$10m grants coming for 650 non-RMG firms to address compliance gap

The government is going to provide new and potential exporters – beyond readymade garments – with grant-based incentives amounting to $10 million to help address their compliance gaps.

On Sunday, it launched the Export Readiness Fund (ERF), the matching grant programme funded by the World Bank, as part of its initiatives to diversify the export basket and create more job opportunities.

Under the new programme of the Export Competitiveness for Jobs project of the commerce ministry, some 650 companies from four target sectors – leather and leather goods, footwear (leather and non-leather), light engineering, and plastic – will get the facilities.

Some 400 firms will get maximum $5,000 in grants each for environmental, social and quality assessments. Another 200 firms will get maximum $40,000 in small grants each while 50 firms will be given as high as $200,000 each in large grants.

The application process for the business firms will begin from March this year. They will enjoy the facilities on a first-come-first-serve basis.

The Export Competitiveness for Jobs project will support private companies to address some of the key constraints they face in accessing export markets, enhancing productivity, improving environmental, social and quality standards, and collective infrastructure facilities, said its director Md Obaidul Azam.

In this way, the firms will be able to meet the standards set by large buyers and comply with the laws and regulations of the export markets.

The main objective of the project is to create 90,000 better jobs and prepare 250 firms for export markets, Obaidul told The Business Standard. 

The project interventions have been designed to benefit companies that are in the export markets or have the potential and are aspiring to access the markets. 

Small and medium enterprises in these sectors are also expected to benefit from the project, particularly those integrated into export value chains, the project director added.

The project will be implemented in 42 months at a cost of $100 million.   

The total funding will be done as grants, but the money will be repaid to the World Bank from the public fund.

Deputy Project Director Abu Sayed Joarder said they will set up four technology support centres across the country for export-oriented firms under the project. Of the support centres, one will be fully dedicated to the leather sector and the rest for all other sectors. 

Hosna Ferdous Sumi, a private sector specialist of the World Bank Group, said to ensure good governance in the project, a globally-reputed independent organisation will select and assess the readiness of the business firms.

Dr Md Jafar Uddin, secretary to the commerce ministry, said the government wants to support the private sector in expanding their businesses. 

Mentioning that the country exports more than 700 items, he also said it is essential to ensure a strong bonding between the public and private sectors to expedite the economy development.

The commerce secretary said they have a plan to sit in a meeting with the leather sector every third week of a month to review its progress. 

Gradually, they will meet with other sectors too, he added. 

Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industries, urged the government to discuss with private sector representatives before finalising the national export strategy. 

He also claimed that government officials are going to take some measures which may hamper their businesses. The business community will not accept any such attempt.

Fahim hoped that the government will take initiatives to remove all types of tariff and non-tariff barriers. 

Md Saiful Islam, president of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh, said, "We need to diversify our export basket. The RMG sector, which now accounts for about 84 percent of the total exports, has been facing a negative growth. It is very alarming as we are dependent on a single item.

"We must have an export-led growth to achieve sustainable development goals. Decent working environment is one of the requirements for SDGs."

Md Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association, said Bangladesh exports plastic items worth $900 million to 29 countries annually. 

Despite having huge potentials, the sector does not get policy support like the apparel sector, he added.

Citing an example that the apparel exporters are enjoying a reduced rate in corporate tax, he also demanded the same for the plastic and light engineering sectors.

Abdur Razzaque, president of the Bangladesh Engineering Industry Owners' Association, said, "The global market size of light engineering industry is about $7 trillion, but it is still untapped." 

He urged the government to focus on the sector where there is a scope of value addition.