A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

Research studies project report (M.BA.) - Asian Institute of Technology, 1997

Securitisation takes root in Asian emerging markets as a new financial tool for financial institutions and corporations to achieve a variety of objectives. In Thailand, securitisation is becoming a significant method of financing for financial institutions to satisfy their funding requirement. However, it is still an expensive choice and time-consuming process. So far, all securitised transactions in Thailand have been backed by the auto loan receivables. They were introduced off-shore, in the European and the US markets rather than the local market. The prominent deal, Thai Cars, is included in the study. In addition, the case study of NORIA2 is also presented. Both case studies have been used to draw a comparison of securitisation process which have taken place in the different environments. There is no specific law and regulation for securitisation in Thailand. Therefore, many problems are faced in structuring the deal. Nevertheless, the Thai government is formulating the "Securitisation Act" and hopefully will implement it soon. This would facilitate and encourage the further development of the market. However, the taxation issues especially the value added tax of 7% and withholding tax are still major obstacles. The prospects for the future market development will depend on many of factors, both from the demand and supply side. The originators should improve their quality of asset portfolios while the investors should prepare and diversify their portfolio of investments. However, even though the study shows that the asset-backed securities market will not develop significantly in the near future unless the legal and regulatory framework has not been put in place; it is still an expensive method of funding andthe local debt market has not developed enough.