environment: The Philippines has maintained as a favorable, regulatory and operating environment for the development of micronance for years. The largest players in the market include unregulated service providers (NGOs, credit cooperatives). That shows that the regulatory environment only applies to a portion of the sector. The differing regulatory environment for the various types of service providers prevents a uniform approach to key issues like accounting standards and client protection. The regulated micronance service providers can always intermediate a wide range of deposits, and the prudential regulations and supervision of the Central Bank - Bangko Sentralng Pilipinas (BSP) is geared to that end. The biggest concerns for the micronance sector: Indebtedness of clients to multiple lenders

Key changes and impacts since last year: In late 2010 the Central Bank allowed banks to establish stripped-down branches called microbanking ofces (MBOs), to enable them to reach out to underserved areas at low cost. In 2010, the Central Bank increased minimum capital requirements for new rural and thrift banks in order to limit new players in an already crowded market. In January 2011, 20 rural banks in the Bankers Association of the Philippines (BAP) network recently launched credit bureau, which may be a positive move towards addressing the multiindebtedness of clients - the biggest concerns for the micronance sector. In March 2011 the Transparent Pricing Initiative was launched by the micronance sector, jointly organized by MFTransparency.org, the Micronance Council of the Philippines (MCPI) and the Rural Bankers Association of the Philippines (RBAP). BSPs Circular 704 (22nd December 2010), together with Circular 649 of 9th March 2009, set forth a regulatory framework for an efcient retail payments platform and set the scope for outsourcing automated systems, network infrastructure and a network of agents in relation to the e-money business. Source: Global Microscope on the Micro finance Business Environment 2011

Successful story: Mobile money wallets help Micro-entrepreneurs in the Philippines The Micro entrepreneurs now can save time and expense by accepting payments using their mobile phones for cash collection and payment. The service allows the customers to pay the entrepreneurs using mobile money thanks to the collaboration between USAIDs Microenterprise Access to Banking Services (MABS) Program, the Rural Bankers Association of the Philippines (RBAP) and Filipino Mobile Money Issuer G-Xchange Inc. (GXI). GXIs service, called G-CASH, allows them to store the money in their mobile wallet. At the same time, they can pay bills, do purchases, and send money to business partners, families and friends via a network of rural banks that have been accredited with the support of the MABS program to cash-in and cash-out mobile money. In addition, the small business owners recognized that it is safer to use as they do not have to keep the money along and G-CASH has brought new customers and make business easier. With the support of MABS participating rural bank partner- Philippine Rural Banking Corporation (PR Bank), over 200 merchants in Greenhills offer mobile commerce services and utilize mobile money. Expand Mobile Phone Banking MABS Program initiatives have enabled participating rural banks to offer mobile phone banking services which are documented on a new website at www.mobilephonebanking.rbap.org. The MABS Program has helped about 100 rural banks with more than 550 branches and other banking offices to expand and offer new microfinance products and services.As of June 2009, there are already 665 bank branches and sub-offices offering mobile phone banking services, benefiting more than 72,000 rural bank clients.
Source: http://philippines.usaid.gov/programs/economic-growth/microenterprise-access-banking-services

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Keys of Success: The microfinance providers know characteristics and demands of the market & customers well. It is convenient service which helps customer save time, money and bring new business opportunities Well cooperation between rural banks and telephone service to ensure a smooth operation The support of USAID organization

2. Cambodia
Overview: As Cambodia has policies, laws and regulations supporting Microfinance sector, the global financial crisis, Cambodian MFIs survived and grew, through a little bit slower than the last years. The market has witnessed a steady growth in GLP, borrowers, deposits and depositors. Some analysts worried that this growth is masking multiple borrowings in the sector, but the newly launched Credit Bureau is likely to help the sector deal with this. Growth in clients has been driven by the diversity of products offered by MFIs, comprising micro-insurance, money transfers and remittances. Loans: 1.6 billion (USD, 2011) Active borrowers: 1.4 million (2011) Deposits: 1.3 billion (USD, 2011) Depositors: 1.1 million (2011) Key players:

1,000,000,000

156,700,000 119,700,000

86,800,000

Source: http://www.mixmarket.org

Key characteristics of the micronance business environment: The National Bank of Cambodia (NBC) maintains a highly investable environment for the provision of a wide variety of micronance services by regulated institutions with no interest-rate restrictions or state providers of credit. Seven non-bank MFIs have been licensed to take deposits in the past few years. This is in part owing to a review by the NBC to ease the process these institutions must undergo to obtain permission to take deposits. Cambodia has early adopted transparent pricing practices and become one of the rst countries where MFTransparency.org began collecting and publishing the true cost of micro-loan products. Multiple indebtedness situations of clients remain one of the biggest concerns for the sector, and plans to launch a credit bureau have been very slow to advance.

