The news about a 72-year-old woman who was beaten up by debt collectors last week has cast doubts on the supposed successes of the government's campaign to combat loansharking.
It is worth noting that the assault took place on July 21 -- four days before the government held a press conference claiming that it had settled the debts of all citizens who participated in its debt management scheme. The victim, as it turned out, wasn't among those who received state assistance.
On Sunday, police in Bangkok arrested four men over the assault. They told investigators that the victim had taken out a 10,000-baht loan from a loan shark, who agreed to provide the loan on the condition that she made daily repayments of 500 baht for 25 consecutive days to cover the principal and interest. This means she was charged 30% interest -- despite the law capping loan interest at 15%.
It needs to be noted that this isn't an isolated incident. Loan sharks have used cruel, undignified tactics to ensure their debtors pay up for a long time. Many illegal lenders chose to lay low after Prime Minister Srettha Thavisin ordered a crackdown against loan sharks in November last year.
The crackdown was spurred by numerous reports by debtors who claimed they had been blackmailed by lenders into paying up. For instance, a loan shark in Prachin Buri was arrested in June last year after a debtor filed a complaint with the police, claiming the lender had threatened to release nude pictures of the debtor if he refused to pay his debts. The loan shark, an elderly woman, was known to require prospective borrowers to send naked photos of themselves as collateral.
In April, the Department of Special Investigation arrested a couple in Chai Nat who ran at least 80 money-lending applications that required borrowers to pay 2,300 baht for every 100 baht they borrowed.
The government deserves praise for trying out a new strategy to tackle the country's growing debt problem. Unlike in the past, the government opted for a holistic approach. On one hand, it invited "good" lenders to be a part of the government's microfinance ecosystem. On the other hand, it ordered the Royal Thai Police (RTP) and the Interior Ministry to look for debtors in areas where loan sharking is known to be a problem. Since November last year, it has brought creditors and debtors who signed up for the debt management scheme together to negotiate debt haircuts.
The question that remains is, are these actions sustainable, or will they be just another flash in the pan? The government's attention is currently divided, with its digital wallet handout scheme failing to take off as expected and Mr Srettha fighting for his political career. It seems that the war against loan sharking, which the PM had previously likened to modern slavery, is no longer on the top of the government's agenda.
The Srettha administration can't go around holding press conferences to tout the progress of its war against loan sharking, when it knew that there are many debtors who didn't sign up for the scheme. In fact, only 150,000 people with a combined debt of 1.2 billion baht signed up. It wouldn't be a surprise if there were still tens of thousands of debtors who are still struggling with debts.
The government needs to encourage debtors to register for help. Meanwhile, law enforcement officials need to work harder to stop loan sharks, while the Finance Ministry strives to develop a microfinancing system that is accessible to low-income earners.
Only then will it be able to claim that it has won the war against loan sharks.