Thailand is dealing with a household debt crisis and a slow economic recovery

[snoop1130]

 

The Economic Cabinet has instructed the Finance Ministry and the Bank of Thailand to urgently address rising household debt. This encompasses bad debts related to housing, cars, motorcycles, credit cards, and student loans, as the Thai economy continues to struggle to rebound.

 

Finance Minister Pichai Chunhavajira mentioned after a meeting lead by Prime Minister Srettha Thavisin, that the PM ordered swift action on economic decline due to the absence of clear recovery signs. The central concern is the growing bad debt in the household sector and among small and medium-sized businesses (SMEs), with household debt reaching alarming levels.

 

The amount of household debt has reached 13.6 trillion baht, equal to 90% of the country's GDP. Of this, around 1 trillion baht is bad debt, a figure that is predicted to rise as more debts risk being classified as bad or special mention (SM) loans. Half of these SM loans, which are overdue by 30 to 90 days, are tied to housing and cars, while the rest is associated with credit card debt.

 

To counter bad debts in the housing sector, the Government Housing Bank has been directed to extend home loan repayments for borrowers until they reach 85 years old. This move particularly aims at increasing the mortgage plan duration for civil servants to 85 years, and for other individuals to 80, from the earlier limit of 60 to 70 years.

 

Finance Minister Pichai added that this extension would lower the installment amount helping reduce financial pressures on homebuyers dealing with high living costs.

 

 

The government also will urge commercial banks to support customers struggling with repayments by increasing the repayment duration and decreasing the principal payment.

 

As for bad debts from repossessed cars and motorcycles, a provision for tackling these will be made and the total debt amount shared at the next meeting.

 

Meanwhile, the outstanding balance on 1.4 million out of a total of 24 million credit cards in the system is expected to rise to between 2 and 3 million cards. The Bank of Thailand will collaborate with credit card companies to decrease the minimum payment from the existing 8% to 5%, with prospects for further adjustments.

 

Minister Pichai assures quick implementation of measures to handle bad debt as the government plans to reduce, manage and extend debt to help the economy gradually recover.

 

File photo for reference only

 

-- 2024-07-16

 

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[Enzian]

That part about "reducing the principle payment" can only mean decreasing the principle amount, the figure on the face of the loan. Pure moral hazard unless there's some god from the machine waiting to come down. And that's the drift I get from this report, that someone thinks there is something coming that will turn events around in terms of the real economy; but these measures all read like stopgaps, not solutions. 

[Pouatchee]

what else is new? wasnt this headline news last month?

next, the headline will be about how much thai teachers are in debt

AN... the hub of revolving news

 

[John Drake]

Just cancel all the debt.

[Tropicalevo]

1 hour ago, Pouatchee said:

what else is new? wasnt this headline news last month?

next, the headline will be about how much thai teachers are in debt

AN... the hub of revolving news

 

 

I do not think that AN are the cause here.

Surely it is the government's PR people who are struggling to get something positive in the press (and failing miserably).

[Pouatchee]

20 hours ago, Tropicalevo said:

 

I do not think that AN are the cause here.

Surely it is the government's PR people who are struggling to get something positive in the press (and failing miserably).

 

i agree they are not the cause, but they still do report the same news for a social problem that is ongoing... nothing has changed since they last posted this. i think that until something actually changes they should abstain from posting the same news...

 

i actually do predict the next time will be about teacher indebtedness

[TroubleandGrumpy]

More lunacy ideas from this land of lunatics - talk about the animals running the farm - did not George write a book about that and warn us all it would lead to economic and social disaster.  

[bkk6060]

Ever talk to Thais about economics or finances?  Most are cluless.  Sure.  2 or 3 holidays every month all charged on credit cards.   Got to buy a car and condo/house post in Tik Tok and Instagram how rich you are.  All these people wanting to live the western lifestyle dream. Fools, with no financial education or management,  It will just get worse

[BangkokReady]

3 hours ago, Enzian said:

That part about "reducing the principle payment" can only mean decreasing the principle amount, the figure on the face of the loan. Pure moral hazard unless there's some god from the machine waiting to come down. And that's the drift I get from this report, that someone thinks there is something coming that will turn events around in terms of the real economy; but these measures all read like stopgaps, not solutions. 

