Thailand has highest household debt: Finance Minister

[SoilSpoil]

It took me 15 years to get the inlaws and wife to understand that credit is the devil's invention. And belief me some heated arguments arose in those years. I never bulged and never gave in. 15 years of hard work, a simple but decent life within our budgets (arai na?) changed us from debt slaves into a family with property, land, cars, and enough money for our kids to study,all debt and mortgage free. Are we rich? Not at all, we just take our finances serious and everyone chips in and is involved in budgetting. Thailand's economy is going to be hit big times I'm afraid, high value Baht, high debt ratios and low domestic spendings. Combined with already 2 governments who's ideas about pubLic investment are irrelevant high speed trains, the omens are written on the wall. Better prepare yourself and pay off your debts as fast as you can.

I would like to ask the economists among us whether we are heading to a 97 like crisis?

[Searat7]

I wonder if the official household debt figures include loans received from loan sharks or family members. Might be worse than we think. There should be a personal finance course in the last year of high school but I wonder who could teach this.

One member said it might help if farmers were paid for 2013 rice. This was done long ago as it was one of the first priorities of the Prayut government.

[SOUTHERNSTAR]

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.

Let me think maybe because there are 1400 plus generals in the Thai army compared to 140 in the US armed forces, or maybe because their budget has had double digit growth while the country grew with single digits or maybe its the billions they spend on the BT 2000 or maybe its the aircraft carrier without aircraft or maybe it is the military that want to buy submarines in a sea thats 40 m deep. Bashing no, a reality check, yes. With an economy like this the military must tighten their belts and not buy more toys.

[Baerboxer]

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

Really - would you like to give the referenced examples please.

Or is this another of the tidbits you've read or heard somewhere you can't quite remember?

[baboon]

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

Really - would you like to give the referenced examples please.

Or is this another of the tidbits you've read or heard somewhere you can't quite remember?

Electrical goods for a start...

[baboon]

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

Really - would you like to give the referenced examples please.

Or is this another of the tidbits you've read or heard somewhere you can't quite remember?

Electrical goods for a start..

[paddyjenkins]

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.

I also find this kind of financial reporting intensely annoying. Nevertheless, even in 2014 Fitch warned on Thai household debt, which at that time was over 80% vs GDP and among the top 5 or 6 countries globally. It is now higher, even though it still isn't the worlds highest. Given the speed of its growth it has represented a large portion of recent Thai economic growth, thats part of the problem. The growth in debt just cant continue, which means GDP growth also cant continue in the absence of other drivers. Just like other countries with high household debt, such as the UK, have suffered boom and bust economies, Thailand will probably suffer to. So far its enjoyed a relative boom, now its probably time for a relative bust, together with any other country whose population believes credit cards are a short cut to a luxury lifestyle and whose banks and government are too stupid and morally corrupt to stop it.

[Jeremy50]

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

Unlikely, as iphone 7 does not exist.

[Theequation]

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 ???

They may have a large part of their budget allocated for Education, but I don't see them getting a good value on that money spent. After two years experiencing University graduates in their various workplaces, I'm not convinced they've actually been challenged to learn something, with the consequence of failure. They pay, they graduate, they have a 'degree' and are much more qualified to manipulate their smartphones and tablets and post on FaceBook, than actually know a thing about their freaking job.

[digibum]

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.

Thailand's problem is exactly what you describe. Thailand is heading towards a deflationary period. While deflation is almost never a good economic tool to use, inflation would only exacerbate the problem and eventually cause an even greater deflationary impact.

But this is a basic mentality of the Thai government (and business). They refuse to take the long view on anything and always look for the cheapest and easiest solution.

Sooner or later you have to pay the bill. Just like all of these households with debt, Thailand eventually has to admit that a lot of their perceived economic strength is an illusion.

If they don't let the baht weaken, exports are going to continue to decline which means eventually people are going to start defaulting on those home, car, and credit card loans. Then they're in a real mess. They won't be able to spend their way out of that.

