Kh. Asadul Islam is the Managing Director and CEO of City Brokerage Limited, a wholly-owned subsidiary of The City Bank Limited. Prior to his appointment as Managing Director and CEO, he held the position of Executive Vice President and Head of Brokerage of the The City Bank since July 2009.Mr. Isalm was former CEO of IDLC Securities Limited and played a key role in setting up the company. He began his career with Premium Securities Limited and later moving to the renowned multinational investment bank Peregrine Capital Ltd followed by a shift to the Union Capital Limited. In 2002, he became the Director of SES Company Limited a wholly owned subsidiary of UCL. In his 16 years of work experience in Bangladesh capital market, Mr Islam carries the ability to support, encourage and motivate colleagues and investors as well as an excellent track record at generating new business and also managing high profile client relationships. Mr Islam has participated in numerous seminars and training programs related to the operations and development of the capital market at both national and international level.
Emerging Frontiers: On exports, what is the current state of the country’s infrastructure? What projects have either being proposed or are underway to expand road, rail and port networks? With a population of 155mm and growing it is assumed that infrastructure is holding back the country from growing even faster.
Kh. Asadul Islam Ripon: During this present government period, 54 power plants have been installed and 3,845 MW of additional electricity add to the national grid. The beneficiary coverage of electricity has been raised from 47 to 60 per cent. Per capita electricity production has increased from 220 kWh to 292 kWh which is remarkable progress compared to other developing countries. Recently the government have signed an agreement with Russia to install two nuclear power plants of 1,000 MW capacities each, at Ruppur in Pabna. By 2015, the total power generation capacity Of Bangladesh will reach 14,500 MW.
Government has adopted 20-year Road Master Plan and similar one for railways also. The major projects of this master plan includes upgrading of Dhaka-Chittagong High way into 4 lane, 22 km long elevated expressway project that has been awarded to a Thai-Italian company from Airport to Jatrabari under PPP arrangement, Connection with Trans-Asian Railway Network: Government is in process of constructing new railway track of about 128 km to ensure this integration.
Emerging Frontiers: A large portion of Bangladesh’s territory is flood plains. Therefore, during exceptional monsoons profound flooding is not uncommon. How does exposure to such natural disasters pose a risk to the stability of the economy?
Kh. Asadul Islam Ripon: Bangladesh is the land of rivers. The Country is predominantly a floodplain country where water is the key to socio-economic development and sustainability of the eco-system. Flood, drought, cyclone, river erosion, situation, and water scarcity in dry season have made water management a challenging task. Flood Action Plan (FAP) an initiative to study the causes and nature of flood in Bangladesh, and to prepare guidelines for controlling it. FAP was based on several earlier studies by UNDP, a French Engineering consortium, USAID and JICA (Japan International Cooperation Agency). The FAP included 29 different components of which 11 were regional, with some pilot projects, and the rest were supporting studies on issues like Environment, Fisheries, Geographic Information System, Socio-economic studies, Topographic Mapping, River Survey, Flood Modeling, Flood Proofing, Flood Response, etc.
Providing action plans, thesis, studies and academics however does not hold back the fact that almost every year, a substantial portion of Bangladesh is submerged by monsoon floodwaters. Bangladeshis have adapted to this recurrent cycle of seasonal flooding with extraordinary resilience in terms of revival of property, farms, agricultural and aquaculture systems. In a months time you will find no difference between pre & post flood landscape. Well medically speaking around 60% of the human body is water, so I believe we Bangladeshi’s probably have more of that percentage in our body.
Emerging Frontiers: Since a recent high in June, net foreign investment in the Bangladeshi capital markets has been falling. What do you attribute this to?
Kh. Asadul Islam Ripon: In line with the declining trend in the last three months, foreign investment in the capital market dropped 45 percent in September. The declining trend in foreign investment is alarming, as other markets in the subcontinent and elsewhere are also experiencing a similar downward spiral. Bangladesh capital market’s reliance on foreign investors has always been limited. Our capital market has very few products and instruments available for foreign investors. This lack of diversified instruments makes our market unattractive, which places a limit on foreign portfolios. It also prevents large investors form hedging their funds. In short, our capital market is seen as a bleak destination for foreign investors as they have limited products to invest in; resulting in limited activities, which translate into limited profit margins. On the bright side currently less than 10 percent of our companies are listed in the stock market so the future prospect of the Bangladesh capital market is promising.
Emerging Frontiers: Besides allowing investors to trade equities on the Dhaka Stock Exchange, what other products either exist or are being proposed? Does Bangladesh have a liquid corporate debt market?
Kh. Asadul Islam Ripon: The market capitalization of the market currently stands around USD 32 billion, against issued capital of USD 12.67 billion. However discounting the Government Treasury Bonds the figures stand around USD 25.06 billion and USD 5.6 billion respectively. Though we do not have a liquid corporate debt market, I believe our Government T-Bond market rates are quite lucrative (2 year – 20 year: 10.92% – 12.48%) even compared to the regional average, however very little information is disseminated and even less initiatives are taken to trade the untapped instruments in a platform like the stock market.
Regarding the probable products there are ample spaces for a country like ours. For example, securitizing infrastructure projects into equity and debt instruments; encouraging more venture capital activities by providing them attractive exit route through exchanges and OTC markets; creation of new capital market products – options and futures; fostering the existing bond markets so that active trading takes place.
Emerging Frontiers: Bangladesh will have Parliamentary elections in January 2014. Do you anticipate a smooth transition of powers?
Kh. Asadul Islam Ripon: The next national election scheduled in January 2014, under a nonparty, neutral Care Taker Government (CTG) is currently the heated topic of discussion as the current government appears strong on not to pay heed to the opposition demands on this issue. After the last CTG debacle, which led to 2‐years military backed regime, the ruling government is dead against implementation of “so‐called” nonparty, neutral CTG, and stands out for a jurisdiction of political parties and politicians from all political parties. The ruling government strongly believes that necessity of CTG exists no more rationally in the light of the emergence and continuance of new democratic political landscape in Bangladesh after the great debacle of 1/11 of 2007. Under this reality, time is of essence to pay due attention, to the forward‐looking reforms on strengthen the Election Commission, which was neglected or set aside demonstratively by all the ruling political parties in the past.
On course of time another notable point would be the era of new faces in the political arena. The next parliamentary election is perhaps the last election for all of the top-notch figures that had been riding the rough road for the last two decades. Right or Wrong, traditional or unorthodox, whatever these handful few people contributed for the last four decades is the platform on where we stand out and look forward, as a 42 year old nation.
Emerging Frontiers: Ripon, thank you for your insight on Bangladesh.
Kh. Asadul Islam Ripon: Thank you Scott.
Originally published in EmergingFrontiers: Investment news and analysis from emerging and frontier markets: THE REAL STORY OF BANGLADESH – PART II 2 | BANGLADESH – Audacity of Hope