BANGKOK, Feb 25 — Koon Thaveepat is in danger of losing his pickup truck and his livelihood. He’s behind on loan payments as Thailand’s anti-government protests delay state rice-purchase payments, threatening to plunge thousands of farmers deeper into debt.

“I haven’t been paid for more than three months,” said Koon, 62, who lives in Ubon Ratchathani province, about 600km northeast of Bangkok.

“I have about 200,000 baht (RM20,196) due from the government. A number of my neighbors are also in the same situation. They are unable to pay for fertilizers and rent planting and harvesting machines.”

Thailand, once the world’s biggest rice exporter, is short of funds to pay 110 billion baht under Prime Minister Yingluck Shinawatra’s 2011 programme to buy the crop at above-market rates.

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The premier faces allegations that she was negligent in overseeing the subsidy in a case that could lead to impeachment, even as borrowings by farmers such as Koon increase the nation’s household debt to gross domestic product ratio, the highest in Southeast Asia after Malaysia.

“Delays in payments to rice farmers have significantly worsened the household-debt situation,” said Voravan Tarapoom, chief executive officer at BBL Asset Management Co. in Bangkok, which oversees about US$10 billion (RM32.85 billion) of assets.

“While the amount of money that the government owes to farmers is not that much, it affects millions of low-income people who have to take on more debt to meet even their daily expenses. This will further worsen the already sluggish domestic consumption.”

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Consumer Loans

The benchmark Stock Exchange of Thailand Index dropped 0.1 per cent as of 3:58pm local time. The baht fell 0.1 per cent.

It has weakened the most after the Malaysian ringgit in the past three months among 11 Asian currencies tracked by Bloomberg.

Household debt as a ratio of GDP rose to a record 80.1 per cent in the third quarter in 2013, compared with 55.6 per cent in 2008, Bank of Thailand data showed.

The delayed payments may add to the debt risk, and the ratio will probably be higher in the fourth quarter and early 2014 as growth in consumer loans may be faster than the pace of economic expansion, BOT spokeswoman Roong Mallikamas said this month.

Household debt climbed 8.7 per cent in 2013 to 159,492 baht per family, the National Economic and Social Development Board said in a statement today. The data showed declining ability of households to repay debt, it said.

The Thai economy grew at the slowest pace in almost two years last quarter as political unrest hurt local demand and tourism. Private consumption fell 4.5 per cent in the fourth quarter from a year earlier, a second straight decline.

Fastest Pace

While Thailand’s household debt-to-GDP ratio trails Malaysia’s, it has risen at the fastest pace in Southeast Asia in the six years since the global financial crisis, according to Hak Bin Chua, a Singapore-based economist at Bank of America Merrill Lynch. Malaysia has a ratio of 86 per cent, Singapore’s is 77 per cent and Indonesia’s is 17 per cent, he estimates.

“High household debt will likely weigh on consumer spending and property demand over the next few years,” he said.

The SET Commerce Index, which includes consumer-related stocks such as CP All Pcl, owner of Thailand’s 7-Eleven chain, and consumer goods distributor Saha Pathanapibul Pcl, has fallen 3.4 per cent this year compared with a 0.4 per cent gain in the SET Index.

Thailand’s central bank unexpectedly held its benchmark rate last month, surprising economists who had predicted a cut. Governor Prasarn Trairatvorakul said last week there is “some policy space” to lower borrowing costs, and that political factors have largely caused the recent slowdown.

Deadly Protests

Demonstrations against Yingluck that began Oct. 31 have killed 19 people and injured more than 600, paralysed parts of the capital and disrupted a national election on Feb. 2. Two people were killed in an explosion at a protest site in central Bangkok yesterday, a day after a five-year-old girl died in a blast at a demonstration site in eastern Trat province.

Fitch Ratings said this month prolonged confrontations could impair economic performance and undermine the nation’s credit strength. Moody’s Investors Service has warned the unrest may hurt Thailand’s credit profile if it stretches beyond the first half.

Household debt is a concern elsewhere in the region too, with South Korean Finance Minister Hyun Oh Seok saying last week the government plans extra measures to tackle record levels that pose risks for the financial system and the economy.

Thailand’s household-debt risk is greater than its neighbors, according to Gundy Cahyadi, a Singapore-based economist at DBS Group Holdings Ltd.

‘Significant Slowdown’

“We need to remember that Thai household debt to GDP ratio is comparable to economies like Malaysia or Singapore, both of which have higher per capita GDP levels,” he said. The Thai ratio may rise to about 82 per cent this year, he said.

Still, Thai consumer-loan growth slowed to 12.9 per cent at end-2013 from 21.6 per cent in 2012, according to BOT data. Consumers have become more cautious and banks are tightening their lending practices, the central bank said on Feb. 13.

“Since the middle of last year, we observed a significant slowdown” in household debt, Prasarn said on Feb. 20. “In fact, the growth rate of consumption credit has been cooling down since the middle of last year, to our satisfaction.”

The Finance Ministry said last week it may sell bonds to raise money to pay farmers after depositors opposed a proposal by the government to borrow money from banks. Meanwhile, non- performing loans may rise, and with banks tightening lending, farmers may turn to loan sharks, said Thanomsri Fongarunrung, an economist at Phatra Securities Pcl in Bangkok.

For Thada Ampin, who traveled with other farmers on tractors from central Uthai Thani province before abandoning a planned protest last week in Bangkok, it may be the only option.

“We are suffering,” Thada said.

“We have to borrow money to pay for everything because the government failed to pay us.” — Bloomberg