If we look at the capital market related proposals in the national budget for the upcoming fiscal year, then it will be clear that it lacks any plan to stabilize and revitalise the capital market.

Bangladesh Securities and Exchange Commission (BSEC), merchant banks, stock exchanges, listed companies and individual investors given a number of proposals for the stabilization and vibrancy of the market. But no important proposal has been considered in the proposed budget.

Instead of accepting the proposals the budget proposed something that would discourage listing of new companies. Instead of cutting corporate tax for listed companies, government proposed to reduce that for only non-listed companies by 2.5 per cent points. The reduced gap between listed and non-listed companies' corporate tax would discourage companies to come to the stock market for establishing or expanding factories. They would rather take bank loans.

India responded to their market fall as soon as the pandemic appeared through reducing corporate tax by 5 per cent points for listed companies. The measure taken four months ago meant to help listed companies offset or face their losses due to the pandemic. Indian government also refunded 1.63 trillion of rupees which companies had paid as advance tax.

Governments in USA, Indonesia, Thailand and Malaysia have declared various financial packages so that their capital markets stay afloat, investors do not lose a lot and the economy remains vibrant over the period of pandemic and economic crisis.

In last year's budget government increased the tax free limit of individuals annual dividend income to Tk50,000. This remained unchanged. I have seen that in the budget the government unnecessarily repeated the point to remind what it has done previously.

In January last when the stock market was continuously going down, honorable Prime Minister had instructed some short and mid-term steps for market stability. Those were: increase bank and financial institutions' capital market participation, easy loan to the merchant banks and other institutional investors, increase investment capability of ICB, take measures to increase investors' confidence, increase institutional investments, listing of multinational and government companies to increase quality IPOs.

Nothing has been implemented so far.

Very importantly, based on the Prime Minister's order it was declared that each of the banks would take Tk200 crore at 4 percent interest rate for a five year capital market investment. The Central Bank also had declared that the amount would be excluded when it calculates the capital market exposure of the banks. Bangladesh Bank also offered banks a waiver from provisioning in cases of banks' loss in the said investment at the year end.

State owned banks and ICB was ordered to invest in market and support it, but unfortunate that it is yet to happen.

However, in the budget the Finance Minister has mentioned that each of the above points has been taken for the capital market. But the fact is that not a single of those points has been implemented. We would rather be happy had the Finance Minister explained what are the points which the Prime Minister ordered have been implemented, or how much progress has been made by now, or is there any obstacle to implement those points.

I agree that the announced measure to allow black money to come back to the mainstream economy is very correct. It's a remarkable decision of the Finance Minister.

The no condition other than a 10 percent tax to whiten the black money, regardless where and in which form it is right, may help the economy now. But I am frustrated to see that only in case of investing the undisclosed money in the capital market a taxpayer have to wait for 3 years for exit.

If I am not wrong, the budget discouraged black money in capital market while it encouraged in other sectors.

In 1997-98 and 2011-12 the then two year lock-in did not result in attracting any black money in stock market.

Now, after the proposed budget, many who bought shares with their black money would rather sell off stocks and go for whitening the cash proceeds, because that is easier and unconditional.
Mr Finance Minister, I am pointing out the reality based on my long experience in stock market. I hope the Finance Minister will understand better the importance of the capital market right now.

The Finance Minister said that it is not government's job to energize the capital market, the job is rather to strengthen the economy and if the economy gets strong capital market would be vibrant automatically. I beg to differ with the Finance Minister. Everywhere in the world monetary policy considers both money and the capital market with equal importance.

It is the finance ministries and central banks that provide incentives to and supports the capital markets. They aim at fueling their economy with the help of their strengthened capital market.

In many developing and developed countries their capital market equates to 60-150 percent of their GDP. In our country the ratio is poor, below 15 percent.

Former Finance Minister AMA Muhit once said that the capital market has no importance in our economy. Echoing the former finance minister, top bureaucrats also said that it is a casino court, fish market and exploitation tool for capital-rich people.
But the reality is, capital market in countries across the world have proved that it is a strong weapon that helps economy forward. I hope, the Finance Minister will come out of emotion, face the reality and ignore any wrong influence to decide the right things for the country's stock market.

The writer is a former President and current Director of the Dhaka Stock Exchange (DSE).