Southeast Asia is among the regions in the world with the worst financial literacy according to S&P Global FinLit Survey. This is so despite the high number of people populating the regions.
The escalation of Southeast Asian consumers will be a seriously dominant economic theme in the following decades. Asia, as a whole, will potentially be housing two-thirds of global middle class by 2030.
However, most Asian countries have surprisingly recorded a low level of financial literacy and understanding. Particularly, in Southeast Asia, the financial literacy is considerably far below the global average.
Except for Singapore and Myanmar, all Southeast Asian countries indicated an average of 30% of their adult population who is financially literate. Cambodia, furthermore, scored only 18%.
In contrast to other parts of Asia, other Asian regions besides Southeast Asia scored between 30% and 40%. Countries such as Hong Kong, Japan, Kuwait, and Bahrain even scored above 40%.
The Financial Literacy Problems in Southeast Asia
The problems with financial literacy in Southeast Asia majorly comes from the major population’s financial ignorance. This ignorance leads to bad daily financial decisions, which can lead to everlasting debts and a less-saving-more-borrowing situation.
The roots of the issue are mainly the unpleasing result of the education system which fails to equip people with an adequate amount of financial understanding. What makes the situation direr is the fact that this “disease” also infects the next generation.
According to S&P Global FinLit Survey, 40% of adults in the region graded themselves C, D, or F for personal finance. Nearly 80% of the respondents said that they obtained benefits from financial advice pertaining to daily decisions, signifying the lack of understanding on the matter.
60% of households admitted that they had no savings. This, moreover, influenced the younger generation’s financial habits. Also, the average family credit card debt was US$15,000.
As a results, in Southeast Asian countries, people easily become the victim of loan sharks businesses. Besides illegal moneylenders, gender inequalities also affected financial decisions, specifically in 1980s to 1990s.
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