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Ceiling of project cost to qualify for equity support lowered |
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February 5, 2001
Dhaka-- (UNB) – In view of poor response from potential investors, the central bank has lowered the ceiling of project cost to qualify for government equity support intended to boost the agro-processing and IT sectors. Acceptable investment projects of Tk 1.5 crore will now be eligible to avail of the Equity and Entrepreneurship Fund (EEF), as Bangladesh Bank relaxed the minimum project cost from Tk 4 crore. A recent central bank circular said no project whose total cost, including the net working capital, is less than Tk 1.5 crore will be eligible for the equity-support. Earlier, in December last year, the government appointed Bangladesh Bank its official agent to channel the fund through scheduled banks. And the central bank issued circulars to banks and financial institutions seeking their response to deal with the fund. But the response so far was not satisfactory as most entrepreneurs found the ceiling of Tk 4 crore much higher. “We relaxed the guidelines for required minimum project cost to invite more response,” said an EEF executive. So far, two state-run development finance institutions and one private bank have signed separate agreements with Bangladesh Bank to handle the fund. Agreements with some more banks are in the offing, said the executive. A leading NGO, now involved in financial activities, also expressed its interest in the fund. Although seven months of the fiscal year already passed, the EEF of Tk 100 crore, allocated by the government to spur software and agro-processing industries, remained unused due to absence of legal procedures to make the fund available to the investors through banks. Entrepreneurs are supposed to get up to 50 per cent of their project cost from the EEF as equity support. The Finance Minister, on several occasions, advised the software entrepreneurs to avail of the fund for their ventures. But leading entrepreneurs of the IT sector felt the equity-support would be of little use until other requirements, including high speed data communication, deregulation of telecom and access to fibre optic cable, are met. EEF officials said since local market for software is quite insignificant, they expect response from non-resident Bangladeshis (NRBs), who have expertise in software industries and have access to international IT market. Joint collaborations of local entrepreneurs and NRBs are most welcome for the fund, the official said. In case of the agro-processing sector, the EEF will give special focus on non-traditional areas with enough export potentials. |