Budget push to resurrect capital mkt, stimulate industrialisation

Bourse operators hope the incentives proposed in the new budget will attract more companies into going public on the capital market for further expansion which will accelerate industrialisation in the country.
Dhaka Stock Exchange (DSE) officials expressed such view Sunday at a post-budget press meet and hailed the government for laying emphasis on the capital market in the upcoming fiscal year's budget.
They expect the incentives will help stimulate the capital market-at a time when the bourses are trying to make a turnaround from the past scam-induced setbacks.
"The budget proposals are capital market-friendly and show the government's willingness to stabilise as well as to improve the capital market," said DSE chairman Justice Siddiqur Rahman Miah at the briefing held on the DSE premises.
"The budget proposals for capital market will also create a positive impact on the stock market," he said. These will prompt more companies to go public which will help enliven the bourses and accelerate industrialisation.
Echoing the finance minister's speech that the capital market now stands on strong foothold out of continuous efforts in last four years, Managing Director of DSE Swapan Kumar Bala said now there is no scope for creating artificial bubble on the capital market.
"We are always alert so that no one can create scope for artificial bubble on the market by taking the advantage of budget proposals," said Mr Bala to a query.
Finance Minister AMA Muhith proposed Thursday a set of fiscal measures in the next budget, including corporate tax cut for listed companies by 2.5 per cent and also trimming down the tax rate for other listed companies to 25 per cent.
Tax-free dividend-income limit has been raised to Tk 25,000 while 5.0 per cent tax at source on interest income of Treasury bond and Treasury bill has been withdrawn for development of the bond market.
The budget also relieves merchant banks and stockbrokers of complex calculations by withdrawing the existing provision of 10 per cent deduction at source on income from share market by any company or partnership. Capital gains tax will be finalised at the time of annual tax filing.
The finance minister also proposed to discontinue the tax waiver for the companies that declare 30 per cent dividend. The condition to impose 35 per cent tax has also been withdrawn if the dividend is less than 10 per cent.
The budget also proposed that if any company offloaded 20 per cent of its paid-up capital through Initial Public Offerings (IPO) to the capital market, it will enjoy 10 per cent tax rebate on its payable tax in the relevant year.
In the Finance Bill 2015, a new provision for imposition of Tk 0.1 million as penalty on corporate taxpayers has been proposed for submitting fake audit reports. The respective taxpayers will also be liable to be punished with imprisonment.
Welcoming the punitive measures, Mr Bala said the punitive measures would help reduce the malpractice of submitting fake audit reports.
Mr Bala also urged the government to pass the Financial Reporting Act as soon as possible to ensure more transparency and accountability in the financial sector as well as stock market.
Referring to the pension fund in the proposed budget, which will be invested in different portfolios to implement welfare programmes for the pensioners, the MD said it would create an opportunity to invest in the capital market.
The government will create a Pension Fund Management Authority to look into the pension-related activities of more than 0.5 million pension-holders, the finance minister said in his budget speech.
"A vibrant stock market can play a significant role in the economy, as it will not only encourage entrepreneurs to raise capital through listing, it will also attract foreign investors to invest in our market," said Mr Bala.
He also urged the government to provide full tax exemption for five years to the bourse, instead of existing partial exemption at graduated rates, for sustainable growth and smooth operation of the exchange.
The stock exchanges are now enjoying the tax-holiday facilities on their own incomes at a graduated rate, meaning that the exchanges' incomes will come under the tax net from the next fiscal.
DSE directors Shakil Rizvi, Khwaja Ghulam Rasul and Sharif Anowar Hossain and chief regulatory officer AKM Ziaul Hasan Khan were among others present at the press briefing.
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