Tài liệu An analysis of housing credit program for urban hoausehold case study in hcmc housing development bank(hdbank)

INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM =======oOo======= VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS AN ANALYSIS OF HOUSING CREDIT PROGRAM FOR · URBAN HOUSEHOLD CASE STUDY IN HCMC HOUSING DEVELOPMENT BANK (HDBANK) BQ GIAO D~C E>AO Tl;\0 TRUONG Dl;\1 H9C KINH TE TP.HCM THUVIEN • 1 A THESIS PRESENTED BY DOHONGNGOC IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF ARTS IN DEVELOPMENT ECONOMICS SUPERVISOR DR. TRAN TIEN KHAI Ho Chi Minh City, February 2009 CERTIFICATION "I certify that the substance of this study has not already been submitted for any degree and is not being currently submitted for any other degree. I certify that to the best of my knowledge any help received in preparing this thesis, and all sources used, have been acknowledged in this dissertation." Ho Chi Minh City, February 2009 Do HongNgoc i ACKNOWLEDGEMENT i would like to express deeply my appreciation and many thanks to the following individuals and organization helped me to finish this thesis. Doctor Tran Tien Khai, the academic supervisor who has spent much time to give me his guides, comments, assistance in this research. All lecturer and staff of Viet Nam-Netherland master program which is helpful program . for me to obtain the knowledge and the method of science studying with international standard. All my classmates, especiaily my group have encouragement, cooperation and help during my stUdying and doing the thesis. All ofmy family members have help and encouragement for me to try my best to finish this research. ii ABSTRACT VietNam is going on the way of modernization, industrialization and especially of globalization with the purpose of economic development and enhancing the life standard of the resident. This implies· to· increase further with a rise in the urbanization levels and in the population along with increasing the demand for housing in urban of VietNam. To . solve the d~mand of urban household, the government has many policies to support the resident such as housing finance system from bank or other financial institution, housing program for low inconie .. : This study only concentrates to analysis housing credit program from bank for urban household on two major aspects. The first is the determinants of probability to get a housing loan. And the second is the determinants of housing loan amount. SO the household should improve their character and capacity to be able to borrow housing loan from bank. Conversely, the bank also should have-suitable . credit policy and condition for the customer to speed up effective and sustainable credit development. iii TABLES OF CONTENTS .·fi . . C ertl 1cat1on. ··················~····· ........................................................................................................... 1 Acknowledgement .................. :.................................................................................................. ii Abstract ..................................................................................................................................... iii Contents ........................................................................... :······· ................................................... .iv List of tables and figures .......................................................................................................... viii ··Abbreviation .............................................................................................................................. ix CHAPTER I·: INTRODUCTION .•...................·.................................................. ~ .................... ! . . 1.1 Prob-em statement.. ~········································································································· I 1.2 Objectives ofihe stlldy ..~ ................................................................................................. l 1.2.1 General objective ........................... ~ ............................................................................. 2 1.2.2 Specific objective ....................................................................................................... 2 · 1.3 Research questions ...... ~·~··············································•···················································2 ·1.4 SuJi:J.macy on rese8.rch· methQdology- and data ..............•............................................... 2 1.5 ·The organization of the thCsis ···~····················································································3 CHAPTER II: LITERATURE REVIEW ............................................................................... 4 2..1 TheOry ba~kground ......................................................................................................... 4 2.1.1 Major concepts ........................................................................................................... 4 Household Credit Borrowing Household credit market 2.1.2 Banking theory ............·............................................................................................... 4 Credit management Credit analysis and loan decision . Issues in credit market 2.2' Experiences of housing development in some Asian countries ••..•.......••....... ;............. 