Finance Minister Sommai Phasee will propose to the cabinet the formation of a venture capital model with a seed fund of 50 billion baht to help expand small and medium-sized enterprises.
The scheme is aimed at supporting SMEs as they give a push to economic growth in the medium term.
"There are a large number of SMEs and they are crucial to the economy. The Small and Medium Enterprises Development Bank is insufficient to strengthen them all," said Mr Sommai.
He said the venture capital would help reduce their debt-to-equity ratio.
The Finance Ministry will hold a 10% share in the SME venture capital and the remaining stake will allow other private companies to invest in the companies.
The venture capital will seek listing on the Stock Exchange of Thailand in the future.
"We will set up a unit to manage the venture capital similar to the state's Social Security Fund," said Mr Sommai.
The details will be settled by the end of the year.
He added that investment policy should focus on modest return instead of investing only in high return companies. For instance, if the satisfaction rate of return on investment in general is 15%, the finance will target return at a lower rate than the benchmark.
"By doing so, the venture capital will achieve our purpose to help more SMEs. We should aim at a medium rate of return, say 8%. We can't just look at the high return otherwise we are not serving our purpose to help them as much as possible," said Mr Sommai.
He said the economic situation would be better soon as the new fund has begun to work through the system via the budget disbursement and the 358 billion baht aid fund for farmers.
In the third quarter, some economic indicators showed improvement. The consumer confidence index rose to 69.3% from 61.2% in the previous quarter. Meanwhile, value added tax collection went up by 2.3% from the third quarter of last year compared with the second quarter growth of 0.3% from the same period last year.
"If the new infrastructure projects move forward as planned, the economy will further improve as private companies will be more confident and reconsider investment again," said Mr Sommai.
The industrial sector also improved after the Industrial Works Department expedited the approval of operating licences. The manufacturing confidence index rose to 88.2% in the third quarter, up from 85.8% in the quarter earlier.