Foreign loans to private sector in 2013 decline

The volume of foreign loans received by the private corporate houses of the country declined in the last calendar year (2013) due to political unrest, official said.
The foreign loans provider organisations are not interested in giving loans to Bangladeshi private commercial houses in absence of investment friendly environment in the country.
Bangladesh Bank Deputy General Manager Mrinal Kanti Sarker, who is a member of the Board of Investment (BoI) scrutiny committee, told the FE: "We had an expectation that the disbursement would rise in 2013, but it didn't. Volatile political environment is the key reason behind the fall in disbursement of foreign loans".
He said rate of receiving foreign loans by the country's corporate houses including telecommunication, power, textile, pharmaceuticals, cement, steel, cotton, fabrics, food processing and readymade garments (RMG) industries dropped compared to that of the previous year.
The BoI committee-approved proposals for foreign credit for local corporate houses were worth $1.19 billion in 2013, down from $1.50 billion in 2012. On the other hand, proposals to Board of Investment (BoI) scrutiny committee for approval of foreign loans also decreased during that period.
Ha-Meem Group Managing Director AK Azad told the FE, "The country's present environment is not at all investment-friendly which forced international loans providing organisations to adopt a wait and see policy,"
He said most of the foreign credit has to be spent on capital machinery setup, but import orders (on capital machinery) came to almost a halt in the last one year.
Mr Azad, also former president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), said due to unstable political situation most of international loans providing organisations have lost their interest in disbursing fresh loans to the country's private sector.
He said fall in foreign loan disbursement to private companies is not a good sign for the country's economy.  Bangladesh Textile Mills Association (BTMA) president Jahangir Alamin told the FE, "The country's entrepreneurs are not expanding their existing plants. So foreign credit disbursement has fallen." Policy Research Institute of Bangladesh executive director Dr Ahsan H Mansur told the FE, "In this volatile environment, the country's big entrepreneurs are not interested in taking foreign loans for fresh investment".
He said in the last one year all business activities including export, import and investment have suffered for the unstable political situation.
He said, "The government had set a target of 7.2 per cent gross domestic product (GDP) growth for the fiscal 2013-14 but I don't think it can be achieved". According to FBCCI the business activities across the country were suspended for 147 days in 2013 due to shutdown, hartal and blockade.