Thai Household Debt

[chiang mai]

Not everywhere is the UK. A transactional account is known as a checking (or chequing account) in North America, and as a current account or cheque account in the United Kingdom.

In the US it is known as a DDA account, despite being a Brit I was in banking in the US for several years.

[chiangmaikelly]

Not everywhere is the UK. A transactional account is known as a checking (or chequing account) in North America, and as a current account or cheque account in the United Kingdom.

In the US it is known as a DDA account, despite being a Brit I was in banking in the US for several years.

I have never heard of a USA account referred to as a DDA account. I doubt if any American outside of international banking or finance will know that abbreviation. It is not in common usage. I mean I never went into a bank and asked to open up a DDA account.

[chiang mai]

"A transactional account is known as a checking (or chequing account) in North America,^[1] and as a current account or cheque account in the United Kingdom, Hong Kong, India and some other countries. Because money is available on demand it is also sometimes known as a demand account or demand deposit account (DDA), except in the case of NOW accounts in the U.S., which are technically distinct".

http://en.wikipedia.org/wiki/Transactional_account

[inthepink]

I'm going by what I see.

My wife makes 7,000 a month in a good low level job.

The vast majority of Thais are in low level jobs, many earning as little as 3,000 a month.

Allowing for Thais in banking type jobs that apparently earn between 10,000 and 15,000 I am ESTIMATING that the average wage is AROUND 10,000 a month.

By all means dispute that, but there are statistics and there are dam_n statistics, and from many years in Thailand I would dispute that most Thais earn enough to buy a multi million baht house or a million baht car, yet we see them everywhere.

This is a bit of a silly post. Whilst the mean average monthly salary may be around 10k, there is a healthy percentage of Thai people earning far more than that. These are the people that are buying houses and cars, not 7/11 workers on 6 or 7k a month.

I think your figures are a little unrealistic too. Burmese maids usually manage to make a fair bit more than 3k a month so I doubt there are all that many Thai people on such a low salary. You need to bear in mind that the majority of people in most countries earn low salaries. The distribution of wealth in Thailand, as measured by the Gini coefficient, is roughly the same as it is in the USA.

Some examples please. In the town where I live, which is a factory town employing many thousands of workers, I see enormous numbers of low level factory employees on motorbikes, thousands of shop workers, miscellaneous workers like stall holders, m'bike taxi drivers, and bar/ restaurant staff, but very few people driving an "elite" car. The number of very expensive houses is miniscule. So what are the <healthy percentage of Thai people earning far more than that> doing?

Read your own post, you just quoted it and it said " I would dispute that most Thais earn enough to buy a multi million baht house or a million baht car, yet we see them everywhere."

I said a healthy percentage of Thai people earn far more than the figures you quoted and now you are asking what they do with their money because where you live "The number of very expensive houses is miniscule" and very few people drive an elite car!!! Are you insane?

Which is it then? First you claim expensive cars and houses are everywhere, now you claim that you see very few of them? If you want to argue with yourself then please carry on but don't drag me into your mad little world.

Edited October 28, 2012 by inthepink

[inthepink]

Checking account is an account with checks; so yes a check book. Personal checking account.

OK, seems like an odd distinction to make when the world is moving away from paper-based transactions but I would assume the people I know with debit and credit cards can write personal cheques if they wish, so that would still be every Thai person I know.

If you think the world is moving away from paper based transactions you have not been in Thailand long.

http://www.thaivisa....opy#entry578586

PS. 195 million active checking accounts in USA.

Been here around 9 years, although I don't know what bearing that has on my thoughts on the world moving away from paper-based transactions. FYI, the USA is not the world and its banking system has always been a little behind the times.

Your link is irrelevant: Thaivisa is not an acknowleged authority on banking practices in Thailand and that thread is about the documentation required as identification by foreigners when opening an account or making transactions as far as I can see - not the nature of the transactions themselves and nothing to do with what we were discussing.

