Masahiro Kawai said private firms would be able to issue bonds only if they had good accounting practices, including the timely disclosure of information and transparent auditing systems.

He spoke at a press conference following a seminar called "Enhancing Financial Cooperation through Asian Bond Markets", organised by the Finance Ministry and the Asian Development Bank (ADB) for a two-day meeting of delegates from the 28 member states and territories in the Asia Cooperation Dialogue (ACD) forum.

The seminar was part of the preparations for an ACD finance ministers' meeting in Phuket in June.

Naris Chaiyasoot, director-general of the Finance Ministry's Fiscal Policy Office, was optimistic that demand for local-currency bond markets in Asia would rise.

In the past few years, the Thai government has allowed the ADB to issue baht-denominated bonds worth Bt4 billion and Japan's Bank for International Cooperation to issue such bonds worth Bt3 billion.

In the next step, the ministry is preparing to allow foreign companies, such as Japanese firms doing business in Thailand, to issue baht bonds.

Senior officials from India and Pakistan said they were optimistic about the development of Asian bond markets.

In a speech opening the seminar, caretaker Finance Minister Thanong Bidaya emphasised that countries must individually develop strong domestic bond markets before regional markets are realised.

He said creating a uniform Asian bond standard was crucial to the further broadening of available instruments.

Following in the footsteps of the Eurobond market some 40 years ago, the Asian bond markets may evolve into offshore bond markets.

Kawai agreed that any country, including Thailand, could potentially be an offshore bond market for outsiders.

Kawai said that East Asian local-currency bond markets had expanded in absolute size and as a percentage of gross domestic product in 2005.

The volume of outstanding local-currency bonds reached US$1.7 trillion (Bt66.4 trillion), up 14 per cent from 2004.

"Bond markets around the world are growing, and emerging East Asia is moving ahead at a faster rate," he said.

Kanit Sangsubhan, director of the Finance Ministry's Fiscal Policy Research Institute, said the Asian bond market development initiated by caretaker Prime Minister Thaksin Shinawatra had drawn the interest of many investors as well as governments in the region.

A state enterprise in Laos is expected to issue baht bonds worth about Bt2 billion to finance its electricity power project.

Wichit Chaitrong

The Nation