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26 Feb 2007Journalists plays pivotal role in Developing Share Market CSE First Vice President says at seminarChittagong, 26th February, 2007: Chittagong Stock Exchange has organized a seminar today at CSE Conference Hall for the print and electronic media to make them aware about the core issues of corporate governance and Investment tools, techniques and process. A large number of journalists based in Chittagong gathered at the seminar titled “Journalists Role in Developing Share Market- Share Market A pros and cons analysis”. Renowned Capital Market Experts and Analysts Mr. Yaweer Sayeed, MD & CEO of AIMS of Bangladesh Ltd. and Mr. Arif Khan, MBA, FCMA, CFA, General Manager of IDLC Bangladesh Ltd have presented their key note papers respectively on “Corporate Governance and its practices” and “Investment instruments, process, techniques and management portfolios”. First Vice President of the Chittagong Stock Exchange Mr. Nasiruddin Ahmed Chowdhury while addressing his speech as Chief Guest said, “This investment avenue is so highly volatile and risk-return oriented that it requires sources of transparent information, adequate training, update information, analytical skill, investment technique etc. etc. As the Journalist Community is playing a pivotal role through circulating financial report on stock market and since a large number of our general investors are fully dependent on their report, therefore your training is necessary to uphold the quality of news on stock market”. He further recalled and said, “Probably you could not forget the tragic share market debacle blew in 1996 in our country. The prime reasons of such incident found for inadequate knowledge, weak rules & regulations, poor good governance etc. etc. Anomalies and uncertainty had halted the progress of the county’s securities market in the past like other sectors which faced the havoc due to corruption, non-transparency and inefficiency”. While emphasizing on regulators responsibility, he said, “As a Self Regulatory Authority we must be able to earn the confidence of the investors so that there is no scope for manipulation. SEC has been initiating tough actions against malpractice through its surveillance system and re-establishing discipline and accountability in the listed companies, brokers, merchant banks etc. and taking proper steps on reforms to consolidate the foundation of good governance. Listed companies are gradually following the international accounting standard in the audited accounts of their entities to boost the confidence of investors. While saying on Investors, he said, “Presently investors are not in the dark regarding any financial disclosures of listed companies rather they are becoming self analyst to analyze the financial information. Albeit we are confident that there is very little chance of such violent collapse on our stock market again, nonetheless necessary measures for example organizing awareness program is essential time to time for all who are dealing with stock market. Our foremost objective, if innocent investors are still walking through on the dark tunnel, show them light so that they can stand alone and remain as investors in our stock market.” While giving example of the neighboring countries economic development he said, “If the literacy rate of a country is high then its benefits are bound to reflect at every level of development including economic system. Economic theory says, “Share Market is a barometer for measuring any country’s economic growth.” Economic growth depends on the investment in the stock market. The stock market must play a vital role as an alternative source of investment fund to accelerate the economic development of the country. If our eyes set to our neighboring countries, we can realize that the rapid industrialization and economic growth is largely contributed by their capital market. We are ahead on the same path, but it needs massive and dedicate concentration while framing the policy. We have to utilize our resources and for that, we need consensus and coordination. My earnest request to you, please accumulate and pursue necessary prescriptions in order to develop our stock market through your report and also keep hammering on those suggestions for implementation.” While drew attention of the Finance Ministry to the following recommendations, he said, “If you allow me, I can disclose in front of you today some issues that can be addressed by the Finance Ministry of our Caretaker Government. I believe my suggestions can contribute a little amount while formulating policies that are coming soon.” 1. Off-load Profitable Government share through stock marketBy successfully mobilizing funds from local sources through stock market, Government can reduce it’s dependency on foreign funds to finance it’s development activities. Decision can be taken to off-load certain percentage of govt. shareholding from various Governments, private and multinational companies and to issue those shares to the public through the stock exchanges. It would be a very pragmatic step, which not only increases the supply side but also brings depth to the market. 2. Foreign/ Multinational companies including Cell phone companies should be brought in the stock marketForeign/ Multinational companies including cell phone companies that are already doing their business profitably in Bangladesh should coerced to be in the stock market either by off-loading a portion of their shares to the public or by raising funds from the capital market. In some neighboring countries this is mandatory, but unfortunately absent in Bangladesh. This will certainly strengthen and increase the size of the market as well as ensure participation of the general people in national economic development. 