Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has placed a five-point demand at a meeting with country’s senior bankers and bank owners last week and asked their cooperation to mitigate the financial crunch that the garment industry is facing at the moment.
Their financial problems are manifolds. It includes repayment of loans which risk new classifications. Payment of salary to workers as they are facing cash crunch and need new bank loans at low cost.
Failure to shipment of exports because of blockades which in turn is slowing down export earnings and that means their financial crisis may continue.
Therefore garment owners have sought the cooperation of the bankers and their owners to devise low cost easy loans to garment factories so that they can overcome the crisis.
They told bankers that they require special loans to implement the new wage structure for the sector’s four millions of workers from the current month. The BGMEA president Atiqul Islam made the case to the bankers. Senior industry leaders and former BGMEA presidents were present.
Islam said the garment sector, which accounts for more than 75 percent of the country’s total exports, is under tremendous pressure for the last few months due to repeated shutdowns and blockades by the opposition.
As a result, they are failing to bring imported raw materials to factories from Chittagong port and send export consignments to the port. The situation has forced the exporters to go for expensive air shipment to meet deadlines, he said.
In some cases, the exporters are also facing penalties and order cancellation due to delayed shipment, Islam said. Mohammad Hatem, acting president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said bank owners would not be able to pay salaries without low cost loans as the factories were closed most of the times in recent months due to workers’ unrest and political violence.
Leaders of the Association of Bankers-Bangladesh, a platform of chief executives of banks, and Bangladesh Association of Banks, a platform of directors, said at the meeting that they are ready to provide loans on easy term to the garment makers. But the question is high rate of interest. The BGMEA said the interest on project loans would have to be waived for the next two years.
The bankers have agreed to waive the interest for a year and said they would require permission from the central bank to do so. The BGMEA also demanded that loans to textile, garment and backward linkage industries should not be classified for their failure to repay instalment for two years starting from the October-December quarter this year.
Nurul Amin, chairman of Association of Bankers-Bangladesh, advised the BGMEA to seek supports, such as incentive and tax break, from the government.
Nazrul Islam Mazumder, chairman of Association of Bankers, Bangladesh the bankers agreed in principle but asked the industry owners to take the issue with the central bank, because many regulatory issues are involved with the matter.
Source: Weekly Holiday