Are Thai people doing better

[Perota]

than a couple of years ago ?

I'm leaving in a gated community north of Bangkok. Recently in every soi there are at least two or three houses going through big renovation. I also noticed a number of nice cars with red license plate.

A few years ago, it was the opposite, houses were falling apart with a increasing number of them abandoned. Cars were old. There were a few Benz and BM but they were usually more than 10 years old.

So definitively my feeling is that Thai people, at least in my neighborhood, are doing much better than a couple of years ago

[chassamui]

They are spending government handouts and borrowed money in a financial bubble. It will burst if not reined in.

[RickThai]

They are spending government handouts and borrowed money in a financial bubble. It will burst if not reined in.

I think that chassamui has hit the nail on the head. Most of the Thai people I know borrow as much as they can in order to buy new cars, cellphones, etc.

I bought a condo for my Thai SIL (paid for in full) a few years ago and just recently her grown son bought a car. I'm almost certain the money to buy the car was borrowed against the condo (but I knew that once I paid for the condo, there was an extremely high chance that sooner or later a mortgage would be taken out against it).

Consumerism is running at a fever-pitch in Thailand.

RickThai

[Brown Sugar]

I sincerely hope that the financial collapse which happened in the western world does not occur in Thailand but I fear that with all the personal and government debt being 'racked' up in Thailand it eventually will.

Where I live most business and employment is attributed to agriculture in one form or another and I see on a daily basis new cars and tractors being purchased (often worth a lot more than the 'hovel' they live in) by people I know cannot afford them. This will only eventually end in tears for a lot of them.

For what it is worth I have always been of the opinion (maybe incorrectly) that if you cannot pay cash for an item you cannot really afford it, especially none essential luxury goods such as cars and T/V's etc. Sensible levels of mortgage for the purchase of a home are ok, better than renting if one is in a situation to be able to do this.

I also have a feeling that this ASEAN organisation, if it goes ahead, will only end up eventually in the same position as Europe. However on the ASEAN situation I cannot really see it coming to 'fruition' as even at this stage of negotiations no member nation appears to want to surrender it's independant control of it's fiscal and government policies another or for that matter offer support to another.

[Boon Mee]

Construction going on everywhere I look whether it's in Chonburi, Suphanburi or Chaing Mai so I'd say that Thai people are definitely doing 'better' than a few years ago.

Malls are packed too...

[Albert Shagnastier]

I think they are definately doing better on the whole - part of the upcycle.

They are spending government handouts and borrowed money in a financial bubble. It will burst if not reined in.

There's a fair amount of that going on too though.

As soon as the US tanked in 2008, ironically..... as Citibank shafted millions in the west they popped up all shiny and new (in Asok) ready to fuck over as many Thais as possible (now they'd squeezed as much out the west as was possible for then).

You go to Big C or Lotus and there's always 2-3 credit card/bank's there trying to noose people with credit.

[beazalbob69]

The one thing you have to keep in mind here is that most of the people in issan even if they live in a hovel they own that hovel outright as it has been in the family for a long time. In the west a house is a huge expense burden for most regular people and amounts to most of their disposable income just to pay mortgage or rent. Most Thai's don't have this burden. So if one year their farm does really well instead of saving that money for a tight year they go out and but a new truck. Mind you they don't but it outright but on the pay once a year farmers plan. Consumerism is crazy here but most of the regular Thais have a pretty big disposable income once a year.

Back in the US where I was living the malls were mostly empty except on the big Holidays but here in Thailand the malls are packed everyday by Thai's buying lots of shit they really don't need but want. The bubble will burst just like everywhere else.

[crippen]

