Households are burdened by debt
Despite the rising debt of households with a monthly income of less than 10.000 baht, household debt in general is not yet alarming, says economist Thanavath Phonvichai of the University of the ภาษาไทย Chamber of Commerce.
The average debt burden is 168.517 baht, according to a survey of 1.237 respondents. It is now increasing by 5,7 percent a year, which is considerably less than in 2009, when the debt burden increased by 14,5 percent.
The surveyed households pay an average of 10.978 baht per month in repayments and interest. Those who have borrowed money from financial institutions pay an average of 10.459 baht per month and those who have borrowed money from loan sharks 5.615 baht.
Tie ends together
Of the respondents, 76,2 percent have problems making ends meet. The reasons cited are rising prices (60,2 percent say so), higher interest rates (18,5 percent) and higher fuel prices (10,3 percent).
Slightly more than half of the respondents supplement the household budget by borrowing money, the others use their savings or borrow from family members. 47,5 percent borrow from financial institutions; 30,1 percent with money loan sharks and the rest with both.
Those indebted to loan sharks typically earn less than 10.000 baht a month. "If the government does not take steps to help this population, the debt will only increase," says Thanavath.
Dick, I don't understand something. It concerns income of less than 10.000 baht per month who pay 10.978 monthly in interest and repayment. Where is my thinking error?
No fallacy.
Read the piece again….
The budget is supplemented with borrowed money, the plundering of the bank book, in short, the debt becomes ever deeper.
Then economist Thanavath should take a good look at himself in the mirror when he says 'that household debt is not yet alarming'.
It is not really clearly formulated, but it is apparently an average of all households, including those with much higher incomes. Statistics show that in Thailand, the percentage of debt to income is on average three times higher for higher incomes than for lower incomes. So a three times higher percentage of a (much) higher amount. Then, of course, the average for all households will skyrocket. This overall average is of course an unusable data. A breakdown by income category is necessary for a true judgement. The high indebtedness of the higher incomes is especially worrying, if you forget that these incomes are often significantly supplemented by unofficial income (the level of income from corruption in Thailand, as in other Asian countries, is unknown, but undoubtedly significant ).
You can certainly say that the lower income groups have lower debt, but they will certainly pay more interest to loan sharks and often lose their collateral.
Pasuk Phongpaichit et all., Gun,Girls, Gambling, Ganja,Silkworm Books,1998 estimate that the illegal economy accounts for between 8 and 10% of the NBP, gambling is at the top, followed by prostitution, drugs and other forms of smuggling . They also describe very openly the positive and negative effects of the illegal economy.
I think Dick is talking about an average debt burden on the questioned
households. Then the picture might look a bit different.
Dick knows better than me. He will supplement.
It's certainly worrying, that's for sure.
Furthermore, I now have a pseudonym, like many who comment on the blog. My real name hasn't done me much good.
J. Jordan
Dick, I also have a question.
At financial institutions they pay 10978 bath per month.
With loan sharks 5615 bath.
Where is my fallacy if they would be more favorable to loan sharks,
because that is a lower amount.
Sincerely,
Lodewijk
If the debt load is 168.000 per household, I can't imagine that the costs of repayments and interest are 11.000 per month. (By the way, the assets of an average Thai household are 8 times as much as the debts).
Say pay off debt in 10 years: 17.000 per year
Interest per year 10%: 16.000 per year, together 33.000 per year, an amount of approximately 2.800 baht per month. The average income per capita in Thailand is 120.000 per year, so more for a household. Household indebtedness has long been around 60% of household income per year, not a worrying number indeed. Also see:
http://www.bis.org/ifc/publ/ifcb25f.pdf for debt problems in Thailand until 2007.
But loan sharks charge 30-50%. But the majority of the debts will surely lie with regular lenders.
I hope you don't really believe that all the Landcruisers driving around this country actually belong to the drivers. The whole country - apart from the 150 families I mentioned earlier - is in debt up to the eyeballs. Thanks to Thaksin's soft loans, soft loans that turned out not to be so soft in the end.
You know what? Sleep well Tino. And don't forget to take the standard work "Khun Dance through the Ages" to the clammy rags tonight. Refreshing literature!
Cor paint,
When I look around me I see a street full of people who work hard and in
reasonable good houses.
When I first came here 25 years ago it looked completely different. Most of
the Thais still lived in huts at that time. Did they borrow that money from T
what are you talking about? Could be, but I use my eyes every day and don't see anyone
up to his eyeballs in debt. And how do I know? My 2 great sons
about neighbor going to school every day with a laptop. They have internet at home.
I have been living in the same ”Soi” for 12 years now and see that about 70 percent have a car. Yes
maybe on installments, but never heard my wife say so or so his car
has been taken back by the bank…..because of every news in the “soi” she is nr1 who knows.
Many Thais get into debt because they buy a lot on credit (( expensive car ))
The Dutch have more debts than the Thais. NLers only have a mortgage
debt together about 600.000 Euro outstanding. Moreover, we are nowhere near meeting the requirements
requirement of a 3 percent deficit on the budget prescribed by Brussels.
As long as there are still so many big expensive cars driving around here in Thailand I think it's to blame
of the average households here in this country is still not too bad.
The average debt burden is 168.517 baht per household, so across all surveyed households.
For other questions, the dear commenters should be with Bangkok Post and not with me. I'm just a conduit.
Excellently formulated! Good advice! I'm going to look around me more and leave the literature behind. Will raise my son in this spirit too. Tiring all that reading and it leads nowhere. Just feast your eyes. Land cruisers, all Thais up to their eyeballs in debt, Thaksin's debt, Thaksin's debt, ………… zzzzz's debt