Key changes and impacts since last year: The ease of setting up a regulated institution is evident in the fact that the NBC granted new licenses to six MFIs to provide micronance services in 2010: Samrithisak; CamCapital; Camma; Khemarak Ltd; Angkor ACE Star Credits; and Prime. A new NGO law drafted in late 2010 imposes additional monitoring requirements on all NGOs, including those that provide nancial services, but the current draft of the law would not impose new restrictions on the activities in which they are allowed to engage. A law governing co-operatives is in the process of being drafted. One reason why large cooperatives are rare in Cambodia is that such a law has been lacking. Source: Global Microscope on the Micro finance Business Environment 2011

Successful story - Sathapana Limited

Sathapana Limited was established as a Cambodian non-government organization (NGO) in 1995, under the name of Cambodia Community Building (CCB), to offer financial and health education service to poor communities. After financial grants were finished in late 1999, CCB adopted a minimalist microfinance approach focusing purely on credit loan and saving service. As a result, the lending operations shifted gradually from predominantly village banking group loans to a mix of solidarity group lending and individual lending. Mission: To empower entrepreneurial poor people, especially women in urban & rural areas to develop their income-generating activities & micro-enterprises through access to microfinance services, including credit & saving, at reasonable rates. Vision: To be the leading regulated microfinance institution in entrepreneurship building of poor people, especially women in urban & rural areas throughout the Kingdom of CambodiaService: Loan, savings and money transferring.

Source: Sathapana Limited annual report 2011

3. Indonesia
Overview: Indonesias approach to credit for micro-, small and medium-sized enterprises (SMEs) has evolved over the last 20 to 30 years mainly in response to lessons learned from preceding programs. In the 1970s and 1980s, the government adopted special credit programs for SMEs. As these programs proved costly, the government then moved toward regulating commercial banks to provide credit to SMEs. As this approach also failed to accomplish its goal of expanding SME credit, as well as created additional costs to the banking sector, the government refocused its efforts on establishing a policy framework that encouraged diversification of the banking and finance sector as a way to improve SME access to credit. Loans: 10.1 billion (USD, 2011) Active borrowers: 449,820 (2011) Deposits: 64.1 million (USD, 2011) Depositors: 229,721 (2011) Key players:

Source: http://www.mixmarket.org

10 Key characteristics of the micronance business environment:

Commercial banks are the most important providers of microcredit in Indonesia, accounting for around 90% of loans. They are also the only microcredit providers regulated by the main nancial services regulator, Bank Indonesia (the central bank). The government-backed Bank Rakyat Indonesia (BRI) is the largest single micronance provider, through its Unit Desa ofces. It mainly operates on a commercial model, but is also responsible for rolling out government nance schemes, giving them a competitive advantage over private MFIs. Banks and other nancial institutions are free to set market interest rates on loans, they do not face excessive documentation and the capital adequacy ratios imposed upon them are not excessively burdensome. The main informal providers of microcredit services are co-operatives. Other than being obliged to put up seed capital and registering with the Ministry of Co-operatives, co-operatives are not closely regulated or supervised. The micronance-providing banks have to follow the same prudential standards, know-your-client principles and anti-money-laundering requirements as all other banks in the country which may make many MFIs find onerous. The presence of mobile and electronic banking has not been applied popularly but some banks start to recognize the opportunities and advantages. The central bank has regulations governing the use of mobile banking and other forms of e-money.

Key changes and impacts since last year:

