Says Covid-19 hampered their revenue stream, making repayment difficult
With the Covid-19 pandemic inducing further economic onslaughts, the country's apparel manufacturers are bearing the brunt of it, for which they are now requesting for more time to repay their bank loans.
A letter in this regard was sent to the Ministry of Finance, from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
In the letter, two apex organizations of the apparel sector requested Finance Minister AHM Mustafa Kamal to extend their repayment period until December 31 this year and also to keep the facility open so that if the loans are not repaid on time, they should not be declared as a defaulter.
Faruque Hassan, president of BGMEA, and AKM Selim Osman, president of BKMEA, signed the letter, saying that the lion's share of Bangladesh's export earnings came from the apparel sector.
The government has always been sympathetic and positive in maintaining the development and growth of the sector. Moreover, they announced various packages, provided financial and policy support to revive the sector from the losses incurred due to the Covid-19 pandemic, the letter said.
The letter also read that the entrepreneurs and the government had hoped that the impact of Covid-19 would decrease soon and the apparel sector would turn around.
“But as the situation of Covid-19 is worsening each day, the RMG entrepreneurs are going through a critical period. Foreign buyers on the one hand have relaxed the purchase order, while payments of exported products have been deferred in many cases,” the letter read.
Entrepreneurs are continuing their business in the midst of such adversity and the sector has continued to create employment. A number of backward linkage industries like packaging, accessories, banking, insurance, transportation, and other associate industries are directly involved with the apparel sector, the letter also said.
About 2 crore people are directly and indirectly dependent on this sector. If there is a catastrophe in the readymade garment industry, it will negatively affect other related sectors as well, it further said.
The letter also said that the prices of main raw material of the garment industry, yarn and cloth, has shot up abnormally in recent times and local spinners continue to raise yarn prices as well.
Given the growth rate of yarn prices, it has become difficult to negotiate the price of the garments with foreign buyers and continue with existing purchase orders. Along with this, the prices of other raw materials have also gone up, said the letter.
BGMEA and BKMEA said that the rise in prices of yarn and raw materials is being reflected in the export price of garments.
As a result, although overall export income increased slightly, the actual price of garments did not increase. Rather some have declined in the case of clothing.
The apparel manufacturers also said that they were deeply concerned about the future of the industry, investment, situation and management of other activities, including payment of wages to the workers if their losses continued.
Half-yearly bank closing is knocking and the Eid-ul-Azha will be celebrated next month. At this time, entrepreneurs will need a lot of money to pay workers’ wages, allowances and bonuses, they said.
They also said that trade has not returned to normal yet and there is also a liquidity crisis. Due to this, it has become difficult for entrepreneurs to repay the installments on time against all types of loans.
“In this situation, we request not to classify loans against all types of loans till next December. We also demand the opportunity to reschedule the repayment of default loans,” said BGMEA and BKMEA.