The Dhaka Stock Exchange has suggested that the government should involve individual investors in the planned public-private partnership budget through raising funds from the stock market for development projects.
‘Public-private partnership would be the best mechanism to collect finances instead of foreign aids,’ DSE president Md Rakibur Rahman told a press briefing at the DSE building in the Dhaka city on Wednesday.
He said, ‘The government should involve the stock market in raising funds for the projects to be implemented under the planned PPP budget for the betterment of the country’s capital market.’
The DSE chief suggested the government to give up the tendency of bank-based economy and make all-out effort to mobilise investment in the stock markets.
According to media reports, the government is likely to earmark more than Tk 5,000 crore under a new head styled ‘Public-Private Partnership’ in the next budget to involve the private sector in implementing development projects covering education and health services and building infrastructures such as power, energy, ports, roads, highways, expressways and elevated expressways.
The DSE, the country’s premier bourse, also suggested a number of other fiscal measures to revitalise and stabilise the country’s stock market.
‘We propose that the government in the next national budget reduce the corporate tax for the listed banks, insurance companies and non-bank financial institutions to 35 per cent from the existing 45 per cent,’ the DSE president said.
He said corporate tax for the other listed companies should be 25 per cent from the existing 27.5 per cent.
‘If corporate tax for listed companies is lowered, their capacity in giving cash dividends will be enhanced and thus benefit the stock market,’ he said.
The bourses also propose that 10 per cent tax at source on dividend income should be final, he said, adding, ‘Currently, shareholders are facing double taxation on their dividend income as their income is being taxed at company and individual phases.’
In the case of dividend income by institutions, the bourse proposes that the tax rate should be 15 per cent from the existing 20 per cent, the DSE president said.
He said, ‘The DSE also proposes that the government should allow investment of undisclosed money into the share market.’
It would help bring huge amount of undisclosed money into the formal economy through the capital market, said the DSE president.
He said, ‘The DSE proposes that the government raise a portion of the funds from the capital market for its large projects including Padma Bridge and Jamuna Multipurpose Bridge.’
The DSE also suggested the government to withdraw the condition for mobile phone operator companies that they have to offload 10 per cent of their paid-up capitals to avail the tax rebate.
‘We have suggested for the withdrawal of the condition as other companies except banks, insurance companies and non-bank financial institutions enjoy tax rebate facility by offloading any amount of shares of their paid-up capitals,’ Rakibur said.
The existing corporate tax for mobile phone operators is 45 per cent. If they become publicly traded companies by offloading 10 per cent of their paid up capitals, corporate tax for them is 35 per cent, he said.
‘We think the tax-exemption ceiling on personal-level investment in the capital market should be doubled to Tk 10,00,000 which is now Tk 5,00,000,’ the DSE chief said.
Source: The Daily New Age, 21 May 2009