LTF tax privileges face uncertain future

The LTF investment scheme begun in 2002 by Thaksin which has essentially helped to bring more local funds into the market in Thailand.

“LTFs are on the front burner when we talk with the Revenue Department. The association must make the department conform to the same view. Many people think such funds only benefit the rich, but that’s not true as more middle-income earners have also showed interest in putting money in these funds after they learn more about their privileges,” she said.

Source: Bangkok Post

The impact of this has been positive because increased the increased investment flow has led 1) increased liquidity within the market 2) The huge valuation discounts that were incredibly evident pre ’07 have now disappeared which in turn allows companies to raise capital at fairer valuations 3) The local Investment industry in Thailand has grown remarkably, with assets under managment at all the major firms hitting new highs year after year.

But Local institutions are still a small part of the overall value traded on the SET, retail investors still represent the largest @ 50-60%, followed by foreign investors @ 15-25% and the remainder with local institutions and prop funds. So there is still a long way to go for the professional investment industry to grow here in Thailand, to remove this LTF tax privelege will result in AUM’s no longer receiving additional funds for which to invest and thereby halting any growth in the capital markets in Thailand.

Let’s just hope they aren’t so silly.

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