In a strategic effort to revitalize its stock market and drive forward its sustainability objectives, Thailand has unveiled a comprehensive initiative centered around Environmental, Social, and Governance (ESG) funds. This move, sanctioned by the Thai Cabinet, is designed to attract considerable investment by leveraging significant tax incentives, marking a critical step in aligning the nation’s economic policies with global sustainability trends.
The new ESG fund initiative offers individual investors generous tax deductions of up to 30% of their assessable income, with a maximum limit of 100,000 baht per year. To qualify for these incentives, investors must hold the investment units for at least eight years. This long-term commitment is structured to ensure sustained support for sustainable investments, fostering stability and continuous growth within the market .
The funds will predominantly invest in domestic stocks and bonds of companies that adhere to stringent ESG criteria, including robust environmental sustainability practices and mandatory emissions disclosure and reduction strategies. A total of 22 ESG funds have been launched, managed by 15 asset management companies. These funds are expected to diversify investment opportunities and bolster the country’s sustainable development goals.
Economically, the initiative aims to draw between 20 and 70 billion baht in investments within the year, significantly boosting the Stock Exchange of Thailand (SET) and enhancing market liquidity. By promoting investments in ESG-compliant companies, Thailand aims to strengthen its commitment to achieving carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065. This aligns with the global push towards sustainable development and responsible investment practices.
The ESG funds are seen as a key mechanism to invigorate the Thai stock market, which has faced sluggish performance. The introduction of these funds is expected to attract both domestic and international investors, enhancing overall market confidence. By embedding ESG principles into the investment framework, Thailand is positioning itself as a forward-thinking, sustainable investment destination. This initiative not only meets increasing investor demand for responsible investments but also promotes the integration of ESG factors into corporate operations across the nation.
This comprehensive approach to sustainable investment underscores Thailand’s dedication to fostering a resilient and inclusive economy. By offering substantial tax incentives and focusing on long-term sustainability, the ESG funds are poised to play a pivotal role in driving the nation’s economic recovery and supporting its ambitious environmental goals.
