BGMEA opposes lifting interest rate ceiling

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said if the central bank lifted interest rate cap on the recommendation of the International Monetary Fund (IMF) it would severely affect small and medium Entrepreneurs (SME) as well as the cottage industry to get loan.

He made the comment at a press conference at the BGMEA office in Dhaka on Sunday.

Faruque said the government set interest rate cap considering the reality. Big entrepreneurs are able to get loan and repay it easily and interest rate is not a big deal to them. But the rate is a key factor to SME. “I believe if the government lifts the interest rate cap, the SME sector will be sufferer,” he said.

In reply to another question, Faruque said IMF recommended lifting foreign currency exchange rate and letting the market to determine the price.

“I think upper cap could be lifted but minimum cap should be fixed to arrest irregularities.”

IMF wants the country to reform revenue policy and ‘we also believe that the government should earn more revenue for development’. But if the government cuts export facilities it will affect the country’s export.

“We are already facing the negative impact on our export earnings.”

He urged the government to reduce source tax from 1 percent to 0.5 percent and claimed it would help the government to generate more revenue.

“Power and energy crises are already incising our production capacity amid the order shortage. Gas supply is low. In addition, the government has postponed Liquefied Natural Gas (LNG) import from spot markets.

LNG and fuel prices are far lower in international market now. If the government ensures gas and electricity supply, we will able to boost our export helping the forex reserve to go up.

The BGMEA President claimed that the apparel sector had already witnessed 7.52 percent negative export earnings in September year-on-year and the sector’s earnings likely to go down by nearly 20 percent this month.

“The trend will likely to continue till November and we will miss our export target,” he feared.

The sector is performing well in non-traditional markets such as Japan and Korea and the size is increasing which will help the economy to turn around, he hoped.