LC margin withdrawal to stimulate trade, investment: DCCI

The Dhaka Chamber of Commerce and Industry (DCCI) has lauded the recent central bank move that lifted margins for letters of credit (LCs) for typical imports, saying this will boost overall industrial output and eventually increase the country's exports.

Besides, the chamber has appreciated the Bangladesh Bank's initiative to form a revolving refinancing scheme for the country's small ventures, which, the chamber said would make funding access easier for small entrepreneurs.

The Bangladesh Bank recently lifted the LC margin on all types of imports except for some luxury items. Importers now can bring in all types of capital equipment, consumer goods and capital raw materials without any margin based on a bank-customer relationship.

"If imports increase, new investment, re-investment, availability of capital equipment and overall industrial production will subsequently increase that would bring a positive result in export growth," said DCCI President Ashraf Ahmed.

Besides, an increased supply of raw materials would result in factories being able to ensure production at their maximum capacity, according to a DCCI press release issued yesterday.

Dhaka chamber believes the supply of products in the market will increase accordingly, positively impacting the overall inflation situation in the country.

The DCCI said that the cottage, micro, small and medium enterprises (CMSME) sector is the main driving force of the country's economy.

About the refinancing fund formation initiative for CMSME, the Dhaka chamber president said it "would play a pivotal role in getting refinancing benefits for the small entrepreneurs".

He said the chamber believes that this fund will be useful for the production growth of both goods and services and for income and employment generation of the CMSME sector.

Under this fund, the interest rate will never exceed 8 percent and in this case, no supervision charge or even early settlement fee can be imposed, which would be a relief for CMSMEs.

"If the CMSME sector is given the special advantage in the development of backward linkage industry and employment generation, its positive impacts will no doubt be reflected in the overall economy," the chamber added.