Lack of rules, incentive barrier to green bond

Experts say at a seminar

Staff Correspondent | Published: 00:00, Nov 21,2019

 
 

Lack of regulations, awareness, skills and incentives is the main barrier to the introduction of green bond in the country, experts said at a seminar held on Wednesday.

The Bangladesh Academy for Securities Markets, a research and training institution of the Bangladesh Securities and Exchange Commission, organised the seminar titled ‘Introducing Green Bond in Bangladesh’ at the BSEC office in Dhaka.

Green bond is one kind of bond that encourages sustainability and supports climate-related or other types of special environmental projects.

Finance ministry financial institutions division senior secretary Ashadul Islam said that there was significance of green bond financing to address climate issues.

Bangladesh is one the most vulnerable nations to the impacts of climate change in the world.

The government should come forward as issuer of the green bond as well as the investor of the bond to encourage other investors, Ashadul said.

The private sector could play a key role in developing the bond market, he said.

There is lack of skills, specific regulations and coordination among the regulators regarding the bond market, he said.

BSEC chairman M Khairul Hossain said the bond market in Bangladesh was very much poor compared with its economic growth.

To achieve sustainable development goal including economic, social and environmental, the bond market development is a must, he said.

Lack of knowledge about the bond market is also a prime barrier to the development of the bond market, he said.

The stakeholders and the regulators should make comprehensive preparations to develop the bond market.

He said that trading of 221 treasury bonds which are listed on the Dhaka Stock Exchange would be activated soon.

BSEC director Rezaul Karim said that the International Finance Corporation estimated a total climate-smart investment opportunity of $172 billion in Bangladesh from 2018 to 2030.

There is no specific principle or standard or rule for issuance of green bond. However, green bond may be issued under the existing rules of the commission.

He mentioned some obstacles including absence of guidelines for green bond, high taxes and regulatory barrier, high cost of green project and low coupon rate, lack of awareness of issuers and investors regarding social and environmental benefits of green bond to the development of the market.

He said that the BSEC had been trying to reduce the cost of bonds and it might seek tax exemption from the government.

Green bond finance projects can aim at renewable energy, energy efficiency and inclusive green buildings, clean transport, sustainable water and wastewater management, and climate change adaptation.

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