Is Thailand in trouble or not?

[elektrified]

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Link please. Everyone I know is coming up roses.

You must be living in a bubble. It's on the Thai news all day long, every day. Kasikorn and one other bank - I forget which one began sounding alarms 6 months ago that they were concerned about a bubble and that there would be massive defaults on real estate and personal loans. Everywhere you go Thais are buying on credit like there is no tomorrow.

[klubex99]

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Link please. Everyone I know is coming up roses.

You must be living in a bubble. It's on the Thai news all day long, every day. Kasikorn and one other bank - I forget which one began sounding alarms 6 months ago that they were concerned about a bubble and that there would be massive defaults on real estate and personal loans. Everywhere you go Thais are buying on credit like there is no tomorrow.

Correct, and following the looming credit crunch will follow a huge property price crash. Because land prices and house prices are so artificially high because of recent bulk lending to those who will never be able to pay the mortgages long term. That also goes for large scale developers whom are using the banks to fund housing projects all over the place that are sat empty. If I want to rent of buy a shop house around my area, I have about 100 to choose from in about 5 square KMs. Been sat there for years unoccupied, and more are being built as we speak. Same with houses, that I have mentioned more than once, which are 70 to 80% empty for years, and still they build more, and we are in the crest of the credit boom. What chance do they have when it all comes crashing down in a few years, and a house is worth less than half of what it is now?

Edited September 6, 2013 by klubex99

[GuestHouse]

^

I think the second hand car market is going to crash first.

When I first came to work in Thailand 25 years ago you could not get a new saloon car for love nor money - prices second hand were often higher than the book price new.

For the following 15 years the availability of new cars always lagged the demand and again second hand prices stayed high.

In the past 10 years, accelerating over the past two years. we've seen the arrival of the 'Tent' - where ten years ago second hand cars where sold privately, basically stick a sign in the car or post on a notice board and the car would sell quickly - the market is now swamped with 'Tents'

Most of the cars in the 'Tents' have not been bought by the business but are placed there by the owner who gives the 'Tent' operator a cut.

There's already a glut into which the 'First Car' vehicles are soon to be added.

Prices will fall and given the amount of personal debt tied up in cars this is going to have an impact of very many Thais.

No link provided - go take a look at the 'Tents' full of second hand cars on a road side near you.... and on the outskirts of every other town in Thailand.

Edited September 6, 2013 by GuestHouse

[giggles]

did they ever introduce 'bankrupcy laws' after 97 ? because there was nothing at that time and there were many promises to introduce them .

[klubex99]

^

I think the second hand car market is going to crash first.

When I first came to work in Thailand 25 years ago you could not get a new saloon car for love nor money - prices second hand were often higher than the book price new.

For the following 15 years the availability of new cars always lagged the demand and again second hand prices stayed high.

In the past 10 years, accelerating over the past two years. we've seen the arrival of the 'Tent' - where ten years ago second hand cars where sold privately, basically stick a sign in the car or post on a notice board and the car would sell quickly - the market is now swamped with 'Tents'

Most of the cars in the 'Tents' have not been bought by the business but are placed there by the owner who gives the 'Tent' operator a cut.

There's already a glut into which the 'First Car' vehicles are soon to be added.

Prices will fall and given the amount of personal debt tied up in cars this is going to have an impact of very many Thais.

No link provided - go take a look at the 'Tents' full of second hand cars on a road side near you.... and on the outskirts of every other town in Thailand.

You're right.

Over the past few years, they are springing up like mushrooms after the rain. I live just off the main 205 out of Korat city, and there are probably half a dozen.

[GuestHouse]

did they ever introduce 'bankrupcy laws' after 97 ? because there was nothing at that time and there were many promises to introduce them .

One of the reasons why real estate became so cheaply available from the banks is the 'then' dysfunctional debt laws.

Very typically a Thai debtor would sit tight on the property he had submitted as a guarantee to a debt he had not paid.

Essentially the banks could not force a debtor to address their debts without going to court and getting the court to seize the debtors assets, the court would then auction the assets there times, each time reducing the asking price.

