Textile millers of the country urged the Bangladesh Bank to extend the repayment tenure of loans from the Export Development Fund (EDF) up to 270 days and to increase the limit of the fund to $30 million.
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), said in a brief on Monday evening that in some cases, the mills cannot pay back the EDF loan timely as they don't get payment from exporters in time.
Currently, the EDF loan repayment period is 180 days, with an additional 90 days permitted with the central bank's approval. However, there are claims that many banks are unwilling to grant additional time.
They also demanded that the central bank increase the limit of the EDF loan to $30 million considering the current business situation, from the existing limit of $25 million.
The BTMA president also said that the size of EDF was only $300 million back in 1988, which now stands at $7 billion.
“The EDF contributed a lot towards achieving the current position of the country's textile and readymade garment exports performance. Without the facility, it was not possible to sustain the growth by importing raw materials at high-interest rates,” he added.
The export-oriented sectors, especially the members of BTMA, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), are the beneficiaries of the special loan facility.
He also said that the textile and apparel sector is passing through a tough time due to the high prices of raw materials, energy and dollar crisis amid the Russia-Ukraine war and a declining trend in remittance inflow.
However, he alleged that a “vested quarter is making a negative propaganda” to close the fund while the millers were trying to overcome the challenges by making some adjustments.
No individual or organization gets a loan from the fund as it is only dedicated to export-oriented manufacturing mills or factories, he said, claiming that there is no scope to misuse the fund.
The BTMA member mills are one of the EDF clients and they usually import raw materials using the fund and make deemed exports of yarn and fabric to RMG exporters through a back-to-back letter of credit, he explained.
He added that the RMG exporters pay for yarn and fabric in US dollars after receiving the export proceeds and textile millers repay the EDF loan accordingly.
The textile millers also sought continuation of the foreign currency support to the export-oriented manufacturing sectors, especially textile and apparel exporters, as they import raw materials like raw cotton, synthetic fibre and dyeing chemicals.
According to the Export Promotion Bureau (EPB), the country's total export earnings were $21.95 billion in the first five months of this fiscal year and $18.85 billion (85.89%) of that came from the home textile and apparel sectors.