Capital market is treated as nobody's baby: Stockbrokers

The capital market has become "nobody's baby" although it could be a source of fund mobilisation for businesses, said brokers, accusing the interim government of paying no heed to resolve problems for its development.

Brokers of the Dhaka Stock Exchange (DSE) pressed home their demands at a programme on Saturday at Dhaka Club in the capital, saying their survival is at stake against the backdrop of low market turnovers and a lack of coordination among regulatory bodies.

Referring to the investment summit held in Dhaka last week, where no one represented the secondary market, they said they grew sceptical about the government's efforts to turn things around for the capital market.

"It would be difficult to draw foreign investments without the development of the capital market. But we failed to attend the investment summit and find any supportive measure to restore investors' confidence," said Saiful Islam, president of the DSE Brokers Association (DBA).

No measure has been taken for the last decade to bring good investment products to the market, brokers said, adding that entrepreneurs have lost interest in offloading shares of their companies as good-performing enterprises are suffering from lower-than-expected market value.

"Square Pharmaceuticals is a company that has a good image across the globe as a Bangladeshi company, but the sad thing for the market is that business groups like Square [Group] don't intend to list more of their companies in this [Bangladesh] market," said the DBA president.

Stakeholders expected proper reforms in the market during the incumbent interim government. At the moment, stockbrokers find no authority that could address the problems facing them and the market, speakers said.

Stockbrokers demanded a reduction in the turnover tax that they are currently subjected to because, they said, the tax is irrationally high compared to regional peers.

Presently, brokerage firms are charged turnover tax at a rate of 0.05 per cent whereas the rate is 0.01 per cent in India, 0.00065 per cent in Pakistan, 0.0075 per cent in Singapore and 0.00565 per cent in Hong Kong.

On the other hand, there is no turnover tax in Malaysia, UAE and Turkey.

The DBA has urged the government to reduce the turnover tax to 0.02 per cent from existing 0.05 per cent.

Brokers said they are also to pay AIT (advance income tax) even if they incur losses as such tax is not adjustable.

The central bank, the securities regulator and the revenue board could solve the problems jointly, said Mr Islam, adding that the Bangladesh Bank now seems to be aloof from the securities regulator in the absence of any initiatives by the latter.

Minhaz Mannan Emon, a DSE director, said the country's capital market has become 'dead' as sufficient investment-friendly measures have not been taken.

"This is the only market across the world that now has no IPO (initial public offering) proposals in the pipeline," said Mr Emon.

The regulatory measures such as minimum investment and BO (beneficiary owner's) account maintenance fee drove away small investors from the market.

Discussants said the market has hit the bottom because of investors' lack of interest in listed securities.

Apart from nominal turnovers below Tk 5.0 billion on the stock exchange, the number of active BO accounts gradually declined to 1.6 million from 3.0 million.

In a country with a population of 180 million, the number of stock investors will not be more than 0.5 million, whereas the number of mobile service provider bkash's accounts is above 70 million.

Mr Emon said they are yet to be able to meet chief adviser Prof Muhammad Yunus to tell him about the issues that are weakening the market.

At the programme, the stockbrokers also criticised the reform actions taken by the securities regulator.

The securities regulator has formed a task force to amend the rules and regulations but the committee has not taken any opinion from the brokers' community before submitting their reports.

DBA representatives said the securities regulator is busy with imposing penalties on non-compliant companies and individuals, having brushed aside its main jobs.

Md Shakil Rizvi, a DSE director, and Md. Saifuddin, chief executive officer of IDLC Securities, among others, spoke at the programme.

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