"We need to build our local capacity for project financing"

Arif Khan, CEO, IDLC Finance Ltd 

What is the goal of this workshop on project financing?

Bangladesh is experiencing rapid growth in all the economic indicators. Several important projects are going on and more such projects are in the pipeline. The success of a project is largely dependent on proper financing plan. We do not have adequate expertise in this sector. To send people abroad for training is a hectic affair both in terms of money and time. That's why we think it is better to invite global experts to our country and create an opportunity for the local profession- also to learn from them. In this workshop, we have invited mid-level officials of bank and non-bank financial institutions because they are the future leaders; and sustainable development of a sector requires overall improvement of all the stakeholders.

What are the challenges do you face in project financing? What role the government should play to encourage more participation of private financiers in big projects?

On the infrastructural side, we are facing challenges of scare land, inadequate power supply and poor connectivity. The government has taken an initiative of establishing special economic zones which will definitely help get the facilities in a structured way. High interest rate is another barrier. Due to global slump in commodity prices, now, we are able to provide loans with single digit interest rate. If this trend continues it will be a blessing for the entrepreneurs.

For the private financiers, project financing is very risky. If a project fails they will incur huge loss. It would be really helpful if the government arrange low cost fund from the donors for private financiers. It will help reduce the cost of the product and public will be benefited more.

There is huge scope of public private partnership in financing big projects. The government has formulated PPP policy and set up an office in this regard. Bangladesh's economic growth is led by private sector. There should be more opportunities for them to grow. The government should provide the policy support and let the private sector do the business.

There are social and environmental costs of big projects like power plants. When you finance a project how do you address these issues?

When we finance a project we assess the environmental and social impacts of the project. We always emphasize on compliance with the existing environmental regulations and energy efficient solutions. Bangladesh Bank is also promoting the green financing concept. We hope that all the major financers and projects will embrace the green concept, although this change needs time and overall support from all the market players.