BGMEA seeks interest-free loan for 6 months

Staff Correspondent | Published at 10:22pm on March 25, 2020

The Bangladesh Garment Manufacturers and Exporters Association has sought interest-free loans for the next six months with a three-year repayment facility for textile and readymade garment sectors so that the factories can meet their overhead expenses, including payment of workers’ wages, bonus and utility bills.

BGMEA president Rubana Huq in a recent letter to the prime minister’s principal secretary, Ahmad Kaikaus, placed a set of demands, including interest-free loan facility and suspension of rules and regulations related to export proceed realisation for six months, as a support to the sectors to overcome the negative impact of coronavirus pandemic.

The BGMEA in its letter said that Bangladesh Bank should re-finance the commercial banks for providing interest-free loans to apparel exporters with a six-month grace period and payable in equal instalments in the next 30 months.

Commercial banks should also waive interest on existing loans for six months and should not charge any special interest on payable instalments of existing term-loan or advances in the next six months, it said.

The trade body also demanded an extension of tenure of loan classification to180 days.

It also recommended the simplification of procedures of receiving foreign currency loans.

The apex body of RMG exporters also said that banks should not create forced loans in case of failure of timely payment of back to back letter of credits.

The time for repayment should also be extended, it said.

The government should also suspend the rules and regulations related to export proceeds realisation for six months.

Rubana also sought repayment tenure extension up to three months for loans against PC and EDF.

The tenure of EDF should be extended to 270 days  from current 180 days if the back-to-back LCs are opened against EDF, she wrote.

Apparel exporters should also be given additional 90 days for submission of bill of entry and EXP reporting.

The BGMEA also sought Tk 5 for each US dollar of retention value during April, 2020 to December 2020 to keep the local exporters competitive with its global competitors.

The government will require around Tk 3,000 crore for the purpose, it said.

Rubana in the letter sent on March 15 sought steps of prime minister’s principal secretary to consider the proposals to keep the sector vibrant and ensure livelihoods of millions of workers in the sector.

She said that global buyers had been cancelling their export orders or delaying ongoing shipments and reducing the volume of future orders as the impact of the epidemic.

The situation is severely affecting Bangladesh export which has declined by 25.90 per cent so far in the current fiscal year 2020 compared with that in the same period of the last FY2019, she said.

Bangladesh Trade Union Centre general secretary Wajed-ul Islam Khan, however, told New Age that it was not rational to seek such facilities before assessment of actual damages due to the coronavirus outbreak.

‘The trade body can demand incentives from the government but it cannot seek interest-free loans for workers’ wages as it is taxpayers’ money,’ he said.

He said that garment owners had been doing business for so many years and making profits.

‘Where have all the profits gone as they cannot handle a problem developed only a few days?’ he questioned.