The cabinet on Tuesday approved changes aimed at making Thai ESG funds more attractive, which in turn is expected to stimulate investment in the struggling Stock Exchange of Thailand.
Investors in approved Thai ESG (environmental, social and governance) funds will be able to deduct investment amounts up to 300,000 baht from taxable income, compared with 100,000 baht previously.
As well, the minimum holding period for the funds has been reduced to five years from eight years, Deputy Finance Minister Julapun Amornvivat said.
The government has been stepping up efforts to boost investor confidence in domestic stocks after corporate scandals, irregular market trading and heightened political risk contributed to foreign investors withdrawing more than $3 billion from the SET so far this year.
The benchmark SET Index has slid 7.4% since end of December, making it Asia’s worst performer.
The SET ESG Index, a gauge of shares of companies that are deemed to prioritise environmental, social and governance issues is down by 9.9% since the start of this year. The measure lost nearly 13% last year, compared with a 15% slide in the SET Index.
Analysts have said that the revised conditions for the funds could boost trading on the SET by 40-50 billion baht a year.
As of May, there were 32 registered Thai ESG funds with total assets under management of 6.8 billion baht. Only one was a bond fund and the rest invested in equities of companies with ESG ratings from the SET.
The nine most commonly held stocks by Thai ESG funds are CP All (CPALL), Airports of Thailand (AOT), PTT, Delta Electronics (Thailand) (DELTA), GULF Energy Development (GULF), PTT Exploration and Production (PTTEP), CP Axtra (CPAXT), Central Pattana (CPN), and Bangkok Dusit Medical Services (BDMS).
The SET recently announced plans to strengthen its ESG ratings methodology in line with global practices, marking a step forward in promoting responsible business practices and sustainable growth among listed firms.