Availability of the low-cost fund is the main challenge to remediation of the country’s RMG sector while risk sharing, tenure of loans and lowering interest are big challenges for loans, speakers told a session of the Dhaka Apparel Summit yesterday.
They made the observations at the 5th session of the apparel summit held at Bangabandhu International Conference Center (BICC) in Dhaka.
The session titled “Remediation Financing for Transforming Bangladesh Garment Industry” focused on a range of issues including access to low-cost financing, moderated by Ahsan H Mansur, executive director, Policy Research Institute of Bangladesh.
The session also focused on how to ensure low-cost financing for relocation of garment factories built in an unplanned way and recommendations for remediation financing.
VF Corporation was the first to issue its fund for factory remediation.
“We are working with International Finance Corporation (IFC) and other organisations to ensure factory remediation,” said Thomas A Nelson, vice-president of the corporation.
Rob Wayss, executive director, Accord on Fire and Building Safety in Bangladesh, said they were in discussion about providing commercial and financial support by the lead brands for the remediation.
“We approached 10 brands and some of them are at their final stage to approve fund for the remediation purpose.”
According to BRAC EPL Investments Chairman Muhammad A Ali, a national standard is required to move finance to garment factories because it is the need not only for exporters but also for millions of workers.
Kyle Kelhofer, IFC country manager, Bangladesh, Nepal and Bhutan, said it is unique that RMG industries are carrying on remediation.
It is necessary to discuss how the factories that are out the purview of Accord and Alliance and have fallen under National Action Plan will carry on remediation, Sarah Labowitz, co-director, NY University Stern Center for Business and Human Rights, said.
“I hope real discussion will be on practical solution to how finance comes to small and medium-size factories.”
BGMEA Vice-President Shahidullah Azim observed that about 1,000 factories would be required to relocate following the inspection.
He said about $1.5m will be required for remediation and about $2m for mobilisation to relocate the factories.
Azim called for a fund for entrepreneurs at low interest rate and with no hidden charges.