Spending growth via Visa credit cards in Thailand could be the lowest in Southeast Asia this year, adding to signs that the country’s economy is reeling.
Somboon: Sees potential in Myanmar
Visa International (Thailand) estimates single-digit percentage growth in spending through its cards here this year compared with double-digit growth over the past few years, said Somboon Krobteeranon, country manager for Thailand and Myanmar.
Visa card spending in other Asean countries in 2014 is expected to expand at a double-digit pace, he said.
Southeast Asia’s second-largest economy has been crippled by months of political turbulence, which has deepened the already lacklustre economy and tepid consumption and private investment.
The Finance Ministry’s Fiscal Policy Office recently cut its 2014 growth projection to 2.6% from 3.1% and warned it could be lowered further if a functioning government is not installed by the third quarter.
The Bank of Thailand last month trimmed its GDP growth forecast to 2.7% from 3%, while the Asian Development Bank warned Thailand’s economic growth will dip below 2% this year if functioning government is not installed by the end of the third quarter.
The international payment card service provider expected that its card spending in Thailand likely to record flat growth in the first quarter due to the political stalemate and seasonal factors.
Even though the political protests flared up late last October, New Year shopping and a buying spree of tax-saving mutual funds ahead of year-end helped to boost card spending in the final quarter of 2013, said Mr Somboon.
Amid the tough period, the company’s banking members have managed to keep credit card non-performing loans (NPLs) at a low level thanks to their tightened risk management. With a reduction in credit card cash advances and exclusive promotional campaign launches to potential clients, banks can control their bad loans while boosting spending.
Bank of Thailand data show NPLs for credit card loans accounted for 1% of outstanding credit card loans.
In a related development, the card business in Myanmar is setting a positive trend, Mr Somboon said.
Visa entered the front-tier market in December 2012, and eight of the 18 banks in Myanmar are now company members. Visa products circulating in the neighbouring country are currently limited to prepaid cards, as Myanmar’s government permits only local banks to provide credit cards.
Visa cardholders now can make payments at about 1,000 merchants and withdraw cash at 600 ATMs across Myanmar.
High-income earners are the company’s key customers in Myanmar. Medical and health care account for the major portion of spending by Myanmar’s cardholders in regional countries including Thailand.
Mr Somboon said debit and credit cards are the next step for Visa’s business in Myanmar, contingent on the regulator’s approval and infrastructure.