3. BTTB Multi-metering billing system for CSE brokers should be waivedDuring the fixed call rate system, brokers used to pay monthly Tk. 150/- as line rent plus a usage charge of Tk. 36/- (excluding VAT) to BTTB for logging-in to CSE trading network. With the imposition of multi-metering system, brokers are required to pay around Tk. 2,500/- per telephone connection to BTTB each month. This big difference is affecting the brokers in their cash flow. As a measure of incentive to this important sector, we propose that the brokers’ community should be kept outside the orbit of multi-metering billing system, as it has been waived for the users logging-in with the Internet Service Providers (ISP). 4. Tax Related Considerations i) To attract more entrepreneurs to raise their capital from the secondary market, a significant (at least 20%) corporate tax gap between listed and non-listed companies should be allowed. ii) Income Tax on dividend income above Tk. 25,000/- should be withdrawn to attract more investors in the market. iii) Necessary steps should be taken to penalize the companies enjoying tax holidays but failed to invest a portion of their tax-exempted income in the share market as appeared under Section 46A of the Income Tax Ordinance 1984. 5. Advance Income Tax (AIT) on BrokersBrokers are paying 0.0015% on their transaction value as AIT to the govt. As a measure of incentive to this important sector, we propose that the brokers’ AIT should be reduced to 0.0010% to enhance more transaction in the stock market. 6. Reducing Interest Rates:Interest rates are a primary determinant of investment flow to the stock market. Due to prevailing rise in the interest rates, a huge amount of funds are going out of the capital market to banking sector as fixed deposits. We propose to reduce the interest rates for the sake of the development of the capital market sector. We further propose that changes of such macro economic policy like interest rates should be taken in mutual consultation with Ministry of Finance, Bangladesh Bank, SEC and Stock Exchanges. 7. Implementation of Securities Training Institute & Inclusion of Stock Market knowledge in the Education systemEstablishment of the Securities Training Institute has become essential for research and development of human resources in the different level of securities industry. The implementation process, under the supervision of Securities and Exchange Commission needs to be accelerated. Inclusion of Stock Market knowledge in the primary, secondary & college level education is essential for developing the new generations with the knowledge of savings & investments. We need your kind attention in this regard. 8. Separate simplified guideline for attracting NRBs to invest in the stock market through Non-resident Investors Taka Account (NITA):Non Resident Bangladeshis have been contributing significantly to the economy of Bangladesh. Unfortunately, most of those funds are being utilized for consumption purpose and real estate investment, while only an insignificant portion of those funds are being used in the financial market for economic activities. Like other neighboring countries (e.g. Pakistan & India), our NRBs should also be encouraged to place their fund directly in the capital market, which will certainly strengthen our overall financial market. In Bangladesh, there is a provision laid down in ‘Guidelines for Foreign Exchange Transactions, Volume-1’ [Chapter 14, Section-I(4)] of Bangladesh Bank for securities transactions by non-residents through Non-resident Investors Taka A/c (NITA). But practically, NRBs could not take the fullest advantage of these provisions due to some operational constraints/ requirements. We strongly believe, simplification of which, will bring significant flow of foreign currency in the country. To develop our capital market, NRBs should be encouraged to actively participate in the secondary market by resolving the factors involved in transferring money with the banks. The issue needs to be addressed immediately. We hope, as soon as the fund transferring problems are resolved, CSE Internet Trading Module can perform effectively to channelise this money into the Bangladesh Capital Market. 9. Allowing Underwriting business to BrokersEarlier brokers were allowed to do underwriting business for IPOs. From the year 2000, brokers having merchant banking license can only do the underwriting business. To facilitate general brokers business, besides the merchant bankers, we propose that eligible brokers should also be allowed to do the underwriting business based on some criteria. 10. Implementation of debt-equity ratio guideline for the companies Seeking large loans from banksThe debt-equity ratio guideline for the companies seeking large loans from commercial banks should be implemented soon, to compel them to invest a portion of it in the share market. 11. Allowing investment of Pension, Provident & Gratuity Funds in the stock market:Allowing a handsome portion of the Pension, Provident & Gratuity Funds for investment in the capital market will certainly increase the depth of the market. Among CSE Directors Mr. Abu Syed Shaidullah, Mr. Bijan Chakroborty, Mr. Tareq Kamal were present and Mr. Nasirul Huq, Chief Reporter of Bangladesh Suprobhat made remarks. Chief Executive Officer Mr. A B Siddique moderated the seminar. AKM Shahroze Alam |
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