I continue my “Credit Cards” serie (look here the first chart)….
Today : total usage volume per month (source : BOT)
In billions THB (left scale) and with the % of growth year-on-year.
In january 2008, a total of 83,17 billions THB were spent with credit cards, that’s a 12,6 % increase compare to january 2007.
The volume increases sharply since september (linked with a huge increase of the number of credit cards issued, look at the previous chart).
What to think about it ?
There are several factors :
-people are struggling with inflation… and therefore are relying more and more on credit cards for their day to day expenses.
-it’s fashion, trendy to have a credit card (don’t laugh, it’s true in Thailand). We can see a slow move from “sound cash and gold are king” to… “look at my gold card !”. It’s a new toy.
-the banks are pushing like CRAZY their customers to take cards… to gain fees.
I would like to emphasize one point : as you can see on my previous chart, the total number of cards exploded in september and october 2007…
Ask yourself : did more than 200 000 people suddendly saw their income jumped in one month… and therefore were eligible to get a credit card from their bank ?
I can’t believe it, even by thai standards. My only explanation : the thai banks, seeing a demand, push deliberately people into more debt, people who shouldn’t have a credit card.
Thailand Crisis 
I’ve been watching the use of credit in Asia, in particular Southeast Asia for a few year now. It is a relatively new concept in this region of the world and from what I’ve gained from social interactions in the region and experiences, Asians tend to “delay” repayment if not completely ignore it. This can be seen in student loans, credit card debts, personal (non-bank) loans, shiny new condo loans, car loans, etc… It is nice to have all these new things but Thailand especially should be careful not to get itself into a mess like America has, the perception of safety and relative calm is very fragile right now, politically and economically in the country. One very bad report that catches international investor eyes and the house of cards could collapse. The shopping malls are another story in themselves, there seems to be a glut of them in Southeast Asia, filled with unprofitable stores like Central World, It is beyond me how they stay in business when more people who go there are simply there to window shop than buy. Condos craze is something I don’t even need to get into, careful on that one Thailand!
What is your assessment of the Bangkok condo market? I am not in country so am curious from someone with a first hand, on the ground view.
Thanks
Just click here :
https://thaicrisis.wordpress.com/category/economy/real-estate-economy/
You’ll easily find out what I think.
😉
To summarize the condo market in BKK from my point of view : “unbalanced”.
First I have to say that I’ve got no -financial and personal- interest in real estate. Therefore I look at it with some freedom. However, I understand that many people are interested, because they want to settle in Thailand, that they have long term plans etc. It makes sense.
I believe in one basic rule : real estate and economy are linked.
I know it sounds stupid.
But because I think that we are heading toward a recession (globally)… and that the issue is “enhanced” if I may say in Thailand due to the political instability and the Great Liability (King’s succession)… I just can’t see now, short and mid term how it would be a good deal to buy a condo in BKK.
I just can’t.
However, for someone who’s looking on the long term, and who wants to live in his condo etc…. why not ?
But for investors, those who want to rent their condos, those who dream to make a capital gain of 100 %(like we had in previous year), the flippers, etc… It goes simply way beyond my understanding and my cognitive capabilities. 😉
The gvt took recently some small dope-fix decisions, to boost the market (for instance : transfert taxes reduced… for 1 year, super…). The boiler room is going to enjoy… And after ?