Bangladesh Bank has formed a Tk 2,000 crore refinance scheme to ensure sustainable development of the shipping industry, increase export earnings and employment and gradually reduce dependence on imports.
The refinance scheme was formed under a Shipbuilding Industry Development Policy 2021, according to a circular of the banking regulator on yesterday.
Under the scheme, a customer can get loans at 4.5 per cent interest. However, the maximum limit of the loan was not mentioned in the circular.
A customer can get term loans for a maximum of 12 years, for which the grace period will be of three years.
However, no loan will be given for the construction of dockyards, land purchases or for taking lease and the loan taken from this scheme cannot be used to repay any other loan.
Working capital loans can be availed under the scheme for one year and loans can be renewed if the business is good.
Bangladesh has more than 100 shipbuilding yards, most of which serve the local market worth more than Tk 3,000 crore.Shipbuilders have long been demanding a refinance scheme for the sector since it is going through a fund crisis as banks usually don’t want to extend loans to them.
In 2021, the Association of Export-Oriented Shipbuilding Industry of Bangladesh requested the government form a Tk 6,000 crore refinancing fund.
The sector is yet to overcome the impacts of the global financial crisis of 2007-08 when demand from western buyers evaporated. On the domestic front, local entrepreneurs failed to maintain international standards and deliver vessels on time, denting the confidence of buyers.
Subsequently, ship exports from Bangladesh fell. Exporters fetched only $0.2 million in the last fiscal year, the lowest in a decade, according to data from the Export Promotion Bureau.
Export proceeds stood at $0.18 million in the July-April period of the current fiscal year, slightly up from $0.16 million during the same period a year ago.
Since 2008, Bangladesh earned around $180 million by exporting 40 ships to several countries in Europe, Africa, and Asia. However, no sea-going ships were exported in the last two years.