• Saturday, Jul 11, 2020
  • Last Update : 09:12 pm

'Brokerage houses paid wages despite no income amid Covid-19'

  • Published at 11:07 pm June 3rd, 2020
Shakil Rizvi -brokerage houses
Shakil Rizvi Courtesy

Director and former president of Dhaka Stock Exchange (DSE) Md Shakil Rizvi, in an interview with Dhaka Tribune's Niaz Mahmud, discuss the capital market, the upcoming national budget for the fiscal year 2020-21 and issues related to the ongoing Covid-19 crisis. Rizvi is also a former president of Dhaka Stock Exchange Brokers’ Association (DBA), a platform of trading right entitlement certificate (TREC) holders in DSE. Working in the capital market since 1987, he is also the managing director of Shakil Rizvi Stock Ltd.

How is Covid-19 affecting the country's stock market?

Due to the virus pandemic, the country's capital market was closed for two months. The rising growth of Dhaka Stock Exchange was stagnated for that period. This caused investors and stakeholder to fall in troubled times. For the last two months, brokerage houses have had to pay employee wages and office rent without any income. These resulted in companies facing major financial loss amid the crisis.  

What initiatives are needed now to strengthen the stock market?

Strong fundamental growth companies should be listed in the DSE mainboard. We should avoid listing weak fundamental companies and encourage long-term investors to stay.

Please tell us your major demands for the stock market in the upcoming national budget.

The difference in corporate income tax between publicly listed and unlisted companies is currently 10%. This difference should be increased to 15% so that more multinational companies and local blue-chip companies will be encouraged to be listed in DSE.

Currently, there is an Advance Income Tax (AIT) of Tk50 on each trading worth Tk100,000 in DSE. This should be changed to Tk15 per trading as it used to be before. This will improve the current state of the capital market.

Tax-free share dividend income ceiling should be increased to Tk2 lakh instead of Tk50,000. This opportunity will attract more long-term investors. During demutualization, it was said that the tax holiday will be five years. Instead, the tax holiday now is 3 years. This should be increased by two more years as agreed beforehand.

Even though exchanges, stockbrokers, stock dealers, CDBL and CCBL have been exempted from VAT, there are constantly complicated situations where misunderstanding and tensions occur regarding VAT. This confusion must be cleared for a smooth operation.

How will the coronavirus further affect the economy?

Bangladesh's emerging economy has fallen victim to the pandemic. The growth of export, remittance, stock market and private sector business is now hampered because of this.

At times of economic turmoil, usually, SME and startups are hit the worst. This will adversely affect job creation. As a result of this, government revenue collection will decrease significantly during this fiscal year.

How can the upcoming budget help businesses and the economy survive?

In order for the country’s industrialization business and trade to progress, the upcoming budget is extremely important. Industries and businesses need to advance in order to reduce unemployment. So new industries and businesses should be incentivized in this budget.

Businesses must also be given high priority instead of focusing on taxes. When massive industrialization and business firms are created, the benefit of the taxes will automatically reach the government.

Export-oriented sectors, especially readymade garment (RMG), are hit hard but there are new opportunities and product demands due to the coronavirus. 

What kind of support should the government offer in the budget to tap new opportunities?

Our government's focus on export-oriented industries should continue. The silver lining of this pandemic is the increase in RMG export where this opportunity must be put in good use. It is also important to diversify our RMG products.

Backward linkage industries also need to be strengthened. Currently, lead time in global export orders has minimized. Therefore, port-handling needs to be more efficient. In future, when more RMG export opportunities arise, the port infrastructure needs to improve and be efficient to meet those demands. Otherwise, we will miss this golden opportunity.

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