Fix SME/household debt to save economy: Property Chairmans
Property Chairman demands a National AMC and 'Debt Warehouse' to fix SME and household debt to revive the Thai economy.
- Business leaders propose resolving household and SME debt as the top priority for economic recovery, primarily through a National Asset Management Company (AMC).
- The proposed National AMC would use government funds to purchase small-scale debts (under 100,000 baht) to help vulnerable businesses regain access to credit and stimulate job creation.
- Another suggested mechanism is an "Asset Warehouse" program, which allows debtors to temporarily transfer collateral to banks to reduce their payment burden while retaining the right to buy it back later.
- A further proposal aims to tackle informal debt by allowing homeowners to use their property as collateral to refinance high-interest loans into more manageable formal ones.
Amid the government's efforts to stimulate the economy, multiple sectors are in firm agreement: the root cause of Thailand's sluggish growth lies with the heavy debt burden carried by households and small businesses.
Sunthorn Sathaporn, President of the Housing Business Association, stated that the government's foremost priority must be resolving household and SME debt through a National Asset Management Company (AMC) mechanism. This plan is currently under discussion with the Ministry of Finance and various financial institutions.
"If we can help the most vulnerable small commercial groups regain access to credit, it will create a massive ripple effect across the wider economy," he noted.
National AMC to Focus on Small-Scale Debt
The proposed National AMC is designed to allocate approximately 26 billion baht to purchase small-scale debt, beginning with groups owing less than 100,000 baht. The economic slowdown has directly hit this segment and has struggled most to access new loans.
Small businesses, such as restaurants and small factories, are viewed as prime targets for initial aid. They are seen as capable of quick recovery if given a financial opportunity, for instance, to purchase new machinery or reopen shops, which would directly lead to job creation and income flowing back into the economic system.
"Debt Warehouse" as a Short-Term Lifeline
Another mechanism the business sector deems suitable is Asset Warehousing, or "Debt Warehouse."
This measure allows debtors to transfer collateralised assets to financial institutions temporarily. This significantly reduces their debt servicing burden while they are unable to make normal payments.
Crucially, debtors can continue to lease the asset for use and retain the right to buy it back later.
This approach not only eases the burden during a crisis but also gives debtors a critical "second chance" to restart.
Expanding the Scope to Loan Shark
Prasert Taedullayasatit, President of the Thai Condominium Association, proposed expanding these measures to tackle loan sharks.
His suggestion involves using partially paid-off homes as collateral to refinance a high-interest loan shark.
This would drastically lower interest rates, stabilise household finances, and revive domestic purchasing power.
"A loan shark is a ticking time bomb. The economy will not recover until we defuse these debts," he warned.
Debt Resolution is an Investment, Not a Burden
The consensus among business leaders is that debt management is not merely a short-term aid measure but an "investment" in the economy’s foundational structure.
Despite budget and time constraints, they argue that if SMEs can be put back on their feet, the positive impact on employment, production, and national income will be substantial.
By employing targeted and focused measures, the government will achieve clearer results than by injecting capital aimlessly.
If the government commits to decisively implementing these plans, the debt that was once a hurdle could quickly become the starting point for a robust economic recovery.
Busakorn Phusae
