Dhaka Bureau Policy Times : The central bank of Bangladesh has expanded the size of the stimulus package for large industries and services sector firms to make the low-cost funds available for the factories located in the economic zones.
The volume of the package was enhanced by Tk 7,000 crore to Tk 40,000 crore as part of the central bank’s effort to facilitate both local and foreign industries in the industrial zones, according to a central bank notice.
Only the units of industrial and service sector firms will get the extended portion of the package.
The units that are operating under the Bangladesh Economic Zones Authority, the Bangladesh Export Processing Zones Authority and the Bangladesh Hi-Tech Park Authority will be eligible for the funds to revive their businesses.
There are three types of units — A, B and C — in the economic zones.
Firms with 100 per cent foreign ownership are considered as Type-A companies. Joint venture companies with foreign and Bangladeshi ownerships are treated as Type-B and those with 100 per cent Bangladeshi ownerships are Type-C.
The central bank initially allowed Type-C companies to borrow from the stimulus fund and gradually extended the facility to the factories belonging to the two other categories. The type-C companies availed financial support from the package as they were included in the package initially, said Abu Farah Md Naser, an executive director of the central bank.The companies under the type-A and type-B categories have not been able to secure funds as the package has almost been depleted after meeting the demand of local firms, he said.
As much as 86 per cent of Tk 33,000 crore has already been disbursed from the package to accelerate the ongoing economic revival, Naser said. The foreign industrial units, like the local ones, have also been hit hard by the financial meltdown and they are unable to avail funds from their home countries, he said. The entire globe is now in dire straits due to the coronavirus pandemic and a second wave of the deadly flu has already hit North America and Europe and many other parts of the world.
If the financial support is not extended to the foreign firms, their businesses will face a severe crisis and many of them will be forced to close their units. This will put an adverse impact on the economy in the long run. The latest initiative taken by the central bank will help the country brighten its image internationally, Naser said.
The central bank asked banks to submit their loan disbursement plans under the stimulus package by November 5. “The extension of the package will help the economy to a large extent,” said Emranul Huq, managing director of Dhaka Bank.
The central bank introduced a Tk 30,000 crore stimulus package on April 12, allowing banks to receive an interest rate subsidy of 4.5 per cent on disbursed loans, which the end-users will get at 9 per cent. The package was later expanded to Tk 33,000 crore so that export-oriented industries could pay wages and salaries to their workers.