Asked yesterday whether Thailand is likely to set up a sovereign wealth fund, prime minister Abhisit Vejjajiva replied that there have been talks on the issue. The Bank of Thailand, the central bank, has been considering the idea as something that could enable it to have "more flexible management of surplus reserves", he said.

"The issue is still being discussed," added Abhisit.  "Obviously we have to look at the legal and political implications and be mindful of the experiences of the various other such entities that have been set up in recent years."

He was addressing an audience of 250 at AsianInvestor's Southeast Asia Institutional Investor Forum in Bangkok, and his speech touched on the financial market reforms his government is implementing.

"The financial sector in Thailand needs to be reformed," said Abhisit, "and to make further progress." He cites two initiatives in progress to improve first the financial sector -- through "financial master plan, phase two" -- and second, the capital markets development master plan.

The financial master plan has several objectives, he said. The first is to reduce system-wide operating costs through the rationalisation of financial regulations without compromising the stability of financial institutions.

The second is to promote further competition in the sector through various measures -- by introducing new service providers into the system and expanding the scope of business of existing providers, in order to improve prices and service quality.

Finally "financial infrastructures will be strengthened, particularly those related to lending measures", he said.

As for the capital markets development master plan, which will be rolled out between 2010 and 2014, it will include improving the competitiveness of the Thai stock exchange, liberalising the securities business, reforming the framework of securitisation for commercial collateral, streamlining the tax system, developing financial products and trying to develop a culture of savings and investment, said Abhisit.

"The plan has clear targets and key performance indicators in terms of both the growth of capital market and of the quality of the products that will be listed on the market," he added.

He also cited the set-up of a National Savings Fund, which will mean the majority of the Thai population not covered by the existing Social Security Fund will have their savings matched by the government to provide for their old age.

Abhisit added that the government will continue to facilitate business and investment by the private sector in Thailand.