Bangladesh Bank is going to introduce a fresh refinance fund worth Tk 458 crore for foreign entrepreneurs by taking finance from the Japan International Cooperation Agency to stimulate Bangladesh’s manufacturing sector and inflow of foreign direct investment.
The government has already formed a steering committee to implement the JICA-funded scheme styled ‘Foreign Direct Investment Promotion Project’.
Principle secretary to the Prime Minister’s Office, senior secretary of the Economic Relations Division, senior secretary of the Finance Division, an executive director of the BB and other senior officials of the government bodies concerned are on the committee.
The steering committee on Sunday arranged its first meeting at the conference room of the finance ministry and set 9 per cent interest rate for the loans under the scheme for foreign entrepreneurs.
The governments of Bangladesh and Japan on December 13, 2015 signed an agreement to use the JICA fund amounting to around Tk 1,030 crore for promoting foreign entrepreneurs.
The fund will be used in two areas as Tk 458 crore will be disbursed to foreign entrepreneurs and the rest will be allocated for expanding the country’s economic zones.
The Bangladesh Economic Zone Authority will use the fund worth Tk 572 crore to promote the country’s export processing and economic zones.
The JICA released the first instalment — around Tk 40 crore — of the fund on March 30 but the money is yet to be disbursed to any entrepreneur.
Under the latest JICA fund, foreign entrepreneurs will have to give 0.10 per cent interest to the development organisation (JICA), 4 per cent to the government, 1 per cent to the BB and 4 per cent to the commercial bank concerned.
According to a steering committee document, foreign entrepreneurs will have to invest in electric and electronic industry, light engineering industry, leather industry, food processing industry, pharmaceutical industry and information and communication technology to avail the JICA fund.
‘Japanese companies will be allowed to get the loans directly from the JICA fund to make new investment in Bangladesh. But, investors from other countries will have to invest jointly with the Japanese companies,’ the document said.
Foreign entrepreneurs will have to spend at least 30 per cent of capital from their own source to set up a new industry and they will be allowed to take loans against 70 per cent of the project cost from the JICA fund.
The maximum credit repayment tenure of the loans will be 10 years and the factory owners will also enjoy a grace period of one or two years.
A foreign entrepreneur will get maximum Tk 30 crore in loan from the JICA fund.
A BB official told New Age on Sunday that the central bank would soon issue a circular regarding the JICA fund for foreign entrepreneurs.
He said that the upcoming refinance fund would attract foreign investors to making investment in the manufacturing sector in Bangladesh.
The foreign investment will play a major role in generating employment, he said.
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