In June 2011, Fundamo, a micronance provider owned by Visa, signed a deal with Bank Andara to provide access to nancial services through mobile terminals. It is aiming eventually to expanse services to 40m nancially excluded Indonesians. In 2011, BI has said that responsibility for the supervision of commercial banks will shift to a newly formed Financial Services Supervisory Agency, but its launch has been repeatedly delayed since 2004 and further delays are probable. Since 2007 the government has run a scheme called Micro Credit Support (KUR) that provides funds to state-owned institutions for making micro-loans. In 2011 it aims to distribute Rp18-20trn (US$2bn-US$2.2bn), up from Rp16.4 trillion in 2010. The scheme is one example of how the government crowds out commercial micronance providers. Source: Global Microscope on the Micro finance Business Environment 2011 Successful story: KUPEDES program The KUPEDES program of Bank Rakyat Indonesia is one of the most successful microcredit programs. In the 1970s, BRI established a vast network of village banks with 3,300 units, employing 14,300 people to deliver subsidized credit (BIMAS) to microenterprises in the rural areas, mainly farmers. In 1983, the year of heavy loan losses (nonperforming loans - NPLs in BIMAS were high) and fiscal cuts made the village bank network unsustainable. The government was seriously considering about shutting them down. However, if that happened, many people would have to face with the unemployment and the loss of an important credit delivery mechanism. In 1984, it established a new, market close approached rural small credit program named KUPEDES, transforming village branches into self-sustaining full-service financial units. The government (including the central bank) provided about 210 billion rupees ($20 million in 1984 dollars) in seed capital and start-up loans and two years' administrative subsidy to help cover projected early losses. The programs principal goals were to provide credit to small creditworthy borrowers at market interest rates and to mobilize rural savings. The village banks operated a savings scheme called SIMPEDES, offering market-determined interest rates on small deposits. In 1984, minimum loan was equivalent to $24 and the maximum to $930. From 1984 to 1994, it grew sixfold and became a model credit program in Indonesia.

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Year 1996 Outstanding loan $2.5 million Value of outstand $1.7 billion Average outstanding loan balance $684million Arrears as a share of outstanding loan 3.6% Net interest revenue $269.8 million Unit desa system profitable since 1986 All loans funded by localled0mobilized savings Year 2001 Branches 4,000 village banks Savings accounts 30 mn (15% of all rural households) Borrowers 3 mn (5% of all households) Total loan portfolio over $2 billion In 2004, they kept $3 billion savings. Microloans range between $5 and $6,000 with interest rates generally above 20% per annum (during. Microloans now account for about 31% of BRIs total loan portfolio. Most of the borrowers are small traders and households borrowing for working capital and/or consumption purposes and for short periods2 to 3 months.

The keys to KUPEDESs success: Focus on mobilizing savings of households just as important as providing them with loans. Adoption of market-based lending operations, sound banking principles; market interest rates; and village banks treated as profit units and revenues used to finance their operations. Appropriate staff training, effective management and attractive performance incentives for the staff at the village bank. A focus on objectives and simplicity of loan design. Source: The Microfinance Revolution: Lessons from Indonesia by Marguerite S. Robinson

4. Thailand
Overview: Micro-insurance is critical to mitigate risks to the poor in Thailand. The micro-insurance sector is in its infancy but is growing fast with huge potential in Thailand. There are a small number of key players in the sector that have been providing insurance to farmers in the last four years. A regulatory framework promoting micro-insurance will be important for creating an enabling environment for the sector to grow.

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Key players: Commercial Banks (Microfinance Activities) e.g. Krungthai Bank Bank for Agriculture and Agricultural Cooperatives (BAAC) Government Savings Bank (GSB) Cooperative Institutions (CIs) Savings-for Production Groups (SGs) NGOs Self-help Savings groups

Key characteristics of the micronance business environment: In general, Micronance activities are mostly sponsored activity by Thailand government. In spite of the commitment to the micro-loans sector through local village funds, this has stied the development of private sector provision. The Bank of Thailand (BOT, the central bank) is interested in making changes, and has unveiled a plan affording opportunities to new and qualied micronance service providers to enter the market. However, the BOT has not proved that it has developed the specialized capacity to regulate or supervise MFIs. It only regulates commercial banks and specialized nancial institutions (SFIs), the main providers of micronance, are regulated by the Ministry of Finance. Under the Civil Procedure Code, an interest-rate ceiling of 15% is in place for lending by unofcial nancial institutions but actually lending rates by unofcial lenders are higher than this. The central bank has set a ceiling of 28% for combined interest and charges on all personal consumer and credit card loans; according to local commentators, this prevents some small-scale credit companies from offering microcredit. Other loans, such as corporate loans, are not subject to caps on interest rates. Large state-owned SFIs dominate the micronance market. Since competition is constrained by government players, there has been no adoption of international accounting standards. Key changes and impacts since last year: In May 2011 the central bank issued new regulations of easing the regulatory burden that aim to facilitate the provision of micronance by commercial banks. Now commercial banks can offer micro-loans of up to Bt 200,000 (around US$6,450) collateral-free and there is an annual interest cap of 28%. The Ministry of Finance, the main regulator of micronance operations, has created a nancial inclusion unit, with specialized capacity regarding micronance. On July 3rd 2011, the former opposition Puea Thai party secured an outright majority in an election for the House of Representatives. The new government, led by the prime minister, Yingluck Shinawatra, is widely expected to pursue policies of subsidized credit and state-directed policy lending akin to those made popular by Ms. Shinawatras brother, the former prime minister, Thaksin Shinawatra. Source: Global Microscope on the Micro finance Business Environment 2011

