Thailand’s household debt soars as auto loans and cooperative debts spike

[webfact]

 

The secretary-general of the National Economic and Social Development Council (NESDC), Danucha Pichayanan, has issued a warning over the steady increase in Thailand‘s household debt.

 

The critical areas requiring stringent monitoring were identified as auto loans and debt originating from savings cooperatives.

 

During a press conference outlining the nation’s social outlook for the second quarter of 2023, Danucha revealed that household debt in the first quarter had surged to 15.9 trillion baht, marking a 3.6% increase.

 

This uptick shows a slight acceleration from the 3.5% rise seen in the previous quarter. Conversely, the household debt to GDP ratio showed a minor decrease, standing at 90.6%.

 

Danucha attributed the bulk of the first quarter’s household debt growth to real estate purchases and personal loans, which rose by 5% and 5.3% respectively compared to the previous quarter.

 

by Alex Morgan

Image by 89Stocker

 

-- The Thaiger 2023-08-29

 

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Full story: https://thethaiger.com/news/business/thailands-household-debt-soars-as-auto-loans-and-cooperative-debts-spike

[retarius]

I don't know what saving cooperatives are exactly....I imagine like in the old days the building societies, if you had a savings account with them, they would give you a mortgage.

[ikke1959]

There should be a controlling institute... Car sellers sell cars to people who can't afford the installments.. After a few months the sellers take the car back for half price they sold and the buyer have to pay the difference with a big interest everytime .... The car seller sell the car again so they use people to get their money.. It is pure scam, but there are no regulations

[DrukenMallardy]

Debt is a really big and growing problem in Thailand.

 

I know loads of people who just max out their cards like no tomorrow or borrow like crazy without any plans of repaying, or get into installments without much whim.

 

Almost all the local Thai's I know have bad debt (i.e letters chasing them and their salary being court mandated to pay off loans) already.  And yet they still walk around with some iphone or other and with a new motorbike/car.  

 

Financial literacy is 0 and if the financial system doesn't curb its lending policies then Thailand's going to have its own financial crisis sooner or later. 

[hotchilli]

4 hours ago, retarius said:

I don't know what saving cooperatives are exactly....I imagine like in the old days the building societies, if you had a savings account with them, they would give you a mortgage.

Except the building society would cap your mortgage to the level of your proven monthly income..

Not family members zig-zagging money through each others account to show income from somewhere.

[itsallmine68]

2 hours ago, ikke1959 said:

There should be a controlling institute... Car sellers sell cars to people who can't afford the installments.. After a few months the sellers take the car back for half price they sold and the buyer have to pay the difference with a big interest everytime .... The car seller sell the car again so they use people to get their money.. It is pure scam, but there are no regulations

Thats what happens in other countries. So, I dont understand what you are on about

[fdimike]

Thais have eyes bigger than their wallets, and need to show off their "wealth" .

[connda]

Every year we hear more about Thai "soaring" debt.  And the banks keep extended credit.  Just walk through the malls and hypermarts to see tables of bank reps soliciting unsecured debt to Thais.

When are we going to get to the point where Thai banks can no longer service the debt that they have over-extended to Thais who have more debt than they can pay month-to-month.  I know - go to the bank and take out another loan to pay off the credit card bills so you can fill them to the debt limit again. 
This is why you don't keep more then a million THB in a Thai bank account.  When the Debt House Of Card folds in on itself, Thai banks will make themselves whole with the savings of their depositors.  Keep your deposits below the Thai guaranteed deposit insurance level as it's just a matter of "When" and not "If" this ponzi-scheme explodes.

[huangnon]

2 hours ago, DrukenMallardy said:

Debt is a really big and growing problem in Thailand.

 

I know loads of people who just max out their cards like no tomorrow or borrow like crazy without any plans of repaying, or get into installments without much whim.

 

 

I think this is a much more widespread phenomenon than Thailand, tbh.

 

You also have to factor in the huge amount of private businesses and jobs lost here as a direct consequence of the Covid lockdowns, with virtually-zero compensation from the Thai Govt.

[connda]

Just now, huangnon said:

 

You also have to factor in the huge amount of private businesses and jobs lost here as a direct consequence of the Covid lockdowns, with virtually-zero compensation from the Thai Govt.

Hey - they're going to give every Thai 10K for voting for the right parties.  "Whoo Hoo"
But of course, a month after they issue those funds to Thailand, inflation will explode 20% or more and it ain't ever coming back down.  Then it's back to applying for more credit so Thais can afford to eat.

[Enzian]

What form would be taken by a national financial crisis brought on by excessive household debt?

