Use stockmarket to fund budget deficit: DSE

The Dhaka Stock Exchange (DSE) yesterday advised the government to utilise the capital market to finance a portion of the large budget deficit and a funding source for large infrastructure projects such as the Padma Bridge.
“Offload shares of state-owned enterprises in the capital market and raise money that you can utilise for infrastructure projects as well as reducing the huge budget deficit,” Rakibur Rahman, president of the DSE, asked the government, speaking from a post-budget press conference.
“All the government needs is a positive attitude towards the capital market,” he added.
Finance Minister AMA Muhith has proposed allocating Tk 6,852 crore in the upcoming fiscal year's budget for construction of the Padma Bridge. Meanwhile, the budget deficit in fiscal 2013-14 has been estimated to be Tk 55,032 crore.
The premier bourse also requested the government to withdraw its plan of raising corporate tax to 40 percent from 35 percent for publicly traded mobile phone operators. Grameenphone is the lone listed firm in the sector, at present.
“Some telecom companies including the state-run Teletalk are planning to be listed in the stockmarket, but this will put them off.”
The DSE chief however applauded the government for announcing several budgetary provisions that he thought will help towards stabilisation of the market.
The finance minister on Thursday announced tax removal on share premium, tax rebate on private sector mutual fund investments, withdrawal of tax at source on income from bond sale, increase in investment ceiling and tax rebate rate, and continuation of tax exemption on capital gains of individual investors.
The proposals, however, failed to prop up stock-trading. The share price indices and turnover dropped heavily yesterday.
DSEX, the benchmark index of the DSE, went down by 145.31 points, or 3.6 percent, to 3,882.81 points, while the single-day turnover fell 31 percent from the previous session to Tk 431.74 crore.
Rahman also urged the government to reduce advance income tax, commonly known as brokerage commission, from existing 0.05 percent to 0.015 percent.
“We also requested the finance minister to clarify about the investment of undisclosed money in the stockmarket, since he mentioned in the budget speech that all existing facilities for the share market will continue into the next fiscal year.”
Earlier on Saturday, the Chittagong Stock Exchange (CSE) requested the government to increase the ceiling of tax-free dividend income to Tk 50,000 from proposed Tk 10,000.
Speaking at a press briefing, CSE President Al Maruf Khan said the individual investors will be benefited.
“Investors will also be encouraged to invest more in private sector mutual funds due to the tax rebate facility.”
Like the DSE president, Khan said the increase in corporate tax for a publicly traded mobile phone operator and tobacco companies will reduce their ability to extend dividends to shareholders.

Referring to an upward trend in foreign investment in the country's stockmarket, he requested the government to prepare specific guidelines on foreign investment, also known as portfolio investment.
He also urged the government to involve the stockmarket in big projects under the public-private partnership scheme.
Commenting on the continued provision to legalise black money via the stockmarket, Khan said it would not have any impact as the market is yet to benefit from it.