A high-level taskforce, comprising representatives from the Chief Adviser’s Office, the Ministry of Finance, market experts, and regulatory authorities, has put forward a comprehensive set of recommendations to fortify the country’s stock market.
The proposals include a reduction in capital gains tax, increased differentiation in corporate tax rates between listed and unlisted companies, and a rationalisation of margin loan interest rates.
The report, commissioned by the Chief Adviser’s Office, underscores the necessity of enhancing investment security by channelling penalty funds towards investor protection measures.
Additionally, it advocates for incentives to mitigate losses incurred by genuine investors and recommends reducing transaction settlement time to a single day.
The taskforce has also stressed the importance of bolstering the Investment Corporation of Bangladesh’s (ICB) financial capacity to strengthen its market interventions.
Chairman of the Bangladesh Securities and Exchange Commission (BSEC), Khandaker Rashed Maksud, stated that efforts are underway to reinvigorate the stock market, with inclusive and effective policies being prioritised.
He expressed optimism that these measures would yield positive results in the near future.
The Chief Adviser’s Office has directed the taskforce to prioritise public investor perspectives when formulating recommendations.
Moreover, stock market specialists have been consulted, and an investigation into past market irregularities has been proposed to identify systemic weaknesses.
The taskforce’s report, submitted last week, highlights the urgent need to attract high-quality companies to the stock exchange.
It underscores the importance of ensuring the authenticity of financial disclosures and recommends greater oversight of auditors to enhance corporate accountability.
The report also calls for initiatives to curb moral hazards such as market manipulation and fraudulent practices.
Abu Ahmed, Chairman of the ICB and former professor at Dhaka University, emphasised the critical need to introduce robust and reputable companies to the stock market.
He asserted that such firms must be provided with appropriate incentives, while fraudulent activities must be met with exemplary punitive measures.
Professor Rashed Al Mahmud Titumir, a noted stock market analyst, observed that the oligarchic structures nurtured under the previous administration significantly contributed to market distortions.
He pointed out that politically connected groups often engineered share price fluctuations by installing relatives as independent directors in listed companies, thereby facilitating unethical investment practices.
The report further argues that Bangladesh’s stock market has the potential to align with international standards, provided robust governance structures are implemented.
It criticises the previous government’s failure to uphold market integrity, citing instances where dubious firms were permitted to enter the stock exchange, often bypassing regulatory scrutiny.
It also raises concerns over expenditure incurred in overseas roadshows, questioning their tangible benefits for market growth.
To restore investor confidence, the report recommends stringent punitive measures against individuals who have misappropriated funds from the stock market. It also suggests discontinuing roadshows if they are deemed financially wasteful.
ANM Ataullah Nayeem, President of the Bangladesh Investors’ National Unity Council, alleged that, under the previous government, the stock market was deliberately kept in a prolonged slump before annual budget announcements.
This was done to justify demands for institutional investment incentives. He further claimed that influential figures pressured the authorities to allocate funds to ICB, ultimately diverting financial resources for personal enrichment.
The interim government, he suggested, must now implement targeted incentives to safeguard investor interests and rationalise margin loan interest rates.
The taskforce recommends categorising investors into four distinct groups—retail investors, high-net-worth individuals, state-owned enterprises, and multinational corporations operating in Bangladesh.
Tailored incentives and regulatory measures should be designed to encourage participation across these segments.
Debabrata Kumar Sarkar, former chief research officer at BRAC EPL Investments Limited, stated that facilitating capital gains tax relief for institutional investors would provide a much-needed boost to market liquidity.
He noted that investors had long advocated for tax exemptions on the first Tk50,000 of dividend income, a proposal that could serve as an impetus for new investment.
He further remarked that the interim government has demonstrated a commitment to stock market reforms, as evidenced by the restructuring of BSEC and punitive actions against major market manipulators.
He expressed hope that the upcoming budget would reflect this commitment through tangible policy measures aimed at stock market revitalisation.
Saiful Islam, president of the DSE Brokers Association of Bangladesh (DBA), echoed these sentiments, expressing optimism that the forthcoming budget would prioritise the critical needs of the capital market.
