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Bangladesh:Govt offers sops on textile loan |
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2004-9-28
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The National Coordination Council (NCC) on readymade garment and textile sector is planning to recommend the government to subsidise Primary Textile Sector (PTS) by 2 per cent in terms of interest on long-term loan up to 2007 for attracting investment in the textile sector.
“Interest rate on long-term and short-term lendings might be reduced to the level of 7 per cent and 9 per cent respectively. Balance 2 per cent on long-term loan may be subsidised by the government,” the NCC said.The NCC, headed by Principal Secretary to Prime Minister’s office Dr Kamal Uddin Siddiqui, includes four Secretaries of related Ministries.
Textile Secretary Mohammed Azizul Islam prepared a paper proposing to facilitate the promising textile sector so that it can compete and face the challenges of quota free regime. The paper suggested creation of a special fund of US$1.05 billion for the sector, which might be disbursed through bank client relationship.
The paper also recommended adjustment of debt equity ratio to a comfortable limit. The existing ratio is 70 and 30. It will encourage new investment in the sector, the paper says. It recommended reduction of tariffs and taxes including VAT to zero on all the raw materials, dyes and chemicals and intermediary products used in the PTS.
Tariff rates of electricity and gas may be subsidised to a reasonable extent for export oriented local textile products, it said. It suggested continuation of 10 per cent cash incentive to face initial post-Multi Fibre Arrangement global competition with a phasing out programme.
Establishment of more industrial estates outside the cities with efficient water treatment plants for PTS and RMG sector has also been recommended. It suggested creation of fund for skill development training to the different levels of manpower for improving of productivity and quality of textile products.
“Effective measures should be taken to stop unauthorised import and bond leakage of textile products,” it recommended.The paper pointed out that about US$ 1.72 billion (Tk 10,330 crore) investment is needed in the textile sector up to 2007. Tk 2,850 crore in 57 new weaving units, Tk 1,420 crore in 71 new knit dyeing units, Tk 2,220 crore in 37 new woven dyeing and finishing units and Tk 3,140 crore for investment in 48 new spinning units. |
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