Last Updated: Friday, 19 December 2014, 13:25 GMT

Thailand: Nature and extent of loan-sharking; protection available for victims of loan sharks

Publisher Canada: Immigration and Refugee Board of Canada
Author Research Directorate, Immigration and Refugee Board of Canada, Ottawa
Publication Date 29 January 2008
Citation / Document Symbol THA102734.E
Cite as Canada: Immigration and Refugee Board of Canada, Thailand: Nature and extent of loan-sharking; protection available for victims of loan sharks, 29 January 2008, THA102734.E, available at: http://www.refworld.org/docid/47ce6d80c.html [accessed 19 December 2014]
DisclaimerThis is not a UNHCR publication. UNHCR is not responsible for, nor does it necessarily endorse, its content. Any views expressed are solely those of the author or publisher and do not necessarily reflect those of UNHCR, the United Nations or its Member States.

According to a Thai magazine, the practice of loan-sharking [the practice of lending money at exorbitant rates of interest] is widespread in Thailand and interest rates can vary between 36 to 60 percent a year (Citylife May 2005). Following a nation-wide survey entitled the Chamber Business Poll, The Nation reports that household debt in Thailand hit an all-time record high of 31 percent of gross domestic product (GDP) in August 2007, and that 32 percent of people were using loan sharks, indicating an increase from 26 percent in the previous year (24 Aug. 2007). Another survey conducted in Bangkok in October 2007 by the Kasikorn Research Center reveals that 21.1 percent of households with monthly incomes lower than 15,000 Thai baht (THB) [1 THB = $0.03 Canadian dollars (Canada 2 Nov. 2007)] owe money to loan sharks (The Nation 3 Nov. 2007). Loan-sharking is illegal in Thailand (ibid. 8 Dec. 2007; ibid. 16 Feb. 2006; Citylife May 2005; thaisnews.com 30 Sept. 2005). An article from the Thai magazine Citylife indicates that, even though loan sharking is illegal, "no one cares" as many people make use of it, and that it is such a widespread practice that it has become ingrained in Thai society (May 2005).

An article in The Nation describes tactics used by loan sharks (The Nation 8 Dec. 2007). Sometimes loan sharks operate through shops, which sell for example gold and electrical appliances (ibid.). Customers buy products on credit cards and then obtain money instead of the product, minus an agent's fee which goes to the shop; the borrower must then pay the credit card invoice for the whole amount (ibid.).

An article published in November 2007 in The Nation reports on a case where a woman was shot at by a loan shark who was trying to collect money owed to him by her husband; the woman had received threats from the loan shark a few days prior (30 Nov. 2007).

In an article on loan sharks, the Thai magazine Citylife interviewed several lenders on their business practices (May 2005). One lender is reported to have "friends in the police force who have visited borrowers reluctant to pay back a loan" (Citylife May 2005).

The Bangkok Post reports that the Centre for Protection of Consumer Rights, a private group consisting of 4,700 members who are in trouble with debts, has lodged a complaint against creditors with the Crime Suppression Division (CSD) claiming that creditors are using "heavy-handed tactics" to get debtors to repay their loans (27 Aug. 2007). The article adds that creditors threaten debtors with criminal charges, even though defaulting on a loan is not a criminal offence, and that some debtors feel they have no choice other than to take out loans with loan sharks in order to pay their credit card debts (Bangkok Post 27 Aug. 2007). Corroborating information on the complaint lodged by the Centre for Protection of Consumer Rights could not be found among sources consulted by the Research Directorate.

Protection and governmental efforts

In January 2006, The Nation reported that then prime minister Thaksin Shinawatra initiated a new program to eradicate poverty, including the implementation of a fund of three to four billion bahts to "take care of the loan-shark problem" (21 Jan. 2006). In May 2007, the Finance Ministry announced an "economic stimulus package" which would help low-income borrowers obtain loans from banks and prevent them from resorting to loan sharks (The Nation 3 May 2007); however, additional or corroborating information on these programs could not be found among the sources consulted by the Research Directorate.

In December 2007, the Bank of Thailand and four state agencies launched a crackdown on illegal loan providers and anyone collaborating with them (The Nation 8 Dec. 2007). People putting up posters or handing out pamphlets advertising illegal loans could be subject to a maximum fine of 2,000 THB, and those placing advertisements in newspapers could be subject to a maximum sentence of three months' imprisonment and a 30,000 THB fine while newspapers could be fined half of this amount for indirectly supporting illegal loans (ibid.). Operators of stores providing illegal loans could be subject to a maximum sentence of one year imprisonment and a fine of 20,000 THB (ibid.). According to The Nation, 32 illegal loan providers had already been arrested, and people involved with 31 of these 32 illegal loan providers had been sentenced (ibid.).

According to two media sources, new legislation (The Nation 16 Feb. 2006) or a new plan (thaisnews.com 30 Sept. 2005) has been proposed that would allow the Anti-Money Laundering Office (AMLO) to seize the assets of lenders who charge illegal interest rates (i.e., over the limit set by the Bank of Thailand) (ibid.; The Nation 16 Feb. 2006). Additional and more recent information on this proposed legislation or plan could not be found among the sources consulted by the Research Directorate.

This Response was prepared after researching publicly accessible information currently available to the Research Directorate within time constraints. This Response is not, and does not purport to be, conclusive as to the merit of any particular claim for refugee protection. Please find below the list of additional sources consulted in researching this Information Request.

References

Bangkok Post. 27 August 2007. "Creditors Accused of Brutish Tactics; Debtors File Police Complaint with CSD." (Factiva)

Canada. 2 November 2007. Bank of Canada. [Accessed 14 Jan. 2008]

Citylife [Chiang Mai]. May 2005. "Loan Sharks." [Accessed 7 Jan. 2008]

The Nation [Bangkok]. 8 December 2007. Anoma Srisukkasem and Somruedi Banchongduang. "Crackdown on Shady Money Lenders." [Accessed 7 Jan. 2008]
_____. 30 November 2007. "Loan Shark Victim." [Accessed 7 Jan. 2008]
_____. 3 November 2007. "20% of Low-income Households Have Loan-shark Debts." [Accessed 7 Jan. 2008]
_____. 24 August 2007. Petchanet Pratruangkrai. "Household Debt at Record Level." [Accessed 7 Jan. 2008]
_____. 3 May 2007. Wichit Chaitrong. "Bt44-bn Stimulus Package to Help Low-income Groups." [Accessed 7 Jan. 2008]
_____. 16 February 2006. "AMLO Sets its Sights on the Assets of Loans Sharks." [Accessed 18 Jan. 2008]
_____. 21 January 2006. Pravit Rojanaphruk. "Foreign Diplomats Get Ringside Seats in At Samat." [Accessed 18 Jan. 2008]

Thaisnews.com. 30 September 2005. "Crackdown on Thai Loan Sharks." (bkkok.com) [Accessed 4 Jan. 2008]

Additional Sources Consulted

Oral source: The Anti-Money Laundering Office (AMLO) did not provide information within the time constraints of this Response.

Internet sites, including: Anti-Money Laundering Office (AMLO), Bank of Thailand, Factiva, Freedom House, Kasikorn Research Center, Ministry of Finance of Thailand, Peterson Institute for International Economics, Thailand Development Research Institute (TDRI), ThailandOutlook.com, United States Department of State.

Copyright notice: This document is published with the permission of the copyright holder and producer Immigration and Refugee Board of Canada (IRB). The original version of this document may be found on the offical website of the IRB at http://www.irb-cisr.gc.ca/en/. Documents earlier than 2003 may be found only on Refworld.

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