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Bangkok, May 25, 2005
—The International Finance Corporation, the private sector arm of the World Bank Group, today signed a memorandum of understanding with the Government Housing Bank of Thailand and the Canada Mortgage and Housing Corporation to promote the development of mortgage insurance in Thailand. The project supports a broader and longer-term effort to further develop the housing finance market in Thailand. Mortgage insurance would enable commercial banks and other lenders to make housing loans to a wider spectrum of borrowers, provide more attractive terms, and better manage and control risks.
The first step in the process will consist of a broad analysis of the mortgage market in Thailand, including the size of the market, the availability of mortgage products, role of various financial institutions, product gaps, obstacles to the development of the secondary market, the need for mortgage insurance and the size of a potential mortgage insurance market. Today’s agreement envisions CHMC taking the leading role as technical advisor, supported by the GHB through financial assistance and other means. IFC plans to support this stage of the project by reviewing the terms of reference of the feasibility study, sharing its knowledge of the Thai financial sector, and providing comments on the drafts of the feasibility study produced by CMHC.
“The use and availability of mortgage insurance can contribute to making affordable housing available to more people,” said IFC Thailand Country Manager Michael Higgins. If the first stage of the project indicates that the conditions are right for a mortgage insurance product that can be met by a commercially viable mortgage insurance company, CMHC, IFC and GHB will work together on developing a detailed business plan for such a company. Mr. Higgins said,“IFC can assist in structuring of a mortgage insurance company by sharing specialized expertise so that a new institution is established in accordance with the best international standards and industry practices.”
IFC’s participation in this project is part of a broader strategy in Thailand to promote the continued development of a strong and stable financial sector. An important component of that strategy is to support the development of debt markets, especially in housing finance.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
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