Household debt increase under control: Sommai
The steep rise in Thailand's household debt has eased after skyrocketing during 2011-13 following the then government's populist policies.
In the fourth quarter of last year, household debt stayed at 85.9 per cent of the country’s gross domestic product (GDP) and bad debt stood at 3.1 per cent.
Finance Minister Sommai Phasee said that the rise in the household debt-to-GDP ratio had started to slow after soaring from 70.6 per cent in late 2011 to 77.3 per cent in 2012 and 82.3 per cent in 2013.
The rise came mainly from the previous government’s populist policies, including the first-car and first-house schemes, he said.
Since then, the ratio rose at a declining rate to 85.9 per cent in the fourth quarter of last year.
However, there was no concern over household bad debts, which remained low at 3.1 per cent of total household debt on average, Sommai said.
Among household debts, personal loans and housing loans have seen bad debts at 4.7 per cent and 3.4 per cent respectively, higher than the average.
In the fourth quarter of last year, household debt totalled Bt10.43 trillion, about 85.9 per cent of the country’s GDP. Of the total, housing debt accounted for 27 per cent, auto hire purchase 16 per cent, credit-card loans 3 per cent, non-bank personal loans 3 per cent, business loans 17 per cent, cooperative loans 15 per cent and other consumer loans 19 per cent.
Sommai said there were no worries over collateralised loans. However, it was relatively difficult to control non-collateralised loans like consumer loans, credit card loans and personal loans. Such loans account for 25 per cent of total household debt.
He said that several factors, including the capability to access credit, should be taken into consideration in comparing household debts among countries.
To solve the household debt problem in the long term, people should be encouraged to get more income through income distribution and narrowing disparity, Sommai said.
Earlier, the government had approved a Bt40-billion budget increase for the village fund. In April, three nano-finance companies have been set up. Presently, there was about Bt100-billion underground debt, or 1 per cent of household debt in the system, but the real figure may be higher at 2 per cent, Sommai said.
