Businesses seek ‘Sick Industries Law’ to revive closed factories
More than 6,000 factories were once listed as operating in Chattogram, but only around 2,700 remain active at present, they say
Businesses in Chattogram today (9 August) called for a "Sick Industries Law", modelled on similar legislation in developed countries, to revive struggling and closed industrial units.
More than 6,000 factories were once listed as operating in Chattogram, but only around 2,700 remain active at present, said Maruf Chowdhury, vice-president of the Chattogram Metropolitan Chamber of Commerce and Industry and a member of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Maruf made the proposal at a stakeholder consultation meeting organised by Bangladesh Bank at Hotel Radisson Blu in Chattogram on Saturday to discuss the implementation of a Tk60,000 crore incentive package.
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Bangladesh Bank Governor Md Mostaqur Rahman said the country's conventional mortgage-based lending system had failed to deliver the desired results in reducing non-performing loans.
Recovering loans by selling mortgaged assets after borrowers default has also proved ineffective, he said.
"Instead of relying solely on collateral or mortgages, banks need to give greater importance to the cash flow generated by the borrower's business," the governor said.
Tk20,000cr for closed industries
The Bangladesh Bank said Tk41,000 crore of the package will come from excess liquidity held by scheduled banks, while Tk19,000 crore will be financed from the central bank's own funds.
The largest allocation under the Tk41,000 crore scheme Tk20,000 crore has been earmarked for closed industries and service-sector businesses. Banks will lend under the scheme at 4% interest, while the customer-level rate has been set at 7%.
Another Tk10,000 crore has been allocated for agriculture and the rural economy, with lending rates of 4% for banks and 8% for customers.
The CMSME sector will receive Tk5,000 crore, with banks charging 4% and customers 9%.
A further Tk3,000 crore each has been allocated for export diversification and the northern agricultural hub. The customer-level interest rate has been set at 7% for export diversification and 9% for the agricultural hub.
Tk19,000cr Bangladesh Bank funding
Of the Tk19,000 crore to be financed directly by Bangladesh Bank, Tk5,000 crore has been allocated for pre-shipment credit refinancing, with banks receiving funds at 2% and lending to customers at 5%.
Another Tk5,000 crore has been earmarked for cottage and micro enterprises, with rates of 4% for banks and 7% for customers.
The frozen shrimp and fish export sector and the leather goods and footwear export sector will each receive Tk2,000 crore. Banks will charge 4% and customers 7% under both schemes.
The package also includes Tk1,000 crore each for overseas employment and employment generation for unemployed youths.
Another Tk1,000 crore has been allocated for rural economic activities and Tk1,000 crore for green refinancing. The creative economy and startup sectors will receive Tk500 crore each.
Package targets 2.5m jobs
The governor said the package should not be viewed merely as a lending programme, but as a coordinated initiative to rebuild the economy, boost investment and production, and create employment.
The programme aims to generate around 2.5 million new jobs, he said.
He also highlighted the "One Village, One Product" concept to promote products from Chattogram's coastal and hill regions in international markets, saying it could increase local production and export earnings.
Entrepreneurs unaware of support
The Bangladesh Bank currently has 31 refinancing and pre-financing schemes, but many genuine entrepreneurs remain unaware of the facilities because of inadequate publicity, the governor said.
As a result, some funds allocated under incentive programmes are not being utilised as expected.
He urged bankers, business leaders and entrepreneurs to ensure information about the schemes reaches genuine entrepreneurs at the grassroots level.
During a nearly two-hour question-and-answer session, representatives of Chattogram's chambers, business organisations, entrepreneurs and regional bank offices raised concerns about industrial-sector challenges and sought clarification from the governor.
