Govt likely to allocate $200m for green fund 

• MMF garments have more than 70% share in global apparel market
• But such items account for only 25% of Bangladesh's apparel exports
• If the government provides a 10% cash incentive on MMF-based apparel exports, it will make a difference, industry insiders hope

The National Board of Revenue (NBR) has proposed allocating another $200 million for the Green Transformation Fund (GTF) to help export-oriented textile and leather manufacturing industries set up environment-friendly facilities, according to the Finance ministry and NBR officials.

Welcoming this initiative, industry leaders have called for financing from the fund for setting up a strong backward linkage industry, especially for woven fabrics. 

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), told The Business Standard, "It is a good initiative, which might help strengthen the backward linkage industry."

"We would like to request the government to give priority to the woven sector as Bangladesh still imports 60% of woven fabrics," he added.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, said man-made fibre (MMF)-based products can be a game-changer for product diversification as Bangladesh still depends on cotton-based items. The apparel sector may bring good results with MMF products as they have significant scope for growth.

MMF garments have more than 70% share in the global apparel market, but such items amount to only about 25% of Bangladesh's apparel exports.

"If the government provides a 10% cash incentive on MMF-based apparel exports, I believe it will make a difference when it comes to product diversification," said the BGMEA president.

Seeking anonymity, a green factory owner who also set up a factory with money from the Bangladesh Bank's green fund, said, "The money allocation from such a fund is not practical as it now covers only buying machinery, not setting up a green factory. if the government wants to transform those industries into green ones, it should include both."

Further explaining it, he said the current GTF only allows financing for capital machinery, which cost only one-third of a green project.  

He also mentioned that a similar fund is available in the market for setting up green factories but entrepreneurs have not shown interest in getting that fund as it allows them for partial financing.

Earlier, in 2016, the Bangladesh Bank introduced a $200 million refinance scheme namely the Green Transformation Fund for the export-oriented industries of the textile and leather sectors to set up environment-friendly infrastructure. 

Before that, the central bank had also another similar fund only for financing green building. 

The GTF is intended to facilitate access to financing in foreign exchange by all manufacturers, exporters in export-oriented textiles and textile products, and leather manufacturing sectors to import capital machinery and accessories for implementing environment-friendly initiatives. 

The refinance fund is provided for water use efficiency in wet processing, water conservation and management, waste management, resource efficiency and recycling, renewable energy, energy efficiency, heat and temperature management, air ventilation and circulation efficiency and work environment improvement initiatives in the export-oriented textiles and leather industries.

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