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Successful story: Krung Thai Bank (KTB) Krung Thai Bank Public Company Limited (KTB began its operation in 1966 following the merger of two government-owned banks. It is the only government-owned commercial bank in Thailand and has branches in all 76 province of the country and as of 2010, it reported total assets of THB 1,762 billion (USD 56 billion) and net income of THB 14.9 billion (USD 47.4 million). Time Trial time in 2011 Expectation for 2012 Outcome for 2012 (first 4 months) Market 20 200 300 Borrower NA NA 4000 Maximum loans Bt200,000 Bt200,000 Bt200,000 Interest Maximum rate/month Repayment term 1.25% 2 years NA 2 years 0.9% 4 years

Krung Thai Bank (KTB) has made successful pilot into the microfinance segment in 2011 by allowing vendors who have no bank statements to acquire funding at lower interest than they would have to pay loan sharks, and confidently expanded the scheme in 2012. KTB started offering microfinance loans on a trial basis in 20 areas to borrowers who have no bank statements, and maximum loans are Bt200,000 ($6,329.11). The loan is for two years with interest at 1.25% per month against the 10% per month charged by loan sharks. The KTB staff work with owners of fresh markets to determine the number of vendors who require loans. The fresh market must be registered with the Public Health Ministry to ensure the quality of clients. About 240 fresh markets are registered, comprising more than 40,000 vendors. To avoid non-performing loans (NPLs), it outsources debt collection to people based in the areas where the service is offered. In details, the bank hired local people in each area to collect debts, so as to maintain a relationship with vendors. That relationship is essential to reduce risk of NPLs, and in fact KTB has experienced no bad loans during the trial period. KTB's microfinance model was agreed by the BOT, and probably many other banks will follow its process after viewing its achievements. Krung Thai Bank successfully extended a total of Baht-300million ($9,493,670) microfinance trade loans to 4,000 borrowers in 300 markets nationwide during the first four months of the year 2012. Repayment term was also extended from two to four years and more basic financial service channels are to be added to reach its planned target of 150 remote communities. According to Mr. Apisak Tantiworawong KTB president and Ms. Sriprabha Pringpong - KTBs Senior Executive Vice President for Government & State Enterprise Relations- Its microfinance gives a 20% higher yield than small-enterprise loans and the microfinance portfolio would be no more than 1% of KTB's total retail banking portfolio because of the small size of each loan. KTB believes that Microfinance would strengthen retail banking, and the bank aimed to increase the proportion of retail loans to 60% within 03 years from 40% currently. The Bank is currently making up for the Women Fund to give retail customers better access to funding sources. "Our business model is based on commercial reliability. As a state-owned bank, KTB wants to help lower-income people without regular salary access financial resources at reasonable prices, while we control asset quality. We acknowledge such an approach has higher risks, but feel reliability will be the key to our success," Mr. Apisak said. Source: http://www.ktb.co.th/ktb/en/news-detail.aspx?nid=P2FPQq8SAG7GrSR2lJ1ezQ%3D%3D

The keys of success: Discovering and operating in the gap of the market, providing lower interest, which means they have less competition and more advantages. Focus on mobilizing savings of households just as important as providing them with loans. Good cooperation with the government and related organization. Appropriate staff training, effective management

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A focus on objectives, flexibility and simplicity of loan design.

5. Vietnam
Overview: The provision of microfinance services in Vietnam is dominated by state-owned banks. The Vietnamese government appears to view Microfinance as a social welfare program and policy lending for the poor, rather than a commercial activity. State-owned institutions provide around 90% of microcredit in Vietnam out of a total of US$5.5bn in loans. Loans: 5.5 billion (USD, 2011) Active borrowers: 9.0 million (2011) Deposits: 1.6 billion (USD, 2011) Depositors: 497,726 (2011) Source: http://www.mixmarket.org/mfi/country/Vietnam#ixzz229vZS8Bg Key players: The Vietnam Bank for Social Policy (VBSP), registering with Mix Market as a microfinance institution (MFI). VBSP sets the tone for the market, disbursing heavily subsidized loans and consequently distorting the market and preventing the emergence of any strong commercially oriented MFIs in Vietnam. The VBSP is subject to special governance rules and different performance standards than private commercial banks The Vietnam Bank for Agriculture and Rural Development (VBARD) The People's Credit Funds (PCFs): The national network of member-based credit co-operatives.

