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Home » News from Thailand » Household debt in Thailand continues to rise: Thai life on credit
Household debt in Thailand continues to rise: Thai life on credit
Thai household debt rose again in the second quarter, albeit slightly less than in the previous quarter. The rising debt burden is due to the weaker economy, according to the budget agency, the National Economic and Social Development Council (NESDC).
On Monday, the NESDC reported that Thailand's second-quarter debt was 13,1 trillion baht, up 5,8%. Total household debt now stands at 78,7% of gross domestic product (GDP). More and more Thais are taking out a loan for the purchase of a car. The number of personal loans and credit card loans have also increased.
Thosaporn says that the cabinet is concerned about the borrowing behavior of the population and the risks that this entails. The NESDC, the Bank of Thailand and the Ministry of Finance will jointly investigate how they can reduce the number of household debts in the country.
Source: Bangkok Post
There are quite a few readers who think that things are going so well in Thailand because they are driving fat cars everywhere. Well, most of it is just from the bank. Nothing is what it seems, especially in Thailand.
That's nice to know. Will go to the bank later to see if wine doesn't get a fat car like that too.
Shouldn't those cars be paid monthly for many years or will they also be repaid by the banks? How much did such a car ultimately cost after a few years of hefty payments?
And how much do those fat cars consume?
My Thai friend's sister bought a house with the parent's house as collateral. Now she has no money left to pay the loan and now the rest of the family has to pay for it. That's how it is in Thailand
Quote:
On Monday, the NESDC reported that Thailand's second-quarter debt was 13,1 billion baht, up 5,8%.
The Bangkok Post says:
On Monday, the NESDC reported the country's household debt in the second quarter amounted to 13.1 trillion baht, up by 5.8%, a deceleration from 6.3% in the previous quarter. The debt accounted for 78.7% of GDP.
So that is 13.1 trillion (and not billion) baht. In the Netherlands, household debts account for approximately 200 percent of gross domestic product, with home mortgages accounting for about 90 percent. In Thailand, those debts are 50 percent mortgages, 25 percent vehicles and 25 percent other debts (mostly credit card debt).
The non-performing loans in Thailand are between 2.5 and 3.5 percent. In the Netherlands it is now 1.9 percent of all loans, but it was once 0.5 percent (2008) and 3.2 percent in 2014.
So I think it's okay.
Yes billion should be trillion, adjusted.
The comparison with the Netherlands is of course not valid. The Netherlands is a rich country and its many guarantees such as a mortgage guarantee, debt restructuring, debt assistance, assistance, pension, etc., which means that the income of a Dutch person is much more guaranteed. If a Dutch person cannot pay his debt, there are safety nets, in Thailand there are none. A bank in the Netherlands will not easily collapse due to bad mortgages in the event of a major crisis, but in Thailand the situation is of course completely different.
In Thailand everything is 'completely different'. Total.
My experiences with debts in Thailand (involving the Netherlands is not correct) is as follows. A few go into irresponsibly high debts. Most, however, run into problems due to unforeseen factors such as unemployment, illness, death and a shrinking economy.
The total debt burden in Thailand has been called 'irresponsibly high' for 20 years. That is not true. Mentioning individual problem cases does not say much about the general picture, which is reasonably favorable.
Statistically it may not be too bad, but if you see how easily people with a salary higher than 15.000 baht can get credit, then that is asking for trouble.
Such people are allowed to have a debt of 100.000 and in a single case in my area 300.000 baht on consumer loans, with a salary of 18.000 baht and a car loan on top.
With a house or car loan there is still a certain value to limit the debt, but that does not apply to other loans.
The whole credit thing of course has a much larger purpose and the non-performing loans are a depreciable side issue that ultimately also ends up on the taxpayer's plate in the form of less corporate tax on profits.
The family debt burden of the Thai is very bad and unfortunately it is not getting any better… Here is a small anecdote: an old mother runs a small shop in a suburb of Korat where all household items and beer are sold with a minimal profit of only a few bahts. She no longer has a husband, but she does have a few daughters. One of them has a job with the government and therefore a fixed salary. She also kept 4 credit cards and eventually fell so deep into debt that she panicked to knock on the old mother's door. For years the mother had saved her meager baht and her fortune amounted to about 90.000.- Thb. Good as she is, she donated the entire amount to her daughter in the hope that she would use it to pay off her debts. However, the amount was enough to pay off only 1 of the 4 credit cards. To make matters worse, the cash register of the shop was looted a few weeks ago. Everything has to be addressed in education, but corruption is introduced with the young spoon, such as in schools where far too much school fees are charged to let the director drive a BMW. And so much more worse… It should also be forbidden to advertise credit cards in department stores. Some feel oh so important when they can pay for their bag of rice at the checkout with their credit card in front of the people waiting behind them.
Moderator: This threatens to become an off-topic discussion about the debts in the Netherlands. Please limit the responses to Thailand.