Policy Research Institute (PRI) has urged the government to provide special incentives for green financing in all sectors to overcome the challenges of climate change.
"South Korea's exemplary strategy of green growth presents an excellent example for other rapidly growing economies like Bangladesh to follow. The lesson clearly is that for achieving sustainable and green growth, Bangladesh will have to resort to green financing," said Dr Zaidi Sattar, chairman of PRI, at a webinar on "Incentives for Green Finance and Investment" in Dhaka on Wednesday.
"It is now established, following in-depth global research on climate and the economy, that we can be 'green' and we can grow. Global research by pioneer climate economist Sir Nicholas Stern (Stern Review on the Economics of Climate Change, 2006) has shown that the long-term benefits of eco-friendly economic growth far outweigh the costs," said Dr Zaidi Sattar, who moderated the programme.
Rapid growth alongside eco-friendly power generation, industrial production, transportation, agriculture, and waste management is possible and realistic for leaving a legacy of sustainable living for our next generation, he said.
"Bangladesh cannot be left behind in the fight against the ravages of climate change. The country is gearing up both adaptation and mitigation measures of the climate resilience strategy, all requiring additional financing for investment," Dr Zaidi Sattar added.
Monika Kumar, environmental specialist at World Bank, made a keynote presentation titled "Incentives for Green Finance and Investment" at the webinar.
She said as per the Bangladesh Bank's rule, banks and financial institutes have to provide 5% of loans for green finance annually, but only 1.4% was disbursed in 2020. This is not due to lack of demand as the potential for climate and green investments is greater than $200 billion in the country.
She said the World Bank supports environmentally sustainable practices and cleaner technologies among 41,659 micro enterprises by financing $110 million to Palli Karma-Sahayak Foundation (PKSF).
"To achieve inclusive green growth, we also need to support cottage, micro, small, and medium enterprise well. Their growth depends on accessing new markets with stricter expectations on environmental impact. So, they have to be part of the green growth pathway," she added.
Referring to South Korea's success story, KyungJin Hyung, CEO of Blissvine Ventures, said their Five-Year Plan outlines government actions for implementation of the strategy, and detailed tasks for ministries and local governing entities as well as specific budgets.
Under the plan, the government will spend approximately 2% of annual GDP on green growth programmes and projects. Investments will initially be geared towards infrastructure development in order to boost the economy.
"In 2020, South Korea invested around 374.28 billion South Korean won in green technology. As of 2020, there were 127 green companies that were designated by the South Korean government," he added.
Taking part in the discussion, Syed Nasim Manzur, managing director of Apex Footwear Ltd, said the government has only exempted taxes for the green corporations in the readymade garments sector. The companies in other sectors must be given this opportunity.
"In case of import of treatment plant equipment, the companies have to pay duty to the National Board of Revenue. That needs to be changed," he said.
Naser Ezaz Bijoy, CEO of Standard Chartered Bank, said, "One cannot make an entity green overnight. Suppose you have invested in a textile. The authorities concerned have to monitor whether you are following environment-friendly measures. We have to give incentives for things like water treatment plants, and solar power."
Dr Ahsan H Mansur, executive director of PRI and chairman of Brac Bank, said, "Our country does not have the financial capacity to deal with the possible disasters caused by climate change. We have to prepare for this in advance."
He further said the Bangladesh Bank has given the commercial banks a target of disbursing 5% of its loan for green financing, but it has not forced them. So, the banks are far from their target.
Dr Mashiur Rahman, chief guest at the programme, said, "Loan financing is urgent for developing green industries. This will also reduce the defaulted loans of banks. The benefits offered in RMG should be extended to other sectors."
"The issue of giving benefits to deemed exporters like direct exporters has also been discussed for a long time. Here too everyone needs to be given equal opportunity," he added.