The Bangladesh Bank (BB) has raised the loan ceiling for leather goods and footwear exporters to $2 crore from $1.5 crore, aiming to woo entrepreneurs who have long been demanding increase of the loan facilities.
A circular was issued by the Bangladesh Bank on Thursday in this regard.
Leather and footwear exporters manage their loans from the Export Development Fund (EDF). The interest rate on EDF loan is fixed by adding 2.50 percent with London Inter-Bank Offer Rate (LIBOR).
Although members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Textile Mills Association (BTMA) get $2.5 crore loan from the fund, the leather sector was allowed $1.5 crore with the special interest rate.
A BB top official said the leather sector could not make much use of the EDF facility.
“The loan was allocated after calculating an exporter’s export volume last year and probable export in the current year. It was complicated for the exporters.
“From now on, the businessmen will not face this as the Export Policy 2018-19 has provided a set of facilities to the leather sector,” said the official.
Leather goods and footwear is the second biggest export sector of the country. However, export in this sector has been witnessing a decline since FY2016-17.
Additional Secretary to the Commerce Ministry Tapan Kanti Ghosh hopes the leather sector will gain better competiveness in international markets with almost the same facilities provided to the textile and RMG sectors.
According to the Export Promotion Bureau, leather products worth $102 crore have been exported from Bangladesh in FY2018-19. Of it, the export of footwear counts early $61 crore.
Though export of leather goods was slightly better in the last fiscal year, the target from the sector could not be achieved.
The export of leather products was 6.06 percent less compared to the previous year. However, export of shoes increased by 7.48 percent.