Incentives For First-Time Home And Car Buyers: Thai Finance Ministry

[webfact]

Incentives for first-time home and car buyers

By The Nation

First-time car buyers will get tax waivers of up to Bt100,000 each and first-home buyers will be eligible for a zero mortgage rate for five years, Deputy Finance Minister Boonsong Teriyaphirom said yesterday.

Finance Minister Thirachai Phuvanatnaranubala will today announce implementation of government policies to financially support people who want to buy cars and homes, Boonsong said.

He explained that the Excise Department will waive its tax, which will result in lower car prices by up to Bt100,000. However, the car must be a new one and its price not over Bt1 million. The car cannot change hands during the first five years, otherwise its owner must return the tax incentives back to the Finance Ministry, he said.

Eligible car models would be passenger cars or pickup trucks, he said, adding it would consider allowing commercial banks to join in financing buyers.

People buying homes would receive a zero mortgage rate for five years, on condition the house prices did not exceed Bt3 million. The Government Housing Bank will implement this new mortgage scheme which offers a much better term loan than that offered by the Abhisit government.

The Bank for Agriculture and Agricultural Cooperatives said it was ready to introduce a credit card for farmers and a fuel credit card for motorists. Other state banks will join the projects. The government also plans to offer commercial banks incentives if they participate in these credit schemes, he said.

-- The Nation 2011-08-19

[siampolee]

Laudable idea? To my mind no, all this concession is going to do is encourage more people into debt bondage. The house buying scheme is indeed excellent , once people have property they tend to keep up paying for it.The car buying scheme, a no brainer,

Automobiles are nothing but depreciating assets, (read millstones) status symbols and people have to maintain them insure them and after a couple of years they want to change their vehicle for a more modern sleeker version the dictates of fashion often rule the mind concerning these traits.

Noticeable that it is the state banks that are being involved in the matter initially, yet the state(government) states it is willing to offer incentives to private banks if they chose to participate in the scheme.

Has anyone realised who will be funding this grandiose scheme ?

The taxpayers.

Corporation tax down, an excise tax waiver on new vehicles that comply with the conditions for cheap loans, no wonder the minimum wage has to rise to 300 baht a day. the lower orders are going to be picking up the tax bill via indirect taxation, whilst the big fat cats are laughing all the way to the bank. As a statistical format the average person is indeed going to be a damm sight worse off as their disposable income is hit hardest by the indirect taxes.

Wonderful ploy to enslave naive consumers to maintain the status quo of the rich individuals and their companies and banks.

Edited August 19, 2011 by siampolee

[rakman]

Laudable idea? To my mind no, all this concession is going to do is encourage more people into debt bondage. The house buying scheme is indeed excellent , once people have property they tend to keep up paying for it.The car buying scheme, a no brainer,

Automobiles are nothing but depreciating assets, (read millstones) status symbols and people have to maintain them insure them and after a couple of years they want to change their vehicle for a more modern sleeker version the dictates of fashion often rule the mind concerning these traits.

Noticeable that it is the state banks that are being involved in the matter initially, yet the state(government) states it is willing to offer incentives to private banks if they chose to participate in the scheme.

Has anyone realised who will be funding this grandiose scheme ?

The taxpayers.

Corporation tax down, an excise tax waiver on new vehicles that comply with the conditions for cheap loans, no wonder the minimum wage has to rise to 300 baht a day. the lower orders are going to be picking up the tax bill via indirect taxation, whilst the big fat cats are laughing all the way to the bank. As a statistical format the average person is indeed going to be a damm sight worse off as their disposable income is hit hardest by the indirect taxes.

Wonderful ploy to enslave naive consumers to maintain the status quo of the rich individuals and their companies and banks.

Sounds like Cash-for-Clunkers in the US and the start of a housing bubble.

Let ensure that these loans are especially given to people who can't afford them. Then take the loan paper and resell it around the world as "mortgage backed securities" with AAA rating. That should create some really big inflation to grow out of any fiscal problem.

