Export sectors get Tk 10b extra stimulus package

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FE Report
The government announced Wednesday the second stimulus package worth Tk 10 billion for helping the export-oriented enterprises, including textile and readymade garment (RMG) face the global meltdown.
"Our objective for providing the second incentive support is to ensure that none of the country's exporting sector turns sick because of the global financial recession," Finance Minister AMA Muhith said while announcing the stimulus package at a press briefing at his ministry.
The government has declared the second stimulus package in line with the recommendations of the recently formed high-powered taskforce headed by eminent economist and former finance minister M Syeduzzaman, Mr. Muhith noted.
"The government will require at least Tk 10 billion for financing the second stimulus package, which include direct export subsidy, fiscal and other policy support, for the export-oriented sectors," the press briefing was told.
Under the package, the government has introduced a 5.0 per cent export support for helping the country's prospective shipbuilding industry diversify its export.
A 5.0 per cent cash incentive on export of crust leather has also been announced, Mr. Muhith told the press briefing.
The government has also announced a conditional incentive support for the country's readymade garment (RMG) sector, under which a 5.0 per cent cash subsidy will be available in first year against exports to the markers other than EU, USA and Canada.
Besides, the rate of such subsidy will decrease to 4.0 per cent for second year and 3.0 per cent in the third year, the finance minister said.
But Textile Mills Association (BTMA) will get the additional cash support for direct export of yarn to any overseas market, he mentioned.
The government will also pay the licence renewal fees on captive generators, which will be payable from November 1,2009 until June 2010 by the private textile sector. And the government would require about Tk 70 million for the purpose.
Moreover, rate of interest for textile sector will be slashed to 10 per cent from the existing 13 per cent while the timeframe for rescheduling loan for the sector will also be extended until June 2010 from November 1, 2009.
The home textile units should be given the 'forward exchange' facility against their exports in respect of any currency other than US dollar, Mr. Muhith said, adding the new conditions of the loan rescheduling facilities could be applied for the sub-sector.
The government has also offered some special support for small and medium-sized textile mills, exports of those reached US$ 3.5 million in fiscal year (FY) 2008-09.
Under the support, such textile unit will get an extra 5.0 per cent incentive on their additional exports of the FY 2009-10 to that of last fiscal.
Besides, the small and medium textile units, without captive or diesel-run electricity generators, will be receiving a 10 per cent subsidy on their electricity bills until June 2010, the stimulus package revealed.
It, however, said such support will be applicable for those who have not enjoyed any loan rescheduling facility.
Apart from those, the government has already issued a circular in order to rationalise the banks' existing service charges and fees, following the discussions with the bankers' association, the press briefing was told.
The availability of loan from three banks under the Export Development Fund (EDF) has also been raised to $10 million for an individual borrower. Moreover, the rate of interest on EDF loan will be fixed at Libor +2.5 per cent.
The Bangladesh Bank will soon issue a circular in order to resolve the problems regarding the EDF, as was raised by the BTMA, the press briefing was told.
The finance minister said the government is keen on establishing the proposed 'contributory fund' for helping the country's textile sector face any possible crisis.
"The government is ready to provide Tk 3.0 billion as seed money for the initiative," Mr. Muhith said. He also expressed the hope that the textile operators would contribute 0.1 per cent of their export earnings from January 2010 until June 2010 and 0.2 per cent from July 2009 to the proposed fund.
In April 2009, the government announced a Tk 34.24 billion stimulus package for the meltdown-hit export sectors, including
The finance minister informed the newsmen that the government will convene a two-day Bangladesh Development Forum (BDF) meeting with donors and development partners from February 15, 2010.
The last BDF meeting was held in 2005, he mentioned.
Besides, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) forum is also scheduled for January 12, 2009, it was disclosed at the press briefing.
About the recent meetings with the governments of Turkey and UAE, Mr. Muhith said both the countries have expressed their interest to widen their cooperation especially in the areas of trade, investment, tourism and communications for Bangladesh.
Responding to a query, the finance minister said although the government had a plan to implement the recently announced seventh pay scale for government employees before the Eid-ul-Azha, it could not be possible because of non-completion of necessary formalities, including publishing of six separate books for the same.
Finance Secretary Dr. M Tareq and ERD Secretary Moshararf Hossain Bhuiyan and other senior officials of the finance ministry were present at the press briefing.