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Poorest Thais Debts Mounting by Borrowing from Loan Sharks




Loan Sharks range their loans according to how poor you are and how long you take to pay; these are typically from 3% per day to 20% per month.


CHIANG RAI – Thailand is well known for corruption and in a recent study it was acknowledge that some 60% of any Government contract is filtered away to Government officials, Military and Police in graft.

You might be shaking your head wondering what on earth Loan Sharks have to do with Government corruption.  The truth is that both are inextricably linked.

The equation is simple; if you have $1,000 and 60% is stolen you now only have $400 to complete whatever project or task set.

Such a practice, especially within the public sector, then leaves the public with a substandard product or service that will soon require yet more public money to make amendments and in turn this will be subjected to graft.

In the long term a particular project can often cost the public ten or twenty times the cost if corruption had not been present.

Let’s get specific… One area that is riddled with corruption is the Thai Education system. Often parents are forced to pay education administrators money under the table in order to get a place in the school for their children.

Now considering that most of the Thai population lives well below any acceptable poverty line the question is ‘Where do they find the money to pay for these bribes?’

The issue of corruption can now be firmly linked to Loan Sharks who ply their illegal trade to people they know have little or indeed no choice but to borrow, as they are unable to secure any legal bank loan due to being unable to meet the requirements of a loan application; due to their poverty status.

A few years ago the Thai Government attempted to assist the poor by buying off their loans and providing them with Government Bank Loans.  This very act was a clear indication to the scale of the problem and only fueled its spread.

As the Government handed out legitimate bank loans to pay off the loan sharks the loan sharks in turn simply upped the ante by targeting even more poor people. The perception was that the Government would simply step in, provide full payment, and transfer the debt into a legitimate loan.

The ruse itself was simple but on the darker side of the equation it was well-known that the perpetrators who were providing the illegal loans were often high ranking police officers, government officials and high ranking military personnel; and they had just discovered a new way of fleecing the public funds to a greater extent.

During the time of Government intervention we could find not one single case where a Loan Shark operation was busted and where those operating it were brought to trial. Once again this is the true face of just how crippling corruption is; especially in a ‘developing’ country.

In May of last year the Bangkok Post, one of Thailand’s leading newspapers, broke a story of a Loan Shark ring in Bang Khen.

During the early hours of one morning a group of men, led by a man known only as ‘Keng’ from a neighboring prescient, attacked the home of one of his ‘clients’ after they failed to come up with their monthly repayment.

Despite the attack, in which two men in the house were stabbed and beaten and caught on CCTV, no person has yet to have been arrested and charged for the crime. Locals, however, continue to note that the coming and going of the ‘collectors’ is still prevalent.

During the attack that night not only were two of the residents stabbed and beaten but a home-made bomb was thrown into the house and the ‘collectors’ trashed the house and the occupants belongings.

The unnamed borrower originally took out a loan of 20,000 Thai Baht with the agreement to repay 24,000 Thai Baht at a rate of 1,000 Thai Baht per day for 24 days.

Considering the national minimum wage is just 9,000 Thai Baht per month and looking at the fact that the person was a food vendor for Thai desert, most likely earning much less, it is obvious that such a loan, within such a time frame and at such a extortionate rate, could not be honored.

The attack on the house came after the borrower had missed just two days repayment; after which the borrower received a menacing text message from the Loan Shark that retribution for non-payment would be swift.

After news broke of the incident the Justice Minister ordered the Department of Special Investigation (DSI) to track down those involved.  The Rights and Liberties Protection Department also said that it would help the borrower – presumably to repay the loans by transferring it into a legitimate bank loan.

Again the case went cold and both the police and the DSI never reported the capture of those involved; but as the locals reported, these were most likely high ranking police officers.

From an insider source was told that the business of loan sharking was rife; alongside corruption and that most of the people running such businesses were either the police or paid off the police.

“Loan Sharks range their loans according to how poor you are and how long you take to pay; these are typically from 3% per day to 20% per month. Black money is as much as 49% of household debt now, with personal bankruptcies on the rise.” Anonymous Inside Source

Another insider provided us with even more information that foreign nationals should be aware of:

“Often when a Thai girl manages to snare a foreign boyfriend / husband it is not long before they provide a sob-story that they or their parents are in debt and need help to repay loan sharks.

This particular story is as old, and as weak, as the ‘sick buffalo’ scam but still many foreigners fall for it; often under the trip of romantic guilt.

Whether the debt actually exists is highly debatable but it is of course all about extracting as much cash out of their foreign boyfriends / husbands as they can.

I personally know of one guy who has been paying 10,000 Baht a month for the last two and a half years to pay off a so-called loan.  Each month the funds are transferred to the mother in Issan who deals with the loan sharks.

I doubt very much if there is such a debt but it certainly isn’t uncommon. This issue here is that he has already paid over 300,000 Baht (approx US$10,000) and there is no end in sight to him being fleeced.

Foreigners need to be made more aware of this issue so that they don’t become entangled in this illegal practice and even more so when you consider that it is widely known that when a foreigner decides to step in and help the loan sharks often increase the interest rates – it’s just another way of getting more money out of a farang.”  Anon

There have been reports of Loan Sharks being arrested but often these cases appear to go remarkably quite; the general consensus is that the Loan Sharks simply were not providing the police with a large enough cut and once arrested and a deal is struck the Loan Sharks are allowed to go on their merry way and continue applying their extortionate trade.

We often look at corruption as being a fixed point issue, that is some crooked government official skims off the top or a police officer fines a motorist and then slips the fine in their pocket.

The truth about corruption however, is that it touches every facet of life and society and for those at the bottom of the pecking order they are always the ones that will suffer the consequence and often live their lives in fear of someone coming in the dead of night to extract payment.

Like any country Thailand has its fair share of problems but in a society that is corrupt from top to bottom the underlying social issues is that a few will continue to grow rich on the misery of others whilst poor continue to suffer at the hands of their loan shark masters.

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