THE BGMEA allegations that the government has raised the service cost of a special donors’ fund from one percent to 11 percent for apparel makers for upgradation of safety in garment factories deserve consideration. The country’s garment industry is working on transformation to achieve higher safety standard for workers from fire and such other environmental odds at work place. Devastating fire in Rana Plaza and at some other factories has changed the ground role many ways in garment industry. Western buyers have advanced safety specifications for faulty factory buildings that need to be refixed in compliance with building safety codes; which is very important for us as the industry earn the bulk of foreign exchange for the nation. It appears that lending agencies like JICA, IFC and USAID have offered special fund at one percent service charge for factory owners for the purpose.
Report in The New Nation on Tuesday quoting senior functionaries of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that the one percent service charge of the fund has now become 11 percent making the cost of fund unreasonably high and also risky for many whether the cost-benefit would justify the borrowing. There is no justification why the Finance Ministry should charge 4 percent levy out of the fund when it is grant money and not taxable fund anyway. Then the 5 percent interest that the disbursing banks charge is rather stealing the special nature of the fund and causing it to miss the special target that it seeks to achieve. The high commercial cost of the grant money has become so reckless that it is turning every such special fund mainly grants money into bad loans. People don’t want to borrow at high cost with other conditions leaving the fund unutilized.
It appears that many factory owners especially with medium to small size factory buildings need at least Taka 5 crore investment on an average to refix the buildings but they are not showing interest to take the high cost loans. Garment factories need several thousand crore taka investment for renovation of buildings to keep buyers in confidence and exports steady. Buyers’ monitoring teams are on regular visit to factories that need refixing the buildings. To them the fund is available but it is failing to lure factory owners at high cost. The central bank or commercial banks have their point that the fund is still less expensive at 11 percent compared to 17 percent interest on such lending.
But the question is why they should treat it as commercial fund and try to make huge profit from it.
