The apparel makers have again sought extension of repayment periods of loan packages in view of the troubles they are encountering due to 'second wave' of the pandemic.
Buyers' new approach to manage their supply chain amid the second wave of Covid-19 has put the local apparel exporters in an adverse situation, especially with their management capacity, industry people have said.
Though order cancellation is not that rampant this time, buyers are now deferring order placements and divide those into smaller ones with shorter lead time, they have said.
A recent communication between the apparel sector apex body the BGMEA and the finance ministry does contain the worries that the buyers' approach has given rise to.
The level of impact of first and second waves on the local industry is different, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said in the letter to finance minister on January 12.
The first spell of the first wave was severe and the mild shock coming from the second wave is proving to be unbearable, it noted.
"With the detection of a new variant of the virus and that being more contagious than the first one, we are missing the biggest sales season this year, the Christmas," the letter signed by BGMEA President Dr Rubana Huq read.
Amidst a fresh surge of Covid-19 cases in Europe, the USA and Canada, different restrictions imposed on the movement of people and economic activities have started making an adverse impact on retail businesses in these countries.
"The second wave of Covid-19 has already started disrupting the retail market and global clothing trade including exports from Bangladesh," the letter read.
Following the surge in new cases in major importing countries, buyers instead of cancelling orders were deferring order placements and splitting those into batches with shorter lead time, the BGMEA chief said in the letter.
"This has an adverse impact on our industry, since factories are not being able to make a forecast and plan their capacity," Ms Huq said.
More than 1100 BGMEA member factories reportedly faced cancellation of work orders worth US$ 3.18 billion during last March-April due to the pandemic, according to the trade body.
Most of those were reinstated at heavily bargained prices, add to it the deferred payment and discounts.
Against this backdrop of multipronged crisis, it was becoming increasingly difficult for the factories to stay on course without additional fiscal support by the government, she noted.
Since the factories were already in deep trouble struggling to meet regular expenses and cash flow with exports falling, prices dropped by 5.0 per cent in recent months. The repayment of wage loan incentive, which was availed during April-July 2020, at equal instalments in 18 months would mean an estimated 20 per cent additional wage burden on the factories, the letter said.
"This, in view of the current situation, "is absolutely difficult," she noted, reiterating her demand for extension of the repayment tenure.
The repayment of the loan was scheduled to start from Sunday (January 17 last).
The BGMEA president in the letter urged the finance minister to extend the repayment term of the wage assistance loan package to 36 months from the existing 24 months.
She also sought extension of the moratorium on the salary stimulus package by six more months.
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