 

They're used to stacks of cash coming from abroad to subsidise everyday life in Thailand.  No doubt they're hoping there's some free money available from the government.

[mancub]

1 hour ago, Pouatchee said:

i actually do predict the next time will be about teacher indebtedness

My money's on the police force 

[Gsxrnz]

It doesn't matter if its Thailand or America (or any other country), the only way to make society wealthier is to boost productivity. And that ain't happening anytime soon. Or at least not until they pull the trigger on WWIII. 

[2baht]

The 10,000 thb hand out from govt will cure all ills, be patient! I'll get that new Honda Wave no matter what!

[hotchilli]

22 hours ago, snoop1130 said:

The Economic Cabinet has instructed the Finance Ministry and the Bank of Thailand to urgently address rising household debt. This encompasses bad debts related to housing, cars, motorcycles, credit cards, and student loans, as the Thai economy continues to struggle to rebound

Don't worry the 10K bribe will fix everything... Srettha says so

[spidermike007]

The economy is still reeling after 9 years of the "Prayuth Decimation" and tremendous levels of incompetence with regard to economic policy. From what I hear new car sales are down over 40%, the used car market is dead, condo and home sales are down, and manufacturers are leaving Thailand in droves, with very little new investment coming in.

 

Thailand is in for quite a ride over the next few years, and that doesn't even take into account the probability of a huge worldwide economic correction, which I believe is coming. 

[thesetat2013]

23 hours ago, snoop1130 said:

This encompasses bad debts related to housing, cars, motorcycles, credit cards, and student loans, as the Thai economy continues to struggle to rebound.

ahh this must be why they want to make gambling legal.. Keep the poor, poor and make the rich, richer. Keep them owing so they never get enough money to educate their children properly. 

[RichardColeman]

On 7/16/2024 at 2:42 PM, snoop1130 said:

As for bad debts from repossessed cars and motorcycles,

The amount of time I have spent trying to explain to my thai wife that people in my UK on the same wage as Thai people would be driving clapped out old bangers sold at the side of the road and held together with newspaper is endless. People living in tin shacks should not be driving round in new pickups !

 

We teach our 8 year old daughter to save for what she wants. My step daughter that lives with us now is earning min wage (well bit more) and puts away 5,ooo baht a month for a new motorbike. Should get a nice one after 8 months ish, but she understands saving and working.

 

It's education these people need - not loans !

 

 

 

[Andycoops]

This has been going on for decades, poorly paid people given loans that don't equate to their income.

 

Especially in the public sectors, police, army, teachers, doctors and nurses etc...

 

All can get loans from government banks at silly times more than their salaries.

[Bday Prang]

21 hours ago, bkk6060 said:

  All these people wanting to live the western lifestyle dream. Fools, with no financial education or management,  It will just get worse

I think the "the western lifestyle scam" would be a better description

16 minutes ago, RichardColeman said:

The amount of time I have spent trying to explain to my thai wife that people in my UK on the same wage as Thai people would be driving clapped out old bangers sold at the side of the road and held together with newspaper is endless. People living in tin shacks should not be driving round in new pickups !

 

We teach our 8 year old daughter to save for what she wants. My step daughter that lives with us now is earning min wage (well bit more) and puts away 5,ooo baht a month for a new motorbike. Should get a nice one after 8 months ish, but she understands saving and working.

 

It's education these people need - not loans !