Thailand’s Rural Boom Yields Mercedes and $6,000 Jacuzzis
By William Mellor & Supunnabul Suwannakij - Oct 29, 2013 5:01 AM GMT+0700
Bloomberg Markets Magazine
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When Tos Chirathivat and his billionaire family make acquisitions for their Thailand-based retail, property and hotel empire, they often do it in style.
Enlarge imageTos Chirathivat
Tos Chirathivat's Central Group, headquartered in Bankok, where this photo was taken, is opening stores, malls and hotels in Isan, Thailand’s poorest region. Photographer: Ian Teh/Bloomberg Markets
Enlarge imageRice Bowl
CP Intertrade’s giant packaging plant dispatches rice to consumers worldwide. Photographer: Ian Teh/Bloomberg Markets
Seeking additional prime space in Bangkok’s congested downtown in 2006, Tos’s Central Group bought 1.4 hectares (3.5 acres) of the British ambassador’s front lawn, which it’s now transforming into a curvaceous luxury shopping mall in the shape of an infinity symbol, Bloomberg Markets magazine will report in its December issue.
Then, in 2011, the family entered the European market, paying $350 million for the Italian department store chain La Rinascente SpA, whose stately flagship emporium fronts Milan’s Piazza del Duomo.
Lately, the urbane Tos, a former Citigroup Inc. investment banker who was educated at New York’s Columbia University, has also been expanding in an entirely different direction. He’s opening stores, malls and hotels in Thailand’s poorest region, the parched northeastern plateau of Isan, which is home to one-third of Thailand’s 67 million inhabitants.
“We are going into towns we would never have thought of five years ago,” says Tos, 49, in his executive suite overlooking the U.K.’s now much-diminished Bangkok embassy compound. “There’s a real boom going on in those places.”
Glitzy Bangkok
For much of Thailand’s recent history, the powerhouse of Southeast Asia’s second-biggest economy has been its glitzy capital. Now, a convergence of local and international currents is reshaping the nation’s economic geography.
In the northeast, rising incomes, property prices and consumer spending have sent economic growth surging by 8 percent annually, or double the rate of Bangkok, according to Siam Commercial Bank Pcl.
Meanwhile, further to the south, Thailand’s burgeoning auto industry -- in 2012 the 10th-biggest manufacturer in the world -- has brought such prosperity to a region known as the eastern seaboard that one province, Rayong, has become twice as rich as Bangkok in terms of per capita income, according to government data.
A visit to Udon Thani (population 400,000), 565 kilometers (350 miles) northeast of Bangkok but only 90 kilometers from Laos’s capital, Vientiane, testifies to the transformation taking place.
In 2011, this rice-growing region’s gross domestic product per capita was just $1,700 -- one-ninth that of Bangkok, according to government statistics. Yet today, Tos’s bustling Central Plaza mall in the center of town would not look out of place in Hong Kong, Singapore or even Milan.
$6,000 Jacuzzis
Nearby, at the local Mercedes-Benz dealership, owner Chettaphon Ruangpattana, whose family originally started off in business dealing in retreaded tires, says he sold 120 of the German luxury cars last year, compared with 55 in 2008.
Across town, the Siam Global House Pcl home-improvement center now stocks $6,000 timber-paneled Jacuzzis alongside more-mundane bathroom fittings. The local unit of U.K.-based supermarket giant Tesco Plc anchors a second shopping mall.
And down a dirt road in a village of still predominantly wooden houses, farmer Uthai Thongsaensuk, 45, slurps spicy tom yum soup and tells how he bought 1.2 hectares of land in 2011 for 500,000 baht ($16,000), then sold it this year for three times the price. He spent part of the proceeds on a tractor for himself and a washing machine for his mother-in-law.
Power Base
In the past two years, populist Prime Minister Yingluck Shinawatra, whose government’s power base is among the poor, has lifted rural incomes by subsidizing Thailand’s 17 million rice farmers and raising the minimum wage to $10 a day.
Yingluck also fueled a property boom by announcing she would spend $64 billion over six years on infrastructure such as high-speed trains that would cut travel time between Bangkok and Udon from eight hours to 2-1⁄2.
At the same time, moves by Thailand and nine Southeast Asian neighbors to relax border controls and form a European Union-style common market of 604 million people in 2015 are transforming remote Thai regions.
Towns such as Udon, once the penultimate stop on a railroad line of little consequence, now straddle international trade routes linking Thailand to fast-growing Laos, Cambodia, Vietnam, Myanmar and, ultimately, China.
“The future is outside Bangkok,” says Tos, who, since 2009, has also opened malls in the Isan cities of Khon Kaen and Ubon Ratchathani as well as Chiang Rai, in the former opium-growing Golden Triangle.
Central Group
Although few foreign investors are likely to have visited those cities, they’re already betting Tos has got it right.
During the four years ended on Oct. 28, shares in the three listed companies the Chirathivat family controls -- mall developer Central Pattana Pcl, hotel operator Central Plaza Hotel Pcl and retail chain Robinson Department Store Pcl -- far outperformed even the 110 percent rise in the benchmark Stock Exchange of Thailand Index, lifting the value of the family’s stake to $6.4 billion.
Foreign investors own about one-fourth of the biggest listed Central Group company, Central Pattana, which leapt 344 percent over that period.
