A Malaysian government minister has expressed alarm over the high number of university graduates being declared bankrupt after losing control of their "excessive" credit card spending in the early stages of their working lives. He is not alone. Similar concerns were echoed this week by Thailand's foremost think-tank which warned the spending behaviour of many low-and middle-income earners has become a source of worry because of increasing credit card debt and the growing number of defaults and non-performing loans.
In its latest Social Outlook report, the National Economic and Social Development Board (NESDB) says non-performing personal loans exceeded 56.5 billion baht in the third quarter of this year, making up 21.4% of the outstanding non-performing loans of all financial institutions. It is little surprise that much of this additional drain on household finances came from eagerness to take advantage of the government's popular "first car" and "first home" schemes as well as the desire to splurge on everything from new motorcycles and flashy TVs to smartphones.
NESDB deputy secretary-general Suwannee Khamman said the number of personal loans taken out to buy vehicles jumped by 33.6% from July to September over the same period last year. Loans for new homes increased 10.3% and for other products and services by 30.3%. She quoted Bank of Thailand figures showing outstanding personal consumption loans stood at 2.74 trillion baht, up 20.4% year-on-year and also consecutively higher than those in the first and second quarters of this year.
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