Stock market analysts yesterday urged the government to encourage multinational companies and local ones with good performance records to get listed to boost stock investors’ confidence and ensure “fair distribution” of profits.
They spoke at a roundtable titled “Present and future outlook of capital market of Bangladesh” organised by Bangladesh Merchant Bankers Association (BMBA) and Capital Market Journalists’ Forum (CMJF) at The Westin Dhaka.
Prof Abu Ahmed, a former chairman of economics at the University of Dhaka, said most of the companies which were allowed to enter the stock market over the past one decade did not have that good of a performance record.
“Unilever, Nestle, and MetLife are working in the country for years and logging huge profits every year…Why are they not sharing their profits with the people?” he asked.
Many of those are listed in neighbouring India and Pakistan but not here. The government should think about it, he said.
The National Board of Revenue (NBR) reduced the corporate tax gap between listed and non-listed companies by 2.5 percentage points to bring it to 7.5 percentage points, said Ahmed.
However, stock market analysts had repeatedly urged lifting the gap to 20 percentage points from the then 10 percentage points, he said.
“Who did this, on what basis, I cannot understand it,” he said.
However, Faruq Ahmad Siddiqi, a former chairman of the Bangladesh Securities and Exchange Commission (BSEC), questioned the rationality of companies coming to the stock market for funds when they can easily avail long-term ones from banks.
Unless the easy, long-term loans are stopped and good governance ensured, the companies will not come to the stock market. Unless companies with good performance records get listed, the stock market will not get developed, he added.
The tax gap can never be attractive, even if it reaches 20 percentage points, because there are a number of ways to evade taxes, he said.
So, ensuring good corporate governance is necessary alongside implementing rules and regulations so that none can evade taxes, he said.
The government reduced the corporate tax for both listed and non-listed companies in order to reduce the overall corporate tax, which is comparatively low abroad, said Mohammad Jahid Hasan, a member of the NBR.
The NBR is always ready to give policy support for the development of the stock market, he added.
“The share price valuation in our stock market should be accurate to attract companies with good performance records,” said Prof Mohammed Helal Uddin, director (research) of the Centre on Integrated Rural Development for Asia and the Pacific.
“Our stock price mechanism has a serious problem, so ghee is sold here at the price of ash and ash is sold here at the price of ghee,” he said.
Unless there are good prices, good companies will not be interested to get listed even if big tax incentives are offered, he added.
The BSEC is trying to bring in multinational and companies with good performance records, for which it has already held talks with some of their top officials, said Prof Shibli Rubayat-Ul-Islam.
A lack of returns in the money market and banking sector and other avenues are prompting investors to move towards the stock market, said Hasan Imam, president of the Association of Asset Management Companies and Mutual Funds.
They are being drawn towards mutual funds for their performances, dividends and high yields, he said.
The mutual fund industry is looking to expand its footprint across country together with brokerages and the merchant bank ecosystem, he added.
Ziaur Rahman, president of the CMJF, Kazi Sayedur Rahman, deputy governor of Bangladesh Bank, Nojibur Rahman, chairman of Capital Market Stabilisation Fund, Eunusur Rahman, chairman of Dhaka Stock Exchange, and Asif Ibrahim, chairman of Chittagong Stock Exchange, also spoke at the event.