“It is a stock that has done really well for us,” says Adithep Vanabriksha, Bangkok-based chief investment officer for Thailand at Aberdeen Asset Management Plc, which manages $318 billion worldwide.
Some investors who backed other entrepreneurs have done even better.
Nascent Billionaire
Witoon Suriyawanakul, 56, began his business life selling nuts and bolts from a wooden shack in one of Isan’s poorest towns, Roi Et. Today, after building a 25-outlet chain of Home Depot-style, cash-and-carry stores, he’s a nascent billionaire.
In August 2009, Witoon raised $19.5 million by selling shares in his company, Siam Global House, on the Thai exchange. Last year, blue-chip Siam Cement Pcl, a company controlled by King Bhumibol Adulyadej’s money manager, the Crown Property Bureau, paid the equivalent of $322 million for a 30 percent stake.
Since the initial public offering, Siam Global’s shares have risen more than 15-fold as of Oct. 28. Yet it doesn’t have a single outlet in Bangkok.
“Our investors want us to stay upcountry,” says Witoon, whose 40 percent stake is worth $656 million.
Jerry Cans
“People who think that Bangkok is Thailand are wrong,” says Boonyong Tansakul, 48, Singer Thailand Pcl’s chief executive officer.
The company, a descendant of the U.S. sewing machine manufacturer founded in 1851, makes 95 percent of its sales outside the capital. It has delivered an almost 20-fold return since the beginning of 2009 by diversifying into appliances as diverse as air conditioners and simple gasoline pumps that are increasingly replacing jerry cans in rural villages.
Viewed from Bangkok, prospects for Thailand as a whole certainly don’t look as exciting as they do from the hinterland.
After devastating floods stalled output in 2011, the economy surged back in 2012 to grow by 7.1 percent. Since then, slowing demand for Thailand’s exports forced the central bank to cut its 2013 growth forecast to 3.7 percent.
In the first half, the economy even entered a technical recession when it recorded successive quarters of negative growth.
The benchmark SET Index was up 4.1 percent this year in local currency as of Oct. 28 compared with a 23.4 percent rise in the Standard & Poor’s 500 Index as of its Oct 25 close.
Rice Scheme
In another blow, Thailand lost its 30-year-old status as the world’s No. 1 rice exporter, falling behind India and Vietnam after the government’s decision to pay above-market rates to farmers kept prices high and made Thai rice less competitive.
“The rice scheme has been widely acknowledged by foreign investors as a disaster,” says Prinn Panitchpakdi, Bangkok-based country head for investment bank CLSA Ltd.
Still, Thailand has bounced back from worse setbacks.
Although the country is prone to coups d’etat, civil strife and natural disasters, tourism is booming. Through it all, Thailand has become the world’s leading manufacturer of hard-disk drives by quantity and last year leapt ahead of Britain, Spain and Canada as an auto producer. Of the 2.4 million vehicles produced in Thailand by Japanese, U.S. and European carmakers, 1 million were exported.
‘Best Potential’
In 2012, Dearborn, Michigan-based Ford Motor Co. opened its second factory in Thailand, where sales that year rose 88 percent to 55,000 -- Ford’s biggest jump anywhere in the world, according to its president for Southeast Asia, Matt Bradley.
Domestic sales account for only about one-fourth of Ford’s production in Thailand, where it makes Fiesta and Focus small sedans and Ranger one-ton trucks. The rest of the vehicles were shipped mainly to neighboring countries and Australia.
Most attractive for Ford is Southeast Asia, where the company says vehicle ownership per capita is less than a 10th that of the U.S.
“It’s one of the best potential growth areas in the world,” Bradley says.
Beside a broad highway two hours out of Bangkok, a signpost directs motorists to turn off for “Detroit of the East.”
In one sense, this industrial zone in Rayong province is well named because it’s the regional headquarters of both Ford and General Motors Co.
In another, the moniker couldn’t be more inappropriate. While Detroit is in the throes of the biggest U.S. municipal bankruptcy, Rayong has become the richest province in Thailand, according to government statistics.
Politically Stable
There may be more good news to come. A renewed marketing effort in 2014 should help Thailand regain the No. 1 spot in the international rice market, says Sumeth Laomoraphorn, CEO of the country’s largest packaged-rice producer, CP Intertrade Co.
Equally important for investors, Thailand remains politically stable, says Adithep, of Aberdeen Asset. The country has been rocked by 15 successful and attempted coups since 1946 -- the last of which, in 2006, overthrew the present prime minister’s brother Thaksin Shinawatra. In August, Yingluck completed her second year in office and should now see out her four-year term, according to Adithep.
“This government is quite dominant,” he says.
Still, things can change fast in Thailand. Since Thaksin’s overthrow, Thai society has been split between a minority urban elite and the majority pro-Thaksin and pro-Yingluck rural poor.
Ensconced in his Central Group headquarters, Tos Chirathivat knows that all too well: In 2010, during a period when anti-Thaksin parties were in power, pro-Thaksin protesters burned down Tos’s biggest Bangkok mall, CentralWorld.
Now, he says, he’s hopeful the narrowing of the urban-rural wealth gap will ease simmering tensions. “It’s part of growing up,” he says. “Once we pass that stage, Thailand will become a major player.”
To contact the reporters on this story: William Mellor in Sydney at wmellor@bloomberg.net;Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net
To contact the editor responsible for this story: Stryker McGuire in London atsmcguire12@bloomberg.net.

