One of Bangkok’s most familiar street sights is the enticing poster promising easy loans, fast. They come with massive interest. (Bangkok Post file photo)
Thai authorities are mulling stringent tax measures to pressure creditors to negotiate with their debtors in over 1,200 farmland-linked debt cases in the Northeast.
The policy statement emerged from a meeting Tuesday between the Department of Special Investigation (DSI), the Ministry of Justice and 21 other state agencies.
The highlight was finding an instrument to ease farmers’ debt as the 1,200-plus cases now amount to 278 million baht, officials said.
Creditors have reportedly been profiteering by charging exorbitant interest rates and then seizing farmers’ land when they cannot meet their repayments.
The new measure would tax the profits these loan sharks earn from the high interest rates in these special cases, thus encouraging them to seek out a “fairer” debt service, officials said.
Without such help, many of the farmers in Khon Kaen, Maha Sarakham and Kalasin provinces are expected to lose their land, said Pol Col Paisit Wongmuang, chief of the DSI.
A similar tax instrument has been used before in Chaiyaphum province, he said. In that case, creditors were taxed on 200 million baht of income they earned from charging high interest rates and from the seized land used as collateral.
The DSI will now look into these debt contracts to assess the fair value of the debt owed, said Pol Lt Col Wichai Suwanprasert, secretary-general of the ministry’s centre for helping debtors who claim to have been treated unfairly.
One problem is farmers’ lack of knowledge when it comes to legally binding contracts concerning debt, land and collateral, he said.
As a result, many have agreed to deals without realising they could forfeit their land or property, he added.
Related state agencies have agreed in principle to transfer the 1,200-plus cases to two state-run banks — the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives — according to Amnuay Patise, an adviser to the National Council for Peace and Order.
Indebted farmers can participate in this debt-restructuring programme as long as they agree to take part in another income-generating programme, said Mr Amnuay, who also serves as chairman of the Agriculture Ministry’s committee appointed to resolve farmers’ debts.
Those who have already been to court and forfeited all of their farmland will have their cases forwarded to the national committee on farmland allocation, said Sompas Nilphan, deputy permanent secretary of the PM’s Office.
Their cases will be forwarded along with a request to consider granting them the right to use new plots, he added.
Authorities said they hope these measures will result in the 1,200-plus cases being resolved or at least significantly lowered within three months.