“The government will have to apply the carrot and stick policy to bring companies into the capital market”

The seminar organized by the Dhaka Stock Exchange with big reputable companies which took place on Tuesday to bring them into the capital market is a very important step. This is the first time that the DSE has officially invited and seated with such companies for this purpose.

Previous actions taken by the DSE to introduce them to the capital market were neither successful nor effective. This current endeavor is not just a big step, but an organized step.

Currently, Bangladesh has around 30,000 companies and although many of them have done good business, they never show any interest in being listed on the capital market.

One of the most frequent complaints made by speakers at the seminar organized by the DSE was that the strict regulations put in place to prevent irregularities in the capital market discourage entrepreneurs from listing.

During the seminar, Rahimafrooz Group Director Munawar Misbah Moin said the company wanted to go public three times in the past 65 years, but backed down due to the complexity of the listing process.

Romana Rouf Chowdhury, Director of Rangs Group was also present and spoke at the seminar. She said they preferred to run a private business because listing meant they would have to compromise with the board and face a lot of compliance issues.

But this tendency of not being listed on the country’s capital market is a big problem for Bangladesh’s economy and its income.

Experts Prof. Abu Ahmed and Md. Sayadur Rahman, President of the Bangladesh Merchant Bankers Association, weighed in to share their observations on why companies avoid being listed.

“They don’t go public because it means more accountability and transparency for them. Their income needs to be disclosed and people need to know about it. They need to submit a financial report every three months,” economist Abu Ahmed said. . “For this reason, they show no interest in joining the capital market,” he added.

Being listed on the capital market is good for the country. The National Income Council (NBR) will get the most benefit if they are on the list. The Dhaka Stock Exchange has only 347 listed companies. About 80 percent of the total corporation tax in the country comes from listed companies.

Since most of our companies are not listed on the capital market, people have little idea about the income of these unlisted companies.

Unilever is a company listed on the Bombay Stock Exchange. It is a listed company with Karachi and Bangkok as well but not in Dhaka.

“Why is the company not listed on our capital market? »Asked Abu Ahmed. There is a company listed on our capital market called Unilever Consumers Limited. Principal Unilever is not listed, ”Abu Ahmed said.

He believes there are thousands of small unlisted businesses in the country because the government cannot properly pressure them to join. Now is the time to get them into the capital market.

Economists believe that the inclusion of unlisted companies in the capital market has yet to take place due to a lack of political decision-making. To achieve this, the government will have to send a “strong message” to unlisted companies.

“Discussion alone will not be enough. The government will have to apply a carrot and stick policy. If companies do not come to the capital market, they will increase corporate taxes but if they come to the capital market. , corporate tax will be cut, “said economics professor Abu Ahmed.” If necessary, the BSEC can seek support from the prime minister’s office. ”

He also added that the NBR can reduce corporate tax to around 18-20% in order to lure them into the capital market. The government should also increase their facilities if they want to woo big business.

Mr Sayadur Rahman also said: “The difference between the corporation tax of unlisted companies and listed companies is 7.5%. enter the capital market.

He also added that the government will have to simplify the process of assessing and collecting taxes.
“The government can also make policy improvements. The government can say that a company will not get bank loans for more than a specific amount of money. This will force a company to come into the capital market,” Sayadur Rahman said.

But there are still companies that come to the capital market to raise funds.

“In Bangladesh, there are two reasons why a company would come to the capital market to raise funds. The first reason may be that their registration in the capital market is made compulsory by the government. Another is when these companies do not have easy access to obtain bank loans and being listed becomes the only way to get financing, ”said Sayadur Rahman.

He said that since well-established businesses, unlike these small businesses, have easy access to bank loans, they show no interest in being listed on the capital market. Large companies have no incentive to be encouraged to register in the capital market.

“If a company wants to enter the capital market, it will have to go through many formalities to be listed in order to raise funds. A business can very easily obtain financing from a bank. So who is to blame? This is the process. said Md. Sayadur Rahman, echoing the complaints made by speakers at the seminar.

Ariful Islam Mithu. Illustration: SCT

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Ariful Islam Mithu. Illustration: SCT