Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
28
Debt and equity instruments
The Dhaka Stock Exchange is the main bourse in the People’s Republic of Bangladesh; a
secondary bourse operates in the port city of Chittagong. At around 25% of GDP, stock market
capitalisation is somewhat lower than in other countries in the region. As of end-2012, there
were 513 securities listed on the Dhaka and Chittagong exchanges, including 240 stocks, with a
total market capitalisation of US$29bn.
Bangladesh has a small bond market at an early stage of development. The government offers
at least three types of bonds targeted at NRBs: Wage Earners’ Development Bond, US Dollar
Investment Bonds and US Dollar Premium Bonds. The rates offered are attractive for
individual investors. The funds the government raises in this way form a very small part of its
outstanding domestic debt.
Policy initiatives to attract capital flows
The government provides generous tax incentives for foreign investors. A lower tax rate
applies to listed domestic companies as opposed to unlisted companies. The latter policy is
meant to make listing more attractive. However, it has had limited success. This is in the main
because many family-owned businesses prefer to avoid the higher scrutiny that comes with
listing. The government has been looking into raising international capital for investment
(including debt/equity, the national currency, the taka, or in foreign currencies), by the
government, sub-sovereign entities such as municipalities or private-sector companies. But
unlike other countries with a large diaspora such as Israel and India, Bangladesh has been
unable to launch a diaspora bond.
Mozambique
Laws regulating capital inflows
Laws and regulations governing capital flows into the Republic of Mozambique have evolved
substantially since the liberalisation of the economy from the late 1980s, and the end of the
civil war in 1992, as Mozambique gradually opened up to foreign investors and aligned its
regulations to international standards. The current legal framework for capital account
transactions was introduced relatively recently: the Law on Foreign Exchange, Law 11/09 of
March 11th was enacted in 2009 and its regulations, as laid down in Decree 83/10 of
December 31st, were approved in 2010.
While there are no general restrictions on FDI, the stakes foreign investors can own in media
companies, private security firms and game hunting concessions are limited. Furthermore,
Law 15/11 of August 10th, the Law on Public-Private Partnerships, Large Scale Projects and
Company Concessions, requires that 5-20% of all such undertakings be owned by Mozambican
nationals. A new mining code and a new hydrocarbons code, expected by 2014, are likely to
add similar provisions for direct investment in the mining and hydrocarbons sectors.