Thailand’s struggle with high household debt and political promises

[webfact]

 

by Mitch Connor

 

Kavita Wongyakasem, a 48-year-old business owner in Bangkok, struggles daily to keep her household afloat. Running a company that provides services for a major energy firm, she owns a house in Nonthaburi, drives a pickup truck, and sends her two daughters to good schools. But beneath the surface, she is eight million baht in debt and lacks any cash savings.

 

“Every minute, I think about it,” Wongyakasem admits, tearing up as she speaks. This personal story is reflective of a broader problem in Thailand. The country has one of the highest household debt to Gross Domestic Product (GDP) levels in Asia, surpassed only by South Korea and Hong Kong according to the Bank for International Settlements. A staggering one in three Thais are trapped in debt.

Addressing the issue has become a focal point for the May 14 general election, with all major parties promising wage increases, debt moratoriums, guarantee-free loans, and handouts. In the past, populist policies contributed to mounting household debt as the government sought simple solutions to stimulate the economy. For example, between 2011 and 2012, the Yingluck Shinawatra administration offered a significant tax rebate to first-time car buyers, which led the household debt percentage to skyrocket from 60.3% at the beginning of 2011 to 71.8% by the end of 2012. That program ultimately cost the government an estimated 91 billion baht.

 

Pita Limjaroenrat, the prime ministerial candidate for the Move Forward Party, is proposing annual minimum wage revisions to tackle the long-standing inequality issue. Limjaroenrat has quickly gained popularity, and he acknowledges that “once you’re in debt, it’s very hard for you to move up the ladder.”

 

Full story: https://thethaiger.com/news/national/thailands-struggle-with-high-household-debt-and-political-promises

 

-- © Copyright Thaiger 2023-05-10

 

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[RandiRona]

22 minutes ago, webfact said:

she owns a house in Nonthaburi, drives a pickup truck, and sends her two daughters to good schools. But beneath the surface, she is eight million baht in debt and lacks any cash savings.

I am not sure if she understand that House , pickup and great school comes at a cost and Debt need to be paid.

But I am sure in school she was indoctrinated about glorified past and promising future of Thailand under the Junta and Maths and economics were optional.

[ozz1]

We all know that most thais are hopeless with money new car new phone ect all for show and dreaming of winning the lottery

[racket]

3 hours ago, RandiRona said:

I am not sure if she understand that House , pickup and great school comes at a cost and Debt need to be paid.

But I am sure in school she was indoctrinated about glorified past and promising future of Thailand under the Junta and Maths and economics were optional.

What if her business requires a car? Her children also need to attend school. The fact of the matter is, social media has played a huge part of this problem. Everyone wants to show off stuff they can't afford, to impress others who don't seem to care anyways. 

[racket]

Inflation have made things worse, and having the government to subsidize loans and hand out money to ordinary people, is the root of all debt problems to start with. Government need to step out of the way, and let the market handle it. Those who have lent out money must take responsibility if they are not getting paid back. 

Edited May 10, 2023 by racket

[Jack Cook]

In a country where wealth accumulation is by corruption for some, and by luck and hope instead of planning and hard work with zero foresight for the many, it is hardly surprising.

Things will get a lot worse before (if ever) they get any better.

[hotchilli]

The wealth divide has widened considerably during the last 9 years.

The very poor are increasing dramatically and ridden with debt, the many middle-class are actually broke, and live zig-zagging debt each month.

A small minority are doing okay and the elites have reaped all the profits.

[NorthernRyland]

I thought Americans had problems with debt and responsible spending but Thailand is worse. All these proposals from the government are going to make things worse and teach the Thais to be even more irresponsible. 

[NorthernRyland]

 

4 hours ago, ozz1 said:

and dreaming of winning the lottery

This is actually a serious problem. I tell any Thai person I can about this (they don't care of course, stupid farang doesn't understand how free money works).

 

The reason playing the lottery is bad is because it teaches a mindset that you can have something for nothing. People here are literally sitting around talking about winning the lottery when they could be doing something productive.

[scottiejohn]

6 minutes ago, NorthernRyland said:

 

This is actually a serious problem. I tell any Thai person I can about this (they don't care of course, stupid farang doesn't understand how free money works).

