Prime Minister will decide over the apparel sector’s demand for financial support from the government in the form of loans to pay wages of the workers of the sector.
The government had announced a Tk 5,000 crore stimulus package for export-oriented industries as loans with a two percent service charge to pay workers’ remuneration amid the pandemic.
The fund was extended twice, with an addition of Tk 2,500 crore and Tk 3,000 crore. The size of the fund now is Tk10,500 crore.
Several apparel exporters said that about 80 percent of
their cancelled orders were restored, and they are enjoying large growth in August.
Despite the large growth in the last two months, the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) demanded additional Tk 7,500 crore as loan to pay their wages in August-September and sent a letter to the Finance Ministry seeking more incentives.
About the demand, the Finance Minister AHM Mustafa Kamal on Wednesday said that they have received a letter from the BGMEA and the Prime Minister will decide whether the demand would be granted or not.
“I received the letter. The Prime Minister had given incentives prior to their demand. It is also in the hands of the Prime Minister. If she gives instructions, we will take action accordingly,” the Finance Minister said after a meeting of the Cabinet Committee on Government Purchase.
Official sources, however, said the Ministry had denied allocating more funds for apparel exporters as loans to pay workers’ wages.
As per the Bangladesh Bank’s directive in July, ready-made garment (RMG) exporters will not be allowed to get any more funds to pay their workers, said Ministry officials seeking anonymity.
However, it will be a different matter if top government officials take a decision about this, they added.
Despite doing good business since July, apparel exporters have demanded financial support from the government in the form of loans with pay workers’ wages for August, Ministry sources said.
The RMG industry regained its position as the second largest exporter in the first month of the current fiscal year after losing that position to Vietnam last fiscal year.
Not only that, with about 51 percent growth, exporters have seen a big jump in business during the first 19 days of the current month compared with the same period last year.
Despite this, the BGMEA have sought additional funds to maintain competitiveness as the RMG industry has faced serious problems due to the ongoing novel coronavirus pandemic.
BGMEA President Dr Rubana Huq said, in the letter, that production in export-oriented apparel units was suspended during the general holidays and the lockdown announced in the wake of the Covid-19 outbreak.
She said the impacts of the pandemic on the national economy were already evident, adding that the RMG industry has been severely affected by the pandemic. As a result, several factories are going to face closure.
Export orders worth about $3 billion were cancelled or withdrawn by buyers when the pandemic began, said Rubana, citing statistics.
She also mentioned that it might take exporters eight to nine months to receive payments of previous shipments.
For these reasons, the apparel sector is facing an acute financial crisis, and that is why exporters are asking for financial support from the government, Rubana wrote.
According to Bangladesh Customs data on daily exports compiled by the BGMEA, during August 1-19, the country exported apparel items worth $2,048 million, up from $1,359 million during the corresponding period last year.
