Without capital markets reform, Bangladesh will stay invisible to the world

On May 11, the Government of Bangladesh made a welcome announcement: a five-point directive to reform the country's capital markets. The goal is to improve transparency, regulatory integrity, and investor confidence—an acknowledgement that the current system is no longer fit for purpose.

It's the right move. But unless this decision is followed by bold, structural action, it risks becoming yet another well-meaning reform lost in translation.

Here's why this moment matters.

Over $100 trillion is allocated globally every year by institutional investors—pension funds, sovereign wealth funds, insurance companies, and endowments. This capital doesn't chase headlines or potential. It follows systems: transparency, liquidity, governance, and access.

But here's the key: that capital doesn't move based on passion or pitch decks. Someone at Fidelity, Vanguard, or a sovereign wealth fund in Abu Dhabi doesn't wake up and decide to explore Bangladesh because of a headline. They follow mandates—pre-allocated capital flows tied to global indices like MSCI Frontier and Emerging Markets. If Bangladesh isn't in those benchmarks, it often isn't even legally investable for them. No matter how promising the story, how many "foreign experts" are brought in, or how many reforms are made—if you're outside the system, you don't exist.

We are being left out

Bangladesh currently holds a negligible weight in the MSCI Frontier Index. To fix this, we must first strengthen our presence there, then aim for graduation into the MSCI Emerging Markets Index—where serious, recurring capital flows begin.

To put this in perspective: Vietnam's 1 percent MSCI EM allocation gives it access to over $300 billion in global flows every year. Bangladesh, in contrast, has received less than $20 billion in total FDI in its entire history.

And this shift won't happen through press releases alone. It requires capital markets professionals at the table and direct engagement with the global institutions and investors who make these decisions.

Bangladesh must build an ongoing feedback loop with actual global investors—those managing billions in emerging and frontier market mandates. We need to understand what's keeping them out, what reforms would pull them in, and how we can align our systems with global standards.

Too often, policy is made in isolation. But investor mandates are shaped by real constraints. Unless we engage the very people deploying this capital, we risk designing solutions no one can actually use.

Why these matters for jobs

In Bangladesh, capital markets are still widely misunderstood—too often viewed as speculative gambling dens or playgrounds for the well-connected. That perception is not only outdated—it's actively holding back the entire economy.

A mature capital market is what allows a country to finance its future without taking on more debt. It brings in institutional capital—patient, long-term money that funds infrastructure, industry, and innovation. It gives growing businesses access to capital without having to trade favours or rely on opaque networks. Most importantly, it creates jobs.

When companies raise capital, they hire. Engineers, compliance officers, operations leads, analysts, designers, lawyers, and researchers. They expand across borders, invest in local talent, and reinvest in innovation.

Capital markets also give families, founders, and state-owned enterprises tools to restructure balance sheets—freeing them to grow, fix debt burdens, or scale in ways they never could through traditional lending channels.

Without functioning capital markets, Bangladeshi companies stay small, not because of a lack of ambition, but because of a lack of access.

Time to reverse the brain drain

We talk endlessly about brain drain, but we rarely ask why it's happening.

Bangladeshis are working at the highest levels of global capital markets—on trading desks in New York, in sovereign funds in the Gulf, at regulatory bodies in Singapore, London, and beyond. They haven't stayed away out of disinterest or disloyalty. They've stayed away because there hasn't been a serious, credible system back home where their expertise could be applied—and respected.

Now, the government has announced that it will bring in foreign experts to support capital markets reform. That's a welcome step. But before we look outward, we must ask: have we looked inward?

We have a world-class bench of Bangladeshi professionals already embedded in the global financial system—people who understand how MSCI works, how capital moves, how systems are reformed, and how institutions are built. If we fail to engage them now, we risk not only overlooking our most relevant talent—but undermining the very idea of self-determined reform.

The hunger to return is real. What's missing is opportunity—and trust in a process that values global knowledge without political interference.

Capital market reform is the clearest signal we can send to our diaspora that Bangladesh is finally serious. That the country isn't just asking for help—it's ready to build with those who've done it before. Not as token advisors, but as co-architects of the system.

The blueprint already exists

We don't need to invent a new playbook. Countries like Vietnam, Indonesia, Morocco, and Romania have already executed successful reform.

Here's what a credible roadmap looks like:

• Increase free float and liquidity of listed companies
• Modernize clearing, custody, and settlement systems
• Enforce timely, transparent financial disclosures
• Streamline foreign investor access and capital repatriation
• Deepen bond markets, including infrastructure and corporate debt
• Protect regulatory independence
• Engage directly with MSCI, FTSE Russell, and global custodians

These reforms are not optional. They are the minimum price of admission to the trillions of dollars allocated every year.

Exits build confidence, confidence attracts capital

Capital doesn't just need access—it demands an exit. Without that, it won't enter.

Functioning markets create predictable exits: IPOs, secondary offerings, bond redemptions. That's why India and Indonesia consistently attract capital across sectors and cycles. Investors trust the systems there.

Bangladesh must earn that same trust—not through PR, but through performance.

The cost of doing nothing

Global capital is going somewhere. If not to Bangladesh, it will go to Vietnam, Indonesia, the Philippines, or Morocco—not because they're inherently better, but because they built what investors need while we stood still.

The math is stark:

• Vietnam's 1 percent MSCI EM weight gives it access to around $300 billion in capital
• In contrast, Bangladesh has received around $20 billion in total FDI in its entire history
• Each year of inaction could mean $5–25 billion in missed portfolio inflows
• Over a 5–7 year horizon, that could be $50–200 billion—enough to transform entire sectors and employ millions

Meanwhile, regional peers such as Indonesia and the Philippines continue to attract substantially more foreign portfolio investment because they've aligned with global standards

Global capital is like water. It follows the path of least resistance. We haven't built the pipes—so it flows around us.

And the result?

• Our top companies stay smaller than their global counterparts
• Our infrastructure remains debt-driven
• Our best minds leave
• Our economy loses competitiveness

This is a National Priority—not sector reform

Capital markets reform isn't about tweaking the DSE or commissioning another white paper. It's about building the financial backbone of a modern economy that attracts global capital on our terms—not through charity, but through credibility.

The government's recent directive is a start. But to succeed, it must engage Bangladeshi talent from around the world—people who've already done this elsewhere and are ready to help rebuild here.

This isn't just financial housekeeping. It's nation-building. We can keep waiting for the world to recognise us—or we can build the systems that make us impossible to ignore.

The talent is ready. The capital is waiting.

It's time to finally build a system worthy of both.

Rahat Ahmed is the founder & managing partner of Anchorless Bangladesh, a New York-based investment firm focused on channelling global capital into Bangladeshi opportunities. He has been professionally investing in emerging and frontier markets—including the Dhaka Stock Exchange—since 2004.