"Bond is a major source of long term finance. Bangladesh can tap this unexplored source to generate much needed investment in power, port, oil, gas, road and other heavy infrastructure development," Wallich said while speaking at the inauguration of a two-day high-profile international workshop on bond market that began yesterday.

"Bond is a precious commodity. But it is frustrating that long term financial products have not developed in Bangladesh as required," Wallich told the workshop on "Development of Bond Market in Bangladesh" at Brac Centre at Rajendrapur in Gazipur.

Citing example, WB director said Jamuna Bridge is a big asset to Bangladesh and Padma Bridge is another in the line. Bonds can be issued for mobilising fund for such big infrastructures, Wallich said.

A strong bond market can also help overcome internal and external shocks, she said suggesting a secondary market development of bond.

Bangladesh Bank (BB) and Securities and the Exchange Commission (SEC) have organised the workshop as part of the World Bank-funded Financial Institutions Development Project.

Apart from top executives of local banks and financial institutions, officials from Reserve Bank of India, State Bank of Pakistan, Central Bank of Sri Lanka, Bank Negara of Malaysia, Clearing Corporation of India, National Housing Bank of India are participating in the workshop aimed at sharing regional experience for development of bond market.

Addressing the inauguration, State Minister for Finance Shah Abul Hossain said the Ministry of Finance is in a process of establishing a public debt management unit to allow smooth issuance of government securities.

"The government has declared waiver on tax and value added tax and stamp duty on special purpose vehicle for issuance of securitised bond. The government has also cut down withholding tax on bonds and securities from 45 percent to 20 percent. All these incentives are initiated to develop a bond market," the minister said.

BB Governor Fakhruddin Ahmed said the country badly requires acceleration in productive investment for generating employment. And such investments can be financed through borrowing from banks, issuing equity and long term bonds. "Banks and other financial institutions alone cannot meet huge borrowing needs of the economy."

"So, there is an urgent need of developing a strong bond market which can be a source of long term fund for investment. Development of domestic securities market can also ensure financial stability," the governor said.

He, however, reminded of some bottlenecks in issuing new securities in regard to role of trustee, limitation of trust act and inadequate market infrastructure. "I understand some debenture issues went sour in the past and coupon payments were not paid which undermined investors' confidence. We must address such bottlenecks for healthy development of bond market," Ahmed added.

Finance Secretary Zakir Ahmed Khan, Chairman of SEC Mirza Azizul Islam and International Monetary Fund Mission Chief for Bangladesh Nissanke Weerasinghe also spoke at the opening of the workshop.