By PETCHANET PRATRUANGKRAI
However, the UTCC does not see this as a worrisome situation, as the survey found that debtors have been moving away from underground lenders towards regulated financial institutions.
“Thai debtors have shifted to systematic loans from banks and other regulated financial institutions, showing that people will not suffer greatly from unfair creditors. People have also borrowed only when it is necessary for durable goods and for getting a better quality of life, including houses and cars,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.
The survey of 1,221 respondents conducted from September 1-12 found that 85.7 per cent were in debt. It also indicated that household debt has been rising steadily for the past 10 years, since a similar survey in 2006.
Last year, debt per household was found to be Bt248,004.
This year, monthly debt-servicing costs average Bt14,889, according to the survey. Of this, 62.3 per cent goes to financial institutions and 37.7 per cent to underground loan providers. Last year, 48.7 per cent went to financial institutions, and 51.3 per cent to loan sharks.
According to the Bank of Thailand, total household debt currently accounts for 82 per cent of gross domestic product. Thailand has one of the world’s highest household debt levels, Thanavath said.
However, rising household debt is not perceived as a major worry as people have tended to borrow to improve their standard of living, while enterprises have borrowed for investment and expansion.
Other loans include borrowing for investment, buying vehicles or homes, credit-card payments, and maintenance of vehicles and residences.
Some groups of debtors should be concerned, the survey said, including farmers and low-income people, as they have to borrow more just to cover rising daily expenses. Many people are having cash-flow problems mainly because their incomes are not keeping pace with the rising cost of living, he said.
Because of this, the government, employers and employees need to recognise that the minimum wage in some provinces may need to increase to cover higher costs, and in some areas it may need to be frozen. Some employers have also felt the impact of the slow economic recovery and cannot take on higher costs.
Thanavath suggested that the appropriate minimum wage would be Bt15-Bt20 higher than the current Bt300 per day, depending on the supply of labour in essential employment areas. Increasing the daily minimum wage to Bt360 is not suitable in this period.
He said the household-debt situation could improve next year if the economy grows by more than 4 per cent.