 

The reason playing the lottery is bad is because it teaches a mindset that you can have something for nothing. People here are literally sitting around talking about winning the lottery when they could be doing something productive.

How is it money for nothing as you are paying, admittedly a small amount, to take part/buy the ticket (product)?

What is the difference between buying a lottery ticket, placing a bet, , playing paid for bingo or buying shares etc in that case?

[Gknrd]

Financial planning is not taught in school. In the US it is the same. It needs to be part of the curriculum.  

[NorthernRyland]

Just now, scottiejohn said:

How is it money for nothing as you are paying, admittedly a small amount, to take part/buy the ticket (product)?

What is the difference between buying a lottery ticket, placing a bet, , playing paid for bingo or buying shares etc in that case?

You've been living in Thailand too long. Nothing good in life comes easy. Gambling is for losers. etc.. etc...

[scottiejohn]

Just now, NorthernRyland said:

You've been living in Thailand too long. Nothing good in life comes easy. Gambling is for losers. etc.. etc...

What has living in Thailand got to do with your post or my response to it?

Typical "I don't have a proper answer" response!

 

[NorthernRyland]

Just now, scottiejohn said:

What has living in Thailand got to do with your post or my response to it?

Typical "I don't have a proper answer" response!

You sound like a Thai. Not sure where you're from but gambling is frowned down upon from where I'm from in America. Only poor and stupid people gamble from what I can tell. The fact so many Thai's gamble makes sense given how many poor people are in the country. Next time you see a person doing well in life ask them where their money comes from and be amazed it wasn't from playing lotto or cards.

[sidjameson]

The government looking for solutions!!!!

The irony, considering that in my experience it's the lure of loans that get many Thais into a government clerical position.

And the government has always charged 7% even when base rate was 1%!!!! 

Seems the government is on the side of the problem not the solution to me.

[BritManToo]

7 hours ago, webfact said:

she owns a house in Nonthaburi, drives a pickup truck, and sends her two daughters to good schools. But beneath the surface, she is eight million baht in debt and lacks any cash savings.

Sell the pickup, send the 2 kids to government school.

Spending beyond your means is foolish in any country.

[fdimike]

Their eyes are bigger than their wallets.  I couldn't agree more with BritmanToo!!!

[Cake Monster]

3 hours ago, racket said:

Inflation have made things worse, and having the government to subsidize loans and hand out money to ordinary people, is the root of all debt problems to start with. Government need to step out of the way, and let the market handle it. Those who have lent out money must take responsibility if they are not getting paid back. 

Inflation cannot be bought under some kind of control as the BOT lending rate is only 1.75 % where many developed world Countries are at around 5 %

And the main reason the Thai rate is only 1.75 % is that the Household Debt is so large, any higher rate would throw Millions into a situation of NPL such is the amount of borrowing they have taken out over just the last few Years.

There is also a massive amount of Loans which are potentially Toxic, roughly only 20 % of all Household debt is secured, Loans having been taken out with little or no security upon the Loan

Of course running Champagne Lifestyles on Beer Money Wages is a recipe for disaster 

Edited May 10, 2023 by Cake Monster

[Mickeymaus]

3 hours ago, racket said:

What if her business requires a car? Her children also need to attend school. The fact of the matter is, social media has played a huge part of this problem. Everyone wants to show off stuff they can't afford, to impress others who don't seem to care anyways. 

If her business requires a car then she has to earn enough that she can pay for the car. Otherwise this is financial suicide. She would pay for working. 

[Bangkok Barry]

3 hours ago, racket said:

Everyone wants to show off stuff they can't afford, to impress others who don't seem to care anyways. 

Reminds me of someone I heard of who bought a new car to leave on her driveway to impress the neighbours. She didn't know how to drive it though so never actually used it except to gain face. So many Thais have the mentality of a child.

Edited May 10, 2023 by Bangkok Barry

[Bangkok Barry]

13 minutes ago, Cake Monster said:

Of course running Champagne Lifestyles on Beer Money Wages is a recipe for disaster 

But but but I want it!!! Just as a child would act.

