The government may earmark Tk 5 billion under the Equity and Entrepreneurship Fund (EEF) next fiscal to extend equity support for some fixed risky but promising investment areas, a Bangladesh Bank (BB) official said Monday.

The government introduced the fund in 2000-2001 financial year (FY) for the first time to promote entrepreneurship and employment generation in the risky, yet promising areas of Information Technology, agriculture and food processing.

BB is the custodian of the fund, executed by Investment Corporation of Bangladesh (ICB). In last 10 years till the 2009-2010 financial year, real disbursement from EEF stood at Tk 9.25 billion against the budgetary allocation of Tk. 21 billion.

In the past two financial years from 2011-12, there was no disbursement for the EEF due to fund crunch. Meanwhile, the central bank has received green signal from the finance ministry this time for a fresh allocation of Tk 5 billion in the upcoming budget, in response to a proposal of it to get the allocation.

“We hope the government will respond to the BB proposal in the next budget, which is likely to be placed in the parliament on June 7,” said a BB high official, who was involved with the process.

An entrepreneur can get up to 49 percent of his or her total project costs from ECF, subject to approval by its Technical Advisory Committee (TAC).

To avail ECF support, total cost (including net working capital) of a project should be minimum Tk 5 million for IT and agro-based industries and a maximum Tk 50 million for IT projects and Tk. 100 million for agro-based projects.

So far a total of Tk 5.71 billion was disbursed for 278 projects since the launching of the fund. Of the approved projects, a total of Tk 5.24 billion was disbursed for 243 agro-based and food processing industries.

On the other, Tk 466.1 million was extended for 35 IT sector projects. The main advantage of availing EEF support is that an EEF funded project gets eight years as interim period before treating the financial support as credit. After the tenure, the minimum IRR (Internal Rate of Return) is 15 percent.

The enterprises to apply for EEF support should be a private limited company registered under the Companies Act, 1994. Established old companies can also apply for EEF support by setting-up new subsidiaries of the existing firms.

The Daily Sun/Bangladesh/ 6th June 2012