[Thormaturge]

A lady-friend of mine works for the government. She has free electricity in her free government apartment and an interest-free loan entitlement which has just risen to ThB 2,million.

Then there's the massive rice-pledging scheme providing farmers with artificially high price for their crops.

The car tax rebate scheme.

Eventually the government is going to have to stop lending money and giving away money to people

[koman]

I'm currently living in the wife's village waiting for our new house to be built. I could do a great building thread but no matter how hard I try, I just can't get photos to upload to my gallery most of the time, and when I do, I can't get them posted....because of my crap internet connection I think... it takes ages to load and then the connection fails...

This village has changed beyond belief over the last six or seven years. Back then hardly anybody had a car or truck....now just about everybody has one. There used to be one guy with a tractor.....now there are lots. I see kids under 12 running around on new motorbikes with mobile phones....and Nike shoes. ..even if they are factory seconds.....

This is a very good farming district and it shows. One thing that is sad is the number of people who have lost their land, house and just about everything they own to gambling and reckless borrowing from money lenders. The money lenders and good card players are doing extremely well however.....

[Perota]

A lady-friend of mine works for the government. She has free electricity in her free government apartment and an interest-free loan entitlement which has just risen to ThB 2,million.

Then there's the massive rice-pledging scheme providing farmers with artificially high price for their crops.

The car tax rebate scheme.

Eventually the government is going to have to stop lending money and giving away money to people

Nothing really specific to Thailand. Everywhere in the world civil servants have special advantages. Subsidies for farm products exist also in Europe and the USA, to such an extent as to distort the world economy. The same for the car industry.

But I agree with your last statement, that the "governments are going to have to stop lending money and giving away money to people" as they're all going bankrupt one after the other.

Back to our subject, I don't know much about Isaan, I always worry to see new tractors everywhere when there is no good reason to justify the purchases, but here I'm talking about Bangkok. And I believe this new spending spree is justified by an improvement of the general situation.

[Marmite the Dog]

Inflation is hitting people quite hard as their wages are still piss-poor. Government workers are getting themselves into as much debt as possible. Central Udon is full of people escaping from the heat, but apart from phones and computer stuff, nothing else is being bought - nearly every store in the complex is devoid of shoppers.

Lots of new stores and mini-malls are being built in town, but only chain stores can afford the rents unless it's a market stall type plot.

On the surface it looks boom, but underneath its bust.

[Yasojack]

The majority of Isaan people may well own there own land for home or farming though were we live the banks have the chanotes of many, if the rice hits the floor which it seems it will, these people are fekked.

there have been many locals buying up land for the future, but what is the future if Thai rice goes west.

[Perota]

The majority of Isaan people may well own there own land for home or farming though were we live the banks have the chanotes of many, if the rice hits the floor which it seems it will, these people are fekked.

there have been many locals buying up land for the future, but what is the future if Thai rice goes west.

It's a form of saving. When they need money, they can always sell a piece of land.

On the other hand, those who sold their land and drank the money ...

[Yasojack]

I would of said if rice farming gets in strife, the land prices will go down.

[Perota]

^ Right. But what are the other options for a poorly educated farmer? Stock exchange ? Foreign Currencies ? Modern art ?
An advantage of land is it never completely lose its value. And if you grow something it brings you regular incomes on top of the capital gain. It may not be the best investment but it's quite a safe one.

[Yasojack]

if whats been reported rice drops by upto 30% the possibilty of your average thai farmer making money, is near to impossible, presently the govt is helping the farmer,if that if and when gets taken away, those same people have to pay back the banks, the way the Kasikorn bank is working now, which is supposed to be the bank that helps the average joe in his yearly pursuit of lending and paying back the bank, will no longer happen as the average joe will not be able to pay.

So which means those same people will and is happening now, get fekked up the ass.

They all believe were i am Asean is going to be there life saver.