[scottiejohn]

1 hour ago, NorthernRyland said:

You sound like a Thai. Not sure where you're from but gambling is frowned down upon from where I'm from in America. Only poor and stupid people gamble from what I can tell. The fact so many Thai's gamble makes sense given how many poor people are in the country. Next time you see a person doing well in life ask them where their money comes from and be amazed it wasn't from playing lotto or cards.

Do you ever answer questions or just post whatever rubbish suits your agenda?

Please answer the first set of questions I asked about one hour ago.

If you have nothing to add to this "discussion" I suggest you do not bother trying to add to it again!

 

[itsari]

Once in the clutches of finance businesses in that you can not service the debt you will be forever smitten.

East or West.

 

[connda]

That fact that lenders extend loans to those who can't service their debt will end up to be the lender's problem in the long-run.....and then the government will step in and rescue their banker/lender friends after which the bankers/lenders will issue themselves massive bonuses and the politicians will get campaign contributions, and the taxpaying public will get the bill. 

The reason there needs to be regulatory controls on banks and lenders is because they can't regulate themselves.  But regulation never happens as politicians are lobbied to make sure it doesn't happen.  It should be law that lenders can not issue loans to individuals or businesses that are so over-leveraged that there isn't a chance in Hell that they will pay their debts, no less go bankrupt if their income streams are interrupted even one month.  Why - because the banks/lender are then over-extended and the WILL go after bank deposits followed by demanding government bailouts.  What should happen is that those committing fiduciary malfeasance, i.e., deliberately issues loans to people who can not pay, should be held accountable - as in being thrown into prison.  
This is a social problem exacerbated by corporate, financial, government, and personal greed. 
And in the end it's the taxpayers and bank depositors who get screwed.

Edited May 10, 2023 by connda

[connda]

2 hours ago, BritManToo said:

Sell the pickup, send the 2 kids to government school.

Spending beyond your means is foolish in any country.

With the exception of a home mortgage you apply these rules.
Rule Number 1: Pay cash. 
Rule Number 2: Read Rule Number 1 again.

[Celsius]

House is probably 7 million, truck another million. What is the problem? Sounds like the rest of the world to me.

[connda]

2 hours ago, Cake Monster said:

Inflation cannot be bought under some kind of control as the BOT lending rate is only 1.75 % where many developed world Countries are at around 5 %

And the main reason the Thai rate is only 1.75 % is that the Household Debt is so large, any higher rate would throw Millions into a situation of NPL such is the amount of borrowing they have taken out over just the last few Years.

There is also a massive amount of Loans which are potentially Toxic, roughly only 20 % of all Household debt is secured, Loans having been taken out with little or no security upon the Loan

Of course running Champagne Lifestyles on Beer Money Wages is a recipe for disaster 

Consider that Thai banks offer such low rates, I'm really surprised that there hasn't been more capital flight as money move to were it receive a higher interest.  Then the BOT ends up in a liquidity crisis.  All I know is that eventually this ends badly for those of us who are net savers/investors as we'll all be handed the bill.  And, for those who are on these long-term visa schemes where your dropping large sums of money into low-interest Thai bonds?  Look out.

[connda]

10 minutes ago, Celsius said:

House is probably 7 million, truck another million. What is the problem? Sounds like the rest of the world to me.

On an income of the equivalent of $1000 USD a month?  Eventually the loan becomes toxic.

[Celsius]

6 minutes ago, connda said:

On an income of the equivalent of $1000 USD a month?  Eventually the loan becomes toxic.

 

"Running a company that provides services for a major energy firm, "

 

Income more likely $5000 a month most likely more. I know it's hard to believe, but my wife who is in sales gets $3000 USD with bonus. 

 

Private school costs a lot. A lot of Thai parents sacrifice a lot to send their kids to best schools. This is why me and my wife are childless. 

[digger70]

6 hours ago, racket said:

What if her business requires a car? Her children also need to attend school. The fact of the matter is, social media has played a huge part of this problem. Everyone wants to show off stuff they can't afford, to impress others who don't seem to care anyways. 

Social media has got nothing to do with common sense and Business management That's what lacking here ,one can't go in debit 10 Mill and blame someone else .