7 2.2.1 In Singapore .... ;..................................................................................................... ,........8 2.2.2 In China .............................................................................................. ,....................... 9 2.2.3 In Thailand .................................................................................................................. 10 iv 2.2.4 In Korea .................................................................................................................... 11 2.3 Theoretical models and empirical studies for house demand ................................... 12 2.3.1 General observations ................................................................................................ 12 2.3.2 Determinants ofhousingloan.-.................................................................................. 13 2.3.3.Determinants of loan amount ................................................................................... 15 2.3.4 Theoretical models ................................................................................................... 16 The basic models ...................................................................................................... 16 :The extended models ........................ ;....................................................................... 16 2.3 .5 Empirical models applied in previous studies .......................................................... 17 CHAPTER III: RESEARCH METHODOLOGV............................................................... 20 ·3·.1 AnalyticiJJ· framework ········~······················•·····································································20 3.1.1 Hypotheses .................... ,.......................................................................................... 20 3.1.2Detenninants ofthe probability ................................................................................ 20 3, 1.3 Determinants of loan amount ....................................................................................• 21 3.1·.4 Specific empirical models ......•................................................................................. 22 Model1 ....... _............................................................................................................... 22 Description of the model1 ....................................................................................... 22 Definition and explanation of variables of the model 1 ........................................... 22 Expected signs of the variables' coefficients ........................................................... 23 Model2 ..................................................................................................................... 24 Description of the model 2 ................. ,....................•.................................... ;............ 24 ·Definition and explanation of variables of the model2 ........................................... 24 Expected signs of the variables' coefficients ........................................................... 25 3.2 Data source· aild sa~pling............................................................................................. 26 3.2.1 Data source ............................................................................................................... 26 Where is data source? ... :........................................................................................... 26 . Its . va•I..d.Ity?....................._.............................................................................. . 26 .What-Is When are they collected? ......................................................................................... 26 . Population .. :.... :........ ;................................................................................................ 26 3.2.2 Sampling ..........................................................................................................•......... 27 v .sample size ............................................................................................................... 27 Sampling method ....................................................................................................... 27 3.3 Analysi-s methods ······~····································································································29 3.3 .!Statistical tests for descriptive analysis ..................................................................... 29 3.3 .2 Correlation analysis .................................................................................................. 29 3.3.3 Statistical tests for validity of specific models ......................................................... 30 . . . . 3.4 Analysis· too1 ........_...................................... ~ .................................................................... 30 CHAPTER IV: ~SU~TS AND DISCUSSION ....................... ,.......................................... 31 . 4.1 Situation ofhousingcreditprogram for urban household in Ho Chi Minh City ... 31 4.1.1 Housing demand of urban household ....... :............................................................... 31 4.1.2 National strategy on housing up to the year 2010 .................................................... 31 4.1.3 The overview of urban finaricial system, borrowing by urban households and .housing finance project. ...................................................................................................... 32 Financial system and source of credit to urban households in VietNam ................ 