[mommysboy]

4 minutes ago, Sticky Rice Balls said:

Debt is slavery   I live beneath my means aka income...never had debt and is a personal choice

 

If I dont have the cash available i simply take a pass.....thais seem unable to do this as Ive seen plenty of poor people that seem quite content...basic human needs are attainable here imo....

 

i eat street food --live in a simple studio--all of my possessions are 2nd hand and as is my 28 yr old honda dream i just drove to the laos border without any issues....built to last...simple living

 

 

The whole world is not a single old guy with life experience.

[scottiejohn]

8 minutes ago, mommysboy said:

The whole world is not a single old guy with life experience

The whole world is not a single old guy with a skinflint lifestyle experience!

[RichardColeman]

My 7 year old takes 30 baht to school each day, what she does not spend she puts in the piggy bank, we got 600 baht this month on recyclables - she knows she get 25% of it and put it in the piggy bank. any money she gets from friends and relatives goes in the piggy bank.  We have taught her to understand money and save for schooling and housing - and she totally understands at 7. Seems like my 7 year old daughter is smarter financially at planning that 95% of the Thai nation

[ikke1959]

50 minutes ago, itsallmine68 said:

Thats what happens in other countries. So, I dont understand what you are on about

name some please

[Cake Monster]

6 hours ago, webfact said:

This uptick shows a slight acceleration from the 3.5% rise seen in the previous quarter. Conversely, the household debt to GDP ratio showed a minor decrease, standing at 90.6%.

I am no economist, but this does not Compute for me

If the Household Debt showed a minor increase of 3.5 % of GDP,, then why , when GDP is falling has the % of debt to GDP also fallen

Surely the % of Debt to GDP would increase

Also I am going to say that 3.6 % rise of Debt to GDP is not a minor increase at all - its huge

6 hours ago, webfact said:

Danucha revealed that household debt in the first quarter had surged to 15.9 trillion baht, marking a 3.6% increase

To put that 15.9 Trillion number into some kind of context, all the Revenue Departments in Thailand collected a total of 1.9 Trillion Baht for the first 9 Months of the Year

This Household Debt is eye watering, specially as 80 % of it is unsecured

[mommysboy]

13 minutes ago, Sticky Rice Balls said:

if youre referring to me, then correct as im stating my opinion as you see the "imo"..

 

isnt that what a forum is? a discussion about ones experiences?....all shapes and sizes....

 

say hello to mommy for me..she need to get in the basement to do laundry...

'say hello to mommy for me..she need to get in the basement to do laundry...'

 

Will do!  Trouble is she's curled up in a chair with terminal cancer and Alzheimers.

[mommysboy]

43 minutes ago, RichardColeman said:

My 7 year old takes 30 baht to school each day, what she does not spend she puts in the piggy bank, we got 600 baht this month on recyclables - she knows she get 25% of it and put it in the piggy bank. any money she gets from friends and relatives goes in the piggy bank.  We have taught her to understand money and save for schooling and housing - and she totally understands at 7. Seems like my 7 year old daughter is smarter financially at planning that 95% of the Thai nation

That's really good.  What I would say though is that you and she are in a position where you can save. Not decrying you or your daughter's achievements, but you likely come from a slightly better background than the majority.  Thailand is a low wage economy without much of a social welfare net.  UK and USA are veering that way too imo.

[Jimjim1]

3 hours ago, RichardColeman said:

My 7 year old takes 30 baht to school each day, what she does not spend she puts in the piggy bank, we got 600 baht this month on recyclables - she knows she get 25% of it and put it in the piggy bank. any money she gets from friends and relatives goes in the piggy bank.  We have taught her to understand money and save for schooling and housing - and she totally understands at 7. Seems like my 7 year old daughter is smarter financially at planning that 95% of the Thai nation

Good practise and well done But I can see a future problem when your daughter goes to uni amongst all the have nots she will probably be the only have a lot and that in itself will cause her angst, the envy and indeed jealousy will be tantamount to suffering so may I also suggest that whilst you are commendably teaching her good life skills you should also begin to teach her how to handle the inevitable.

Best wishes 

[bkk6060]

Just another place where people want to be like the West.  Own things, buy cars, buy condos, go on vacations.  But, there is no way they can sustain it here.  At some point these bills will be due and I bet a major recession will occur once many are maxed out on everything.

[Srikcir]

In February 2023 the Bank of Thailand published "Sustainable Solutions to Thailand's Household Debt Problems" is detailed on the subject. You want to be wide awake to entirely read it.

https://www.bot.or.th

An example of a debt area among many identified is "Debts that Require Immediate Attention." It covers 70% Non Perfoming Loans (NPL's) which are mostly personal and agricultural loans which are held by Specialized Financial Institutions. It proceeds to address the desired outcomes from immediately solving problems from 4 types of debt and remedial actions.

