Bangkok--8 Dec--NESDB
The Office of the National Economic and Social Development Board (NESDB), on December 4, 2009, reported Thailand’s social condition in the 3nd quarter of 2009.
Dr. Ampon Kittiampon, NESDB Secretary General, and Ms. Suwannee Kamman, Deputy Secretary General, together reported significant social situation and movements, summarizing as follows:
Social Development Report in Q3/2009
Overall employment increased from the corresponding period of last year by 1.4 percent. The number of jobless claims dropped. A low unemployment rate at 1.2 percent is one factor indicating some improvements in quality of life of people. In this quarter, there were major structural changes, i.e., (1) there was a growing tendency for self-employment, especially in trading and service sectors, due to adjustment after economic crisis, and preference for a free and flexible working style. Therefore, there requires measures for labor protection, social securities and funding sources for self-employed workers. And, (2), most workers had better educational achievements, but they still need necessary qualifications and skills for occupation that meet the labor market demand, and applicable for changes in technology and production structure, in order to increase productivity of labor.
Health problems following new diseases should be monitored closely, especially as the result of the outbreak of Influenza A (H1N1), thus increasing the number of patients suffering from flu by 8.6 fold from the same period of last year. Special attention would be needed at yearend, during which flu, bird flu, and pneumonia tend to increase seasonally.
Consumption of tobacco and alcoholic beverages dropped, but consumption of self-wrapped cigarette and smokeless-tipped tobacco tended to rise. Thus, controlling measures for sales and consumption are need urgently, together with excise tax adjustment in order to close the loopholes.
Security in life and property remained a major social problem. The number of offence against property increased 12.7 percent from Q2/2009. Some serious offence against life, body and genders, also tended to rise. Furthermore, drug cases related partly to other types of crime by both traders and drug addicts.
Consumer protection has improved since the enforcement of 2 Consumer Protection Acts in 2008. The Act on Liability for Damage from Unsafe Products has urged all producers to pay due attention to sound quality control of their products and services, and the Consumer Case Procedure Act has enabled customers to file their complaints more efficiently. The numbers of complaints against telecommunication services increased rapidly in 2008, and 41 percent of these cases have been solved. In this regard, consumers should remain prudent in their service exposures and understand their legitimate rights.
Household debts continued to increase. The NSO Socio-economic Survey of households in the first six months of 2009 showed that 61.8 percent of the households were obligated to debts, and an average debt per indebted household was 214,684 Baht, increased by 8.5 percent a year. Due attention should be paid to the mounting informal loans because borrowers are prone to risks from the extraordinarily high debt burdens and unfair treatments by loan sharks. Particularly when the economy has fully recovered and tight liquidity has prevailed, many people would have to turn to express cash services and informal lending sources.
Highlights: Express Cash: Lender of Last Resort or Pitfall for Needy People
Express cash service has been increasingly popular in the last ten years. Express cash service in the formal financial system usually includes cash card, hire-purchase or purchase under installment plan. Informal lending sources, however, are more variable by nature, such as general loans, and loans based on some formal financial instruments, such as credit cards and installment purchase of goods.
A recent survey of people indebted with express cash service by non-bank institutions and informal sources showed that, 33.5% of respondents were obligated to express cash, and 20.3% were obligated to loans from other sources. This gives the total of 53.8% of respondents who are indebted. Among the express cash users, 82.2% of them borrowed from informal sources, and farmers showed the highest proportion of debts from informal sources. Low-income earners showed a higher proportion of debts from the informal sources than those high-income earners. The main reason underpinned increasing reliance on express cash is the easy and fast approval process. Around 67.4% of express cash users used to borrow from other sources, especially pawnshops, and 13.5% had applied for credits from financial institutions, but most of them were rejected. Major borrowing purposes were for their daily expenses, education, working capital, and for debt settlement. The point of concern was the borrowing for installment payment / debt settlement, and students who borrowed money to settle debts incurred from gambling and to spend on night entertainment. An average loan under express cash service was 35,090 Baht per head. Most of them were able to pay back loans, but 25.8% of them had to re-borrow to pay loans, which would become a never-ending debt creation process.
Express cash service can resolve their problems immediately, and somehow create opportunity for occupation, but easy lending would lure borrowers to spend lavishly. Some negative effects would follow, especially high interest payment burdens, unkind debt collection process, tension in daily life, family conflicts, and swindle by the lenders. Some indebted persons may end up with crime that leads to more social problems.
Government measures have been implemented so far include expansion of accesses to funding sources, such as loans from people’s banks and village funds, etc., restructuring of household debts, promotion of household savings, as well as provision of consulting services and assistance. One of the upcoming measures is to increase an additional between 200,000 to 600,000 baht on top of each village fund depending on certain criteria, which will increase accesses for more than 900,000 people. The new measures also include debt restructuring by converting informal lending to lending under a formal scheme by state-owned financial institutions, including rearrangement of the informal lending system.
A solution for the mounting express cash is to urge people’s awareness and attitude of prudent spending with careful planning. It is also crucial for people to attempt to seek extra income and to save money for emergencies. The government should provide thorough access to funding sources, promote community financial organization, and rearrange the informal lending system. In addition, relevant authorities should be urged to provide knowledge to people about their rights and necessary legal issues to prevent unfair treatments by lenders. However, to ensure sustainability in eradication of household debts, it would be greatly necessary to ensure stable source of income for people, promotion of savings, and promotion of living according to the Philosophy of the Sufficiency Economy, with moderate and reasonable spending
NESDB : National Economic and Social Development Board