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Globalisation is the watchword of the twenty-first century. However, before the peoples all over the world think of going global in the truest sense of the term, they need to start thinking about their own immediate neighbourhoods. Hence comes the question of integration at the regional level. And the best way to achieve that end is through economic integration of the peoples living in a particular region.
The just concluded two-day regional seminar titled 'Capital Market Development: Asian Experiences' in Dhaka shows one of the ways in which the peoples in South Asia can come closer by building the capital markets of the countries of the region on a stronger and more sustainable basis. They can help each other in this respect by sharing more information on the situation of their respective capital markets.
Capital market is one of the least explored areas in Bangladesh. Unlike in the economically advanced countries, the entrepreneurs in Bangladesh still depend on the traditional bank loans for building up the capital necessary to start and develop their enterprises. The general perception of the stock market is one of speculation and uncertainty. Excepting the few, who understand the behaviour and the utility of the capital market, the common investors and entrepreneurs would hardly ever include the stock market as a source of their investment fund. This has been mostly due to ignorance and the fear arising from the ignorance about the capital market. Which is why president Iajuddin Ahmed, while inaugurating the seminar, underscored the need for developing domestic bond market in the region as a source of industrial finance. Since a thriving capital market also provides the opportunity for investing the surplus fund of a country or a region in it, economies of a particular region can benefit equally from that surplus capital. But for making that possible, the comparatively advanced economies of the South Asian region should exchange their information on capital markets with other less developed economies more often for the sake of regional integration of the markets as well as for their mutual benefit.
In Bangladesh, in particular, the government should encourage the general investors to come out of their traditional mindset and go public with their investments through the capital market. But as the proverbial charity always begins at home, the government, too, should float the shares of the state-owned enterprises in the capital market rather than borrowing from the banks to run those public sector enterprises. At the same time, it should also create an enabling environment for the private sector companies to float their shares in the capital market by way of streamlining the bureaucratic procedures further and reducing the cost of the entire process.
When thinking about a well linked-up regional setting of the capital markets, especially in South Asia, the investors of all the countries of the region would be greatly benefited if a regional forum could be developed for the purpose. In that case, they would be able to formulate a roadmap for development for the whole region. The president of the International Chamber of Commerce, Bangladesh (ICCB) has pointed out on this score that such seminars as the one held in Dhaka can provide the opportunity for the regulators, policymakers, capital market operators, financial institutions and other stakeholders to share their regional experiences to chart out a right course of action in this regard. But all these discussions will turn out to be empty talks unless the larger companies having the necessary capital and confidence enter the stock market in a big way to enlist with the local bourses. By strengthening the financial and administrative capacity of the Securities and Exchange Commission (SEC), the government can infuse the necessary confidence and dynamism among the willing entrepreneurs in the private sector.
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