When my partner does contract work for companies in Thailand she is paid by electronic transfer, not in cash, and I believe that this is common practice among Thai people and businesses that need to move money around, rather than writing cheques. Having said that, she is sometimes paid by cheque so practices vary from business to business. As far as whether all the people I know could write cheques if they desired, I would have to ask them to be completely sure but I believe this to be the case.

Edited October 28, 2012 by inthepink

[chiangmaikelly]

Checking account is an account with checks; so yes a check book. Personal checking account.

OK, seems like an odd distinction to make when the world is moving away from paper-based transactions but I would assume the people I know with debit and credit cards can write personal cheques if they wish, so that would still be every Thai person I know.

If you think the world is moving away from paper based transactions you have not been in Thailand long.

http://www.thaivisa....opy#entry578586

PS. 195 million active checking accounts in USA.

Been here around 9 years, although I don't know what bearing that has on my thoughts on the world moving away from paper-based transactions. FYI, the USA is not the world and its banking system has always been a little behind the times.

When my partner does contract work for companies in Thailand she is paid by electronic transfer, not in cash, and I believe that this is standard practice among Thai people and businesses that need to move money around, rather than writing cheques. Having said that, she is sometimes paid by cheque so practices vary from business to business. As far as whether all the people I know could write cheques if they desired, I would have to ask them to be completely sure but I believe this to be the case.

// Off topic comments removed //

I have worked for the Thai government for many years and have always been paid by check.

Edited October 28, 2012 by metisdead

[chiang mai]

Here we go, the BS getting too deep for me, I'm out, again!

[inthepink]

FYI the USA has been the largest economy in the world since the 1920's. That of course does not mean the USA is the world it just means it is the largest economy in the world and has been since the 1920's. Soon to change I suspect.

I have worked for the Thai government for many years and have always been paid by check.

What has the size of the US economy got to do with it? I am merely pointing out that its banking practices are hardly cutting edge and it is just one country. Governments the world over are not usually known for early adoption of new technologies so it doesn't surprise me that they issue cheques. However, this does not change the fact that many businesses use electronic transfers and whether we are talking about cheques or electronic transfers, neither of these are part of the cash based economy which you claimed was prevalent here. Edited October 28, 2012 by inthepink

[thaibeachlovers]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

[chiangmaikelly]

Here we go, the BS getting too deep for me, I'm out, again!

You really should say what is BS if you are going to call someone less than truthful. Unless you just want to flame.

[nietzche]

By anyone's definition, Thailand is a third world country, and that's the discussion really.

Certainly not anyone's, and the word itself isn't useful anymore as its considered an insult. And I don't consider the discussion that fruitful, like defining "middle class" ends up being an argument about the basis for arbitrary terms.

Rapidly "developing" is more accurate.

Thailand's GDP is pretty respectable, and per-capita beats out China.

It's light-years ahead of the bottom half of the 200+ countries, depending how you count.

Thailand is defined by the World Bank as being a "transitional economy". This is the second tier between "Third World" and "First World".

Many people like to point out that the minimum wage in Thailand is very low. This is true, however, the minimum wage in the United States is very low also (around $240/week after taxes). Try living on that. At least in Thailand the poor don't have to pay taxes from their meagre paycheck.

During the credit bubble in the U.S. I was able to take out a $25,000 car loan without any job (I was in graduate school at the time). I also had around 5 credit cards with combined limits of 40k +.

A similar trend is emerging here in Thailand. Property prices are rising very rapidly and credit is freely available to everyone. There is a lot of Chinese money flooding into this region.

The point is that something has got to give. The Thai's are on a similar road the the Americans and Europeans. Funding lifestyles through loans will only end in disaster.

[chiangmaikelly]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

I was trying to answer a question posted by inthepink. My point has been for quite some time that Thailand is a cash economy and the banks are set up to facilitate that and cater to the gray market economy. There are thousands of gold shops to facilitate that process and all the basic services can be paid for at 7/11 in cash.

When you have an economy that is cash and gold based it adds another dimension to banking when discussing how much wealth or debt is held by individuals or families.

