Revealed debt strategies from the last two contenders for the Bank of Thailand's leadership as financial instability persists
In a bid to tackle the growing issue of household debt and strengthen the country's economic resilience, two candidates for the Governor of the Bank of Thailand, Roong Poshyananda Mallikamas and Vitai Ratanakorn, have put forth their strategies.
Roong Mallikamas, the BOT Deputy Governor for Financial Institution Stability and a former Krungthai Bank Executive Vice President of Global Business and Strategy, emphasises a broad, balanced approach that combines income growth stimulation and responsible lending enforcement as key pillars. One of his initiatives is the "Your Data" project, a multi-sector collaboration aimed at building a transparent financial profile for borrowers, thereby increasing commercial banks' confidence in extending credit.
On the other hand, Vitai Ratanakorn, the Director of the Government Savings Bank and known for steering GSB towards a social banking model and expanding into the non-bank sector, outlines three practical measures to tackle household debt. These include promoting nominal GDP growth at around 4% annually over multiple years, reducing interest rates, and transferring non-performing, unsecured debt at discounted rates for long-term restructuring.
Vitai also supports expanding credit by enhancing institutions like the Thai Credit Guarantee Corporation and offering targeted low-interest loans to sectors affected by external pressures, such as exporters and SMEs. He acknowledges concerns about lowered interest rates leading to increased borrowing but argues the overall benefits for debt reduction and economic stimulation outweigh the risks.
Both candidates acknowledge the challenges facing the Thai economy, with Vitai noting that Thailand is currently facing long-term structural challenges, including weakened export competitiveness, a fragile tourism sector, high household debt, and entrenched structural problems. Rung, meanwhile, highlights the growing issue of debt among younger generations in Thailand, who are entering debt cycles earlier and staying in them longer.
The issue of household debt has been a concern for some time, with schemes such as the Debt Clinic and "You Fight, We Help" providing some relief, but not fully resolving the issue. The selection committee has submitted the names of two final candidates for the Governor of the Bank of Thailand: Roong Poshyananda Mallikamas and Vitai Ratanakorn.
As the Finance Minister prepares to propose either candidate to the Cabinet, the focus remains on finding a solution to the household debt crisis and boosting the country's economic resilience. Both candidates' proposals offer a comprehensive approach to the issue, recognising that a balanced approach, combining income growth and responsible lending, is essential to addressing the problem sustainably.
Sources: [1] Bangkok Post (2023) [2] Nation Thailand (2023) [3] The Standard (2023) [4] The Nation (2023) [5] The Bangkok Post (2023)
- Both candidates have proposed various strategies to address the issue of household debt in the Thai economy, with Roong Poshyananda Mallikamas emphasizing a balanced approach that includes income growth stimulation and responsible lending enforcement.
- Vitai Ratanakorn, on the other hand, has outlined practical measures such as promoting growth, reducing interest rates, and transferring non-performing debt for long-term restructuring to tackle household debt.
- Both candidates acknowledge that the Thai economy faces challenges, including weakened export competitiveness, a fragile tourism sector, high household debt, and long-term structural problems.
- In their proposals, both candidates have recognized the importance of a comprehensive approach to the household debt crisis, one that combines income growth and responsible lending for sustainable solutions. This approach also extends to business sectors, with Vitai suggesting enhancing institutions like the Thai Credit Guarantee Corporation and offering targeted low-interest loans to affected sectors like exporters and SMEs for credit expansion.
