Cement makers plead for mortgage loan moratorium until June next year

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If extended, the sector, in addition to the economy, could strongly recover from the pandemic's fallout, said the letter dated December 22 from BCMA to BB

Cement companies have requested the Bangladesh Lender (BB) to extend the ongoing moratorium period on the repayment of mortgage loan instalments by another half a year as a cushion to combat the economical fallout of the pandemic.

“Global economies are passing through recession as a result of unprecedented impacts of the pandemic and Bangladesh’s economy can be hit hard. But we have no idea when it'll be over,” explained the letter signed by Md Alamgir Kabir, president of the Bangladesh Cement Companies Association (BCMA).

The BB had previously introduced financing moratorium facility for borrowers to save lots of them from becoming defaulters because of non-payment of instalments.

The ongoing moratorium facility, which is defined to expire on December 31, helped the sector to carefully turn around. 

“The sector is trying to bounce back but the facility will expire soon after this season. In the offered context and taking into consideration the present position of the economy and trade, we happen to be urging for an extension of the facility until June 2021.” 

If extended, the sector, and also the market, could strongly get over the pandemic's fallout, said the letter dated December 22. 

Meanwhile, the cement producers claimed that the non-bank financial institutions are charging 13 to 15 per cent interest on financing, which increased their cost of doing business.

“The high-interest rate is leaving the entrepreneurs at risk and hindering economical growth. Unless the interest is reduced, we'd not remain competitive running a business.”

Subsequently, they needed the implementation of a 9 % lending rate for the NBFIs also.

The country’s cement sector is certainly going through trouble as the pandemic had a poor impact on the intake of construction materials.

According to data compiled by sector, the sector witnessed a degrowth of 13 % 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 financial activities to a screeching halt. And with it, construction activities continued the slow lane. 

The countrywide shutdown was lifted on May 30 and the economy slowly started checking from July.

However the cement sector’s fortune did not turn around immediately. It recovered somewhat but it didn't return to normal.

The slump in cement sales in Bangladesh is consistent with its South Asian neighbours, where in fact the sector is expected to witness a 10 % negative growth in 2020, according to the International Financing Corporation. 

The global cement require is expected to shrink 3 % year-on-year when China is roofed and 6.4 per cent when excluding China, the analysis found.

Source: https://www.dhakatribune.com

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