The government is expected to rev up support and investment privileges for the new investment fund set to replace the long-term equity fund (LTF), says Merchant Partners Asset Management.
"The government needs to create a new investment fund to prevent outflows of capital worth about 240 billion baht, the amount scheduled to be redeemed this year," said senior vice-president Prakit Siriwattanaket.
Incentives to attract investment flows into the new fund could include allowing a tax reduction of no more than 20%, 100,000 baht of annual income, or a minimum annual tax amount payable. The fund may have a holding period of 10 years, Mr Prakit said.
The new fund is expected to have a mandate to invest 50% in infrastructure projects launched by the government and sustainable-themed equities, with the fund manager free to allocate the other 50%, he said.
Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organisations (Fetco), said earlier that conditions would be tweaked for the new investment fund to replace the LTF, pending discussions with the Finance Ministry.
The investment fund could be called the Prosperity Mutual Fund.
Fetco proposed to Deputy Prime Minister Somkid Jatusripitak the idea of a new investment fund as a substitute for the LTF, with a 10-year investment period and a tax credit of no more than 100,000 baht.
The move is aimed at encouraging greater long-term savings among Thais and reducing healthcare spending by using public funds in the future.
Regarding stimulus measures to rejuvenate the economy, the government is expected to roll out a fiscal stimulus package worth about 30 billion baht, Mr Prakit said.
"The aim is to concentrate on stimulating private consumption by injecting capital into state welfare cards, lowering the personal income tax, offering relief measures for farmers affected by the drought, supporting tourism in secondary provinces and launching property stimulus measures," he said. "These policies are expected to add 0.1-0.2% to GDP growth."
For the Stock Exchange of Thailand, the bourse is expected to garner support in the second half through the government's stimulus measures, global monetary policy easing and an upgrade of Thailand's sovereign credit rating, Mr Prakit said.
"We expect fund inflows into the Thai stock market of more than 150 billion baht this year," he said.