Thai village funds open to abuse, NPLs 'quite high'

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SPECIAL REPORT
Village funds open to abuse, NPLs 'quite high'
Hataikarn Treesuwan
The Nation


A file photo shows Prime Minister Yingluck Shinawatra during the village fund relaunch ceremony.
If fund was not properly managed it would not have lasted 12 years, says official

BANGKOK: -- The government has spent more than Bt77 billion over the past two years on its four key populist projects. However, some experts have cast doubts on the official percentage of non-performing loans (NPLs) generated by the funds, saying the real figure is much higher.

The four funds in question include the National Village and Urban Community Fund, the Village and Community Capacity Development Fund, the Women Empowerment Fund and the Urban Development Project.

So far, the Yingluck Shinawatra government has allocated Bt44.7 billion of the Bt79.2 billion it earmarked for the National Village and Urban Community Fund, and given Bt29.8 billion of the Bt30 billion it set aside for the Village and Community Capacity Development Fund. The Women Empowerment Fund has received Bt3 billion of the Bt7.7 billion allotted for its 39,586 projects, while the Urban Development Project has received Bt16.1 million.

Since the National Village and Urban Community Fund went into operation 12 years ago, it has accrued Bt10 billion in NPLs and another Bt62 billion in pending loans. The government will assess the other funds next month.

Natee Khlibtong, CEO and secretary-general of the National Village and Urban Community Fund Office, said these four funds did not overlap as each had its own specific purpose. He explained that many villagers sought loans to purchase agricultural tools and materials, even though some critics have been saying that farmers borrow money to purchase unnecessary items like mobile phones, pick-up trucks and motorcycles.

"If the village fund was not properly managed, it would not have lasted for 12 years. There is Bt206 billion revolving in the fund at present, and if it had not been managed well enough, it would have been lost. Sixty to 70 per cent of the money is still available, with the level of NPLs at no more than 5 per cent," he said.

He went on to explain that the high level of NPLs was based on a difference in accounting criteria. For instance, he said, the Comptroller-General's Office turns a loan into an NPL from the first day that a borrower fails to finance the interest. The fund, on the other hand, does not change the loan's status if the borrower asks for an extension on repayment.

Natee said that legal action was being taken against those who were refusing to pay back. More than 5,000 cases are currently in court with Bt400 million at stake - a small sum compared to the fund's total value of more than Bt200 billion.

As for irregularity in the accounting, he said some of it could be blamed on the people who are asked by villagers to submit project plans on their behalf. He said these project writers are usually local government officials or those who are closely related to members of the fund committee. Also, he said, officials found to be irresponsible would not be selected as committee members.

Somchai Jitsuchon, research director for macroeconomic development at the Thailand Development Research Institute, meanwhile, expressed concerns about how the money was being spent and what impact it was really having despite the so-called promise of a low-interest loans for poor people.

Instead, he said, the government was in a better position to explain why so many funds were needed and what tangible benefits they had. He also questioned whether those seeking SML loans truly represented the local community as he cited research that less than half of the villagers seeking loans had truly benefited over the past decade.

Somchai also questioned the 5-per-cent NPL figure, asking how non-performing loans were calculated. For instance, he said, some villagers borrowed from loan sharks to pay what they owe the village fund - a move that would keep the number of NPLs artificially low and allow them to become eligible for a government loan the following year. "The real NPL figure is most probably between 30 and 40 per cent," Somchai said, as he called on people to monitor various government funds and find out how they are being used and repaid.


-- The Nation 2013-09-09

[lujanit]

TIT. Live, in your face corruption at work. Please pay us a visit so we too can show you how to achieve 'irregular accounting' to your benefit, at a price of course. BTW my buffalo is sick.

[noitom]

The newspaper is just now discover corruption, fraud, and abuse in Thai village funds.

[CelticBhoy]

Somchai Jitsuchon, research director

Just knew there would be a Somchai lurking in this one.

[trainman34014]

Most Village Leaders in this part of the country have renewed their Merc's and/or BMW's in the last year or so. One was caught having 2'' water pipe replacements dug in instead of the 4'' pipe replacements that should have been used, one of the many local scams worth mentioning. Every year our 'Leader' holds a huge party at his Mansion and invites everyone to eat and drink all they want; the money for this is redirected Village funds for 'projects'. The locals think he is a wonderful man and very clever so, as long as they get their free food and beer they don't care what he does the rest of the year.

When you have a large part of the population that are brain washed educated to act like sheep and never challenge 'authority', and indeed look up to swindlers and cheats all of their life, there will never be any improvements that are beneficial to the country as a whole.

[klauskunkel]

Yes, let the fleecing of the sheep continue...actually, let's celebrate, embrace and promote it!

[MoonShadow]

Its all about how you define a non-performing loan; there are many agreed international accounting standards on this so why is it so hard.....for sure Moody's and S & P will use the international standards to arrive at the correct figures; so should BOT!!

[NongKhaiKid]

Most Village Leaders in this part of the country have renewed their Merc's and/or BMW's in the last year or so. One was caught having 2'' water pipe replacements dug in instead of the 4'' pipe replacements that should have been used, one of the many local scams worth mentioning. Every year our 'Leader' holds a huge party at his Mansion and invites everyone to eat and drink all they want; the money for this is redirected Village funds for 'projects'. The locals think he is a wonderful man and very clever so, as long as they get their free food and beer they don't care what he does the rest of the year.

