Alternative sources of infrastructure funding in focus

Speakers at a virtual discussion on Sunday stressed the need for a long term, vibrant, innovative and structured infrastructure finance for the private sector investment.
They suggested creating alternative sources of financing other than banks for infrastructure development.
A developed and mature bond market can be a sustainable solution for the private sector finance, they observed, adding that Bangladeshi bonds should be raised on the international market.
They were speaking at a webinar on 'Bridging the infrastructure gap through credit solutions in Bangladesh' - jointly organised by the Ministry of Commerce and the Dhaka Chamber of Commerce and Industry (DCCI) under the Bangladesh Trade and Investment Summit 2021.
Speaking on the occasion as the chief guest, Prime Minister's Private Industry and Investment Adviser Salman F Rahman said that the government's main job was to play the role of a facilitator to ensure that the private sector acts properly.
The present government has opened up almost all the sectors like power, airlines, televisions, mobile, banking, insurance, universities to be operated by the private sector, he said.
For long-term sustainable infrastructure financing, he said, "We need to think of more strategies to go to the next level."
Infrastructure financing has improved in Bangladesh, observed the PM's adviser, adding, "But what we need is to create a vibrant structured bond market in our country."
Mr Rahman said there was a huge liquidity in the banking sector now.
"If we could have been able to divert this liquidity into bonds that would have been helpful," he added.
While speaking as a special guest, Md Nojibur Rahman, chairman of the Capital Market Stabilisation Fund, said the boom of infrastructure development in Bangladesh was going on.
"We need capital and long term finance … domestic finance is not enough for that," said Mr Rahman, also a former principal secretary to the prime minister.
Guarantco is doing well in this regard, he said.
Bangladesh Bank and the regulatory bodies concerned are very supportive now - this is a positive sign for the private sector, said Mr Rahman.
He further mentioned that Bangladesh's private sector was very vibrant now and the political will of the government for the private sector was very positive in order to move the engine of growth.
Capital market has a big role to play in this regard, Mr Rahman observed.
Taka bond has already been issued in the London Stock Exchange and SUKUK bond has also come into play, said the former secretary, adding, "These are all positive signs … we need a mixed approach."
Addressing the webinar, DCCI President Rizwan Rahman said infrastructure was a critical enabler of compounding industrialisation and economic development.
Substantial investment in infrastructure is needed to accelerate trade and economic growth, observed Mr Rahman.
To improve infrastructure competitiveness, investment is being made in wide-ranging infrastructure projects though they are relatively inadequate, commented the DCCI chief.
"Our infrastructure development has been heavily reliant on public sector financing which hovers around 4 per cent to GDP whereas most of our neighbouring economies maintain it within 5 per cent to 10 per cent."
The lack of long-term and alternative financing solutions holds back the private sector role in infrastructure development, he added.
Andrew Bainbridge, chair of PIDG, said that mobilising the private sector was a very critical enabler of growth.
"We work across the project life cycle through deploying grants, equity, long term debt and guaranty even in local currency," he said.
"We are here to support nations and people to achieve their ambitions," he said, adding that investment of US$4.4 billion over the last 20 years had actually mobilised $35 billion.
Yukiko Omura, chair of GuarantCo, said that GuarantCo was a solution provider under PIDG.
"We are working with innovative and creative solutions in the form of structured guaranty," she said.
She said GuarantCo was quite unique and they were in Bangladesh to assist in developing the local capital market and provide credit solutions to finance infrastructure projects that help boost economic growth and improve the quality of people's lives and alleviate poverty in line with the SDG goals.
Nishant Kumar, managing director of GuarantCo Asia, said they had already financed a project in Bangladesh, named Technaf Solartech, worth $13.5 million dual currency financing solution fund.
It's a 20 megawatt solar power project, said Nishant, adding that they had also provided a $25 million (Tk 2.1 billion) guaranty for a seven-year onshore bond to Pran Agro Ltd.
These projects will boost the private sector and will create job opportunities, he added.
Dr Abul Kalam Azad, executive director of Bangladesh Bank, said the country needed more infrastructure funding as it was the backbone of the country's development.
"We have to build our own capacity and for that we can try long term bonds in the capital market."
Depending solely on the banking sector will not meet long term financing, he added.
Muhit Rahman, managing director of Standard Chartered Bangladesh, said large infrastructure projects needed financing for 12-15 years.
He said there were ample opportunities for Bangladesh to avail foreign currency solutions.
"We need to focus on attracting commercial loans and bond investments."
Domestic source is not enough - there has to be a mix of local and foreign currency solutions, he added.
Ahsan Khan Chowdhury, chairman and CEO of PRAN-RFL Group, said Bangladesh was growing and it needed alternative financing and funding for infrastructure development and for the private sector.
Bangladesh also needs to improve its sovereign credit rating, he said, adding, "We need to raise bonds on the international market."
Nuher Latif Khan, managing director of Technaf Solartech, said GuarantCo was working for capacity building and skills development beyond their guarantee.
It also puts emphasis on community development and economy - this is good for the country, he added.

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