If the price was not met after the final auction the bank would then have the chance to buy the property at the price of the debt owed. So a Bht2M property could be bought by the bank for Bht50K debt - deals like this were frequent - too frequent, and the banks became awash with bad debt and property they could not clear.

The laws were changed to split the debt assets and allow them to be sold, again at auction.

But why would the bank auction get a better price than the court auction?

So some real bargains were bought real cheaply :-)

And within five years the property market had recovered and profits where realised.

Bless 'em.

No link provided - the smiles of happy memories on the faces of people who where there to enjoy the party is evidence enough.

[klubex99]

When I was in Prechuab Kiri Khan a month or so ago, we were staying in this small resort on the beach. We were the only people there, so had great attention.

The owner frequently commented that they bought the land and built the resort and were hoping to cash in big time when the whole strip of beach was developed and the tourists would come in droves.

I enquired to the owner how much was land valued at on the beachfront, he said no less than 10 million a rai. I said, but it is in the middle of nowhere, no facilities close by, with a dodgy road to get down to it, and not really a tourist destination, as a matter of fact, some days, we never saw a single person on the beach, Thai or farang.

I asked how much of it was for sale around here, he replied. 'all of it'. I couldn't make him understand that land is only worth, what people are willing to pay for it. None of the land was selling because the price was way over what someone was willing to pay. The only people likely to pay that is someone with plenty of cash who was determined to build their own private dream house on that particular beach.

I think the guy will be waiting a long time. I think he made a crazy investment. Because of the lack of amenities and the cost to get water and electricity to a property there. I would not pay more than 2 or 3 million. Even then I would have to think about it.

[OldChinaHam]

The financial trouble that the Thai economy faces is not one that is going to drive the Bht to the cheap rates we saw post 97 - if that's what you are hoping for to help your retirement/life in Thailand out then I'd make another plan.

The problems Thailand face are growing government debt/mismanagement of public funds and massively growing personal debt - coupled with the leaching of land from cash poor land rich Thais.

Those around in 97 will remember that when the economy crashed, vast numbers of Thais simply went back to the farm.

The farm has since been sold or lost to money lenders.

Open your eyes and look around, the one car policy is driving debt, credit cards are being handed out like sweeties, investment in same same box like properties that nobody wants to rent.

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Government policies are promising things will get better, things are not getting better for the vast majority of Thais.

And it is on the collapse of expectations that social problems start to arise.

These problems are not going to make your Bht cheaper, they are going to make life a lot harder for most Thai people and when that happens life here will change too.

Don't expect it to be for the better.

I find it interesting what you say about farms being lost.

Is this really true?

And, what percent have actually been lost?

I do not doubt what you say may be true.

I just find it interesting and would like to know more.

Everything GH says is true, another thing not mentioned is, many farmers had no farm to go back to.

Many thought the construction boom was going to last forever, hence sold their farm to come and work in construction in Bkk, when the bubble burst there was no place to go back to.

He is also spot on about properties, my mrs bought a condo for 1/5 th of the price it would have cost her a few years earlier.

Sorry I have no links, its one of those things, if you were here at the time you would remember.

I remember the Bangkok Post being full of adverts of buyers flying into to Thailand to buy everything, boats airplanes etc.

The garage sales in Thong Lor is something many choose to forget.

The BP used to have on page 2 a list of certain people where all their assets were listed, loved how much of the wealth was classified as "buddha amulets"

Right now a certain family member working for the Gov't borrowed 300k baht, pay it back at 3k per month for the next ten years, she is now pregnant and its doubtful if the loan will ever be repaid.

As I stated, I did not doubt the accuracy of the statement.

But I did want to hear more about it.

I was not here at the time.

I was in Taipei where I remember reading about the crisis in detail. I have never heard about how the crisis affected the farmers, or much about how it affected individual members of the society at a more personal level.

If you have a few links, or a book that discusses this aspect of the crisis, in English, yes to list it here. Thanks.

[farang000999]

I have made similar predictions to those stated in this thread and even a couple of years ago I felt like I could see it starting. Indicators like going to visit cousins of wife in Isaan and everyone is selling their land and buying stuff. last time they were trying to hit me up for stuff and this time they are awash in shiny electronics and bikes etc.

