Sherpa Hossainy's Blog

Exporters push for special economic zones (Urges single-digit lending rate)

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import, RMG and textile by Sherpa Hossainy on May 14, 2011

My first business report for The Daily Independent (published May 13, 2011).

Read this on The Daily Independent website

Digital print edition

Exporters yesterday urged the government to set up special economic zones, especially in the underdeveloped northern region in a bid to develop the country’s economy.

“We are proposing to the government to set up at least three to four economic zones in the northern part of the country, which will result in an industrial balance,” said Abdus Salam Murshedy, president of the Exporters Association of Bangladesh (EAB).

He was speaking at a press conference on budget proposals at Pan Pacific Sonargaon Hotel, organised by EAB.

EPZs are given many facilities like tax exemption and continuous utility services but other industries are not getting those — this is creating an internal competition, said Murshedy, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

In the budget proposal, EAB also urged the government to bring down the banks’ lending interest rate to a single-digit.

“After the withdrawal of the lending cap of 13 per cent, the interest rates now depend on bank-client relationships, some are gaining advantages while others are not,” the EAB president said.

He said the banks are taking various additional charges like service and monitoring charges, which is making the total interest rate climbing up to 18-19 per cent now.

“Small and medium industries will not be able to survive the competition with 18-19 per cent interest rates. I don’t think there is any industry, anywhere in the world, which was viable after giving 18 per cent interest rates.”

Other demands on the budget proposal of EAB were: bringing source tax down to 0.25 percent from 0.40 per cent, exemption from VAT against utility charges, interest-free cash incentives, duty-free diesel and furnace oil, exemption from PSI inspection of capital machineries and spare parts, allotment of funds for human resource development, unified dollar exchange rate for all exporters and tax exemptions for sub-contractors.

Murshedy also asked for prioritised new connections of gas and electricity as government plans to provide new utility connections from June.

“There should be at least 25 per cent of the total electricity generation allotted for the export-oriented industries,” Murshedy proposed.

He said jute and shipbuilding are promising sectors and those should be provided with proper policy support and cash incentives to help them thrive. The EAB president urged the government to fulfil all their demands so that the country can dig out of the impacts of the ongoing global recession.

Murshedy said: “Even after facing all the difficulties, our total exports are almost $35 billion now. If the government supports us, it’s not going to be difficult to increase the exports to $50 billion, even with our existing infrastructure.”

Safi Ullah Chowdhury, vice president of EAB, Md Saiful Islam, president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, Faruque Hasan, vice president of BGMEA, AH Aslam Sunny, vice president of Bangladesh Knitwear Manufacturers and Exporters Association, and Jahangir Alamin, president of Bangladesh Textile Mills Association, were also present.

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