Thailand - Loans for home repairs to Thai flood victims

The Finance Ministry of Thailand will expand the first-home scheme to extend financing for home repairs to flood victims.

Deputy Finance Minister Viroon Tejapaibul said yesterday that going beyond the original focus on first-time home-buyers, the scheme would also lend to those in need of funds to repair their homes. The loans could amount to a total of Bt5 billion (US$159 million) out of Bt20 billion to be extended by the Government Housing Bank.

Under the scheme, the Bt5 billion to be loaned for home repairs will include purchase of furniture. Borrowers can avail of zero interest for the first three years and borrow up to Bt100,000 with no collateral and Bt300,000 with collateral.

Government Housing Bank yesterday announced a pact with Home Products Centre for home-repair loans to those buying furniture at the retail chain.

Viroon said the proposal would be submitted to the Cabinet for approval next week.

Due to the severe floods, the number of applicants for first-time home-buyer mortgages have been below expectations despite the three-year zero interest rate.

Meanwhile, the massive flooding that has hit several regions of Thailand has had an adverse impact on the home-furnishing market, which is suffering from a severe slowdown in the fourth quarter instead of experiencing a peak in sales as it usually does, according to Kasikorn Research Centre.

This is because the flooding expanded to the Central region, especially Bangkok and its suburbs, which are the key hubs for furniture manufacturers and distributors.

The country's home-furnishing market is worth about Bt55 billion this year and estimated at Bt60 billion next year.

More than 700,000 households have been damaged by floods, which will create an enormous demand for furniture once the waters recede. The government's first-home stimulus package is also expected to boost demand for furnishing products.

This explains why many manufacturers have been active in setting up new stores, speciality outlets and home centres. They are also improving the quality of their products, and offering better after-sales service.

Kasikorn Research Centre predicts that the total earnings of home-furnishing firms will amount to about Bt55 billion, only a 3-4 per cent increase over the previous year.

Viroon also asked finance officials gathering at a seminar in Chiang Mai to consider whether populist schemes like rice-pledging, first-car and the small, medium and large fund for villages need to be adjusted to make them more efficient.

For example, the Bank for Agriculture and Agricultural Cooperatives should not demand the immediate settlement of existing debts from farmers as soon as they receive funds from the rice-pledging scheme.

These farmers should be able to use all available funds in improving their farms, Viroon said.

A few have also applied for tax refunds under the first-car scheme in the wake of the flooding.

As of the end of October, about 1,000 people had asked the Excise Department for tax refunds of up to Bt100,000 per buyer, Deputy Finance Minister Boonsong Teriyaphirom said yesterday.

The Finance Ministry originally expected this scheme, launched in late September - before the floods hit Bangkok - and scheduled to end in 2012, to boost car sales by 100,000 units.

Wichit Chaitrong

The Nation

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