When you have a large part of the population that are brain washed educated to act like sheep and never challenge 'authority', and indeed look up to swindlers and cheats all of their life, there will never be any improvements that are beneficial to the country as a whole.

How true ! Village funds are nothing more than the headman's personal bank account.

[CelticBhoy]

Most Village Leaders in this part of the country have renewed their Merc's and/or BMW's in the last year or so. One was caught having 2'' water pipe replacements dug in instead of the 4'' pipe replacements that should have been used, one of the many local scams worth mentioning. Every year our 'Leader' holds a huge party at his Mansion and invites everyone to eat and drink all they want; the money for this is redirected Village funds for 'projects'. The locals think he is a wonderful man and very clever so, as long as they get their free food and beer they don't care what he does the rest of the year.

When you have a large part of the population that are brain washed educated to act like sheep and never challenge 'authority', and indeed look up to swindlers and cheats all of their life, there will never be any improvements that are beneficial to the country as a whole.

How true ! Village funds are nothing more than the headman's personal bank account.

One in Mukdahan got too greedy recently and is doing time in the local nick.

Surprised a few that did.

[thequietman]

Wifey got a loan from this fund. 30000 baht over 6 months at 50 baht interest. that's good. will be paid back end of this month. I might consider hitting them for a load myself. Wife says I can apply. Our village head is one of the few good pu yai's. no money gone missing. It did happen some years back by another lady who stole the credit union funds. No jail time but she has to pay the money back or she goes to jail.

[Mampara]

Of course they will abuse funds, They are not businessmen, they are simple farmers at heart with no means of controlling huge funds. The first thing they want when getting a huge lump sum is to improve their status, hence the start of cash abuse.

what should actually happen when any village (or Government body for that matter) is allocated a budget is that it should all go into one account that is controlled by a procurement department (or state expenditure department) any purchases should be paid directly to the supplier after scrutinizing by its staff members. all large purchases over 10,000 should be made after submitting three quotes from the village. the decision of who gets the purchases should be made by the committee and not the village headman. the benefit of doing this is cash flow control, minimum corruption by suppliers, and furthermore village protection, should there be any irregularities then the responsibility would fall on the procurement body because they haven't done their job properly.

To put the "feather on the cap" is that this function should be controlled by the opposition party, by doing this I can almost guarantee minimum corruption.

[selftaopath]

We live in a rural village in Isaan. I asked the Mrs. if she knows a/b said funds or where/if money from the govt benefits the village/women. She shook her head NO. When I ask why a road stays delegated etc. I get a "no money" response. ?????? Do all village Chiefs have nice houses and new vehicles???

[NongKhaiKid]

Most Village Leaders in this part of the country have renewed their Merc's and/or BMW's in the last year or so. One was caught having 2'' water pipe replacements dug in instead of the 4'' pipe replacements that should have been used, one of the many local scams worth mentioning. Every year our 'Leader' holds a huge party at his Mansion and invites everyone to eat and drink all they want; the money for this is redirected Village funds for 'projects'. The locals think he is a wonderful man and very clever so, as long as they get their free food and beer they don't care what he does the rest of the year.

When you have a large part of the population that are brain washed educated to act like sheep and never challenge 'authority', and indeed look up to swindlers and cheats all of their life, there will never be any improvements that are beneficial to the country as a whole.

How true ! Village funds are nothing more than the headman's personal bank account.

One in Mukdahan got too greedy recently and is doing time in the local nick.

Surprised a few that did.

I'll bet but probably nothing to do with his pocketing too much of the funds as the real hanging offence is not spreading it around.

We are so used to the opinion poll results that Thais don't mind corruption as long as the spoils are shared.

[tingtong]

these funds are a good way to buy votes/voters...without actually doing it direct...

if we go away, so will your loans dry up - better you vote for us!!

[bkk_mike]

I believe the phrase is "extend and pretend", when explaining that NPLs aren't really NPLs. But it's a global thing, not just Thailand.

[winstonc]

our village in ubon was getting a new road finally done 3 months ago 4 km.length..37ft actually laid funds dried up .....amazing thailand..now the rains have started its very dodgy driving now..

[Thaddeus]

We live in a rural village in Isaan. I asked the Mrs. if she knows a/b said funds or where/if money from the govt benefits the village/women. She shook her head NO. When I ask why a road stays delegated etc. I get a "no money" response. ?????? Do all village Chiefs have nice houses and new vehicles???

Our Poo Yai looks and lives like a pauper, but I think that is because he is never sober long enough to have a coherent thought.

[Moruya]

Have troughs will snuffle

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

[ggold]

while I can't say there is no corruption, the fact is many of the villagers rely on this money to help them buy seeds and chemicals and fertilizers for the next crop. I think the guy chosen to do this has to be trustworthy or the villagers would kick up really bad. I can only say this about the village I live in, I can't speak for what goes on in other villages. they have to pay a very low interest on the amount they borrow, but at least they get a chance at farming a crop, which otherwise I dare say they would not be able to.

for those that say it is a vote buyer, I think you will find that while Thaksin introduced this the Dems when in power continued it. It may also have been responsible for lifting northern farmers out of the poverty they were in. Even to the point where the local infrastructure has improved more in the last 15 years than before that time. Again I can only speak of what I see in my locale.

[alexander69]

No money no rice harvest,,,,,,,,,,,,its like betting on the horses