Emphasis on utilising intl financing for big projects
Staff Reporter
Experts at a seminar urged the stakeholders to focus on using the tools of international financing for big domestic projects as its lending rate is much lower than that of local banks and non banking financial institutions.
Also, the international financing specialists have recommended to use the international financing options which includes syndicated loans from offshore commercial banks, Export Credit Agency (ECA) backed financing, Development Financial Institution (DFI) financing and Asset backed financing.
These recommendations were made at a seminar on international financing options at the ICAB auditorium in the capital on Sunday.
Abrar A Anwar, chief executive officer, Standard Chartered Bank, Bangladesh, delivered a keynote paper on the topic International Financing Options: A Bangladesh Perspective.
Anwar described all the tools of international financing options for raising fund from the international financial management institutions.
He said: After achieving the lower middle income country status, our countrys project sizes are getting bigger, so we can not entirely depend on the local market financing. The economic situation of Bangladesh is such that international financing can be used here at this moment.
The keynote speaker also discussed about the syndicated loan from international market and its significant options. In international financial market the pricing of the interest rate which is a London Inter bank Offered Rate (LIBOR) is much lower than local currency borrowing.
He also informed that US $ 8 billion has been raised so far by using syndication loan from offshore commercial banks. Abul Khair Chowdhury, session chairman and former president of ICAB, was also present at the seminar.
In the welcome address, president of ICAB Kamrul Abedin discussed about the prospect in terms of capability and resources of Bangladesh. He noted that Bangladesh is the 44 largest in the world in nominal terms, and 32nd largest by purchasing power parity.
Since 2004, it has been a decade that Bangladesh averaged GDP growth of 6.5 per cent.
While highlighting the ECA backed financing, Anwar said Germany could be a good source of financing, because most of the capital machineries come from there. In international financing ECA backed financing is the viable, cost effective and efficient way of fund raising, he added.
Emphasising on DFI financing, Abrar A Anwar addressed an example of Multilateral Investment Guarantee Agency (MIGA) and the facilities that a country can get from this international development financial institution.
He also added that MIGA invested 2 billion dollars of projects in the last three years around the world.
Vice President of ICAB, Mahmudul Hasan Khusru, said that three things are required to establish a proper bond market-- finding a good project, creating a good bond structure, and then raise the money.
International market requires one thing to raise the money and that is transparency, he also added.
A question and answer session was also conducted at the seminar which was also addressed by the CEO of StanChart.
Liquidity is a short term asset, the currency rate of Bangladesh is floating, so no debt is available in the market. Trust funds are required at this moment to finance big projects.
Abrar A Anwar also spoke about asset backed financing and said that it is a securitisation process of conversion of illiquid assets to securities. Plane financing, moveable assets are the example of backed financing that he also mentioned.
According to IMF, Bangladeshs economy is the second fastest growing major economy of 2016, with a rate of 7.1 per cent GDP.
ICAB former President ABM Azizuddin was present as the chief guest along with other distinguished ICAB fellows.
