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Scrapping opportunity of money whitening provision:::Stock mkt won't be affected : CSE

Saturday, June 8, 2013
The Chittagong Stock Exchange (CSE) Saturday said scrapping the opportunity of money whitening provision in the stocks will not affect the capital market.

The government proposed to scrap the provision for amnesty for undisclosed money invested in stocks in the next fiscal year though the market witnessed a lot of hypes over the issue in the last few days.
CSE President Al Maruf Khan addressing a post-budget press
 conference held at the Dhaka office of the port city bourse Saturday.

"I think scrapping the money whitening provision through investment in the stock market will not affect the market as it did not get good responses in the few years," CSE President Al Maruf Khan said at a post-budget press conference held at the Dhaka office of the port city bourse.

Mr Khan said the sluggishness in the stock business was seen over the last two years despite the presence of money whitening opportunity. "So, we believe it will not put negative impact in the stock market," Mr Khan told reporters in a query.

He praised the government for a number of proposed benefits, including tax removal on share premium and tax rebate on private sector mutual fund investments.

"The individual tax payer investors will be benefited as the government increased tax-free income from the capital market, said Mr Khan"

"Investors will also be encouraged to purchase the units of private mutual funds amid a level playing field created by the government," he said.

Though the individual tax payer investors will be benefited in line with the capital market aspect, the overall budget is as usual, he said.

The bourse, however, requested the government to increase the level of tax-free dividend income up to Tk 50,000. The government has raised the tax exempted dividend income threshold up to Tk 10,000, from existing Tk 5000.

However, he said that there is no encouraging incentive for the institutional investors. "The budget would be more suggestive and reformative to make the capital market the main source of raising capital," said Mr Khan.


Mr Khan urged the government to withdraw the proposed extra 5.0 per cent tax on listed Mobile Phone Company and Tobacco Company as the bourse think that it would decrease the power of giving divined.

About the government's high bank borrowing target in the next fiscal year, he said, it might put a negative impact on the capital market.

To meet the budget deficit, some Tk 259.93 billion (2.2 per cent of GDP) would be lent from the banking system, Finance Minister AMA Muhith said in his budget speech on Thursday.

"If the government borrows huge amount of money from the internal sources, the private sector investment will suffer, liquidity shortage would intensify and interest rate would be high which will affect the capital market,' he explained.

In addition to the incentives to the capital market, a number of reform measures are reiterated in the budget, for example financial reporting act, company act, bank company act, insurance act, tax act 1984, clearing company act etc, he said. 

"We hope that these reforms would take place within the present government tenure," he said.

In its written statement, the CSE president requested the government to reconsider some issues including re-fix tax at source for the members of the stock exchange at 0.015 per cent, down from existing 0.05 per cent, as commission for brokerage services reduced significantly.

"We hope the government will take some monetary measures like stimulus package, reduce the bank interest rate, and increase the capital market exposure limit in the next monetary policy," he said.

He also urged the government to increase the tax net, to decrease the tax burden on the exiting ones.

Mr Khan said, though there is an upward trend in the foreign direct investments (FDI), portfolio investments is not at satisfactory level. "We want a specific guideline about the portfolio investments," he said. 

The port city bourse also urged the government to involve the stock market with big projects under the public-private partnership (PPP).

He said though the government pointed out the about the Bangladesh Fund in its budget proposal, there is no specific indication about the fund implementation.

Besides, there is no specific guideline on the recently formed Bangladesh Securities and Exchange Commission's 'Capital Market Master Plan' in the budget proposal, he said.

The CSE noted that there was no specific policy about the state owned enterprises to be listed in the stock exchanges and there is no indication on derivatives market to develop the stock market in the proposed budget. "We want specific policy and guidelines about the issues," he added.


The CSE also wants a seven-year tax exemption for making the share holders' broad-base after demutualization. 

CSE Senior Vice President M K M Mohiuddin, director Md Mofizuddin and Chief Executive Officer (CEO) Syed Sajid Husain were, present among others at the press conference.
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