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As debt levels rise, more Thais struggle to keep up


Flashermac
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Pimpa Panlao, 31, is struggling to pay off an 80,000-baht bank loan and spends a third of her income from selling women's accessories at a Bangkok market to repay the loan.

"Business is bad and it's very tough when you have debt," Ms Pimpa told Reuters, who used part of the loan to finance her business. She is not alone.

With a debt mountain of 12.17 trillion baht at the end of March, the equivalent of 77.6% of gross domestic product, Thai households are among the biggest borrowers in Asia and they are finding it increasingly difficult to keep up with payments.

In addition, their debt pain could increase because the central bank has signalled it is likely to follow other central banks around the world and raise interest rates from near-record lows.

Non-performing mortgages, defined as those that have not been serviced in more than three months, were 3.39% of total home loans at the end of the second quarter, the highest level since the end of the global financial crisis in 2009.

Auto loans that have been delinquent for one to three months rose to 7.25% at the end of June, the highest since September last year, and compared with 6.97% at the end of March.

Private consumption is a critical element driving the Thai economy, accounting for half of its $490 billion GDP.

Consumers continued to borrow at a robust pace in the second quarter, when overall consumer debt rose 8% from a year earlier. That included a 6.2% rise in mortgage loans and a 12.4% jump in car loans.

But the risk is that an increasing debt burden will drag on Southeast Asia's second-largest economy.

The latest GDP figures for the second quarter showed the economy's expansion slowing down from the first quarter, although the state planning agency, the National Economic and Social Development Board, kept its 2018 growth forecast unchanged in a range between 4.2% and 4.7%.

But economists said expansion remains heavily reliant on exports as the high levels of household debt weigh on consumers. That was underlined by a central bank index that showed private consumption did not grow in June from May.

JMT Network Services, Thailand's top unsecured consumer debt collector, expects consumer debt to rise further this year, with housing loans making up half of the total.

"As consumer loans increase, bad debt will also rise. Now we also see more secured loans, particularly home loans, turning sour. We are buying more of that too," Sutthirak Traichira-aporn, chief executive of JMT, which buys bad loans and provides debt collection services.

JMT predicts a 30% rise in profit in 2018 on top of last year's record profit, Mr Sutthirak said.

The firm manages 3.2 million distressed debt accounts worth 128 billion baht and aims to amass more this year, he said.

"We can buy any bad debt we want in the market. It's very big, much bigger than us," he said.

One struggling debtor, Rosukon Chakkrapongwan, fears she may lose her house as she struggles to keep up payments on a 4-million-baht home loan she took up three years ago.

"It was not a problem two years ago. But this year, business is very bad as people don't spend," said the 44-year-old trader, who earns 30,000 baht a month selling cosmetics. More than half of that goes towards paying off her debt.

"I have failed to service my debt for three months now".

She also fears the worst if the central bank raises interest rates.

"This would make life even more difficult. I don't know if I can keep my house," she said.

https://www.bangkokpost.com/business/news/1531118/as-debt-levels-rise-more-thais-struggle-to-keep-up

 

Are we heading for another crash again?  It might help if Thais learned how to make a budget. And seriously folks, you don't really need a new car for every member of the family. At least show a little sense and buy a used one

 

 

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I apologise for posting in a thread and for not posting  about Thailand or bizarro porn. There... that should keep my detractors happy.

Same same Laos

Some I know have got themselves cars etc and have discovered that it's not easy making payments ad infinitum ...

In Laos the whole economy is waiting on big injections of Aid from overseas and when they do arrive, it all flows through the society, from top down of course, but in anticipation they rush out and buy stuff now...

Some of you may recognise the street that this was taken on, in Vientiane. I've seen it my self, so it's about 4  or so years old....

 

1.jpg?last_change=1388831485

 

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Hi,

"One struggling debtor, Rosukon Chakkrapongwan, fears she may lose her house as she struggles to keep up payments on a 4-million-baht home loan she took up three years ago.

"It was not a problem two years ago. But this year, business is very bad as people don't spend," said the 44-year-old trader, who earns 30,000 baht a month selling cosmetics. More than half of that goes towards paying off her debt."

You bought a 4M Baht home while making 30K Baht/month? Why the fuck did you think that would work out? And what fucking bank employee signed off on that?

But of course foreigners have to put 50% down in cash when buying a house.

Sanuk!

 

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If you're wise, you can find some great deals. However, most Thais have a thing about buying only new cars. A friend bought a 3-month-old repossessed Tiburon for maybe half its original price after the 1997 crash. First thing he had to do was order parts from Porsche (who designed it) to replace the damage the Thai buyer had done to lower its suspension to "look cool" (thereby fucking up its performance). I remember even in the early 2000s going past row after row of dealers' storage lots on the Thonburi side of the river with nearly new repossessed cars sitting in them.

Also after the last crash, the banks also started selling repossessed houses for as little as 1/3rd of their original price. The banks just wanted to clear them off their books and get recover money for them. A colleague bought one (in his wife's name) that way. I think he paid 1.5 million baht for a house and property that is now valued at about 6 million.

If you've got money to spend, hang on and wait for the opportunities.

 

 

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