The Finance Ministry plans to push the Thailand ESG Fund (TESG), a long-term savings fund that can be used for tax deduction, for cabinet approval next Tuesday, says permanent finance secretary Lavaron Sangsnit.
The fund invests in securities on the Stock Exchange of Thailand (SET), focusing on domestic environmental, social and governance (ESG) related stocks and bonds.
With a maturity of up to 10 years, the fund would be open for purchase within this year to allow for investment expenses to be deducted from personal income tax between January and March next year.
Investors receive a tax deduction not exceeding 30% of the income of the unitholder, up to 100,000 baht per year provided the purchaser holds the investment units for eight years.
The fund is expected to raise 10 billion baht by December, Mr Lavaron said.
He said the TESG can be a mechanism for Thailand to align with the global trend of businesses operating under ESG principles.
Mr Lavaron said he believes with government support measures, the fund can help listed companies adjust their work processes to be more in line with ESG principles.
There are 210 listed companies out of 800 verified by the stock exchange that conduct business according to ESG principles.
The 210 listed companies include small and medium-sized enterprises.
The long-term savings fund that can be used for tax deduction include the retirement mutual fund (RMF) and the Super Savings Fund (SSF).
Due to expire next year, Finance Ministry plans to review whether the SSF needs a revamp to function effectively and be more attractive to investors, he said.
Kulaya Tantitemit, acting director-general of the Revenue Department, said the department expects tax deductions for TESG investment will result in a tax revenue loss of around 10 billion baht per year, based on the value of investment unit purchases for the entire year.
Koraphat Vorachet, head of research at Krungsri Capital Securities, welcomed the establishment of the ESG fund, saying Thailand lacks such a long-term fund.
This fund, which is similar to the previous long-term fund (LTF), could attract 40-50 billion baht to the Thai stock market a year, he said.
The tax-saving LTF, which expired at the end of 2019, attracted investment worth 45-60 billion baht annually, said Mr Koraphat.
"This fund could enhance the Thai stock market to grow sustainably, while reducing the state's financial burden in the long term in supporting retirees," he said.