However, since 2008 the media has become filled with an endless amount of talk of boom-bust cycle and low interest rates anti-central banking banksters hyperinflation yada yada yada

We have all heard it and we should be questioning whether these visions we have are based on the subconscious of this very noisy media.

[farang000999]

A trend of my wife's friends is to get a gov job and then get a loan. many seem to be switching into the public sector for this purpose.

[klubex99]

I have made similar predictions to those stated in this thread and even a couple of years ago I felt like I could see it starting. Indicators like going to visit cousins of wife in Isaan and everyone is selling their land and buying stuff. last time they were trying to hit me up for stuff and this time they are awash in shiny electronics and bikes etc.

However, since 2008 the media has become filled with an endless amount of talk of boom-bust cycle and low interest rates anti-central banking banksters hyperinflation yada yada yada

We have all heard it and we should be questioning whether these visions we have are based on the subconscious of this very noisy media.

Well it all comes from tangible indicators that have shown to be the same indicators that created boom and bust scenarios in the west, one by one, like a house of cards it always comes tumbling down, and yes, inflation rises and interest cuts are 2 of the main fiscal stimuli to try to jump start things again. But it takes time, and I would say that possibly the Thai government are not experienced enough to handle the job in 10 years, and even much less interested in doing so.

No doubt the country will have to be handed back over to the democrats to sort the shit out.

Edited September 6, 2013 by klubex99

[baffledbaboon]

Well basically all the politicians still have no idea what is going on, meanwhile educators have given up trying to make sense of it all. Any quasi-feudalistic society is bound to fail, and Thailand is just a hop and a skip away from moderate socialism (just ask Thaksin). So basically yes, Thailand is screwed, in the next few years particularly..lets not even get into the seemingly random assignation of ministers. Military minister for education? Sure! Ranting aside, bangkok is my lovingly hated adopted home. Toyota fortuners are the most <deleted> drivers and motorbike taxi helmets are thinner than my stilettos.

[historyprof]

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Link please. Everyone I know is coming up roses.

http://mobile.reuters.com/article/idUSBRE97513Z20130806?irpc=932

"At 8.97 trillion baht ($287 billion) as of March, outstanding household debt was up 78 percent from 2008. It rose an average 13.6 percent a year between 2008 and 2012, twice the pace at which incomes grew. The ratio of debt payments to monthly income for Thai households was 33.8 percent in the first quarter, up from 29.6 percent in 2011, central bank data showed."

Perhaps everyone you know is planting their roses in a pile of debt manure - the'll grow for sure, but eventually the stink gets too much.

Thank you for the link. I would agree Thailand is in a mild recession. I don't see the tent sales here but then I don't live in Issan. I live in the South and everything seems fine here.

[historyprof]

I have made similar predictions to those stated in this thread and even a couple of years ago I felt like I could see it starting. Indicators like going to visit cousins of wife in Isaan and everyone is selling their land and buying stuff. last time they were trying to hit me up for stuff and this time they are awash in shiny electronics and bikes etc.

However, since 2008 the media has become filled with an endless amount of talk of boom-bust cycle and low interest rates anti-central banking banksters hyperinflation yada yada yada

We have all heard it and we should be questioning whether these visions we have are based on the subconscious of this very noisy media.

Well it all comes from tangible indicators that have shown to be the same indicators that created boom and bust scenarios in the west, one by one, like a house of cards it always comes tumbling down, and yes, inflation rises and interest cuts are 2 of the main fiscal stimuli to try to jump start things again. But it takes time, and I would say that possibly the Thai government are not experienced enough to handle the job in 10 years, and even much less interested in doing so.

No doubt the country will have to be handed back over to the democrats to sort the shit out.

Thailand is in no immediate trouble. Remember it has been through a couple of major wars with no real trouble. I did not feel confident in the democrats as we had a lot of trouble with them in power. Did you forget the riots?

