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  • Proposals of Stimulus Package for Chittagong Stock Exchange Ltd. (CSE)and all stakeholders

    Chittagong, April 20, 2020:

    We all are well aware that the whole world, including our country, is now passing through a very crucial time due to the Covid-19 pandemic. The government has announced general holidays from March 26 to April 25. Governments of many countries of the world have declared total lockdown. People of each and every country are instructed to stay at home and not go out. This instruction has been given in to save the people, to save the country. The contemporary globalized, world economy is in the way to a deep recession and we are not an exception and the economy of Bangladesh is indisputably going to face a dense shock since the Export and foreign remittance would decrease and the domestic production is under serious threat due to hamper of import and thus, local demand will reduce.

    Unlike others sectors mentioned above briefly, different stake holders of Bangladesh Stock Market have been severely affected since January this year. We are further aware of the fact that, the downtrend of the stock market has been ongoing since 2018 and Covid-19 is supplemented and escalated the sufferings of the small/institutional investors and different stakeholders of the Bangladesh Stock Market.

    CSE has proposed a stimulus package in total 1050 Cr to the Finance Ministry and BSEC to consider for the CSE small investors and brokers at the time of severe crisis caused by pandemic and lockdown in the country:

    1. Subsidize interest on Margin Loan:                Tk.400 cr.
    2. Subsidize broker’s office expenses:                Tk.  80 cr.
    3. Incentive of Corporate Tax of CSE:                 Tk.  20 cr.
    4. Waiver of BO Account Renew Fee:                 Tk.  50 cr.
    5. Special Loan only for CSE Brokers:                 Tk.500 cr.

    Total                                                          =          Tk.1050 cr.

    A humble description of above proposal,are given below:

    Fresh Loan for CSE Brokers: Chittagong Stock Exchange feels that most of the moderate brokers of CSE can not avail the loan facility from the recent declared 100 bn loan facility by the Bangladesh Bank due to stringent criteria. Therefore, to pave a comfortable access into the fund, CSE seeks Bangladesh Bank to allocate a special fund/loan of Tk.500 cr. which will be distributed by CSE among the CSE stock Brokers after meeting eligible criteria set by CSE. CSE strongly believe that this opportunity will be a great help for CSE brokers who are directly participated in the development of Bangladesh Stock Market.

    • Subsidize/freeze interest on Margin Loan: Small investors who have taken margin loan from their respective brokers of CSE at higher rate have to bear huge liability which cannot be met within the shortest possible time. If govt. offers a financial package to subsidize a majority portion of interest amount, i.e.400cr, it will be of great assistance for the small/retail investors of Chittagong Stock Exchange Ltd. Or, govt. can instruct relevant authority to waive interest amount for 6 months.

      Subsidize broker’s office expenses: Due to lockdown and ongoing govt. holidays, brokers/dealers are not earning commission from their investors which are a mainstream income of their business. Considering the salaries for the month of April, May and also the EidBonusCSE urge govt. to subsidize 80% of this expense which is tk. 80 cr. and include itin the stimulation package. Or, government can arrange a soft loan for this amount of Tk.80 cr. as working capital @ 2% interest rate for the brokers so that they can overcome and meet their salary expenses.

    • Cushion for Chittagong Stock Exchange: CSE has been always prompt in conveying the corporate tax and other govt. charges within due time. However, CSE has been lagging behind to reach its revenue target since 2018 due to various reasons mentioned briefly above and the situation deemed to be soaring due to the ongoing Covid-19 turmoil. Taking this into account govt. can consider reducing the corporate tax rate for CSE from @35% to 10% to confront the current battle and the harmonious survival of CSE.

      Advance Income Tax (AIT) on Transaction value: Presently a small investor has to pay AIT on their every transaction value @ 0.05%. It can be reduced to 0.0025% which will help to condense their commission cost to broker significantly. This incentive will also participate in increasing exchange turnover in future.

    • Waiver of BO Account Renew fee:  We assume that there are 25 lakhs BO Accounts registered with CDBL and the total amount of Tk.50 cr. to be collected by NBR after end of June this year. We request to waive this amount and include in the stimulus package for the greater interest of small investors.
    • Revise interest rate of 100bn loan: Bangladesh Bank in its recent circular approved Tk.100 bn loan for the ailing stock market which will be equally distributed of Tk.200 cr. among the interested commercial banks.

    CSEChairman Asif Ibrahim and the Board of Directors humbly request the government to consider the above proposal positively. The Chittagong Stock Exchange and its brokers/dealers will survive from huge business losses which soon due to the ongoing crisis of pandemic Covid-19. Therefore, many employees can save their jobs and small investors can turn around in the market positively.

     

     

    For Details

    Tania

    CSE-PR

    | April 20, 2020 |