BB won't give guarantee to shipbuilding sector
Sunday, 7 December 2008
Shakhawat Hossain
Bangladesh Bank (BB) has expressed inability to give guarantee to any commercial bank in favour of ship building industry saying it is contrary to the existing provision, officials said Saturday.
The central bank cleared its position at a meeting held at Chief Adviser's office last month on guarantee issue, which has been sought by the local ship builders.
Local leading ship builders like Ananda Shipyard, Western Marine and High Speed want such guarantee in favour of the local commercial banks to minimise the import cost of ship building materials.
Most of local commercial banks rely on foreign commercial banks operating in the country for 'Letter of Credit (LC) confirmation' which leads to higher import cost, the shipbuilders said.
The BB, however, said the local commercial banks, which need LC confirmation, will be exempted from such obligation in coming years when they will adopt new banking regulation to improve their standard.
With the adoption of the new banking regulation, known as BASEL-II, from next month the local commercial banks will get acceptability for external trade globally, the central bank representative told the meeting.
The meeting was held to discuss the kind of incentives to be offered to the ship building industry, which has already fetched export order worth US $700 million in a span of two years.
Ananda chairman Abdullahel Bari said the stance of the central bank on guarantee issue is disappointing.
"We did not expect such negative stance," he said, adding that it would deal a big blow to the growth momentum of the local ship building industry.
The shipbuilding industry has flourished in the countries like Korea, China, Japan, India and Vietnam because of adequate government support, he said.
The CA's office reviewed 16 incentives, including bank guarantee, duty-free import, waiver of income-tax, land allocation, special fund, separate windows in the Board of Investment and the Export Promotion Bureau (EBP) and export subsidy.
The revenue board has already facilitated bonded warehouse facilities, allowing them to import raw materials duty-free without facing the hassles at the port.
Experts, however, said other incentives are crucial as the local shipbuilding industry is still at its infancy.
The incentives will help the industry develop further in the country that badly needs export product diversification amid deepening financial downturn globally.
They said local ship building industry has high potential to make $10 billion export earning in less than 10 years although the country's garments sector earned such amount in 25 years time.
Bangladesh Bank (BB) has expressed inability to give guarantee to any commercial bank in favour of ship building industry saying it is contrary to the existing provision, officials said Saturday.
The central bank cleared its position at a meeting held at Chief Adviser's office last month on guarantee issue, which has been sought by the local ship builders.
Local leading ship builders like Ananda Shipyard, Western Marine and High Speed want such guarantee in favour of the local commercial banks to minimise the import cost of ship building materials.
Most of local commercial banks rely on foreign commercial banks operating in the country for 'Letter of Credit (LC) confirmation' which leads to higher import cost, the shipbuilders said.
The BB, however, said the local commercial banks, which need LC confirmation, will be exempted from such obligation in coming years when they will adopt new banking regulation to improve their standard.
With the adoption of the new banking regulation, known as BASEL-II, from next month the local commercial banks will get acceptability for external trade globally, the central bank representative told the meeting.
The meeting was held to discuss the kind of incentives to be offered to the ship building industry, which has already fetched export order worth US $700 million in a span of two years.
Ananda chairman Abdullahel Bari said the stance of the central bank on guarantee issue is disappointing.
"We did not expect such negative stance," he said, adding that it would deal a big blow to the growth momentum of the local ship building industry.
The shipbuilding industry has flourished in the countries like Korea, China, Japan, India and Vietnam because of adequate government support, he said.
The CA's office reviewed 16 incentives, including bank guarantee, duty-free import, waiver of income-tax, land allocation, special fund, separate windows in the Board of Investment and the Export Promotion Bureau (EBP) and export subsidy.
The revenue board has already facilitated bonded warehouse facilities, allowing them to import raw materials duty-free without facing the hassles at the port.
Experts, however, said other incentives are crucial as the local shipbuilding industry is still at its infancy.
The incentives will help the industry develop further in the country that badly needs export product diversification amid deepening financial downturn globally.
They said local ship building industry has high potential to make $10 billion export earning in less than 10 years although the country's garments sector earned such amount in 25 years time.