Innovative Solution of Rural Thai Household Debts: Community Fund Management Center

Abstract

The objectives of this research were to 1) study the characteristics of debts and the needs for household spending in rural Thailand and to 2) identify the important success factors and driving factors in managing rural Thai household debts and in managing the economy; via collecting relevant documents, conducting in-depth interviews, arranging workshops and studying case studies.

The research results showed two main findings as follows: 1) The state of household debts was negatively correlated to the macro-economic debts. In other words, the household debt to household income ratio increased for rural Thai household. While three out of four community fund management centers that have been studied can reduce the ratio of household debt to household income to lower than the country’s average in 2019 at 24.6%. Only one center had household debt to household income ratio above the country’s average but it was considered much reduced.

2) There were three factors that contributed to the success that took place including (2.1) Strength in community organization which coordinated with the advice from the Community Development Department. (2.2) The cooperation between community financial institutes and the community fund management center and (2.3) The work procedures that integrate economical concepts into debt management, focusing on communicating and understanding the perspectives on debt management, daily spending on luxury goods that did not correspond to seasonal and price fluctuation of agricultural incomes.

The suggestions for household debt management and economy management include: (1) Practical measures which involve expanding the Community Fund Management Center project to cover the whole country. (2) Suggestions for the policies are to elevate the objective from managing household debts to “solving problems about poverty and building sustainable economy for low-income groups”, determining the policies for solving household debts in poor areas, and developing the role of the institute to develop local economy by utilizing lessons and experiences of the community fund management centers, in coordination with the relevant financial institutes.