Experts have underscored the need for ensuring financial schemes and credit lines for exporters in order to maximize export competitiveness.
Meantime, a central bank representative has echoed the government plans to support the private sector through implementing a number of reforms for enhancing export competitiveness by simplifying the foreign exchange guideline.
They made the observations at a dialogue on Financing Schemes and Available Credit Facilities for Export Competitiveness under the 7th Financial Sector Development Working Committee (FSDWC) Meeting held at DCCI Board Room on Wednesday. Speaking as the chair, Ahmed Jamal, Deputy Governor of Bangladesh Bank said, “We have simplified the Foreign Exchange Guideline to support the private sector.”
Having underscored the gravity of the dialogue, he appreciated BUILD for supporting the central bank learning inputs from the grassroots that incredibly supporting Bangladesh Bank for preparing befitting policies.
The Ministry of Industries has drafted the SME Policy 2019 and is currently awaiting approval of the Cabinet Division, which was not coordinated with the Bangladesh Bank. So, the Deputy Governor requested the Ministry of Industries to hold a coordinated meeting with them before issuing gazette notification for the SME Policy 2019.
Echoing the voice of the participants, Waqar Ahmad Choudhury, senior vice president urged the government for looking for alternative financing facilities rather than borrowing all funds from public sector banks while implementing mega projects.
BUILD organised the meeting and presented two policy papers on Financing Schemes and Available Credit Facilities for Export Competitiveness of Bangladesh and Access to Collateral Free Loan for Women Entrepreneurs in Bangladesh.
The first presentation shows how the SMEs in Bangladesh is constrained by limited access to credit, leaving them with a financing need while the second study unveils constraints while availing collateral-free long-term credit for SMEs run by women entrepreneurs. The study recommends guarantor identification, personal guarantee, group based loan, setting standards for definition of new entrepreneurs.
The entrepreneurs also urged for a simplified trade license for marginal women entrepreneurs and an earmarked fund from the recently announced Tk 100 crore startup funding. Having expressed gratitude to the central bank, BUILD CEO Feradus Ara Begum updated the working committee members about the implementation of last working committee meeting and said “we are increasing demand for loans but complicated process is driving our entrepreneurs away.”
The dialogue laid importance on different pre-shipment finance and post shipment financing schemes for export competitiveness that includes export development fund, long term financing facility, green financing, green transformation fund, refinancing schemes by Bangladesh Bank and Islamic Shariah-based finance, packing credit, factoring etc. It also proposed for some alternative financing such as mezzanine structures, special funds, esco contracts, impact funds, subordinated bonds and many others.
Swapan Kumar Bala, Commissioner to the Bangladesh Securities and Exchange Commission (BSEC) informed that for greater securitization of funding one person company (OPC) is going to be corporatized so that documentation and related issues can be resolved. It was also informed that venture capital fund can also be explored for the women entrepreneurs. In case of venture capital funding a number of reforms have been taken but stamp duty at the rate of 2% still remains which increased upfront cost of the entrepreneur. These issues have been hampering the funding issue of the new entrepreneurs.
Dr. Shah Md. Ahsan Habib, Director, BIBM laid emphasis on both demand and supply side of funding so that the gap should be minimized.Representatives from different banks, NBFs, lending agency and venture capital representatives and multinational companies including representatives from public and private sectors attended the meeting and took part in the discussion.