[lovelomsak]

Laudable idea? To my mind no, all this concession is going to do is encourage more people into debt bondage. The house buying scheme is indeed excellent , once people have property they tend to keep up paying for it.The car buying scheme, a no brainer,

Automobiles are nothing but depreciating assets, (read millstones) status symbols and people have to maintain them insure them and after a couple of years they want to change their vehicle for a more modern sleeker version the dictates of fashion often rule the mind concerning these traits.

Noticeable that it is the state banks that are being involved in the matter initially, yet the state(government) states it is willing to offer incentives to private banks if they chose to participate in the scheme.

Has anyone realised who will be funding this grandiose scheme ?

The taxpayers.

Corporation tax down, an excise tax waiver on new vehicles that comply with the conditions for cheap loans, no wonder the minimum wage has to rise to 300 baht a day. the lower orders are going to be picking up the tax bill via indirect taxation, whilst the big fat cats are laughing all the way to the bank. As a statistical format the average person is indeed going to be a damm sight worse off as their disposable income is hit hardest by the indirect taxes.

Wonderful ploy to enslave naive consumers to maintain the status quo of the rich individuals and their companies and banks.

Huh? What planet are you from? This is just about exactly the same plan Canada had about 25 years ago. These kinds of government incentives put people in debt,but debt to build networth isnot a bad thing. In Canada after incentives such as this were in place I saw many families who before incentives such as this were offered thought they would never own a home and felt outside the middle class or in lower middle class.. These same families now own their home 25 years later. Also because they lived in a new neighbourhood and had what is considered basic of middle class life they were inclined to provide better education for their children,develop stronger work ethic values,and simply treat themselves to a better lifestyle. All because of home ownership and personal pride arrived from it.

Edited August 19, 2011 by lovelomsak

[jalansanitwong]

Sounds like an excellent idea but there are two obvious snags.

How are they going to fund it without robbing Peter to pay Paul.

Very tough guidlines will be in place eliminating those who need home loans the most.

Thai banks and government offices dont trust Thais which is why they have to pay their power bill every month and water every 1-2 months or youre cut off.

Edited August 19, 2011 by jalansanitwong

[jfchandler]

I think the housing loans idea is a good one....

But, I seem to remember a similar plan a few months back also offered under the prior govt. via Government Housing Bank....

And from the date applications started being accepted, the program opened and closed in like a week...or some very short time...

And if I recall, you had to have a finalized purchase in hand when you went to apply for the loan....

So if you blinked, you missed it....

Wonder how this one will operate.....

I never did hear any stats about how many loans were actually issued under the prior program.

[lovelomsak]

Sounds like an excellent idea but there are two obvious snags.

How are they going to fund it without robbing Peter to pay Paul.

Very tough guidlines will be in place eliminating those who need home loans the most.

Thai banks and government offices dont trust Thais which is why they have to pay their power bill every month and water every 1-2 months or youre cut off.

You appear to assume a lot here. First there is no evidence as of yet of what the criteria is to benefit from this. So to state there will be tough quidelines is pure fiction.

Second it isnot robbing Peter to pay Paul. It is giving citizens something in return for taxes paid.That is the crux of these plans to get the nations working paying tax and improving on the standard of living for the whole populace not just the rich.

In my last post I stated it was 25 years ago a very similar plan was started in Canada. after more thought I realised it was actually started in the 1960's in Canada.Pierre Elliot Trudeau started it. Since that time I personally have seen many families who were at the onset poor working class, who's families now are university educated and strong contributors to society. People who oppose these moves donot understand them, or donot wish to see others develop their lives and families.

[supaprik]

Sounds like an excellent idea but there are two obvious snags.

How are they going to fund it without robbing Peter to pay Paul.

Very tough guidlines will be in place eliminating those who need home loans the most.

