Finance adviser for encouraging foreign, family-run companies to enter stock market
"How will the base grow without increasing the number of good companies in the market? Where will the investors invest?" asks Salehuddin Ahmed
Foreign companies and family-run companies should be encouraged to enter the stock market, not only the state-run ones, said Salehuddin Ahmed, finance adviser of the interim government, today (7 January).
"How will the base grow without increasing the number of good companies in the market? Where will the investors invest?" he asked during a meeting with stakeholders at the Dhaka Stock Exchange (DSE) office in the capital's Nikunja, according to sources.
He said there is an initiative to enlist domestic, governmental, and foreign institutions.
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Talking to reporters after the meeting, Salehuddin said that various initiatives are currently underway to restore confidence in the market. "Only reforms are being carried out now. We are not creating any new policies. We will not proceed as before, giving advantages or raising some share prices through policy."
"Several measures have already been taken. Various types of support, including liquidity, are being provided. We have sat down with brokerage houses, two stock exchanges, and market stakeholders to discuss their advantages and disadvantages. We are confident that the market will improve," he added.
He said no policy is being made to increase the prices of any shares.
At a previous meeting with stakeholders, the adviser stressed that foreign companies doing business in Bangladesh need encouragement and incentives to be listed.
Representatives of the Bangladesh Securities and Exchange Commission (BSEC), Bangladesh Bank, National Board of Revenue (NBR), Chittagong Stock Exchange (CSE), DSE Brokers Association of Bangladesh (DBA), Bangladesh Merchant Bankers Association (BMBA), Central Depository Bangladesh Limited (CDBL), Central Counterparty Bangladesh Limited (CCBL), Investment Corporation of Bangladesh (ICB), and Financial Reporting Council (FRC) attended the meeting.
After the meeting, state-run ICB's Chairman Professor Abu Ahmed said, "We have discussed providing fiscal incentives like various exemptions, including duties in the budget. Foreign companies won't come if we don't offer them benefits. He [the adviser] feels that incentives must be given.
"We are expecting that the upcoming budget will include such measures. The adviser had previously held meetings and provided tax relief on capital gains. Such incentives are needed for long-term market development."
During the meeting, the stakeholders advised Salehuddin on introducing duty and policy exemptions to bring foreign institutions and large corporates into the market by holding discussions with officials from the government, the National Board of Revenue (NBR), and Bangladesh Bank.
The finance adviser commented on the need to reduce reliance on long-term financing from banks to increase liquidity in the capital market and reduce non-performing loans.
"In every country, long-term investments come from the capital market, not banks. Businesses should not rely solely on banks for all their funding. They should have at least 20-30% of their own. If everything is based on debt, how would that work?" he said.
"One or two individuals will not hinder reforms. If anyone obstructs the implementation of policies, actions will be taken against them," Salehuddin said when asked how confidence will be restored with those involved in malpractices still in BSEC and DSE.
The meeting, organised by the DSE Board of Directors with all capital market stakeholders and the finance adviser in attendance, had started at around 10am. However, journalists were barred from attending it.
DSE officials did not give any particular reason for not allowing reporters at the meeting.
The country's capital market has been passing a volatile situation since the Awami League government was ousted in a mass uprising in August last year.
The key index at DSE fluctuates daily as turnover continues to be around Tk300 crore.
Amid the situation, the finance adviser attending a meeting with all the key stakeholders is very significant for the capital market, said insiders.
Generally, the DSE public relations department sends reporters invitation cards for such meetings or notifies them through emails or messages to attend them. But this was not the case for the meeting this morning.
Reporters present at DSE claimed that it was one of the first major meetings with stakeholders where journalists were not allowed in.
