Post 386: Thai Households Underwater

In November of 2011, the district of Lak Si on the northern edge of Bangkok was strategically flooded. That year, Lak Si was just one of many areas that sank beneath the putrid sewage mixed flood waters but for me it was the most important, because it’s the place that I call ‘home’. In 2013 it seems highly possible that the flooding will happen again, but in this post I’m actually referring to a very different kind of ‘underwater’.

Back in 2008, while travelling through Thailand on a scooter, I witnessed a fundamental economic change, a change that impressed and worried me in equal measures. Following the Asian Economic Crisis of 1997, Thailand had experienced a high and consistent level of economic growth and the evidence of that sustained development was clearly visible. The good people of Thailand were living the material dream and new scooters, motor cars and apartments were everywhere. In Ashes to Boonville I commented that the dreams of parents had apparently become the expectations of their children, but just as had happened in the West, the availability of easy credit for low income families would be a slippery slope to ruin. The previously frugal lifestyle of the Thai’s had dramatically changed, taxi-bike riders earning THB 15,000 per month ($500) were riding brand new Honda’s, living in THB 1,000,000 apartments and every home had a brand new Japanese car or pick-up truck in its driveway, often both.

Recently released figures show that in 2012, the registration of new vehicles in Thailand had rocketed by 81%. Of course, some of those vehicles were replacements for those lost in the floods, but most of them were actually purchased by virgin owners under a government backed scheme. That scheme was the Thai version of ‘Cash for Clunkers’, but without the ‘Clunkers’, where the government offered a THB 100,000 ($3,000) incentive to first-time purchasers. The result was a huge increase in the sales of new vehicles and the fallout from that huge increase is already visible.

To buy a new vehicle in Thailand, you’ll pay slightly more than you would in the USA and slightly less than you would in the UK or Europe, but the average income for a Thai is substantially lower than in the West. After removing the top 5% of high-income-households, the average income for a Thai worker is approximately $7,000 per annum. For many of these first-time vehicle buyers, the delayed monthly payments are kicking-in and the households are sinking beneath the flood of easy credit. Repossessions are rocketing, residential car parks are emptying and the used car lots are overflowing with nearly new merchandise. 

I'm not sure what the final outcome will be, but I am sure that whatever it is, it won't be pretty... mai pen rai kap