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[Thai Economics Library | Archives| Currency Crisis 2007| Entrepreneurs]
February 16, 2010

How do loan sharks operate in Bangkok?

By Jon Fernquest

loan shark ads in BangkokHow loan sharks operate in Bangkok was the focus of an investigative report this weekend by investigative journalist Maxmilian Wechsler. 

That government officials moonlight as debt collectors is quite a revelation.

There must be an (unenforced) civil service regulation prohibiting this practice. 

The report was part of a larger report on credit bureaus in Thailand (Read article).

There was also a front page article this week on the progress being made on shifting debtors from loan sharks to government loans (Read article).

Read previous Bangkok Post articles on loan sharks (Read article #1 and #2). 

Today's article begins after the vocabulary.

(Photo on right of leaflet with ads promoting quick loans at a public telephone booth in Bangkok)

loan sharks - people who offer loans at high interest rates often backed by violence or blackmail (See Wikipedia)
investigate (verb) - try to find out what happened in a situation or event
investigative (adjective)
investigative journalism - a story involving crime, political corruption, or a scandal that requires a great amount of research to come up with facts that might be hidden, buried, or obscured by people who have a vested interest in them (See Wikipedia)
investigative journalist - a person who does investigative journalism as their job
moonlight - work at another job after your regular 9 to 5 work
debt collectors - people whose job is make people pay back money they owe to lenders
revelation - learning some fact that you did not know already
civil service - permanent government workers (who have a guaranteed job for their whole life and career)
regulation - an official rule made by a government agency
prohibiting - saying or ordering that people cannot do some activity
a practice - something that is regularly done by people or an organisation
credit bureau - a company that collects financial and credit information on individuals and reports this information to organisations such as banks that need to assess the credit risk of the individual (Se eWikipedia)
progress - have moved closer to achieving goal (by completing tasks)
leaflets - small pieces of paper with advertisements on it

Face to face with a loan shark

Maxmilian Wechsler
14/01/10

In an ordinary two-storey townhouse in Bang Yai on the outskirts of Bangkok, Mr Pak is preparing to do business with someone he believes is another willing customer who has fallen on hard times.

Inside his "office" on the ground floor there isn't much except a grey, dilapidated sofa, four wobbly wooden chairs, a table, an ancient refrigerator and a 16-inch television.

loan - an amount of money that a person, business or country borrows เงินกู้
outskirts - the areas at the edge of a city ชานเมือง
fallen on hard times - aren't making enough money to support themselves and their family (maybe lost job in bad economy)
dilapidated - old and in bad condition ซึ่งชำรุดทรุดโทรม
wobbly - moving back and forth like about to fall down
ancient - very old ที่เก่าแก่ ที่โบราณ

Mr Pak is one of the many loan sharks operating around the country, providing ready cash for people who have fallen foul of, or have never had access to, the formal financial system. He lends a minimum of 2,000 baht, but the figure can reach as high as 15 million baht. The usual amount his clients borrow is 3,000-5,000 baht, and the busiest time is often before the new school terms in May or June.

I will lend to anyone because of the high profit," says Mr Pak, who claims he has a wealthy backer. "I can't remember when I last refused a loan.

cash - money in the form of notes or coins เงินสด
foul - extremely unpleasant น่ารังเกียจ
fallen foul of - didn't pay back loans or pay bills on time so now they have a bad name and reputation (so they cannot get a loan anymore)
access - the means by which you can get into a place การเข้าสู่
formal financial system - loans from banks (not loan sharks)
figure - an amount of money จำนวนเงิน
profit - money that you make from selling goods and services after all your costs have been paid กำไร
wealthy - having a large amount of money, land, and other valuable things ที่มั่งคั่ง ร่ำรวย
backer - supporter, someone who is helping you

I don't care and I don't want to know what my customer will do with the money. This is up to them. I now have 36 clients and there's no problem with them, but I have some bad customers from time to time.

Accompanied by one of Mr Pak's old customers, a low-ranking government official, this reporter recently met Mr Pak under the pretext that I was a potential new customer. My companion made the introduction and did some interpreting. He doesn't really agree with how Mr Pak earns his living, and later gave some additional information about the operation.

