The Dhaka Chamber of Commerce and Industry (DCCI) has lauded the central bank’s decision for LC margin withdrawal stating that it would stimulate trade and investment in the country.
Recently, Bangladesh Bank through a circular decided to lift the LC margin on all types of imports except for some luxury products manufactured in Bangladesh with a view to largely alleviate the recent stagnation caused at the product import level and speed up industrialisation, reports BSS.
In addition, the Dhaka Chamber expects that the initiative of forming a “Revolving Refinancing Fund” by the central bank to expand the financial services for the development of cottage, micro, small and medium enterprises (CMSME) in the country will make financing of entrepreneurs in this sector easier, said a press release.
The DCCI applauded the central bank for taking such initiative in the prevailing situation of the financial sector and economy.
As per the directives of the central bank, from now on importers can import all types of capital equipment, consumer goods and capital raw materials without any margin based on bank-customer relationship.
Moreover, if imports increase; new investment, re-investment, availability of capital equipment and overall industrial production will subsequently increase, that would bring a positive result in export growth, said DCCI President Ashraf Ahmed.
Along with this, the supply of raw materials to the industries will also increase; as a result, factories will be able to ensure full-fledged production at their highest capacity, he added.
Supply of products in the market will accordingly increase as well as it may have a positive impact on the overall inflation situation of the country.
On the other hand, while the country is experiencing the ongoing liquidity crisis in the financial sector, especially difficulties in obtaining easy lending by the CMSMEs and lower credit flow to the private sector; at that time such an initiative of a “Revolving Refinancing Fund” by the central bank would play a pivotal role in getting refinancing benefits for the small entrepreneurs.
The Dhaka Chamber also believed that this fund would be useful for the growth of the production of goods and services, income and employment generation of the CMSME sector.
This fund will also help the affected small entrepreneurs in meeting their need for working capital to turn around.
Especially for CMSMEs, in the case of refinancing under this fund, the interest rate will never exceed eight per cent and in this case, no supervision charge or even early settlement fee can be imposed, which would be a relief for CMSMEs.
The DCCI also believed that the CMSME sector is the main driving force of the country's economy.
If the CMSME sector is given a special advantage in the development of the backward linkage industry and employment generation, its positive impacts will no doubt be reflected in the overall economy, added the press release.
