Plans in pipeline to attract 530bn baht to Thai capital market

TUESDAY, JUNE 25, 2024

Finance Ministry preps new rules for ESG funds and state-owned securities

The Finance Ministry is working with the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) on plans to attract additional funds to the capital market, Finance Minister Pichai Chunhavajira said on Monday.

The move aims to restore investor confidence after the SET index fell to around 1,300 points earlier this month, its lowest level in four years.

Pichai said the first plan is to improve rules on investment in Thai ESG (environment, social and governance) funds.

Under the new rules, investors will be offered tax deductions of up to 300,000 baht or 30% of their income with a holding period of five years, compared with the current 100,000 baht and eight years, respectively.

“The new regulations should receive Cabinet approval in the next two weeks, after which they would be retroactively effective from January 1,” said Pichai, who is also a deputy prime minister.

Pichai said Thai ESG funds should bring in at least 30 billion baht of investment to the market this year, while the tax reduction should cost the government around 13 billion baht.

The second plan, currently in the feasibility study phase, involves adding a third Vayupak fund of state-owned securities. The VAYU 1 and VAYU 2 funds, aimed at small investors and institutes, are currently worth around 350 billion baht.

“We are looking at the possibility of establishing a VAYU 3 fund for the general public,” said Pichai. 

“Under improved rules, these three funds could attract another 150 billion baht to the market with Vayupak Funds standing at half a trillion baht.”

The VAYU 3 fund could offer interest of 3% and be established as soon as the third quarter of this year, he said.