Thai Prime Minister Surayud Chulanont yesterday promised to restore democracy after a referendum on an army-backed constitution that exposed deep political divisions.

The military-installed Surayud said this week's vote was the "first step" on the road back to democracy after an army-backed coup in September that ousted premier Thaksin Shinawatra.

"The Thai people have already accepted the new constitution," Surayud told reporters after a meeting with his Malaysian counterpart Abdullah Ahmad Badawi in Penang.

"I can assure you we are trying our best to hold a democratic election by the end of the year," Surayud said.

Nearly 58 percent of the voters who turned up last Sunday voted for the new charter, although many in the northeast rejected it in what analysts said was an indication of grass roots support for Thaksin.

Surayud said he was "not concerned" over voter rejection in the countryside. He has already declared victory in the referendum and pledged to hold general elections by December.

"The Thai people have to choose the new government and I think they do understand the difficult time we have had in the past two years," he said.

Surayud also said he wanted to work closely with Abdullah to try to stem an insurgency in three mainly Muslim provinces in Thailand's south, where more than 2,400 people have been killed since 2004.

"I came here to strengthen Malaysia and Thailand relations," Surayud said.

"We want to have social and economic cooperation. We have to help each other solve the problem in the south," he said.

Scholarships for students

On Tuesday, Surayud and Abdullah oversaw the signing of an agreement for Malaysia to provide scholarships for students and training for teachers in the the southern provinces.

The agreement will establish links between educational institutions in the two countries. About 100 Thai teachers are expected to be sent to Malaysia at the end of the month for training, officials said.

Abdullah said Malaysia can foster greater economic cooperation by introducing Islamic banking in Thailand.

A bridge is also being finished to connect southern Thailand to Malaysia's northern provinces to spur development in the troubled area, Abdullah said.

"I am very happy with the meeting yesterday (Tuesday) and today. It centered on a need to widen and deepen our bilateral relations," he said.

Officials from both sides meanwhile said both countries were also working on an agreement to give Thai workers easier access to Malaysia, which relies heavily on imported manpower for its industrial, construction and farm sectors.