'Visible changes in capital market expected within 2-3 months': Tanvir Shahriar Ghani

Since taking office, the current government has taken various initiatives to revitalise the country's capital market.

In an interview with The Business Standard, Prime Minister's Special Assistant for Investment and Capital Market Affairs Tanvir Shahriar Ghani outlined the measures and talked about the country's overall investment environment.

Infographic: TBS

Ghani expressed optimism that visible positive changes will emerge in the capital market within the next two to three months if these initiatives are implemented.

He said Bangladesh's capital market is heavily dependent on retail investors, while institutional investors account for a very small share. As a result, even minor developments can trigger panic in the market and lead to increased selling pressure.

"We are planning measures to increase the participation of foreign institutional investors and expand the involvement of domestic institutional investors. Taken together, we are working to build a better capital market in the future," he said.

Following the new government's assumption of office in February, the capital market returned to an upward trend, with significant changes in both the market index and trading activity.

Nearly four months after the new government took office, changes were made to the top leadership of the Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator.

'Maximum focus on liquidity and institutional investor depth'

Tanvir Shahriar Ghani said the country's capital market faces numerous problems and obstacles at almost every stage.

"Steps have already been taken to remove these obstacles. An efficient team at BSEC is working on them. The finance ministry and Bangladesh Bank are also providing various forms of support. Everything will gradually become visible.

"Our maximum focus is on two areas: first, liquidity, and second, institutional investor depth," he said

"If we can address these two issues, many problems will be reduced, although it will take time," he added.

Ghani said Bangladeshi companies are highly leveraged, with some having negative equity. He said he has prepared a three-year action plan to help convert this negative equity into positive equity.

Ghani pointed out that the plan is not limited to any particular company but will apply to companies across all sectors.

Highly leveraged companies will be able to raise capital through preferred shares, warrants or initial public offerings (IPOs), reducing negative equity and returning to financial stability, he said.

He expects the capital market to grow exponentially.

"Our objectives are to bring foreign fund managers into the capital market and dramatically shift the composition of the investor base towards institutional investors," he said.

He also said the capital market would see greater product diversification, with derivatives and other products to be introduced. Work is also underway on a commodity exchange.

'Long-term projects must come to the capital market'

Ghani said there is currently a major mismatch in the country's bank lending system.

"Banks take deposits with one-year maturities but provide loans for projects with maturities of 12 years or more. This is a major mismatch.

"We are working to bring changes to this. Bangladesh Bank is also working on it. If long-term projects need to raise capital, they will have to come to the capital market," he said.

He said legal changes were being made to bring strong and fundamentally sound companies to the capital market.

"Experienced people have been appointed to the current commission. They are market-friendly and are continuously working on what can be done for the capital market," he said.

He said a lack of confidence remains a major issue in the country's capital market.

"If the measures the government is taking to develop the capital market can be implemented, confidence will increase," he said.

Previously, it took 18-24 months to approve an IPO. This will now be reduced to two to three months, he said.

'Investment-friendly environment essential'

Ghani said attracting foreign investment requires an investment-friendly environment, but there are numerous obstacles to creating such an environment.

"The government is taking initiatives to resolve these problems.

"To improve the investment environment, steps are being taken to address legal issues and obstacles related to the National Board of Revenue (NBR) and Bangladesh Bank. There will be significant improvements in these areas in the future," he said.

"The new government is extremely focused on making all organs of the government function properly and on trying to do the right things. If we can do these things, Bangladesh will be a miracle country, and a $1 trillion economy will really be possible," he said.

Ghani added that the government is taking initiatives every day to create a more investment-friendly environment. Discussions are also underway on which sectors should receive incentives and which incentives should be reduced so that investment in the country can increase.