THALAND: Jiraporn Mesungnon, 58, can't remember the last time she got out of debt. She obtained a loan to buy a motorcycle so that he could earn a starting monthly salary of 2,200 baht (US$60) to work as a freshman teacher in eastern Thailand at the age of 18.
He started a tour company two decades ago to supplement his income, taking on more debt to buy tour buses. As he supported his family and paid off credit card debt while buying a new family home, his debt increased.
Jiraporn claims that she has never been in black, despite making 30 times as much money as she did four decades ago. His debt, which is still outstanding, is 8 million baht ($218,000).
I am not sure if I will ever be free from debt till the age of 80, she said. But how will I be able to achieve anything in life without borrowing money?
Jiraporn is a part of the domestic debt crisis that affects nearly half of the 66 million people in Thailand, despite the fact that she earns a regular income in contrast to the millions who work in the country's unorganized sector.
Kajorn Thanapas, a representative of the Bank of Thailand, claims that many Thais take loans when they are young or early in their careers. Speaking at a recent Think Forward Center symposium, he said data showed that half of those over 30 had debt, and a fifth of them were unable to repay it, leaving them with an "economic scar". Left together which affected their productivity and emotional stability.
Around 2017, the central bank established a "loan clinic" with a focus on financial literacy, responsible lending, which included, for example, a prepayment fee adjustment and a loan-to-value principle.
To help farmers, teachers, government employees, police officers, and people with student loans with debt restructuring and debt settlement, the Thai government has set 2022 as the year to tackle household debt.
JiraPorn is one of many teachers who borrow money from federally-backed teacher cooperative savings, where monthly payments are automatically deducted from bank accounts, leaving borrowers with little or no money to cover living expenses. There is no money. As they continue to borrow money from credit cards or loan sharks to pay for requirements, it creates a vicious cycle that drives them deeper into debt.
Until 2019, when a group of borrowers sued the education minister alleging misconduct, the organization technically ignored a rule from the Ministry of Education that required teachers to leave with at least 30% residual Was.
According to the Bank of Thailand's Kajorn, the remaining 30% will not only assist borrowers with expenses, but will also help them maintain their dignity.
The crisis started before Kovid
At the end of 2021, household debt in Thailand was 90% of GDP, and is expected to rise, cripple consumption and further delay economic recovery. It is one of the largest in Asia. By comparison, South Korea's domestic debt stood at 104% of GDP during the first quarter of this year, but unlike Thailand, it has a developed economy.
The central bank estimates that household debt in Thailand stood at 14.5 trillion baht (394 million US dollars) in 2021, with most loans for home mortgages, business loans and car or motorcycle leases.
Dechrut Sukkumnoed, an economist and director of the Think Forward Centre, claimed that unlike loans in other major economies, household loans in Thailand were primarily for consumption and became non-performing over time. Depending on the state of the Thai economy in the coming years, he continued, it would take decades for Thailand's domestic debt level relative to GDP to decline.
"Knowledge is valuable."
Jiraporn now works as a cargo lorry driver in the central and eastern regions of Thailand, where most of his manufacturing and distribution facilities are located during his summer holidays.
She claims the job pays between 70,000 and 80,000 baht ($1,900 and $2,170) per month and that working conditions are not as bad as she had anticipated. She works with many other female truck drivers.
Achin Chunglog, vice president of the Supa Wongsena Foundation for Debtors' Rights Reform, whom Jiraporn first met five years ago, advised him to take up the position.
Achin joined the organization in 2009, and a year later, more than 10,000 people with more than 7 billion baht ($190 million) in debt had signed up to participate in their debt rehabilitation program.
When Achin first met her, Jiraporn had six credit card balances, and the credit card company later sued her and confiscated her home. "For her case, a relocation strategy was to negotiate a settlement with the credit card company and pay off the debt gradually, one at a time."
Achin is currently working on a bill that would protect people in dire financial situations, much like the company could get a court-approved business rehabilitation protection. When a credit card or loan interest is already high to begin with, this aims to seek protection for the individual's assets that were vulnerable to being confiscated by debtors, in Jiraporn's case, his home, Achin said.
According to Achin, loans have become a common way for people to access money so they can buy assets, leaving many people in a permanent state of debt. Loans accumulate, and the term loan eventually turns into an ongoing loan as well.
To break out of the cycle, Achin is collaborating with a network of about 50 volunteers in various regions of Thailand to inform people about money matters and assess their financial situation in order to come up with a solution for their debt issues. She has assisted in the resolution of cases for people who simultaneously borrowed money from a dozen loan sharks and for farmers who became indebted after their crops failed.
"Knowledge is crucial because most borrowers are ashamed of their predicament and many of them are unaware of the full scope of the loan contract. Thailand has a very low level of financial literacy, and we are actively trying to change that.
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