The Bangladesh Garment Manufacturers and Exporters Association has requested the Bangladesh Bank to take a special assistance scheme for the country’s readymade garment sector to face the impact of China’s coronavirus outbreak on the RMG supply chain.
BGMEA president Rubana Huq on February 13 sent a letter to the BB governor Fazle Kabir placing a number of proposals, including formation of a disaster assistance fund, a special credit guarantee scheme and amendment to the back-to-back LC procedures to support the sector.
Rubana wrote that the deadly coronavirus outbreak in China was taking its toll on trade and industry, especially on the supply chain of Bangladesh’s manufacturing industries.
The disaster assistance fund may be extended to exporters to support unforeseen costs such as air freight, sourcing of raw materials and accessories from alternate and more expensive options to complete the orders and cost of financing for the extended period, the letter said.
While exporters will negotiate with buyers, banks should be willing to extend the credit term by 30-60 days due to late arrivals of raw materials and increased costs for the extended period, it said.
The Bangladesh Bank may consider a special credit guarantee scheme to encourage commercial banks so that they can continue to support the industry, Rubana wrote in the letter.
She also requested the central bank for issuing policy directives to the scheduled banks to amend the respective clauses in the back-to-back LCs to make the payments to the suppliers conditional and justified in proportion to export proceeds.
China remains the largest trading partner of Bangladesh with total import worth $13.63 billion in the last fiscal year 2018-2019, she said.
Of which, import of textile fibre and articles was worth $5.02 billion as around 46 per cent of the country’s textile raw materials come from China, she added.
The supply chain might become paralyse, which could prove to be fatal for the industry, if the epidemic in China prolongs, she said.
The country’s import from China has already started slowing down and China vessels’ berthing at Chattogram port have come down to zero, she said.
Import from China decreased by 21 per cent in January and by 37 per cent in February 1-8, she said, referring to the data of the National Board of Revenue.
‘It is high time to adopt a set of precautionary policy measures to save the industry from the unprecedented disaster considering the severity of the multipronged impact of the virus in our industry,’ she said.
The impact includes delays in the arrival of raw materials, late shipments and delivery and cash flow crisis, she added.
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