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  1. #1
    Thailand Expat misskit's Avatar
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    Thais borrow early and get trapped in a cycle of debt

    Thais, nowadays, are indebted from an early age, and the level of their debt is maintained even as they approach retirement.


    A study by the Bank of Thailand reports that Thais get into debt in their 20s and tend to borrow more as they age.


    It is not surprising, therefore, that Thailandís household debt has steadily increased to 78.6% of the countryís gross domestic products (GDP), or Bt12.8 trillion in the fourth quarter of last year, according to figures from the National Economic and Social Development Council.


    By comparison, household debts in Thailand averaged 49.89% of GDP from 1991 to 2018. Between 2008 and 2012, the figure rose 12.8% per year, and its size, relative to GDP, surged from 56% to 77%.


    Thailand is now a top-ten highest household debt country among 89 countries worldwide and third highest among 29 Asian countries.



    Debt at all ages


    Even when overall economic performance is less than stellar, people cannot resist the temptation to consume, so they seek loans to fulfil their desires.


    A report from the Bank of Thailand says Thais get into debt within the first years of starting work. Half of people aged 30 have personal debt or credit card debts. One-fifth of loan balances of debtors aged 29 are likely to transition into delinquency.


    Additionally, Thais are indebted for a longer period of time. They tend to borrow more when they are approaching 30, for their first house or first car, among other things. When they pay off old debts, however, they continue to borrow more throughout their working life.


    Therefore, people are not free of debt even when they retire. Thais aged 60-69 are Bt453,438 in debt on average and people aged 70-79 years are Bt287,932 in debt.


    Thais have more personal debt, as the median average debt obligation for each person doubles from Bt70,000 in 2010 to Bt150,000 in 2016, the Bank of Thailand reported. The trend reveals the fragility of Thai household finances. Moreover, almost 16%, or 3 million Thais, have debt payments which are 90-days overdue.


    Trapped in a debt cycle, these people donít have enough savings to satisfy their needs and they donít have sufficient financial literacy or spending discipline.


    In addition to a slowing economy, debtors are also persuaded to borrow more by campaigns and promotions offered by financial institutions, which are competing for borrowers.


    For example, some financial institutions previously offered cashback mortgages, which enabled borrowers to seek a greater amount of loans than the value of their collateral.


    The Bank of Thailand has recently introduced macro-prudential measures to mandate that financial institutions assess each borrowerís ability to repay a loan based on a prudent debt-service ratio. For example, the central bank imposes a limit on loan-to-value ratio for mortgage loans and a tightening of auto loans to ensure responsible lending practices.


    At the end of the day, though, it depends on whether the borrowers are sufficiently equipped with life skills to constrain their needs to within their financial means. Even when borrowers are rejected by financial institutions, there is always the option to borrow from loan sharks.


    Beware of credit karma though, because borrowers may get easy money from these illegal lenders, but the borrowed money comes with exorbitant interest rates.

    https://www.thaipbsworld.com/thais-b...cycle-of-debt/

  2. #2
    CCBW JPPR2's Avatar
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    One of the evils of western society. Buy what you can't afford.

  3. #3
    Thailand Expat Pragmatic's Avatar
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    Fcuk know how they do it. I can't sleep if my water bill isn't paid on time. Thais seem to worry about fcuk all.

  4. #4
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    I stopped reading after "nowadays" ... As if the first Thaksin regime didn't put the large majority of his supporters in debt by giving them government loans that would take generations to pay back .... if at all!!

  5. #5
    The Fool on the Hill
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    Quote Originally Posted by misskit View Post
    Thais, nowadays, are indebted from an early age
    ahh, yes... embracing the Western ways...

    How the rich get richer while the poor get poorer. The rich, who have money to lend, lend their money to the poor at a premium, the poor, who do not have money, borrow the money from the rich, at a premium. Thereby, there is a transfer of money from the poor to the rich in the form of the premium.

    Why wait 'till you can afford something when you can mortgage your future earnings away and own it today - after all, you are entitled, aren't you?
    Last edited by bowie; 12-08-2019 at 06:44 PM.

  6. #6
    Days Work Done! Norton's Avatar
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    Quote Originally Posted by misskit View Post
    Thais borrow early and get trapped in a cycle of debt
    None the less Thailand looks better than many on this very lengthy list.

    https://tradingeconomics.com/country...ds-debt-to-gdp
    Last edited by Norton; 12-08-2019 at 07:01 PM.

  7. #7
    ความรู้ลึกลับ HuangLao's Avatar
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    The learning curve is diminishing greatly and still wrought with ignorance.
    Remember the good old days when folks lived easy and happy without the note of living beyond one's means and attached mindless/needless consumption.

