Lack of awareness of issuers and investors regarding social and environmental benefits of green bond was one of the major challenges in the way of popularizing the investment instrument, speakers said on Wednesday at a seminar.
Besides, absence of guidelines for green bonds, high cost of green projects and low coupon rates and lack of good governance were other challenges, they mentioned.
The seminar titled ‘Introducing green bond in Bangladesh’ was organized by the Bangladesh Academy for Securities Markets (BASM), a research and training institute of the stock market regulator BSEC, at the Commission Bhaban in Agargaon in the capital.
The seminar was chaired by the Bangladesh Securities and Exchange Commission (BSEC) and BASM Chairperson M Khairul Hossain. Md Ashadul Islam, senior secretary at the finance division, was the chief guest at the seminar. Mohammad Rezaul Karim, director at the BSEC, presented the keynote paper at the seminar.
M Khairul Hossain said that the Commission was working to formulate rules for new private placements and the issuance of public bond. Ashadul Islam said that investors and markets for the green bonds should be diversified, which helps to mobilize private sector financing for climate-focused and environmental-friendly activities.
Rezaul Karim in his keynote paper said the lack of awareness on the part of the issuers as well as the investors, absence of a guideline, high cost of green projects and low coupon rates, and difficulties in the application of green bonds in eco-friendly projects were the major hurdles in the way to make green bond popular.
He also informed that the International Finance Corporation (IFC) estimated the total climate-smart investment potential in Bangladesh to be approximately $172 billion between 2018 and 2030, mainly in green buildings, transportation infrastructure, urban water, agriculture, waste management, and renewable energy.
Bangladesh’s fixed-income bond market remains small and underdeveloped. In 2018, the country’s bond market was worth $16 billion, or about 6% of GDP. Both the investors and issuers in the bond market face a wide range of barriers. Green bonds can help develop the bond market in Bangladesh, attracting a new pool of international and institutional environment-friendly investors.
The Bangladesh government, along with the other signatories of the 2015 Paris Agreement, recognized the risks and opportunities of transition to a low-carbon growth path.
BSEC Commissioner Swapan Kumar Bala, NBR member Md Alamgir Hossain, and IDRA member Mosharraf Hossain attended the panel discussion of the seminar, while Md Mahbubul Alam, the director general at the BASM, moderated the session.
Source Dhaka Tribune