Bangladesh on Sunday announced a $500 million economic support package for the final quarter of the financial year, with the aim of protecting export, farming and energy sectors from the global slowdown.

"It is an interim measure to save the economy for the rest nearly three months (April to June) of the fiscal year from current global crisis," Finance Minister Abul Maal Abdul Muhith said.

"Export, farming and energy sectors are the government's main focus along with social safety for the most poor people," Muhith told a news conference.

"We are not gifted with abundant resources, so we must be careful to make any commitment and it is wise to face challenges with our limitations," said the minister.

Exports in the previous fiscal year to June 2008 totalled $14.11 billion and the target for the current fiscal year is $16.3 billion.

"The cash incentive for jute sector will be raised to 10 percent from 7.5 percent, for leather and leather products will be 17.5 percent from 15 percent and for frozen food 12.5 percent from 10 percent," Muhith said, adding that incentives for the other sector would remain as before.

Despite growth in textile exports between last July and February, foreign sales of frozen food, leather and jute goods declined sharply, officials said.

Businesses in the clothing sector were disappointed by the absence of any cash incentives.

"We are deeply frustrated with the package and urged the government to offer at least 10 percent cash incentives to make us more competitive in the international market," said Salam Murshedy, president of Bangladesh Garment manufactures and Exporters Association.

He said that prices have dropped by 25 percent in recent months.

Mohammad Fazlul Haque, president of the Bangladesh Knitwear Manufacturer and Exporter Association, also told reporters that over the last three months buying orders had dropped by 16 to 23 percent.

"We request the government to readjust the rescue fund and save the sector otherwise from next month we may not able to pay wages to the workers which may lead a social unrest," Haque said.

Ready-made garments earn cash-strapped Bangladesh about $11 billion on average a year and the sector employs more then 2.5 million workers, mostly women, in nearly 5,000 factories.

The minister said a $150 million export development fund had already been created, to offer exporters funding support with relaxed conditions.

Exporters will also get loans with a 7 percent interest rate against more than 12 percent currently, and there will be no additional charges for exporting by air, he said.

"The relevant government ministries and agencies will foster the diplomatic activities in overseas markets to send more expatriates and also will find new markets," he said.

Exports and remittances from Bangladeshis working overseas are key sources of foreign exchange for the impoverished south Asian country of more than 140 million people.

Expat incomes totalled $7.91 billion in 2007/08 financial year, nearly a third higher than the previous fiscal year.

($1=69.00 taka)


Reuters