Bangladesh will roll out a US$2 billion dedicated equity fund based in Hong Kong to broaden its financing channels, breathe fresh life into its stock market, and lighten reliance on domestic borrowing.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury while speaking at the Dhaka Chamber of Commerce and Industry (DCCI) seminar, underlined that the fund is purely equity-based, generating no national debt liabilities.
“We are set to establish a dedicated fund for Bangladesh in Hong Kong. This is equity, not a loan,” Khosru remarked, noting that global fund managers are demonstrating keen interest as market reforms take root.
This fund is expected to mainly provide this alternative financing to export oriented industries like garments and leather.
Khosru explained that the initiative would establish an alternative avenue for drawing in international capital at a juncture when the government is striving to relieve pressure on domestic financing channels.
He noted that Bangladesh has been examining alternative financing routes given the capital market’s prolonged weakness and the need to bolster private-sector access to funding.
“Since Bangladesh has had virtually no functioning capital market for a fair stretch of time, we are working to revive it as one of the alternative financing sources,” he said.
Khosru said the government was already witnessing the reforms’ impact, with the capital market steadily rebounding and investor confidence returning.
He said the government was now working to shift that culture by embedding greater transparency, professionalism and institutional governance.
Khosru said the reforms were also drawing the notice of international fund managers. “We’re seeing global fund managers stepping forward. That’s a very positive sign,” he said.
He said the proposed $2 billion Hong Kong fund ranked among the initiatives being pursued to channel international equity capital into Bangladesh.
He clarified that the fund would create no debt obligation for either the government or the country, given it would be structured as equity rather than as a loan.
The finance minister said the government was likewise weighing other instruments to diversify Bangladesh’s sources of overseas financing.
“We intend to pursue dollar bonds, panda bonds and samurai bonds,” he informed.
According to Khosru, such instruments would enable Bangladesh to access varied international capital markets rather than leaning excessively on domestic banks and other conventional financing sources.
He said the government was especially focused on cutting its reliance on domestic financing so that private enterprises could secure fuller access to credit and investment resources.
“We’re working to reduce borrowing from the private sector through alternative financing,” he said.
Khosru said the government had already taken measures to trim bank borrowing to some extent, though the shift towards alternative financing would take time.
“We’ve already brought bank borrowing down somewhat. But the process will take time. We’re heading in that direction,” he said.
He said the government would continue pursuing alternative financing mechanisms to open up greater room for private-sector investment.
Image courtesy: Context