So it seems to me that NESDC's current revelations now are very past due and lacks any specific agenda to address Thailand's debt issues. In spite of BOT's 6 month-old analysis. Why?

The answer might be in BOT's section "What Success Looks Like." Basically, it cites several intuitive actions (vs rocket science ) required by creditors, the government, stakeholders and debtors. Those actions might not be very acceptable to a new government that may have the need to weave politics between its minority coalition members to maintain power. Stalling any substantive solutions might be its immediate priority that will in effect further exacerbate the debt crisis. It will be the "Do Nothing" scenario but with "Great Fanfare."

 

[WashingUpagain]

Using an exchange rate of 40baht - £1, that's 400 billion pounds of house hold debt. This number cannot possibly be correct with a population of 68 million of which only 34 million work??

[ExpatOilWorker]

On 8/29/2023 at 3:48 PM, Cake Monster said:

If the Household Debt showed a minor increase of 3.5 % of GDP,, then why , when GDP is falling has the % of debt to GDP also fallen

Surely the % of Debt to GDP would increase

Also I am going to say that 3.6 % rise of Debt to GDP is not a minor increase at all - its huge

Thailand’s GDP grew by 2.6% Q1 and 1.8% Q2, 2023.

The 3.5% increase in household debt is an annual increase, so +0.875% this quarter. 

It actually all make sense.

[TallGuyJohninBKK]

On 8/29/2023 at 12:12 PM, DrukenMallardy said:

Financial literacy is 0 and if the financial system doesn't curb its lending policies then Thailand's going to have its own financial crisis sooner or later. 

From the OP:

 

"Despite the Finance Ministry’s efforts to improve financial literacy regarding borrowing, finance, and debt management, the survey indicated a decline in financial literacy and access to financial services compared to 2020."

 

[TallGuyJohninBKK]

On 8/29/2023 at 10:07 AM, retarius said:

I don't know what saving cooperatives are exactly...

I believe they're kind of like the Thai version of a credit union... except from everything I've read in the past, very loosely regulated or effectively not regulated here...and often seem to be the location for various financial misdeeds by the big wigs involved.

 

This one from the OP was a shocker:

 

"Loans to cooperatives totalled 940 billion baht, with half being classified as non-productive loans."

 

Half???

 

[Cake Monster]

15 hours ago, ExpatOilWorker said:

Thailand’s GDP grew by 2.6% Q1 and 1.8% Q2, 2023.

The 3.5% increase in household debt is an annual increase, so +0.875% this quarter. 

It actually all make sense.

Thanks

As I said I am no economist

I still cannot equate how falling Exports and diminished Tourism, which account for roughly 48 % of GDP can have possible expanded a GDP

[retarius]

On 8/29/2023 at 5:48 PM, Cake Monster said:

I am no economist, but this does not Compute for me

If the Household Debt showed a minor increase of 3.5 % of GDP,, then why , when GDP is falling has the % of debt to GDP also fallen

Surely the % of Debt to GDP would increase

Also I am going to say that 3.6 % rise of Debt to GDP is not a minor increase at all - its huge

To put that 15.9 Trillion number into some kind of context, all the Revenue Departments in Thailand collected a total of 1.9 Trillion Baht for the first 9 Months of the Year

This Household Debt is eye watering, specially as 80 % of it is unsecured

The GDP to debt ratio usually refers to national debt, and doesn't include personal debt. 

[Cake Monster]

26 minutes ago, retarius said:

The GDP to debt ratio usually refers to national debt, and doesn't include personal debt. 

In Thailand they refer to Household Debt as a percentage to GDP ratio, which currently stands at 90.6 % of GDP

[DrukenMallardy]

On 8/31/2023 at 9:52 AM, Cake Monster said:

In Thailand they refer to Household Debt as a percentage to GDP ratio, which currently stands at 90.6 % of GDP

Oddly enough Thailand isn't that bad I guess in the grand scheme of things, but I'm not sure if it's a good thing or bad if that number is high based on the below table.  My intial thought would be a lower % would be better, but some wealthy countries seem to have high %

 

[Cake Monster]

1 hour ago, DrukenMallardy said:

Oddly enough Thailand isn't that bad I guess in the grand scheme of things, but I'm not sure if it's a good thing or bad if that number is high based on the below table.  My intial thought would be a lower % would be better, but some wealthy countries seem to have high %

 

In most, if nor all, the Household Debt in Wealthy Countries is secured on property

In Thailand, only roughly 20 % of the Household Debt is secured

The other 80 % is potentially Toxic Debt on unsecured Loans for such things as Credit Cards, personal :Loans Vehicle Loans, White Goods Etc

Auto Loan NPL has risen just over 30+ % in the first half of the Year

One of the major concerns for Toxic Debt