[Brown Sugar]

I agree with Beazalbob69's comments entirely. When I described peoples houses as "hovels" I did not mean this in a derogatory manner but to illustrate that the money spent on a vehicles for which they honestly cannot afford to run or have any real use for (whether paid for in cash or by going into debt) could have built quite a decent dwelling, on land which they already own, to protect them from the elements for many years to come

[Retro]

Seems like there are certainly people doing better. I was in Laos recently and that place seems to be picking up from six months ago. ASEAN has to be encouraging some spending if any of these business people think it's going to affect them. The government certainly thinks it's going to affect Thailand.

[ENT]

Thai wealth increasing? Definitely. how long the upswing lasts, I don't know.

I'm taking advantage of that upswing to increase sales of my products in Asia, as there's a better growing market there than in western economies.

My Thai hosts and extended family are doing very well, with their businesses expanding so affording my employment in their future.

I'm not complaining, make hay (or rice-straw) while the sun shines, as they say.

[beazalbob69]

I live in Cassava Country not much rice around here. The farmers that have more than 40 or so rai of Cassava are doing really well lots of new trucks and new houses popping up in the villages.

People who have mainly rice... not so much I have heard it is a hard life and a lot of work for little returns unless going really big.

Cassava is low maintenance, Can be reused every season, Grows in some of the crappiest soil I have seen, and usually gives a decent ROT.

But I agree with everyone else. A lot of Thai's are selling their souls for new stuff and it wont end well.

[koman]

The majority of Isaan people may well own there own land for home or farming though were we live the banks have the chanotes of many, if the rice hits the floor which it seems it will, these people are fekked.

there have been many locals buying up land for the future, but what is the future if Thai rice goes west.

I doubt if Thai rice will ever go west...at least not in the longer term. It may take a hit temporarily but it has plenty of potential in the long term.

What is quite likely to happen is that many small operations will be replaced by larger, better managed and more productive rice farming methods....like you see in Taiwan or Japan. Yields are far lower in Thailand because they are mostly operating in an old and inefficient way. Just because you replace the Buffalo with a Kubota does not mean you are going to get higher yields, and although these small inefficient units have given a subsistence level income to a lot of people, they are not really likely to survive in the longer term. Government subsidies come and go.....but land goes on forever..

There is plenty of evidence (at least around here) that more and more land ownership is being controlled by fewer and fewer people....and the richest people by far here are Sino-Thai's who accumulated as much land as they could get their hands on...years ago; probably in another land bust cycle. These same people have now bought up even more land....because it always pays off in the long run even if there is a crash of some kind in the near future. Booms are nearly always followed by crashes....which are followed by more booms....

Land is (usually) an income producing asset, which also has great capital gains potential. There are not that many real alternatives around these days. It is the long term thinkers and planners who do well under these circumstances, not the get rich quick types who don't have the vision to see beyond next week.

[Perota]

The majority of Isaan people may well own there own land for home or farming though were we live the banks have the chanotes of many, if the rice hits the floor which it seems it will, these people are fekked.

there have been many locals buying up land for the future, but what is the future if Thai rice goes west.

I doubt if Thai rice will ever go west...at least not in the longer term. It may take a hit temporarily but it has plenty of potential in the long term.

What is quite likely to happen is that many small operations will be replaced by larger, better managed and more productive rice farming methods....like you see in Taiwan or Japan. Yields are far lower in Thailand because they are mostly operating in an old and inefficient way. Just because you replace the Buffalo with a Kubota does not mean you are going to get higher yields, and although these small inefficient units have given a subsistence level income to a lot of people, they are not really likely to survive in the longer term. Government subsidies come and go.....but land goes on forever..

There is plenty of evidence (at least around here) that more and more land ownership is being controlled by fewer and fewer people....and the richest people by far here are Sino-Thai's who accumulated as much land as they could get their hands on...years ago; probably in another land bust cycle. These same people have now bought up even more land....because it always pays off in the long run even if there is a crash of some kind in the near future. Booms are nearly always followed by crashes....which are followed by more booms....

Land is (usually) an income producing asset, which also has great capital gains potential. There are not that many real alternatives around these days. It is the long term thinkers and planners who do well under these circumstances, not the get rich quick types who don't have the vision to see beyond next week.

Good analysis. I completely agree with you.

[Perota]

I had lunch with friends yesterday who confirmed that Thai are generally more optimistic today than a couple of years ago which explain why they are more willing to invest. And also a lot of people made money because of the stock exchange, hence the brand new cars.

[good2bhappy]

I'm leaving in a gated community north of Bangkok

so am I
The rich seem to be better off, but the poor are getting poorer
cash is tight