Thai banks and government offices dont trust Thais which is why they have to pay their power bill every month and water every 1-2 months or youre cut off.

You appear to assume a lot here. First there is no evidence as of yet of what the criteria is to benefit from this. So to state there will be tough quidelines is pure fiction.

Second it isnot robbing Peter to pay Paul. It is giving citizens something in return for taxes paid.That is the crux of these plans to get the nations working paying tax and improving on the standard of living for the whole populace not just the rich.

In my last post I stated it was 25 years ago a very similar plan was started in Canada. after more thought I realised it was actually started in the 1960's in Canada.Pierre Elliot Trudeau started it. Since that time I personally have seen many families who were at the onset poor working class, who's families now are university educated and strong contributors to society. People who oppose these moves donot understand them, or donot wish to see others develop their lives and families.

absolutely correct..a similar program was implemented in Australia in the late sixties whereby low income earners were given low start mortgages and low or zero deposits, there was some stupid outcries from the rich but it went ahead, most of the people who got these loans would never of otherwise been able to afford them...40 years down the track..how are Australia and Canada traveling? I say good on ANY Thai government that at least attempts to lift the average families expectations of life and I agree that having a home mortgage also gives families more reasons to work and most importantly remain families

Edited August 19, 2011 by supaprik

[KhunBJ]

Good idea, but not necessary right now as unemployment rate is low, around 0.4% , source : http://www.tradingeconomics.com/thailand/unemployment-rate , and the economy is still expanding , GDP to be up around 3.5% in 2011 according to Bloomberg, http://www.bloomberg.com/news/2011-08-18/thai-gdp-growth-probably-accelerated.html , furthermore the Governments intention to raise minimum wages, increase the price for rice and temporary halt the the oil fund will also contribute to more consumption....

[cloudhopper]

This would be a terrible policy resulting in increased debt slavery to the big banks and inflation.

As usual nothing creative just imitating the failing populist policies of western democracies.

[OzMick]

IMHO buying a home now is a great idea, especially if you can get a 5 year interest holiday. Having a fixed baht amount debt as inflation kicks into high gear does wonders for the bottom line, but rising interest rates tend to spoil the party.

Worst comes to worst, flog the place after 5 years and walk away with a tasty windfall profit.

[nong38]

The only Thais that do have a set of wheels are those that cannot afford a set of wheels, as this only applies to first time buyers of new vehicles I dont see much of market or give away here. As has been said before another debt black hole to jump into as well.

[siampolee]

lovelomsak.

Huh? What planet are you from? This is just about exactly the same plan Canada had about 25 years ago. These kinds of government incentives put people in debt,but debt to build networth isnot a bad thing. In Canada after incentives such as this were in place I saw many families who before incentives such as this were offered thought they would never own a home and felt outside the middle class or in lower middle class.. These same families now own their home 25 years later. Also because they lived in a new neighbourhood and had what is considered basic of middle class life they were inclined to provide better education for their children,develop stronger work ethic values,and simply treat themselves to a better lifestyle. All because of home ownership and personal pride arrived from it.

You mention Canada and a scheme that was instigated some 25 years ago. Fine.

This is Thailand and the Thai logic process is indeed far removed from the logic of Canadians and I feel I should include the greater majority of the Western people too.

II've lived and worked here for some twenty years and married to a Thai for 18 of those years.

We do not believe in, the "face ethic" unlike the average Thai, lots of bling, all on credit debt up to the eyes via the local moneylenders at 15-20% per month so as to show FACE.

The scheme mooted by the government will delight these poor souls until the bills come in then it's do a runner or down to the pawn shop as they never considered that monthly payments should be within your budget.

This is Thailand not Canada circa1 985 ish, Thailand has a lot of leeway to make up to catch Canada or the west in general.

Debts are fine if you service them, trouble is Thai's in general can't, dont understand or see those facts.

Financial disaster looming for the participants of this proposed tawdry debt bondage scheme.

