Bangladesh apparel factory owners seek more government incentives to pay workers

The owners of readymade garment factories in Bangladesh have sought more coronavirus bailout funds from the government to pay the workers for three months from August.

Abdur Rahim Badal Chief Economics Correspondentbdnews24.com
Published : 26 August 2020, 07:39 PM
Updated : 26 August 2020, 07:39 PM

The BGMEA and the BKMEA, lobbying groups of the sector’s entrepreneurs, said in a letter to Finance Minister AHM Mustafa Kamal on Aug 20 that the industry is still in a crisis due to the pandemic even though exports have bounced back.

Kamal told bdnews24.com on Wednesday that Prime Minister Sheikh Hasina will make a decision on the issue.

“The prime minister gave it [incentives] before they even asked for it. Their new request depends on her discretion as well. We will take steps following her instructions,” he said.

Mohammed Abdus Salam, the acting president of BGMEA, told bdnews24.com they have not resumed production in full swing. They are indeed getting new orders, but the figure is still low, he said.     

“We‘re actually exporting the products ordered in March, April and May. We‘re still in a financial crunch. We’ll be able to fully overcome the crisis if we get easy loans to pay the workers for three more months,” Salam said, adding that they were making a final request for funds.

He admitted the situation was improving. “But no one can say when it will get back to normal.”

He urged the government for incentives until October, when the sales in Europe and the US are expected to puck ahead of Christmas.

AB Mirza Azizul Islam, a former finance adviser to a caretaker government, wonders why the apparel industry entrepreneurs are seeking incentives even though exports are increasing gradually.    

RMG exports dropped to $360 million in April after the pandemic shattered the global economy with most of the world on lockdowns.

As the economies began reopening, apparel exports increased to $1.23 billion in May, $2.25 billion in June and $3.24 billion in July.

The upward trend has continued through August as well. The exporters sold apparels worth over $2.37 billion in the first 22 days of the month, with a nearly 46 percent year-on-year growth.

While imposing the lockdown in March, the government announced a Tk 50 billion stimulus package for the payment of the RMG sector workers.

The factories paid the workers for April, May and June by taking loans from the fund with 2 percent interest.

Following their request, the government added Tk 30 billion more to another stimulus package of Tk 300 billion for industries and services sectors. The RMG factory owners got funds from the package to pay the workers for July.

“It appears the government is focusing more on the garment sector though all the sectors suffered damage due to the COVID-19 pandemic. The government must pay attention to all the sectors,” said Azizul.

He believes the cottage, micro, small and medium enterprises should get more attention now because the implementation of the Tk 200 billion for the CMSME sector has not progressed much.

“And we may be forgetting the fact that no sector can be kept afloat with incentives for a long term. Many people have asked where the money earned by the RMG industry owners over so many years has gone. Why do they always ask the government for help?” Azizul asked.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher