Special fund for recession-hit sectors in next budget: Muhith
Monday, 27 April 2009
FE Report
Finance Minister AMA Muhith assured Sunday the country's businesses of creating a special fund in the next budget for supporting the sectors hit by ongoing global recession.
"A special fund, whatever its name is, will be created in the next budget to help the recession-hit sectors cope with the external shocks," Mr Muhith said.
The finance minister's assurance came when a delegation of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), led by its president Annisul Huq, placed a 'Comprehensive Economic Stimulus Package (CESP) designed to help the local industries and create employments amid the global recession.
Under the CESP, the country's apex trade body made a set of proposals including creation of a 'Financial Crisis Mitigation Fund', and ensuring necessary policy supports, including low-cost credit for local industries and reduction of existing customs duties.
"We have placed a fresh proposal on the CESP, laying emphasis on four important areas - uninterrupted credit flow supports for affected and vulnerable sectors, favourable 3government policies and higher investment in infrastructures and technology sectors," the FBCCI president told newsmen.
Among the proposals, the Federation has demanded creation of a Financial Crisis Mitigation Fund, which could be as big as possible, so that banks provide credit at 6.0 per cent rate of interest to both the affected and vulnerable industries under the central bank's existing guidelines.
"Such credit facility, having a repayment provision for five years from 2011, should be disbursed until December 2010, Annisul Huq said.
The FBCCI also proposed for establishing a Tk 5.0-billion fund for both the rehabilitation and skill development of returnee-expatriates and other unemployed people.
It also proposed for brining down the maximum rate of interest on lending to 11 per cent for all the sectors, including those already selected by the central bank.
Besides, the apex trade body also suggested that necessary steps should also be taken to bring down the interest rate to 10 per cent in future against the backdrop of the ever-increasing global competition.
Apart from the rate of interest, it also sought the central bank's intervention in reducing the spread between credit and deposit rates to 2.5 per cent.
Besides, it demanded extension of loan-rescheduling facilities without down payments to all the affected sectors until December 2010.
The FBCCI also sought exemption of all the existing service charges on transactions of foreign remittances and exports receipts. It demanded disbursement of the outstanding cash subsidy and other dues on duty-drawback within June 30, 2009.
It also proposed reduction of the existing port charges and exemption of tax, income tax and other charges from the affected industries until the fiscal year 2010.
The Chamber, however, proposed for creating a 'Bangladesh Power Fund' through issuing bonds so that local and foreign investors can invest in this sector without disclosing their sources of income.
It also stressed the need for introducing 'investment bonds' in the market for creating a "Bangladesh Infrastructure Fund' and also allowing the use of a huge amount of idle fund of insurance companies for the purpose.
The FBCCI also proposed for brining down the customs duty on capital machinery to 1.0 per cent, intermediate goods to 5.0 per cent.
It, on the other hand, proposed for reducing the rate of corporate tax to 25 per cent for the companies with net profit remaining below Tk 10 million and 30 per cent for those with net profits of Tk 10 million and above.
Considering the ongoing nagging power crisis, the Federation also suggested setting up of small power units in the country.
The finance minister told the FBCCI leaders that the government was giving thrust on the areas like food, fertiliser and fuel in its budgetary allocations
About the FBCCI proposals, Mr Muhith said: "We went to ensure credit flow to the private sectors but no time-frame is to be set in this connection."
He also said foreign investment will be encouraged for telecom, power, education and healthcare sectors and necessary strategies will also be devised to this effect.
Responding to a query, the minister said the World Bank and the International Monetary Fund (IMF) are expected to double their assistance to US$ 600 million.
UNB adds: Muhith said the government is working on the development of the country's nagging power sector, but the people working on it could not make it public.
"Around 700 MW power have been added after the present government assumed office," he told a meeting with a FBCCI delegation at the Finance Ministry.
"The availability of power is so meagre, compared to the huge demand, that the improvement is barely noticeable," said the Minister, replying to a question whether the government has so far taken any visible steps towards improving the power supply situation.
