A Comparative Study of the Informal Debt Solutions for Low-Income People in Thailand Compared to Malaysia, the Philippines and Bangladesh

Abstract

This research's main objective was to examine informal debt problems experienced by low-income people in Thailand and propose solutions to the problems. Data was collected from documentaries, in-depth interviews, and a comparative study of the informal debt solutions in Malaysia, the Philippines, and Bangladesh. The study showed that these selected countries and Thailand have enacted and enforced the laws in order to solve the informal debt problems. Bangladesh has enforced the Usurious Loans Act of 1918 and the Money-Lenders Act of 1940. Malaysia has enforced the Moneylenders Act of 1951 and Islamic Law. The Philippines has enforced Act No. 2655 (Usury Law). Thailand has enforced the Civil and Commercial Code and the Excessive Interest Rate Prohibition Act (B.E. 2560). Moreover, the study showed that microfinancing is a solution to the informal debt problems in those countries and Thailand. Grameen Bank, the first microfinance community bank in the world, was founded in Bangladesh with the aim of alleviating poverty. Malaysia, the Philippines, and Thailand adopted the Grameen Bank model by establishing banks and financial institutions for low-income earners as a solution to informal debt problems.

The research results revealed that the laws in Bangladesh, Malaysia, the Philippines, and Thailand do not possibly play a direct role in solving the informal debt problems. Such problems still remain in these countries. The laws could not solve the problems at their root causes. The laws are merely enforced to punish informal lenders. It can be suggested that the informal debt problems in Thailand should be solved at their root causes by adopting non-legal measures such as applying the concept of the Sufficiency Economy Philosophy and encouraging low-income people to practice financial self-discipline. Other suggestions for solving the problems would include increasing access to funding sources, organizing vocational training for low-income people, and developing markets where low-income people can sell goods and services. In addition, the government should continue to implement policies or measures to solve the said problems.