Global financial crisis unlikely to affect country's economy: SEC
Sunday, 16 November 2008
FE Report
The global financial meltdown is unlikely to affect the country's economy at least for next two to three years, the Securities and Exchange Commission (SEC) Chairman Faruq Ahmed Siddiqi said Saturday.
"It will rather be a boon for the country's overall economy," he said, while speaking as the chief guest at a roundtable discussion titled, "Global financial crisis and its impact on financial markets in Bangladesh."
Country's prime bourse Dhaka Stock Exchange (DSE) and the University of Dhaka jointly organised the programme in a city hotel. Bangladesh Bank (BB) Deputy Governor Ziaul Hasan Siddiqui was the special guest in the function.
The SEC chairman, however, urged all not to be complacent about it saying, "It is a fact that the global economy has slowed down due to the meltdown."
"And if the recession continues for the next two to three years we must have to be cautious," he said.
The global financial meltdown led to some immediate effect on the country's economy, said the SEC chairman.
Fuel prices has slided by over 60 per cent from its peak in July last year, import bill has declined due to lower prices of commodities and other import items in the international market, Mr Siddiqi said.
"The credit flow to private sector is set to increase as an outcome of declining fuel prices," he said.
"The lower fuel price will lead to lower government borrowings from the commercial banks and thus increase the amount of excess liquidity in banks for lending to private sector," the SEC chairman elaborated.
About the country's main export earning sector - the ready-made garment (RMG) - the SEC chairman said: "We may have to be less concerned over this sector as the country's entre export low-cost garment products."
Besides, the country's garment sector is resilient as it did overcome successfully the fear of post multi-fibre arrangement (post-MFA) after 2005, when the multilateral donor agencies feared a doomsday.
With the falling oil prices, the country's remittance earning from the Gulf countries might be affected due to slowdown of their growth, the SEC chairman feared.
"The country's labour market needs to be diversified to absorb any such shock," he suggested.
The BB has introduced the remittance and payments partnership (RPP) project to take necessary steps for boosting remittance and ensuring inflow of remittance in quicker time at lower costs, said the BB deputy governor.
The country's central bank has also introduced ceiling on sector loans to avoid credit risks, Mr Siddiqui added.
Professor MA Baqui Khalily in his keynote paper said the country's capital market may not face any adverse impact of the global financial meltdown as it has a very limited exposure.
He, however, said the foreign portfolio investment is likely to increase in the country's capital market due to the meltdown.
"The foreign investors will move to the emerging markets to recover their losses and Bangladesh's capital market is one such destination where they will be able to make money," Mr Khalily added.
Chief Executive Officer (CEO) of DSE Salahuddin Ahmed Khan said the market capitalisation and the gross domestic product (GDP) ratio has increased significantly over the last several years from two per cent to 16 per cent showing a trend of sound development of the capital market.
The global financial meltdown is unlikely to affect the country's economy at least for next two to three years, the Securities and Exchange Commission (SEC) Chairman Faruq Ahmed Siddiqi said Saturday.
"It will rather be a boon for the country's overall economy," he said, while speaking as the chief guest at a roundtable discussion titled, "Global financial crisis and its impact on financial markets in Bangladesh."
Country's prime bourse Dhaka Stock Exchange (DSE) and the University of Dhaka jointly organised the programme in a city hotel. Bangladesh Bank (BB) Deputy Governor Ziaul Hasan Siddiqui was the special guest in the function.
The SEC chairman, however, urged all not to be complacent about it saying, "It is a fact that the global economy has slowed down due to the meltdown."
"And if the recession continues for the next two to three years we must have to be cautious," he said.
The global financial meltdown led to some immediate effect on the country's economy, said the SEC chairman.
Fuel prices has slided by over 60 per cent from its peak in July last year, import bill has declined due to lower prices of commodities and other import items in the international market, Mr Siddiqi said.
"The credit flow to private sector is set to increase as an outcome of declining fuel prices," he said.
"The lower fuel price will lead to lower government borrowings from the commercial banks and thus increase the amount of excess liquidity in banks for lending to private sector," the SEC chairman elaborated.
About the country's main export earning sector - the ready-made garment (RMG) - the SEC chairman said: "We may have to be less concerned over this sector as the country's entre export low-cost garment products."
Besides, the country's garment sector is resilient as it did overcome successfully the fear of post multi-fibre arrangement (post-MFA) after 2005, when the multilateral donor agencies feared a doomsday.
With the falling oil prices, the country's remittance earning from the Gulf countries might be affected due to slowdown of their growth, the SEC chairman feared.
"The country's labour market needs to be diversified to absorb any such shock," he suggested.
The BB has introduced the remittance and payments partnership (RPP) project to take necessary steps for boosting remittance and ensuring inflow of remittance in quicker time at lower costs, said the BB deputy governor.
The country's central bank has also introduced ceiling on sector loans to avoid credit risks, Mr Siddiqui added.
Professor MA Baqui Khalily in his keynote paper said the country's capital market may not face any adverse impact of the global financial meltdown as it has a very limited exposure.
He, however, said the foreign portfolio investment is likely to increase in the country's capital market due to the meltdown.
"The foreign investors will move to the emerging markets to recover their losses and Bangladesh's capital market is one such destination where they will be able to make money," Mr Khalily added.
Chief Executive Officer (CEO) of DSE Salahuddin Ahmed Khan said the market capitalisation and the gross domestic product (GDP) ratio has increased significantly over the last several years from two per cent to 16 per cent showing a trend of sound development of the capital market.