The Bangladesh Bank (BB) will soon develop a new Export Development Fund (EDF) worth about US$ 500 million to support environment-friendly industrial and development projects.
BB Governor Dr Atiur Rahman disclosed this while addressing a seminar on 'Access to Finance - Environmental Sustainability in the Textiles Sector' in Dhaka on Saturday. He asked concerned officials to implement the instructions accordingly.
Addressing the seminar, organised by a private think-tank -- Policy Research Institute (PRI) of Bangladesh-the central bank governor expressed the hope that the country's mainstream banking system would soon be transformed into Green Banking which, he said, would unlock new opportunities and spur business activities.
"To achieve US$50 billion RMG export by the year 2021, there is no alternative to environment-friendly industries," said the governor urging banks and non-bank financial institutions to finance more projects that promote green initiatives.
The whole world, including India, the governor said, has now concentrated more on green technologies and is making budgetary provisions to promote eco-friendly industries. But, he lamented, Bangladesh is yet to take any initiatives in this regard.
He urged the government to make budgetary allocation from the next fiscal and incorporate the issue into the ensuing Seventh 5-year Plan to promote green industries.
"There should be separate allocation in the budget for green financing," said the governor.
In the backdrop of local entrepreneurs' demand for enhanced financial support to meet environmental compliance as per global market requirement, the central bank has come up with the new initiative to introduce the new EDF.
"Entrepreneurs who want to invest in eco-friendly
industries will get assistance from the fund. Small enterprises from leather and RMG sector may utilise it," said the governor.
The BB has so far identified 47 green products under the refinance scheme with addition of three new ones, including the garment sector.
"All financial institutions have been directed to allocate at least 5 per cent of their loanable funds to green finance by the year 2016," said the governor.
He said the BB has remained proactive in lining up policy support, both on its own and also in cooperation with the government and the development partners. The central bank supports lending for installation of Effluent Treatment Plants (ETPs) in textiles dyeing and finishing establishments.
The PRI organised the seminar in collaboration with the IFC to find out ways and means how to turn textile and RMG industries, a major contributor to water pollution, into an eco-friendly industry by addressing the challenges, ensuring safety issues and improving environmental efficiencies.
A large number of entrepreneurs, economists, researchers, bankers and environment activists attended the seminar.
Held at the PRI conference room, the seminar was addressed among others by Bangladesh Water Pact Programme Manager Mrinal Sircar, Centre for Policy Dialogue (CPD) executive director Dr Mustafizur Rahman, Standard Chartered Bank CEO Abrar A Anwar, chairman of Financial Excellence Limited Mamun Rashid, former BGMEA vice president Faruque Hassan and Business Initiative Leading Development (BUILD) CEO Ferdaus Ara Begum.
PRI executive director Dr Ahsan H Mansur presented the keynote paper on the subject.
According to Dr Mansur, the industry is now at a crucial juncture. Several outstanding structural deficiencies have been brought under the spotlight following a series of recent tragic incidents like Rana Plaza building collapse and Tazreen fire.
To overcome the problems, he said, the Bangladesh Bank could extend various credit lines for green investments to encourage the polluting industries to adopt more environment-friendly processing facilities and inputs.
To make the RMG sector more compliant and environment-friendly, speakers at the meeting urged the government to eliminate customs, supplementary and regulatory duties in case of importing environment-friendly, cleaner technology equipments and machineries.
Dr Mustafizur Rahman in his speech highlighted the urgency for extending necessary financial help to small and medium enterprises (SMEs) which are confronting a lot of problems to make those more efficient and compliant both technically and environmentally.
"Efficiency leads to higher productivity," he said.
To make the Export Development Fund more effective, Dr Mamun Rashid suggested modification of the fund, extension of its time limit and increase in the size of the fund. He also felt that there should be political commitment to ensure viable use of the fund.