The National Economic and Social Development Council (NESDC) of Thailand, in its recent analysis of the local economic state, relayed the National Credit Bureau’s data demonstrating that Thai citizens have aggregated debts in a staggering 83.1 million accounts recorded as of the culmination of Q1.
Strikingly, only a third of these NPLs (Non-performing loans) originated from commercial banks, accounting for a meagre 2.6% of total household debts. This essentially infers that many Thais have acquired a substantial portion of debts from non-banking financial institutions. These insights were put forth by NESDC’s Deputy Secretary-General, Vorawan Plikamin.
It is noteworthy that Plikamin emphasised monitoring young professionals (under 30) and older individuals between 50-59 years, as these age categories have led to notable elevation in NPLs with a yearly increment of 4.1%. She expressed deep concern regarding the Gen Y (18 to 32 years) demographic as these individuals frequently invest in high-end commodities, without adequately considering the future impact on their personal finances.
Vorawan also elaborated on the rise in NPLs among seniors over the last three-year span (2020 to 2022), with an extraordinary annual rise of 10.2%. However, the cause was not overspending, but rather, a decline in their earning capability and therefore, lesser ability to repay debts.
The NESDC report underscored that within Q1, auto loans constituted the most sizable chunk of NPLs, with a dramatic annual increase of 30.3%. This was reportedly the highest escalation noted over a 14-quarter duration. Approximately 95,000 vehicles are potentially facing repossession as the majority of the buyers, who are under 30 years, have begun to default on their repayment.
In light of escalating household NPLs, the NESDC has cautioned the Bank of Thailand and other relevant authorities to regulate the loan provisions of financial institutions and ascertain their accordance with legal and ethical financial standards. It also proposed for the National Credit Bureau to waive application fees to encourage more loan providers to join, resulting in a more accurate representation of Thais’ household debts.
The council also stressed the importance of imparting financial literacy to Thai citizens of all ages, covering essential topics such as financial planning, investment, and saving.
In the Monday report, the NESDC revealed an improvement in the employment scenario during Q2 of 2023, with an average monthly wage of Thais approximated at 14,032 baht. A total of 39.7 million individuals secured employment, marking a 1.7% year-on-year rise. Meanwhile, the unemployment rate has fallen from 1.37% last year to 1.06%, with around 430,000 Thais reported jobless during the second quarter of 2023.