Thailand is grappling with a household debt burden of around 90% of GDP, sparking urgent discussions among key speakers at Thailand Focus 2025 event, hosted by the Stock Exchange of Thailand. The panel, featuring insights from the Bank of Thailand, the National Credit Bureau (NCB), and the banking sector, Krungthai Bank, explored the complex nature of this challenge and outlined strategies for a more sustainable financial future.
The Evolving Debt Landscape
Dr. Roong Mallikamas, Deputy Governor, Financial Institutions Stability, Bank of Thailand, highlighted several areas of concern. First-jobbers are taking on debt earlier, with half of those aged 22–29 already indebted and a quarter struggling to repay. Many retirees also carry debt post-retirement, while a large share of borrowing is consumption-based rather than investment-driven.
Formal sector debt covers about 38% of the population, averaging roughly THB 500,000 per person. Yet the informal sector is thought to carry even heavier, largely unmeasured, debt loads—estimated at 14% of GDP.
Dr. Luxmon Attapich, Chief Executive Officer, National Credit Bureau, stated that outstanding formal household debt in their database reached THB 13.5 trillion as of June 2025, covering around 80% of total formal debt. Housing loans remain the largest component, but personal loans are climbing even as auto loans decline. The number of loan accounts continues to grow, pointing to continued borrowing in smaller amounts. Non-performing loans (NPLs) are rising across personal, auto, and even housing loans, signaling broad deterioration in debt quality.
Mr. Payong Srivanich, Chief Executive Officer of Krungthai Bank (KTB) and The Thai Bankers Association, provided an in-depth assessment of Thailand’s household debt, identifying structural challenges and proposing a coordinated, multi-layered solution. His remarks highlighted the banking sector’s pivotal role in economic development and the urgent need for collective action.
Mr. Payong stressed that household debt is deeply tied to Thailand’s economic foundation, which faces several imbalances. The informal economy makes up 48% of GDP, with 53% of the labour force classified as informal. Out of a population of 68 million, only 11 million file income tax and just 4 million pay tax, while 69 million receive state welfare. SMEs, though employing 70% of workers, contribute just 30% of GDP compared with 65% from the top 1% of firms.
Panelists pointed to several root causes:
- Low financial literacy leading to poor debt and income management.
- Slow growth and ageing demographics increasing household financial strain.
- Weak social safety nets, which push families into high-interest informal debt.
- Lack of comprehensive data, limiting accurate credit assessments.
- A large informal economy (48% of GDP, 53% of employment), creating low incomes, inequality, and weak resilience.
- Economic concentration, with 1% of firms generating 65% of GDP while SMEs (70% of employment) contribute just 30%.
- A fragmented financial system, with over 3,000 institutions, raising questions about competition and resource allocation.
Pathways to Resolution
The panel emphasized combining short-term relief with longer-term structural reform:
- Expanding AMC capacity: Dr. Roong proposed scaling up the 86 existing Asset Management Companies, which handle THB 2 trillion in distressed debt. Regulatory adjustments and soft loans could help reclassify “re-performing loans,” reducing resolution time from 7–10 years to 4–5.
- Formalizing informal debt: Dr. Roog stressed the importance of bringing informal borrowers into the system through initiatives like the Bank of Thailand’s Your Data Project (an open banking-style platform) and government data sources (e.g., utility usage). Virtual banks will play a key role in serving underserved markets with data-driven services.
- Strengthening data-driven decision making: Dr. Luxmon highlighted the NCB’s plan to expand high-quality data for lenders, consumers, and policymakers, enabling better risk management and fraud detection. Alternative data will be critical to boost financial inclusion.
- Banking sector principles and coordination: Mr. Payong outlined five principles for the industry—inclusivity, fairness (risk-based pricing), a level playing field, and healthy borrowing that supports wealth creation. He also detailed a three-phase coordinated plan with the government and central bank:
- Short-term relief through programs like You Fight We Help and lower interest rates.
- Stronger social safety nets, including a negative income tax (announced for 2027).
- Income generation via job creation, collaboration with the real sector, and incentives such as soft loans and tax breaks.
Dr. Roong concluded by stressing that while automation will help, human expertise—“doctors” for the financial system—remains essential for managing “bad banks” and restoring long-term stability.
Mr. Payong concluded by emphasizing collaboration among government, business, and citizens, anchored by respect for market mechanisms. He highlighted the importance of data—both from the National Credit Bureau and alternative sources—to drive informed policymaking.
Despite describing the current situation as a “perfect storm,” the panelists agreed it also offers a “perfect opportunity” for structural reform. Thailand can leverage its strong digital infrastructure and high internet penetration (91%), though digital adoption remains shallow (only 6% engage with tools like ChatGPT). A shift toward a data-driven economy, upskilling the workforce, and promoting financial innovation could not only ease household debt pressures but also unlock new investment opportunities in analytics, fintech, and SME lending.
