Household debt is a ticking time bomb, warns Narumon of Palang Pracharath

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She advised lenders to pay attention to borrowers’ debt repayment potential, as household debt came from banks, savings cooperatives, hire-purchase and leasing companies, as well as loan sharks.

“Lenders need to lend responsibly and not just focus on interest or collateral value,” she advised.

Many borrowers do not fully understand the interest mechanism until they suffer from the debt burden or even lose their homes, Narumon said.

Borrowers should have basic financial knowledge and be able to make easy repayment/financial plans on how much they can borrow, so that they do not suffer from crippling debt in the future, a she declared.

The government should not use state banks to provide low interest loans as this would encourage households to borrow more money.

“The government would gain political benefits in the short term, but it would cause problems for citizens and the economy in the long term,” she said.

Government and private sectors must cooperate to increase public revenue, Narumon said.

She also advised to upgrade the skills of 10% of the workers in the agricultural sector before moving them to the industries, which would allow the workers to generate more income.

“Meanwhile, the government and private sectors must come up with innovations to increase the incomes of the agricultural sector,” she said.

“Most importantly, they need to develop workers’ skills to meet labor market demand.”

There are many ways to tackle informal and household debt, including debt restructuring, Narumon added.

“Everyone must help tackle household debt together before it’s too late,” she warned.

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