Old advice in new package of "action plan" to calm market

An "immediate action plan" of the securities regulator has coincided with the suspension of its 21 officials in a seemingly calculated move to contain negative impacts of the punitive action on the equity market.

A press release issued by the Bangladesh Securities and Exchange Commission (BSEC) cited age-old expert recommendations as being incorporated in a plan to regain investor confidence in the market.

The key features of the plan are share offloading by profitable state-run and multinational enterprises, introduction of attractive tax incentives for companies to go public, the setting of a limit on bank financing, and establishment of the capital market as a source of long-term financing.

All these have long been suggested by market stakeholders and experts for the strengthening of the market's foundational base but the BSEC has failed to hammer out solutions to the problems that are hindering implementation of the suggestions. For example, persistent losses and bureaucratic tangles are often blamed for the failure to list government entities.

The press statement on the latest action plan was issued late into Tuesday evening after a meeting of the commission with Dr. Anisuzzaman, special assistant to the chief adviser, and Nazma Mobarek, secretary of the Financial Institutions Division (FID) of the Ministry of Finance (MoF).

FID sources said Finance Adviser Dr. Salehuddin Ahmed was also supposed to attend the meeting as concerns gathered magnitude over the market's recent fall but he could not make it.

The meeting made two major decisions - one on the temporary suspension of BSEC officials over their involvement in the March 5 hostage situation inside the BSEC following the forced retirement of an executive director, MD. Saifur Rahman and the other was the action plan.

One of those, who received the suspension letter, said he received the letter on Wednesday but it was dated April 29.

"In the consideration of the extent of allegation and nature, it is required to suspend you temporarily and a decision is taken as it is appropriate," reads the letter, a copy of which has been seen by the FE.

When asked if there is any thought-out plan on how to achieve the goals laid out in the BSEC statement, a top FID official said, "These are proposals from the BSEC. We are trying to facilitate the execution.

"They [the ministry] have already written to the National Board of Revenue (NBR) so that it considers the demands regarding incentives," the FID official added.

Both the action plan and the suspension order came against the backdrop of a sharp fall of the index. The DSEX, broad index of the Dhaka bourse, dipped below the 5,000-mark on April 24. It lost 5.53 per cent or 288 points to 4,917 points in the 13 sessions through Wednesday.

The action plan announced on Tuesday could not stop the market from a further erosion of 18 points the following day, leading to a protest waged by investors in the capital's Motijheel.

A source who attended Tuesday's meeting at the BSEC said the government's top officials insisted on simplifying listing and trading procedures to attract new companies and investors.

"We are trying to facilitate the development of the market," the FID official said, preferring anonymity.

The securities regulator has also decided to find out if the stocks, which have greater influence on the index, endured sale pressure and the reasons behind it.

Meanwhile, BSEC Executive Director Md. Abul Kalam said the regulator would follow its service rules while deciding the next course of actions against the officials suspended.

Of the 22 officers, 14 are accused in a case filed with Sher-e-Bangla Nagar Police Station after BSEC employees held the chairman and commissioners hostage on March 5.

After the appointment of new chairman and commissioners, tension escalated inside the BSEC as, according to insiders, the commission pointed fingers at employees for the misconduct during the tenure of the previous commission.

The new commission opened investigations into anomalies and corrupt practices during the previous commission.

BSEC officials say that in the absence of any power delegation they had no role in the decisions taken by the previous commission.

mufazzal.fe@gmail.com