Thailand's capital market representative has proposed a 10-year investment extension period for extra units of the Super Savings Fund (SSF) to financial authorities, aiming to help stabilise stock market volatility.
The proposal by the Federation of Thai Capital Market Organizations (Fetco) was submitted to the Securities and Exchange Commission and the Finance Ministry.
"We have discussed with capital market-related agencies and concluded the extra units of SSF are a long-term investment tool," said Fetco chairman Paiboon Nalinthrangkurn.
"They should be extended for another 10 years."
"This fund will help support the stock market's stability in the future as a long-term investment fund can [help] reduce market volatility."
The negative factors affecting market sentiment are the economic downturn and the pandemic, said Mr Paiboon.
Fetco's proposal will maintain the same concept and investment conditions, such as the 10-year lock-up period and tax deduction incentive, to demonstrate the intention of long-term savings through investment in long-term equity funds, he said.
Fund inflows into extra units of the SSF were anticipated to reach 10 billion baht before the one-time investment incentive lapsed on June 30, said the Association of Investment Management Companies.
In March, the cabinet approved a raft of measures, including allowing investors to receive an additional tax privilege of 200,000 baht of annual income, separate from the tax-deductible amount applied to retirement-related funds, for SSF units in which 65% of net assets are invested in SET-listed securities.
Investors must have purchased these investment units between April 1 and June 30 and must hold them for at least 10 years.
The main objective of the one-time investment incentive was to shore up equity investment inflows in Thailand's stock market.
The SSF, approved by the cabinet in December 2019, is a new tax-saving fund meant to replace long-term equity funds (LTFs), whose tax incentive lapsed at the end of last year.
SSF investment conditions are more relaxed than those for LTFs, as SSF units can invest in any assets, while LTFs stipulate equities as the major investment asset.
The one-time investment incentive for extra SSF units garnered less interest than expected because investors had limited time to make a decision, while asset management firms had inadequate time to prepare their fund structure and the distribution period, said Mr Paiboon.
Investment conditions that require a long-term lock-up period of at least 10 years may be another contributing factor, he said.
Narongsak Plodmechai, chief executive at SCB Asset Management, said the company logged the highest fundraising amount for extra units of the SSF at 2.32 billion baht through three SSF extra unit funds.
A source in the investment industry speaking on condition of anonymity said a major obstacle to SSF unit sales was distribution taking place during the lockdown.