During our meeting, Mr Pak, a middle-aged Thai man who spoke some English, was friendly and even smiled on occasions, which was in contrast to six young male "employees" who looked rather serious and unwelcoming. After a while, four of the men left on two motorcycles parked outside the house.

up to them - they have to make the decision by themselves (meaning: the loan shark does not care what they spend it on)
clients - customers
from time to time - sometimes (but not often)
accompanied by... - going together with...
an official - a person who has a position of authority with power to make decisions in government or a large organisation
low-ranking government official - a person who works for the government
pretext - a reason for doing something
under the pretext that... - to do something using the reason....
potential - possible ความเป็นไปได้
companion - a person you go somewhere with or do something with
interpreting - translating speech from another language for someone
aged - very old สูงอายุ
man - to operate something บังคับ ขับ (ยานพาหนะ)
contrast - a noticeable difference ความแตกต่าง
X in contrast to Y - X different from Y 
on occasions - sometimes, not often

Mr Pak said that several foreigners with Thai spouses who lived in the area sometimes took out short-term loans.

We don't have any designated area," he said when asked if loan sharks had specific territories. "Anyone can come here and lend money. Anyway, when some of the other money lenders' customers move here, they have to come to collect money. I don't worry too much about them. I have many clients as I started the business 12 years ago.

spouses - husbands or wives คู่สมรส
term - a period of time
short-term loans - loans for a short period of time
designated - marked, separated, or give a name for a particular purpose ถูกกำหนด
territory - an area that you control (that an army or an animal or a criminal controls, for example)
specific - precisely one special thing or a fixed set of things (not just anything)
specific territories - special areas (not everywhere or anywhere)

The business has been always good for me, especially during an economic crisis like it is at this moment," he said, adding that "the volume of lending has been the same for years.

His bread-and-butter customers are poor Thai families, and for them, securing the cash loans often depends on a referral from a trusted customer. For bigger loans, however, such as property, Mr Pak may ask for title deeds.

crisis - an urgent, difficult or dangerous situation วิกฤต
moment - a very short period of time; a particular time or occasionชั่วขณะ, โอกาสสำคัญ
lending - giving money to someone who agrees to pay it back in the future การให้ยืม
securing - getting
referral - sending a person to another person who is qualified to deal with their problem (example: a doctor's referral to a specialist)
trusted - a person you believe in, when they promise to do something, you know they will do it
property - things that people own like a house, a car and other valuable things in their home
title deeds - the document that shows and proves that you own a piece of land

As a guarantee - if it is a small amount, say, up to 10,000 baht - I need a personal verbal guarantee from a family member, for example, or nothing at all if it is an old customer," he said.

For the large amounts, I need the original title deed, which I keep. I won't go with the client to the local land department, at least not yet. I won't accept anything else as collateral.

guarantee - a promise that something will be done or will happen คำรับรอง, การประกัน
say - (the right to give) an opinion about something สิทธิในการแสดงความเห็น, สิทธิในการพูด
deed - something that someone does การกระทำ
client - a customer or someone who receives services ลูกค้า
local - in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
land - to get or achieve something good, especially in a way which seems easy or unexpected ได้รับ

A typical loan is over 24 days. "The client must return the principal and interest at the same time," he said.

With other types of loans you can have months or years to repay. There's no limit. I will collect the installments every day unless I have another special arrangement with my client. In fact, I like them to repay for a long time because I can charge more interest and make more money.

principal - the amount of money that the lender loans to the borrower
interest - the money you pay the lender for giving you the loan
installments - regular payments of money, every month, for example 
charge - request that people pay money (for goods or services received)

Interest charges range from 15% to 100%, depending on the amount borrowed and the repayment period. The longer the life of the loan, the more interest for Mr Pak.

If the amount is large, I will make a contract with my clients. However, it won't say that I lent them cash, but that they bought some product from me, like rice or whatever, and they will pay for it in installments," Mr Pak said.

range - a number of different things that are of the same general type ขอบข่าย, ประเภท
repayment period - the period during which the money borrowed is paid back to lender
contract - an official agreement to do something (usually written on a document)

He said that in the majority of cases his clients pay their loans back on time. But what happens when they don't? 

Sometimes, if they pay for a long time and default, for whatever reason, if I get my principal back, I will do nothing against them. Of course, they will lose their credit, at least with me," Mr Pak said.

majority - most of the people in a group, i.e., more than half เสียงส่วนใหญ่
default - failure to repay a debt การผิดสัญญา
lose their credit - get a bad credit rating so that they can no longer borrow money
credit rating - a measure of the risk of loaning money to someone, the risk that they do not pay the money back (See Wikipedia)

When the debtor neglects the payment, I double the interest at first. If they still don't pay, I send my staff, including government officials I sometimes hire on a part-time basis, to watch them outside their home. We also photograph the debtor. This is to make them scared and force them to start paying.

