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Exporters have demanded the continuation of Export Development Fund (EDF) facility and other assistance for keeping the export sector strong amid the global economic crisis.
At the same time, they also proposed to end the complexities to get cash assistance and provide cash assistance to new sectors.
Businessmen came up with the demands on Sunday at the ninth meeting of the “Trade Support Advisory Committee’ regarding import-export and overall trade and investment at the Ministry of Commerce.
Commerce Minister Tipu Munshi presided over the meeting where Senior Commerce Secretary Tapan Kanti Ghosh and officials of the ministry and traders from the export sector were present.
Tapan Kanti Ghosh told The Business Post that EDF fund has been reduced due to dollar crisis. However, export earnings have been negative since last month.
Amid such a situation, the businessmen demand the continuation of EDF fund. Moreover, they have proposed to enhance cash assistance in new products, including man-made fibre and recycled products, he said, adding that the commerce ministry will recommend the proposals of the businessmen.
In the meeting, the possibility of boosting exports in the RMG sector and export of seven other sectors was highlighted.
“Although we want to diversify opportunities for garments are now more than ever. China’s market share is falling fast due to geopolitical factors, and Bangladesh will set to gain from it. The vast potential exists in exporting more man-made fibre-based export.”
Commerce ministry finds out the export potential of other seven sectors---leather goods and footwear, jute goods, light engineering, agro-processing, ICT and ITES, plastic and pharmaceuticals, he added.
BKMEA executive president Mohammad Hatem told The Business Post that in the advisory committee meeting, they demanded the government provide the EDF facility like the previous time to increase export income considering the current situation. At the same time, they wanted to end the complexity regarding cash assistance.
Corruption is rampant in cash assistance at various times. In this case, direct export has offered to provide cash assistance in repatriated value, he said.
He also said that they have placed the demand to give new cash assistance to man-made fibre and recycled products to boost exports in the garment sector. Moreover, AIT has been proposed to be reduced from 1 per cent to .25 per cent for a period of five years on import of raw materials in the ready-made garment sector. They also demanded ensuring facility for opening of back-to-back LCs in case of non-bonded import goods to contribute to the export sector.
Due to dollar crisis, there is a gap in the value of dollar in terms of sales as they demanded reducing the gap. Besides, they have proposed to provide duty-free facilities for importing solar panels for solar power generation in various factories, said Mohammad Hatem.
Recently, the Export Development Fund was reduced by another $200 million to $5.2 billion. And it has come down from $7 billion in the last five months. In December last year, the size of EDF was reduced from $7 billion to $6 billion.
To reduce pressure on EDF, Bangladesh Bank has taken various measures, including increasing the interest rate on borrowing from the fund, reducing the credit limit of single customer and not giving new loans if export income is not brought to the country.
As a condition for receiving the second instalment of the $4.7 billion loan from the International Monetary Fund (IMF), the country’s net foreign exchange reserves must increase to $24 billion by June this year.
Import costs have already been brought down much more than previous times. Exports have not grown as much and it is now going negative. In this case, the central bank has limited options to increase net reserves other than reducing the EDF loan range.
Besides, earlier the maximum loan amount was $25 million, but now it has been reduced to a maximum of $20 million. The loan interest rate has been increased to 4.5 per cent in phases.
