BANGKOK -- The Thai government has decided to scrap plans to privatize Thai Tobacco Monopoly (TTM), preferring to retain control rather than relinquish it to foreign investors, a report said Friday.

"This company will not be listed on the stock exchange of Thailand and there will be no initial public offering, which is in line with government policy not to promote cigarette smoking among Thai people," TTM Managing Director Suchon Watanapongvanich was quoted as saying in the Business Day.

Suchon said that instead of privatizing the monopoly, it would be set up as a limited company and its operations would be reformed, AFP reported.

If the unit was privatized with foreign directors taking control, they could use TTM as a base for expanding the cigarette market, posing a health hazard to the country, the director reportedly said.

Various multinational companies such as Phillip Morris, Rjr Nabisco and British-American Tobacco had expressed an interest in acquiring a stake in TTM, the ****Business Day**** said.

TTM initially planned to sell a 30 percent stake by the fourth quarter of this year, but the ministry of finance will continue to hold a 100 percent stake in the company.

"We have to improve and upgrade the efficiency of the TTM in order to prepare for more intense competition from foreign-brand cigarettes," he told the daily.

Privatization of state enterprises, which is a cornerstone of Prime Minister Thaksin Shinwatra's economic policy, is aimed both at both increasing bureaucratic efficiency and boosting stock market capitalization.

In May, the Thai government said it would proceed with a plan to put graphic warnings on cigarette packs, despite protests from foreign tobacco firms.