[gandalf12]

I think with more money in the pockets of the Thai's will only increase the debt. Most Thai's have the live for today attitude

[Jeremy50]

It's only a matter of time before a crash. Until then it is just spend spend spend like there is no tomorrow, and most Thai people only plan about a day ahead anyway. The first rule of personal finance - If you don't have the money, don't buy it. I can't see what is so difficult about that maxim to understand. I have never had a credit card. Meanwhile the Thai baht is stronger than ever, no idea what that is all about.

[trogers]

It took me 15 years to get the inlaws and wife to understand that credit is the devil's invention. And belief me some heated arguments arose in those years. I never bulged and never gave in. 15 years of hard work, a simple but decent life within our budgets (arai na?) changed us from debt slaves into a family with property, land, cars, and enough money for our kids to study,all debt and mortgage free. Are we rich? Not at all, we just take our finances serious and everyone chips in and is involved in budgetting. Thailand's economy is going to be hit big times I'm afraid, high value Baht, high debt ratios and low domestic spendings. Combined with already 2 governments who's ideas about pubLic investment are irrelevant high speed trains, the omens are written on the wall. Better prepare yourself and pay off your debts as fast as you can.

I would like to ask the economists among us whether we are heading to a 97 like crisis?

No. This debt bubble is mainly from domestic sources. Crisis would be similar to what is happening in China.

[elgordo38]

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.

Teaching people how to use credit has disappeared with the appearance of cheap money. People seeing such low interest rates now and what looks like forever are scratching their heads and wondering why should they save for retirement? At these interest rates your money is standing still. This is another reason nobody world wide is socking money away for their Golden Years like us old mislead retirees did. How does one save for retirement anymore? Employers have washed their hands of in house pension plans they will only contribute to your 401K or other plans. Stock market? good luck

[digibum]

I wonder if the official household debt figures include loans received from loan sharks or family members. Might be worse than we think. There should be a personal finance course in the last year of high school but I wonder who could teach this.

One member said it might help if farmers were paid for 2013 rice. This was done long ago as it was one of the first priorities of the Prayut government.

Ahhh, one of my long-standing annoyances with Western education as well. I'm not anti-liberal arts but unless it's your major, chances are our societies would be much better off if Personal Finance 101 was a required course rather than giving students of the option of Music Appreciation 101 (a course I took), Astronomy 101, or basically any of your elective liberal arts courses.

As to whether household debt includes loan sharks, uhm, I doubt it. It's much worse than the official numbers.

[Bluespunk]

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

3-6 months? Doesn't seem that slow a process...

[elgordo38]

Western consumerism on a developing world budget.

This was the whole idea of free trade to lift developing countries up to our level. Well its happened look at all the new cars on the streets here. Meanwhile we in the west are now sinking down to their level and soon big business will have a level wage field so they can pick and choose where they want to do business. Its a mugs game at best slanted in the favor of big business. We are all beggars on the sidelines looking for a handout. Its only going to get worse.

[elgordo38]

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...

You got to be kidding. When I go for a KFC 10 baht cone I see well dressed Thai kids in front of me buy the more expensive ice cream concoctions. They have a wallet full of money and do not hesitate to pull out a 1000 baht note to pay. I just stare in amazement. The most popular vehicle here in Chiang Mai is the 4 door pickup truck.

[elgordo38]

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.

I can quote you 2 or 3 more doing the same thing. Its called living on a shoe string. Its a huge wobbling pyramid scheme waiting for a strong wind to blow it over. The Dow Jones hit another 293 point increase yesterday we are not there yet. Talk about a pyramid the stock market has to be right up there near the top reaching a top. Brace yourself it will be a wild ride down.

[digibum]

It's only a matter of time before a crash. Until then it is just spend spend spend like there is no tomorrow, and most Thai people only plan about a day ahead anyway. The first rule of personal finance - If you don't have the money, don't buy it. I can't see what is so difficult about that maxim to understand. I have never had a credit card. Meanwhile the Thai baht is stronger than ever, no idea what that is all about.

That is not the first rule of personal finance. Black and white views on debt are nearly as harmful as living on credit. There are times when using debt is wise and there are times when using debt is unwise. Knowing the difference is the first rule of personal finance.

And the difference is usually on whether you're purchasing an appreciating asset or a depreciating asset. A TV is going to depreciate in value so it's usually unwise to purchase a TV on credit. However, real estate, generally, is an appreciating asset so, assuming you're going to live there long enough to realize the appreciation, it's often a better to use credit.

