The apex organization of ready-made garment (RMG) manufacturers and exporters has sought the assistance of Prime Minister Sheikh Hasina in waiving Tk686.32 crore worth of debt for 133 ailing factories.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), made the request in a recent letter.
According to the BGMEA, the government had announced paying off the loans and interest of 269 ailing garment factories in the FY2013-14 budget.
But due to various complications, 133 of the factories could not take advantage of it.
Later, when the lending banks filed a case against them, the court issued arrest warrants and property seizure orders against several borrowers.
“Since 1985, export-oriented garment industries have been playing a groundbreaking role in the socio-economic development of the country, including earning foreign currency,” Hassan said in the letter.
However, from 1985-2005, 269 BGMEA-member factories, which played a pioneering role in the export earnings, closed down due, said the letter.
The prime minister had committed to reschedule the loans from 2010 to 2012 and to end the debts of these factories in the budget of FY2013-14 but due to various adverse conditions, 133 of the factories could not take advantage of the scheme.
Many of these 133 factory owners are heroic freedom fighters, the letter reads, adding that the owners are currently living in dire straits and many of the entrepreneurs have already died or are suffering from severe health issues.
In this situation, it is impossible for them to repay these loans, Hassan said, so the BGMEA sought a waiver for these loans.
According to the letter, in response to the president of the BGMEA, the Financial Institutions Division of the Finance Ministry, the Commerce Ministry, and Bangladesh Bank have already agreed to waive the Tk686.32 crore debt.
A copy of the letter has also been sent to the finance minister and the senior secretary of the Finance Department.
However, the Finance Department has not yet taken any decision in this regard, said a BGMEA source.
Asked about the letter, SM Mannan Kochi, senior vice-president of the BGMEA, said that this has been in the works for a long time.
“This is one of the many issues we have been discussing with the Finance Ministry. All these ailing factories have been doing business with a reputation for a long time, contributing to the country's economy and employment,” he added.
“In many countries of the world, the government provides various policy support to the bankrupt or sick industries. We also need to give such support. We need to formulate entrepreneur-friendly policies,” he added.
Kochi said they have discussed the matter with the secretary of the Finance Ministry, who said they will take action regarding the debt waiver after the prime minister okays it.
According to the BGMEA, they also applied to the Finance Ministry in September last year, during the tenure of Rubana Huq, for a waiver of the debt owed by the factory owners.
Following the request, the Financial Institutions Division sought the opinion of Bangladesh Bank though the central bank said that since the commercial banks conduct business activities with the deposits of the customers, the central bank has no authority to issue any instructions for termination of such loans.
However, the central bank said that if the government wanted, they could take responsibility for the debt relief.
In that case, the government would have to pay the money, the central bank stated.
The BGMEA had also applied to the Commerce Ministry around last year for waiving the debt.