Mentioning that the current financing facilities are very much inclined to the apparel sector, speakers suggested for bringing parity in financing projects of all industries in order to boost exports and raise competitiveness in the international market.
They said industries other than RMG are facing discriminations in getting finances as the limited resources are applicable for the garments sector which are availing multiple financing for a single project.
Since availability of funding schemes is essential for maximising export diversification and competitiveness, the government should introduce attractive and innovative financing options for all sectors equally, they added.
The speakers made this view at a consultation dialogue on Financing Schemes for Maximizing Export Competitiveness in Bangladesh where a policy paper of BUILD for presenting to the 7th meeting of the Financial Sector Development Working Committee was placed. BUILD organised the programme at its office recently.
The objective of the meeting was to discuss with the economists and experts about their opinion and suggestions on making funding schemes available for all industries. The policy paper highlighted importance of export diversification, sectoral issues for export competitiveness, experiences of different credit lines and financing schemes such as Export Development Fund, Green Transformation Fund, Long-Term Fund, Packing Credit and other related funds, financing options and credit lines being used at the pre and post export stages.
Ms. Shahriar Rawshon gave a presentation on ‘Collateral Free Loan for Women Entrepreneurs’ where government initiatives for allowing collateral, available schemes for women entrepreneurs and the financial scenario of CMSME (WE) loan disbursement issues and policies in that context.
Dr. Mahmood Osman Imam, Professor, Department of Finance of DU highlighted the need for subordinate bonds other than bank based credit facilities as a form of financing. Mentioning about the high requirements of Basel III, he urged banks to be ready to face innovative schemes which will enter into the market within the next five years.
To make the transparency and effective monitoring of present export funds, he suggested full automation of the processing from the time of application to the disbursement citing example of EDF.
As per the conditions of EDF for leather and leather goods, ceramics along with export performance, a certain projected growth can also be considered for allowing funds to the firms to create the scope of diversified export basket.
The refinancing schemes can be dealt by non-banking financial institutions (NBFIs) as this may not be affordable for banks because of high interest rates. He also highlighted IDLC’s collateral free loan as an example of refinancing scheme and informed that a number of women entrepreneurs became successful by availing of this loan. For them, the amount can be even doubled to Tk 50 lakh, he said suggesting efforts for bringing changes in the respective policies of the banks. He laid importance on cash flow based financing and put emphasis on the market based interest rate.
Dr. Ahsan Habib added that the issue of Back to Back L/C and UPAS L/C as required in the pre-export stage is being used largely in economic zones are important to consider for discussing the financing schemes for exporters in the country.
He also said that DA (Documents against Acceptance) is more relevant in the present international trade rather than DP (Documents against payment). He highlighted the importance of Negotiation of Documents under L/C as post shipment finance and also said that packing credit has lost its attraction because of high interest rate. About SME financing, he added that the concept and application of cluster financing in the country is not clear, and suggested for introduction of export credit guarantee scheme.
Md. Joynal Abdin, ED, DBI focused on loan facilities for women entrepreneurs for SMEs at subsidised rate from the SME Foundation and suggested that additional funding for successful collateral financing recipient, policies of the banks and FI needs to be changed.
Joydeb Saha, joint director, Bangladesh Bank also contributed. A number of BUILD officials were present and contributed in the meeting.
BUILD CEO Ferdaus Ara Begum made presentation on the topic.
BUILD CEO Ferdaus Ara Begum is presenting a paper at a dialogue on Financing Schemes for Maximizing Export Competitiveness in Bangladesh at BUILD office in Dhaka recently.