32 Overview ofborrowing by urban households .......................................................... 32 · 4.1.4 HCMC Housing development program .................................................................... 35 4.2 IiCMC Housing D-evelopment Bank ·························~······-············································35 ·4~2.l.Overview ofHDBank ............................................................................................... 35 4.2.2 Housing credit program ofHDBank ........................................................................ 38 4.3 HCMC ·aousing D.eveloprri.ent Bank ·····································································~·····40 .4J~1Analysis ofborrower' characteristics ....................................................................... .40 4.3.2 Correlation.analysis ................................................................................................... 44 4.3.3 Statistical tests for validity of specific models ........................................................ .47 4.3 .4 Description collecting data and choosing suitable method ..................................... .48 ·4.4 .Results ·of ~odels ~esting and explanation .................................................................. 49 4.4.1 ·:Empirical result- Model I .................... ;.................................................................. 49 4.4.1.1 Enter method ................................................... ;............................................ 49 4.4.1.2 Backward LR method ............................... :........................... ;........ ;· .............. 50 vi 4.4.1.3 Analysis the factor affect to the probability to get housing loan for household .................... :...................................................................................................... 50 4.4~2 Empiricalresult- Mod.el2 ............ :.......................................................................... 54 4.4.2.1 Enter method ................................................................................................ 54 4.4.2.2 Backward LR method .................................................................................... 54 4.4.2.3 Analysis the factor affectto the probability to get housing loan for household ............................................................................................... ,.................. 54 CHAPTER V: CONCLUSION AND IMPLICATION ....................................................... 58 5.1 Conclusion on the applied methodology and limitation ....•..•....•.••.•.•..•.........••.......... 58 5.2Conclusi0n On the studie.d results ................................................................................. 58 5.3 Po.licy impli~ation in. macro levCI ................•................................................................ 59 5.4 Policy implication for HDBank as well as housing credit program •...•..••.........••..... 59 References Annex vii LIST OF TABLES . Table 1.1: Compare mean of variable Table 1.2: Correlation Matrix Table L3: Durbin:_ Watson in model! Tahie 1.4: Durbin- Watson in model 2 Table 1.5: Regression result of model 1 from step 1 to step 6 by back ward method Table 1.6: Regression result ofmodel2 froni stepl to step 6 by back ward method LIST OF FIGURES Figure 2.1: Structure ofprobability to get housing loan Figure 2.2: Structure of samples possibility to get a housing loan Figure 2.3: Growth oftotal assets and chartered capital in HDBank Figure 2.4: Growth ofloan outstanding debts in HDBank Figure 2.5: Outstanding ofhousing credit program and total loan outstanding in HDBank Figure 2.6: Regression standardized residual LIST OF ANNEXS: Annex 1: T-Test result Annex 2: The result of model 1- Enter method Annex3: The resultofmodell- Backward method Annex 4:Theresult ofniodel2- Enter method Annex 5: The result ofmodel2- Backward method viii ·ABBREVIATION HDBank: Housing Development Bank ADB: Asian Development Bank SBV: State Bank of VietNam SOB: State Owned Bank · DLH: Department of Land and House ix CHAPTER 1: INTRODUCTION 1.1 Problem statement The world is flat on all fields by globalization, information technology development especially in the economic field. Viet Nam also follows this tendency by joining econoinic organizations in area as well as in the world such as AFTA, WTO ... Economic development and reforms in the sector has brought increased urbanization. Urban population is expected to increase further with a rise in the urbanization levels and in the population. In a research of JBIC (1999) stated that VietNam has been experiencing rapid urbanization owing to economic development after the Doi Moi policy, and urban population is predicted to increase to 46 million in 2025 from 15 millionin 1995, · Urban development and housing sector, especially in Hanoi and HCMC, is urgently challenged by swelling migration from rural· areas, expanding informal settlement, emerging .relocation needs by inner-city redevelopment, accelerating reform of SOEs that provided their employees with houses. This implies demand for housing would increase at a faster pace in urban VietNam in the short term to medium _term. To solve urban development and housing problem for the resident, Viet Nam is learning valuable lessons from other country's different models of housing development. Vietnamese authorities clearly organized and exposed a particular plan such as urban development policy, real estate institution, housing