In the interest of job creation and an increase in foreign investment, BEPZA has recently written a special letter to the PMO (Prime Minister’s Office) seeking easier loan conditions for the separate economic zone it is establishing in Bangabandhu Sheikh Mujib Industrial City.
The letter asked for a lower loan interest rate at 1 percent from the existing 6 percent and an increase in grace period to 10 years from 2 years like other EPZs (Export Processing Zone).
Bangabandhu Sheikh Mujib Industrial City is being developed on around 30,000 acres of land touching three upazilas: Mirsarai, Sitakundu and Sonagazi under Chattogram and Feni districts respectively.
The Bangladesh Export Processing Zones Authority (BEPZA) is establishing a separate economic zone for local and foreign entrepreneurs in the industrial area.
According to the proposed revised Development Project Proposal (DPP) in the region, BEPZA will implement the project with a loan of Taka 1,321.92 crore from the government.
According to the existing loan policy, these loans have to be repaid in 20 years with a grace period of 2 years and 6 percent interest.
In response to BEPZA's demand, the Prime Minister's Office recently sent a letter to the Finance Ministry asking it to take action as per the rules on reducing interest rates and amending the grace period for repaying loans, according to the Prime Minister's Office and the Ministry of Finance.
A senior finance ministry official, under the condition of anonymity, said, “We have received a letter from the Prime Minister's Office regarding the matter. Now the matter is being judged and analysed. If the government agrees, a summary will be prepared for the finance secretary and finance minister for approval. It will be implemented only if they agree.”
Earlier, a letter from BEPZA to the PMO said the DPP of the BEPZA Economic Zone, Mirsarai (Phase I) project was approved at the ECNEC meeting at a cost of Taka 750.58 crore. The duration of this project is from September 2017 to June 2021.
However, it was later proposed to amend the DPP of the project. According to the revised DPP, the cost of the project has been increased to Taka 1,321.92 crore. At the same time, it has been proposed to extend the implementation period and reschedule it till June 2023.
The letter said, BEPZA said it currently contributes about 20 percent of the country's national exports. Besides, it has been playing an important role in the socio-economic development of the country with the creation of more than 5 lakh jobs.
So far, interest free loans of Taka 553.36 crore have been taken from the government in 7 EPZs under BEPZA.
In the last 10 years, BEPZA has spent about Taka 1,563 crore on various infrastructural development works. As a result, BEPZA's financial capacity has declined.
Meanwhile, the finance department has categorized Bangladesh Economic Zone Authority (BEZA) as a special category and has given the facility to borrow from the government at the rate of one per cent.
However, both BEPZA and BEZA are similar institutions that play a role in investment and socio-economic development under the Prime Minister's Office.
Despite being a homogeneous institution that plays a role in investment and socio-economic development, BEPZA has to borrow from the government at a rate of 6 percent.
In addition to repaying the loan instalments, the government has to pay more than Taka 100 crore every year for income tax at the rate of 25 per cent on BEPZA income.
In this case, repaying the loan at 6 percent interest rate will put huge financial pressure on BEPZA. As a result, BEPZA is likely to become financially weak.
Therefore, in the larger interest of BEPZA and the country, it is necessary to rationally reduce the interest rate on the proposed repayment of the proposed DPP and to increase the grace period rationally, the letter said.
ask/zn
