UNB, Dhaka :
High interest rates and a lack of financial literacy are highlighted as major obstacles to factories in the
Bangladesh Readymade Garment (RMG) sector from obtaining remediation financing, according to a latest report. The International Finance Corporation (IFC) and International Labour Organisation (ILO) launched the report in the city on Monday. According to the report, interest rates that can range from 9 to 18 percent were cited as a barrier to carrying out remediation. Besides, RMG owners need support to present audited balance sheets, profit and loss statements and cash flow projections to banks and prospective investors.
IFC and the ILO jointly commissioned the report titled ‘Remediation financing in Bangladesh’s Readymade Garment Sector: An Overview’ to analyse the cost of safety remediation for structural, electrical, and fire safety work in RMG factories, as well as the ability of factories to finance this work.
Country Manager, IFC Bangladesh Wendy Werner, said it is imperative for the RMG sector in Bangladesh to realise the significance of remediation finance and, respective factories ought to look at expenditure for safety as an investment. “Once compliance levels are respected, buyers will have more confidence, leading to overall industry expansion.” Deputy Director of ILO Bangladesh Gagan Rajabhandari said only when remediation is completed will the safety of workers in export-oriented RMG factories be ensured.
High interest rates and a lack of financial literacy are highlighted as major obstacles to factories in the
Bangladesh Readymade Garment (RMG) sector from obtaining remediation financing, according to a latest report. The International Finance Corporation (IFC) and International Labour Organisation (ILO) launched the report in the city on Monday. According to the report, interest rates that can range from 9 to 18 percent were cited as a barrier to carrying out remediation. Besides, RMG owners need support to present audited balance sheets, profit and loss statements and cash flow projections to banks and prospective investors.
IFC and the ILO jointly commissioned the report titled ‘Remediation financing in Bangladesh’s Readymade Garment Sector: An Overview’ to analyse the cost of safety remediation for structural, electrical, and fire safety work in RMG factories, as well as the ability of factories to finance this work.
Country Manager, IFC Bangladesh Wendy Werner, said it is imperative for the RMG sector in Bangladesh to realise the significance of remediation finance and, respective factories ought to look at expenditure for safety as an investment. “Once compliance levels are respected, buyers will have more confidence, leading to overall industry expansion.” Deputy Director of ILO Bangladesh Gagan Rajabhandari said only when remediation is completed will the safety of workers in export-oriented RMG factories be ensured.
“Efforts are needed to ensure that financing is available and accessible for all RMG businesses; however, those which are already able to self-finance this work or access loans should do so without delay.”
According to the study, the cost of remediation if the factory does not need extensive structural retrofitting work can range from $20,000 to $900,000.
