Study on Private Sector Development and Investment Promotion in Bangladesh through Infrastructure and Industrial Financing

The assignment involved conducting a comprehensive study on private sector development and investment promotion in Bangladesh through infrastructure and industrial financing. The Japan International Cooperation Agency (JICA) engaged Young Consultants (YC) to collect and analyze data on Bangladesh’s financial sector, with particular emphasis on infrastructure financing, including Public-Private Partnerships (PPPs), industrial financing for large and medium-sized enterprises, and equity financing. The study aimed to identify financing gaps, assess market demand and supply, examine challenges within the financial sector, and develop a potential lending programme or financing scheme. It also assessed the interest of Japanese companies in investing and conducting business in potential Special Economic Zones (SEZs) in Bangladesh, including opportunities for partnerships with local enterprises.

Scope of Services Provided
1. Desk Study and Secondary Research

Conducted desk-based research and reviewed secondary sources to gather relevant data and information on Bangladesh’s financial sector, private sector development, investment opportunities, and industrial financing landscape.

2. Financial Sector Data Collection and Demand–Supply Gap Analysis

Collected and analyzed data on infrastructure financing, including PPPs, industrial financing for large and medium-sized enterprises, and equity financing. Conducted demand–supply gap analyses across these segments to identify financing constraints, market inefficiencies, and key challenges affecting their development.

3. Assessment of Public-Private Partnership (PPP) Development

Reviewed the current state of PPP development in Bangladesh, including relevant laws, regulations, actual transactions, and implementation challenges. Recommended potential financial modalities for incorporating PPP arrangements into the proposed lending programme.

4. Private Sector Consultation and Investment Demand Assessment

Conducted interviews with large Bangladeshi companies that could potentially partner with Japanese enterprises to establish SEZs and undertake business activities at prospective SEZ sites. Assessed their financing requirements, investment interests, and potential challenges associated with developing and operating businesses in these zones.

5. Focus Group Discussions with Financial and Industry Stakeholders

Organized focus group discussions (FGDs) with banks, non-bank financial institutions (NBFIs), housing developers, and other relevant stakeholders to understand financing conditions, investment requirements, market constraints, and opportunities for improving access to finance.

6. Identification of Potential Industries for Special Economic Zones

Identified promising industrial sectors for development within upcoming SEZs through interviews with large and medium-sized Bangladeshi companies. Assessed potential investment opportunities and explored prospects for collaboration between Bangladeshi and Japanese businesses.

7. Institutional Structure and Operational Framework Design

Developed a preliminary institutional design for the proposed lending programme, covering organizational structure, reporting lines, accountability mechanisms, financial sustainability, compliance arrangements, human resource capacity and adequacy, physical infrastructure, and the potential use of information and communication technology (ICT).

8. Development of the Proposed Financing Modality

Recommended a financing modality for the potential lending scheme, including the proposed scale of funding, cost implications, interest rates, financing periods and maturities, target investment areas, types of investment instruments, and other relevant technical considerations.

9. Recommendation of Technical Assistance Activities

Identified potential technical assistance (TA) activities that could complement and facilitate the implementation of the proposed lending programme, strengthen institutional capacity, and support effective programme delivery.

10. Preparation and Submission of Reports

Prepared and submitted the draft and final reports, consolidating the study findings, financial sector analysis, stakeholder consultations, investment opportunities, institutional design, and recommendations for the proposed lending programme.

Key Deliverable
A comprehensive study report containing an assessment of Bangladesh’s infrastructure, industrial, and equity financing sectors; demand–supply gap analysis; PPP financing recommendations; potential investment opportunities in upcoming SEZs; a preliminary institutional framework; proposed lending scheme modalities; and recommendations for complementary technical assistance.

Assignment Details
Client: Japan International Cooperation Agency (JICA)
Project Location: Dhaka, Bangladesh
Client Address: JICA Bangladesh Office, 3rd Floor, Bay’s Galleria, 57 Gulshan Avenue (CWS-A19), Gulshan-1, Dhaka-1212, Bangladesh
Telephone: +880-2-9891897
Fax: +880-2-9891689
Email: bd_oso_rep@jica.go.jp
Approximate Contract Value: US$45,500
Assignment Duration: 3 months
Start Date: January 2014
Completion Date: March 2014
Total Staff-Months: 4
Associated Consultants: N/A
Senior Professional Staff Involved
Name
Designation / Function
Mr. M. Zakir Hossain
Team Leader
Mr. Alim Haider
Financial Analyst
Dr. Rahim B. Talukder
Adviser – Private Sector Development
Md. Khalilur Rahman
Industry and Infrastructure Financing Expert
A. A. Mahboob Uddin Chowdhury
Public-Private Partnership (PPP) Expert