BANGKOK (Bloomberg): Thailand’s government approved measures aimed at boosting the local stock market by increasing tax breaks and reducing lockups for individuals investing in so-called sustainable funds.
Individual purchases of as much as 300,000 baht ($8,341) in approved Thailand ESG funds will be exempt from a levy after being held for five years, said Deputy Finance Minister Julapun Amornvivat after the Cabinet approved the changes on Tuesday.
The waiver was increased from 100,000 baht, while the qualification period was reduced from eight years.
Prime Minister Srettha Thavisin’s government has stepped 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 country’s stock market so far this year.
The benchmark SET Index has slid 7.3% since end of December, making it Asia’s worst performer.
"We have high optimism that this new fund will add to positive news for the Thai stock market,” said Pornanong Budsaratragoon, the secretary-general of the Securities and Exchange Commission. The measure should also encourage local companies to improve ESG practices, the regulator said.
The SET ESG Index, a gauge of shares of companies that are deemed to prioritize environmental, social and governance issues, dropped 0.2%, taking this year’s loss to 9.8%.
The measure lost nearly 13% last year, compared with a 15% slide in the SET Index.
New investments in ESG funds between 2024 to 2026 will be eligible for the tax breaks, according to a government statement.
While the finance ministry expects to lose as much as 14 billion baht of revenue from the waiver, the government sees the measure boosting individuals’ savings and long-term investments.
--With assistance from Suttinee Yuvejwattana. -- ©2024 Bloomberg L.P.
