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11 May 2007Investor confce concludes with overwhelmed appreciationEntrepreneurs, financial service providers decry 'exorbitant' lending ratesThe two-day Investor Conference 2007 ended Friday at Hotel Sheraton with a call to invest in Bangladesh's untapped stock market. The conference showcased the country's capital markets and its investment potentials to portfolio investors of different countries. Jointly hosted by Citigroup, Dhaka Stock Exchange (DSE), and Chittagong Stock Exchange (CSE), the conference was attended by about 40 equity and fixed income investors from across the globe. Speaking in a session Friday, experts said the country's stock market will see a major development when shares valued at 1.0 billion dollars will be floated within next three to six months as eight large profitable state-owned companies will go public under the Direct Listing Regulation. A presentation said the top telecommunication companies are finalising their offers to go public. "With the inclusion of more companies under power, telecommunication and energy sectors, the market capitalisation will cross the $ 15 billion-mark from the present $ 5.50 billion and the daily average turnover will cross the $ 100 million-mark from the present average of $ 10 to $ 15 million by 2009," A deep sea port requiring $ 1.0 billion is going to start with a policy decision that it will also float shares in the stock market. Chaired by chairman of Securities and Exchange Commission (SEC) Faruq Ahmad Siddiqi, the session was addressed by former DSE chairman Imtiyaz Hussain, senior vice president of DSE Ahmad Rashid, managing director of AIMS of Bangladesh Yawer Sayeed, president of Chittagong Stock Exchange MKM Mohiuddin, additional attorney general Salahuddin, MH Samad of Central Depository Bangladesh Ltd, Nihad Kabir and Adeeb H Khan. Yawer Sayeed said though adequate reforms were accomplished during the last one decade but more is needed including rules on debt market and venture capital to attract foreign investment in the capital market."SEC should update regularly its website to disseminate the latest information on the stock market," Sayeed added. In another session on pharmaceuticals, experts said Bangladesh is a good destination for foreign investors to invest in the pharmaceutical sector to re-export the products to global markets. "Having a strong backward vertical integration, cheap labour and power costs and better profit margins are the best incentives for investors here to invest in the pharmaceutical sector," said Sayed S Kaiser Kabir, managing director of Renata Ltd. Chaired by managing director of Incepta Pharmaceuticals Abdul Muktadir, the session was addressed by Nazmul Hassan of Beximco Pharma, Ashfaque Ur Rahman of Novartis and M Azizul Huq of GlaxoSmithKline. Dusan Dujmic of Slovenia said he was interested to see development of the pharmaceutical sector."The prices of pharmaceuticals are comparatively cheap and I think the investment in this sector will be profitable," he mentioned. Entrepreneurs and captains of the financial services industry have decried the country's exorbitantly high interest rates, saying it was "unjustified" on the part of banks to earn profit keeping the borrowing rate at 15 to 16 per cent. "There's no reason why the commercial banks keep the interest rates at 15 to 16 per cent," Anis A Khan, who heads a multinational non-banking financial institution operating in Bangladesh, told a session on financial services. Speaking at the session as a panelist, Khan said there is an urgent need to cutback on the borrowing rate to help businesses grow and thrive in a fiercely competitive global environment. Vice president of Citigroup Tawfiq Ali presented an overview of the theme at the session, presided over by former governor of Bangladesh Bank Mohammad Farashuddin. Chairman of Mutual Trust Bank Syed Manzur Elahi, managing director of the Trust Bank Limited Iqbal U Ahmed, and managing director of BRAC Enterprise Rumee A Ali addressed the session as panelists. "How could an entrepreneur make money in a situation where the interest rates are unreasonable?" Anis A Khan asked.Mohammad Mofiz, a former chairman of Bangladesh Export Processing Zones Authority, alleged that commercial banks were simply involved in profiteering at the cost of entrepreneurs. "Why banks are earning more than entrepreneurs?," Mofiz, now involved in the power sector business, asked the question, pointing to high interest rate and overcharges. In response, chairman of the Mutual Trust Bank Syed Manzur Elahi defended the banking sector, saying profits were needed to grow further."Without profits, you can't grow. Today, commercial banks constitute 50 per cent of the market capitalisation at Dhaka and Chittagong Stock Exchanges. Let's hope that banks make more profits as they pay higher corporate taxes," the business baron told the audience, including bankers, entrepreneurs and investors. He, however, denied that banks were making super-profits by overcharging the clients."Bangladesh believes in free market. The question is overcharging. If banks have done so, the clients would go elsewhere," he said. Stressing on regulation to stimulate competition at the local banking industry, Elahi pointed out that the United States has remained the most regulated economy in the world, although it is the proponent of free market. "The US is the Mecca of free market, but it is also the most regulated economy," he said about the need for proper regulation to help serve its clients. As the country's financial services sector continues to flourish, he maintained that it needed to be manned by efficient human resources. Anis A Khan, chief executive of IDLC, also echoed the points made by Elahi, saying there was a significant dearth of capable human resources in Bangladesh to run and lead 48 banks, 49 non-banking financial institutions and 45 insurance companies. He suggested there should be merger and acquisition in the financial sector, given the size and liquidity of banks and other financial bodies. Khan, who leads IDLC, lamented that there existed no sophisticated financial instruments such as hedge funds or mortgage-based securities while both the capital market and the money market lacked in depth. Mohammad Farashuddin, in his presidential speech, asked local and foreign investors to tap the potential of the country, whose economy is chalking up a 6.5 per cent growth rate over the last couple of years. "Potential is there … It's for us to take risks. Be innovative," the former central bank chief noted. He, however, regretted that the ideas of securitisation, asset management and merger and acquisition were yet to pick up in Bangladesh. Farashuddin, who teaches economics at a private university, also stressed on improvement of social infrastructure to give the country's development process a boost. "If you want to develop, you need infrastructure. But it's not physical infrastructure alone, you also need social infrastructure," the economist said about the human resources. Speaking at another session devoted to "Debt Capital Markets," local and international financial analysts called upon the government to concentrate its energy on developing a robust bond market in order to avoid the possible financial crisis.
Quoting a study of the Asian Development Bank, Amias, now in the city to attend a two-day international investors' conference, said a large and thriving bond market was "a key" to averting any financial crisis like the 1997 one that struck the South East Asia.The Citigroup executive pointed out that it would require a rating system and a properly regulated tax regime to develop the domestic bond market. In his speech, chief executive of the Dhaka Stock Exchange Salahuddin Ahmed Khan said the corporate bond has the potential, as it has high yield while there involves no risks. "It's one of the finest and highly secured financial instruments in Bangladesh," the DSE chief told investors about the corporate bonds. At the session, director and country treasurer of Citigroup Bangladesh Bashar M Tareq delivered a presentation on the theme. Deputy governor of BB Ziaul Hasan Siddiqui, managing director of Investment Corporation of Bangladesh Ziaul Haque Khondker and chairman of finance of Dhaka University Mahmood Osman Imam were also spoke at the session, chaired by resident economic adviser of Bangladesh Bank (BB) Moinul Ahsan. The Deputy Governor fired a broadside at the National Board of Revenue for its "unpredictable" policy shift in determining the tax regime."There shouldn't be sudden change in the tax regime. You can charge higher taxes on bonds, but that should be predictable," Siddiqui said. |
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