“Bond Market May Address Long-Term Financing Gaps in Bangladesh Banking Sector”


| Update:
Nov. 01, 2021, 9:59 a.m.

Bangladesh can no longer rely solely on budget money or bank capital to finance long-term projects, including infrastructure development, an investment conference concluded on Sunday.

Participants called for creating a vibrant bond market to help take the country’s infrastructure development to the next level after massive public sector funding for the implementation of mega-projects in recent times.

During the webinar on the 6th day of the ‘Bangladesh Trade and Investment Summit 2021’, current and former businessmen, investors and officials observed that Bangladesh would need multiple windows to fund projects of development with the participation of private actors.

Salman Fazlur Rahman, the Prime Minister’s investment and private industry adviser, observed that the finance market does not function “like a perfect market” because the Taka is not fully convertible under a controlled exchange rate regime.

“I don’t think we’ll get Take convertible very soon, (but) at the end of the day we will have to (make it convertible), if we are to become a middle-income country,†he told the webinar on. Bridging the infrastructure financing gap through credit solutions in Bangladesh â€, jointly organized by the Ministry of Commerce and the Dhaka Chamber of Commerce and Industry (DCCI).

Mr. Salman Rahman pointed to the “fundamental distortion” of the country’s banking system when financing long-term projects. “We use short-term deposits for long-term projects,†he said, addressing the main guest.

The entrepreneur-turned-politician mentioned that the central bank has a difference of opinion with the securities regulator over banks’ exposure to the capital market, which he added involves the securities market. stocks and not a bond market.

Mr. Salman Rahman expressed his belief that a properly traded bond market can remedy banking sector defaults and also eliminate the differences between Bangladesh Bank and Bangladesh Securities and Exchange Commission.

DCCI President Rizwan Rahman said in his opening remarks that the country’s infrastructure development depended heavily on public sector funding, which hovers around 4.0% of GDP, against 5,010% of the rates maintained by neighboring economies.

“The participation of private investment is essential to accelerate infrastructure development,†he said.

Special guest Md. Nojibur Rahman, former Principal Secretary to the Prime Minister and Chairman of the Capital Market Stabilization Fund, observed that there is a boom in infrastructure development in Bangladesh. “We need capital and we need long-term funding. National funding is not enough for this, â€he added.

He also mentioned that partnering with foreign entities such as Guarantco “now makes life easier”.

“The government’s political will for the private sector is very positive,†he said.

GuarantCo, which funds projects in low-income countries, funded a project called Technaf Solartech in Bangladesh worth US $ 13.5 million to generate 20 megawatt electricity with a dual financing solution. currency, said its managing director for Asia, Nishant Kumar. He added that they also provided a 100 percent US $ 25 million (Tk 2.1 billion) bond guarantee for a 7-year onshore bond to Pran Agro Ltd.

Yukiko Omura, President of GuarantCo, said that GuarantCo, a PIDG solutions provider, is in Bangladesh to help develop the local capital market and provide credit solutions to finance infrastructure projects that help drive growth. economic.

“We work throughout the project life cycle deploying grants, equity, long-term debt and guarantees, even in local currency,†said Andrew Bainbridge, President of PIDG.

Standard Chartered Bangladesh Managing Director Muhit Rahman explained that large infrastructure projects require funding over 12 to 15 years. “There are many opportunities for Bangladesh to benefit from foreign currency solutions,†he said, adding, “We need to focus on attracting business loans and bond investments. “

Dr Abul Kalam Azad, Executive Director, Bangladesh Bank, Ala Ahmad, Managing Director, MetLife Bangladesh, Ahsan Khan Chowdhury, Chairman and Managing Director, PRAN-RFL Group, and Nuher Latif Khan, Managing Director, Technaf Solartech also spoke on this occasion .

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