Thailand will establish an asset management firm in the first quarter of this year to help resolve its stubborn problem of high household debt worth $452 billion, the prime minister said on Monday.
Household debt management had many challenges as some creditors refused to enter the process, Srettha Thavisin told a press briefing on recently announced measures to tackle debt both in and outside the financial system.
Thailand has one of the region's highest ratios of household debt, at 16.2 trillion baht ($451.6 billion) or 90.9% of gross domestic product (GDP), as at the end of September 2023. Use of illegal loan sharks is rife among lower-income families unable to get bank loans, with many people trapped by debt with high interest rates.
The asset management firm would be set up by the Government Savings Bank and would mainly tackle persistent debts, Srettha said, without giving details.
The government said the new company would offer more relaxed rules in managing debt but did not disclose how much debt it would buy or how many people it would help.
While Srettha has said the government aims to resolve debt in the entire system, the results of the recent measures have not been fast.
"The road ahead is still very challenging," Srettha said, adding incomplete debtor registrations were also a factor.
Since December, the government has only helped about 12,000 people with a combined informal debt of 670 million baht ($18.7 million), out of more than 140,000 people registered. The government has estimated there is about 50 billion baht of informal debt.
During the same period, the government said it had tackled about 259 billion baht of debt in the financial system.
Srettha has cited the debt problem as a major impediment to strengthening Southeast Asia's second-biggest economy, which his government is seeking to revive with big stimulus.
Earlier on Monday, Srettha reiterated that his government would move ahead with a $14 billion handout scheme to boost consumption. He said he would meet with the committee overseeing the scheme to discuss the delayed plan on Thursday.
The scheme would transfer 10,000 baht ($279) each to 50 million Thais to spend in six months, but has been hounded by concerns over how it will be funded, with some experts calling it fiscally irresponsible. ($1 = 35.88 baht) (Reporting by Orathai Sriring, Kitiphong Thaichareon, Satawasin Staporncharnchai and Panarat Thepgumpanat; Editing by Martin Petty and Shri Navaratnam)