Public Policies for Reducing Inequality in Thailand : Microfinance

Abstract

     Inequality may derive from lack of opportunities, rights, and natural resources,although to some people, it must have been caused by bad luck or past-life sins. No matter the cause of inequality, the government should be held accountable for
reducing inequality in the society. Sarinee Achavanuntakul (2011:38) asserts that economic inequality, particularly income inequality, is the most recognized inequality of all. Although it is known that one way to tackle poverty and income
inequality issues is to provide more economic opportunities, i.e. “financialinclusion”, for grassroots people, certain groups of them surprisingly have difficulty accessing services of financial institutions.

     Muhammad Yunus, who was jointly awarded the 2006 Nobel Peace Prize together with the Grameen Bank, initiated a theory-based view stating that to develop human capital, loan serve as money which can create capital. This could make the people who receive loan facing the situation of poverty. Nonetheless, since access to the commercial financial system is complicated and credit borrowers have to own assets, those who have low income and do not own any assets are not usually granted credit for consumption and investment, hence are unable to free themselves from the vicious cycle of poverty. “Microfinance” may therefore be made available for low-income people. With regard to microfinance in Thailand, it is found that financial institutions have provided numerous types of financial services for poor and low-income people. However, despite the existence of the institutions, there are still limitations to the services provided. As a result, the 
government sector should perform a role in reforming microfinance in Thailand as well as enforcing more practical policies. In particular, a Microfinance Act should be enacted and a committee established to be directly responsible so that corporate governance of the financial system works to solve inequality, stabilize the nation’s microfinance, and turn it to be a “social safety net”, and eventually reclaim “human dignity” for the low-income and poor people in Thailand.