Industrial and business entrepreneurs have urged the government of ensuring low-cost fund to help them make their factories green, which has by now become almost an obligation for the markets both at home and abroad.
They raised the demand at a seminar in Dhaka today as researchers estimated an additional investment requirement of 10% to 20% for the green industry than traditional ones.
They said the Bangladesh Bank fund for green finance is not adequate as compared to the needs while it carries an interest rate of 9%, which cannot be afforded for an additional investment. Many of them also alleged that the complex process of the loan is not also benefiting the industries.
In response, Finance Minister AMA Muhith apparently frustrated the entrepreneurs as he sought more tax in exchange for better state services like establishment of effluent and sludge disposal facilities.
“You should provide more resources to the government so that it can provide those services what the factories are supposed to create to curb environment pollution,” he said.
Metropolitan Chamber of Commerce and Industry (MCCI) in association with the Asia Foundation, and Centre on Budget and Policy of the University of Dhaka jointly organised the seminar on “Promoting Green Industrial Policy in Bangladesh: Opportunities and Challenges”.
The minister said initiatives are there for effluent disposal – the government also set up a central effluent treatment plant for tanneries at Leather Industrial Park at Dhaka’s outskirt Savar. But there is no organised arrangement for sludge disposal.
It would be helpful for the private sector if the government provides the facilities, but then it would require increased revenue that should come from the rich people – the owners of the industries and businesses.
He recognised that it would be difficult for a single industry to establish an ETP and suggested organising a combination of industrial units to make things easy.
Muhith said the industrial zoning is another important issue for green industries and sustainable growth because of our scarcity of land. “If industries are set up in a zone and then effluent treatment facilities could be created by the government for 40-50 industries in a combined manner.
Business people from export-oriented industries argued that the interest cost on the central bank’s green fund would be too high to set up an ETPP.
In a washing project worth Tk200 million, it costs Tk60 million for setting up an ETP. A 9% interest is too high for the sector’s people, Md Mohiuddin Sheikh, General Secretary of Bangladesh Washing Association, said urging the minister to provide easy-term low cost fund.
Bangladesh Bank provides funds through commercial banks at an interest of 9% (bank rate plus interest and service charges for the commercial banks) and these banks charge 4% interest.
“Long term low cost fund is needed for meeting the buyers’ environment –related requirements,” said MCCI President Syed Nasim Manzur.
The cost of setting up ETP and other facilities for discharging chemicals and waste is very high, said Ziaur Rahman, Managing Director of Bay Footwear Limited.
“Setting up of green factories mean spending extra money compared to the traditional factories. Green factories cost 10% to 20% more,” M Abu Eusuf, a Dhaka University professor in the department of Development Studies, said in a presentation on the seminar.
The government does not have any strategic action plan to promote green industries while lacking fiscal incentives to import equipment, said Eusuf.
He added that barriers for going green includes absence of specific policy guideline, lack of multi-sector approach in promoting green growth and policy related with green financing.
Experts also focused on multi-sector consultation to find out areas of intervention (fiscal incentives), identification of financial support required by different industries and more public private dialogue to devise specific plans for a Green Industrial Policy in Bangladesh.
Leading businessman Kudubuddin Ahmed said he has set up a green textile industry – would be unique in Bangladesh – but he had to make a huge capital investment at the initial stage. “In return, now I’m getting benefits as my electricity consumption has come down by around 50%.”
He said the buyers were not offering any incentive for projects like this, urging the government to provide incentives to promote these industries.