Thailand says not ready for sovereign wealth fund

SINGAPORE Nov 14 (Reuters) - Thailand sees no need to set up a sovereign wealth fund, unlike many of its neighbours that are looking to earn higher returns on their foreign reserves, Thai Finance Minister Korn Chathikavanij said on Saturday.

"I don't it is the right time for Thailand to set up a sovereign wealth fund as we can't be too confident that the foreign reserves we have now will be sustainable in the longer term," Korn told Reuters in an interview.

"If we decide to tap the foreign reserves to set up a wealth fund to invest overseas, our current account surplus could turn into deficit, which could undermine investor confidence," Korn said on the sidelines of an Asia-Pacific summit in Singapore.

Thailand's reserves have risen 22 percent to $135.7 billion as of Nov. 6 from the end of last year, due to a trade surplus and currency inflows. The baht currency THB= has gained nearly five percent against the dollar this year.

Korn said Thailand still lacks "highly credible" financial institutions that could provide good corporate governance and capable fund managers to run such a fund.

The number of wealth funds has ballooned in recent years with countries such as China and South Korea channelling part of foreign reserves into funds that will invest in equities and other riskier products in a bid for higher returns. [ID:nL236030]

Even the tiny nation of East Timor and the Malaysian state of Terengganu have their own funds. (Reporting by Nopporn Wong-Anan; Editing by Neil Chatterjee)