Thailand ESG funds miss target but optimism remains for increased sales

Despite the Thai government’s target of 10 billion baht (US$290 million), Thailand ESG (TESG) funds only managed to reach sales of 5.2 billion baht (US$150 million) from December 8 to 28 in the previous year.

The shortfall has been attributed to the brief sales period, although the Association of Investment Management Companies’ chairwoman, Chavinda Hanratanakool, acknowledged the funds’ popularity among the public.

This year, authorities anticipate TESG funds will surpass the previous year’s sales, exceeding 10 billion baht (US$290 million). Chavinda, also the CEO of Krungthai Asset Management (KTAM), shared this expectation, reports Bangkok Post.

In early December last year, a total of 30 ESG funds were launched by 16 asset management firms, offering investors a variety of choices.

The Thai Cabinet approved tax incentives to foster sustainable investment over a decade, from 2023 to 2032. Individuals with assessable income can enjoy a tax deduction of up to 30%, with an upper limit of 100,000 baht (US$2,896) per tax year.

The deduction applies to any TESG fund units purchased, provided the investment units are held for at least eight years from the purchase date.

The focus of TESG funds is primarily on domestic assets like stocks or debt securities, with an emphasis on environmental protection and sustainability.

As Chavinda revealed, SCB Asset Management (SCBAM) led the sales with 1.13 billion baht (US$32 million) earned from six TESG funds. This was followed by Kasikorn Asset Management, BBL Asset Management, Kiatnakin Phatra Asset Management, and KTAM, which had sales of 1.12 billion baht (US$32 million), 817 million baht (US$23 million), 570 million baht (US$16 million), and 551 million baht (US$15 million), respectively.

Narongsak Plodmechai, SCBAM’s CEO, sees a high possibility of recovery for the Thai stock market this year due to a dip in interest rates.

He anticipates that exports and private investment will bounce back as global trade improves.

“This is an opportunity to accumulate investments in TESG funds to obtain more tax deductions in the 2024 tax year.”

He views TESG as a long-term investment option that aids the economy and society in moving towards sustainability.