Finance Minister AMA Muhith on Thursday said the stock market will be the source of funds for investment to develop Bangladesh’s economy, as the government is going to provide policy support in the upcoming budget.
The minister made the comment while addressing a seminar on financing for long term investment in Bangladesh, jointly organized by the Bangladesh Securities and Exchange Commission (BSEC), Finance Ministry and World Bank in Dhaka.
“For the economic development of the country, we have to increase long term investment. The stock market will be the source of this investment,” Muhith said.
Although some of the commercial banks were trying to provide funds for long term investment, this is not their duty, the finance minister added.
“In the upcoming budget, there will be policy support to make the stock market a source of long term investment,” the minister further said, adding that Prime Minister Sheikh Hasina was working in this regard.
“We will call some of the players in this field to bring life to the long term capital market,” he said.
Although BSEC has been working hard, they are yet to become consistent in providing long term financing, Muhith added.
Meanwhile, BSEC Chairman M Khairul Hossain said it was concerning that the capital market in the country was retail investor driven.
He also said that there should be co-ordination between regulators in making any decision.
Khairul added that financial incentives were required make the bond market in the Bangladesh vibrant.
Finance Ministry Senior Secretary (Financial Institution) Eunusur Rahman said: “Our financial sector is mostly dominated by banks, who are doing 90% of their business in short term loans as they cannot provide loans beyond the ceiling of five to six years maturity.”
He added that the next option for long term financing, the capital market, was also failing because it was equity based and a small cap stock market which also did not have the required number of products.
Bangladesh Bank Governor Fazle Kabir said: “We need to widen the policy structure and promote private equity, debt equity, and derivatives in the capital market. There are many challenges to developing the bond market for long term investment.”
National Board of Revenue (NBR) Chairman Md Mosharraf Hossain Bhuiyan said Bangladesh really needs long term financing, as the country has become eligible for LDC graduation and the investment will be valuable for sustaining economic growth.
“We have to implement a well-managed and combined program to make fiscal and monetary policy changes to attract investment,” he added.
International Finance Corporation (IFC) Bangladesh Country Manager Wendy Jo Werner said the country needs to develop the market to encourage long term financing.
“We would like to introduce all kinds of IFC long term financing available in Bangladesh,” she added.
She also praised the Dhaka Stock Exchange and BSEC for signing an agreement with a strategic investor, as this would strengthen the capital market and make it a more effective source of long term financing.