'We could invest and mobilise $5 billion in the next five years': IFC Regional Vice President, Asia and the Pacific

Riccardo Puliti – who oversees all investment and advisory operations of the International Finance Corporation across Asia and the Pacific – is focused on leveraging the World Bank Group to scale sustainable private sector-led growth by supporting innovative products and transformative technologies. 

His key priorities for the region lie in enhancing financial and digital inclusion for underserved communities, increasing climate financing, helping countries transition to cleaner sources of energy and bridging infrastructure gaps.

In a recent interview with The Business Standard, Riccardo Puliti, an Italian national fond of Bangladesh's mangoes, spoke about the international financial institution's role, ambitions and goals in the country. 

One of the key goals of the IFC is to increase the competitiveness and diversification of Bangladesh's industries. How do you think we can speed up this process?

We can speed up this process through two actions: the first action is reforms. We are very much aware that there are discussions going on [regarding] a new Banking Act to make sure that banks are more capitalised, that the non-performing loans (NPL) are well categorised and well addressed. That should help to make the financial sector more competitive, [and] more reliable, should help with financial inclusion, and should help, above all, with access to credit. 

These are the kind of reforms we are looking forward to. 

The other reforms are about public-private partnerships. [We need to] make sure that Bangladesh can have a fair share of Foreign Direct Investment from private corporations, from multilaterals and all the rest, which is extremely important. 

And last but not least, there is the issue of having not only paper reforms but also the construction of the infrastructure that makes the country more competitive. 

The country has a demographic boom and there is a strong urbanising phenomenon. A lot of the population tends to move to urban areas so, it is very important to develop ports, roads, airports, railways, [and] power (with a different energy mix) - all of these will certainly attract investors. 

Always remember – the cost of energy is key to competitiveness. 

So, it is very, very important that Bangladesh looks at these and IFC is ready to help in any possible way.  

We are very ambitious about the next five years here and we believe that with proper reforms, we could invest and mobilise around $5 billion in the next five years.   

Decarbonisation is a major thrust worldwide to make this earth livable. What kind of decarbonisation opportunities do you see in Bangladesh's economy?

First of all, the energy mix. Bangladesh is heavily reliant on fossil fuels - the traditional way to produce electricity. It would be very important to develop, whenever possible, renewables. 

We are very much aware of the problem of land. In a country like Bangladesh, the nexus between the land – especially agricultural land – and renewables is very important. There are many, many ways to try to get that, if you think about the various technologies: rooftop solar, floating solar etc. I have also noticed a lot of waste. Waste to energy [is an option]. 

In this context, some of the neighbouring countries to the North can offer hydropower, which is a clean technology, which could be harnessed for a country like Bangladesh, with a big population and growing very fast. 

There are many other sectors where decarbonisation can take place. 

IFC is working in the Ready-Made Garment sector. We have several initiatives, one of them is called PACT, which is Partnership for Cleaner Textiles. I think in the last years we have financed around $120 million in 12 projects, if I am not wrong. RMG is also one of those sectors where we can be more energy efficient, and can better utilise resources. 

There are many other sectors as well, transport, for example. We are big fans of electric vehicles in general. In fact, during my visit here we have had a couple of opportunities to talk about electric bicycles. This is a country which produces a lot of bicycles, so maybe it is time to go to work on bicycles. 

In the aftermath of Russia's invasion of Ukraine and the current climate challenges, food security has become a major concern for countries. What are the challenges and opportunities for Bangladesh regarding developing its agribusiness?

First of all, I think that a certain degree of food security has become more important of late. The invasion of Ukraine by Russia has made it more important to think about inflation, food inflation, fertiliser price inflation, etc. There are several opportunities in this area, and this is a country that could be far more efficient in the production of basic foods. 

We [just] provided Meghna Group with a loan of $35 million. We met the owner today and we are incredibly impressed by their story. We provided [the loan] for a new rice mill that should help them to diversify even more, to improve, to have structures that are more efficient, and more energy efficient. 

What we see here in Bangladesh is not only the possibility to develop with money but a lot of knowledge as well. For example, we have worked a lot with Pran Group on food security standards and how to develop them, which is absolutely necessary. I would like the IFC to not only be seen as a provider of financing but as a provider of smart financing. Financing, together with knowledge. 

These are just two examples, but we can have many more.   

How can Bangladesh draw a big pool of private funding for a faster energy transition? What does the global experience say? What kind of policies should be in place to leverage private-sector financing to meet large investment needs?

There are two main sources of financing: public and private. Following the war in Ukraine, public financing from donors all over the world is not as big as we would expect.