[elektrified]

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Link please. Everyone I know is coming up roses.

http://mobile.reuters.com/article/idUSBRE97513Z20130806?irpc=932

"At 8.97 trillion baht ($287 billion) as of March, outstanding household debt was up 78 percent from 2008. It rose an average 13.6 percent a year between 2008 and 2012, twice the pace at which incomes grew. The ratio of debt payments to monthly income for Thai households was 33.8 percent in the first quarter, up from 29.6 percent in 2011, central bank data showed."

Perhaps everyone you know is planting their roses in a pile of debt manure - the'll grow for sure, but eventually the stink gets too much.

Thank you for the link. I would agree Thailand is in a mild recession. I don't see the tent sales here but then I don't live in Issan. I live in the South and everything seems fine here.

A "mild recession"? LOL come on. Things are much deeper than that. Look what happened in the USA, Europe, Japan, and so on when inflation hit and people were buying on credit at a feverish pitch, buying homes and automobiles from loans with payments they couldn't really afford, etc. Sure Thais are doing well right now and many are making money hand over fist. The problem is, that they are spending it faster than it is coming in. Look how many young people are driving brand new BMW's, carrying expensive mobile electronics, etc. The same thing is happening in Thailand that got other countries in trouble...i.e. banks loaning money much too easily. It can't go on like this. And, every day there are price increases imposed by the government, etc. The cost of everything is going up.

Edited September 7, 2013 by elektrified

[chiang mai]

I have made similar predictions to those stated in this thread and even a couple of years ago I felt like I could see it starting. Indicators like going to visit cousins of wife in Isaan and everyone is selling their land and buying stuff. last time they were trying to hit me up for stuff and this time they are awash in shiny electronics and bikes etc.

However, since 2008 the media has become filled with an endless amount of talk of boom-bust cycle and low interest rates anti-central banking banksters hyperinflation yada yada yada

We have all heard it and we should be questioning whether these visions we have are based on the subconscious of this very noisy media.

Well it all comes from tangible indicators that have shown to be the same indicators that created boom and bust scenarios in the west, one by one, like a house of cards it always comes tumbling down, and yes, inflation rises and interest cuts are 2 of the main fiscal stimuli to try to jump start things again. But it takes time, and I would say that possibly the Thai government are not experienced enough to handle the job in 10 years, and even much less interested in doing so.

No doubt the country will have to be handed back over to the democrats to sort the shit out.

Perhaps you could post some of those tangible indicators for us all to examine?

[ericnoodeeka]

Girlfriends brothers and sisters are all fully maxed out on their credit cards,mortgaged to the hilt,monthly payments on 1 Million Baht cars.Very similar circumstances to what happened 6-7 in the UK before the crash of 2007.Its only a matter of time before the same happens in Thailand.

well said, all my wifes work mates, who are all tax inspectors, are all in debt to the tune of millions on cheap loans from the government, with no real chance of ever paying them back before them die.it a strange situation. they just keep borrowing more and more.

the real question is, when they all, i mean millions government workers, stop paying how will this fare for the government???

[ericnoodeeka]

The financial trouble that the Thai economy faces is not one that is going to drive the Bht to the cheap rates we saw post 97 - if that's what you are hoping for to help your retirement/life in Thailand out then I'd make another plan.

The problems Thailand face are growing government debt/mismanagement of public funds and massively growing personal debt - coupled with the leaching of land from cash poor land rich Thais.

Those around in 97 will remember that when the economy crashed, vast numbers of Thais simply went back to the farm.

The farm has since been sold or lost to money lenders.

Open your eyes and look around, the one car policy is driving debt, credit cards are being handed out like sweeties, investment in same same box like properties that nobody wants to rent.

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Government policies are promising things will get better, things are not getting better for the vast majority of Thais.

And it is on the collapse of expectations that social problems start to arise.

These problems are not going to make your Bht cheaper, they are going to make life a lot harder for most Thai people and when that happens life here will change too.

Don't expect it to be for the better.

I find it interesting what you say about farms being lost.

Is this really true?

And, what percent have actually been lost?

I do not doubt what you say may be true.

I just find it interesting and would like to know more.

Everything GH says is true, another thing not mentioned is, many farmers had no farm to go back to.

Many thought the construction boom was going to last forever, hence sold their farm to come and work in construction in Bkk, when the bubble burst there was no place to go back to.

