The government has decided to reserve 25 percent primary shares in initial public offerings (IPO) for non-resident Bangladeshis (NRB) at the NRB banks to attract more investments from them.
Prime Minister Sheikh Hasina instructed the authorities concerned in this regard at the first meeting of the national steering committee on Expatriates' Welfare and Overseas Employment on August 25.
NRB Bank Ltd, NRB Global Bank Ltd, NRB Commercial Bank Ltd and the Probashi Kallyan Bank are on the list to offer the benefit to the expatriate Bangladeshis.
Currently, Bangladesh Securities and Exchange Commission's (BSEC) existing regulations secure a 10 percent quota for the NRB investors in each IPO of listed companies.
The IPO in Bangladesh is believed to be a safer investment with a potential of higher returns compared to that of the secondary market investments.
The market records prove that investors, who receive primary shares in IPOs, can enjoy a huge gain within a very short period of time.
Like resident individuals, non-resident individuals also enjoy a 10 percent rebate on annual income tax based on their investments in listed securities at stock market.
Besides, they get a 10 percent discount while applying for primary shares offered in IPOs under book building method.
They also do not have to pay any tax on capital gains from listed securities.
All these incentives are being provided to the expatriate Bangladeshis to encourage them in investing into the capital market of the country, as the major portion of the remittance is not invested in industrialization or in local stock market.
According to a Bangladesh Bureau of Statistics (BBS) survey in 2014, around 75 percent of remittance is not invested in the sectors.
Government data suggests that in last 10 years, almost 60 lakh of Bangladeshi have joined the global labour markets.
The amount of remittance was over $15.5 billion in 2018 while it was $10.5 billion till July this year.
It can cross $18 billion by the end of 2019, hope the analysts.
Now, this remittance is rather increasing land prices across the country, as 17 percent of the NRBs' incomes are spent on buying land properties only. About five percent of their incomes is spent to buy consumer durables, according to the BSS survey.
So, only three percent is left there for investments.
Around 78 percent of the families of expatriate Bangladeshis solely depend on the single income source.
After meeting all the family expenditures, they do not have much for savings as well as investing into businesses, suggests the survey.
Lack of diversified investment tools is another significant reason behind the lower rate of remittance investment in the economic development process, according to experts.
Besides, there are allegations that NRB investors have experienced losses and sufferings in some ventures with some listed companies like United Airways Bangladesh Ltd.
A number of NRB investors have been complaining that they are fraudulently treated as investors in Dhaka Regency Hotel also.
However, Khairul Bashar Abu Taher Mohammad, managing director at MTB Capital Ltd and also the secretary general of Bangladesh Marchant Bankers Association, welcomes the government decision, as it will attract more NRBs to the capital market.