On 21 November 2023, the Cabinet approved the principles for tax incentive measures to promote sustainable investment in Thailand for a 10-year tax period (2023-2032), leading to the support for the establishment of Thai ESG Funds. Individuals with taxable income are eligible for a tax deduction of up to 30 percent of their assessable income, with a maximum limit of 100,000 baht per tax year, for the purchase of units of any Thai ESG Funds on the condition that they hold the investment units for a minimum of eight years from the date of purchase. All Thai ESG Funds mainly invest in domestic assets such as stocks or debt securities with environmental protection or sustainability themes.

Dr. Kulaya Tantitemit, Comptroller-General and acting for Director-General of the Revenue Department, the Ministry of Finance, referring to the Ministry’s policy, stated: “In our role as the public sector pillar in finance and economy for sustainable development, we need to address national challenges urgently. This includes building competitiveness of Thai businesses and executing the National Strategy towards the goal of carbon neutrality and net zero greenhouse gas (GHG) emissions. Furthermore, it is important to promote income and savings sufficiency to empower Thai people to lead a quality life, financially and otherwise, after retirement, especially as the country is transitioning into a fully aged society. Given these circumstances, the Revenue Department is ready to support tax incentive measures to encourage the public to invest towards sustainable goals. This fundraising initiative is expected to boost Thai businesses’ adaptation and emphasis on the importance of sustainable goals. This will contribute to stronger competitive edge on the global stage and align with Thailand’s commitment to achieving the United Nations Sustainable Development Goals (UN SDGs) and the national goals of carbon neutrality and net-zero GHG emissions.”

SEC Secretary-General Pornanong Budsaratragoon said: “The Thai ESG Fund as endorsed by the governmental sector features an investment policy that focuses on ESG assets, helping to diversify the types of sustainability-themed mutual funds. This initiative also offers investors more opportunities to promote Thailand’s sustainable goals through the investment in Thai ESG Funds, while benefiting from tax privileges and long-term savings to build a sound financial health. Moreover, this aligns with the country's sustainable development goals and the SEC Strategic Plan, which aims to build a sustainable capital market. In this regard, the capital market is a key mechanism in driving the business sectors, both listed companies and market participants, towards serious integration of ESG factors into their business operations and work processes. This in turn will help to strengthen the resilience of the Thai economy and society and respond to investors’ increasing expectations of more emphasis on sustainability. Initially, the SEC has already approved the establishment of 22 Thai ESG Funds. More launches of such funds are expected in the coming years.”

Dr. Kobsak Pootrakool, FETCO Chairman, said: “The Thai ESG Fund with tax incentives from the government will be a key capital market mechanism driving Thailand towards the national sustainable goals, especially the net zero GHG emissions by the year 2065, as outlined in the Paris Agreement. This can motivate listed companies to build their competitiveness particularly by conducting business with ESG focus. On the investor side, the Thai ESG Fund is a vehicle for building sufficient retirement savings. With strong support from the government sector, particularly the Ministry of Finance, the Revenue Department and the SEC, all players in the capital market are actively collaborating to promote this initiative as Thai ESG Funds can contribute to the achievement of the national sustainable goals and ESG excellence."

Mrs. Chavinda Hanratanakool, AIMC Chairperson, said: “Institutional investors, particularly asset management companies (AMCs), are necessary and important stakeholders in the sustainable development process. They serve as intermediaries helping to unlock the value and as a bridge connecting the supply of listed companies with the demand of Thai investors. This collaboration for the establishment of Thai ESG Funds marks the first time that all aspects of ESG principles are covered in the sustainability building goals to make sure that Thai ESG Funds will be another efficient channel for long-term savings and investment for the public. We should also underline the important point that this initial phase has already covered more than 200 listed companies selected for their outstanding sustainability efforts and/or commitment to disclosing information and setting the GHG emissions reduction goals, as well as sustainability-themed bonds, etc. Moreover, Thai ESG Funds must be registered as a Sustainable and Responsible Investing Fund (SRI Fund) with the SEC, which requires compliance with international standard sustainable investment criteria, and subject to stricter oversight than other regular mutual funds. Once established, Thai ESG Funds must set an investment policy and investment strategies, product selection guidelines, investment monitoring and active engagement in addition to disclosing the fund management results to check whether they align with the set sustainability objectives. Furthermore, our AIMC members join the group efforts to monitor and inspect listed companies that may fail to comply with the ESG criteria, guided by the AIMC ESG Policy and Collective Action and the Negative List, which has been created for fund managers to screen listed companies for investment. This entire process demonstrates the commitment of AMCs and Thai ESG Funds. Investors can rest assured that their investments will contribute to the achievement of carbon neutrality and net zero GHG emissions of Thai listed companies and sustainability-themed bond issuers as well as Thailand’s sustainable goals. So far, 16 AMCs have joined force to establish 22 Thai ESG Funds, accounting for more than 98 percent of the market shares. More details are available at www.ThailandESG.com."

Dr. Pakorn Peetathawatchai, SET President, said: “The SET has always placed an emphasis on all aspects of ESG operations, from the development and improvement of Thai listed companies to the integration of ESG factors into their business strategies and operations. This involves business growth consideration alongside responsibility towards stakeholders and the creation of an ESG-driven business model. Moreover, the SET has made the SET ESG Ratings List, showcasing listed companies with outstanding ESG performance. This year, there are 193 listed companies on the list. Additionally, the SET has developed the SET ESG Data Platform, managing ESG-related data systematically, and the SET ESG Index as a benchmark for stakeholders and product development. The establishment of Thai ESG Funds urges all sectors to emphasize the importance of ESG, expedite business development in line with ESG principles, and offer ESG investment products as another option for investors. Now is a perfect time for Thai investors to invest in a sustainable future. Thai ESG Funds will also help to expand the investor base and attract more interest from potential targets. The SET pledges full support to this Thai ESG Fund initiative, providing more information and conducing investor outreach activities. On 17 December 2023, an SET Mutual Fund Fair will be organized at the SET Building to further publicize Thai ESG Funds to the interested public."   

-------------------------------------