Department of International Business

University of Dhaka

EMBA Spring 2021

EIB-534/532: Bangladesh in International Business

Assignment 2

Stimulus Packages of Bangladesh Government to Support International

Business During COVID-19 Pandemic
Name: Md. Nazmul Kabir Bhuiyan
ID No.: 801826044
Report Period: 1st January to Present
Section 1
Description of All Stimulus Packages of Bangladesh Government During COVID-19 Pandemic:
1.Special fund for the continuation of salaries and allowances of export oriented workers
including readymade garments:

In the interest of maintaining the salaries and allowances of the workers of these export
oriented organizations, a fund of Tk 5,000 core has been announced on the basis of interest
free and only 22 per cent service charge.

2. Provide low interest working capital loan facility for loss-making industry and service
sector enterprises to sustain business.

A loan program of Tk 30,000 core was announced, but later it was increased by Tk 10,000
core in two phases and the limit has been increased to Tk 40,000 core.

3. Provide working capital loan facility at small interest to small and medium enterprises
including damaged cottage industries.

A total of Tk 20,000 core at low interest under this incentive package is required to keep the
capacity of cottage, micro, small and medium enterprises (CMSMEs) affected by the impact
of Covid-19 intact and to keep the manpower employed in these industries employed.
4. Increase the size of the Export Development Fund from 3.5 billion to 5 billion and set the
interest rate at 1.75 percent.

5. Introduce loan facility called Pre-Shipment Credit Refinance Scheme to increase the
capacity of exporters.

A total of Tk 5,000 core loan facility will be provided under this incentive package to
increase the export capacity of exporters.
6. Special honorarium equal to two months’ salary of doctors, nurses and health workers.
According to the circular, the list of doctors, nurses and health workers suitable for special
honours will be finalized and the health services department will issue a government order
with the consent of the finance department. 100 core has been allocated for this honour.

7. Compensate if the field administration, law enforcement, armed forces and other directly
employed republican employees engaged in medical treatment and prevention of infection
die of the virus.

750 core for compensation in case of death or infection with Corona virus.

8. Providing free food aid to the unemployed poor Distribution of 5 lakh metric tons of rice
and 1 lakh metric tons of wheat.

The activities of this package have been implemented in the three months of April, May and
June 2020. The total allocation for this incentive was Rs 2,500 core.

9. Sale of rice at the rate of Tk 10 per kg among the affected low income people.
A total of Tk 770 core has been allocated for this.

10. Distribute cash at the rate of Rs. 2,500 to each of the 5 million beneficiary families
across the country to protect the unemployed and the extremely poor.

This incentive package has been formulated with the aim of providing a total grant of Tk
1,256 core at the rate of Tk 2,500 to each of the selected beneficiary families from among
these poor people across the country.

11. Expansion of social security zone.

In addition to the allocation for existing social security programs, Tk 815 core is being spent
for the increased beneficiaries under this package. This incentive program is being
implemented through the Ministry of Social Welfare.

12. Allocation of money for construction of houses for the affected homeless people.
A total of Tk 2,130 core has been allocated under this package for the construction of
houses for the poor and homeless across the country.

13. Increase the target of government procurement and distribution of paddy and rice by
two lakh MT in order to get fair price of paddy and keep the price of rice stable in the
market.

The additional allocation for this is Tk 860 core. It is being implemented by the Food
Department, Ministry of Food.
14: Provide additional allocation for agricultural mechanization.
The incentive package has been formulated with a total allocation of Taka 3,220 core for
distribution of agricultural equipment to ensure overall food security including
modernization of agriculture and increase in production, solution of labor crisis in major
seasons. The Ministry of Agriculture is implementing this program.

15. Increase in agricultural subsidies.

In the face of the Corona crisis, the issue of food security has been given more importance
and the amount of agricultural subsidy has been increased to Tk 9,500 core in the fiscal year
2020-21.

16: Announcing refinancing scheme for low income professionals, farmers and small traders.
Due to the outbreak of corona virus, an agricultural refinance scheme of Rs. The scheme
has been formulated with a view to increase agricultural production and facilitate farmers in
obtaining loans with a view to food security. The loan is being disbursed through
Bangladesh Bank A package implementing agencies and various scheduled banks. The loan
disbursement period under this package has been extended till December 31.

17. Announcing refinancing scheme for low income professional farmers and small trader
under this incentive package for low income professional farmers / small traders . There is
an opportunity to give a loan of Tk 3,000 core.

18. Disbursement of low interest loans to rural rural farmers, expatriate migrant workers
and trained youth and unemployed youth for business and self-employment in rural areas.

The government first took up the Tk 2,000 core programs to disburse low interest loans to
expatriate workers, trained youth and unemployed youth for business and self-
employment. Later, its size was increased to Tk 3,200 core.

