AIG's board of directors will soon discuss the matter and it is likely to instruct its Thai unit, American International Assurance (AIA), to invest in the fund, Uttama told Manager Online.

AIA, Thailand's largest life insurer, is expected to join the Government Pension Fund, Thai Life Insurance and other insurers in investing in the fund, Uttama said during a trade and investment trip to the United States led by caretaker Commerce Minister Somkid Jatusripitak. The Thai delegation has met senior US officials and executives, including AIG president and chief executive Martin Sullivan.

"The formation of the fund aims to provide a channel for insurance companies to manage capital and to stabilise the Thai stock market, as the insurance business has long-term policies. The fund will have a five-year maturity and it will concentrate on investing in stocks. We will select a mutual fund company to manage the fund," Uttama said.

The fund's formation is subject to approval by the Securities and Exchange Commission. The Insurance Department will also have to give its approval before insurance companies can use more than 10 per cent of their capital to invest in stocks, he said.

Uttama said Government Pension Fund secretary-general Visit Tantisunthorn visited Brunei recently to help negotiate the establishment of a second Brunei Fund, following attractive returns for Thai investors from the first one. The second fund will invest in non-listed companies.

Meanwhile, Somkid said he had received assurances that Dow Chemical and Colgate Palmolive would select Thailand as the location of their regional production bases.

He made the announcement after meeting executives from the two companies.

Dow Chemical plans to spend US$1 billion (Bt37.91 billion) to expand its petrochemical business in Thailand, Somkid said.

"Dow Chemical is seeking a Thai partner for the project and I expect that it will join hands with an affiliate of Siam Cement, which is its current partner. Dow Chemical is discussing the investment with Thailand's Board of Investment," he said.

Thailand will resume free-trade talks with the Washington once a new government is formed, Somkid said in a luncheon speech.

"Today's meeting is to confirm that Thailand needs an FTA [free-trade agreement], but we have to do it transparently," he said, referring to a meeting with executives of US corporations. "We don't want the temporary [political] situation to delay the building up of the relationship between Thailand and the US."