No shortage of bait for the kingdom's many debt traps

It seemed this perception once resonated strongly in Thai society; one could use a title deed to guarantee loans at several banks, until the Tom Yum Kung crisis erupted in 1997. That brought an end to the lavish lending and spending.

Indeed, Thais have learnt the hard way and many people now manage to save more. Still, as Thailand is among the Asian countries attractive to Western investors thanks to its strong economic fundamentals, someone out there is always ready to lend to us, as seen in the inflows of Bt100 billion so far this year to the bond market.

It was big fun to visit Queen Sirikit National Convention Centre on March 16-18. Three events took place, showing that while some are looking for job security, it seems easy to lure people into indebtedness despite the hard lessons and warnings of the past.

The first, taking place at the Plenary Hall, was the job fair organised by JobsDB.com. In front of the hall were computer stalls, with staff wearing blue T-shirts ready to take visitors’ resumes. At the first fair, some job-seekers dropped off their resumes in the hope that they would attract invitations to interviews, while others with jobs were looking for better-paid work.

Opposite the Plenary Hall, the Bank of Thailand’s Financial Wisdom Fair was rather quiet; the fair’s theme was aimed at educating the public on how to achieve financial security. There, visitors picked up tips, among them how to escape the massive penalty charges by credit-card companies and how to avoid being cheated by insurance companies. 

This was in contrast to the crowds to be seen at the House and Condo Fair nearby, hosted by three real estate associations and the Finance Ministry, which is working very hard to attract people to its first-homebuyer scheme. The booths welcomed heavy traffic; it did not surprise me to learn that over Bt3 billion worth of transactions were signed during the three-day event, with more expected to follow. 

All participating developers came up with packages, while banks were ready to lend. Buyers were more than ready to take up a 22-square-metre condominium unit for Bt1 million. For some, a unit with enough space for a bed, a small sofa and a small pantry area could require them to pay about Bt7,000 a month, assuming a down payment of 10 per cent and a 25-year repayment period. For those earning less than Bt20,000 a month, that sum is huge. At a time when the cost of living is high, it would be difficult for them to save if they also have to pay the instalments. 

Those with higher income at the fair were lured to buy units in inner-city areas or tourist destinations like Hua Hin, where the asking price is Bt3 million to Bt12 million. Salespeople were busy explaining details of their projects and rushed all comers to sign booking contracts with special discounts. It seems that the amount of Bt5,000 or Bt10,000 required for a booking was so small that most were ready to pay. A salesperson for a condominium project in Sukhumvit Soi 69 offered me a Bt100,000 discount on a 29-square-metre unit, with a price tag of Bt2.9 million. 

He said it wouldn’t cost me a thing if I decided to pay Bt5,000 for the booking now to get the discount. His implication was that the amount was negligible, should I decide later not to buy the unit and forfeit the money. That sounded funny, given that I saw only the floor plan of the unit – not even a model was available. Yet, he said he sold many units during the fair, as many buyers simply swiped their credit cards to make the booking or a down payment.

Yes, accommodation is a basic need. In an industry where demand is huge, it seems most are ready to pay whatever amount is necessary for units in preferred locations. Banks are also ready to lend if you earn a steady income. I believe that many have received more than one phone call from credit card companies, offering to lend at zero interest for three months. Please take it to finance your spending, the callers say. The callers sound so sad when you say that you have no spending plan whatsoever. 

The salesperson’s promise of a discount and the credit-card loan conditions could convince many to build up debt. As people are bullish about the future, it seems my relative’s motto is still shared by many.