Amid the ongoing reforms for a deeper capital market with diversified products, Bangladesh is heading to be an emerging market, Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat-Ul-Islam has said.
The capital market's existing size and Bangladesh's status as a frontier market do not match the country's economic success story, he said at a programme titled "ERF Dialogue on Business and Economy" organised by the Economic Reporters Forum in the capital on Saturday.
The chief of the securities regulator also said if the ongoing pace of the BSEC programmes continues, status upgradation would take place in two years.
International investors tend to classify the global capital markets into three categories – developed markets that have both a developed economy and the best capital market base and infrastructure, emerging markets that are yet to be a developed economy but both their economy and market are heading to be developed ones, and the frontier markets that have a developing economy with a less flourished capital market.
Bangladesh is one of the six Asian markets left behind in the frontier market category, according to Morgan Stanly Capital International, while neighbouring India and Pakistan belong to the emerging market category.
For the mission to be successful, the BSEC is simultaneously working to strengthen both the supply and demand of good securities alongside its efforts for product diversification.
The BSEC is welcoming billion-dollar turnover companies to be in the bourses of Dhaka and Chattogram, while it is activating the new platforms for smaller but potential companies.
Initiatives for a vibrant bond market are going to offer a relief to the country's banks that have been suffering from a mismatch between the tenures of their borrowing and lending, while bonds and Sukuk – Shariah-compliant asset-backed securities – are offering a great role in the economic development of the country.
Market infrastructure is almost ready for hosting securities other than shares.
To match the planned supply, the BSEC is especially campaigning for investment by non-resident Bangladeshis and international investment funds, said the BSEC chairman, adding that market manipulation and accounting jugglery are almost matters of the past as IT-based surveillance and crosschecking of financial information are already in action.
Responding to reporters' questions, the BSEC chairman also said success of the massive plan is subject to similar levels of support from other government offices.
For example, the desired companies barely need capital from public and the existing corporate tax incentive that has a 7.5 percentage point gap between listed and non-listed firms does not attract them to the stock market. The BSEC already requested the National Board of Revenue to widen the gap to 15 percentage points for the sake of quality supply in the stock market.
Emphasising financial literacy of the masses and skills of market professionals, Professor Shibli Rubayat-Ul-Islam invited all to take the diploma and master's programmes being offered by two BSEC-run institutions – Bangladesh Institution for Capital Market and the Academy for Securities Market.
ERF President Sharmeen Rinvy chaired the discussion while General Secretary SM Rashidul Islam moderated the event.