Call for financial education strategy
A national strategy on financial education is needed to enhance the country's financial stability, says the Organisation for Economic Cooperation and Development (OECD), while the governor of the Bank of Thailand says financial inclusion and financial lit
“The principle of national strategies to promote financial education and inclusion is very important because they basically organise a comprehensive approach of strategies which are being developed by countries,” said Andre Laboul, chairman of the OECD International Network on Financial Education.
“A lot of Asian countries are developing this national strategy and some are revising their strategies that [were] developed years ago. Thailand is one of the countries which [are] currently developing this strategy,” Laboul said at the “OECD/Thailand Seminar on Financial Inclusion and Financial Literacy in Asia” yesterday.
BOT Governor Prasarn Trairatvorakul said financial inclusion and literacy were the prerequisites for solid development of the national economy and a sound financial system, since consumer empowerment is important to the stability of the financial sector. There is work to be done in the Kingdom on this aspect because an effective measure to improve financial behaviour is still needed.
Prasarn said attempts by the Financial Consumer Protection Centre to get Thais to save and spend wisely had not yet been fully accomplished.
“Household debt has been high, at 70-80 percent of GDP, for the past two years. Crucial financial information and knowledge provided at point-of-sale are often ignored by customers. Moreover, people still seek loans from alternative sources such as from the informal sector.”
Nevertheless, Prasarn has said the central bank is less worried about the rising level of household debt, since it has been slowing down substantially since mid-2013.
Thailand’s household debt to gross domestic products has risen from 55.8 per cent in 2008 to the latest official number of 83.5 per cent in the second quarter of 2014. But the rate of household debt growth when compared year on year has slowdown from 15.7 per cent in the second quarter of 2013 down to 8.1 per cent in second quarter of 2014.
Prasarn also pointed out that supply-side factors could partially influence the demand side. Intense market competition and countless innovative products and services could encourage careless spending behaviour.
He added that the three root causes for adverse decisions on saving and spending might be poverty, the growing trend of consumerism, and ignorance.
“Consumerism largely overshadows people’s self-restraint and eventually entices them to spend recklessly. In this well-connected era, consumerism has rapidly intensified and spread widely through various perceptive channels, especially the mass media,” he said.
Jeanette Kwok, senior manager of corporate communications, research and planning at Hong Kong’s Investor Education Centre, said the IEC’s three-year strategy for financial education concentrated on three key components: mass media, community outreach, and website approaches.
