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Wednesday, April 8, 2009

Exporters to get Tk 1,500cr bailout

The bail-out package being prepared by a high-powered committee to enable businessmen to weather the global financial meltdown is against awarding any cash incentives to exporters in the current fiscal year, said sources.
Instead of direct cash incentive, which is the major demand of the local exporters, the committee will offer policy support for giving them indirect benefits during the remaining three months of the current fiscal year, the sources added.
The committee, led by finance minister AMA Muhith, is expected to come up with an announcement of keeping a block allocation of more than Tk 1,500 crore in the next fiscal budget for the affected exporters, the sources said.
The block allocation fund will be additional to the existing export subsidy facility provided for the export of 13 items, mainly readymade garments, frozen food, leather, leather goods and jute.
Sources said the bail-out package is likely to be unveiled at the end of this week.
Among the policy supports that the committee will announce, there will be expansion of the export development fund, rescheduling of bank loans and waiver of accumulated interest for the export-oriented entrepreneurs.
The export development fund, supervised by the Bangladesh Bank, has been designed to cater to the needs of import payment of export-oriented manufacturers. A single borrower can avail himself of a soft loan of not more than one million dollars at a time.
‘We will welcome any initiative by the committee which will help us to increase our competitiveness,’ said the Bangladesh Garments Manufacturers and Exporters Association president, Salam Murshedi.
It may be direct or indirect cash incentive, he said, adding that the country’s readymade garments sector badly needs the incentives to survive in the competition against rival countries like India and Pakistan.
Readymade garments is the main export item that accounted for 76 per cent of the country’s export income of around $14 billion in the last fiscal year.
Fazlul Hoque, the Bangladesh Knitwear Manufacturers and Exporters Association president, said the committee should at least consult the stakeholders before announcing the incentives.
‘This can help the government to prepare a comprehensive package,’ he added.
The committee, while preparing the package, scrutinised various factors and forecasts and is convinced that the country’s export sector will not face a major backlash in the current fiscal year, said sources.
Export data in the first eight months suggest that the growth of exports has slowed down. As the growth might slow down further in the coming fiscal year, the committee focused on it while designing the package.
The committee is also convinced that cash incentive for local exporters in the current fiscal year is not a logical demand. It found that fiscal discipline would be hampered if such incentives are offered, sources added.

The New Age



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