Experts blame policymakers for undisclosed money whitening

Experts and market insiders have blamed some of the policymakers and key stakeholders, who prescribed and demanded the facility of whitening undisclosed money through investing in stock market, although meagre amount of such money is invested.

They said some policymakers and stakeholders demanded the opportunity of whitening undisclosed money in the stock market in the name of stabilising it.

However, in lieu of being stabilised the market is rather experiencing price manipulation and volatility, following confusion regarding the announcement and clarification of the undisclosed money whitening facility, they added.

Their comments came after the Dhaka Stock Exchange (DSE) Monday lost 3.33 per cent or 167.68 points, mainly due to the announcement that the government would allow disclosure of only legally earned yet untaxed money for whitening through investment in the share market by paying 10 per cent tax.

The aggrieved investors Monday staged demonstration in front of the DSE, following the flagging trend of the market.

Except the tenure of the last Army-backed caretaker government, the country's stock market so far received very insignificant amount of undisclosed money.

In the fiscal year 2010-11, a total of Tk 4.23 billion undisclosed money was invested in the market, whereas the DSE's average daily turnover in value term during the year was Tk 6.64 billion. In the year 2010, the DSE's average daily turnover value was Tk 16.83 billion.

In the fiscal year 2008-09, Tk 7.82 billion undisclosed money was invested in the stock market. The amount was Tk 88.95 billion in the fiscal 2007-08, Tk 46.03 billion in 2005-06, Tk 10 billion in 2003-04, and Tk 4.0 billion in the fiscal 2001-02.

"It's a game, which is ensued every year before the announcement of the national budget," Yawer Sayeed, managing director of AIMS of Bangladesh, told the FE.

He said some of the policymakers and stakeholders put forward the demand of whitening undisclosed money through investment in the stock market.

"Such people push the stock market forward, creating the mirage of whitening the undisclosed money, whereas every year an insignificant amount of such money comes here."

"But ultimately the market suffers due to price distortion, following the revisions of or clarifications on the facility of whitening the undisclosed money," Mr Sayeed said.

He said the market can never be restored, riding on the facility of whitening the undisclosed money, as those who own undisclosed money know the ways of spending such money.

"Some policymakers and stakeholders made the issue of undisclosed money very shameful for the nation. Some policymakers, who urged for the facility of whitening undisclosed money, are responsible for price distortion in the market," Mr Sayeed added.

Former chairman of the Securities and Exchange Commission (SEC) Faruq Ahmad Siddiqi said the government will have to take the responsibility for its inconsistent policy regarding undisclosed money.

"The government once says that undisclosed money will not be allowed, and on another occasion it paves the way for investment of this money. On the other hand, the NBR once says that it will not make questions about undisclosed money, although other agencies may raise questions regarding the source of such money. As a result, ultimately confusion is created, affecting the market," Mr Siddiqi told the FE.

He said those who make lobbying with the apex authorities, seeking the opportunity of whitening the undisclosed money, are also responsible for price distortion in the stock market.

"From the very beginning, the government should have upheld its strict stance regarding the disapproval of whitening undisclosed money in the stock market," Mr Siddiqi added.

President of the Chittagong Stock Exchange (CSE) Al Maruf Khan said an insignificant amount of undisclosed money is invested in the stock market.

"But every year a debate relating to undisclosed money whitening is created," Mr Khan added. 


News Source: Financial Express