Thailand’s struggle with informal debt likened to modern-day slavery

[webfact]

 

The struggle with informal debt, described as a form of modern-day slavery, has been prioritised on a national level by Srettha Thavisin, the Prime Minister. A vast number of individuals are trapped in both formal and informal debt cycles, with interest rates for the latter often surpassing the 15% legal limit. The government’s estimated informal debt stands conservatively at 50 billion baht, according to PM Srettha.

 

Glazer family 'set to snub Sir Bobby Charlton's funeral with Man United's owners fearing abuse from fans could overshadow the service', and other top stories from November 13, 2023.

 

He remarked during a press conference on the national agenda and the measures to tackle informal debt last month, “The government, in cooperation with administrative organisations and the police, will act as an intermediary to ensure equitable treatment for both creditors and debtors. When the government has revived the economy, people should be able to escape these cycles of perpetual debt.”

 

The debt problem is further complicated by low income levels, uneven economic recovery, and certain behavioural patterns among Thais that plunge them deeper into debt. Young adults who are attracted to the buy now, pay later (BNPL) system, heavily promoted through online and offline marketing, require special attention, according to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC).

The “Thailand Buy Now Pay Later Market Report 2022” reveals that while 96% of Thai BNPL users have not defaulted on their repayments, this practice could potentially lead to household debt issues in the future. Over half of Gen Y and Millennials earning less than 15,000 baht (US$439.44) per month are likely to use BNPL. In Thailand, the most common BNPL purchases are jewellery and clothing.

 

by Alex Morgan

Photo courtesy of iStock

 

Full story: The Thaiger 2023-12-29

 

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[stoner]

i wonder what this country could do if they ever had the boot taken off their throats...

[edwinchester]

"....with interest rates for the latter often surpassing the 15% legal limit"

 

That's not even close, rates can be as high as 30-50% a day where we are. Absolute insanity and the reason a relatively small loan balloons into a lifetime burden.

Edited December 29, 2023 by edwinchester

[2baht]

2 hours ago, stoner said:

i wonder what this country could do if they ever had the boot taken off their throats...

Eat more rice! 

[ikke1959]

And the slavery should be stopped... The high earners, companies and owners of the country should stop abusing the people and give decent salaries.. Elderly with 3000 THB a month is a shame.. teachers or classroom helpers with 7000 THB a month is  laughable.. and yes maybe prices will increase but must the elite earn billions millions are not enough for them?? No they shout they can't afford it, while they drive many luxury cars, have houses abroad, luxury holidays... It seems Thailand is still living in the time of a banned movie

[GregBow]

3 hours ago, edwinchester said:

"....with interest rates for the latter often surpassing the 15% legal limit"

 

That's not even close, rates can be as high as 30-50% a day where we are. Absolute insanity and the reason a relatively small loan balloons into a lifetime burden.

Here small timers at 10% per month, the " highly protected" big guys are at 5% per day and really seriously scary.

As others said low incomes, protected gambling games like hilo all add to it.

I cannot see a way to control it as it is deeply entrenched and protected and paid like the gambling at high levels.

[hotchilli]

6 hours ago, webfact said:

The struggle with informal debt, described as a form of modern-day slavery, has been prioritised on a national level by Srettha Thavisin, the Prime Minister

Prioritized yet ignored... as we've recently seen by the miserly wage rise.

[John Drake]

6 hours ago, webfact said:

“The government, in cooperation with administrative organisations and the police, will act as an intermediary to ensure equitable treatment for both creditors and debtors. When the government has revived the economy, people should be able to escape these cycles of perpetual debt.”

 

Why should the government be "equitable" in their treatment of loan sharks? Loan sharks should be arrested, put out of business, fined, and jailed. And debt owned to loan sharks should be seen as illegal and cancelled.

[bradiston]

6 hours ago, webfact said:

 

The struggle with informal debt, described as a form of modern-day slavery, has been prioritised on a national level by Srettha Thavisin, the Prime Minister. A vast number of individuals are trapped in both formal and informal debt cycles, with interest rates for the latter often surpassing the 15% legal limit. The government’s estimated informal debt stands conservatively at 50 billion baht, according to PM Srettha.

 

Glazer family 'set to snub Sir Bobby Charlton's funeral with Man United's owners fearing abuse from fans could overshadow the service', and other top stories from November 13, 2023.

 

He remarked during a press conference on the national agenda and the measures to tackle informal debt last month, “The government, in cooperation with administrative organisations and the police, will act as an intermediary to ensure equitable treatment for both creditors and debtors. When the government has revived the economy, people should be able to escape these cycles of perpetual debt.”

 

The debt problem is further complicated by low income levels, uneven economic recovery, and certain behavioural patterns among Thais that plunge them deeper into debt. Young adults who are attracted to the buy now, pay later (BNPL) system, heavily promoted through online and offline marketing, require special attention, according to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC).

