Most analysts attributed the snail's pace of Thai corporate debt restructuring in the last five months to the absence of effective bankruptcy and foreclosure troubled borrowers to the negotiating table.

A joint government-private sector panel for monitoring debt restructuring said on Friday a paltry 4.7 per cent of a total 2.5 trillion baht ($69 billion) loans (NPLs) had been restructured since it was 1998.

``The size (of restructured loans) is less important than the momentum that it generates,'' said an analyst at a Thai-foreign brokerage joint venture.

The analyst, who declined to be identified, said she expected Thai banks the first half of this year as they tried to ease the burden of meeting a minimum 40 per cent bad loan provisioning requirement by mid-1999.

The more NPLs which banks rehabilitate, the less provisions they need to make.

Thai banks are saddled with mammoth NPLs amounting to about 45 per cent of total lending. The level of distressed loans is expected to peak in the second or third quarter of this year at an industry average of more than 50 per cent.

Analysts said a big portion of the debt come from strategic defaulters who were financially viable but had lacked effective legal means to force them to pay on time.

``Why negotiate when the banks cannot do anything ? '' said banking analyst, James Moss, at Nava Vickers Ballas Securities Plc.

Donaldson Hartman of Salomon Smith Barney said Thailand's amended economic laws, including bankruptcy and foreclosure bills that the government was trying to push through parliament, must play a crucial role in speeding up debt restructuring.

Passage of the bills has been delayed because of opposition from some senators in the upper house of parliament.

``This is probably the most important factor in terms of public policy of the government ... the current legal infrastructure and process is viewed unworkable by the market in solving the structural NPL situation,'' Hartman said.

``It needs to be changed. If not, people will continue to hold back paying their loans and the economy will recover much slower than it otherwise should.''

Thai finance minister Tarrin Nimmanahaeminda has since August urged bank creditors to avoid what he called an NPL trap which he said would widen if banks refused to help clients restructure unserviced loans.

Tarrin said banks making progress on loan restructuring would be awarded with government support when they raised capital.

But the minister faces a tough job getting key economic laws passed by Thailand's appointed senate where they encounter strong opposition from senators with private business interest.

James Moss of Nava Vickers said most foreign creditors carried no serious wish to foreclose assets of troubled clients.

``They are not so much interested in actual foreclosing but only in bringing debtors to the negotiating table. The laws will have a good psychological effect,'' he said.

Some analysts held out hopes that the bankruptcy and foreclosure laws would be passed during the current parliamentary session ending March although the legislated versions might be sharply watered down as demanded by senators.

Others foresee further delays as some reticent senators hold out on passage.

``If the laws failed to sail through, foreign investors may all close doors, pack up and go home,'' another foreign analyst said.

Some analysts said a delay of the bills' passage had depressed prices fetched by assets of defunct finance companies that were closed by the government in late 1997.

Hartman said although Thai banks carry heavy NPL burdens, they should enjoy a slowly improving situation partly due to plunging Thai interest rates in recent months and a government success in lowering the cost of bailing out weak financial institutions.