Lasting Communities

Kenan Foundation Asia released the “Literacy Improvement for better Finance in Thailand (LIFT)” research study, which details the three key problems behind Thailand’s rising household debt levels

Jan 26,2023

Piyabutr Cholvijarn, President of Kenan Foundation Asia, said “since April 2014, with support from Citi Foundation and the assistance of Citi, Thailand, Kenan Foundation Asia (Kenan) has conducted a research study as part of the ‘Literacy Improvement for better Finance in Thailand (LIFT)’ project, which assessed Thai government policies relating to debt and savings, and engaged relevant stakeholders across all segments of society, including debtors, policy makers, and bankers.”

Kenan collected data using a variety of methods, including primary research and secondary research. The research focused on three key groups, young adults, low-income workers, and farmers, who collectively have the lowest levels of financial literacy in Thailand. Mr. Cholvijarn stated, “The research findings from our year-long effort demonstrate understanding and provide policy recommendation for the three main causes of Thailand’s increasing household debt problem, which can be summarized as: a low level of financial knowledge, poor personal financial management, and insufficient financial inclusion.”

Mr. Cholvijarn went into more detail about the three main factors driving Thailand’s increasing levels of household debt. Low levels of financial knowledge, or low levels of functional financial literacy, means that individuals lack critical logical thinking and calculation skills. Poor personal financial management is often reflected in poor financial behaviors, such as failing to repay loans, especially common with student loans. Insufficient financial inclusion directly affects individuals who are unable to access financial credit systems or formal financial institutions.

Mr. Cholvijarn added that “to improve their personal financial management abilities and develop their financial awareness, related stakeholders should think in terms of holistic development, not only financial literacy development. To that end, this research developed a number of strategies designed to enhance Thailand’s national financial literacy efforts, which should be considered by all related stakeholders, such as: Public awareness: Thailand must first raise public awareness of and stimulates the public’s interest in financial literacy. Monitoring scheme: Related regulators should work to protect people, as well as enhance their financial knowledge. And (Semi-) Compulsory programs on savings, trainings, and debt control: In the first period of financial literacy development, related stakeholders should provide knowledge, and educate people through a learning-by-doing method.

Darren Buckley, Country Head and Citi Country Officer, Citibank, N.A, added that “Citi is an industry leader in its support of financial literacy education. In 2004, Citi announced a 10-year, $200 million commitment to meet the growing financial education needs of the communities we serve. In 2014 alone, the number of financial literacy projects conducted globally by the Citi Foundation numbered 167 projects, which helped over 1.2 million people around the world.

Mr. Buckley added that “the “Literacy Improvement for better Finance in Thailand” is the Citi Foundation’s first systems change project in Thailand, and was initiated in response to rapidly rising household debt levels – 15% per year since 2010. This high level of household debt, coupled with a falling savings rate (down 16% per year during the past decade to 5.8% per year since 2010), should alarm everyone. All stakeholders in this country’s financial system have a duty to ensure that those who use financial products and systems do so responsibly.

Mr. Buckley added that “we have seen quite a few good examples of successful models used by governments in other countries through our Citi Foundation work. For instance, we know that targeting students is a great way to help build life-long skills in good financial behavior, and we have supported efforts like the Financial Education Policy Initiative and Pre-School Education Program in Malaysia, which raises awareness about the importance of financial literacy and promotes financial education through television and other media channels. At a more personal level, in Thailand, Citi’s At-Risk Women Program run by Kenan, now in its seventh year, it has helped thousands of low-income women through financial literacy education, promoting savings and investment. Another good example is the School Bank project. Citi Thailand has supported the School Bank project since 2011, school banks have been established in 13 schools in Chiang Mai, Rayong, Chonburi, and Ayutthaya provinces, where 9,845 students have accumulated over 8.6 million Baht in savings.”

Mr. Buckley also added “it is important that the Thai government has recognized the critical need to address financial literacy education and has already begun the process of addressing this. The LIFT project aligns well with these efforts, including the need for more resources to be focused on low-income workers, farmers, and students. We are pleased to help support efforts to bring together key stakeholders to study, recommend, and support policy changes that help improve Thailand’s financial literacy.”

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