development and housing finance... With· housing finance, the authority specifies two aspects are municipal housing fund and housing finance facility. In municipal housing fund, respective "Housing fundl' was establish in the early 1990's in HCMC and in 1998 in Hanoi; These funds mobilized capitals primarily from the sales revenue of the former state-owned houses, and are used for housing finance. Another facility named HIFU was set up in HCMC in 1997. HIFU mobilizes capitals from bank loans, equity and trust fund entrusted by the People's Committee, and it invests in urban development including housing projects of the public developers. Besides that, housing loan activities are chiefly supplied by state-owned commercial bank, private joint-stock bank, municipal fund ... This study just concentrates to analyze housing finance especially housing credit program for household. In real, a large of the urban population lacks access to affordable finance for housing construction or improvement, so they have to resort to informal sources such as moneylenders, friends, relatives and credit associations ... So investigating the determinants of access to credit and the determinants of loan amount 1 help household and· bank have change to quickly find the common result. It means that the household satisfy bank's·loan condition to get the housing loan and the bank has housing creditto the customer safely and effectively. Another further issue concerns this study is the housing finance project will set up a facility to provide mortgages and loans for urban low-income and poor people to improve their property or build or buy new homes. It will also promote institutional strengthening and capacity building to develop VietNam's housing finance system. 1.2 Research objectives. 1.2.1 General objective Analysis of housing credit program for urban households by analysis the probability of credit for household and. the deteirninants affeCt to loaiiamomil 1.2.2 Specific objective . , The demand of house and housing system in urban VietNam. -- - The demand of housing loan of urban household. - The_ ~eterminants of housing credit program for urban household including· probability of credit and loan value. - The research analyzes the relationship between urban households and credit market to find -out relation of characteristics and endowment of urban households and characteristics of loan to chance to borrow, loan amount. "' Enrich our knowledge on credit market and borrowing by household in Viet Nam, particularly in housing credit program. - The effective of the housing finance project to the low-income and poor · people artd contribute the economic growth in VietNam. - In addition, housing finance project do strengthen and capacity building to develop VietNam's housing finance system. 1.3 Research Questions _ How is the housing demand of urban household? .What are the determinants of housing credit program for urban household? How does the credit especially housing credit program contribute the economic development and economic growth? 2 1.4 Summary on research methodology and data The method is used, including statistical and descriptive analysis, review of historical ·trends, and·. comparative methods. Apart form, quantitative method is extensively used; Data is used in the analysis from the core banking of HCMC Housing Development Banlc 1.5 Strcuture of the thesis The thesis consists of five chapters, following chapter 1, the rest of the structure as follow: . Chapter 2: Literature review Chapter 3: Research.methodology Chapter 4: Result arid discussion Chapter 5: ·Conclusion and Implication 3 CHAPTER II: LITERATURE REVIEW 2.1 Theory background ·. 2.1.1 Major concepts Household is area of concern in social science. Concept of household is defined and discussed by economists, feminists and anthropologists. Ringen (1991) defines of household that as is a group of at least two people pools their incomes and uses income collectively.. In house holds, income is not split up.between household members for each to use his or her · share, at least not all of it. In large .measure, household members cooperate on the use of income and thereby get more out of their income than they could if each had been on his or her own .. However, there is much controversy over the boundary of this definition. Generally, economists view household as an essential unit of analysis and develop theory based on modeling behavior of household. There are two themes of economi~ model of household behavior. The first treats consumption and produce separately or simultaneously in an integrated model. The second emphasizes on market condition, and relationship between household and market for land, labor, and credit. Credit is the trade of money, goods or services at the present time for a payment in the future. Credit can be provided in many different forms and under a wide variety of . arrangements (Kinnon Scott, 2000) Borrowing is one side of credit. In general, borrowing is defined as that to be transferred property right on a given object (e.g. sum of money) in exchange for implementing . obligation of a claim on specified object (e.g. a certain sum of money) at specified point of time in the future .. In extension of this definition, borrowing by households, particularly Urban household is defined as activities of households to obtain external resources to support other household activities with obligation to repay in future. In other way, borrowing is made by household to finance household's budget deficit. Housing credit market the presence of heterogeneity among different household induces to situation whereby households fall into budget deficit while some others are in budget . surplus. Therefore, the deficit households desire to borrow in order to cover their deficit while surplus households also desire to lend out for their interest. Consequently, . household credit market is established to facilitate borrowing and lending of households. Credit. market function is to transfer purchasing power from surplus households to deficit . . ones by issuing and acquiring of money-denominated debt. . . . . 