The New Nation - Internet Edition

Talha Bin Habib

The high interest on bank loan, excessive price increase of raw materials, increase of transport and shipment cost have been hampering industrial growth in the country, said economists.

The targeted 7 per cent growth set for the current fiscal year would not be possible without setting up of new industries and significant increase in investments, they added.

Up gradation of technology, enhancement of productivity, modification of products and improvement of design capability are also vital factors for gearing up industrial productivity and growth of the country.

Businessmen said the optimum level of industrialisation in the country has not been achieved due to non-reduction of interest rate on commercial bank loans.

Besides the number of setting up heavy industry in the country has sharply fallen in the last couple of years.

And there is no significant investment in the labour intensive industries. As a result the scope for creating new jobs are narrowing day by day, said owner of an industry on condition of anonymity.

The flow of investment in Readymade Garment (RMG) sector was continuing. But no notable investment was visible in the backward linkage industries and textile sector.

Frequent power outrage coupled with severe crisis of gas is deterring entrepreneurs to setting up new industry in the country.

Decrease of local products demand in the international markets is forcing many industrial units to cut down their production volume and minimise their production cost and in some cases it also led to shut down of many industrial units.

Most of the commercial banks receive deposit from the clients with 6 per cent interest rate and give industrial loan with 16 per cent interest rate that is too high for the private sector entrepreneurs, said businessmen.

They said that the high interest rates of banks were discouraging the entrepreneurs for setting up new industrial units.

Banks should not only consider their profit margin rather to look after the interest of the country's entrepreneurs, they added.

They called upon the commercial banks to drastically cut the lending rates for massive industrialisation and maintaining upward industrial growth.

A high official of the Bangladesh Bank (BB) admitted that most of the scheduled banks are charging high interest rate from the entrepreneurs despite the central bank's specific direction regarding this matter.

An influential leader of Bangladesh Association of Banks said some commercial banks have already reduced the interest rate to 14 per cent from 16 per cent.

If the government reduce corporate tax from 45 per cent to 40 per cent then it would be possible for us to cut the interest rate, he mentioned.

According to CPD during the last 13 years gross investment (as a percentage of GDP) increased from 20.0 per cent to only 24.02 per cent in the country.