[inthepink]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

Nothing at all but why did you tell me you saw million baht cars and multi million baht houses everywhere and then claim you hardly ever see them?

[metisdead]

Can we back on the topic of Thai Household Debt?

[chiangmaikelly]

By anyone's definition, Thailand is a third world country, and that's the discussion really.

Certainly not anyone's, and the word itself isn't useful anymore as its considered an insult. And I don't consider the discussion that fruitful, like defining "middle class" ends up being an argument about the basis for arbitrary terms.

Rapidly "developing" is more accurate.

Thailand's GDP is pretty respectable, and per-capita beats out China.

It's light-years ahead of the bottom half of the 200+ countries, depending how you count.

Thailand is defined by the World Bank as being a "transitional economy". This is the second tier between "Third World" and "First World".

Many people like to point out that the minimum wage in Thailand is very low. This is true, however, the minimum wage in the United States is very low also (around $240/week after taxes). Try living on that. At least in Thailand the poor don't have to pay taxes from their meagre paycheck.

During the credit bubble in the U.S. I was able to take out a $25,000 car loan without any job (I was in graduate school at the time). I also had around 5 credit cards with combined limits of 40k +.

A similar trend is emerging here in Thailand. Property prices are rising very rapidly and credit is freely available to everyone. There is a lot of Chinese money flooding into this region.

The point is that something has got to give. The Thai's are on a similar road the the Americans and Europeans. Funding lifestyles through loans will only end in disaster.

I don't think that your contention that a credit bubble exists has been established. Certainly nothing you wrote above establishes that fact.

[thaibeachlovers]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

Nothing at all but why did you tell me you saw million baht cars and multi million baht houses everywhere and then claim you hardly ever see them?

Ha. I said <few people driving an "elite" car. The number of very expensive houses>.

An ordinary bog standard car is a million now, and an average house is worth a couple million or more. I was saying that there aren't many REALLY wealthy Thais around in the town where I live. So I still want to know how all the Thais I see on average wage can afford new m'bikes and cars, unless they have someone supporting them.

[transam]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

Nothing at all but why did you tell me you saw million baht cars and multi million baht houses everywhere and then claim you hardly ever see them?

Ha. I said <few people driving an "elite" car. The number of very expensive houses>.

An ordinary bog standard car is a million now, and an average house is worth a couple million or more. I was saying that there aren't many REALLY wealthy Thais around in the town where I live. So I still want to know how all the Thais I see on average wage can afford new m'bikes and cars, unless they have someone supporting them.

It's the Chanotes of family who know no better that are backing them. Sadly these perhaps old folk might be in for a not nice surprise.

[chiangmaikelly]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

Nothing at all but why did you tell me you saw million baht cars and multi million baht houses everywhere and then claim you hardly ever see them?

Ha. I said <few people driving an "elite" car. The number of very expensive houses>.

An ordinary bog standard car is a million now, and an average house is worth a couple million or more. I was saying that there aren't many REALLY wealthy Thais around in the town where I live. So I still want to know how all the Thais I see on average wage can afford new m'bikes and cars, unless they have someone supporting them.

How much is a new Ford Fiesta? How much is a new Honda wave? How much is the payment on a million baht home 30 year note?

[duiter]

@ nietzche

you say " Property prices are rising very rapidly"

How fast are they ? if the price of property 5 years ago was 1 million B in Bangkok

How much is that property's value now ?

[inthepink]

Checking account is an account with checks; so yes a check book. Personal checking account.

OK, seems like an odd distinction to make when the world is moving away from paper-based transactions but I would assume the people I know with debit and credit cards can write personal cheques if they wish, so that would still be every Thai person I know.

Nonsense. There are almost no people in Thailand with a personal checking account. One needs a checking account to write a personal check. An ATM debit card is not a checking account. The photo below is what they don't have in Thailand.