[rubl]

begin removed ...

Financial disaster looming for the participants of this proposed tawdry debt bondage scheme.

Wrong! That's when the 'debt moratorium' comes in, over the last decade at least three or four times thanks to those selfless taxpayers

To be a bit serious as well, I think the 'house starters' thing can be beneficial to the people, but depends on conditions and how it's implemented. The 'first time car owner 100,000 tax deduction' is a no-brainer, IMHO. A larger part of the population in Thailand doesn't pay taxes or not enough to benefit.

[wandrinstar]

The only Thais that do have a set of wheels are those that cannot afford a set of wheels, as this only applies to first time buyers of new vehicles I dont see much of market or give away here. As has been said before another debt black hole to jump into as well.

Best comment so far. Spot On.

[Ricardo]

The only Thais that do have a set of wheels are those that cannot afford a set of wheels, as this only applies to first time buyers of new vehicles I dont see much of market or give away here. As has been said before another debt black hole to jump into as well.

And having had one's new car repossessed after a year by the bank or finance-company, for failing to pay the loan-repayments on-time, the poor ex-car-owner will also owe an additional 100,000 Baht to the Finance Ministry !

[Grove]

As if there isn't enough cars, unskilled drivers and un licensed drivers in the country already.

[TAWP]

Is this for Thais only or for everyone that pays tax [way above others here]?

[BuffaloRescue]

It will just put the house prices up - as housing becomes more affordable.

IMHO - people should not be able to borrow money to buy propery anywhere. Thats why we have had a huge housing bubble worldwide. Where the cost of a small peice of land with a house costs half a million dollars and a lifetime to buy - half your wages going into your mortgage.

Who benefits? Rich land owners, banks and money lenders.

[dcutman]

lovelomsak.

Huh? What planet are you from? This is just about exactly the same plan Canada had about 25 years ago. These kinds of government incentives put people in debt,but debt to build networth isnot a bad thing. In Canada after incentives such as this were in place I saw many families who before incentives such as this were offered thought they would never own a home and felt outside the middle class or in lower middle class.. These same families now own their home 25 years later. Also because they lived in a new neighbourhood and had what is considered basic of middle class life they were inclined to provide better education for their children,develop stronger work ethic values,and simply treat themselves to a better lifestyle. All because of home ownership and personal pride arrived from it.

You mention Canada and a scheme that was instigated some 25 years ago. Fine.

This is Thailand and the Thai logic process is indeed far removed from the logic of Canadians and I feel I should include the greater majority of the Western people too.

II've lived and worked here for some twenty years and married to a Thai for 18 of those years.

We do not believe in, the "face ethic" unlike the average Thai, lots of bling, all on credit debt up to the eyes via the local moneylenders at 15-20% per month so as to show FACE.

The scheme mooted by the government will delight these poor souls until the bills come in then it's do a runner or down to the pawn shop as they never considered that monthly payments should be within your budget.

This is Thailand not Canada circa1 985 ish, Thailand has a lot of leeway to make up to catch Canada or the west in general.

Debts are fine if you service them, trouble is Thai's in general can't, dont understand or see those facts.

Financial disaster looming for the participants of this proposed tawdry debt bondage scheme.

I totally agree Siampolee

Owning a home or a car does require disipline and extra money in the bank for the unexpeted thing that come up and a large percentage do not have it.

I have not met to many Thai's that can save or even have an extra 100 thb at the end of the month or what ever date they get paid. I have seen to many times, if one gets an extra 500thb in the morning it is gone by lunchtime.

Edited August 20, 2011 by dcutman

[David006]

can't say I really care about where the money comes from but being married to a Thai farmer..I would not hesitate to grab what's going for the wifey..finance our house,new truck, farm assistance etc..bring it on...

Now need to find out the small print....wonder who, if anyone, has the info....

[Chris Lawrence]

Sounds like an excellent idea but there are two obvious snags.

