Thailand’s Working Poor Household Debt on the Rise


 8-9 million of them earning less than $300 per month.

8-9 million of them earning less than $300 per month.

BANGKOK – For the last couple of years inflation has been on a steady raise in Thailand making many poor Thais who earn less than $330 per month victims of loan sharks, and become trapped in a cycle of debt and exorbitant interest rates to repay.
Such low salary, whether in rural or industry area is considered insufficient to meet today’s high cost of living. Economists at Chulalongkorn University say that informal debt has moved from farmers in rural areas to factory workers in the cities countrywide..

About 14 million daily wage workers in Thailand are in the private sector, with 8-9 million of them earning less than $300 per month.

Banks do not lend money to those with no repayment ability, that is why most workers turn to their bosses or co-workers when short of money and take on monthly interest rates of 8-10%. if the repayment is not met every month, then serious problems arise among the workforce.

Government statistics show that household debt rose 5.7% in 2012 compared to a year ago. The average debt is as high as ($5500) per household, with many forced to pay interest rates of 3% per day.

Economists urge the government to tackle the problem, by first educating the public about loan contracts, then they want a creation of bonds for state-controlled banks. They would provide loans with low interest to those in debt, but only if they fulfill a strict condition – that they open a fixed deposit account with monthly deposits that employers are required to deduct from the debtor’s salary.

Debts are increasingly becoming a serious issue among workers in urban areas as they lack access to formal capital. Economists say the government must act as a watchdog to prevent unlawful transactions and banks must review the debt payment ability of borrowers.



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