Capital market representatives will likely meet with Finance Minister Uttama Savanayana on Wednesday to propose a new investment fund to replace the long-term equity fund (LTF), whose tax privilege is set to expire this year.
One of the core features of the new fund is the maximum limit for tax deduction of 250,000 baht a year, and no more than 30% of annual income, said Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco).
The new tax deduction rate is a solution to improve social inequality, Mr Paiboon said.
At present, investment in LTFs allows investors to deduct up to 15% of their total annual income or a maximum of 500,000 baht a year. Capital gains from the redemption of units are exempt from tax.
The new investment fund will also require that 65% of investment capital be allocated to large infrastructure funds; equities meeting environmental, social and governance criteria; and stocks associated with small and medium-sized enterprises, Mr Paiboon said.
It was reported earlier that the new investment fund might be called the Prosperity Mutual Fund or PMF.
LTFs were designed to help save for retirement and create stock market stability, but they have come to play less of a role in balancing the equity market because the local bourse is significantly bigger than it was in the past.
Fetco will ask Mr Uttama to set up a mandatory provident fund to help people accrue enough savings for retirement.
Separately, investor confidence for the next three months, August to October, edged up into bullish territory for the first time in five months amid offshore fund inflows and US monetary policy easing.
The investor confidence index rose by 19.9% to 131.21 from July's 109.44, according to the monthly survey by Fetco. An index below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.
Indices gauging confidence across different groups of investors showed a rise except for the institutional investor index, which was in neutral territory.
Foreign capital inflows and the lower rate outlook in the US are the main factors ushering investor confidence, while the Sino-US trade dispute and the lacklustre earnings outlook of SET-listed companies are the main drags on confidence, Mr Paiboon said.
"The result from the interest rate expectation index projects that [Thailand's] policy interest rate will remain unchanged at 1.75%, while yields of five- and 10-year government bonds are not expected to change over the next seven weeks because Thailand's economic outlook and inflation still do not require monetary policy easing," he said.