Investment research should be classified as R&D and receive corporate tax deduction incentives, says the Federation of Thai Capital Market Organizations (Fetco).
At present, companies investing in R&D projects can claim expenses of three times the investment amount for corporate income tax because these projects are approved by the National Research Council of Thailand, said Fetco chairman Paiboon Nalinthrangkurn.
Investment research provided by securities analysts is excluded from this classification.
"The government should consider investment research as part of R&D for businesses, allowing them to claim a corporate income tax deduction of three times. This move should be approved by capital market regulators, such as the Securities and Exchange Commission," he said.
"Good quality investment research is key to Thailand's capital market development, as many people still have inadequate financial and investment literacy."
The capital market has a role to help businesses through capital resources allocation. There are more than 700 securities listed on Thailand's two main stock indices and the number will rise to 2,000 to 3,000 securities if other investment products are included, such as derivative warrants, futures, options and corporate bonds, said Mr Paiboon.
"The number of investment instruments is growing at a fast pace the past few years in terms of types of products," he said.
"However, the number of analysts in the market has declined to around 300 from 500 in the past."
Mr Paiboon said doing investment research in Thailand adds to costs for securities companies.
Securities companies are facing tighter profit margins and intensifying competition after the regulator's capital market liberalisation, allowing an influx of digital brokers and niche market brokers, where investment research is not a focal point.
At present, there are only around 200 SET-listed companies covered by analysts, with analysts taking turns to cover another 100 listed companies.
The remaining 400 listed companies are not covered by any investment research.
Fetco is also preparing to set up an academy that would act as a pool of analysts to prepare investment research for the capital market.
This small academy can also help develop human resources for the market capital, said Mr Paiboon.