Thailand Initiates Asset Management Firm to Tackle $452 Billion Household Debt

Thailand plans to create an asset management company in the early part of this year to address the persistent issue of high household debt, totaling US$452 billion, according to the prime minister’s statement on Monday (Feb 12). Addressing household debt presents numerous obstacles, including the reluctance of some creditors to participate in resolution processes, Prime Minister Srettha Thavisin explained during a press conference about recent initiatives aimed at reducing debt within and beyond the banking system.

With one of the highest household debt ratios in the region, Thailand reported 16.2 trillion baht (US$451.6 billion) or 90.9% of its GDP in household debt as of the end of September 2023. Lower-income families often resort to unlicensed lending entities for financial assistance due to banking restrictions, finding themselves in cycles of high-interest debt. The Government Savings Bank will establish the asset management company to primarily address enduring debt issues, Srettha noted, though specifics were not provided. The government has promised that this new entity will implement more lenient regulations for debt management but has yet to reveal the extent of the debt it will acquire or the number of individuals it intends to assist.

While the government’s goal is to mitigate debt across the board, progress on recent measures has been gradual, Srettha acknowledged, pointing out that incomplete registrations of debtors also play a role. Since December, governmental efforts have aided approximately 12,000 individuals with a collective informal debt of 670 million baht, from over 140,000 registrants. It’s estimated that around 50 billion baht of informal debt exists. In the same timeframe, approximately 259 billion baht of debt within the financial sector was addressed. Srettha has highlighted the debt crisis as a significant barrier to fortifying the economy of Southeast Asia’s second-largest economy, which his administration aims to bolster through substantial economic incentives.