 

 

 

             Its by no means a uniquely Thai problem its endemic in the developed world. Look on the average council estate in the UK ,at least 2 cars per household and no bangers anymore, huge flat screen TV in every room, £1000+ mobile phones, £300 training shoes etc etc and that's just the ones on benefits

            Education would certainly help , when I was at school there was nothing on the curriculum that dealt with basic money management and I doubt there is these days either, Unless one  specifically studies "economics" which is not generally an option at primary school, money is pretty much never mentioned. Its almost as if "they" don't want people to know much about the subject, 

             The availability of quick and "easy" credit, and the effectiveness  of the sophisticated  marketing industry that has developed to ensure that people continually  feel the need to buy things that they don't actually  need, ideally  with money they don't have, means its more than education that is needed, its actually a complete change in culture.

              Its not rocket science, your example of teaching an 8 year old to save for what they want is all it takes to put them on the right track,and a valuable lesson to be learnt,  but you need to get them on board while they are still relatively young ,  If you wait until they  are  teenagers they would think you were crazy and you'd be wasting your time

             

              

                     

[Purdey]

Unfortunately, any Thai government cannot cancel bad debt as it will allow people to think they can get into debt again and again and the government will miraculously take it all away again and again.

Better education is a long term solution - for teachers.

[Peterphuket]

12 hours ago, Gsxrnz said:

It doesn't matter if its Thailand or America (or any other country), the only way to make society wealthier is to boost productivity. And that ain't happening anytime soon. Or at least not until they pull the trigger on WWIII. 

Indeed, that is what I have been saying for some time, there needs to be a major reset, then one can start all over again, nothing new under the sun, only I hope not to witness it again.

[DonniePeverley]

No attempt made to diversify the economy 

 

Instead a reliant on cheap mass tourism.

 

Disgrace

[Ben Zioner]

17 hours ago, hotchilli said:

Don't worry the 10K bribe will fix everything... Srettha says so

They think it'll "educate" the masses...

[sidneybear]

14 hours ago, Bday Prang said:

 Its by no means a uniquely Thai problem its endemic in the developed world.

That's true. Most of the whole world is up to it's armpits in debt. People who blame this or that Thai government have too narrow a focus.

[sidneybear]

On 7/16/2024 at 3:26 PM, Enzian said:

That part about "reducing the principle payment" can only mean decreasing the principle amount, the figure on the face of the loan. Pure moral hazard unless there's some god from the machine waiting to come down. And that's the drift I get from this report, that someone thinks there is something coming that will turn events around in terms of the real economy; but these measures all read like stopgaps, not solutions. 

Economies do expand and contract in cycles. Other than defaulting en masses, which would wreck the financial system, there's no other option than to buy time. The 1997 crash was worse, but Thailand got over that.

[john donson]

corruption replaced education

 

learn to live by your means and education to try to crawl out of the poverty cycle

 

but education is rote learning, no value added

 

buying crap you cannot afford and banks slow to repossess or asking new price ...

 

I saw a house in my old moo baan...  after construction and being sold not long after, it stayed vacant for over 10 years....  for sale sign by the bank and the asking price kept almost new price for a decade... till recently someone gutted the place to the bones, reconstructed it and now being sold 50% ABOVE  original sale price 10+ years ago

Edited July 18 by john donson

[CharlieKo]

This government has no idea how to solve this problem. They think by issuing orders it will be resolved. Idiots the lot of them. How about looking for real investment into the country, and not relying on Tourists to fill the financial hole. 

[spidermike007]

The problems are far greater than this administration will admit. Alot of it is out of their control. And the parts which are within their control are not being addressed, due to an enormous lack of talent and intelligence in this bought and paid for proxy administration. 

 

Thailand has witnessed nearly 2,000 factory closures in the past year, upending its manufacturing sector that contributes nearly a quarter of its gross domestic product (GDP).

 

“The industrial sector has slumped, and capacity utilisation has fallen below 60 per cent,” Mr Srettha told Parliament last week. “It is clear that the industry needs to adapt.” As a result, job losses jumped by 80 per cent during the same period, with more than 51,500 workers left without work, the data shows.

 

https://www.straitstimes.com/business/thai-economy-faces-upheaval-due-to-factory-closures-cheap-chinese-imports

Edited July 18 by spidermike007