1. Thailand Reform Agenda for Further Development of Securitization in East Asia Mr. Thirachai Phuvanatnaranubala Secretary-General, Securities & Exchange Commission, Thailand At the ASEAN+3 Workshop on the Rise of Asset Securitization in East Asia (November 7-9, 2005, Shanghai)

2. Thailand 2 Need for More Developed Securitized Markets in East Asia From economic perspective  High economic growth region  In need of funding to support investment From social perspective  Increase in credit need for consumption  Housing loans : household formation / house upgrade  Credit card  Hire purchase  Need for long-term savings instruments  More affluent society  More savings need to support post-retirement living

3. Thailand 3 Need for More Developed Securitized Markets in East Asia From regional perspective  Greater capital movements within region  Regional FTA  Exchange linkage  Mutual recognition for mutual funds  Regional bond funds : ABF1, ABF2  Increase in demand of financial instruments  Return enhancement  Risk diversification

4. Thailand 4 Reform Agenda Within individual country Common impediments for most countries: Lack of infrastructure and legal systems to adequately structure and protect the interests of parties in securitization transactions, reform should cover:  Infrastructure -Adequate and timely information of credit rating / default rate / prepayment rate -Credit enhancer to enhance paper rated below investment grade

5. Thailand 5 Reform Agenda Within individual country (Cont.)  Tax issue : Treat SPV as a tax neutral unit to avoid tax burdens -Exempt transaction/corporate income tax  Accounting issue : Specific accounting standard for securitization -Recognize “true sale” and allow a removal of assets from the balance sheet of the originator -Develop accounting guidelines with certain flexibility and in line with international standards

6. Thailand 6 Reform Agenda Within region Standardized documentation  Loan agreements -Type of loan -Contract size -Maturity Common credit analysis standards  Establish objective standards to help investors and intermediaries to assess related risks

7. Thailand 7 Reform Agenda Within region (Cont.) Linkage of settlement system  Connect the settlement system in each country to facilitate remote access Credit enhancement mechanism  Adopt appropriate technique -Internal credit enhancement: Proportion of over-collateralization/sub-debt -External credit enhancement: Pool insurance, Letter of guaranty, etc. Credit information system  Easily access to cross country credit information of securitized assets and credit risk

8. Thailand 8 Reform Agenda Within region (Cont.) Harmonization of legal/regulatory frameworks  Bankruptcy remoteness of SPV  Tax neutrality of SPV  Common accounting standards  Rules and Regulations on securities offering/underwriting

9. Thailand 9 Conclusion Reform agenda : Better securitization to serve an increasing and diverse demand in the region, joint effort is needed from: Government and private sector Regional cooperation