Reduce bank interest rates for investment
Reza Mahmud:
Business leaders urged the authorities concerned to reduce bank interests for the sake of attaining investments in Bangladesh.
They opined that reduction in policy interest rates must inspire investors to invest more in businesses, including the industry and service sectors.
Talking to The New Nation separately, Dhaka Chambers of Commerce and Industry (DCCI) former President Ashraf Ahmed and Sakif Shamim, vice-president candidate in the upcoming election to Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), shared this view.
The business leaders requested Chief Adviser Professor Dr. Muhammad Yunus to directly intervene in the matter saying the businesses are also in a vulnerable situation due to the additional tariff imposing by the USA.
In this situation, policy supports is highly important for survival the businesses in Bangladesh, they said.
“While, almost all businesses are in anxiety over the US’s imposed additional tariff barriers, the government has to come ahead with policy supports with low interest rates for stimulating entrepreneurs to ensuring investments and creating jobs,” said, DCCI former President Ashraf Ahmed.
He asked the government to continue negotiations with the US over the tariff issues.
Sakif Shamim also Managing Director of Labaid Cancer Hospital and Super Specialty Center, believes that in order to promote the growth of business, trade, and industrialization, the interest rates on bank loans must be reduced quickly. He said, “To attract new investment, bank loan interest rates must be brought down. Otherwise, both domestic and foreign investment could come to a halt.”
He highlighted that special steps must be taken to ensure low-interest loans on easy terms for priority sectors such as agriculture, SMEs (small and medium enterprises), health, education, renewable energy, housing, garments, and women entrepreneurs. Many entrepreneurs had taken loans under the assumption that interest rates would remain below 9% and have already set up industries. But now they have to pay 14-15% interest.
If the policy interest rate keeps increasing like this, loan costs will rise further in the future, leading to an overall crisis. Bangladesh will lose its competitive edge in the international market. Those who invested by taking high-interest loans may become defaulters under the burden of repayment. Simply put, increasing interest rates is akin to “strangling” entrepreneurs.
Speaking to The New Nation about the upcoming FBCCI elections, bank loans, investment, and employment, Sakif Shamim reiterated that sectors directly related to food production-like agriculture, SMEs, energy, and health-need immediate interest rate reductions.
Due to high interest rates in these sectors, borrowers are discouraged from taking loans, leading to stagnation in business, trade, and overall economic activity.
He stated that if elected as vice-president in the upcoming FBCCI elections, he would prioritize bringing down interest rates to single digits on behalf of the FBCCI. The current government should, alongside market-based interest rate policies, set special interest rates for priority sectors. This will increase loan flow to these sectors and positively impact the country’s overall economic development.