Study of Bangladesh Bond Market April 2019 Table of Contents Abbreviations ........................................................................................................................................................... ii List of Tables ......................................................................................................................................................... viii List of Figures .......................................................................................................................................................... x Forewords ............................................................................................................................................................... xi Executive Summary.............................................................................................................................................. xiv 1. Introduction ......................................................................................................................................................... 2 1.1. Background to our work ....................................................................................................................................................... 2 1.2. Structure of the report .......................................................................................................................................................... 2 1.3. Our methodology and approach ...................................................................................................................................... 2 2. Overview of Bangladesh Infrastructure Financing Market ............................................................................ 5 2.1. Introduction ............................................................................................................................................................................... 5 2.2. Overview of Bangladesh infrastructure pipeline ....................................................................................................... 6 2.3. Infrastructure sub-sectors of potential interest .......................................................................................................... 7 2.4. Sources of funds for infrastructure projects ...............................................................................................................14 2.5. Role of Islamic finance in the country ......................................................................................................................... 20 2.6. Conclusion ............................................................................................................................................................................ 22 3. Overview of Bangladesh Bond Market .......................................................................................................... 24 3.1. Financial system of Bangladesh .....................................................................................................................................24 3.2. Long-term debt market in Bangladesh ....................................................................................................................... 27 3.3. Market infrastructure ...........................................................................................................................................................31 3.4. Comparison of Bangladesh Bond Market with Other Asian Countries...........................................................33 3.5. Current market procedures for issuing a bond ........................................................................................................33 3.6. Key benefits in bond issuance........................................................................................................................................36 3.7. Structural issues associated with the debt market of Bangladesh ..................................................................36 3.8. Conclusion ............................................................................................................................................................................. 37 4. Overview of Credit-Guarantee Products in Bangladesh .............................................................................. 39 4.1. Current credit guarantee schemes available in the Bangladesh financing environment ........................39 4.2. Credit assessment in Bangladesh ................................................................................................................................39 4.3. Key regulations pertaining to treatment of credit guarantee products ......................................................... 40 4.4. Key licensee requirements if an entity plans to set up operations to provide such products................42 4.5. Conclusion .............................................................................................................................................................................42 5. Market Perspective .......................................................................................................................................... 44 5.1. Introduction .............................................................................................................................................................................45 5.2. Key findings ...........................................................................................................................................................................45 6. Conclusion ........................................................................................................................................................ 52 Appendix A: Infrastructure Sectors in Bangladesh........................................................................................... 57 A.1. Affordable Housing ............................................................................................................................................................. 57 A.2. Airports.....................................................................................................................................................................................61 A.3. Logistics ..................................................................................................................................................................................63 A.4. Manufacturing ...................................................................................................................................................................... 67 A.5. Ports .........................................................................................................................................................................................70 A.6. Power....................................................................................................................................................................................... 72 A.7. Railways ................................................................................................................................................................................. 80 A.8. Roads and Highways........................................................................................................................................................ 82 A.9. Social infrastructure (Health and Education) ........................................................................................................... 85 A.10. Special Economic Zones (SEZs).................................................................................................................................. 88 A.11. Telecommunication Industry ...........................................................................................................................................91 A.12. Urban infrastructure (Water, Sanitation and Waste Management) ................................................................94 Appendix B: List of Institutions ........................................................................................................................... 97 Appendix C: References .................................................................................................................................... 100 Abbreviations Acronym Definition ACI Advanced Chemical Industries ADB Asian Development Bank ADF Asian Development Fund ADP Annual Development Plan AIIB Asian Infrastructure Investment Bank AMC Asset Management Company AMEZ Abdul Monem Economic Zone AOA Articles of Association APSCL Ashuganj Power Station Company Limited ASA Association for Social Advancement BAS Bangladesh Accounting Standards BBA Bangladesh Bridge Authority BDT Bangladeshi Taka BEPZA Bangladesh Export Processing Zones Authority BERC Bangladesh Energy Regulatory Commission BEZA Bangladesh Economic Zones Authority BFI Bilateral Financing Institutions BGTB Bangladesh Government T-Bonds BHTPA Bangladesh Hi-Tech Park Authority BI Bilateral Institutions BIBM Bangladesh Institute of Bank Management BIDA Bangladesh Investment Development Authority BIFFL Bangladesh Infrastructure Finance Fund Limited BIMB Bank Islam Malaysia Berhad BIS Bank for International Settlements BLPA Bangladesh Land Port Authority BNM Bank Negara Malaysia BOO Build-Own-Operate BOOT Build-Own-Operate-Transfer BOT Build-Operate-Transfer BPDB Bangladesh Power Development