Wednesday, 1 February, 2023

Commodity exchange to curb over-invoicing, under-invoicing

  • Sun Online Desk
  • 6th December, 2022 08:27:53 PM
  • Print news

Bangladesh Securities and Exchange Commission (BSEC) Chairman Prof Shibli Rubayat Ul Islam on Monday said the introduction of commodity exchange will reduce the scope for under-invoicing and over-invoicing. 

“We are working on introducing commodity exchange in the country. With the introduction of commodity exchange, it will be possible to analyseboth the local and international markets while staying inside the country," he explained.

The BSEC Chairman was speaking at a seminar titled “The problems and potentials of capital market in Bangladesh” as the chief guest, organised by the Economic Reporters Forum (ERF) at its Paltan office in the capital.

BSEC Chairman said creating jobs is one of the major problems facing the country. "We were working hard to find suitable workers for better paying jobs, but suddenly the war began, harming the world economy," he noted.

He said that as a result of the war, the world’s second largest gas and fuel oil producer has halted its supply. The country which supplies basic foods to other countries has also been involved in war. This impacts other European nations as well.

In the event of an impact on fuel oil, the global economy is affected. As a result of the shock following the start of the war, Bangladesh had to suffer from load shedding despite there being surplus electricity, he added.

The country had been self-sufficient in food, but its people have been asked to remain prepared for future challenges.

Presided over by ERF President Sharmeen Rinvy, Dhaka Stock Exchange (DSE) Chairman Md Eunusur Rahman, Chittagong Stock Exchange (CSE) Chairman Asif Ibrahim, Bangladesh Association of Publicly Listed Companies (BAPLC) former President Azam J Chowdhury and Bangladesh Merchant Bankers Association (BMBA) vice president

 Md Moniruzzaman spoke on the occasion. ERF general secretary SM Rashedul Islam moderated the seminar.

The BSEC Chairman noted that many big incidents took place across the globe over the last few months that were beyond the imagination of most people. The British Prime Minister has been changed three times, leaders of four to five countries have also changed. "But we have not faced any such situation."

Turning to the capital market situation, Shibli said that Bangladesh did not receive such shock which it was supposed to experience owing to the global situation.

He said across the globe, institutional investors occupy about 80 to 90 percent of the capital market, but the situation is completely reversed here, since around 80 percent of investors are small investors.

"In order to protect small investors, we have taken a temporary measure through a floor price. However, it is not a permanent solution," he said.

As the BSEC Chairman explained, if a commodity exchange is launched in Bangladesh, then anyone can find out what the price of rice is in Ghana while living in Bangladesh as well as which countries are interested in Bangladeshi apparel items.

“We will be able to see both the international and local markets from a commodity exchange, which will eliminate under-invoicing and over-invoicing,” he said.

While highlighting the various challenges of the capital market, DSE Chairman Eunusur Rahman noted that the country has very few knowledgeable investors.

"Our investment decisions are often based on advice from others. This is a big challenge for us, since we do not have a large number of institutional investors or skilled workers."

Noting that the policy support in the country is still insufficient, he said that there is still cap on the bank interest rates which means that anyone can take loan from banks at 9 percent interest rate.

In contrast, large companies can borrow from banks at 8 percent interest rates, according to the DSE chairman, adding that for this they might not go to the capital markets since they would have to give dividends at a higher rate.

CSE Chairman Asif Ibrahim said that there is no commodity exchange in Bangladesh considering the overall size of the economy. “We’ll ink an agreement very soon with the Indian multi commodity exchange. We’ve already sent the draft rules to BSEC in this regard. If we get approval, then hopefully we’ll be able to launch here commodity exchange,”

Former ERF president Sultan Mahmud and general secretary Ziaur Rahman spoke, among others, on the occasion.