I think what you may have been trying to say is that, "if you can't *afford* it, don't buy it." That's entirely different than saying not to buy it if you don't have the money. Most people don't have hundreds of thousands of dollars laying around to purchase real estate. And although recently we've seen a massive depreciation in real estate prices in Western countries, that was mostly due to a bubble created by too easy access to credit by people who could not afford the property they were purchasing. Overpaying for an asset with cash is nearly as bad as paying with credit.

And while you're proud to have never have owned a credit card, wouldn't you be better off today if you had a credit card that had 2% or 3% cash back and you used it for all your expenses and paid it off at the end of every month without incurring any credit charges? Personally, I prefer the milage cards so I use them to pay for everything and pay the bill at the end of the month. I get 1 - 2 free international roundtrip flights out of it. Plus, if you know how to work the bonus offers, you can really rack up the points. Last one I did was 50,000 miles if I spent $3,000 USD within 3 months on the card. I spent the $3K on some things I had to buy anyway, paid off the card, and nearly earned a free roundtrip flight out of it.

[trogers]

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.

And this young man would discover later that he would not have money left to buy his date a meal at McDonald's.

[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.

Let me think maybe because there are 1400 plus generals in the Thai army compared to 140 in the US armed forces, or maybe because their budget has had double digit growth while the country grew with single digits or maybe its the billions they spend on the BT 2000 or maybe its the aircraft carrier without aircraft or maybe it is the military that want to buy submarines in a sea thats 40 m deep. Bashing no, a reality check, yes. With an economy like this the military must tighten their belts and not buy more toys.

Another reality check, your agenda does not include the RICE--Tablets schools,--Water management--50 trips abroad by the sister of the stand in PM abroad ??--- agree to the point about toys etc BUT get real with YOUR balance of the economy and why it is in such a state------

The armed forces here have always enjoyed their toys so why pick on the PM to try to justify your argument.

[digibum]

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

3-6 months? Doesn't seem that slow a process...

Have some understanding. They just admitting that there is a problem. For the Thai government, that's a huge step. The next step will be admitting how severe the problem is but it's going to take them some time to come to grips with it. :-)

On a certain level, you have to take some pity on new governments who inherit problems built up from previous governments. Not just in Thailand but you see the same thing in the US due to the length of the presidential term vs. the length of an economic cycle. All of this was going to happen sooner or later no matter who was in power. In fact, Thailand's problems are decades in the making. When this thing goes over the cliff - and it probably will - the guy left holding the bag is the one everyone will remember.

[petermik]

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

Well at least he got one thing right.

And the Baht is strengthening daily

[varun]

And here you have all manner of pushy sales staff from Citi, Krungsri and others in the shopping malls luring people to sign up for credit cards.

What does he expect?

When you get the chance, take a peek into the wallet of a typical working to middle-class Thai; you will see a plethora of bank cards, at least 2-3 credit cards.

Given that the income threshold for getting a credit card is quite low (15k or so), it doesn't surprise me at all.

[digibum]

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.

Let me think maybe because there are 1400 plus generals in the Thai army compared to 140 in the US armed forces, or maybe because their budget has had double digit growth while the country grew with single digits or maybe its the billions they spend on the BT 2000 or maybe its the aircraft carrier without aircraft or maybe it is the military that want to buy submarines in a sea thats 40 m deep. Bashing no, a reality check, yes. With an economy like this the military must tighten their belts and not buy more toys.

Another reality check, your agenda does not include the RICE--Tablets schools,--Water management--50 trips abroad by the sister of the stand in PM abroad ??--- agree to the point about toys etc BUT get real with YOUR balance of the economy and why it is in such a state------

The armed forces here have always enjoyed their toys so why pick on the PM to try to justify your argument.

I don't think he said anything about the PM. He seemed to be referencing the army's budget. And why would his agenda include the rice scheme, tablets, Yingluck's travels or anything else that happened in the past? Yes, those may be contributing factors (I think you really betray your agenda by mentioning 50 trips which are a pittance in terms of the GDP of Thailand) but Thailand's problems can only be solved by the actions you can take today. You can cut the army budget. You cannot go back and change money already spent. Unlike everything that you mentioned, the Thai military still exists so it is logical to point out the excesses as those excesses can still drag the economy down.

