(July 20): Thailand is pulling out all the stops to channel idle household savings into long-term investments in stocks and bonds as a rapidly aging population drives up pension liabilities and the cost of elderly care.

Authorities are finalising details of investment accounts that would allow individuals to save up to 600,000 baht (US$17,840 or RM73,019) a year and enjoy tax incentives. Modelled after Japan’s Nippon Individual Savings Account, or Nisa, the accounts are aimed at encouraging households to shift to goal-based long-term investment from savings that are held mostly in bank deposits and earning 2% or less in interest.

Under the so-called Thailand Individual Savings Account, investors will receive portfolio management services from professionals to suit their financial goals, investment horizons, and risk profiles, according to the Securities and Exchange Commission. The plan was first floated nearly a year ago when Thailand’s stock market ranked among the world’s worst performers as a prolonged period of political uncertainty led to an exodus of foreign investors.

The initiative comes as Thailand, with one of Asia’s fastest-ageing populations, grapples with rising elderly care costs and pension obligations. Officials believe encouraging more people to invest for the long term can help improve retirement security while channeling more domestic savings into the country’s capital markets.

“We are looking for ways to encourage households to convert savings into investments through tax incentives,” Pornanong Budsaratragoon, secretary-general of the Securities and Exchange Commission, said in an interview. “It’s also a way to help address the growing retirement and pension gap, which is becoming more urgent as societies age more rapidly.”

Thai investors would be able to allocate their savings across a range of financial instruments, including equities, fixed-income securities and investment funds, under the proposed scheme, Pornanong said.

Thailand currently offers tax incentives to individuals investing in government-approved retirement mutual funds and long-term savings funds. Such funds hold an estimated 725 billion baht, according to the Association of Investment Management Companies.

Tisa would mark the first time investors could receive tax benefits for making direct investments in stocks and bonds, expanding the range of eligible assets beyond mutual funds.

The government is also considering a Child Investment Account that would be exempt from tax on interest, capital gains and dividend income, Pornanong said. Under the plan, parents could invest up to 200,000 baht a year for each child until they turn 20, encouraging long-term savings from an early age, she said.

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