2.1.2 Banking theory Credit management: how to determine the creditworthiness? 4 In credit scoring method, the creditworthiness can be measured by the values basing on the characteristics. However, there are some core factors that are usually used in credit management (Kapoor, Dlabay, Hughes, 2001). They are: Characte~: the borrower's attitude toward his or her credit obligations. Capacity: the borrower's financial ability to meet credit obligations. Capital: the borrower's assets or net wealth. Collateral: a valuable asset that is pledged to ensure loan payments. Conditions: the general economic conditions that can affect a borrower's ability to repay a loan. ·· Access to credit in this research can be understood as two components: The probability to get credit from bank for household. In case of the household can get the loan, the size of the loan is also one compop.enf in access to credit. Credit analysis and Loan decision Purpose of credit analysis: Credit analysis is a process of collecting information, analyzing information with sciences method for the aim to understand clear about clients and their business projects, serving process of short-term loan decision. Credit analysis is an important step with the purpose using to make loan decision: accept or reject issuing credit. In order to make credit decision banks must do three steps following: Collecting sufficient & accurate information. Analyzing and processing data collected. Predicting ability of repaying seed and interest of household. By credit analysis, banks can replace their experiences about household and their project applied for loan with scientifically argument and evidences rely on information and· data processing. Therefore,· credit analysis help banks avoiding two types of mistake: (1) give credi(for bad client, (2) and rejecting the good one. Information usingfor credit analysis Collecting good information is. initial necessary when carry out credit analysis; ·quaiification of data analyzed have significant effected to result, by this, it is effected to loan decision, the quality of data is noticed with three attributions: (1) sufficiency, (2) timely, (3) accurately. 5 Analysis contents: analysis should be targeted evaluation of capacity repaying loan that mean, it evaluate whether customer can repay seed money and interest or not. To ·appreciate repayment capacity of company, we have to determined factors effecting to customer's repaying-debt capacity. In other hand, credit analysis contents should be concentrated into analyze factors effecting to ability to meet obligation. Basically, ability of repayingloan is influenced by: Finance situation. Practicability and effectiveness of projects. Customer's attitude to refund debt. Issues in credit market .- .Chung (2000). Credit rationing is a condition of loan market in which the lender supply of fund is less than borrower demand at the quoted contract term. In other words, it means that there is excess demand. In credit market, credit rationing appears to be an inefficient situation of credit market, where interest rate does not work well to balance supply and demand sides. There are two major ways to explore causes of credit rationing. Firstly, traditional . view:s consider credit rationing resulted from government interventions on credit market by imposing interest rate ceiling on lending institutions. Interest rate is exogenously held under market clearing leveL With interest rate keep artificially low, some poteritialborrowers who want to borrow are rationed. Secondly, after . .. the demise of the traditional theories, a new approach to credit rationing was developed. The new approach argued that permanent credit rationing is considered as an equilibrium phenomenon rather than a temporary phenomenon. . Modem theories identify problems of moral hazard and adverse selection in credit market as a source of credit rationing when information is distributed . asynimetrically among market participants. . Fragmentation of credit market strongly affects the borrowing· behaviors of urban households. Fragmentation of credit market, firstly, is thought as a consequence of the repressive government policy. Ceiling rate on deposit and loan rate imposed by central bank induces to severe credit rationing in formal financial sector. Resulting from inter-linkage between formal and informal financial markets the.unsatisfied demand of households for formal loan flows into informal financial sector and put demand for informal loans to rise up. Secondly, it is viewed that fragmentation of household credit market is caused. by structural and institutional features of credit market in developing countries. In addition, fragmentation of credit market may also result from weakness in the infrastructure 6 that supports the financial system. Thirdly, another perspective on fragmentation of credit market argues that formal and informal