The last multinational company that came up to be listed with the stock exchange by selling 10 per cent of its equity capital to the public was the GrameenPhone. That too did not happen easily. Like other multinational companies, GrameenPhone was also reluctant to go public. But public demand built up pressure on it and GrameenPhone saw some benefits in going public. At last in 2009, it decided to go public.
The day Grameen was listed with the stock exchange was definitely an auspicious day for the stock market as a whole. The market was going buoyant and the listing of GrameenPhone added additional boost to the confidence of enthusiastic investing public. This writer was present at the listing ceremony at the Dhaka Stock Exchange. He noticed great joy all around. Before that, he had met the then Finance Minister M. Saifur Rahman to talk about the need for Grameen going public. Saifur Rahman was a brilliant person and he quickly understood the issue. This scribe also requested him to issue some more licenses for the mobile phone operators so that the market became competitive. He said he would think about the issues.
Also, sometimes in early 2009, a senior journalist called this writer from Oslo, Norway. She wanted to know the whole affairs of GrameenPhone operation in Bangladesh. She was told, GrameenPhone was charging high price per call, and also it was refusing steadfastly to go public. The intention was to bring the phone company to the stock market so that the investors could get an opportunity to buy its equity.
At that time, GrameenPhone was the fastest-growing mobile company in the country, which it still is. But for Grameen, it was not possible to off-load more than 10 per cent of the equity, because, if it did, it would have lost majority control over management of the company.
The government and the Bangladesh Securities Exchange Commission (BSEC) facilitated the Grameen going public. Notable was that there was no licensing condition for it to go public. Our administrators made a mistake while they issued the operational licenses to the mobile telephone companies. Taking the advantage of there being no condition in the licensing system to go public, no other mobile company has floated shares for public subscription until now. Our licensing authority was not smart at all.
In some cases, the authority acted foolishly. This is why the profit-making and fast-growing multinational mobile telephone companies have still been able to avoid listing with the DSE. The irony is that the policymakers do not bother about the matter. It seems they do not understand properly the economies of a company going public.
After 2009, many other local companies went public by selling equity to the investors but not a single multinational company did so until now. The profit-making multinational companies will try to stay away from the stock market listing as they did in other countries also. But the difference is that in other countries, the multinationals had to eventually go public. Here in Bangladesh, they could do without going public. In other countries, policy-makers give priority to the stock market listing, here they do not.
In the absence of prodding from the policymakers, or any kind of binding in the licensing condition, going public or not by the multinational companies is purely a voluntary act. When such a freedom exists in the system, hardly any multinational company will go public. Of the few multinational companies that are listed with the stock exchange, some of them were there since the Pakistan days. In some other cases, the government of Bangladesh sold its own shares it held in them to the public. For example, the Bangladesh government sold shares of Bata BD Ltd. to the public in late 1980s.
This writer applied for Bata's IPO. Out of three applications he made, two were successful. The government sold those shares at the par value, which is unthinkable now. Why did the government sell shares of the Bata (BD) Ltd. to the public? It was seeking to do something good to the stock market at that time. Irony is that what the government had understood in late 1980s, it is not understanding this now though the need for helping the stock market with good stocks is being felt more now than anytime past. The policymakers in the government want more tax from the stock market, but they are indifferent in providing any type of policy support.
Many multinational companies like Unilever, City Bank NA, HSBC, Nestle, Bangla Link etc. are doing good business in Bangladesh, but they are not ready to share their profit with the public of this country by off-loading a very small percentage of their equity shares to the markets. Why? Because, nobody told them boldly to do so. Some of them publicise their Corporate Social Responsibility (CSR) activities. But what CSR is all about? Is not it the best kind of CSR to share business profit with the people by giving them an ownership no matter how small that ownership is?
In Bangladesh, policymakers understand by CSR as doing some charity by corporate businesses. This is a wrong way, or partial way of seeing the CSR. Bangladesh's stock market does not have much good stocks. The gap could have been filled in had the multinationals gone public. There are some tax incentive in the system. Unfortunately, that too will be narrowed down through the budget proposals of 2014-2015. The policymakers should, instead, provide more incentives so that the good companies feel encouraged to go public. Absence of policy support is holding back the much-needed growth in the stock market.
In recent days, some foreign portfolio investors tried to find out what they could buy from the Bangladesh market. They became disheartened, as they did not find good stocks sans a few multinational ones.
The writer is a Professor of Economics, University of Dhaka. abuahmedecon@yahoo.com
Why multinational companies do not go public
Abu Ahmed | Published: June 17, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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