This is part of a broader Capital Account Liberalization Master Plan aimed at facilitating and encouraging more outward investment by Thai residents in foreign assets. At the same time, we are mindful that financial sector development cannot be sustained without adequate attention to risk management. I should briefly mention here that we are moving steadily forward with Basel III implementation. The overall implication of this new regime is a shift in bank capital structure that should result in greater resilience to liquidity shocks and less pro-cyclicality. From a macro-prudential perspective, the new regime implies more pre-emptive policy actions and a greater mix of policy options. In this respect, there is a balance to be achieved. On the one hand, tighter regulatory structure and more active use of macroprudential policies may imply higher costs for banks. On the other hand, these costs, some of which can be offset through efficiency gains, represent a price worth paying for a safer and more stable financial system. In terms of implementation, the BOT is currently finalizing the national standards and time-frame for adoption. The Thai banking sector can expect the first draft of the Basel III capital regulatory framework and liquidity risk management guidelines to be available later this month, with an industry hearing in the second quarter to gather feedback. Ongoing monitoring will be supplemented by the conduct of a Quantitative Impact Study  BIS central bankers’ speeches  3  semi-annually. This is to address any unintended consequences and maintain on-going communication and feedback with the industry.

Finally, Thailand is well positioned geographically to serve as a supply-chain hub for many industries, and stands to gain from the expanding set of opportunities created by a growing and more integrated Asian economy. Thailand’s underlying strength places us in a position to reap the substantial benefits from such regional expansion and integration. However, realizing these benefits will be a challenge and requires considerable adjustments. The key task is to ensure the necessary structural reforms to enhance Thailand’s international competitiveness. Factors of production will need to be relocated from sunset to sunrise sectors. The quality of our human capital should be continuously strengthened to handle broadened and more complex activities as well as competition. Logistics and basic infrastructure need to be upgraded to support increased flows of goods and services. Government policies, rules, regulations and the legal framework must be improved and updated to facilitate all of this. In a world with so much uncertainty, what is certain is that we cannot simply make-do with the status quo. Lifting our growth potential requires vigorous change and transformation in what we do and how we do it. Ladies and gentlemen, As the familiar French proverb – “Rome was not built in a day” goes; these structural challenges cannot possibly be addressed in the short-term. Successful implementation of this reform agenda requires a medium- to long-term perspective. The public sector will play a critical role in this. This brings me to the final part of my address, the BOT’s policy focus going forward.