Thailand

Multinational companies drawn to Southeast Asia by hopes of a long consumption boom are witnessing a reversal of fortunes in its three biggest economies as shoppers lose their mojo, the Financial Times reported. Household debt, sluggish wage rises and political uncertainties are dragging on spending growth in Thailand, Indonesia and Malaysia.

Thailand's military-led government has approved a restructuring plan for Thai Airways International PCL in a bid to restore profitability to the national carrier's operations, a senior government official said on Monday, Reuters reported. State-controlled Thai Airways is one of the major state companies to undergo reform after the military seized power from an elected government in a May coup. The restructuring includes measures to cut operating costs, boost revenue and sell some non-core assets, said Kulit Sombatsiri, director general of the State Enterprise Policy Office.

Din Ruenmeesang spends about half his monthly income making minimum payments on his seven credit cards and multiple bank loans. That isn’t stopping the 33-year-old from borrowing again to buy a new car next year. Spenders like Din are making it hard for Thailand’s central bank to cut interest rates even as Southeast Asia’s second-largest economy struggles with weakening growth. Thai household debt has more than tripled in a decade to a record high 83.5 percent of gross domestic product, and lower borrowing costs may exacerbate that.

The junta that seized power in Thailand four months ago has used martial law and a crackdown on its critics to subdue the politically polarized country, the International New York Times reported. But it may have more difficulty handling a fragile economy. Household debt is at a record high in Thailand, exports are flat, the number of tourists is well below last year’s count and experts say low levels at dams across the country are foretelling a severe water shortage. The central bank predicts economic growth of 1.5 percent this year.

Thailand revealed plans Tuesday to provide $312 million in loans to help its financially strapped farmers, many of whom are in debt to loan sharks, in the latest step by the military junta to help boost the economy, The Wall Street Journal reported. Loan sharks, who charge as much as 60% in interest a year, have thrived amid growing household debt, which rose to 82.3% of gross domestic product this year. Economists are concerned Thailand's high household debt will reduce consumption, a major engine driving the country's economic growth.

Bankruptcy cases, both personal and commercial, have shown signs of rising due to the economic slowdown this year, the The Nation reported today. As of October, the Legal Execution Department had 264,232 cases with assets for sale valued at up to Bt3.47 trillion. In the last fiscal year ended September, the department succeeded in settling 25,717 cases by mediating between debtors and creditors and selling assets for Bt33.14 billion out of an estimated value of Bt33.23 billion. For this fiscal year, the department targets to clear at least 150,000 cases.

Thailand’s biggest bout of political unrest under the current government has increased economic risks, threatening to crimp a rebound from recession as protests damp local consumption and investment while weakening the currency. Gross domestic product will rise an average 3.6 percent this year, according to the median estimate in a Bloomberg survey of 26 economists, lower than a forecast of 4 percent in August. GDP probably expanded last quarter from the previous three months after contracting in the first half of the year, a separate survey showed ahead of a report due Nov. 18.

Two Thai business tycoons, one a politically connected Chinese speaker, the other the son of a street vendor, have spent $27 billion on acquisitions in the past year, mainly abroad - more than all Thai firms spent overseas in the previous three years. The billionaires - 74-year-old Dhanin Chearavanont and Charoen Sirivadhanabhakdi, five years his junior - personify Thailand's bull market and Asia's frothy credit, feeding on fast, cheap loans bolstered by a surging local currency.

Last quarter, 7,221 Thai companies closed down, 27 percent higher than in the same period a year earlier, when the worst floods in 70 years swamped most of the country, Bloomberg reported. The figure is also more than double the average of 3,000 in the previous nine years, according to data from the National Economic & Social Development Board. Prime Minister Yingluck Shinawatra’s government raised the daily minimum wage to 300 baht throughout the country last month, after a similar increase in April in seven provinces including Bangkok.

Thailand's government will today press the central bank chief to take on $35 billion of legacy debt from bank bailouts as Prime Minister Yingluck Shinawatra looks for fiscal scope to finance flood defenses, Bloomberg News reported yesterday. Bank of Thailand Governor Prasarn Trairatvorakul meets with cabinet members in Bangkok over the proposal to shift the debt to the BOT's balance sheet.