The cabinet on Tuesday approved the Thailand ESG Fund (TESG), a long-term savings fund that provides tax deductions for individual taxpayers and encourages investments in sustainability.
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 eight years, the fund will be available for purchase later this year to allow for investment expenses to be deducted from personal income tax starting from the 2023 tax year until 2032, said government spokesman Chai Wacharonke.
Investors receive a tax deduction of up to 30% of the income of the unitholder, or up to 100,000 baht per year provided the purchaser holds the investment units for eight years.
The government believes TESG can be a mechanism for Thailand to align with the global trend of firms operating under ESG principles.
Mr Chai said the tax deductions for TESG investment are estimated to result in a potential loss of personal income tax revenue of around 3 billion baht in the first year and around 10 billion baht annually in the years that follow.
However, the anticipated benefits include an increase in long-term investments in the Thai stock market, leading to greater stability on the bourse. This, in turn, is expected to encourage investments in businesses that prioritise ESG considerations, he said.
Such investments are likely to contribute to Thailand achieving its sustainable development goals, including the targets for carbon neutrality and net greenhouse gas emissions, Mr Chai said.
In a separate development, Industry Minister Pimphattra Wichaikul said the cabinet has yet to consider the government's pledged incentive of 120 baht a tonne if sugar cane farmers agree to cut fresh sugar cane without burning, a move to help reduce PM2.5 dust in the 2022/23 harvest year.
She said the Industry Ministry has yet to propose such incentives.
"The 120-baht incentive was not submitted to the cabinet on Tuesday because it requires the prior consideration of various agencies, including the Finance Ministry, the National Economic and Social Development Council, and the Budget Bureau," said Ms Pimphattra.
"Once we receive their feedback, we will expedite the submission to the cabinet. We believe it will be proposed at the next cabinet meeting."