Boom Time for Credit in Southeast Asia

Chamikorn Buranananda has a vision of a Thailand where everyone, rich or poor, city dweller or rice farmer, is in debt – be it for a car loan, mortgage, a credit card or some other loan.

“You want an educated population that can manage debt,” said Mr. Chamikorn, who after helping General Electric start its own finance operations in Thailand has moved on to become managing director at Capital OK, a consumer finance start-up with ties to Prime Minister Thaksin Shinawatra.

Capital OK is a newcomer in a market that has been gathering momentum in Thailand and throughout Southeast Asia for the last four years. As strengthening economies enable more consumers to emerge from poverty to the lower middle class, banks and finance companies are greeting them with financing options once limited to developed nations.

“It is booming,” said Supavud Saicheua, an economist at Phatra Securities in Bangkok. “There are lots of finance companies and banks interested in expanding the business.” In Thailand, consumer credit grew 35 percent last year, according to Fitch Ratings, sending the average household’s debts up to 52 percent of its income.

That consumers will borrow and repay is a welcome switch for Southeast Asia’s banks after the untrammeled corporate lending that devastated them in the Asian financial crisis of 1997 and 1998.

But the region’s banks are playing catch-up with aggressive foreign institutions like Citibank, G.E. and Aeon of Japan, which pioneered consumer finance in Southeast Asia after witnessing the markets take off in Japan, South Korea and Hong Kong.

For this complete story, please visit Boom Time for Credit in Southeast Asia.