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Govt mulls interest rate cuts for SMEs

Says Faruk Khan as fair kicks off

Star Business Report
The government considers a further cut in bank interest rates, especially for small and medium enterprises (SMEs) to help the sector grow faster, said the commerce minister yesterday.
“We have already brought down the interest rate to support the country's entrepreneurs. We are considering reducing the rate further to help different sectors, especially the SMEs, grow faster," said Faruk Khan.
“The government is also considering a special package for the SME sector in the next budget for fiscal 2009-10," he added.
He was speaking at the inaugural ceremony of the fourth SME fair organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at Bangladesh-China Friendship Conference Centre in Dhaka.
The government fixed the ceiling of the bank interest rate at up to 13 percent in April.
“We are hopeful of reducing the rate soon. We are discussing the rate cut at several levels in the government to help new entrepreneurs source capital at a lower interest rate and start a new venture," the minister added.
He said the government is working to ensure capital sourcing at lower interest rate for SME sector and help improve its infrastructure further.
“We have to develop our local industries and boost domestic economy to fight the affects of the global financial meltdown. So, developing sectors
including SME are very important to us," he added.
“The government is prioritising the SME sector in the industrial policy that we are framing now. Simultaneously, we will take necessary measures to ensure market for locally produced goods," said Khan.
He said the SME sector plays an important role in export and employment generation, as the country's 98 percent enterprises fall in SME category, and so the government is giving an extra attention to the sector.
FBCCI President Annisul Huq urged the government to implement the federation proposals through the upcoming budget.
"We want to see the implementation of our proposals in the budget. Increasing number of loan defaulters indicates that the impact of global financial meltdown has already started hitting Bangladesh. So, the budget should have a specific solution to this," he said.
Huq said the government should pay special attention to the SME sector, as it is the key component of vibrant economy of the country.
The FBCCI chief said the government should give necessary support for the growth of internal economy and the budget should have a reflection of "our proposals."
"We're going through a tough time because of global recession," he said, urging the government to cut duty on import of raw materials for the SME sector.
“The sector has a great potential and the government needs to nourish it
further," he said.
"Although the local entrepreneurs have the ability to produce international standard products, they fail to introduce their products to domestic and global markets due to absence of proper campaign," said the FBCCI chief.
"A lack of funding, high interest rate, erratic power supply and unavailability of raw materials hold back the growth of the sector,” he added.
He also identified reluctance of the private banks to give loans to SMEs as a major barrier to flourishing the sector.
A total of 86 local companies are displaying their products at 108 stalls at the four-day show that will remain open to visitors from 10am to 8pm with a Tk 10 entry fee.
The products on display include textile, frozen foods, leather and leather goods, plastic products, surgical equip-
ment, medical machinery, sanitary products, agro-based machinery, bicycle, ceramic and melamine products, software, cosmetics, furniture and jewellery.
Khalil Bin Abdullah Bin Mohammad Al-Khonji, chairman of Oman Chamber of Commerce and Industry, and Abul Kashem Ahmed, first vice president of FBCCI, were also present at the ceremony.