Green bond coming for green investment
The commission has enacted a law for the development of the bond market
As Bangladesh faces a high risk of climate change impact, a masterplan has been chalked up in a bid to fight the impending threat.
Under the comprehensive plan of action, environment-friendly factories, infrastructures and plants for green energy production will be built. All those projects require mega investments.
In consultation with the finance ministry, the Bangladesh Securities and Exchange Commission (BSEC) is going to introduce green bond as an alternative source of funding.
To this end, the capital market regulator organised a seminar titled "Introduction to Green Bond." A green bond is a bond whose proceeds are used to fund environment-friendly projects.
Ashadul Islam, senior secretary to the Bank and Financial Institutions Division, was present at the programme as chief guest, while BSEC Chairman M Khairul Islam presided over it.
Asadul Islam said green bond will play a significant role in financing climate and environment-friendly projects.
"To raise awareness, more seminars will be organised," he added.
Meanwhile, BSEC Chairman M Khairul Islam said, "Our bond market has not developed at all. Bangladesh is moving fast and our GDP growth is 8.2 percent. This growth will not be sustainable if we do not develop the green bond market."
The commission has enacted a law for the development of the bond market.
"A total of 221 treasury bonds are listed on the stock exchange. But those bonds are not marketable. Trading of treasury bonds will be reactivated soon," he said.
Among others, Md Alamgir Hossain, tax policy member of the National Board of Revenue, and Dr M Mosharraf Hossain, member of Insurance Development and Regulatory Authority, attended the discussion.
Senior officials of Dhaka and Chittagong Stock Exchanges, commercial banks, merchant banks and asset management companies also took part in the seminar.
BSEC Director Md Rezaul Karim presented a keynote paper at the event.
What is green bond?
Green bonds are designated bonds with intent to encourage sustainability and support climate-related or other types of special environmental projects.
This kind of bonds finance projects which aim at energy efficiency, pollution prevention, sustainable agriculture, river and habitat restoration, acquisition of land, fishery and forestry etc.
Challenges
The absence of guidelines for green bonds, high costs of green projects and low coupon rate make it difficult to ensure utilisation of green bond proceeds in eco-friendly projects.
There is also a lack of awareness of issuers and investors regarding social and environmental benefits of the green bond.
Talking about this, the BSEC chairman said they will formulate a policy ideal for the green bond.
IFC's assessment of green bond market
The International Finance Corporation said Bangladesh needs a total of $172 billion from 2018 to 2030 for climate-smart investments.
Of the amount, $3.2 billion will be required for renewable energy, $118 billion for green buildings, $23.7 billion for transport infrastructure and $13 billion for climate-smart urban waste water and $4 billion for municipal solid waste management.
The IFC gave some proposals, including credit enhancement, strategic public issuance, re-adjust risk weighing and tax incentives for making green bond popular in the country.
Alternative Trading Board
In order to provide liquidity of non-listed equity and debt securities, including green bond, the BSEC and exchanges are working to develop the Alternative Trading Board (ATB). A 0.05 percent transaction tax is applicable to the ATB.