If this doesn't work, we write a note saying: 'You owe me money and you don't want to pay it back.' We paste it at the person's workplace; whether it is an office or a factory. This is to let everyone know and to embarrass them as well.

debtor - a person who owes money ลูกหนี้
neglects - fails or forgets to do something
government officials - people with decisionmaking power who work for the government
part-time work - work less than a full eight hour day
hire on a part-time basis - give a person part-time work
embarrass - to cause someone to feel nervous, worried or uncomfortable ทำให้รู้สึกอาย, ทำให้ขวยเขิน
...as well - also  

If this is not successful, I will send my people, including officials, to their home and confiscate a cell phone, notebook computer, electrical appliances or motorcycle. In case they have nothing or run away, I will demand money from their relatives.

Mr Pak did not say if violence is used to recover bad loans, but one of his old customers later confirmed that Mr Pak had used violence in the past, but did not want to mention it to me so as not to scare me off.

confiscate - to official remove someone's possessions for legal reasons or as a punishment ริบทรัพย์ ยึดทรัพย์
cell phone - mobile phone
electrical appliances - washing machines, refrigerators, other large things used in kitchen and home
relatives - more distant family (outside of mother, father and children who live in one home) 
run away - run quickly from a place (in fright)
violence - physical force with the deliberate intention of causing damage to property or injury or death to people ความรุนแรง
recover - to get something back
scare off - make a person afraid so that they go away and leave you alone

Mr Pak said he employed six men to collect payments. "They ride motorcycles to the client's home. They are not really afraid to show their faces, but sometimes they wear a helmet with a dark visor to the job. They don't carry any weapons of any type.

He said he didn't collect money personally unless there was a problem. "Then I will go personally to their home or ask them to visit me at this house

employed - have people working for you in your company
helmet - a strong hard hat that covers and protects the head หมวกกันน็อก
visor - the part of a hat or helmet that keeps the sun out of your eyes

I don't pay bribes to the police or other officials. Instead, I will only hire them to collect money or confiscate goods from the clients or their relatives," he said.

Loan sharks are rarely arrested as it is not easy to obtain evidence against them. People won't call the police because they are afraid of a conflict and usually some other arrangement is worked out between the loan shark and the client when repayments become a problem.

bribes - money paid to government officials to get them to do something for you (do you a favour)
confiscate - take away
rarely - not happening often นานๆ ครั้ง, ไม่บ่อย
evidence - facts statements or objects that help to prove whether or not someone has committed a crime หลักฐาน
conflict - an angry disagreement between people or groups ความขัดแย้ง

Loan sharks, operating in groups of five to eight people, are mostly Thais and Thai/Indians, with the latter having a reputation for being more friendly, reasonable and patient. The Thai/Indian loan sharks won't threaten people, but increase the interest instead. However, if there's a problem, they hire standover men to collect the money.

It was a relief to leave Mr Pak's office and his henchmen behind, albeit with the unpleasant thought that almost all of his customers are in desperate financial states with no one else to turn to.

reputation - the opinion people have about how good or bad someone or something is ชื่อเสียง ความนับหน้าถือตา
patient - peaceful and quiet; without anxiety อดทน, อดกลั้น
threaten - to say that you might do something bad or harmful, especially in order to make someone do something ขู่เข็ญ คุกคาม ทำให้กลัว
standover men - people who collect money for other people (usually gangs) by threatening people with violence, extort money by intimidation (Australian slang)
relief - a feeling of happiness that something unpleasant has not happened or has ended การผ่อนคลาย
desperate - very worried or confused because you do not know how to deal with an unpleasant or dangerous situation อย่างสิ้นหวัง อย่างหมดหวัง
X albeit Y -
no one else to turn to

The government is conducting a public relations campaign to stop people dealing with loan sharks. As part of the campaign they are trying to collate information on loan sharks and remove ubiquitous flyers pasted to electricity polls, telephone booths and advertising billboards all over Bangkok, which usually read: "If you need cash then call me on this number."

Despite their efforts, business is going strong for Mr Pak and his colleagues.

conducting - doing, carrying out
public relations (PR) - the activity or job of improving the image of a company or person and getting the public to notice and know about them
campaign - a planned group of activities which are intended to achieve a particular aim การรณรงค์
remove - to take something away เอาออกจาก
ubiquitous - found everywhere
flyers - small pieces of paper with an advertisement (See photo above on right)

(Source: Face to face with a loan shark, Maxmilian Wechsler, 14/01/10, link)





Posted by Jon Fernquest at 10:35 AM | | Comments (0)


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