Capital market is the backbone of an
economy. It is the engine for economic growth that helps to mobilize the
resources efficiently. The capital markets play a critical role in economic
development since they are the principal platform through which businesses can
raise low cost funds to finance projects thereby promoting industrial
development.
The Bhutanese capital market is one of the
newest and smallest capital markets in the world. Bhutan's capital market can
evolve and become vibrant like any other capital markets around the world. If
we want to diversify investment from Hydro-power to other sectors, then, a
vibrant capital market is necessary. A good capital market will encourage
savings and investments helping investors to create wealth.
A good capital market will foster
industrialization in the economy. Through industrialization, a nation can
produce most of the goods and services. This would help to fulfill the Bhutan's
goal of economic self-reliance. Today, Bhutan is in dire need of industrialization.
The unemployment rate is increasingly steadily every year. Lack of
industrialization is also putting pressure on the foreign currency reserves
especially rupees. Poverty still remains in some nook and corner of the
country. The only way to overcome these problems is to establish small, medium
and large industries which the capital market has a major role to play. Most
industries can thrive if they have access to enough funds for running the
business. Therefore, capital market has a critical role in fostering
industrialization.
There are many budding entrepreneurs who
want to venture into a business. But setting up business require huge amount of
capital. Though, Loden Foundation and some financial institutions provide
capital, there are many regulatory hurdles that needs to be fulfilled.
Moreover, the amount of capital these institutions provide is barely enough for
the entrepreneurs to take up the project on a full swing. There is an enormous
competition from firms from the neighboring country India. For our industries
to thrive and compete with them, substantial capital is required either to
develop or import technological know-how. Raising capital from financial
institutions is not the best option for the entrepreneurs because many of the
businesses involves long gestation period. It is the capital market
that has the capacity to provide such huge sums of long term capital
through the issuance of shares.
The capital market helps to pool the
resources of the country and channel it to industrial activities. For economic
growth, a nation requires a lot of domestic and foreign investments. The lack
of access to capital has hampered the economic growth and industrial
development in the country.
The government and public authorities must
realize the importance of the capital market in the economy and start improving
the functioning of the existing capital market. To stimulate people to invest
in shares and other securities, the government should give greater tax
incentives to the investors. The government should also raise funds in the
capital market for its developmental activities to develop the capital market.
There should be more awareness programme on the importance of making investment
in companies’ securities rather than making investment in unproductive assets
like cars and electronics.
Capital market plays an extremely
important role in mobilizing funds and channeling it to businesses to enhance
country's economic growth. It helps to minimize the risk by through
diversification in different sectors.
