Bangkok: Thailand's soaring household debt, reaching 16.55 trillion baht, is not just a figure in a bank account; it's a matter of life and death for many small business owners and citizens. Surachai Kamplanonwattana, Director of the SME Financial Advisory Center, highlighted the problem and offered insightful suggestions for the new government to consider as a "national agenda."
According to Thai News Agency, the alarming data reveals approximately 2.9 trillion baht in personal loan debt, with interest rates as high as 25% per year. Even more striking is that about 18%, or nearly 3 million, of these borrowers have consistently made timely payments. Mr. Surachai points out that this group often consists of small business owners who lack access to business loans, forcing them to bear exorbitant interest rates to finance their businesses. Therefore, the government should implement measures to pull these borrowers out of the 25% interest rate cycle and into business loans from state-owned banks with lower interest rates (e.g., MRR+ or no more than 10-12.5%), allowing them to "recover" and become a genuine driver of the economy.
Home loans constitute the largest portion of household debt (approximately 5 trillion baht) and are secured loans. Currently, there are as many as 500,000-600,000 houses and condominiums at risk of foreclosure and auction, a matter of great concern. Mr. Surachai proposed adapting the "asset and debt moratorium" model previously used in the hotel industry for the public sector. This would involve state-owned banks taking over the assets, allowing the original owners to rent them at affordable prices for 3-5 years, with the rental income offsetting the principal, and offering a repurchase option in the future. This method would prevent Thai assets from falling into the hands of foreigners waiting to snap them up during a crisis.
To ensure debt resolution truly reaches communities, the government should establish "Provincial (or District-level) Debt Resolution Centers for Entrepreneurs and Citizens" without requiring massive budgets. Instead, it should focus on recruiting "retired financial experts" from various banks to act as intermediaries in debt negotiations. This group is knowledgeable, experienced, and doesn't need the same high income. Besides being able to address debt more effectively than negotiating directly with creditors, it also creates jobs for capable senior citizens.
Often, government measures focus on helping bad debtors, neglecting those who are disciplined. Mr. Surachai concluded by suggesting that the government should implement reward or incentive programs for those who make timely payments and pay taxes correctly, to encourage and motivate people to remain within the system properly.