Thailand has highest household debt: Finance Minister

[Thaivisa News]

Bangkok: – The country’s household debt soars to 80 per cent in seven years, a highest increase in the world, Finance Minister Sommai Phasee said.

The soaring debt is one of the major economic woes and the government has to rule out consumption-led stimulus measures, Sommai said.

Past populist policies have been seen as a quick fix for economic slowdown but this has also further put families into debt, he said.

Plagued by debt-ridden families, the government could not rely on consumption to resolve economic doldrums, he said. Public investment remains the only option to stimulate the economy under the circumstances, he added.

The government has projected slow economic recovery because it takes time to implement public investment projects, he said.

The country’s exports are expected to experience low growth due to the world’s weak demands.

The finance minister has conceded that Thai economy is in trouble and that economic revitalisation would not be speedy.

He said the government is pinning its hopes on speeding up public investment projects at national and local levels. Spending through investment and routine expenditures would inject money into the economy.

This would, in turn, help families to repay loans and to have more spending money for consumption.

The government expected the economic recovery to be a slow process taking more than three to six months.

In order to boost public spending, the Finance Ministry is mulling ways to increase the efficiency of tax collection in order to finance investment projects.

Presently, the country’s tax collection stands at 18 per cent of GDP, a lowest rate in the world.

In developed economies, tax collection is about 40 per cent of GDP.

Inefficient tax collection has thwarted the government’s options in using fiscal measures to remedy the economy.

[HeijoshinCool]

He said the government is pinning its hopes on speeding up public investment projects at national and local levels. Spending through investment and routine expenditures would inject money into the economy.

This would, in turn, help families to repay loans and to have more spending money for consumption.

Nope. If it even succeeded it would only cause the average Thai to go out and borrow more.

You can't give people things without teaching them first how to properly use them. Look at what happened when you gave them automobiles and trucks, without first teaching them how to drive. Now you've been tempting them with credit card marketing where everyone is handsome and beautiful and smiling, without teaching them about compound interest.

You are way out of your depth, Mr. Minister.

[kotsak]

I bet they would still buy an iPhone 7 even if they couldn't afford it :>

[baboon]

... Meanwhile, back in the west, potential tourists to Thailand can buy brand name merchandise cheaper than the knockoffs at markets there...

[NongKhaiKid]

Highest household debt in 7 years.

If certain blokes on motorcycles didn't have such dark visors I'd be able to see their happy smiles.

[Commerce]

"The finance minister has conceded that Thai economy is in trouble..."

Well at least he got one thing right.

[Ricardo]

Time for a dose of good-old-fashioned inflation, to reduce the real cost of repaying those debts, or perhaps a banking-crash ?

And farangs should start saving now, for those inevitable appeals for family-help, which will arrive from distant-relatives shortly !

Repeat after me, chaps, "Mei Mee Satang, Mia Chob Shopping !"

Or, for the educated/better-off, "That's very unfortunate, and I have the greatest respect & sympathy for your distressing situation, I will discuss whether I can help with my financial-adviser in the B.V.I., and get back to you sometime next year"

[Schillaci]

Western consumerism on a developing world budget.

[JOC]

>>In order to boost public spending, the Finance Ministry is mulling ways to increase the efficiency of tax collection in order to finance investment projects.<< Quote

So according to Thai logic, decreasing peoples disposable income will make them able to spend more!!

Makes sense........................

[trogers]

Thais are learning from farangs - 30-year house mortgage, 10-year car loan and a few credit cards.

If one cannot handle debts, commit suicide.

[ezzra]

No surprise at all here, every farmer and lay man knows that if the form a long procession

of hundreds of cars, block highways and sit in months on end rendering major roads useless,

they will get the government to hand out freebees and or moratorium on debts..

Such it it in this country that people do not know or care how to manage their financials,

or have the smallest fiscal responsibilities as far as their money concern, they spend way

more than what they earn, the average Thai person wouldn't have more than a 100 baht

in his/her wallet...

[JOC]

>>Presently, the country’s tax collection stands at 18 per cent of GDP, a lowest rate in the world.<<

Of course that has nothing to with previous and current governments unwillingness to tax the really rich.

The untouchable remains exactly that, no matter the color of the leadership!!

[JOC]

Thaitanic is heading for the iceberg at full steam.

And everybody on the bridge are acting like headless chickens!!

[HeijoshinCool]

Thaitanic.

That's a good one.

[kotsak]

Thaitanic.

That's a good one.

Goes well with Thighland

[bangon04]

"He said the government is pinning its hopes on speeding up public investment projects at national and local levels. Spending through investment and routine expenditures would inject money into the economy."

or to put it another way, put large parts of the national infrastructure under Chinese control, as long as the "commission" is adequate.

[SuwadeeS]

The ARMY needs a lot of budget. ......

