Sixteen local asset management companies launched 22 Thailand ESG (TESG) funds yesterday, with the authorities and brokerages estimating the tax-saving long-term funds could attract roughly 10 billion baht in investment this month.
Pornanong Budsaratragoon, secretary-general of the Securities and Exchange Commission (SEC), said the regulator approved the first batch of 22 TESG funds, aiming to mobilise about 10 billion baht worth of investment.
The funds provide investors greater variety in mutual funds while supporting Thailand’s sustainability goals, she said at a launch for the funds yesterday.
“Investors can receive tax benefits for long-term savings using mutual funds to strengthen their financial health,” said Ms Pornanong.
TESG funds serve the SEC’s strategic plan of shifting the Thai capital market towards sustainability and driving both listed companies and capital market operators to engage with environmental, social and governance (ESG) factors in their operations to drive Thai economic growth.
“We expect the number of TESG funds to increase in the coming years,” she said.
TESG funds were approved by the cabinet late last month, offering tax benefits to investors.
Investors can deduct their investment in the funds, up to 30% of assessable income with a maximum of 100,000 baht for the tax year in which the investment is made.
Investors must hold the TESG units for a minimum of eight years from the date of purchase.
According to the SEC, TESG funds are allowed to invest in stocks listed on the Stock Exchange of Thailand (SET) and Market for Alternative Investment that were selected by the SET as outstanding in terms of green and ESG criteria.
The first phase for the funds covers more than 200 Thai listed companies, said the regulator.
The funds can also invest in stocks that disclose information on greenhouse gas (GHG) emissions, management plans and targets to achieve Thailand’s goals for reducing emissions, as well as in debt securities that meet regulations for sustainability-related bonds and digital tokens for fundraising related to sustainability that comply with the same standards.
Kulaya Tantitemit, director-general of the Comptroller-General Department, said TESG funds increase the competitiveness of Thai entrepreneurs and support national strategies promoting carbon neutrality and net zero GHG emissions.
“As Thailand becomes an ageing society, there is a need to support retirees in having sufficient income and savings. The Revenue Department is ready to offer tax incentives to the public,” said Ms Kulaya.
“Funds raised through the TESG scheme can also be a mechanism to drive Thai businesses to adapt on sustainability.”
Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), said TESG funds are expected to attract investment amounting to 10 billion baht this month, half of which are likely in the form of equities.
Companies with strong ESG ratings or marked improvement in ESG compliance will be targets of these funds, he said.