Govt sincere about capital market development: BSEC Chairman

Bangladesh Securities and Exchange Commission (BSEC) Chairman Khondoker Rashed Maksud on Tuesday welcomed the proposed budget, saying it reflects the government’s sincere and constructive approach to capital market development by giving due emphasis on crucial sectoral issues.

In a written statement in response to the new budget, Rashed Maksud said Chief Adviser Dr Muhammad Yunus' five-point directives over the capital market were prominently incorporated in the budget speech delivered by Economic Adviser Dr Saleh Uddin Ahmed.

Among these directives were the direct listing of multinational companies in the capital market and the enlistment of strong, fundamentally sound local companies.

In addition, the directives called for appointing foreign consultants to implement essential reforms, taking strict actions against irregularities and misconduct by market-related entities and individuals and providing policy support from the government to position the capital market as a central pillar of the future economy.

Reflecting these directives, the Ministry of Finance has proposed widening the corporate tax gap between listed and non-listed companies from 5 per cent to 7.5 per cent. As a result, companies listed on the stock market will benefit from a lower corporate tax rate.

The BSEC chairman expressed the hope that this move would encourage both domestic and foreign profit-making companies with strong fundamentals to become listed.

To stimulate trading volume in the market, the transaction tax on brokerage houses has been reduced from 0.05 per cent to 0.03 per cent.

Maksud noted that the capital market is currently facing liquidity constraints and low trading volumes, and he hoped this tax relief would encourage greater investor participation and enhance trading activity.

Merchant banks, considered crucial stakeholders in the market, have also received incentives, he said.

Highlighting their role in ensuring a sustainable supply of quality shares, the Chairman noted that the corporate tax rate for merchant banks has been reduced by 10 percentage points—from 37.5 per cent to 27.5 per cent.

He believes this will further encourage merchant banks to contribute to capital market development.

In a move to protect investors’ interests, the chairman recalled a key decision made shortly after the interim government assumed office on 4 November last year.

The National Board of Revenue (NBR) issued a directive to reduce the capital gains tax from the sale of shares of listed companies. The maximum tax rate was halved from 30 per cent to 15 per cent.

Rashed Maksud considered this a clear sign of the government's commitment to the capital market, reports UNB.