financial sectors are parallel developed because they serve different segments of credit market. In conclusion, under perfect credit market, borrowing, along with saving, allows urban households to maximize their utility overtime. Resources or endowments, incomes, and activities of households determine the demand for loan. The effects of those factors on the demand of urban households for credit are called "demand side effectsi'. On the other hand, credit market conditions and relationship between urban households and financial intermediaries affect borrowing by urban households. If credit market is inefficient; some of potential household borrowers fail to access to credit market. Therefore, severity of credit rationing is an explanation for credit constraint of urban households; and high fragmentation of credit market is an explanation for various borrowing behaviors of urban households. Borrowing by urban households is substantially determined by condition of credit market so called "supply side effects". Thus, borrowing by urban households is jointly affected by both demand and supply side factors. 2.2 Experiences of housing development in some Asian countries: As with Latin America and Africa, the number of urban residents is fast .expanding in Asia. Asia is also home to the largest concentration of poor people in the world (Chapman et al, 1999; Montgomery et al, 2001). About a quarter of the total urban population in Asia is living below the poverty line although the proportion may be higher in some countries. India and China· each holds about a third of the region's urban population with many living in relative poverty. (Jacquemin, 1999). Of the 12 million people in Mumbai, for example, about 50 per cent lives in slums, dilapidated houses and .on pavements. In the extreme, they join the number of homeless people, estimated to be in excess of 100 million in the world (UNCHS, 1999). In one recent estimate, Asia alone will need to Invest a sum of US$280 billion a year over the next 30 years to meet the basic needs · of the population in housing and other urban sectors (Brockman and Williams, 1998). . · . T~e lack of housing access is one of the most serious and widespread consequences and causes .of poverty ili Asian cities. The· improvements in housing that are important to improving the quality of life ·among the poor often does not receive the attention they · deserve from policy makers (Daniere, 1996). To make any appreciable improvement, substantial government spending is needed, both in the physical expansion of the city's infrastructure and implementation of poverty alleviation programs. Buttressed by the . heritage of literature that argues the importance of affordable and improved housing in 7 · urban poverty reduction (see, for example, Mitlin, 2001), the immediate research issue is how poor families can access urban shelter more affordably. · Experience for VietNam from other countries in Asian as follow: 2.2.1 In Singapore .The Singapore public housing development has attracted keen research interest (see, for example, Wong and Yeh, 1985; Yuen et al, 1999) but few have clarified the public housing-urban poverty nexus. This provides the starting point for the present analysis of the performance of housing development. · Follow by Global urban development magazine in Singapore (GUDS, 11/2007), in a fundamental perspective, without parallel economic development, the housing improvements would not have advanced so dramatically. Deliberate action was taken to . diversify the economy and provide employment in Singapore. With economic growth, the nominal household income had increased. Real GDP had grown at an average of 8.6% per year over the 30-year period from 1965 to 1999. This had fuelled growth in real per capita GDP from S$4000 in 1965 to S$32,000 in 1999 (while inflation remained low, around 2 to 3% per year). At the household level, the average monthly household income increased. As Ng and Yap (2001} illustrated, from 1988 to 1998, average monthly household income. had increased by 6. 7% per year, leading to higher asset ownership. The proportion of homeownership public flats expanded from 26 per cent in 1970 to 92 per cent ofthe housirig stock by 1999. Although the financing of public housing draws from the general background of the country's economic progress,· Singapore's experience also demonstrates the employmentgeneration potential of this sector. By 2000, the HDB (Housing Development Board of · Singapore was established in the beginning of year 1960) in providing a total housing environment forallwho lack has initiated the construction of more than 850,000 dwelling units, 19,500 commercial premises, 12,800 industrial premises, more than 1460 schools and community facilities, 45 parks, 17;347 markets/hawker centers, and numerous car parks. The construction of these facilities while providing improved housing and better quality of life for the poor has created construction jobs and has· a high multiplier effect. Reflecting on the economic impact, some housing scholars such as Sandilands (1992) have described the construction sector as a leading sector since its growth rates are above the rate of growth of overall GDP. Others have written about the pump priming effect of public sector housing construction (see Krause et al, 1987). As with many other cities, Singapore's quest to provide its poor residents with good living environment is not new. Adequate shelter with the promise of a decent life of dignity, good