He is also spot on about properties, my mrs bought a condo for 1/5 th of the price it would have cost her a few years earlier.

Sorry I have no links, its one of those things, if you were here at the time you would remember.

I remember the Bangkok Post being full of adverts of buyers flying into to Thailand to buy everything, boats airplanes etc.

The garage sales in Thong Lor is something many choose to forget.

The BP used to have on page 2 a list of certain people where all their assets were listed, loved how much of the wealth was classified as "buddha amulets"

Right now a certain family member working for the Gov't borrowed 300k baht, pay it back at 3k per month for the next ten years, she is now pregnant and its doubtful if the loan will ever be repaid.

agree.

like i posted earlier, many of my wife friend at work getting cheap loans, 800,000 plus, pay back 3000 per month.

they will never be paid back,it easy to see.

[historyprof]

Thank you for the link. I would agree Thailand is in a mild recession. I don't see the tent sales here but then I don't live in Issan. I live in the South and everything seems fine here.

A "mild recession"? LOL come on. Things are much deeper than that. Look what happened in the USA, Europe, Japan, and so on when inflation hit and people were buying on credit at a feverish pitch, buying homes and automobiles from loans with payments they couldn't really afford, etc. Sure Thais are doing well right now and many are making money hand over fist. The problem is, that they are spending it faster than it is coming in. Look how many young people are driving brand new BMW's, carrying expensive mobile electronics, etc. The same thing is happening in Thailand that got other countries in trouble...i.e. banks loaning money much too easily. It can't go on like this. And, every day there are price increases imposed by the government, etc. The cost of everything is going up.

http://www.todayonline.com/business/thailand-slips-mild-recession-q2

Thailand’s economy contracted unexpectedly in the second quarter, slipping into a mild recession because of weakness in exports, domestic consumption and investment.

Southeast Asia’s second-largest economy shrank 0.3 per cent in the second quarter from the preceding three-month period, after contracting by a revised 1.7 per cent in January-March, data showed on Monday. The median forecast in a Reuters poll was for growth of 0.2 per cent.

Edited September 7, 2013 by historyprof

[ghworker2010]

The government have on a number of occasions over the past 18 months been late paying government worker salaries and has its head buried in a rice mountain trying to avoid awkward questions regarding balancing the books.

Meanwhile personal debt in Thailand has risen dramatically in the past five years.

So, the indications are that yes, Thailand is heading for trouble, if not already in it.

I wonder if OP wrote this whilst sitting in a bar in Pats and if Guest house knows what he is talking about....

Thailands debt as a proportion of GDP was only 44.5% in 2012. This is fairly low in comparison to other countries around the world.

I think we should worry more about the Japanese economy that is going broke. Recent reports suggests that its debt is 260% of GDP.....

[GuestHouse]

A massive personal credit bubble is swelling up - personal debt problems are common place and becoming more common.

Link please. Everyone I know is coming up roses.

http://mobile.reuters.com/article/idUSBRE97513Z20130806?irpc=932

"At 8.97 trillion baht ($287 billion) as of March, outstanding household debt was up 78 percent from 2008. It rose an average 13.6 percent a year between 2008 and 2012, twice the pace at which incomes grew. The ratio of debt payments to monthly income for Thai households was 33.8 percent in the first quarter, up from 29.6 percent in 2011, central bank data showed."

Perhaps everyone you know is planting their roses in a pile of debt manure - the'll grow for sure, but eventually the stink gets too much.

Thank you for the link. I would agree Thailand is in a mild recession. I don't see the tent sales here but then I don't live in Issan. I live in the South and everything seems fine here.

The problem is not 'mild recession',the problem is a combination between government debt, government mismanagement of the state funds and personal debt.

The government side of these problems is all over the press, you need to get into personal conversations with ordinary Thai people, or refer to the link above for details of the personal debt side of these problems.

Personal debt is, even before a 'mild recession' outstripping wage increases. One need not be an economist to work out the consequences of that.

As for a comparison between Isaan and the south - I've never lived in either parts of Thailand, so I can't comment - but nobody here is disputing what I say, and I take it that expats here are living in all parts of Thailand.