Well, I just checked with my partner and yes, she can have a cheque book with her account if she wishes but she does not have one because she has no need to write cheques. Some of her friends have them and some don't.....basically the current accounts to which I was referring are the same as the checking accounts to which you are referring but not everybody bothers to order a cheque book, so I am not talking nonsense at all. I think the truth of the matter is that there are almost no people in Thailand that you know who have checking accounts and you are generalising as many people do.

[chiangmaikelly]

Checking account is an account with checks; so yes a check book. Personal checking account.

OK, seems like an odd distinction to make when the world is moving away from paper-based transactions but I would assume the people I know with debit and credit cards can write personal cheques if they wish, so that would still be every Thai person I know.

Nonsense. There are almost no people in Thailand with a personal checking account. One needs a checking account to write a personal check. An ATM debit card is not a checking account. The photo below is what they don't have in Thailand.

Well, I just checked with my partner and yes, she can have a cheque book with her account if she wishes but she does not have one because she has no need to write cheques. Some of her friends have them and some don't.....basically the current accounts to which I was referring are the same as the checking accounts to which you are referring but not everybody bothers to order a cheque book, so I am not talking nonsense at all. I think the truth of the matter is that there are almost no people in Thailand that you know who have checking accounts and you are generalising as many people do.

I'd tell you but I believe we have all been warned to get back on topic. Sorry.

[inthepink]

Ha. I said <few people driving an "elite" car. The number of very expensive houses>.

An ordinary bog standard car is a million now, and an average house is worth a couple million or more. I was saying that there aren't many REALLY wealthy Thais around in the town where I live. So I still want to know how all the Thais I see on average wage can afford new m'bikes and cars, unless they have someone supporting them.

No, this is what you said:

By all means dispute that, but there are statistics and there are dam_n statistics, and from many years in Thailand I would dispute that most Thais earn enough to buy a multi million baht house or a million baht car, yet we see them everywhere

I see enormous numbers of low level factory employees on motorbikes, thousands of shop workers, miscellaneous workers like stall holders, m'bike taxi drivers, and bar/ restaurant staff, but very few people driving an "elite" car. The number of very expensive houses is miniscule.

You are comparing factory workers on motorbikes to "elite" car drivers so I think it's clear that you started off saying one thing and then changed your mind and contradicted yourself in the next post that you made.

I'd like to know why you assume that all the car drivers you see are earning so little? Som tam stall owners can make a tidy sum in a month so don't be fooled into thinking they are all scraping by on 6k a month or less.

Edited October 28, 2012 by inthepink

[Bangkokhatter]

Simple fact is they are earning more than the posters on here realise and their living costs are generally quite low. At the start of the thread i gave 2 examples of colleagues who had purchased houses and cars with money borrowed from the banks. These colleagues earn around 15,000 baht a month plus bonuses, which right now are pretty good.

[linno2]

In my thai rural experience it seems that just about everyone owes money to repay a loan from either the 1mil Thai Baht/village scheme that Taksin introduced, or to the multinational fertilizer and pesticide companies, to the tractor finance companies, to an informal money lender or to the bank. Tractors, fertilizers and pesticides are all sold on credit with the promise of vastly increased returns. These are all to often lost to floods, soured land, equipmemnt breakdowns without spare parts available for repairs and similar. Marketing strategies are effective at convincing people that they need more and more consumer goods like in most countries and Thai consumers respond predictably. Money is often borrowed to pay for weddings, funerals, Monk ordination festivities and medical care. And then there is the all too often example of the lender calling in the guarantors when the borrower has failed to make payments - on a number of occasions people did not even know they were a guarantor due to dodgy paperwork until the fast motorbike with 2 guys wearing full faced helmets paid a visit! Financial skills are not refined and older people in our village have come from subsistence agricultural/barter based economies. Saving for an unexpected event or even predictable risk is not the usual and occasionally when people do receive a financial windfall it is spent on some short term enjoyment. Compounding the problem is the apparent growing need to 'save face' by 'keeping up with the Jones's'. One tragic consequence is the loss of many a family's house and land due to the inability to pay the phenominal compounding interest when a flood or similar has stripped them of cash flow and inability to make the scheduled payments to money lenders. The title to the land that has been in their family for many generations is used as the security - mostly for an original loan that is a tiny fraction of the market value of the land. It is truly a tragedy in the making and not going away. In the Asian financial crisis in the late '90's the bad debts of many middle and upper class Thais were written off by the banks with funds from the government - not so for the poorer members of the nation with this current situation. In my own Thai family, borrowing money has been sorted out in a form of 'credit cooperative'. Essentially loans now mostly paid out collectively by the family - no new loans - working in cash or kind to pay off the now 'family based loan'. Not perfect but at least not going backwards any more. The initial challenge was being able to discuss and discover the full extent of the problem. Would be very interested to find out any more strategies for managing this difficult and very real issue.

