Typical Story Of Poor Rural Thais

[fanciman]

How would this story usually begin and end?

Does it happen often? Enough to be a social problem?

Are there vested interests keeping it going? How do they benefit?

What is the way out for most people?

What can be done to help them?

[Rinrada]

Wouldnt just limit it to rural Thais since nowadays most people seem to be under the clutches of moneylenders

We however make them sound respectable by calling them BANKS....but a leech by any other name is still a.......

Notice how they are all rushing to give everyone $2 for a pound......

[Farma]

One of the many cases I know of involved a family needing money to put their daughter through university.

They offered a parcel of land to the money lender. The lender kept hold of the land title, used the land and kept all profits from the crops instead of charging the family interest on the loan.

The family slowly repaid the original loan amount for nearly 10 years before it was paid in full. Their daughter had graduated from university well before the loan was repaid.

The lender made a huge profit from all those years harvesting the land.

Bank loans are nearly impossible to obtain for a lot of the poorer folk.

[Thaddeus]

Bank loans are nearly impossible to obtain for a lot of the poorer folk.

A loan from the Thai Farmers Bank is obtainable, as long as they have the title deeds to some land.

For the very poor with nothing of value, they are at the mercy of the real loan sharks. I've heard tell that they are made to pay interest rates of 10% a month and are in debt for years.

A close relative of the wife (sisters Father-in-law) needed some medical treatment a while back. He asked if he could borrow 10k Baht and pay us back at 1.5k a month for 10 months, with his Army pension he could afford that and that figure would save him quite a bit on what the sharks were quoting him.

We lent him the money on one condition..... he paid back 1k a month for 11 months (wifey insisted on that, I didn't want to charge any interest at all but, she said any other relatives would then start asking for the same deal)

//edit/clarity

Edited December 1, 2006 by Thaddeus

[GuestHouse]

The answer to this problem in the UK was the Co-operative, Building and Friendly Societies they provided the means by which ordinary working people in the UK were able to get affordable loans and laid the foundations of wealth which Britain enjoys today.

They came about through 'Collectivism' an ideology so far removed from Thai cultural values that I can't ever see Thais enjoying the liberty and benefits it brings.

But I don't gloat, selling out for a fast buck has destroyed these institutions in the UK and is laying the foundations for a two tier society of the kind the UK hasn't seen since the 19th century.

So we can hardly preach the lessons of history to Thailand when we've failed to learn them ourselves.

Edited December 1, 2006 by GuestHouse

[Farma]

My wife insists on charging interest on loans to her family for the same reason your wife does.

The family get a cheaper rate than others who ask. The others are usually work collegues who need a quick loan for a month or two. She reluctantly lends to them but only if she knows them well and is assured of repayment.

The people asking for loans from my wife generally offer the large repayments when asking for a loan.

[psychedelix47]

Problem is, as in my gf's family: they are in debt to their eyeballs already, banks, the village cooperative, you name it. The last resort is to hand landtitles over to moneylenders.

They are not wasteful people, good-hearted guys who live by the Buddhist precepts, a lot can be learned from them (except for one of the granuncle's alc problem) Small scale farming just isn't profitable enough to provide the small luxuries in life and see the kids through education.

My gf, as she's finished university, is paying monthly installments for the family, that seems normal in Thailand. Good karma for her future.

[chownah]

People all over the world have differing degrees of money managing abilities.....some people are really really bad at managing money.....these people are often poor....its not that they are being victimized but that they simply don't have money managing skills.....they are not able to see that their ability to repay a loan is simply not there.

Sometimes people borrow money because of a necessity but I think that the majority of debts incurred in Thailand are for unnecessary things.....this is fine but buying unneccessary things keeps you on the edge financially so that when a problem arises your resources are all used up and you can't cope.....this is called poor money management and happens all over the world.

Chownah

[KireB]

Just a question: how often do you see Thai people paycash at Lotus or Big C?

My experience here in Thailand is that the Thais, in general are practically unaware of financial planning or money handling! Credit-card debt, mortgage debts, car loans, etc.....

When wil the bubble burst? Under the Thaksin Government the motto was: buy, spend and borrow!

Mai dee!

[brahmburgers]

I'm directly involved with some very poor immigrants from Laos (not a girlfriend/wife connection). They're two families, each with husband, wife, teenage daughter. I'm very low income, but because I'm farang, I'm expected to pay for their important things (like medical emergencies and their daughters' education) - which I do when I can. Ironically, though they're dirt poor, they insist on buying brand new when it comes to motorbikes and mobile phones. The m.bike is paid on time, which consumes about 4/5 of their monthly income, but they're Asian, so there's only one way to perceive of having such a thing - it's got to be purchased brand spanking new. In contrast, they cook food with wood fires because they can't afford to refill a bottle of propane for a cookstove (both of which I bought for 'em). Another irony is my motorbike and mobile phone were both bought 2nd hand and are archaic in comparison to theirs. For special occassions, they (like all Asians) absolutely have to travel to be with relatives, even though such travels consume nearly all their tiny bit of cash on hand.