19. Government subsidy for partial interest waiver on deferred loans of commercial banks
for April-May / 2020

In order to provide relief to the people in the face of economic stagnation due to the
outbreak of corona virus, the collection of interest for the months of April and May 2020 has
been postponed against the loans disbursed by all commercial banks. A portion of the total
interest for these two months will be subsidized by the government and the borrowers will
repay the rest in 12 equal instalments.

20. Credit guarantee ski for SME sector

The program has been launched through Bangladesh Bank to encourage banks and financial
institutions to increase the credit flow of Tk 20,000 core announced under the incentive
program in micro, cottage industries and small scale industries.
21. Zick protection activities for unemployed and destitute workers in export oriented
readymade garments, leather goods and footwear.

This incentive package of Tk. 1,500 core jointly funded by the Government of the European
Union, Germany and Bangladesh has been approved by the Honourable Prime Minister on
03/09/2020.

Section 2

1) Special fund for export oriented industries:

As a result of the Kovid-19 epidemic, the export-oriented sector, including garments made
in this country, was severely affected. In March-April, a large number of export orders
began to be cancelled and suspended. The money has been paid through Bangladesh Bank
to the workers / employees of the export oriented industries including garments.
26/04/2020. Its implementation activities have started on the date and necessary guidelines
/ circulars have been issued by Bangladesh Bank in this regard.

2. Zick protection activities for unemployed and destitute workers in export oriented
readymade garments, leather goods and footwear.

This incentive package of Tk. 1,500 core jointly funded by the Government of the European
Union, Germany and Bangladesh has been approved by the Honourable Prime Minister on
03/09/2020. Unemployed and destitute workers in the readymade garments, leather goods
and footwear industries will enjoy the benefits of this package. Each selected unemployed
worker will be paid Rs 3,000 per month as cash assistance for a total of 3 months. The
Ministry of Labour and Employment will implement this incentive package.

3. Increase the size of the Export Development Fund from 3.5 billion to 5 billion and set the
interest rate at 1.75 percent.

The size of the Export Development Fund introduced by Bangladesh Bank to increase the
scope for import of raw materials under back-to-back credit has been increased from 3.5
billion to 5 billion under this incentive package. Again, the interest rate under the package
was reduced to a fixed 2 percent at the beginning of April 2020 instead of the variable rate.
Recently, in October 2020, it has been further reduced to 1.75 percent. 01/04/2020. Its
implementation activities have started on the date and necessary guidelines / circulars have
been issued by Bangladesh Bank in this regard.

4.Introduce loan facility called Pre-Shipment Credit Refinance Scheme to increase the
capacity of exporters.

A total of Tk 5,000 core loan facility will be provided under this incentive package to
increase the export capacity of exporters. 13/04/2020. Its implementation activities have
started on the date and necessary guidelines / circulars have been issued by Bangladesh
Bank in this regard to avail refinancing benefits under this package, 21 October 2020. So far,
a total of 31 banks have entered into agreements with the Sustainable Finance Department
of Bangladesh Bank.

Section 3

Sl Title of Report Name of Date of Web / Online

Newspaper/ Publication Link
Periodical
1. How effective The Daily Star December 28, https://www.thedailystar.net/opini
have stimulus 2020 on/macro-mirror/news/how-
packages been? effective-have-stimulus-packages-
been-2018197
2. Covid-19 The Financial February 24, https://www.dhakatribune.com/bu
stimulus Express 2021 siness/2021/02/11/pandemic-
packages and caused-bigger-blow-to-bangladesh-
performance of s-exports-than-its-competitors?
the country's fbclid=IwAR15f6RlTm2VhWTKJ1KtT
banking sector zMSnxyRRVbARiOBbByMOXMnVd
m2kRv0hZXCE2E

With the goal for individuals to retain future stuns, all inclusive social insurance and general
medical care ought to be introduced. The expanded public use ought to be on medical care
and schooling areas for improving the nature of human capital. Government speculation
ought to be for innovation and advancement to adapt to the changing method of training,
work, and business and administration delivery. Public venture ought to be made on
institutional fortifying for better nature of services. Fiscal improvement ought to be
accommodated green framework to make financial recuperation feasible.

Section 4

As a result of this incentive, about 5 million workers received four months' salary and their
families were able to overcome the financial crisis during the Corona period. Export-
oriented organizations did not need to lay off their experienced staff. And those workers are
again playing a role in the production of the institutions that belong to the country. It is also
contributing to keep the economy afloat. Export oriented industries and businesses are
being able to survive in a competitive position.

The volume of imports will increase as the opportunity to import raw materials under back-
to-back bonds increases. Besides, production of exported goods / products will increase and
export income will increase to a great extent reduced interest rate to 2% against disbursed
loan Exporters and businesses will benefit.