Perhaps there is no growth in the car sale 'Tents' around the southern provinces, but are you telling us that southern Thais have not been offered and have not taken up the easy credit that has been dished out all over Thailand?

[RAZZELL]

Those of us who moved assets into this "banana republic" in 2005 and went on to buy our cars and condo's with those funds realised a substantial profit subsequently, not only did the assets increase in value but the subsequent currency gain added over 40% profit and without being taxed.

Unless you've cashed out just a "Paper" profit

RAZZ

Edited September 7, 2013 by RAZZELL

[GuestHouse]

The government have on a number of occasions over the past 18 months been late paying government worker salaries and has its head buried in a rice mountain trying to avoid awkward questions regarding balancing the books.

Meanwhile personal debt in Thailand has risen dramatically in the past five years.

So, the indications are that yes, Thailand is heading for trouble, if not already in it.

I wonder if OP wrote this whilst sitting in a bar in Pats and if Guest house knows what he is talking about....

Thailands debt as a proportion of GDP was only 44.5% in 2012. This is fairly low in comparison to other countries around the world.

I think we should worry more about the Japanese economy that is going broke. Recent reports suggests that its debt is 260% of GDP.....

Read what I have said, not what you think I said.

Its government mismanagement of the national finances and climbing personal debt.

Ponder this.

Why are some nations allowed to run massive national debts and yet have access to cheap international finance, while other governments have relatively low debts but cannot access cheap international finance?

Here's a hint - confidence in fiscal management.

[chiang mai]

Those of us who moved assets into this "banana republic" in 2005 and went on to buy our cars and condo's with those funds realised a substantial profit subsequently, not only did the assets increase in value but the subsequent currency gain added over 40% profit and without being taxed.

Unless you've cashed out just a "Paper" profit

RAZZ

First car cashed out and profit already take, bought CRV new for 1.2 mill at 70 baht per Pound, sold two years ago for 670k and converted back into Pounds at 45, cost of ownership over seven years, GBP 2,250. CM Condo bought for 6.4 mill at 70, sold for 6.4 mill at 51, now renting.

[RAZZELL]

Those of us who moved assets into this "banana republic" in 2005 and went on to buy our cars and condo's with those funds realised a substantial profit subsequently, not only did the assets increase in value but the subsequent currency gain added over 40% profit and without being taxed.

Unless you've cashed out just a "Paper" profit

RAZZ

First car cashed out and profit already take, bought CRV new for 1.2 mill at 70 baht per Pound, sold two years ago for 670k and converted back into Pounds at 45, cost of ownership over seven years, GBP 2,250. CM Condo bought for 6.4 mill at 70, sold for 6.4 mill at 51, now renting.

Jammy sod!

RAZZ

[chiang mai]

Haven't seen this reported elsewhere so I'll add it here:

BOT reports, contrary to popular belief, that they spent USD3.37 billion in foriegn reserves since early August, defending the baht presumably, reserves still stand at 168 bill.

[GuestHouse]

Haven't seen this reported elsewhere so I'll add it here:

BOT reports, contrary to popular belief, that they spent USD3.37 billion in foriegn reserves since early August, defending the baht presumably, reserves still stand at 168 bill.

Not a suprise its not reported. Its in the same bag of denial as the secret rice export deals.

[farang000999]

Looking at the website Prakard. They list real estate in topics like on Thai Visa and then update the thread when it is sold. Seems like sales are still running hot.

Edited September 7, 2013 by farang000999

[farang000999]

http://www.thaivisa.com/forum/topic/666187-thailands-foreign-exchange-reserves-drop-usd-17-billion/

[ghworker2010]

Those of us who moved assets into this "banana republic" in 2005 and went on to buy our cars and condo's with those funds realised a substantial profit subsequently, not only did the assets increase in value but the subsequent currency gain added over 40% profit and without being taxed.

Unless you've cashed out just a "Paper" profit

RAZZ

ha ha chiang mai gloating about an asset that is NOT sold yet. Try selling the said condo or car and see how hard this is and how much you get..... then gloat. its the same with shares. Not until the money is in the bank can you brag...