[Heng]

How would this story usually begin and end?

Does it happen often? Enough to be a social problem?

Are there vested interests keeping it going? How do they benefit?

What is the way out for most people?

What can be done to help them?

There are about a hundred thousand different stories. As mentioned, some out of necessity, but more likely originating from poor money management + the desire to live beyond one's means.

The vested interests don't even need to advertise because they are sought after. It's actually not so much different from the "typical" farang experience (someone finds out that you have funds available... soon after you're asked for a loan) in Thailand with the principle difference being that interest is charged and the lender typically gets repaid.

The way out for most people is that they don't get into debt in the first place or quickly pay down their debt as fast as they can, just like anywhere else in the world.

What can be done to help them? Teach and demonstrate money management in your own family to the current and next generation. Start at an early age.

[libya 115]

Interesting topic.

From my personal observations, thrifty Thai's are in the minority, yet the thrifty Thai's are often labelled 'Chin Yo' ie. mean.

The world has gone credit mad, and excessive, unsuitable credit only creates poverty in the long run.

The moneylenders here in Pattaya charge 5% per month which is the best rate available. However I suspect that this high rate is due to the many defaulters.

Some moneylenders in the U.K. used to prey on the poor with loans at interest rates over 1000% per annum. However I think this was recently made illegal. Which is nice.

[libya 115]

duplicate in error.

Edited December 7, 2006 by libya 115

[Heng]

The moneylenders here in Pattaya charge 5% per month which is the best rate available. However I suspect that this high rate is due to the many defaulters.

Some moneylenders in the U.K. used to prey on the poor with loans at interest rates over 1000% per annum. However I think this was recently made illegal. Which is nice.

1% per month in Pattaya is the normal "low" end rate (and quite legal) in my experience -as well as our own rates- with land title as collateral. The normal "high" rate is around 20% per month (and illegal).

[glenbat]

Have just finished reading 'Welcome to the Bangkok slaughterhouse' and it was a great read. All about the Klong Toey slum, and the people who live there. Not quite rural thailand i know, but as said before I think there isnt a place on earth which isnt affected by money lenders of some description.

If you live in the UK and tune into any cable channel, every other advert is to consolidate you loans with one simple call

Theiving scumbags.. the ads shouldnt be on daytime tv, sending out the message to our kids that being in debt is acceptable

[stevejones123]

Ironically, though they're dirt poor, they insist on buying brand new when it comes to motorbikes and mobile phones. The m.bike is paid on time, which consumes about 4/5 of their monthly income, but they're Asian, so there's only one way to perceive of having such a thing - it's got to be purchased brand spanking new.

Ths makes sense. Second-hand motorbikes and mobile phones are notoriously unreliable; after all if they worked properly why would somebody want to sell them in the first place? With new ones there's the guarantee, and how would they borrow the money to buy the second hand one anyway

Moreover by spending most of your income on the motor bike you're ensuring others don't borrow off you, and that you don't waste it.

In contrast, they cook food with wood fires because they can't afford to refill a bottle of propane for a cookstove (both of which I bought for 'em).

If it's not raining outside why on earth should they spend money on propane (which costs a fortune with the increase in the oil price) when they get the wood for free? Seems you're the one being extravagant here.

[a2396]

I guess this is how they afford 1 million bht (gas guzzling) SUV's, etc. AND explains why (in part) they consider a Farang a ticket to the promised land and financial happiness.

[Heng]

IMO it's just wanting to place the blame on someone. If funds from poor people aren't in the pockets of money lenders, then they are almost certainly in the pockets of merchants, banks (in the form of loans, not savings), liquor distillers, cigarette manufacturers, the gov't lottery office, the local underground lottery vendor, etc. Now this isn't 100% by any means, but the folks who aren't poor in today's society were the ones whose ancestors cut out most of their excess consumption of those same things.

One thing you can do for your kids is teach the importance of savings and compound interest at a young age. The Government Savings Bank (Omsin) is the only bank that allows children (my 4 and 6 year old nephew and niece just opened their first accounts) to open bank accounts. Putting XX% of their allowance into their accounts from an early age*, combined with seeing their parents putting XX% of their income into fixed accounts and property and lots of teaching by example, often (not always) translates into these kids growing up to become adults who know how to manage their funds for the betterment of their families. That is the root of the issue. If you're looking to blame the sources (money lenders, the banks, BMW, Johnny Walker, Caesar's Las Vegas or Caesar's Ratchadaphisek...) of people wasting their money, you're wasting your time, because as we all know, there are infinite ways to waste your money on this planet.

*they can walk into the bank by themselves -usually parents will park and wait out front- and deposit as often as they like. Withdrawals require an over-18 guardian present.