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Tanners in Dhaka have sought Tk 100 billion (US$130 million) from commercial banks in soft loans to establish international-standard tanneries in the industrial hub being built for them at Savar.
The tanners have also demanded 12 years' “tax holiday” at the start of production to export from the new industrial belt. Bangladesh Tanners Association (BTA) sent a letter to the Business Promotion Council (BPC) which passed it on to the Ministry of Commerce (MoC).
"We badly need long-term loans/soft loans at a lower interest rate for building the tanneries in Savar to international standards. It is quite impossible to bear all costs of relocation," Md Shahin Ahmed, BTA president, told the Financial Express Sunday. "We have proposed to the government to take the necessary initiatives for the bank loans. But there is no progress yet," he said. ”A large number of tanneries may stop production if they do not get the soft or long-term loan facilities at lower interest rates from banks”, he added.
The tanners are worried over the relocation of the tanneries without long-term loans. The term should be of 20 years with a grace period they say with a rate of interest at 4% like that of special agricultural credits disbursed for cultivation of pulses, oilseeds, spices and maize, they said.
Industry sources in the Financial Express article also say that the government should also give them a 6.0% subsidy on the interest rate to the banks so that they could get 10% in total when the banks lend to tanners at 4.0% rate.
The tanners and the government signed a memorandum of understanding (MoU) in October last year to ensure the relocation of Hazaribag tanneries away from the city to the new Savar Tannery Estate. Under the MoU, the government allocated Tk 2.5 billion (US$3.25 million) as compensation to the tanners for relocation. "But we do not get the funds allocated", the BTA president said. The relocation work on 80-85 tanneries out of 155 has already started, Shahin said. He expressed hope that they would be able to start production at the new location next year. The tanners, in the letter, have also sought withdrawal of import duty on chemicals needed for making leather.