To bring change in the financial sector, ICB must change itself first

The Investment Corporation of Bangladesh (ICB) was established with a noble and ambitious vision: "To encourage and broaden the base of investments, to develop the capital market, to mobilise savings." For any nation aspiring to economic maturity, these are the right pillars. 

Yet, decades later, a stark and uncomfortable truth must be acknowledged: The ICB has not only failed to live up to its mandate but has become an active impediment to the vibrant financial ecosystem it was meant to create. Its manner of functioning and opaque objectives embody the inertia that modern finance abhors.

The corporation, conceived as a catalyst, has instead morphed into a bureaucratic bottleneck. Rather than being run by seasoned investment professionals, it is largely managed by civil servants on deputation—individuals who, while accomplished in their respective fields, are often overburdened by multiple responsibilities and lack the vision, practical experience, and market-driven acumen required for sophisticated capital allocation. 

This governance deficit is the original sin from which all other failures flow.

The consequences are twofold. First, the ICB has inadvertently stifled the development of private capital. Its dominant, state-backed presence has crowded out private fund managers, creating a non-competitive environment where innovation and performance are not the principal currencies. Why would a budding asset management firm compete against a state entity that is not driven primarily by profit? 

Second, and more damagingly, this lack of expertise and accountability has fostered an environment ripe for the "fixing" of deals and the systematic looting of state money through market manipulation—allegations whispered incessantly in financial circles. The institution meant to build trust has instead become a symbol of its erosion, captured by vested interests and operating as a cesspit of corrupt syndicates manipulating the market.

So, where do we, as a nation, go from here? The solution lies not in tinkering with the ICB but in embracing a fundamental strategic pivot: from a state-led model to one that fosters a vibrant, competitive private capital market—and, dare one say, doing away with the ICB altogether. Recent performance indicators reveal a failure so profound it appears beyond resuscitation.

The global blueprint — ignored

The proof of concept for this shift is visible everywhere except Bangladesh. Our most brilliant financial minds are not languishing; they are thriving. Bangladeshis are key players in leading investment banks, private equity giants, and quantitative hedge funds across global hubs such as New York, London, and Singapore. The problem is not a lack of talent—it is the domestic ecosystem, which remains actively hostile to it.

Globally, the engines of growth are Private Equity and Venture Capital, which provide patient, strategic capital to businesses, and Hedge Funds, which supply liquidity and advanced risk-management capabilities. 

Alternative finance and capital markets have grown so dramatically over the past two decades that they now compete vigorously with banks—and increasingly with each other. This competition fuels innovation and expansion, ensuring that entrepreneurs have access to plentiful, competitive, and often cheaper capital.

More importantly, the game has been fundamentally transformed by technology. Firms such as Renaissance Technologies have demonstrated that modern markets are dominated by algorithms and automated systems, not just human intuition. To still be debating manual trading and human-driven analysis as the pinnacle of sophistication is akin to using a bullock cart on a Formula One track. We are not merely behind; we are fast asleep—a slumber that is costing us dearly.

The regulatory spanners

A core reason for this stagnation lies in our regulatory and tax framework. The Bangladesh Securities and Exchange Commission (BSEC) and the National Board of Revenue (NBR) too often operate as gatekeepers seeking rents, rather than gardeners nurturing growth. Their instinct is to tax and regulate every visible transaction, with little appreciation for the delicate nuances that make modern finance function.

Consider the case of Blackstone, one of the world's largest private equity firms. It was once structured as a partnership, where it was taxed nominally only on its management fee—typically 2% of assets. 

The vast majority of its profits, the "carried interest" earned upon successful exits, was taxed as long-term capital gains. This nuanced distinction is essential for attracting large, patient capital. Today, Blackstone is a publicly listed entity in the US and manages nearly $1 trillion in assets, with no shortage of global investors.

In Bangladesh, our blunt tax instruments would likely impose a corporate tax on the entire fund, rendering such a globally competitive structure unviable. The BSEC similarly applies a one-size-fits-all regulatory framework, failing to create tailored, enabling rules for different investment vehicles. We cannot hope to cultivate future Blackstones if our regulatory soil is toxic to them.

Awakening

It is time for a coordinated effort to revive our capital market.

The ICB must either be drastically restructured—with the authority to hire global talent and operate on commercial terms—or privatised entirely and replaced with a wholly new institution. Its current role as a state-directed behemoth must end.

We must actively create incentives, both financial and regulatory, to entice our world-class financial diaspora to return home, lead, and seed new investment vehicles.

The BSEC must develop bespoke rules for PE, VC, and hedge funds. The NBR must introduce a nuanced tax code that differentiates clearly between fee income and capital gains, providing the clarity and incentives required for long-term, patient capital.

We must encourage and regulate algorithmic trading to improve market efficiency, depth, and transparency. Above all, constant state intervention must end—both the paternalistic oversight and the reckless, distortionary injections of failed, misallocated capital.

The task ahead is not one of "catching up." That implies a linear path we can simply follow. The required shift is more profound: a fundamental awakening to the realities of 21st-century finance. It is a choice between clinging to a failed, state-centric past and unlocking the immense, dormant potential of Bangladeshi talent and private enterprise.

The world is moving at the speed of light. It is time we opened our eyes.

Sketch: TBS

Barrister Muhammad Zeeshan Mohsen is an advocate of the Supreme Court of Bangladesh and a partner at AAZ & Partners.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.