May 24, 1999 -- THAILAND has become ''the land of the silent screamers'', according to Vichai Punpocha, the general manager of Dresdner Bank AG. This is how the banker refers to victims of the economic crisis -- those who have lost their entire savings which have been invested in home-ownership. This hard-hit sector is now left alone to deal with their problems.

A banker who also enjoys his role as a social critic, Vichai says there are hundreds of thousands of so-called ''screamers'' out there who have no one to turn to when they suffer job loss or falling incomes. They have no means of paying their mortgage and are left out of society.

''These are the pitiful people who have no one to turn to. They patiently saved money all their lives before they could buy their first home. But they ran into unscrupulous housing developers who never built their homes and walked away with their down-payments.

''For those who managed to buy their first homes with their savings and bank mortgages, they cannot afford to continue to pay the instalments because of the economic hardship. These people are seeing their houses being taken away,'' he says.

The misfortune befallen on these silent screamers is not totally their fault and can be partly traced back, apart from the economic crisis, to the lack of consumer protection and institutional development in Thailand.

In Germany, where Vichai is now a citizen, there is a Mortgage Savings Association to protect the first-time home buyers. The arrangement acts as an insurance so that consumers will not totally lose out the investments in their first homes.

''The system works this way. If you need Bt1 million as down payment for your first home, you can join the mortgage savings agency by gradually contributing the money from your savings until the amount reaches Bt400,000.

The agency will contribute the balance of Bt600,000 and charge you only a low interest of 4 per cent. Once you get hold of this Bt1 million, you can buy your first home with this down payment at a low interest of 0.5 per cent, with a total cost of 4.5 per cent. In this way, no matter how the economy fluctuates, you will not lose your home easily,'' Vichai explains.

''Moreover, once you stay in this mortage system for three years and circumstances change, you can sell your contract to anyone and get the money back without losing your principal.''

The absence of consumer protection for first-time home buyers has become a big social cost for innocent, hard-working Thais. Vichai suggests that the government should create a mortage savings institution through legislation which can act as a buffer in the next crisis.

For low-income Thais, who depend on their interest-bearing bank accounts, they, too, have become the victim of an inefficient financial system. Banks now virtually dominate the financial system, becoming the only source of investment for low-income Thais or pensioners.

They have no means or knowledge to invest in stocks, nor can they take the money out of the country to save in US dollar accounts like rich Thais. So they end up being held hostage by the banks, which, without a proper competitive environment and with their impaired balance sheets, are giving them take-it or leave-it rates.

''The Thai banks are now complaining that their interest incomes are not enough to meet their interest expenses. This is because the banking system, saddled by bad debts, is not working. They cannot extend new loans because that will require them to put in new equity to satisfy banking regulations. And they cannot do so because they have no money,'' Vichai says.

The way to get around this problem is for the government to create ''disintermediation'' from the banking system through securitisation, he suggests. Lehman Brothers recently announced a plan to issue mortgage-backed securities, backed by its holdings of housing loans acquired from the Financial Sector Restructuring Authority's auctions. By doing so, it can raise fresh capital with its housing loan packages as collateral without having to turn to the banks. Thus it will issue bonds which will become a savings instrument for the public or institutions.

Vichai suggests that if the mortage-backed securitisation system is put in place, a new Thai company which cannot rely on the undercapitalised banks for a start-up loan can plough its assets into the special-purpose vehicle, which will in turn issue bonds on its behalf to raise money.

The bonds, he says, may carry an interest rate of 8 per cent. ''The Thais, who have now had to be content with a savings rate of 4-5 per cent will be more than happy to switch to the mortage-backed bonds as another option for investment which would double their return,'' he says.

The special-purpose vehicles, created by legislation, may charge the company issuing the asset-backed securities 0.50 or 1 per cent above the 8 per cent interest offer. In total, the issuer can raise money at the prime rate without having to be at the mercy of the banks.

If the Financial Institution Development Fund, the lender of last resort to Thai banks, guarantees the special-purpose vehicles, the financial system can continue to function with this disintermediation without having to wait until the banks clean up their their act, he says.

BY THANONG KHANTHONG