Creating a 'safety net' to protect workers from predatory lending.

Amidst the ever-increasing cost of living in major cities, many low-income workers have virtually no savings. A single unexpected event, such as illness, an accident, or job loss, can leave them struggling, forcing them to borrow money and risk falling into the trap of predatory lending. Therefore, Ho Chi Minh City has been implementing a comprehensive set of solutions to raise awareness, combat usurious lending practices, and build "financial support systems" at the grassroots level, helping workers access safe sources of capital.

Small event, big consequences.

Having moved from Ca Mau to Ho Chi Minh City to work as a garment factory worker in the Tan Thuan Export Processing Zone, Ms. S.'s family, residing in rented accommodation on Huynh Tan Phat Street, never imagined they would be caught in the vicious cycle of high-interest loans. Over two years ago, a crisis occurred when her eldest son was involved in a traffic accident requiring urgent surgery. In her desperation for money, she took a gamble and borrowed 20 million VND through an online lending app. Ms. S. shared that in less than half a year, her debt more than doubled due to high interest rates and other fees. Facing difficult circumstances, her family tried everything but couldn't find the money to pay the interest and principal, leading to constant calls, messages, and even visits to her workplace demanding repayment. The entire family lived under immense pressure, unable to concentrate on their work.

Ms. NTHTT, a factory worker producing shoe accessories in VSIP 2 Industrial Park (Binh Duong Ward), also went through a similar crisis. Her husband lost his job due to declining health, her young child was frequently ill, and her meager worker's salary was insufficient to cover living expenses, forcing the family to take out high-interest loans to make ends meet. Initially, the loan wasn't large, but the compounding interest quickly led to the debt exceeding their ability to repay. Constant debt collection calls and threats, and at times even threats coming to their rented accommodation, caused the family great anxiety. There were moments when she considered taking her children back to her hometown because she didn't know where she would find the money to repay the debt...

Stories like those of Ms. S. or Ms. T. are not isolated cases. In fact, many workers in the city's export processing zones and industrial parks have faced similar situations when encountering difficulties or unexpected events but lacking contingency funds.

According to Ms. Nguyen Hong Bich, Chairwoman of the Trade Union of Hai Thanh Limited Company, behind these "high-interest" loans are often very similar circumstances such as sick relatives, accidents, unemployment, or a sharp drop in income… forcing them to turn to illegal lending. When they are unable to repay, they are frequently harassed by lenders demanding repayment, putting pressure on their families, colleagues, and even their workplaces. Many workers fall into mental distress, directly affecting their jobs and family lives.

Mr. Vo Van Hung, Chairman of the Trade Union of Hansae Vietnam Co., Ltd. (Northwest Cu Chi Industrial Park), said that in the past, the practice of borrowing via apps or "hot" loans was quite common among workers. Loan sharks used many sophisticated tactics, from social media and advertising messages to brokers embedded in rental housing areas. The most worrying aspect was not only the debt increasing daily but also the resulting consequences such as job loss, family breakdown, labor disputes, and a loss of security and order in the locality…

Creating a safe "shield" to prevent predatory lending at its root.

The situation of illegal lending in Ho Chi Minh City has recently decreased significantly due to the coordinated efforts of various levels of government, relevant agencies, and the increased vigilance of workers. In particular, strengthening the fight against and dismantling usurious lending rings has been identified as a cornerstone; promoting awareness, providing capital support, and guiding financial management for workers are considered sustainable development strategies.

The city police have continuously launched intensive campaigns to combat and dismantle usurious lending rings, warning about many new and deceptive tactics such as loans through apps and social media, online informal lending schemes, and debt collection methods disguised as service businesses. The Steering Committee for Crime Prevention, Social Evils Control, and the Development of the National Movement for Protecting National Security at all levels of the city has intensified the campaign to remove illegally advertised products; combining this with the fight against and strict handling of criminal offenders.

The City's Trade Union is stepping up its awareness campaigns at businesses, accommodation areas, and workers' dormitories to help workers identify risks and avoid accessing illegal loans. The CEP Microfinance Organization (under the Ho Chi Minh City Federation of Labor) is expanding its credit activities, providing direct capital support to workers quickly, efficiently, and conveniently; even directly visiting businesses and dormitories to survey needs and provide timely advice and guidance to workers, creating a safe "shield" to prevent illegal lending at its source.

Mr. Nguyen Phuoc Dai, Chairman of the Trade Union of Juki Vietnam Co., Ltd., observed that many workers, when facing difficulties, only need a loan of a few million or tens of millions of dong to overcome them. If they cannot access official sources of capital, they are very likely to turn to illegal lending. In that case, the consequences are often much greater than the initial amount needed to borrow.

CEP is a specialized financial support model for low-income workers, requiring no collateral, with simple procedures, and tailored to their ability to repay. CEP aims to help workers maintain their livelihoods and avoid falling back into debt; it also advises and supports borrowers on financial management and budgeting to ensure more effective use of funds.

Ms. Tô TTS said that after being introduced to the CEP fund by the Trade Union, she received a suitable loan to pay off her high-interest debt and develop a repayment plan based on her salary. They also advised and supported borrowers on how to manage their finances and balance their spending so that workers could use the capital more effectively. Now, paying a manageable amount each month relieves her of the pressure she felt before. Most importantly, her family has the opportunity to stabilize their lives.

According to Hoang Van Thanh, Chairman of the Board of Members of CEP Microfinance, CEP is currently serving over 306,000 worker customers with a total outstanding loan balance of over 4,727 billion VND. Behind these figures are thousands of stories of worker families who have overcome the most difficult period thanks to access to legitimate capital, including the cases of Ms. TTTS and Ms. NTHT.

In addition to providing capital, CEP also implements many community activities such as awarding scholarships to children of workers, supporting health insurance, building charitable houses, and providing emergency assistance to particularly disadvantaged cases.

Recently, CEP branches have signed agreements with motorbike taxi unions to support drivers in transitioning from gasoline-powered to electric vehicles. CEP's goal is not only to provide capital but also to help workers develop safe financial habits and gradually accumulate savings for the future.

Mr. Phung Thai Quang, Vice Chairman of the Ho Chi Minh City Federation of Labor, believes that the greatest effectiveness of CEP lies not in the scale of disbursement but in its long-term social impact. When workers have access to legitimate capital at reasonable costs, they can stabilize their lives, work with peace of mind, and take care of their families. This also contributes to stabilizing labor relations and limiting the negative consequences of illegal lending.

For many migrant workers, loans of a few million or tens of millions of dong are sometimes the thin line between securing stable employment and unexpected events. In the fight against predatory lending, these small amounts of capital are quietly creating a "financial safety net" at the grassroots level, providing workers with a place to turn to and protecting them from the vicious cycle of predatory lending…

Source: https://baotintuc.vn/van-de-quan-tam/tao-dung-luoi-an-sinh-bao-ve-cong-nhan-truoc-tin-dung-den-20260603105910315.htm