Finance Minister AMA Muhith assured Sunday the country's businesses of creating a special fund in the next budget for supporting the sectors hit by ongoing global recession.
"A special fund, whatever its name is, will be created in the next budget to help the recession-hit sectors cope with the external shocks," Mr Muhith said.
The finance minister's assurance came when a delegation of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), led by its president Annisul Huq, placed a 'Comprehensive Economic Stimulus Package (CESP) designed to help the local industries and create employments amid the global recession.
Under the CESP, the country's apex trade body made a set of proposals including creation of a 'Financial Crisis Mitigation Fund', and ensuring necessary policy supports, including low-cost credit for local industries and reduction of existing customs duties.
"We have placed a fresh proposal on the CESP, laying emphasis on four important areas - uninterrupted credit flow supports for affected and vulnerable sectors, favourable 3government policies and higher investment in infrastructures and technology sectors," the FBCCI president told newsmen.
Among the proposals, the Federation has demanded creation of a Financial Crisis Mitigation Fund, which could be as big as possible, so that banks provide credit at 6.0 per cent rate of interest to both the affected and vulnerable industries under the central bank's existing guidelines.
"Such credit facility, having a repayment provision for five years from 2011, should be disbursed until December 2010, Annisul Huq said.
The FBCCI also proposed for establishing a Tk 5.0-billion fund for both the rehabilitation and skill development of returnee-expatriates and other unemployed people.
It also proposed for brining down the maximum rate of interest on lending to 11 per cent for all the sectors, including those already selected by the central bank.
Besides, the apex trade body also suggested that necessary steps should also be taken to bring down the interest rate to 10 per cent in future against the backdrop of the ever-increasing global competition.
Apart from the rate of interest, it also sought the central bank's intervention in reducing the spread between credit and deposit rates to 2.5 per cent.
Besides, it demanded extension of loan-rescheduling facilities without down payments to all the affected sectors until December 2010.
The FBCCI also sought exemption of all the existing service charges on transactions of foreign remittances and exports receipts. It demanded disbursement of the outstanding cash subsidy and other dues on duty-drawback within June 30, 2009.
It also proposed reduction of the existing port charges and exemption of tax, income tax and other charges from the affected industries until the fiscal year 2010.
The Chamber, however, proposed for creating a 'Bangladesh Power Fund' through issuing bonds so that local and foreign investors can invest in this sector without disclosing their sources of income.
It also stressed the need for introducing 'investment bonds' in the market for creating a "Bangladesh Infrastructure Fund' and also allowing the use of a huge amount of idle fund of insurance companies for the purpose.
The FBCCI also proposed for brining down the customs duty on capital machinery to 1.0 per cent, intermediate goods to 5.0 per cent.
It, on the other hand, proposed for reducing the rate of corporate tax to 25 per cent for the companies with net profit remaining below Tk 10 million and 30 per cent for those with net profits of Tk 10 million and above.
Considering the ongoing nagging power crisis, the Federation also suggested setting up of small power units in the country.
The finance minister told the FBCCI leaders that the government was giving thrust on the areas like food, fertiliser and fuel in its budgetary allocations
About the FBCCI proposals, Mr Muhith said: "We went to ensure credit flow to the private sectors but no time-frame is to be set in this connection."
He also said foreign investment will be encouraged for telecom, power, education and healthcare sectors and necessary strategies will also be devised to this effect.
Responding to a query, the minister said the World Bank and the International Monetary Fund (IMF) are expected to double their assistance to US$ 600 million.
UNB adds: Muhith said the government is working on the development of the country's nagging power sector, but the people working on it could not make it public.
"Around 700 MW power have been added after the present government assumed office," he told a meeting with a FBCCI delegation at the Finance Ministry.
"The availability of power is so meagre, compared to the huge demand, that the improvement is barely noticeable," said the Minister, replying to a question whether the government has so far taken any visible steps towards improving the power supply situation.