SEC Poises to Approve the Launch of Thailand ESG Fund

As per the Cabinet’s resolution at its meeting convened on 21 November 2023, approving tax measures to promote sustainable investment in Thailand, as proposed by the Ministry of Finance, tax benefits will be granted to the purchases of investment units of Thailand ESG Fund, which will focus on investment in businesses contributing to the sustainable development of the country. This approach uses mutual funds as a vehicle to achieve the national strategic goals related to sustainability and support long-term savings through investment in the capital market. The Securities and Exchange Commission (SEC) is in the process of stipulating regulations in support of Thailand ESG Fund. 

SEC Secretary-General Pornanong Budsaratragoon stated: “On 20 November 2023 the Capital Market Supervisory Board (CMSB) Meeting No. 11/2566 approved the principles for amending the governing regulations to support the establishment of Thailand ESG Fund in line with the government’s policy directions. The SEC has completed the amendments, which are expected for publication in the Government Gazette in early December this year. In the meantime, asset management companies are welcomed to submit draft documentation for the establishment of Thailand ESG Fund in advance for the SEC’s consideration. This aims to facilitate the companies’ preparation for prompt offering of the Fund to investors. Once the proposed amendments take effect, the SEC expects to approve the establishment of Thailand ESG Fund by early December as well to ensure that investors will be able to benefit from tax privileges related to the Fund within the tax year 2023.'”

In alignment with the government’s policy directions, the CMSB has approved the principles for Thailand ESG Fund to invest in the assets owned by issuers in the Thai public sectors or businesses established under Thai law, as summarized below:

  (1) Stocks listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (mai) that have been selected by the SET as outstanding in terms of environmental and ESG consideration, and/or:

  (2) Stocks listed on the SET or the mai that disclose information on greenhouse gas GHG emissions, management plans, and targets to achieve Thailand’s goals for reducing GHG emissions, as reviewed by carbon footprint auditor, and/or:

  (3) Debt securities that meet the regulations for offering of sustainability-related bonds* and digital tokens for fundraising related to sustainability that comply with the same standards as the sustainability-related bonds.

In this regard, Thailand ESG Fund must disclose sustainability information in accordance with the regulations governing Sustainable and Responsible Investing Fund (SRI Fund). This is to provide investors with sufficient information for making informed investment decisions. Additionally, Thailand ESG Fund will be exempt from the application fee and the modification fee from the SEC, in the same manner as SRI Fund**.

The government recognizes the importance of savings and investments for individuals to build their long-term financial well-being. These tax benefits are expected to support investors in Thailand ESG Fund by allowing them to deduct their investment amounts for tax purposes, up to a maximum of 30 percent of assessable income, specifically not exceeding 100,000 Baht, for the tax year in which the investment is made. Additionally, the capital gains or returns obtained from the redemption of investment units will be exempted from tax calculations. This exemption applies only when the investment meets the conditions specified by the Revenue Department. In addition, investors must hold the investment units of Thailand ESG Fund for a minimum of eight years from the date of purchase. 




* Sustainability-related bonds are Green Bond, Sustainability Bond, and Sustainability-linked Bond. 

** Regulations related to Sustainable and Responsible Investing Fund (SRI Fund) prescribe that asset management companies managing SRI Fund comprehensively disclose relevant information under the same disclosure standards. This enables investors to conveniently compare information among SRI Funds, ensures that they have sufficient information for making investment decisions, and helps mitigate the risk of greenwashing. The SEC grants fee exemptions, namely the 100,000 Baht application fee for approval of the establishment of a new SRI Fund, and the 5,000 Baht application fee for approval of the modification of a mutual fund scheme to become an SRI Fund.