health, safety, happiness and hope is one theme that has been repeated internationally and enshrined in successive United Nations declarations (see, for example, 8 UNCHS, 1998; 1999; World Bank, 1993). The Singapore development expenence, however; shows thatpublic housing (even: high-rise) for the lower income families need not degenerate irito polarized and marginal environments. Nonetheless, the reemergence of the homeless underscores the urgency for further research. In particular, the trend towards taller housing presents challenges The poor of Singapore do not have the alternative to opt out of this housing. In this regard, we are reminded of Mitlin's (2001, p512) exhortation to understand and follow the realities of the poor in the continuing effort to create affordable housing that seek to address their diverse needs. In sumrilary, Singapore's system of housing development with a single empowered authority responsible for housing delivery may not be the model for all countries, but effective pragmatic management principles (such as inclusive housing and widening homeownership opportunity for lower-income families, directed assistance for lowincome· renter households and continual review of housing access) apply in most contexts. There is a growing literature that emphasizes a comprehensive approach to housing. Similar to situation of China and Thailand or other Asian countries, VietNam can get the most suitable lessons for housing market and policy in the way of economic development. . 2.2.2 In China China's housing market and policy context are relatively unique, differing from those of the urope and the US, including the post-Communist countries (Wang and Murie 1999, ·Naughton 1994). This section therefore review China's homeownership-oriented housing polices. In this section and throughout the paper the discussion focuses on urban housing ·policy olily be.cause. of the different rules and institutional arrangement governing . housing hi rural and urban areas. . Privatization As economic· reforms deepened in the 1990s China's policymakers sought to privatize much of the publicly-owned housing stock that had been previously rented from the state or state-owned enterprises (SOEs). In doing so the government was motivated by a number of factors, foremost of which was the fact that maintenance cost levels ran well above the nominal rents paid by tenants; Zhang (2003) cites figures indicating that as of .1991 rent on government-owned housing averaged 0.13 ¥/m2 of living space (enterpriseowned housing was even cheaper) while upkeep expenses averaged 2.31 ¥/m2. Under ·these conditions housing costs accounted for only 1 percent of the average worker's earnings. Inl994 the Housing Reform Steering Group of the State Council unveiled several 9 reforms designed to encourage the development of housing markets. Liu, Park, and Zheng's (2002) analysis of the relationship between housing investment and economic growth found significant positive relationships over both the short and long runs: another important policy motivation for spurring development of housing markets. Housing Provident Fund The Housing Provident Fund (HPF) was designed in 1992 to help wean employees from workplace housing provision. As such, it was paired with reform of the salary system. Instead of providing housing directly and paying employees a correspondingly lower . salary, the progranfs goal was to enlist public sector employees in the development of the coriunercialliousing market by raising their incomes but siphoning the increase into savings accounts dedicated to housing~ while reducing their in-kind housing benefit, thereby encouraging them to find housing in the marketplace (Wang 2001). The reform was part of a more general effort to have individuals and markets replace government and .work units as the entities responsible for housing finance (Lee 2000). Because employer participation is not mandatory in the private sector, the primary HPF beneficiaries are government, party, SOE, and other public sector workers, although some private firms and foreign joint ventures also match employee contributions. In a recent overview of China's housing policy, Sun (2004) criticizes the targeting of the HPF system. This is. reinforced by the fact that even most working lower-income households are not in the kind of official, full-time, and typically public sector positions likely to carry an HPF benefit. · Affordable Housing The other principal homeownership-oriented public policy is the development of 'affordable housing' (Jingji Shiyong Fang or 'economic and comfortable housing'). The policy is designed for lower-middle- and middle-income urban residents and involves ·government subsidies and profit caps for developers. 2.2.3 In Thailand .In May 2005, Veerachai Veerametheekul, Vice Minister of Finance, Khan Prachuabmob, President of· Government Housing Bank, Pomsak Boonyodom, National Housing Authority Governor; Kitti Pattanapongpiboon, President of Housing Loan Association and Ballobh K.rittayanawat of the Government Housing Bank, represented Thailand at the "More Than Shelter: Housing as an Instrument of Economic and Social Development", an international conference organized by Harvard University's Joint Center for Housing Studies (JCHS) in Bellagio, Italy. Important leaders from four other countries, including · the USA, Mexico, South Africa and :kenya also attended the conference. After the conference, the participants from five countries endorsed the "Bellagio Housing 10