The “Thailand Buy Now Pay Later Market Report 2022” reveals that while 96% of Thai BNPL users have not defaulted on their repayments, this practice could potentially lead to household debt issues in the future. Over half of Gen Y and Millennials earning less than 15,000 baht (US$439.44) per month are likely to use BNPL. In Thailand, the most common BNPL purchases are jewellery and clothing.

 

by Alex Morgan

Photo courtesy of iStock

 

Full story: The Thaiger 2023-12-29

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

Get our Daily Newsletter - Click HERE to subscribe

Why do we get the Glazer family news shoved into a serious topic about debt in Thailand? Not the first time.

[bradiston]

I've suggested elsewhere the Thai government looks at setting up a loan scheme for saving, house purchase etc etc. The Philippines has one, with over 4 million signed up. Been going for 50 years. Low rates guaranteed, between 4.5 and 5.5%. Government regulated. But, you need a regular salary, as with any mortgage. So lifting the population out of poverty should be the first priority of this government. And 10,000 THB is really not going to do that. So think again Billionaire Bob. Stop laughing hysterically for a minute and wake up to the mountainous problem you've inherited from half your fricking cabinet.

[edwinchester]

15 minutes ago, bradiston said:

Why do we get the Glazer family news shoved into a serious topic about debt in Thailand? Not the first time.

The 'Phantom Cut'n'Paster' strikes again.

[spidermike007]

It is not slavery, and it is not anything like slavery. The primary difference being that the slaves never had a choice, they never asked to be taken away from their families, shipped across the high seas in cages, and sold at auction to slave owning farmers, ranchers, plantation owners and who knows what other kind of people, who engaged in slave ownership.

 

Taking a loan is voluntary, yes your financial situation might be dire, and yes you might be facing great hardship, but one does make a decision to sign off on a loan, and one should inquire about the terms before making such a decision, and after making that decision one has to be held accountable no matter how heinous the terms are. I do feel for these people. But, they were not forced at gunpoint to take these loans. And it is likely they knew who they were dealing with.

 

The real question is why the govt. or the cops does not go after them? The real story begins and ends there.

Edited December 29, 2023 by spidermike007

[fondue zoo]

I'm curious, if the borrower shuffles off this mortal coil , do the sharks then go after whoever is left to recover their money?

[Lee65]

 

Government acknowledges a serious problem yet debt repayment using the 10,000 baht handout is expressly prohibited.  

[bradiston]

3 minutes ago, Lee65 said:

 

Government acknowledges a serious problem yet debt repayment using the 10,000 baht handout is expressly prohibited.  

 

3 minutes ago, Lee65 said:

 

Government acknowledges a serious problem yet debt repayment using the 10,000 baht handout is expressly prohibited.  

It's no way a long term solution in any case. They need to be looking at a proper national savings and loans fund IMHO.

[billd766]

10 minutes ago, bradiston said:

 

It's no way a long term solution in any case. They need to be looking at a proper national savings and loans fund IMHO.

Thank you for triggering a memory.

 

I can remember in the 1950s back in the UK that there was a small savings scheme called The National Savings Movement

 

https://en.wikipedia.org/wiki/National_Savings_Movement

 

Children at school could save small sums of money and cash the stamps in later. They also paid a small interest as well.

 

There also used to be the POSB which was the Post Office Savings Bank but it looks as though that has gone seriously (and expensively) up market now in the UK.

 

https://www.gocompare.com/savings/post-office/

 

Either or both of those would be great in Thailand, depending on the minimum deposit. It was possible to make regular deposits from your salary direct to your POSB account. They could be issued through the schools and teach children (and adults) a form of money management.

 

Also you could only withdraw to the amount you had saved and never overdraw. Nor could it be used for a loan.

[Pouatchee]

11 hours ago, webfact said:

The debt problem is further complicated by low income levels, uneven economic recovery, and certain behavioural patterns among Thais that plunge them deeper into debt.

 

how much was that minimum wage increase again?

2-15 bht a day? or an hour?

certainly debtors will get out of debt with such a generous increase thrown their way

[atpeace]

5 hours ago, GregBow said:

Here small timers at 10% per month, the " highly protected" big guys are at 5% per day and really seriously scary.

 

10% per month is no longer the norm ( much lower now) and 5% a day doesn't happen excluding the extremally rare exception.  Who is telling you this?

[zzaa09]

4 hours ago, spidermike007 said:

It is not slavery, and it is not anything like slavery. The primary difference being that the slaves never had a choice, they never asked to be taken away from their families, shipped across the high seas in cages, and sold at auction to slave owning farmers, ranchers, plantation owners and who knows what other kind of people, who engaged in slave ownership.

 

Taking a loan is voluntary, yes your financial situation might be dire, and yes you might be facing great hardship, but one does make a decision to sign off on a loan, and one should inquire about the terms before making such a decision, and after making that decision one has to be held accountable no matter how heinous the terms are. I do feel for these people. But, they were not forced at gunpoint to take these loans. And it is likely they knew who they were dealing with.