[SoilSpoil]

It took me 15 years to get the inlaws and wife to understand that credit is the devil's invention. And belief me some heated arguments arose in those years. I never bulged and never gave in. 15 years of hard work, a simple but decent life within our budgets (arai na?) changed us from debt slaves into a family with property, land, cars, and enough money for our kids to study,all debt and mortgage free. Are we rich? Not at all, we just take our finances serious and everyone chips in and is involved in budgetting. Thailand's economy is going to be hit big times I'm afraid, high value Baht, high debt ratios and low domestic spendings. Combined with already 2 governments who's ideas about pubLic investment are irrelevant high speed trains, the omens are written on the wall. Better prepare yourself and pay off your debts as fast as you can.

I would like to ask the economists among us whether we are heading to a 97 like crisis?

No. This debt bubble is mainly from domestic sources. Crisis would be similar to what is happening in China.

Yes but the Yuan is only getting stronger and stronger. And so is the Baht. Doesn't a debt bubble lead to a devaluation of the currency? I am not really pleased with the present price of the Baht!

[digibum]

They may have a large part of their budget allocated for Education, but I don't see them getting a good value on that money spent. After two years experiencing University graduates in their various workplaces, I'm not convinced they've actually been challenged to learn something, with the consequence of failure. They pay, they graduate, they have a 'degree' and are much more qualified to manipulate their smartphones and tablets and post on FaceBook, than actually know a thing about their freaking job.

Education in Thailand is a scam. A huge scam.

There are three classes of people in Thailand - Those who get an education simply to they have something to hang on the wall of the office they would have gotten anyway, those who are trying to pull themselves up by getting an education, and those who know an education is of no use to them.

Obviously the first group of students could care less. Daddy is going to make sure they get a good job. University is merely a formality.

The second group also realize how the system works and realize that without connections their diploma will get them a job might get them a job as a hotel receptionist, a retail clerk in a department store, or some menial office job (or perhaps as a teacher) where they'll be taking orders from the people in the first group.

The last group - the vast majority of people in Thailand - just doesn't care. An education is a waste of their time as far as they're concerned. They already know their future is driving a taxi, working on a farm, or some other job that requires no education. They're resigned to the fact that that is just how the system works.

The lack of upward mobility in Thailand is what is harming education. The government can keep throwing money at education but unless an education has any value, it's a pointless endeavor.

I've never seen so much waste of education for the sake of maintaining sexism and cronyism. I have a friend who comes from a fairly wealthy family. She got her undergrad degree in Thailand and did her MBA in the UK. With that she was able to get a job as a regional manager at a fast food company in Thailand. After several years of stagnating in that role she quit and became a manager of a restaurant. A job that anywhere else in the world, you could work your way up from the bottom and do in less time than it took her to earn her MBA.

If there was better upward mobility in Thai society, education would improve and the economy would explode in productivity.

[trogers]

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

Well at least he got one thing right.

And the Baht is strengthening daily

Law of Relativity. The Baht is not strengthening. The other major currencies are depreciating, due mainly to QEs.

[Laughing Gravy]

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.

Let me think maybe because there are 1400 plus generals in the Thai army compared to 140 in the US armed forces, or maybe because their budget has had double digit growth while the country grew with single digits or maybe its the billions they spend on the BT 2000 or maybe its the aircraft carrier without aircraft or maybe it is the military that want to buy submarines in a sea thats 40 m deep. Bashing no, a reality check, yes. With an economy like this the military must tighten their belts and not buy more toys.

Another reality check, your agenda does not include the RICE--Tablets schools,--Water management--50 trips abroad by the sister of the stand in PM abroad ??--- agree to the point about toys etc BUT get real with YOUR balance of the economy and why it is in such a state------

The armed forces here have always enjoyed their toys so why pick on the PM to try to justify your argument.

Maybe this person mentioned I because he is the chosen one who will bring happiness and smiling faces to all. The fact that many will be broke and in debt for the rest of their life isn't important.