Public servants to be barred from stocks investment

From New Age
The prime minister, Sheikh Hasina, on Monday asked the authorities concerned to issue an official order reminding the public servants, including members of the armed forces, that they could not invest in any profitable business, including in share market.

The prime minister, while presiding over the weekly meeting of the cabinet at the secretariat, said the government officials and employees as per the service conduct rules could not engage themselves in the capital market, which fluctuates frequently, or any other profitable business, a cabinet member told New Age.

The minister said that Sheikh Hasina had asked the authorities to strictly implement the service rules in this regard.

The order came amid widespread allegations that a large number of public servants, including military officers, had made huge investments in the share market in violation of their service conduct rules. It has been alleged that many such officers and employees remain busy monitoring the capital market online and trading even in office hours.

The cabinet approved the draft amendments to the income tax law, proposing tax waiver for foreign investors and mutual fund income and reduction of tax on brokerage commission to boost the stock market, facing a serious crisis for continuous depression for last one year.

‘No government servant shall speculate in investments. For the purpose of this sub-rule the habitual purchase and sale of securities of notoriously fluctuating value shall be deemed to be speculation in investments,’ reads Section 15 of the Government Servants (Conduct) Rules 1979.

It says that no government servant shall make any investment the value of which is likely to be affected by some events of which information is available to him as a government servant and is not equally available to the general public.

‘The authorities have been asked to issue a circular ordering that no public servant either in civil service or in military can invest in any profitable business like share market which fluctuates frequently,’ the prime minister’s press secretary Abul Kalam Azad told reporters after the meeting at the secretariat.

He said that the official order would be made available soon with immediate effect.

The amendments of the tax law proposed reduction in tax at source on brokerage commission from 0.10 per cent to 0.05 per cent and waiving 10 per cent tax on mutual fund income to boost up the crisis-ridden stock market, the press secretary added..

The government imposed tax on foreigners’ investment in the capital market during the 2011-12 fiscal budget, but such investment was free of taxes before the current fiscal.

Short-sighted and uncoordinated regulatory policies reportedly helped create the stocks bubble and its riotous burst that had remained in the centre of the government’s economic mismanagement throughout past three years.

Sudden investment inflows, mostly from the banking sector, gave rise to a boom in 2010. Experts said use of funds by the alleged ‘market cartels’ had played a key role in generating a monstrous bull run, the price of which had to be paid later by the retail investors.

Since the beginning of 2011 to its last trading day on December 29, the general index of the Dhaka Stock Exchange dropped by 37 per cent of its value losing 3,032 points.