Only Tk 5.61b disbursed to reopen closed factories, despite Tk 200b allocation

Only Tk 5.6 billion (Tk 561 crore) has been disbursed from the incentive fund established by Bangladesh Bank to reopen closed industrial factories.

A further Tk 9.295 billion (Tk 929.5 crore) is being processed for disbursement under the scheme. The fund has an allocation of Tk 200 billion (Tk 20,000 crore). Over the past five months, industrial entrepreneurs have received less than 3 per cent of the allocated amount.

Around five months ago, Bangladesh Bank announced an incentive package worth Tk 600 billion (Tk 60,000 crore) to stimulate the economy as a whole. The package was subsequently increased to Tk 620 billion (Tk 62,000 crore). During these five months, less than one-fifth, or 20 per cent of the total incentive funds could be disbursed. As of 15 October, approximately Tk 119.60 billion (Tk 11,960 crore) had been released.

Bangladesh Bank stated this in a press release issued today.

According to a press release issued by Bangladesh Bank, a total of Tk 119.598 billion (Tk 11,959.82 crore) had been disbursed under 15 pre-financing and refinancing schemes included in the incentive package as of 15 October. Financing worth a further Tk 25.6 billion (Tk 2,560 crore) is being processed.

The total amount disbursed and under processing stands at approximately Tk 145.198 billion (Tk 14,519.79 crore).

According to Bangladesh Bank’s statement, cumulative disbursements under the various schemes include Tk 69.17  billion (Tk 6,917 crore) under the pre-shipment credit refinancing scheme. Another Tk 25 billion (Tk 2,500 crore) has been disbursed under a special scheme to support cottage and small enterprises, while approximately Tk 9.08 billion (Tk 908 crore) has been disbursed from the working capital refinancing fund for the cottage, micro, small and medium enterprise (CMSME) sector.

In addition, Tk 5.61 billion (Tk 561 crore) has been disbursed under the pre-financing scheme supporting closed industrial and service-sector enterprises. A further Tk 92.95 billion (Tk 929.5 crore) in financing for this sector is being processed. The scheme established to support the creative economy has disbursed Tk 5 billion (Tk 500 crore), while Tk 2.93 billion (Tk 293 crore) has been disbursed under the refinancing scheme aimed at increasing agricultural production, expanding economic activities in rural areas, ensuring food security and creating employment.

Bangladesh Bank said Tk 2 billion (Tk 200 crore) had been disbursed under the financing scheme for creating overseas employment opportunities, Tk 486.7 million (Tk 48.67 crore) under the refinancing scheme to establish a special agriculture-based economic zone in northern Bangladesh, and Tk 325.9 million (Tk 32.59 crore) under the startup financing scheme. A further Tk 50 million (Tk 5 crore) is being processed under the startup scheme.

Meanwhile, financing worth Tk 10 billion (Tk 1,000 crore) under the scheme for creating employment opportunities for unemployed young people, Tk 5.27 billion (Tk 527 crore) under the refinancing scheme for green factory buildings and green industries, and  Tk 980 million (Tk 98 crore) under the financing scheme for export-oriented leather goods and footwear businesses is being processed.

Bangladesh Bank announced an incentive fund of Tk 620 billion (Tk 62,000 crore) to revive the economy, including reopening closed factories. Loans from the fund are supposed to be offered to industrial entrepreneurs at an interest rate of no more than 7 per cent. The government will cover the remaining 6 percentage points of interest.

The package also set a target of creating employment for 2.5 million people. However, five months after the incentive package was announced, loan disbursements have yet to gain the expected momentum. Industry insiders say factories are not benefiting from the initiative as intended. Instead, industrial enterprises are struggling with multiple challenges, including fuel shortages.