Domestic group Outline: Opportunities Government Private - PowerPoint PPT Presentation

Domestic group

Outline: • Opportunities • Government • Private • Challenges • Government • Private • Reforms

Opportunities: government • Capital market as the option with Government intervention: • Infrastructure bond, bond tied with specific projects: T ‐ bill already there, revenue tied up bond • Sovereign bonds: whether the banks will participate and take risk or not so the issue is price taker or price maker • Able to develop the yield curve and determine long run interest rate • Diversification of portfolio for the banks: diversification of asset quality • Saving bonds appealing to the retail investors & inflation bonds • Divestment of SOE • Calling for Private companies/individuals participation • Plough back the money for infrastructure development • PPP • FDI

Opportunities: Pvt. sector • Alternative investment market (Second tier market): • Pvt sectors/individuals with good business ideas can pitch the idea • Call for interested institutional investors/individuals • Successful projects can later be incorporated as company • IPO • Corporate bonds • Peer to peer lending • Crowdfunding • Short term instruments

Challenges: Government • Depletion of Forex Reserves • High dependency on external grants • Low Exports with high Imports • Confined to Institutional Investments • Lack of willingness to pay taxes • Tax leakages • High reliance on government: contingent liability and exposure • Lack of institutional coordination leading to inconsistent policies pertaining to business environment

Challenges: Pvt. Sector • Lack of willingness to come to formal market for fund • Lack of financial literacy • Lack of professionalism: no books keeping and business plan • FIs not so keen to lend to SME due to prevalence of high NPA • Credit rating agencies

Reforms • Promotion of Brand – Bhutan through aggressive marketing • Promote and encourage FDI • Tax policy reforms • Promote financial literacy • Agency responsible for the development of private sector • Govt. may support promising Start ‐ up businesses (SME) • Targeted incentives • Long term strengthening of economy

Tashi Delek