For sustainable financing, the development of the stock market and the bond market is crucial
Bangladesh must develop a vibrant capital market – that includes debt and other securities along with equities – to facilitate alternative sources of financing for achieving the sustainable development goals (SDGs), said experts at a seminar on Thursday.
The International Chamber of Commerce, Bangladesh (ICC Bangladesh) organised the seminar "Innovative Finance to Achieve Inclusive and Sustainable Business and Investment; Capital Market Development, Blended Finance and FinTech", in the closing day of the three-day Asia-Pacific Conference on Financing Inclusive and Sustainable Development.
Dr AB Mirza Azizul Islam, former caretaker government adviser, said that the vulnerability in the banking sector shows that banks should not finance the long-term projects that created a mismatch and put pressure on liquidity.
For sustainable financing, the development of the stock market and bond market is crucial and the government should prioritise the issue, said Mirza Aziz, also the former chairman of Bangladesh Securities and Exchange Commission.
But, unfortunately, the country's capital market is not performing well despite its essentiality, he maintained.
"In Bangladesh, we need to look beyond bank loans as a source of finance and the bond market can be the solution," said Alamgir Morshed, managing director and head of global banking of Standard Chartered Bank.
Also, he called for more bond issuance from the private sector.
"We have to acknowledge that financing requirement for growth cannot be fulfilled domestically without the support of bond and stock markets," Alamgir said, adding that National Board of Revenue, Bangladesh Bank, stock exchanges, securities regulator and other stakeholders must be on the same page for a functional bond market in the country.
Former Dhaka Stock Exchange (DSE) managing Director KAM Majedur Rahman said that the capital market failed to contribute to the country's SDGs.
In the last five years, the DSE has formed platforms for bond trading, including capital raising board for small companies and a separate platform for alternate trading, Majedur elaborated.
Unfortunately, those initiatives are yet to bear fruits, thanks to lack of assistance from different regulatory regimes, rules and regulations, and the unwillingness of different stakeholders to invest in the bond market, he explained.
Wendy Jo Werner, country manager of the International Finance Corporation, said that the bond market should be developed to lessen pressure on the banks' liquidity.
She said that if the government securities were traded on the country's market, the local and foreign investors would have a clear picture of the bond market.
Nguyen Phi Van, chairwoman of Viet Nam Angel Network of Ministry of Science and Technology of Viet Nam, said no one could underestimate the participation of the private sector in achieving SDGs.
Venture capital and impact investment can play a role in accelerating SMEs and start-ups, and Bangladesh needs a supportive eco-system and environment, she added.