Muhith doubts the bid-winning Chinese consortium's capacity to help the capital-market development hot on the heels of a tussle between the country's prime bourse and the regulator over choosing a strategic partner.
"I am sceptical about Chinese capability," the finance minister, AMA Muhith, wrote in his comment on a letter forwarded to him from the Chinese embassy in Dhaka, sources said.
The minister's apparent position comes to light at a time when the Dhaka Stock Exchange (DSE) and the Bangladesh Securities and Exchange Commission (BSEC) are at loggerheads over the choice between two main bidders-a consortium of two Chinese firms and an Indian one.
Economic and commercial counsellor of the embassy of China Li Guangjun in a letter, dated February 12 last, sought cooperation of BSEC chairman Dr M Khairul Hossain, as the regulator reportedly differed with the bourse operators on partner selection.
A copy of the letter was also sent to Mr Muhith and the minister made the comment thereon on February 19 last.
The DSE board approved the Chinese Consortium's proposal on February 10 last.
The Chinese consortium, comprising Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE), competed against an Indian consortium comprising the National Stock Exchange (NSE) of India, Nasdaq, an American stock exchange, and Frontier Bangladesh to buy stipulated 25 per cent shares of DSE.
As invited by DSE, the Chinese SZSE-SSE duo participated in the equity-stake divestment of DSE and submitted its competitive tender to the bourse management.
"It would be highly appreciated that BSEC may evaluate the tender in accordance with your rules and regulations and make professional decisions to carry out the cooperation for the most benefit of our two sides," Mr Guangjun wrote to the BSEC chairman.
Though Mr Muhith aired doubt about Chinese companies' capability, the DSE board, in the meantime, favoured the Chinese consortium which turned out to be the highest bidder.
The DSE last Thursday submitted the proposal to the BSEC for approval to make the Chinese consortium strategic partner of the bourse. Thereafter, the regulator formed a four-member committee to look into the proposal. The committee was given 10 working days to evaluate the proposal and submit a report.
According to officials, after the DSE board had approved Chinese proposal on February 10, it allegedly came under pressure to consider the proposal submitted by the consortium led by NSE of India. Later on February 19, the DSE board 'reconfirmed' its previous decision in favour of the Chinese consortium.
The Chinese bidder offered Tk 22 per share for the 25 per cent stake in the DSE while the NSE-led consortium offered much lower, Tk 15 a share. The former also offered long- term investment without imposing any condition. On the other hand, the NSE-led consortium wanted scope for exit after five years by offloading shares.
In addition, the Chinese consortium offered technical support worth nearly $37 million for free while the technical offer of NSE-led consortium is limited to only consultancy and experience sharing.
According to the demutualisation scheme of the stock exchange, the DSE has more than 1.80 billion shares with a paid-up capital of Tk 18.03 billion of which 25 per cent or more than 450 million will be sold to a strategic partner.
"The proposal of Chinese consortium is more attractive than that of the other consortium. We hope the regulator will evaluate our approval," DSE director Rakibur Rahman told newsmen earlier.
He said the DSE expects that the BSEC would consider the merit of the proposal keeping in mind interests of both the country's capital market and shareholders.
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