Key characteristics of the micronance business environment: The micronance sector in Vietnam is dominated by the Vietnam Bank for Social Policy (VBSP). The few private semi-formal MFIs are geographically limited and mainly offer services to members of the mass organizations with which they are afliated. The State Bank of Vietnam (SBV) has weak supervisory capacity on micronance sector. They appear to focus more on compliance than supervision of nancial institutions, but the lack of progress in issuing licenses to semi-formal MFIs is symptomatic of the central banks inability to assess regulatory compliance adequately. The range of services offered by MFIs is limited with poor accounting and governance standards. They provide wide range of loans but other services are not developed. State-owned banks focus

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more on providing cheap credit than mobilizing savings. They follow Vietnamese Accounting Standards, which does not meet the international best practice. Key changes and impacts since last year: The SBV is still busy nalizing legislation that will guide regulatory implementation of new regulations to formalize MFIs and incorporate them into the nancial system. The rst license for a regulated MFI was issued in January 2011, to TaoYeuMay (TYM). Two other organizations, CEP and M7, remain in the process of applying for a license, and a small number of other organizations are preparing to apply, but are waiting to see how the process goes for the initial applicants. Semi-formal MFIs continue to face operational difculties like the inability to access foreign funds. Although formal interest-rate caps no longer apply, MFIs are constrained by the heavily subsidized lending programs of state-owned banks. In February 2010, a new decree on credit information was enacted, creating the legal framework for the establishment and operation of private credit bureaus (PCBs), with the rst PCB established in July 2010. However, PCBs may be established only if at least 20 banks agree to provide credit information to the central authority. Vietnam has a total of 51 commercial banks, implying that, at most, only two PCBs may be set up. A public registry exists, but is not available to MFIs. The VBSP has been studying the implementation of mobile banking in other countries but has not yet developed a plan to implement this system in Vietnam. Successful story - Capital Aid Fund for Employment of the Poor The Capital Aid Fund for Employment of the Poor (CEP) is a poverty-focused Vietnamese microfinance institution that delivers its financial and non-financial services directly to the poor communities of Ho Chi Minh City and the surrounding provinces to help them open new businesses. They have run a profitable investment and continuously grown even in the crisis time. In 2011, CEP was awarded a First Class Labour Medal from the Government of Vietnam in recognition of CEPs contribution to improving the well-being of poor families in Vietnam.

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Key of Success
C.

Good cooperation with other NGO, commercial Banks. Enthusiastic and well trained staff. Good classification of customer with clear knowledge about their conditions, cultures, capacity. The quality of service and good interest rate.

Conclusion the challenges for Microfinance in Southeast Asia

Southeast Asia is one of the most enable environments for Microfinance to develop; however, there are still some challenges which financial service providers for the poor need to overcome which can be divided into o2 sector Regulatory and Policy Framework Lack of Capital Adequacy: To be able to run this service smoothly, the MFIs need not only capital, but also effective management approaches. It is necessary to understand the market, and people to run the business in long term, Accounting Standards: Some countries like Philippines and Indonesia have already applied successfully this system, but some others like Vietnam still need to improve a lot Interest Rate Caps: In some countries, MFIS can adjust the rate mortgage but still in the limit regulated by the government which sometimes does not give prompt or correct response.

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Multi-indebtedness is one of the biggest concerns for MFIs as this rate is quite high in the area and easily lead to serious lost for lenders. In addition the area have to suffer for Debt Stress and weak Risk Management The Political Conflicts still happen now and then in some ASEAN countries (Thailand, Indonesia.) which cause the insecure feeling for providers and interrupt the production of microenterprises. Market Perception Perception: Some individuals or even governments have not got correct understanding about Microfinance which can result in inappropriate action and policies. The Cost to Borrow a loan from MFIs and Operating Cost is high as those organizations have to suffer high risk and have many extra cost. The variety of Currencies among those ASEAN countries also effect to foreign investor for Microfinance and also may cause risk if some MFIs want to spread abroad because of the Foreign Exchange Fluctuation To deal with the above obstacle, it is necessary to get support and cooperation from all sides: MFIs, Governments, Enterprises, Social cooperative group in order to create an transparent, positive and active environment for Microfinance. So Microfinance can truly become an efficient tool fighting again the poverty and bring prosperity to ASEAN people.