How are they going to fund it without robbing Peter to pay Paul.

Very tough guidlines will be in place eliminating those who need home loans the most.

Thai banks and government offices dont trust Thais which is why they have to pay their power bill every month and water every 1-2 months or youre cut off.

You appear to assume a lot here. First there is no evidence as of yet of what the criteria is to benefit from this. So to state there will be tough quidelines is pure fiction.

Second it isnot robbing Peter to pay Paul. It is giving citizens something in return for taxes paid.That is the crux of these plans to get the nations working paying tax and improving on the standard of living for the whole populace not just the rich.

In my last post I stated it was 25 years ago a very similar plan was started in Canada. after more thought I realised it was actually started in the 1960's in Canada.Pierre Elliot Trudeau started it. Since that time I personally have seen many families who were at the onset poor working class, who's families now are university educated and strong contributors to society. People who oppose these moves donot understand them, or donot wish to see others develop their lives and families.

absolutely correct..a similar program was implemented in Australia in the late sixties whereby low income earners were given low start mortgages and low or zero deposits, there was some stupid outcries from the rich but it went ahead, most of the people who got these loans would never of otherwise been able to afford them...40 years down the track..how are Australia and Canada traveling? I say good on ANY Thai government that at least attempts to lift the average families expectations of life and I agree that having a home mortgage also gives families more reasons to work and most importantly remain families

Agree. The American mortgage fiasco had different parameters that forced foreclosure's and got people out of housing.

In OZ we also have just had a advantageous and generous schemes to first time house buyers. It has over inflated housing, but due to current market conditions this appears to be slowing down. But there has been little mortgagee in possession sales.

Many of the OZ purchasers in the 1960's & 70's received what was called Terminating Building Society loans at about 3.5%. You had to be married or about to be married to be eligible.

Although a lot of these schemes have the ability to accelerate or prolong boom bust cycles, they do have the ability to create housing opportunity. The other affect is on the rental market as they can also dry up stock.

The idea has the advantage of pumping the economy, and improving long term financial outcomes of families. If not kept in check it can also have disastrous effect on the economy.

The car deal sounds interesting. This is a country where cars that are driven by most can be worth more than their house.

Good idea to kick start the economy and continue spending. Its one of those things I think one will try and see how it goes.....

[bkkjames]

Sounds like band-aid solution to appease auto and construction industries faced with increased labor costs.

Or somebody has a good idea? I don't see the need to incentive car sales though-people should be given 100k to take theirs of the road for 5 years.

[Buchholz]

the Governments intention to raise minimum wages, increase the price for rice and temporary halt the the oil fund will also contribute to more consumption....

there's been yet another governmental U-Turn... on the oil fund, this time

[Buchholz]

He explained that the Excise Department will waive its tax, which will result in lower car prices by up to Bt100,000

The scheme seems to changed from this earlier description.

The plan approved by the Cabinet this afternoon appears to be the car price is the same, but one year after purchase, the buyer applies for, and presumably receives, a tax rebate (up to the same 100,000 baht above) of the excise tax paid initially.

It takes effect Oct. 1. First payments will be the following year, October 1, 2012.

Yingluck government's Finance Ministry is asking for a budget of 30 Billion Baht for this scheme.

Wondering what wonderful scheming plans are in works to bleed the program dry of what is, a lot of money.

.

[Buchholz]

Cabinet nods to first-car tax cut measure, starting 1 Oct

BANGKOK, 13 September 2011 (NNT) – The tax reduction measure for first-car buyers has been approved by the Cabinet and is set to commence on 1 October while the budget required for the tax rebate is expected at 30 billion THB.

After the purchase, the buyer will be obligated to remain the owner for at least five years. The tax rebate process will begin after the first year of purchase at the rate of not exceeding 100,000 THB per vehicle.

http://thainews.prd.go.th/en/news.php?id=255409130007