and production base to neighboring gms countries, it is natural for thai financial institutions to follow their clients. thai banks therefore have an important role in partnering thai and gms corporates. areas such as project evaluation, business - set up, cross - border financial transaction are areas where the local know how matter and where thai banks can meaningfully contribute. through the vertical integration of these corporate finance services, thai financial institutions naturally become an intermediary between thai business and our gms counterpart. as clients organize themselves around a regional supply chain, thai banks become a natural partner to bring gms business and investment to thailand. thai banks and their gms correspondent banks or joint venture partners have a niche market advantage. they have close business links, geographical advantage, and access to funding in local currencies which are the natural means of payment for intraregional trade. • thailand is therefore poised to assume the role of a connector – by acting as a link or point of reference for the entry of global banks into the subregion. this is underpinned by our established financial platform, familiarity with the local business practices, as well as close cultural ties among our people. • of equal importance is our own inherent understanding of the challenges of developments faced by gms, through our own experience. this is particularly important in two aspects. • first, thai financial institutions are still focused on core financial intermediary functions such as payments services, deposit, and loans which serve the basic needs of the real sector. thai banks are inclined to serve the needs of the real economy rather than in speculative types of businesses such as proprietary trading. for these reasons, thai banks are also less complex, with good risk management bis central bankers ’ speeches and strong capital base. regulators in thailand and gms neighbours can understand fairly well the business model of our banks and their risk. we believe that given the lesson of the current global crisis, this type of bank model makes good sense for home and host regulators. • secondly, both regulator and the banks in thailand could well remember the bitter experience of our own economic and financial crisis in 1997. we understand that financial liberalization needs to be properly sequenced. we also understand that financial development must be underpinned by a solid foundation suitable for each country ’ s economic, social, and political context. the speed of liberalization and change must not be too fast that it overtakes the fundamental preconditions such as strong financial laws, the ability to regulate and manage

should give them a comparative advantage to support the traditional sectors that are the mainstay of the region, namely the agricultural sector, household and small entrepreneurs. in this way, they have a predominant role in promoting financial inclusion. non - bank institutions or innovative financial services such as microfinance, mobile and e - banking and remittance services help promote financial access for households and enterprises. for larger corporate or infrastructural projects that local or regional banks might not have the financial capacity or know how, there is a role for global institutions to lead finance or underwrite. but global institutions would need local guides to venture into new markets. here there is a role for local or regional banks to partner with global banks. bis central bankers ’ speeches as to who should be borrowing, given the public goods nature of the long term infrastructural projects, the government should take the lead. options for financing include direct government borrowing, concessional borrowing from overseas development assistance, or through public private partnership ( ppp ). beyond banking, developments in the capital market and regional cooperation initiatives provide channel to intermediate cross border savings to finance infrastructure investments. these include the asean infrastructure fund ( aif ), the credit guarantee investment facility ( cgif ), and asian bond market initiative ( abmi ). going forward, the combination of the above arrangements should provide a division of task that is healthy and balanced for the region. secondly, on the role of thai financial intermediaries, i see the following prospects for the subregion. in addition to our strength in core banking business, the thai banking sector has been partnering with foreign entities to serve the broad - based demands of the economy. thus, we can play a meaningful role in bridging between the global financial players and the smaller local intermediaries. we can also contribute in terms of expertise and experiences. • so what is thailand ’ s value proposition? thai banks can play a role and compete in the business of financing small and medium enterprises. and with the natural trade links and the people - to - people relations, there is a role for thai banks in the payments and remittance services. these areas may not be commercially viable for global banks if the scale of the transaction is deemed too small. but for thailand, such basic services can help support the robust growth of cross border trade and investments which are important for rural development and income distribution. • with the fundamental trend where thai businesses start to diversify investment