Dhaka, Bangladesh, January 10, 2008—IFC,
a member of the World Bank Group, in collaboration with Bangladesh Leasing
and Finance Companies Association, is facilitating the adoption of operating
leases to benefit small and medium enterprises in Bangladesh.
The new operating lease can be used to rent equipment, vehicles, and technology
required for everyday business. It is an SME-friendly product, as it requires
no collateral, involves no asset risk, can be tailored to a specific usage
period, and can be less expensive than traditional leasing. Such
a product is essential for an emerging market like Bangladesh because of
its large segment of small and medium enterprises and the scarcity of collateral
to secure financing. An operating lease not only enables leaseholders
to acquire equipment without collateral, it also reduces their operating
risk because they are not required to own the equipment outright.
Bangladesh's estimated 6 million micro, small, and medium enterprises,
with less than 100 employees, have a significant role in generating growth
and jobs. “This is a sector that has its own distinct financial needs
and requires specialized focus,” asserts Sudhir Amembal, Chairman and
CEO of Amembal & Associates, whose services have been commissioned
by IFC Advisory Services for South Asia – the SouthAsia Enterprise Development
Facility – and BLFCA to introduce operating leases in the country. As
a government advisor, Amembal has spearheaded lease consultancy engagements
for at least a dozen other emerging lease economies, including Albania,
Bosnia and Herzegovina, China, Croatia, Estonia, Indonesia, and Korea.
He will be reviewing the overall leasing industry in Bangladesh and
devising strategic recommendations to facilitate the growth of the industry,
while applying international best practices and global knowledge.
In a drive to introduce operating leases to Bangladesh, IFC-SEDF and BLFCA
will perform a diagnostic to assess how conducive the environment is for
finance companies to introduce the product and develop secondary markets
to cater for asset mitigation. Upon completion of the diagnostic, workshops
and discussion sessions on leasing will be conducted for BLFCA’s members.
Policymakers, including representatives from Bangladesh Bank and the National
Board of Revenue, as well as external auditors and managing directors and
CEOs of the member financial institutions of the BLFCA, are expected to
attend the discussion sessions. Two leading finance companies will be advised
on how to launch and manage operating leases.
“Finance is the lifeline of business,” said Roger D. Handberg, IFC-SEDF
Program Manager. “The operating lease is an important product for enhancing
SME access to finance.” Through initiatives such as these, IFC aims
to increase the market’s ability to address issues related to SME financing.
IFC, a member of the World Bank Group, fosters
sustainable economic growth in developing countries by financing private
sector investment, mobilizing private capital in local and international
financial markets, and providing advisory and risk mitigation services
to businesses and governments. IFC’s vision is that poor people have the
opportunity to escape poverty and improve their lives. In FY07, IFC committed
$8.2 billion and mobilized an additional $3.9 billion through loan participations
and structured finance for 299 investments in 69 developing countries.
IFC also provided advisory services in 97 countries. For more information,
About the IFC SouthAsia Enterprise Development
IFC-SEDF is a multidonor funded facility managed
and operated by IFC. One of 11 such programs managed by IFC worldwide,
the facility is set up to promote the growth of SMEs in the region. IFC-SEDF
is jointly funded by IFC, the governments of the Netherlands and Norway,
the European Commission, DFID (UK), CIDA (Canada), and the Asian Development
Bank. It provides increased access to finance and quality business development
services to projects in Bangladesh, Bhutan, northeast India, Maldives,
Nepal, and Sri Lanka. IFC-SEDF also works to create a business-enabling
environment and supports value addition to firms through sector development,
advisory services, capacity-building programs, training, and research.