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In a bid to rejuvenate its equity market, which has lagged behind regional peers this year due to significant foreign capital outflows, Thailand is rolling out attractive tax incentives aimed at boosting local investments.
During a press conference following a cabinet meeting, Finance Minister Pichai Chunhavajira announced that individual investors will receive a tax allowance of up to 300,000 baht for their new investments in specific equity funds known as ESG X. These sustainable funds are set to launch by June and will focus on stocks of local companies rated favorably in the environmental, social, and governance (ESG) categories.
The initiative comes as the Finance Ministry anticipates a revenue loss of approximately 50 billion baht due to these incentives, according to Pornchai Thiraveja, director-general of the Fiscal Policy Office. Despite a challenging landscape, the Stock Exchange of Thailand (SET) Index surprisingly recouped early losses, closing up 0.9% at 1,187.63 points on Tuesday. However, the index has seen a steep decline of over 15% this year, nearing a five-year low, largely influenced by subdued economic growth and struggling corporate earnings.
Foreign investor sentiment has been cautious, with a recorded withdrawal of 25.7 billion baht from Thai equities so far in 2025. The global trade climate, marked by rising volatility and tariff disputes, further complicates the situation for Thailand, a nation with a favorable trade surplus with the United States.
In response to these challenges, Prime Minister Paetongtarn Shinawatra underscored the importance of enhanced collaboration among policymakers to support the country’s economic growth. Additionally, investors holding expiring long-term equity funds, valued at about 180 billion baht, will be encouraged to transition their investments into the new ESG X funds. They will be eligible for a tax allowance of up to 500,000 baht, provided they commit their holdings to the new fund for five years. This strategy aims to mitigate potential market disturbances resulting from redemptions of long-term funds.
The government’s proactive measures build on previous initiatives to improve tax breaks and reduce investment lock-up periods for individuals investing in ESG categories, all designed to invigorate the stock market.
In a related effort, the government is considering a new regulation to enhance the crackdown on malpractices in stock trading and company operations. Pichai emphasized that swift action against irregularities will be crucial in restoring investor confidence in the financial markets.
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