The new version aims to close loopholes in the current law by making it harder for corrupt politicians and state officials to siphon off public assets. It would also be used as a mechanism to improve the management of state enterprises.

The ousted Thaksin Shinawatra administration had been accused of mismanaging privatisation, causing the Supreme Administrative Court to reverse the privatisation of the Electricity Generating Authority Of Thailand (Egat).

The new draft would make it almost impossible for policy makers to privatise Egat's power grid or the water grid, which are considered natural monopolies.

Tobacco production would also likely escape privatisation, as the new draft would prohibit the government from floating enterprises that would produce an adverse health impact on consumers.

The source said the draft would not include a list of state enterprises to be put up for sale in the future. "A list of state enterprises would make the law become 'rigid'," said the source, who preferred a set of conditions for enterprises that could be privatised.

A law expert last week suggested that the ministry should say which state enterprises are subject to sale to prevent misinterpretation of the law.

The source went further, saying the draft would also resolve the controversy over public offerings, especially the distribution of shares between retail and institutional investors. The first draft that was put up for public hearing last week aims to reserve as many shares as possible for retail investors.

However, Korn Jatikavanich, a senior member of the Democrat Party, argued that allocating more shares to retail investors would lead to a lower price for the shares and then the whole population of 65 million would lose out. In real business, institutional investors offer higher prices than retail investors, he said, adding that the ministry should focus on the pricing of shares rather than saving them for many small investors.

The source gave assurances that the ministry would take Korn's comments into account.

The bill is expected to face opposition from many members of the National Legislative Assembly (NLA), who have demanded the scrapping of the Corporatisation Act without agreeing to introduce a new law.

The labour unions of some state enterprise last week voiced objection to the ministry's move, claiming that the interim government still wants to privatise state enterprises.

They said privatisation should not take place.

The source said the Finance Ministry understood labour's stance due to the bungling of privatisation in the past and the many weaknesses of the current law, which was introduced by the Chuan Leekpai administration on recommendation from the International Monetary Fund.

Major mistakes, the source said, are that the law does not require the setting up of an independent regulator, nor does it define the procedures for initial public offerings. The law also allows politicians to manipulate technical issues such as share pricing, resulting in lower stock prices and more than a fair share of the shares ending up in the hands of their cronies.

If the Cabinet approves the draft it will be forwarded to the Council of State, the government's legal adviser, for review, then to the NLA. Chalongphob has put the draft bill on the fast track and it is expected to reach the NLA within 45 days.

Wichit Chaitrong

The Nation