BIDA for allowing foreign banks to lend to local businesses

Bangladesh Investment Development Authority (BIDA) has recommended the finance ministry to allow the foreign lenders to provide loan to local businesses as working capital since Covid-19 pandemic has hit them hard.

BIDA also advised to form a high-level national taskforce to guide the government on how to prevent the spread of coronavirus and mitigate the economic losses. Besides, BIDA has further advised the government on waiving all investor-related fees from BlDA during the pandemic period. Director of BIDA Md Ariful Haque on Thursday sent a 14-point recommendation to senior finance secretary Abdur Rouf Talukder detailing the process of mitigation of losses incurred for coronavirus.

The letter reads “We believe the sustained the growth that was continuing can be reinvigorated if all relevant bodies work in tandem”. Foreign lenders meant not only the World Bank and Asian Development Bank but a total of 9 foreign banks can provide foreign loan to a local businesses that badly need working capital.

Former Finance Adviser Caretaker Government Dr AB Mirza Azizul Islam said, “The foreign banks in Bangladesh usually provide a loan in the US dollar which mounts pressure on our foreign currency.”

Earlier, Prime Minister Sheikh Hasina announced a Tk 50,000cr package in working capital to help the coronavirus-hit big industries, medium and small businesses at subsidized interest rates.

On May 4, a UNCTAD report titled ‘Global Investment Trends Monitor’ predicted that global Foreign Direct Investment (FDI) flows will see a drastic fall up to 40 percent during 2020-2021.

Earlier in March, the UNCTAD had projected that coronavirus might eat up 15 percent of global FDI. “There may be no major impact or drastic fall in FDI flow to Bangladesh which annually gets only two billion US dollar,” said former finance adviser Dr AB Mirza Azizul Islam.

BIDA’s 14 points suggestions include simplification of foreign loan approval procedures by shifting notification from current approval process, extension of monthly VAT returns submission date due to the coronavirus pandemic, adoption of business-friendly tax/VAT recovery policy and enforcement policy to avoid indiscriminate bank account, government approval for the industries and firms to defer the payment of the worker's profit participation fund (WPPF), exemption of nonresident citizens from 182 days rules for being treated as resident for tax purposes and exemption from congestion charges at ports during COVID 19 situation.

The recommendations also include that power ministry will reduce the prices of industrial and commercial units of electric and gas or extension of deadlines of bill payment, commerce ministry will extend deadlines to submit all statutory return to Registrar of Joint Stock Companies and Firms due between February and June 2020 and ensure delayed submissions without penalties. Besides, the authorities concerned will extend the deadlines for submitting all statutory returns, and allowing delays without fines or penalties for listed companies.