[soalbundy]

It might help if the government would finally pay a lot of farmers the money for the 2013 harvest, could help with debt reduction but i'm only guessing.

[marko kok prong]

That tax figure is astounding.

[Commerce]

That tax figure is astounding.

And that is based upon the assumption that those who are legally obliged to pay taxes actually do so.

[mike324]

I bet they would still buy an iPhone 7 even if they couldn't afford it :>

I use a iPhone 4, most of the office ladies have Iphone 4, 5 or Samsung that are higher models compare to my phone. They always ask me why I don't change my phone, they just because you are "rich" you should be keeping up with the trend. They like to tease me how slow my phone is and how I always miss my message they sent through Line app because my Line app doesn't notify me right away (something wrong with my phone). But it still makes and takes calls....

[paddyjenkins]

Time for a dose of good-old-fashioned inflation, to reduce the real cost of repaying those debts, or perhaps a banking-crash ?

And farangs should start saving now, for those inevitable appeals for family-help, which will arrive from distant-relatives shortly !

Repeat after me, chaps, "Mei Mee Satang, Mia Chob Shopping !"

Or, for the educated/better-off, "That's very unfortunate, and I have the greatest respect & sympathy for your distressing situation, I will discuss whether I can help with my financial-adviser in the B.V.I., and get back to you sometime next year"

I doubt inflation will help, Thailand is already pricing itself out of the market and it as an export driven economy. In my view the only only way will be to somehow gradually weaken the baht, in order to maintain foreign currency inflows and remain competitive, because if exports keep falling their currency wont just weaken, it will collapse.

Public spending wont work until tax collection rises but in a country as corrupt and inefficient as Thailand that will be a tall order. Thailand has few choices, they need to minimize negatives rather than find new positives, because they've bled everything they had totally dry.

[trogers]

Do like China, give out more loans through state banks...

[ginjag]

The ARMY needs a lot of budget. ......

Amazing post from a newbie ??? Target the army---I wonder why ?? another one joins the bashers.

Of course it is the army that created this mess---ha ha ha-----go and have a strong coffee.

[ginjag]

Thaitanic is heading for the iceberg at full steam.

And everybody on the bridge are acting like headless chickens!!

And not forgetting a few hundred headless chickens in the PTP set up, amazing in 8 months how peoples memories die.

[baboon]

The ARMY needs a lot of budget. ......

Amazing post from a newbie ??? Target the army---I wonder why ?? another one joins the bashers.

Of course it is the army that created this mess---ha ha ha-----go and have a strong coffee.

I think you are making a little too much of the above post. The army does have a very large budget and he did not blame them for the crisis. I'll have a coffee if you've got the kettle on, though...

[Docno]

Headline is wrong and misleading... suggests that Thailand has the highest household debt in the world. No stats to support that. Instead, the article claims that household debt has increased the fastest in the world. That's possible, but what's the source report? Given such a politicised climate, we can't just accept something along the lines of "the Finance Minister says...". Also, growth rates can be misleading because they all depend on what your starting point is: going from 1% to 2% represents a 100% increase, while going from 50% to 75% represents only a 50% increase (though clearly the latter would be more concerning). p.s. I'm not disputing that HD is a serious problem (and an increasing one), but simply saying that I'd like to see the numbers.

Edited March 31, 2015 by Docno

[ginjag]

True story.

A young man in Bkk with a reasonable job 20k has been scrambling around for 3 months to get the money for a Toyata Yaris he ordered, needing around 50K deposit, He was well happy with the terms offered 9,500 Bht a month for 7 years.

4,000 bht for room rent, petrol and upkeep of the Yaris, his food for the month, and drink + plus pleasure. SAVINGS ???? NIL.

Not forgetting internet for facebook and, i phone.

[ginjag]

The ARMY needs a lot of budget. ......

Amazing post from a newbie ??? Target the army---I wonder why ?? another one joins the bashers.

Of course it is the army that created this mess---ha ha ha-----go and have a strong coffee.

I think you are making a little too much of the above post. The army does have a very large budget and he did not blame them for the crisis. I'll have a coffee if you've got the kettle on, though...

Not really mate, everyone is aware of the budgets here in Thailand, Education one of the highest in the world Population wise---and so on.

He indirectly implied that it was a main reason or else why did he not speak about a million other budgets. It was the ARMY he was targeting was it not ??? no one elses fault ???

Edited March 31, 2015 by ginjag

[zakk9]

Many use cash withdrawn on a credit card to pay interest on another credit card and so on. When they cannot get more credit cards, they borrow in the gray market to even higher interest rates than the 30-50% they pay on the credit card debts, depositing the ATM card with the loan shark as collateral. A financial director in an industrial company I just talked with says that the number of people caught in this process approaches 50% of low to medium income workers.

Sooner or later, something will break, and the Thai baht will probably take a serious downturn.