Crisis management fund on cards
Finance Minister AMA Muhith yesterday assured the business community of forming a crisis management fund in the upcoming national budget to provide quick financial assistance to the entrepreneurs hurt by the ongoing global financial recession.
The disclosure came at a meeting between the finance ministry and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at the minister's Secretariat office.
FBCCI President Annisul Huq submitted a set of recommendations to the minister suggesting a 'Comprehensive Economic Stimulus Package' in the FY 2009-10 budget to mitigate the recession fallout.
Although the minister did not spell out immediately the size of the proposed fund, he said, "I can assure you that there would be a fund in the next budget to face the recession."
The FBCCI's 28-point demand includes loans from the block allocation of the central bank for the affected entrepreneurs at 6 percent interest in line with the Bangladesh Bank guideline, which should be repayable in a span of five years from the year 2011. "Giving stimulus packages to the affected sectors in this system will be more effective," Huq thinks.
The apex trade body also proposed that the rate of interests is slashed to 11 percent for all industrial credit, including the sectors specified by the central bank, and bank service charges reduced to maintain its smooth flow.
Another demand the federation put forward was formation of funds, such as Bangladesh Power Fund and Bangladesh Infrastructure Fund to resolve the power crisis and develop infrastructure.
It also demanded the government move to issue power bonds at 7 percent interest, with a seven-year term.
The government can purchase electricity from captive power plants, as many businessmen are ready to sell it, the FBCCI chief also suggested.
To develop infrastructure, the trade body recommended a five-year term investment bond at five percent interest. “Such investment should remain above question and undisclosed,” Huq said.
The FBCCI pointed to the huge idle fund of the state-owned Jiban Bima Corporation (a life insurer) and suggested its utilisation for the formation of Bangladesh Infrastructure Fund.
Huq also recommended initiatives on the government's part to get funds from the lenders like International Monetary Fund, World Bank and Asian Development Bank, as those organisations have recently launched a $850 billion bailout package.
"Bangladesh as an LDC should be entitled to an allocation from this fund," he said.
Huq urged the government to keep the interest rate spread between the cost of fund and the interest on deposits at 2.5 percent.
He also proposed fixing the tax rate at 25 percent for the manufacturing companies earning less than Tk1 crore a year, 30 percent for the ones earning more than Tk 1 crore and 35 percent for the trading and non-manufacturing companies in the national budget for the fiscal year 2009-10.
The FBCCI reiterated its demand that the government target a Tk 55,000 crore revenue earning, with an estimated growth rate of 6 percent.
It also sought an import duty cut to 1-2 percent by 2016 so that industrialisation gains a speed.
Huq also asked the government to cap duties on the imports of capital machinery by 1 percent, 5 percent for intermediate goods, 12 percent for essential intermediate goods and 25 percent for luxury items.
Different stakeholders like apparel, frozen foods, textile and handicraft manufacturers and exporters were consulted before outlining the recommendations the trade body placed to the minister.
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