In response to Nich’s request for topics to be discussed on New Mandala, one reader posted the following comment:
Here in the Northeast I am repeatedly meeting Thais, who have relatively huge debts, formal and informal, which they will never be able to repay. How common is this? What is the national level of personal debt? What are the implications (if any) for the national economy?
This is a topic of considerable interest to me, and one that I have posted on previously. Today I was working with data compiled by the National Statistics Office. Their 2007 Household Socioeconomic Survey has some interesting figures on debt. Here are a few, which I have taken from the Executive Summary and from the various tables.
- 63 percent of households in Thailand are indebted. (Perhaps a nicer way of saying this is that 63 percent of households have taken advantage of access to credit.)
- The most common purposes for debt are: household consumption (33 percent); real estate (31 percent); agriculture (15 percent); non-farm business (14 percent) and education (3 percent).
- The average household debt was 117,000 baht – about 110,000 from the formal sector and about 7,000 from informal lenders. The average was highest in Bangkok (151,000) and lowest in the Northeast (105,000).
- For landowning farmers the average debt was 85,000. For tenant farmers the average was 105,000. Farm workers have an average debt of 38,000. The highest level of debt was among professional/technical/admin workers with 367,000!
- To put rural debt into perspective, some income figures are useful. For landowning farmers the average annual income is 150,000. For tenant farmers it is 144,000 and for farm workers it is 117,000. In other words their average debt is 56 percent, 73 percent and 33 percent respectively of their average annual income. That does not strike me as an overly onerous debt burden.
Overall, my perspective on debt is rather different to that raised by the New Mandala reader who requested more discussion on this topic. It is certainly a problem in some cases and a major source of anxiety in many rural areas (as it is in the so-called “mortgage belt” in Australian cities). But the contribution it makes to enhancing agricultural productivity and increasing rural incomes should not be understated. Credit/debt is an important component in the rise of the “middle-income peasants” who now make up a majority of Thailand’s rural population.