Bangkok: FETCO promotes a 'new savings campaign' to bring 500 billion baht back to Thailand. FETCO proposes solutions for the Thai economy through a "new savings cycle" coupled with a "new investment cycle," along with increasing domestic savings to 28-30% of GDP to support the goal of increasing investment to 30%. The company also proposes four measures to the government to incentivize the repatriation of approximately 500 billion baht in foreign investment back to Thailand.
According to Thai News Agency, Mr. Paiboon Nalintrungkur, Chairman of the Federation of Thai Capital Market Businesses (FETCO), revealed that Thailand needs to enter a new investment cycle because the rate of investment in Thailand has decreased from over 40% of GDP before the 1997 crisis to only 23% currently, which is considered too low over the past 20 years. The government aims to push the investment rate back up to 30% of GDP in order to create a new economic engine.
However, Mr. Paiboon emphasized that if the government wants to accelerate investment, it must not forget to also accelerate savings. He stated that a sustainable new investment cycle cannot occur without a supporting new savings cycle. Currently, the domestic savings rate is approximately 25% of GDP. To achieve a 30% investment target, domestic savings need to be increased to 28%, and an additional 2% must be relied upon foreign savings to create balance and prevent a large current account deficit leading to liquidity shortages, as seen in the past.
FETCO has therefore proposed four measures to increase the savings rate and attract capital into the country, as follows:
1. Increase incentives through TISA by setting a higher investment limit for sustainability funds than the current tax deduction cap to create new savings incentives. The government is currently working on this.
2. Upgrade provident funds to mandatory savings: To support an aging society and create a long-term savings base for all citizens.
3. Develop Trust and Family Office Ecosystem: Improve trust laws and asset management to make them more flexible in order to attract savings from wealthy individuals worldwide to be managed in Thailand.
4. Facilitating the repatriation of investment funds: Temporarily exempting income tax for two years on foreign investments and profits reinvested in the Thai capital market for at least one year, to convert foreign savings into long-term capital within the Thai economy.
Currently, approximately 500 billion baht of investment funds have been transferred through brokers to be invested abroad. FETCO believes that these four proposals will attract Thai investors to return to invest in Thailand, and they are preparing to submit them to the government for consideration.
Mr. Paiboon further stated that the new investment goal should not only be to increase investment, but also to improve productivity through future industries such as data centers, semiconductors, and automation. In addition, the Thai stock market is a key option for long-term savings, especially dividend-paying stocks with strong fundamentals and guaranteed profits, which can generate an average annual return of 5-6%.
This comprehensive approach will strengthen the Thai capital market ecosystem, encompassing regulations ready to support fundraising for new economy businesses and analysts with a deep understanding of technology, making Thailand an attractive destination for international investment.