The two-day investment conference, entitled, 'Bangladesh- The New Investment Frontier' is jointly organised by Citigroup and the Dhaka and Chittagong stock exchanges.

Its aim is to promote foreign investment in Bangladesh and to show domestic corporations the large pool of funds that are potentially available to companies that list.

Conference organisers said Bangladesh's stock exchanges had taken a long time to recover following the crash in 1996, which had frightened off both foreign and domestic investors.

However in recent years capital market reforms including improved surveillance, automated trading and investor protection funds had pushed the market towards international standards. At the same time, sustained economic growth averaging around 5 percent a year for the last decade had created the foundations for new investment opportunities.

Turnover on the Dhaka Stock Exchange has also increased significantly reaching more than Tk100 crore a day on several occasions this year.

Although there has been some increase in foreign portfolio investment, up to $42 million in the eight months to the end of February, many investors abroad have failed to notice the improvements in Bangladesh, organisers said.

For example, market capitalisation as a percentage of GDP in Bangladesh was only around 9 percent compared to 85 percent in India, 36 percent in Pakistan and 32 percent in Sri Lanka.

Another reason for the lack of interest has been the limited number of corporations listed on the bourses. Mamun Rashid, managing director of Citibank NA and Citigroup Country Officer-Bangladesh, said capital markets in Bangladesh faced a 'chicken and egg' problem. "Big corporations do not come to the market because they think the market does not have the depth of investment to support them. On the other hand, investors say there is nothing to invest in."

This may change in the future however as expanding corporations looked for new ways of raising funds apart from bank loans, the organisers said. This view was echoed last week by Sundeep Bhandari, managing director, head - global markets, South Asia with Standard Chartered Bank, who in an interview with The Daily Star said Bangladeshi corporations would need to supplement traditional forms of borrowing through increased use of capital markets.

More than 50 foreign institutional investors are taking part in the conference and around 200 local institutions and individuals are expected to attend.

Salahuddin Ahmed Khan, chief executive Officer of Dhaka Stock Exchange, said they had already received a good response both from home and abroad.

"We hope this conference will open a door for the local business community to expand their horizon in their efforts to access funding for their companies," he said.

Bangladesh Bank Governor Dr Salehuddin Ahmed is scheduled to inaugurate the conference in the Ballroom of Dhaka Sheraton Hotel.

Key sessions will look at Bangladesh's overall economic potential, the untapped capital market and reforms of the last decade. It will also focus on specific sectors such as power, telecoms, textiles, pharmaceuticals and financial services.