Transforming capital market: A call for decisive action

Despite over a decade of investing in Bangladesh's stock market, I have suffered a 40 percent loss even with a strategy focused on blue-chip shares since 2012. This experience highlights the structural issues plaguing our capital market -- low liquidity, lack of depth, and eroding investor confidence. Addressing these challenges requires bold, immediate measures grounded in global best practices tailored to local realities.

Offloading shares from public limited companies offers significant opportunities to revitalise the capital market. A 2011 directive to offload shares from 23 public entities has seen limited success, but revisiting and expanding this effort could strengthen the market and attract new investments. Companies like Bangladesh Submarine Cable Company, Eastern Cables, Titas Gas, Desco, and Usmania Glass are already listed while others such as Biman Bangladesh, Bangladesh Telecommunication Company, Bangladesh Data Center Company and Teletalk are well-positioned for entry.

Accelerating this process would create broader investment options and capture interest from local and foreign investors. A related issue is the limited public float in many listed companies, which restricts market liquidity and deters broader participation. Increasing public float to the regulatory minimum of 10 percent can be quickly achieved with regulatory support. Such measures would enhance liquidity, improve price discovery, and boost investor confidence.

The government's significant stakes in multinational corporations also present untapped potential. Strategic offloading of portions of these holdings, particularly in high-performing companies, could attract substantial institutional investment and bring dynamism to the market, signalling confidence to global investors.

Such measures have proven successful in other countries. For example, Vietnam's strategy of offloading government shares in state-owned enterprises resulted in significant foreign investment and enhanced market depth. Similarly, India's efforts to enforce public float compliance and strategically divest government holdings have transformed its capital market into one of the most vibrant in the region. Bangladesh can learn from these experiences to implement policies that address immediate market concerns and set the stage for sustainable growth.

In addition to these immediate actions, complementary reforms can further strengthen the capital market. Simplifying regulatory procedures and incentivising new listings can encourage more companies to go public. Investing in digital infrastructure for trading and market access, as seen in Singapore, can make the market more efficient and attractive to investors. Finally, introducing targeted incentives for retail investors, such as tax benefits and revamping mutual funds, could expand the investor base and drive participation.

Among other measures, the NBR and BSEC could explore incentivising major conglomerates such as PHP, TK, Abul Khair, Ispahani, Nasir, Akij and other multinationals through tax holidays or reduced tax rates as low as 10 percent for the first three years. This approach would encourage their expansion and investments. Additionally, a mechanism could be developed to enable greenfield projects, particularly in infrastructure, IT, and start-ups, to raise funds from the capital market under specific categories. These steps would not only attract investment but also foster innovation, enhance industrial growth, and strengthen Bangladesh's economic infrastructure.

The time to act is now. These measures represent a low-hanging fruit that can be implemented quickly to create immediate impact. By prioritising the offloading of shares in public and multinational companies, enforcing public float compliance and adopting global best practices, we can set Bangladesh's capital market on a path towards growth and resilience. It is essential to take decisive steps to build investor confidence and position the market as a competitive destination for regional capital. With collective will and focused efforts, the capital market can become a powerful engine for the country's economic progress.

The author is president of the Institute of Cost and Management Accountants of Bangladesh and founder of BuildCon Consultancies Ltd