  8. #8
    The Fool on the Hill
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    Quote Originally Posted by HuangLao View Post
    Remember the good old days
    ancient history, no credit cards (loan sharks), no lotteries (numbers), no off track betting (ponies), no casinos (vegas), very few two earner families, broken homes were a rarity...

  9. #9
    ความรู้ลึกลับ HuangLao's Avatar
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    A sizable difference between situations of familiar "loans" and banking mafia loans.
    Never taken into account when media/media types examine these aspects.

  10. #10
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    Quote Originally Posted by JPPR2 View Post
    One of the evils of western society. Buy what you can't afford.
    unfortunately a necessary evil, otherwise it would mean zero growth and return to medieval times

    the rich lends to the poor and everyone is happy

    win-win until the poor defaults on the rich, and the rich lose all their marbles

  11. #11
    Thailand Expat
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    Quote Originally Posted by Dragonfly View Post
    the rich lends to the poor and everyone is happy

    win-win until the poor defaults on the rich, and the rich lose all their marbles
    Small issue, but the "rich" don'y actually have to money to loan out in the first place, they loan out imaginary money & get paid real money in return.

    Have they never thought of furthering student loans here, seems a great way to get folks into debt that they will struggle to repay for the rest of their lives.

  12. #12
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    Seeing billboards offering pickups (Toyota?) for 18,500 Baht down payment, how much it is %? Many years ago the law here was raised from 10 - 30%, now it's back again...

  13. #13
    CCBW JPPR2's Avatar
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    Quote Originally Posted by Dragonfly View Post
    unfortunately a necessary evil, otherwise it would mean zero growth and return to medieval times
    I agree. Loans and financing allow growth and the consumer index to look positive. Problem is that every bank will loan to anybody because they all have default loan insurance. But somebody has to pay for it.


    Quote Originally Posted by Klondyke View Post
    Seeing billboards offering pickups (Toyota?) for 18,500 Baht down payment, how much it is %?
    We just purchased our Mitsubishi Pajero and surprisingly its Zero % for 3 years. Originally I was going to cough up the cash for it, but when I saw % for 3 years I put half down and figured I'd use their money for 3 years. Its basically a simple loan and I can pay off any time. IIRC if you put down 20% and qualify for a loan the interest rate was 5.5%

  14. #14
    Pedantic bastard
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    After all my time here, I really do not get it. My fairly standard working environment is chock full of apparently rich fuckers. The clerks with original designer handbags, most of the people driving fuck-off big trucks and cars, have several overseas holidays a year. One thing I do know, is that pretty much everyone around me has at least one side-line business. Working for the government means that they have a job they can give minimum effort on, and spare their energy for their side line business.

    I am sure many of them have debt that would stagger me - but the paying the piper never seems to come due.

    Meanwhile I remain relatively debt free (I do have a credit card) and live within my means.

  15. #15
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    At the moment there are heaps of farmers going down the drain.

    Every year the same story. The rice planting is due, the farmer goes to bank and takes credit for the rice for planting, after harvest payback but this year all was different, rice could not be sold and the credit could not be paid back and the bank claims their land and sells it for heck all.
    Same counts for rubber. Many farms rubber trees are for sale, also Farangs are now in troubles. Everywhere are Rubber-farms for sale, trees are just 7-10 years old, hence planted as the boom was at its pike and it became a barrel without bottom and a disaster for the owners...


    Now you see them on sale..
    I have seen 21 rai Freehold for 2 million, 42 rai with modern house for 4 Million and nobody buys.

    the strong Thai baht does its job, export in the cellar and everywhere sales focusing on last coins of the people.
    Ducati 0%, cars at the lowest credits since years..
    And if right the Thai Banks want to drop credits another 0.25% which makes it getting worse.. Not for export but for the people.
    The plan to make the Thai middleclass bigger and all Thais wealthier than the Rest of Asia didn't work out.
    Last edited by See Will; 13-08-2019 at 10:58 AM.
    Arguing with an engineer is wrestling a pig in the mud, after 3 hrs you realize that he f**king enjoys it

  16. #16
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    Not so different from many Western countries also.

  17. #17
    CCBW JPPR2's Avatar
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    Quote Originally Posted by nidhogg View Post
    My fairly standard working environment is chock full of apparently rich fuckers. The clerks with original designer handbags, most of the people driving fuck-off big trucks and cars, have several overseas holidays a year.
    Me too Nid, I see 15 to 25million baht cars all over the place parked in front of malls. I see women cruising around with Gucci and Chanel bags on their arm while the other is carrying new stuff they just bought. Most of the high end malls in BKK are JAMMED with people buying things and I see it all being purchased on Credit Cards as I walk buy the counters. Now BKK is big city life and thus fierce competition to one up others by parading around with big ticket items to give off the impression they are affluent. But I have to say, having lived In California this was not an uncommon site, same behavior. Most have loads of expensive material things along with HUGE debt.

