Thailand drafting new support plan for vulnerable businesses amid slowdown

Roong Mallikamas, Deputy Governor for Financial Institutions Stability at the BOT, said Thailand’s sluggish economic growth, coupled with rising global risks such as recent developments in the United States, has created an urgent need for a new wave of sustainable businesses and a renewed investment cycle—something the country has not seen in decades. 

Liquidity alone, she stressed, is no longer sufficient.

To that end, the BOT, NESDC and the Finance Ministry are in discussions to develop targeted support that helps debtors adjust more effectively to volatile conditions. This effort includes integrating financial data from banks to thoroughly assess debtor vulnerabilities.

“The Finance Minister has personally instructed us to speak with commercial banks to determine the characteristics of businesses that are likely to survive—whether they need new products, access to new markets, or specific types of support. The banks also need clarity on what assurances they would require before lending to these groups,” Roong explained.

She said the initial focus will be on three pilot industries: tourism, food and agro-processing, and medical and wellness sectors.

Asked whether interest rate cuts could help, Roong said such measures could ease debt burdens and improve liquidity but warned they are not a panacea.

“A rate cut may ease some of the burden, but the Thai economy needs more than just liquidity. Our priority must be helping businesses adapt. Liquidity is one part of the puzzle, but not enough on its own to ensure survival,” she said.

Roong noted that ongoing efforts to identify appropriate support for debtors would help guide the design of government-backed initiatives, such as credit guarantees or soft loans.

As for credit guarantees, she clarified that these could be implemented without waiting for the newly established National Credit Guarantee Agency (NaCGA), and could instead proceed through the Thai Credit Guarantee Corporation (TCG), albeit with higher guarantee coverage ratios.

One major obstacle to credit access, Roong noted, is commercial banks' reluctance to lend due to heightened credit risk. In the short term, the BOT is working with multiple agencies to clarify the risk landscape, as banks will only lend if they believe a debtor has a high probability of survival and repayment.

In the long term, Roong said, efforts must focus on reducing the cost of acquiring smaller debtors and shifting more bargaining power into the hands of borrowers. This includes diversifying financial service providers, enhancing flexibility, and increasing the availability of credit data.

To support this, the BOT is advancing the “Your Data” initiative—an inter-agency effort to build a digital data bank that allows borrowers to use their financial transaction history as collateral. 

Clearer borrower data, she said, will give banks greater confidence in extending loans.

Tackling household debt alongside interest rate policy

Thailand faces a combination of short-term and structural challenges, including the lingering effects of global trade tensions and persistently high household debt levels, which continue to weigh on domestic consumption.

According to the World Bank’s July edition of the Thailand Economic Monitor, household debt has declined slightly to 87.9% of GDP but remains the highest in ASEAN. Much of this debt is non-productive, such as consumer loans.

Roong said that many Thais, especially younger generations, are incurring debt earlier and for longer periods. Some retirees also remain trapped in the debt cycle due to inadequate financial literacy or unexpected life events.

To address this, the BOT is adopting a holistic approach—working to stimulate income growth, promote responsible lending practices among banks, and boost financial literacy among the public.

One such initiative is the “You Fight, We Help” scheme, designed to assist indebted individuals who are willing to actively manage and resolve their debt problems. Although only around 50% of debt enrolled under the first phase qualified for relief, Roong said the result was still considered satisfactory. 

“This programme is designed for those who are willing to fight. It’s not for everyone. If you choose to fight, you still have to repay, but the scheme allows you to pay just 50% of your normal instalment in the first year, rising to 70% thereafter.”

Roong added that the programme offers powerful incentives. If participants meet all repayment conditions without taking on new debt for 12 months, the suspended interest is waived entirely—essentially creating a zero-interest loan, something unprecedented in Thai lending history.

“Of course, these generous terms come with discipline. We understand some borrowers may lack sufficient income to join this scheme, and for them, we have alternative debt restructuring programmes, albeit with less favourable terms,” she said.

Next steps and lessons from phase one

Looking ahead to phase two of the programme, Roong said the BOT has identified gaps in the first phase—particularly the high number of applicants (over two-thirds) who were ultimately ineligible.

Adjustments in the next phase will target such cases, for example, debtors with arrears of no more than 30 days.

She also pointed out inconsistencies in commercial banks' participation. BOT data shows differing rates of enrolment depending on the type of debt. For example, mortgage borrowers with arrears of less than three months responded positively, while those with auto loans—especially those overdue by more than six months—rarely joined.

Moreover, state-owned banks have no auto loan portfolios, which explains their higher participation rates in the scheme compared to commercial banks with larger auto loan exposure.

She added that the BOT is prioritising banks’ best efforts over uniform KPIs due to differences in their loan portfolios.