FRIDAY, March 29, 2024
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Village funds prove critics wrong

Village funds prove critics wrong

Democratisation of spending encourages new jobs and better loan repayments

ONCE DUBBED as a populist policy, the country’s Bt1-million village-fund project has gone from strength to strength over the past 16 years. 
At present, the project has given birth to more than 2,560 community-based financial institutes. Its non-performing loans (NPL) rate is about four per cent. 
“And although there are more than 70,000 village funds across the country, we have received just 2,000 complaints about it,” National Village and Urban Community Fund Office’s chief executive Natee Khlibtong said recently.
He said his office defines NPLs differently from banks, because village funds are closer to their members. 
“For as long as our members still live in the village, we have not treated their debts as NPLs,” Natee said. 
Launched in 2001 during the Thaksin Shinawatra government, the project drew much criticism. Several academics said it was just a populist policy with a significant risk of failure. 
The project has proven all its critics wrong. 
Just as it has extended funding access to people who are often shunned by commercial banks, it has allowed them to upgrade their occupational qualifications and evade the danger of loan sharks. 
As village-fund members improved their financial status, the economy became stronger, which in turn benefited the country. 
Over time, the Bt1 million-per-village fund project has expanded and transformed into the National Village and Urban Community Fund. 
The current government led by General Prayut Chan-o-cha has used village and urban community funds to strengthen local economies. The government has allocated Bt40 billion for developing these funds further, Bt60 billion for loans that will be interest-free for two years, and Bt35 billion for developing community infrastructure. 
This is expected to create jobs and further boost the potential of communities.
In addition, the Prayut-led administration is expected to approve Bt15 billion for strengthening village and communities via its Pracha Rath policyon July 31. 
Aside from money, the government has extended various other forms of support for this project. 
Prime Minister’s Office Minister Suvit Maesincee, who oversees the National Village and Urban Community Fund Office, said the government would be equipping village and urban community funds with knowledge. 
“We will teach fund members about laws, digital technology, accounting, financial planning and marketing,” he said. 
According to Suvit, the Attorney-General’s Office and the Justice Ministry will help provide legal knowledge. 
“We will also inculcate financial discipline in fund members,” he said. 
Suvit said the Digital Economy and Society Ministry would partner with village and urban community funds to teach their members about IT, and digital knowledge. The Commerce Ministry, meanwhile, would teach fund members about marketing. 
“Such knowledge will boost the sustainability of the funds and fund members,” he said. 
Suvit emphasised that village and urban community funds must embrace HM the late King Bhumibol Adulyadej’s “sufficiency economy philosophy” based on the self-reliance concept and networking guidance. 
At the same time, they must also follow HM King Maha Vajiralongkorn’s outstanding virtues about sufficiency, discipline and public-mindedness. “In the face of a volatile global economy, the government focuses on strengthening the Thai economy from within,” Suvit said. “We will create a society that promotes fairness, opportunities and abilities.” 
Suvit described fair economic opportunities as a form of “economic democracy”. 

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