    Like you, I live within my means. I use the credit card and pay balance in full at end of every month. The banks making nothing on me.

  18. #18
    The Fool on the Hill
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    Quote Originally Posted by misskit View Post
    Thailand is now a top-ten highest household debt country among 89 countries worldwide and third highest among 29 Asian countries.
    Well, Thailand always wanted to be a Number One - almost there.

  19. #19
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    Thailand is living like it's 1999, time is good, people spend. A small grain of salt will eventually block the cogs, and it will all fall apart.

    yet, that's not the point. You still need the cogs rolling and it's only a small price to pay. The question is how much debt you are willing to take and the risks that go with it. Are you willing to take them?

  20. #20
    Hansum Man! panama hat's Avatar
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    I'm not sure why debt of any kind is seen as a 'western' invention or import as it has been used for millennia fairly well everywhere in the world . . . particularly Asia . . . and compounded interest rates go back 3500 years (I knew my economics degree would come in handy one day) . . . debt to slavery

  21. #21
    Pedantic bastard
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    Quote Originally Posted by panama hat View Post
    I'm not sure why debt of any kind is seen as a 'western' invention or import as it has been used for millennia fairly well everywhere in the world . . . particularly Asia . . . and compounded interest rates go back 3500 years (I knew my economics degree would come in handy one day) . . . debt to slavery
    Long time no see? Hows things?

  22. #22
    The Fool on the Hill
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    Quote Originally Posted by panama hat View Post
    I'm not sure why debt of any kind is seen as a 'western' invention or import as it has been used for millennia
    I'll give the westerners the discovery of Plastic - can't get much more convenient than a wallet full of plastic, revolving credit, paying interest on interest, and, let's not forget the good ole' "minimum payment due". Sounds downright inviting. Only hafta pay the minimum - what could be better than that. Not like those damn shylocks.

  23. #23
    CCBW JPPR2's Avatar
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    Quote Originally Posted by bowie View Post
    I'll give the westerners the discovery of Plastic - can't get much more convenient than a wallet full of plastic, revolving credit, paying interest on interest, and, let's not forget the good ole' "minimum payment due". Sounds downright inviting. Only hafta pay the minimum - what could be better than that. Not like those damn shylocks.
    Yeah we definitely took the lead on the CC market. 18 to 21% on remaining balance. Minimum payment so low people just can't help themselves. Pretty soon they have $10K or more of debt with a minimum payment of $89 dollars a month for life.....

  24. #24
    ความรู้ลึกลับ HuangLao's Avatar
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    Quote Originally Posted by See Will View Post
    At the moment there are heaps of farmers going down the drain.

    Every year the same story. The rice planting is due, the farmer goes to bank and takes credit for the rice for planting, after harvest payback but this year all was different, rice could not be sold and the credit could not be paid back and the bank claims their land and sells it for heck all.
    Same counts for rubber. Many farms rubber trees are for sale, also Farangs are now in troubles. Everywhere are Rubber-farms for sale, trees are just 7-10 years old, hence planted as the boom was at its pike and it became a barrel without bottom and a disaster for the owners...


    Now you see them on sale..
    I have seen 21 rai Freehold for 2 million, 42 rai with modern house for 4 Million and nobody buys.

    the strong Thai baht does its job, export in the cellar and everywhere sales focusing on last coins of the people.
    Ducati 0%, cars at the lowest credits since years..
    And if right the Thai Banks want to drop credits another 0.25% which makes it getting worse.. Not for export but for the people.
    The plan to make the Thai middleclass bigger and all Thais wealthier than the Rest of Asia didn't work out.

    Sign of the times.

  25. #25
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    Not a surprise for anyone here I think, I've yet to meet a Thai which has no debts... especially among the apparently most affluent ones (nice cars, last iPhone, junkets abroad etc).

    I remember a chat I had with some friends when we were "discovering" each others (i.e what the farang is thinking)...they were truly "impressed" by my view on life money wise, I stated that if I want something I save money to buy it cash and that I could go into debt for a house or something that's necessary for me to earn money (vehicle if required to get a job etc...e.g a pickup truck to do deliveries, a car if the job is too far to bike there, tools etc...), I told them being rich was IMO being stress-free on money issues, which requires not only no dents but also savings available to soften the landing if (when) an incident occurs..
    That night they looked at me like I was a real Buddhist, they all agreed with me... nevermind years later they're all heavily indebted and life incidents (car/bike accident, health issues, divorce, job loss etc) took their toll too.
    Last edited by Farang Ky Ay; 13-08-2019 at 09:14 PM.

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