[BigJohnnyBKK]

> if the price of property 5 years ago was 1 million B in Bangkok How much is that property's value now ?

In my neighborhood south of Sathorn quiet mostly residential soi, just back from the main commercial road, a 5-storey shophouse just sold for 4.5 million that I had looked at about six years ago at 3.2.

Apparently some of the local appreciation is from the fact that our area wasn't touched by the floods.

[BigJohnnyBKK]

No question that the rural poor are up to their necks and more in hock.

Although I can see how there might be high levels of consumer debt here, I think the banks' collateral security procedures and guarantees by senior/wealthy family members would reduce any popping bubbles from hitting the banking industry too hard.

To me the much greater danger is the banks' funding of more and more speculative high-end housing development by the top 1%, probably a lot of suspect valuations and check-kiting collateral on that end than in the consumer retail sector.

All WAGs . . .

[Heng]

I like a sidetrack as much as any, but what do cheques or the US have to do with Thai household debt?

Nothing at all but why did you tell me you saw million baht cars and multi million baht houses everywhere and then claim you hardly ever see them?

Ha. I said <few people driving an "elite" car. The number of very expensive houses>.

An ordinary bog standard car is a million now, and an average house is worth a couple million or more. I was saying that there aren't many REALLY wealthy Thais around in the town where I live.

How would you know their financial status? Some of the wealthiest folks I know drive beat up cars and live in rather modest homes (like a lot of wealthy people anywhere else). One only gets glimpses of their true wealth now and then when it's revealed usually not by their choice. Like when someone wants to make an inquiry on a plot of particularly sought after beachfront or Sukhumvit-side land, and after one goes through the trouble of finding out who owns it, it's ol' Uncle Meng who drives a 14 year old Toyota Camry (two toned) and runs a rather modest looking wholesale grocery operation.

[metisdead]

And some more off topic posts have been removed.

[chiang mai]

The UK at least is now considering a helicopter drop of money, rather than engage in yet another round of questionable quantative easing, put the money directly into the hands of the consumer. In effect that is what Thailand is doing with its village funds, I note that another million has now been allocated to each village which means the rural poor can borrow twice as much, a good thing or a bad thing, unsure, probably a double edged sword.

For those unware the village fund is a sum of money that is administered by the village headman where locals in that village can borrow a maximum amount that has very generous rates of interest and the repayment schedule quite flexible. It was one of Thaksins ideas to keep the rural poor as loyal voters and a major part of the reason why he is liked by them so much..

[anon210]

A few comments about what I know...

At my company, there is at least one person who is repaying credit card debt all the time, since I know her (buying Iwhatevers and other gadgets).

In our company, there are many young staffs who are paid at about 20-25 K/month base salary + incentive (which can double their salary). Obviously, as we are just starting our activities here, many of them have not met their targets... And their manager was complaining to me that they were having difficulty, as many of them have car loans and have to repay it... My thai friends tell me many a tale of young graduates who drive a car, when they have just started with a meager salary of 20 K (but they live at their parents, so savings are to be found there). So, from my point of view, yes, there is overabundance of cheap credit in the commercial market. Myself I got 3 credit cards, each with very high limits (which, obviously, I never use fully).

For those who are into economics and maths, here is an interesting paper on the previous bubble: http://faculty.washington.edu/karyiu/papers/bubbles.pdf