Asst. Prof. Dr. Roongrueng
Bhidayasiri, keynote speaker (second from
right)
Sopon Pornchokchai, President, Thai Appraisal Foundation (right)
Ballobh Kritayanavaj, SVP, Government Housing Bank (left)
John Cirincione, a participant from the Appraisal Institute, Chicago
(second from left)
Distinguished participants;
Ladies and Gentlemen,
It is my great honor to be here tonight.
I would like to express my sincere appreciation
to Dr. Sopon Pornchokchai, President of the
Thai Appraisal Foundation for inviting me
to speak at this forum. I am confident that
a forum like this one will help contribute
to the development of the housing finance
system.
Ladies and Gentlemen,
I would like to focus my remarks tonight on the Thai government's housing
finance policy—where we are today and where we aspire to be tomorrow.
I am certain that you would agree with
me that, homeownership and affordable housing
finance is crucial to a well-functioned economy
and society. Housing is one of the four necessities
in life, besides food, clothing and medicine.
In economic terms, homeownership is the first
step to financial security for most people.
Access to affordable housing, thus, is key
to this first stepping stone. Financial security
then leads to an establishment of strong
and stable communities, a basis for better
quality of life.
The Thai government has put forth homeownership
and affordable housing finance as one of
its policy priorities. Our Prime Minister,
Dr. Thaksin Shinawatra, has often stated
his vision that all Thai households will
be homeowners within the next five years.
Moreover, homeownership supports another
main policy priority to mobilize assets into
capital. As people have rights in their properties,
they will be able to better access other
financial products. Highly valuable in the
market economy, such access encourages private
investment as well as entrepreneurship.
To make the homeownership vision come true,
we realize that housing finance sector is
a key part, and, thus, we are dedicated to
making housing affordable for people. By
providing “best quality” financing, management,
information, and other appropriate assistance,
the government's Specialized Financial Institutions
(SFIs), especially the Government Housing
Bank, facilitates affordable mortgage financing.
By “best quality”, I mean shorter loan procedures,
less working steps, larger loan size compared
to collateral, better service such as efficient
call centers and good risk management system.
The government itself, through the arm of
the National Housing Authority, assures the
continued availability of low-income housing
by introducing Homes for the Poor Program
(Baan Aua-Arthorn), aiming to build 600,000
units of new housings in the next 5 years.
Ladies and Gentlemen,
I would like to give you some clear examples
of our policy implementation to provide housing
finance and to improve our housing finance
system.
On the measures to facilitate mortgage
financing, we have launched many housing
loan programs such as the Government Housing
Bank's mortgage loan program for civil servants
and state-owned enterprises' employees and
the Government Savings Bank's mortgage for
low-income people. The Government Housing
Bank program for civil servants and state-owned
enterprises, initiated in 2002, was highly
successful. Low interest rate as well as
long maturity of these loans has been highly
conducive to borrowers. The program currently
finances 26.7 billion baht worth of mortgages.
The success of these loan packages has induced
many commercial banks to offer comparable
loans, giving the consumers more alternatives.
Starting this year, under the Homes for
the Poor Program, the Government Housing
Bank and the Government Savings Bank will
also support the scheme by providing mortgages.
It is expected that the mortgages under this
program will amount to around 60 billion
baht for the first three phases of the program.
On the measures to upgrade the housing
finance system in the medium term, we have
initiated an establishment of the National
Real Estate Information Center. This center
will not only be the central real estate
database of the country, but will also be
one of the main property appraisers. I myself
see this information center a critical success
factor in developing our housing finance
system. Why do I believe so? Please let me
elaborate on the objectives and the benefits
of this Information Center.
The main objective of this Information
Center is to supply information and data
required in making important decisions in
the housing finance system. Financial institutions,
policymakers and real estate developers will
all benefit from the establishment of this
Center. All three parties will be able to
access the current demand and supply of each
real estate types. The database will serve
as an early warning system for an oversupply
of real estate development and will assist
financial institutions in making its decision
to lend to real estate developers and individuals.
By the concept of “economy of scale,” the
central database will ease the costs of data
collection and collateral valuation born
by each individual bank. Financial institutions
can access current information on the dynamic
of Thailand's mortgage market. The most updated
appraised property value included in the
database of the Information Center will be
highly worthwhile. This information is crucial
for the decision to lend, to refinance, and
to determine loan to value ratio; it is inevitable
for a good risk management system.
Besides the National Real Estate Information
Center, another important measure to develop
Thailand's housing finance market is the
development of securitization. Economy-level
action plan to overcome impediments in securitization
development has been established under the
APEC Finance Minister Process. The plan will
be endorsed and reported to the APEC Finance
Minister Meeting this coming September.
Ladies and Gentlemen,
In the year 2002, we saw a nice pick-up
in the real estate and housing finance market
as a result of better economic condition,
lower interest rate and government programs.
In the Bangkok Metropolitan Area alone, new
housing projects launched in 2002 grew 114
percent from the year before. New mortgage
origination for the whole housing finance
market amounted to 164.9 billion baht in
2002, 46.5 percent higher than the year 2001.
For the first quarter of 2003, the new housing
loan origination totaled 50.5 billion baht,
representing 71.8 percent year-on-year growth.
Our current survey also showed that Thailand's
housing demand is still very strong and can
expend up threefold. This is in line with
many regional surveyes from respectable research
houses. Therefore, we can be quite ambitious
in targeting growth in real estate and housing
finance market.
With the strong growth momentum and the
low interest rate environment, we expect
strong growth in both the real estate and
the housing finance market for the rest of
this year, as seen by continuous credit growth
in the first quarter, partly due to the government
schemes mentioned earlier. The specialized
financial institutions still carry on the
lending program and the home building scheme
that have been initiated. In pushing forward
these schemes, we have been closely monitoring
the system's housing and housing finance
demand. Products will be tailored to needs
of different groups, with a special emphasis
on the needs of low-income people. The National
Real Estate Information Center will be introduced
and implemented in the near future while
the development of securitization is currently
ongoing.
Ladies and Gentlemen,
Let me conclude my remarks by reaffirming
our aspiration in homeownership of the Thai
people and our commitment in developing housing
finance system. With all the measure implemented,
I envision a robust housing finance market
that allow everybody to access affordable
mortgages. Available information about housing
finance and real estate situation will assist
everybody in making their decisions in the
housing finance system. As asymmetric information
will be minimized, housing bubble can be
avoided while risk management at each financial
institution will be significantly improved.
In closing, I would like to thank Dr. Sopon
Pornchokchai again for giving me the opportunity
to share with you the Thai government's aspiration
as well as our means to an end. Thank you. |
