City Hall last year saw profits from its pawn business jump by millions of baht although financial gain is not its primary goal.
In the 2017 fiscal year, which ended in October last year, the Pawnshop Office attached to the Bangkok Metropolitan Administration, which oversees 21 pawnshops across Bangkok, generated a net profit of 257 million baht, an increase from 227 million baht the previous year. In particular, it was earnings from auctioning off assets which owners failed to redeem that brought in the office's biggest profit in 10 years.
However, City Hall does not attach a priority to profit, Pawnshop Office chief Noppadol Permpitaya told the Bangkok Post. The primary aim of running the pawn shops is to use this micro-lending business as a measure to help poor people, especially during the economic slowdown, he said.
A customer leaves his fingerprints on a pawn ticket. Pawnshops do brisk business in Bangkok, especially at the start of new school term when many parents are short of cash. Chanat Katanyu
What he wants to see is people being afforded a "financial breather" so they can have more time to manage their finances and earn enough money to reclaim their pawned valuables. The redemption period extends for up to five months.
That is why the Pawnshop Office sets no target for profits. In fact, it encourages customers to get their belongings back within the period.
Unlike predatory lenders who usually charge outrageously high interest rates, the city-run pawn shops set the rate at 0.25% per month for items worth less than 5,000 baht and 1.5% for items valued more than 5,000 baht but not exceeding 100,000 baht.
The City Hall-run pawn shops permit customers to pawn up to five items at a time, each not exceeding 100,000 baht in value.
"We don't want to see people lose their assets," Mr Noppadol said. "We really want to help the poor."
The City Hall-run pawnshops normally give less money for items than that offered by privately-owned competitors. The lower rate also means people will find it easier to redeem the pawned items later.
The pawn rate is calculated based largely on how much the items are in demand, which reflects their market value, according to Mr Noppadol.
A staff member from a City Hall-run pawnshop examines gold necklaces pawned at the outlet before they are put up for auction at a centre in Chatuchak district. The items were left unredeemed by their previous owners. Patipat Janthong
He noted students, mostly those from the provinces who are in Bangkok to study, would not let the items they pawned go unredeemed. Often, they pawned jewellery or items of high economic and sentimental value their parents had given them.
Items commanding high pawning value are gold jewellery and ornaments. Rates for these can be as high as 90% of the market value compared to other items which are normally given 50% or less of their value.
However, Mr Noppadol observed that in light of the sluggish economy, people now tend to take less valuable assets to pawn shops.
"My staff told me more and more people have come in to pawn their construction tools," Mr Noppadol said.
It is apparent some of those in the building business are not making ends meet and have had to resort to pawning off their tools, he said. They may be between jobs and need money urgently to get by.
These people usually live or work in suburban Bangkok. Many of them are regular customers of pawn shops in Nong Chok, Min Buri and Thung Khru districts, exchanging such equipment as electric drills, angle grinders and steel cutters for money.
They told pawn shop staff construction work was hard to come by these days and they had no choice but turn their equipment in for money, Mr Noppadol said.
Some struggle to scrape up enough money to redeem the tools. Others are resigned to fact that they may never get their assets back.
"I had to let go of my gold," said a 47-year-old woman in Nong Chok who failed to pay back money within the five-month period.
Her family's finances are in bad shape, forcing her to make frequent visits down to a pawn shop. At the same time, there are fewer and fewer items at home which she can use to pawn.
"I hope the government will launch more measures to help low-income folk this year," she said.
In the previous fiscal year, the Pawnshop Office earned over 83 million baht from auctions alone, up 46% on 2016. This higher profit is a barometer of people's current financial vulnerability.
The government has rolled out measures to relieve the financial burden of those on low incomes. Last August, the cabinet approved an aid package, worth 41.9 billion baht, for more than 11 million low-income earners countrywide. They received cash handouts via welfare smart cards to pay for essential goods and transportation.
Last month the government announced the second phase of the aid package, aimed at extending the scheme to include more people.
Meanwhile, City Hall will continue to help poor people through various measures, including pawn shops at which interest rates will remain unchanged this year, Mr Noppadol said.