A delegation of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) met Bangladesh Bank Governor Md. Mostakur Rahman in his office today, Wednesday, in an important courtesy call and exchange of views. Led by BGMEA President Mahmud Hasan Khan, the delegation sought urgent intervention of the central bank to resolve the current multifaceted crisis in the ready-made garment industry and presented several specific recommendations, a press release said.
The delegation included BGMEA Director Majumder Arifur Rahman, Director Dr. Rashid Ahmed Hossaini and Managing Director of Mahin Apparels Limited Abdullah-Al-Mahmud Mahin, among others. Senior officials of Bangladesh Bank were also present in the meeting.
BGMEA President Mahmud Hasan Khan said in the meeting that the country’s garment industry is currently going through a difficult time due to the instability in the global economy and internal constraints. Many banks are not providing the necessary working capital despite rescheduling loans, thus hindering both keeping factories operational and repaying loans on time.
The BGMEA leaders strongly called for increasing and maintaining the rate of cash assistance under policy support to protect the existence of the industry and create new entrepreneurs in the current crisis situation. The delegation proposed increasing the rate of special cash assistance from 0.30% to 1%, increasing the rate of alternative cash assistance instead of customs bonds and duty draw-backs from 1.5% to 2%, and increasing the rate of small and medium (SME) industries from 3% to 4%. They clearly stated that if the incentive money is not released at the earliest and regularly, many factories will soon close, which will have a negative impact on the labor market.
In addition, it was proposed to reduce the interest rate of Packing Credit (PC) to 7 percent to support the industry, increase the amount of Pre-Shipment Credit Refinancing Scheme from Tk 5,000 crore to Tk 10,000 crore and extend the term of this fund till 2030. At the same time, it was recommended to bring the interest rate on export loans to single digits and provide loans on easy terms for SMEs.
After listening carefully to the proposals of the BGMEA delegation and the crisis of the industry, Governor Md. Mostakur Rahman assured that prompt and effective action would be taken on the issues under the jurisdiction of Bangladesh Bank. Regarding cash assistance, he firmly stated that from now on, no application would be kept pending. To resolve the liquidity crisis of exporters, measures would be taken to release the cash assistance amount every month in the corresponding month.
The delegation also highlighted the issue of inability to cash out fixed deposits and export value deposited in the joint Islamic banks (formerly Exim Bank, First Security Islamic Bank and others). They said that due to liquidity crisis, many factories are struggling to pay salaries and allowances to workers and electricity bills. The Governor assured special supervision from the Central Bank to resolve this problem.
The BGMEA delegation expressed hope that these quick steps by the Central Bank will play a helpful role in helping the garment industry to face the current global challenges and to maintain employment.
