BANGKOK, Thailand - Sit down to dinner with a banker here and prepare for double-speak about the future of the industry in Southeast Asia. As the appetizer is passed, he will profess broad support for the government's aggressive plan to open the market to new competition.

By the time coffee arrives he is clearly angry at the implication for his bank. "Let's be honest, no one really likes competition. It means much change and lower profits," he grumbles. "We are spending furiously now to try and get a jump on foreign banks."

That is an understatement. Banks face the need for radical change as their government open the financial sector to new competition in a bid to expand trade and draw in international investments. The needs are incredible. Local companies are privatizing and require billions of dollars from the U.S. Infrastructure needs total $2 trillion at a time when local banks have more limited resources and local bond markets don't exist.

Few countries are opening as quickly as Thailand. In February, the government approved a plan calling for more licenses for foreign and domestic banks and will allow finance and securities companies to go into new businesses. The plan will force the 15 existing banks to expand beyond the capitol city into the sparsely populated countryside of Thailand - a costly venture few would pursue independently.

The locals already have seen a glimpse of what the future will hold. A 1992 plan created the Bangkok International Banking Facility, a bank license giving significant tax incentives to domestic and foreign banks to establish offshore branches. The benefits: the corporate income tax rate is 10% versus the normal rate of 30% and the offshore branches are allowed to lend and take deposits in foreign currencies for nonresidents.

"I think the Thai banks probably hate the new structure," said Richard Duncan, Bangkok-based banking analyst at Salomon Brothers. "You wouldn't like it if you had a monopoly and it was going away."

So far, the effects of new competition haven't hit the bottom line of Thai banks, which last year reported record profits. The largest banks across the region, from the Phillipines to Vietnam, are studying joint ventures or investments in technology and personnel that will allow their companies to be competitive in local retail banking as traditional corporate business is chased by new off-shore competition.

Others warn that change will be slow in coming even if new laws aren't.

"On competition, they are really talking out of both sides of their mouth," said Lynn Exton, analyst in the Hongkong office of Moody's Investor's Service. "Foreigners will be heavily restricted in size and other factors even after these markets open up. The real juicy stuff in these markets is the retail bank and few foreign banks even want that business."

Citibank is the notable exception. Its cherry-picking strategy has allowed it to offer U.S.-style banking to the top 1% in most markets.

"We may have new competition, but we still control the banking markets," said the Thai banker. "Our greatest competition comes from within our own borders."

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