| Abstract | Leasing as an important source of funding has proven its significant role in the
developed countries during the 1970s to 1980s. The studies in last decades of 1980s in the
three major leasing markets --US, Europe and Japan-- have shown that leasing
contributed significantly in the equipment financing during their industrialization period.
The attraction of leasing has been spreading worldwide especially to the economic
growth center region in the Asia Pacific countries. Yet not much studies have been
conducted to understand the structure, role and impact of the leasing mechanism as a
source of funding in the developing countries. This study is an attempt to meet that need.
However, because of its exploratory nature this study focuses only in leasing mechanism
of the industrial or production equipment investment in three ASEAN countries namely
Thailand, Singapore and Indonesia.
In order to fully understand the leasing mechanism as a source of financing, a
conceptual framework has been proposed. This framework proposes three levels of
analysis, namely global, macro-regional and micro-firm level. The analysis is based on
four determinants in the leasing industry: legal, taxation, accounting, practice. The
framework has been operationalized through the development of a questionnaire and its
application in case studies from both lessor and lessee side.
The study of global-macro-regional interaction shows that leasing industry depends
heavily upon the government policy, especially on the taxation regulations. It is due to the
government policy that a leasing industry can grow rapidly in one time and slow down or
even dying in another time. Therefore, in order to fulfill its function as a promoting factor
in the development of the technological capability of the country through easy financing
in industrial equipment, it needs a conducive environment in the form of supporting
regulation from the government.
In the context of macro-micro interaction in the three ASEAN countries under study,
this study reveals that qualitative factors of availability, flexibility, less administration and
speedy process are the strong points of lease mechanism compared to established
financing form of bank loan. Quantitatively, lease scheme cannot compete loan scheme
since the spread between the interest rates cannot offset the tax deferral benefit generated
in the lease mechanism, this has been demonstrated in the case studies analysis which
proposed some simple rules. The availability is the strongest reason for small and medium
size companies to engage in the lease scheme since their borrowing capacity is limited.
Based on the findings, the lessors can strengthen their competitiveness and the lessees
can improve their bargaining power. Through the cooperation with the authorities, leasing
mechanism can be used to promote capital investments which will eventually benefit to
the whole economy of the country. |