|Published:||4 Oct at 6 PM|
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As the Thai baht gets ever stronger against Western currencies, more and more expatriates are feeling the pinch.
Thailand has been perennially popular with expat retirees from the Western hemisphere, but the inexplicable rise in the value of its baht currency is wrecking the carefully-calculated financial strategies of a good number of retirees dependent on monthly pension transfers from the home country. For British long-stay retirees, it’s even worse, as their pension payments were frozen at the rate current when they left the UK. Some ten years ago, the baht/sterling rate was around 68 to the pound as against today’s rate of 38, and recent price rises have made the Kingdom unsuitable for those relying on the UK state pension.
To make matters worse still, new bank deposit rules for the so-called ‘retirement visa’ have restricted access to the 800,000 baht compulsory deposit in a Thai bank account required for the annual renewal of the visa. Expat retirees who bought homes and a vehicle on arrival and once believed their financial plans would last until the end of their lives are now in a state of shock, wondering how long they can hold out until they’re forced back to a post-Brexit Britain or a Trump America. Many believe full-on currency manipulation of the baht is holding its rate, but the currency has been a top performer over the past five years and is now wrecking the country’s prospects of growth at the same time as other Southeast Asian countries, especially Vietnam, are forging ahead.
According to the Thai government, some 80,000 retirement visas or annual extensions were granted in 2018, a full 30 per cent more than in 2014. Requirements are either a deposit of 800,000 baht or a monthly income of 65,000 baht, far more than the average white-collar wage for Thais. Last year, British expats made up the majority of retirement visa applicants, followed by USA citizens, Germans, Chinese and Swiss. To date in 2019, the baht has increased more than six per cent against the US dollar, and is forecast to stay resilient for the foreseeable future.
Increasing numbers of expat retirees are now leaving, either to return to their home countries or to try again in the Philippines, Vietnam or Cambodia. According to media reports, thousands have already left and more will follow over the next year. Formerly crowded immigration offices have lost their queues, and those not actively planning to leave are drastically cutting back the monthly spend, thus hurting local businesses. Expat-owned restaurants, bars and other SMEs are suffering as a result, with many closing down due to a lack of customers.
One USA retiree in Pattaya told local media his monthly pension amounts to $1,235 (£1,000) – far less than the minimum monthly requirement but plenty enough to retire comfortably in many other world retirement hubs. The only option for those unwilling to return home or start yet another ‘new life’ in a strange land is to live modestly, adapt and adjust to the present circumstances, hoping against hope no further changes to immigration requirements will occur. For British expats, ongoing concerns are two-fold – the threat of compulsory private health insurance and the reality of yet another fall in sterling after October 31.
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