The equity market lacks incentives to attract multinational companies, said the chief of the association of listed companies.
"There is a dearth of good companies in the equity market. The government should provide policy support and tax incentives to inspire multinational firms operating in Bangladesh to join the stock market," said Rupali Haque Chowdhury, president of the Bangladesh Association of Publicly Listed Companies (BAPLC) on Sunday.
She spoke as the chief guest at a programme organised by the Capital Market Journalists Forum (CMJF).
Five years ago, the tax rate gap between listed and non-listed companies was 10 percentage points, which came down to 5 percentage points last year despite repeated requests from market stakeholders for an expansion of the gap.
As a result, the flow of initial public offerings (IPO) dried up; not a single company floated an IPO in 2024. To make the secondary market vibrant, the regulator needs to create scope for new IPOs.
"Why will companies issue IPOs if they don't get benefits after listing?
"They will take credits from banks. Although the interest rate in banks is high, it is easy to take loans," said Mrs Chowdhury.
She said multinational companies would feel encouraged to list if there were incentives.
Moreover, consistent and long-term fiscal policy should be taken to lure multinational companies to the market.
Ms Chowdhury said non-listed companies were getting more benefits than their listed peers as they could take advantage of the loopholes of the Companies Act 1994.
"So, the Companies Act should be reviewed; both listed and non-listed companies need a level-playing field," said Ms Chowdhury, also managing director of Berger Paints Bangladesh.
Sunday's programme was presided over by CMJF President SM Golam Samdani Bhuiyan and conducted by its General Secretary Abu Ali.
Nearly 200 multinational companies have been doing business in Bangladesh for a long period but most of them are yet to get listed in the stock market.
Only 13 companies are in the equity market.
To increase the depth of the market, the regulator must draw well-performing local companies and multinational organisations to the market, said Ms Chowdhury.
"We are also working with the securities regulator to identify the barriers that prevent good and multinational corporations from going public."
Ms Chowdhury said that subsidiaries of Berger would be listed if the board of directors gave their consent.
Presently, Berger Paints Bangladesh has five subsidiaries and associate organisations, including Berger Tech Consulting, a next-generation technology solutions and services company; and Jenson & Nicholson (Bangladesh).
Berger is one of the oldest names in the paint industry and the country's major specialty paints business, with a 50 per cent market share.
"Berger has invested more in technology and research & development (R&D), innovation and product development than any other paint manufacturers, which keeps Berger far ahead of its competitors," said Ms Chowdhury.
Responding to a query, she said corruption does not happen without the blessing of the regulatory bodies. "Those, who commit corruption, should be punished."
Ms Chowdhury proposed supporting the Bangladesh Securities and Exchange Commission (BSEC) in physical inspections of the factories of listed companies.
The BAPLC is the apex body of the companies listed on the stock exchanges.
"We have expertise across the industries. If needed, we will form a panel and help the regulatory bodies to visit companies' factories to examine operational status," said Ms Chowdhury.
Replying to another query, she said many family-owned companies were unwilling to go public to avoid questions from the regulatory bodies. Also, many companies are not willing to comply with the obligations tied to good corporate governance and disclosure of financial results.
Fresh investments have shrunk in the last few years. Businesses suffered a lot due to the Covid-19 in 2020 and the start of Russia-Ukraine war in 2022.
"We need fiscal policy as a way to attract investment as well as infrastructure development," said Ms Chowdhury, adding that "If we compare with other countries, we will see that their lead time is very short. But the condition of our roads is beyond words.
"Our supply chain must be improved to the global standards. Investors want better infrastructure in Bangladesh compared to the competing countries.
On VAT and supplementary duties, she said it would not be right to increase supplementary duties, including port charges, at the moment.
"Businesses will not be able to bear any kind of inflationary pressure. We from the association are strongly protesting against the increase in duties."
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