Good and promising RMG companies should tap the capital market for long-term financing to diversify their funding sources and reduce heavy reliance on bank loans, speakers at a workshop said on Wednesday.
They said greater access to equity and debt financing could help Bangladesh’s ready-made garment (RMG) companies expand business, create jobs and contribute to economic growth.
The speakers made the remarks at a workshop titled “Expanding RMG’s Financing Horizons: Opportunities in the Capital Market,” jointly organised by the Dhaka Stock Exchange (DSE) and Swisscontact at the DSE Training Academy.
Senior officials of leading member companies of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), top officials of the DSE and merchant bankers attended the event.Subscribe To News
Speaking at the opening of the workshop, DSE Managing Director Nuzhat Anwar said the capital market was not merely a platform for investment but an important source of long-term financing for economic growth and private-sector expansion.
“The capital market should not be limited to IPOs or the equity market; rather, it should expand opportunities for various forms of financing, including bonds,” she said.
Although discussions on developing an effective bond market had continued for years, recent initiatives by the current commission and relevant stakeholders created fresh opportunities to advance the sector, she said.
She called for reviewing policy and regulatory constraints to make capital-market financing more effective, including the use of IPO proceeds and refinancing opportunities.
“The main goal of such discussions is to identify the existing limitations of the capital market based on the needs and practical experiences of entrepreneurs and take effective initiatives to resolve them,” added Ms Anwar.
BKMEA Deputy Secretary Md Harunur Rashid said industrial enterprises remained largely dependent on banks, limiting the ability of many businesses to fully utilise their growth potential.Bangladesh economic report
“The capital market can be an effective alternative source of long-term financing,” he said.
Listing good and promising companies would support business expansion, create employment and accelerate economic growth, Mr Rashid said.
He, however, stressed the need to ensure sustainable business growth after listing to maintain investor confidence.
Swisscontact Progress Project Team Leader Farzana Amin said the organisation had been supporting the RMG sector for nearly two decades and that capital-market financing should be considered alongside bank loans.
Swisscontact plans to provide end-to-end support to RMG companies interested in accessing the capital market, she said.
The organisation aims to develop several RMG companies as role models within the next year to encourage other businesses to seek financing from the capital market, she added.
Bangladesh Merchant Bankers Association (BMBA) President and LankaBangla Investments CEO Iftekhar Alam outlined opportunities for raising long-term capital through IPOs and the structural challenges facing the capital market.
He discussed the listing process, including eligibility for main-board IPOs and qualified investor offers (QIOs) on the SME platform, company valuation, fund utilisation, subscription, share allotment and lock-in requirements.
Bidowra Tahmin Khan, team leader of Swisscontact’s INSPIRE Project, said Swisscontact would provide advisory and technical assistance in coordination with the DSE, Bangladesh Securities and Exchange Commission (BSEC) and other stakeholders to help promising RMG and textile companies access the capital market.
Swisscontact has been working with Bangladesh's RMG and textile sector for around 20 years, focusing on compliance, skills development and the green transition, she said.
