A new ray of hope for SMEs

They may be allowed to raise funds from capital market

The Chinese consortium will work to create an SME-based board in the Dhaka Stock Exchange so that small entrepreneurs get the opportunity to raise fund from the capital market. “It will help to boost the SMEs as well as the capital market,” said Wang Jianjun, president and chief executive officer of Shenzhen Stock Exchange (SZSE).

The consortium of SZSE and Shanghai Stock Exchange will emphasise innovation and product diversification so that investors can get a variety of options to put their money in. Wang’s comments came yesterday on a roundtable styled ‘Bangladesh-China capital markets’, jointly organised by the Policy Research Institute and the Chinese consortium at the capital’s Le Méridien hotel. Liu Fuzhong, a director of SZSE, hoped that SME-based board will foster the sector in Bangladesh like it did in China. “The SME sector in China has bloomed,” he said, adding that the sector is now creating employment opportunities. Only 20 percent of the Chinese SMEs take loans from banks. The rest turn to the capital market to raise funds, he added.

In its proposal to the DSE, SZSE has offered to share its experience in market design, information disclosure, supervision, investor suitability management, IPO promotion and other areas of interest for the development of an SME market in Bangladesh. SZSE has developed a financing supply chain for startups by involving venture capital firms, investment banks, small-loan companies, banks and other financial intermediaries. It also worked with the Chinese government to design incentive programmes and public policies to offset market failure resulting from information asymmetry, which is often associated with small companies, the proposal added.

Salman F Rahman, private sector development adviser to the Awami League president, expressed his disappointment that startups cannot raise funds from the stockmarket.