Welcome to Business Outlook
Related Articles
If extended, the industry, as well as the economy, could strongly recover from the pandemic’s fallout, said the letter dated December 22 from BCMA to BB
Cement manufacturers have requested the Bangladesh Bank (BB) to extend the ongoing moratorium period on the payment of loan instalments by another six months as a cushion to fight the economic fallout of the pandemic.
“Global economies are passing through recession due to the unprecedented impacts of the pandemic and Bangladesh’s economy is also hit hard. But we do not know when it will be over,” said the letter signed by Md Alamgir Kabir, president of the Bangladesh Cement Manufacturers Association (BCMA).
The BB had previously introduced a loan moratorium facility for borrowers to save them from becoming defaulters due to non-payment of instalments.
The ongoing moratorium facility, which is set to expire on December 31, helped the sector to turn around.
“The sector is trying to bounce back but the facility will expire later this year. In the given context and considering the present status of the economy and trade, we are urging for an extension of the facility until June 2021.”
If extended, the industry, as well as the economy, could strongly recover from the pandemic’s fallout, said the letter dated December 22.
Meanwhile, the cement manufacturers claimed that the non-bank financial institutions are charging 13 to 15 per cent interest on lending, which increased their cost of doing business.
“The high-interest rate is leaving the entrepreneurs at risk and hindering economic growth. Unless the interest rate is reduced, we would not remain competitive in business.”
Subsequently, they called for the implementation of a 9 per cent lending rate for the NBFIs too.
The country’s cement sector is going through a tough time as the pandemic had a negative impact on the consumption of construction materials.
According to data compiled by industry, the sector witnessed a degrowth of 13 per cent between January and May.
With the view to slowing the spread of coronavirus, the government put the country on a two-and-a-half-month-long general shutdown, bringing all economic activities to a screeching halt. And with it, construction activities went on the slow lane.
The countrywide shutdown was lifted on May 30 and the economy slowly started opening up from July.
But the cement sector’s fortune did not turn around immediately. It recovered to some extent but it did not return to normal.
The slump in cement sales in Bangladesh is in line with its South Asian neighbours, where the sector is expected to witness a 10 per cent negative growth in 2020, as per the International Finance Corporation.
The global cement demand is expected to shrink 3 per cent year-on-year when China is included and 6.4 per cent when excluding China, the study found.
(DT)