 

The real question is why the govt. or the cops does not go after them? The real story begins and ends there.

Awaiting the rise from their slumber.

The coming revolution should [and could] be activated. 

[GregBow]

20 hours ago, atpeace said:

10% per month is no longer the norm ( much lower now) and 5% a day doesn't happen excluding the extremally rare exception.  Who is telling you this?

I see it all around me in rural isaan. Agree 5% per day is not normal but it happens. 10% per month is really normal in these areas. I know it and have seen family exposed to it

[Phil1964]

On 12/29/2023 at 2:49 AM, 2baht said:

Eat more rice! 

Or send more daughters away to work as w****s, sorry bar girls!

🤔

[bannork]

On 12/29/2023 at 5:54 AM, John Drake said:

 

Why should the government be "equitable" in their treatment of loan sharks? Loan sharks should be arrested, put out of business, fined, and jailed. And debt owned to loan sharks should be seen as illegal and cancelled.

Not as simple as that. With banks not accepting land documents such as sor bor kor, many Thais have to rely on family or loan sharks if they wish to work overseas, for example, they may have to pay 100,000 baht or more in advance for labour fees, etc . Some loan sharks are liked, a teacher in our village enabled many Thais to work in Korea in the golden years before Covid.

I believe 5% interest per month is the legal limit but many loan sharks charge 10% a month.

Compulsive gamblers are easy prey for loan sharks, and when the latter 'have connections' as they invariably do,  (otherwise how could they survive?) then the hapless debtor is in deep trouble, often having to leave the area.

The problem is intractable unless the government punishes loan sharks with several years in the slammer.

And that won't happen because  of .....   'connections'.

 

 

 

 

[retarius]

It i9s absolutely nothing to do with slavery. All these silly comparisons need to stop. They are there to make the problems appear to be worse than they are and to sell more newspapers or get more clicks. Sickening and idiotic. When the court cases come up will the defendants be charged with 'slavery' or 'usury'?

It is loan sharking or usury, not slavery, for goodness' sake. It is not difficult to understand. 

[bradiston]

46 minutes ago, retarius said:

It i9s absolutely nothing to do with slavery. All these silly comparisons need to stop. They are there to make the problems appear to be worse than they are and to sell more newspapers or get more clicks. Sickening and idiotic. When the court cases come up will the defendants be charged with 'slavery' or 'usury'?

It is loan sharking or usury, not slavery, for goodness' sake. It is not difficult to understand. 

The end result is enslavement to a debt you probably will never be able to pay. People say "But it's voluntary." Yes, volunteered slavery when there is no alternative. Like "voluntary exile" or anything else purporting to be voluntary when it's not. The arrogance of people who say "Well, you didn't have to sign", when you have no choice. Oh yeah, there's always a choice they say. If there was a choice, who in their right mind would sign up to these insane terms? The lenders prey on the desperate. They know their customers.

[lordgrinz]

Informal debt is voluntary, slavery is not.

[ChaiyaTH]

1 hour ago, lordgrinz said:

Informal debt is voluntary, slavery is not.

Hence it is called modern slavery, which is also what was written in the article.

[Bday Prang]

On 12/30/2023 at 3:42 PM, GregBow said:

I see it all around me in rural isaan. Agree 5% per day is not normal but it happens. 10% per month is really normal in these areas. I know it and have seen family exposed to it

          I tell you what I see all around me in rural Isaan.....   Brand new pick ups, A very high per capita rate of Brand new tractors and Combine Harvesters far in excess of what is required, Huge flat screen TV's in most houses, The latest Smartphones permanently in use, Endless drink sodden parties, and a lot of people swinging in hammocks, when they are not thrashing round on their brand new motorbikes, Every thing paid for on the never  never.  Getting married involves  a ridiculous amount of money that most of them don't have  same goes for bereavement.  And of course endless donations to the temple and the school ( which has just decided it needs a new huge building just  to host the regular teachers meetings) 

           Strangely  there never seems to be much work done especially by the vast majority of young males,  Its called living beyond one's means where I was brought up and hardly worthy of sympathy

           The few that do knuckle down however do quite well but are looked at in jealous disdain by the rest My inlaws, who have never asked me for a single Baht in 20 years raised and educated 5 kids and built several houses all on the proceeds of the father in laws  honest hard work on his relatively modest amount of land which i might add  has never been mortgaged. 

            Mrs tells me many in the village laughed at him when he sent his daughters to school, few are laughing now.

             For a nation of Buddhists, the Thais  are probably the most materialistic  people I have ever encountered, couple that with aggressive  advertising, online shopping, and easy credit  its a recipe for disaster, all those monthly payments soon add up and they are quickly overwhelmed

             Recently a local supermarket had a promotional display of Isuzu pick ups There were no prices displayed, just the deposits required with an 84 month payment option.  

              Like lambs to the slaughter most of them