Textile mills ask for unified dollar rate, loan relief amid crisis

To overcome the current business challenges, the Bangladesh Textile Mills Association (BTMA) has come up with a number of demands including a unified US dollar exchange rate for export and remittance earnings, an increase in the letter of credit (L/C) limit and Covid stimulus loan repayment extensions.
The trade body, representing primary textile millers, urged the government to extend the repayment period for loans provided under the COVID-19 stimulus package by an additional two years.
In a letter to the Bangladesh Bank on December 5, BTMA President Mohammad Ali Khokon made the pleas, arguing that they are crucial to the industry's survival amid the global recession fueled by the Russia-Ukraine war, post-pandemic recovery and the ongoing dollar crisis.
"Without proper incentives and policy support, it will be impossible for local textile mills to sustain themselves in this current situation," he wrote.
Mr Khokon said that while the initial impact of COVID-19 was mitigated by the government's stimulus package, the industry has faced renewed challenges in recent months due to the war, the global economic crisis, the dollar crisis and local political instability.
Rising costs of gas, electricity, transportation and other raw materials have further eroded competitiveness and hampered exports, added the BTMA president.
He pointed out that the 150 per cent gas price hike and 50 per cent increase in workers' wages have substantially increased overhead costs for the mills.
"In many cases, textile mills are operating at break-even or even incurring losses," Mr Khokon said.
He further argued that the current exchange gap in the US dollar rate for export and remittance earnings, standing at Tk 5 to Tk 6, is causing huge losses for textile mills.
Moreover, the 40 per cent devaluation of the local currency and the existing L/C limit have hampered import and export activities, Mr Khokon noted.
He urged the central bank to extend the L/C limit and raise the single borrower exposure limit accordingly. The BTMA also requested either a unified dollar rate for both export and remittance earnings or the removal of exchange rate fixing altogether. Other demands included allowing 20 per cent term loan instalment payments until the global recession subsides, with the remaining instalments deferred for four years after the initial repayment expiry date.

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