Loan Sharks: Thailand

Loan Sharks: Thailand

Many individuals who work in the agricultural industry in Thailand are not able to take out loans from banks as banks fear these people won't be able to pay them back based on their income. The problem is as the economy starts to improve in Thailand, those working/living in the rural areas are now aspiring to have the same consumer goods as that of their countrymen and women that live in the cities. As a result of this, these people are being left stranded in a position where they are desperate for money and so they turn to loan sharks. The actions of these loan sharks in lending have stripped many of the little income they have. Even with the work of the Thai government to stabilise rural income, loan sharks are now at the centre of Thai economics.

 

 

Loan sharks in Thailand commonly offer two lending schemes:

1)A borrower can pay interest of 2% per day every day for 24 days.

2)A borrower can repay the initial amount plus 2% daily interest in equal instalments.

 

It's fair to say that both options aren't really good deals.

 

Figures stated suggest that in taking a loan of 100,000 baht from loan sharks, households could lose out on roughly $800 per month.The government plan to take action against loan sharks by scrapping their current interest ceiling that has been in place for sixty years. The effects of this will mean that loan sharks will have to charge households no more than 28% interest per annum. The government think that in introducing this policy it will make loan sharks see the light in helping poorer households so that they can contribute to the vastly growing economy.

 

I personally view that all as malarkey, there is no way of making sure that these loan sharks follow these new rules and I don't see any of them wanting to cut back on the amount of profit they gain. After all, that's how they make a living. Also, there is no reason why loan sharks should side with a government who are trying to get rid of them. If someone were to strike you with their hand, would you run to their defence?

 

I think this is another prime example of governments trying to sweep issues 'under the carpet' just because the people involved won't have a big impact on the economy. Had these problems occurred in the urban districts of Thailand, I doubt the government would have taken such feeble action. I think that the only way to win the fight against loan sharks is to give these people welfare benefits so they don't have to be in position where they need loans. Another solution would be to give them tax credits so they can retain more of their income.