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BGMEA seeks 10-yr block account facility

MONIRA MUNNI | November 05, 2020 12:00:00

The Bangladesh Garments Manufacturer and Exporter Association (BGMEA) has sought a 10-year block account facility for resolving back to back liabilities of its members to help them ride out the corona crisis.

The Association also urged the government to keep the apparel plants' bank liabilities out of the single borrower exposure limit.

The association made the demands in separate letters to the central bank and the commerce ministry.

The worldwide pandemic has severely affected the local RMG industry resulting in the shutdown of many garment factories, BGMEA president Dr Rubana Huq said in a September letter to the commerce ministry.

The country's largest foreign currency-earning sector has been passing through a crisis as many global buyers have stalled or cancelled orders since the outbreak of the coronavirus.

Due to Covid-19, many global brands and retailers, especially in the European Union (EU), USA and China have seriously been affected and as a result many of them like Sears, Debenhams, La Halle, La Camaieu, JC Penny and Nygard have declared themselves bankrupt, she noted.

Work orders worth US$3.0 billion have been affected, she said, adding none could be blamed for the crisis surfaced due to the Covid-19, the BGMEA chief said.

There are piles of stock lots in factories either at the stages of raw materials or production or ready goods.

"Many are facing return of their shipped goods as buyers are not receiving those while many are asked to pay the demurrage charges at foreign ports," she noted.

Given the situation, government's policy support is needed to help sustain the RMG industry, Ms Huq said, warning of the closures of many factories resulting in the unemployment of many workers and employees, thus imperiling the economy.

The BGMEA has demanded that the outstanding loans of the Covid-hit factories be kept in block account for 10 years and also keep their liabilities out of the purview of the single borrower exposure limit.

The BGMEA president requested the commerce minister to take necessary measures in this connection.

Talking to the FE on Wednesday, Ms Huq said some 90 per cent payment is deferred by buyers and the government's support is a must so that the members' regular line of credit cannot be hampered."

In another letter, the trade body also asked for five years to repay the loans disbursed by the government under a stimulus package to help the sector offset the economic fallout from the pandemic.

According to the BGMEA, the sector received a total of Tk 105 billion to pay four months' (April to July) wages of the workers.

The scheme requires factories to clear the debt in 18 equal installments in two years, with a grace period of six months. The BGMEA demanded extending the grace period for up to one year.

RMG exports year-on-year fell by 20.14 per cent to $2.25 billion in March, 85.25 per cent to $374.67 million in April and 62.06 per cent to $1.23 billion in May last.

The export recovery has started since June and continued until September last with highest $3.24 billion earnings in July.

But garment exports shrank last month reaching $2.32 billion.

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