Thai household debts highest in nine years
Household debt in Thailand has risen 20,2 percent this year, the highest rate in nine years. Total debt is 11 trillion baht. Still, experts don't think this is cause for major concern.
A study by the University of the Thai Chamber of Commerce (UTCC) shows that households have an average debt of 298.000 baht, up from 2015 baht at the end of 248.000.
According to Thanavath Phonvichai, director of the UTCC's Center of Economic and Business Forecasting, the situation is less serious than it seems. Most debts are made with banks and no longer in the black circuit, such as with money loan sharks. In addition, most debts are secured by collateral.
Many debts are incurred for leasing cars, mortgages, the purchase of heavy machinery and loans for working capital. As a result, the effect on banks' NPLs (non-performing loans) is limited, says Thanavat.
“The increase in household debt started in 2013,” says Thanavath. The Yingluck government then started a support program for the purchase of the first car and the first house. The controversial rice mortgage system was the most damaging. Because people thought that it would make them financially much better, many luxury goods, such as cars, electrical appliances and expensive smartphones, were bought on credit.
According to Thanavath, the consequences are far-reaching: “Due to the weak economy this year, small businesses have less money available, which means they are forced to borrow money. One reason why debts have shot up.”
With 81,5 percent of gross domestic product in debt, Thailand is in the top ten countries with the highest household debt in the world.
Source: Bangkok Post
20% increase in personal debt in 1 year while average income does not increase.
And then it is claimed by Thai "experts" that it is not a problem. It will still have to be paid back and then it will become an increasing problem if households have almost no increase in income.
Fortunately, the real experts abroad think differently: negatively, so those increasing debts.
And then the story of the collateral: more and more farmers are losing their land because they cannot pay back.
The Thai "experts" reason from the banking perspective. Don't pay, car back, auction land and so on. The fate of the debtor will be a concern to them. What a country with such experts.
An increase in household debt of 20% is quite a lot and whether or not there is collateral against it does not affect that debt. I therefore agree with Ger that the problems for Thai households are getting bigger and the Thai experts, who probably have a large amount of money themselves, would do better to recognize that instead of trivializing the problem.
Although you can hardly make ends meet on the minimum wage of 300 Bath p / day, it is also increasingly difficult for low-skilled people in Thailand to find work. And yes, many Thai people buy everything on credit, they want to take advantage today and see where the ship strands tomorrow.
Dear Leo,
The minimum wage, in the isaan they have come up with the following the working week is 7 days the day lasts 12 hours no more days off a deposit of between 3000 and 5000 Baht is no exception and the monthly wage is 7000 Baht especially new companies and new contracts do this.
Greetings Cees
The big blow is coming, this government promotes borrowing money, which makes debts even bigger.
Farmer suicides are on the rise. Huge projects are popping up all over the place. But more than half of it is empty. Many cars are recalled by the bank because they do not know how budgeting works. A Thai spends everything at once. When a new mobile phone comes out, people want it at all costs. Bath is too expensive, exporters complain bitterly, but the elite don't care. They live in their glass tower. The blow is coming, the only question is when.
The black circuit is growing, but differently than expected, no money is now being lent, but gold is sold, you take that gold to the gold shop and you get money for the overpriced gold you first bought, which you pay off daily with at least 100 Baht. There are no loan sharks anymore, only very expensive gold shops
Have a nice weekend Cees
It is the highest amount in nine years. That is, it was even higher nine years ago.
The table shows that in 2012 it was slightly more than half of today.
Between 2007 and 2012, the total debt should therefore be approximately halved.
It would be interesting to know what factors led to this.
This shows the development of household debt in Thailand from 1992 to 2016, gradually from 30 to 70% of GDP now peaking in 1997-8 during the economic crisis.
http://www.tradingeconomics.com/thailand/households-debt-to-gdp
Other figures show that approximately 1/3 of the debt concerns a home mortgage, 1/3 a loan for a business and 1/3 for consumer purposes.
Furthermore, the Thai save an average of about 8% of their income per year.
In preparation for next year's record, farmers will receive a credit card:
http://m.bangkokpost.com/business/telecom/1087041/baac-to-supply-debit-cards-to-farmers
Teaching people how to save? Taking the right incentives for this? Support of innovative economically viable economic initiative with (micro) credit and appropriate guidance?
No, the ruling political class and their green coat henchmen will not even consider that.
Providing a lot of credit to masses of people who certainly cannot afford it, preferably with collateral that has an equivalent value. Can be hit nicely. Thus, the ruling class and its henchmen in green coats seize the lands of the peasants. Restoration to a Thai "Ancien Regime".
About 50% of the Thais have to live from agriculture, while the agricultural sector in the GDP barely weighs 10%. There is an urgent social need for a sound economic conversion policy. Unfortunately, there is hardly any attention for this, not in political circles, not in “competent” official cenacles and not even in academic circles.
It is one of the real time bombs ticking in Thailand. A credit card from BAAC only delays the bomb for a while.
If commercial banks do not want to cooperate with this credit card program, this says everything about the effectiveness and the risk content of the BAAC/Krungthai credit card program.
If I'm right, there is a debit card, so if there is no money in the account, don't buy anything. Actually just like with us pins
The article is 'imho' quite unclear.
There is indeed a debit card, but also learning how to deal with credit cards and 30 days interest-free loans.
The only thing I see is that the showrooms are springing up like mushrooms…..The average Thai already drives a car of around 30.000 euros.
The second-hand cars are almost as expensive as a new one….which means that there is little supply and high demand….So that myth that they all have to sell their cars is nonsense
All children have a scooter under their butt…no one does 50 meters on foot…..Everyone has a smartphone. A day off and all Thais drive to the coasts where they eat and drink to death.
The residential areas are growing at an amazing rate…..big houses….4 rooms…3 bathrooms….
I only see that Thailand is becoming more and more prosperous …….
Almost everywhere in Thailand you can still see the transparent protective layer on electronics (TVs, etc.).
I think this is done to make it easier to hand in when asked.
In any case, it can have nothing to do with frugality, nothing you lend you get back in one piece 🙂
In other words, people consciously live on credit and if it is brought back, then you have enjoyed it for a while.
If that is indeed the mentality, then the percentage will not fall quickly.
I think leaving the protective film on is largely out of economy. I always left that alone and my Thai sweetheart did the same. We just had a new laptop and I smoothly threw a bunch of keys on the laptop. Hommeles, the laptop immediately got an inspection for scratches and she had discovered a small scratch when you looked at it with the right light. Protective film therefore remained in place against the scratches, she said. Whether leaving that foil in place is of added value when buying on installment? No idea, she first saved money before she bought anything -even before I came into her life-.
In my opinion, buying on credit has everything to do with also being able to have 'important' things today rather than next year. In this world, hardly anyone in the Netherlands or Thailand can do without a smartphone, flat screen, tablet or means of transport. And what is 5-10% interest per month? A capital of interest over the entire period, but few people think about it. The need, greed, to get something must be met immediately, and the costs seem to be reasonable.
Learning that saving is more sensible will help a bit, but don't expect miracles with such a change in mentality, and then I even wonder how collective the saving / borrowing culture is for a country. If the money burns, better legislation (and control) on credit helps a lot more. So let the consumer live less easily on credit.