You remember that in Copenhagen in 2009, there was a commitment from the richest countries to provide $100 billion per year, which has never been reached. 

There is now the need to involve more and more private financing, which is very much available, to help green projects. We have discussed with the central bank about how to develop green bonds, blue bonds, etc, which I find very appropriate in a country where water and wastewater is a big issue. 

We will be very happy to help the country to issue the first sovereign green bond or to see the introduction of more of these thematic bond instruments that can attract international funding from institutional investors for big projects. 

I think there are several great projects in the country that could attract such finance, but of course, there is the need to develop that regulation, and above all, to have the right taxonomy. You need to have the right taxonomy for green projects, in order to avoid complications later, and accusations of greenwashing and all the rest. 

How can IFC further bolster Bangladesh's investment climate?

The IFC can, together with the World Bank and many other institutions, work with the government to support the creation of legal regulatory frameworks that are predictable. In reality, the best way to attract private investment is predictability. International and domestic private investors are not looking for anything else. They make calculations about the returns and what kind of risk they are looking at, which is why predictability in the legal and regulatory framework is the most important thing. 

In terms of PPPs, we are working a lot here in the country. For example, in the port city of Chattogram, we are helping [with] the PPP regulations for the development of the container terminal. The idea is to always provide the experience that we are continuously getting from around the world and adapt it to Bangladesh. That is what we are trying to do.      

What kind of investment can we think about in infrastructure, especially when we are talking about deeper economic integration with northeast India?

I have always been a fan of deeper economic integration. Additional wealth and additional welfare can be created by working with, in a constructive way, with neighbours. As we were saying earlier, it is not only about India, which is certainly important, but it is also about Nepal, Bhutan. 

I think being able to integrate the economies further will create wealth and welfare for everybody. There are certainly very important resources in terms of hydropower in countries like Nepal and Bhutan. 

In a world which is more fragmented than it used to be, we have to start thinking again about how we can all work together, how we can go back to integrate, support, [and] all be together. Then it is not only, of course, about integration towards the North, but also a broader global integration. 

When we were talking to Pran, I was very impressed by their presence in Africa –

which is really big. I like the ability of Bangladeshi companies to export knowledge, to export products. I think that is real integration in the global economy. 

IFC has financed 20% of the power infrastructure of the country. We have several other projects that we are considering in transport. As I told you, our ambition is to have $5 billion in the next five years, of our money, that we will bring, mobilise. Obviously, infrastructure will play a big role in that.   

Bangladesh is rapidly urbanising and in a haphazard way. How can this process be channelled for building green cities?

We were discussing it at the very beginning. We, the World Bank, and especially IFC will have to be far more present in investing together with the private sector to have private solutions to many issues. 

There is the possibility to develop and invest in water treatment plants and water distribution. 

Then there is public transportation. The level of traffic is unbelievable and the quality of air is very low. So I think there is a lot of work to be done with that, and there is a private sector experience from all over the world that could very much be adapted to the Bangladeshi situation. 

We are happy to provide advice on what is being done elsewhere and we are also very, very happy to invest alongside domestic and international investors. So this is a little bit of a call to arms for international companies to come here. But to come here, there is the need to have these reforms.  

What kind of reforms are needed to boost private-public partnerships?

I would say, there are three kinds of reforms. The first kind is a clear, legal, regulatory and contractual framework that allows international investors to evaluate what is the possibility to invest in the country. 

The second thing is reforms in domestic financial and capital markets. It is conducive to find accessible credit nominated in taka - in local currency - because the payments will be in local currency. This is very important because, without financing, it is very difficult to do it. 

I would say the last thing is, although it looks less important but is extremely important, reforming all the kinds of administrative acts, and enforcement of administrative acts, that allow the projects to get access to land for construction, access to transport in order to build power, etc. 

What is your sense of the horizontal and vertical depth of the Bangladeshi market in terms of being able to absorb equity and loans that come from IFC?

For the amount of money that we have been investing so far, I don't see any problem with absorption whatsoever. To be honest with you, we have an ambition here to issue, in the future, domestic onshore bonds, which will be taka denominated, so we can tap the Bangladesh market, get taka, and then lend in taka to Bangladeshi investors. 

This is a big ambition of ours, we are really trying to pursue this opportunity in every possible way and I strongly believe that every triple-A issuer like IFC issuing domestic bonds in taka in the market will help deepen the market to make it deeper. That is something we would really like to do. I think that the market can certainly be made deeper for sure, but you do that when you have more and more issuance.