BGMEA writes open letter for more favours to repay COVID stimulus package loans

BGMEA President Rubana Huq has written an open letter seeking extension of the tenure of loans from the coronavirus stimulus package and ease of other rules.

Staff Correspondentbdnews24.com
Published : 7 Jan 2021, 09:01 PM
Updated : 7 Jan 2021, 09:01 PM

The government had announced the nearly Tk 100 billion incentive for the readymade garment industry to pay the workers from April to September in 2020 amid the coronavirus crisis.

The repayment in 24 monthly instalments was scheduled to start in January and the Bangladesh Bank has recently set the third week of the month to begin the repayment.

But the president of the Bangladesh Garment Manufacturers and Exporters Association said they need one more year to repay the loans.

She cited the dire condition of exports due to the shattered global economy, especially the major Western markets of Bangladesh’s apparel products, in the open letter on Thursday.       

If the loan tenure is not extended, the industry will need a six-month extension of the moratorium of the salary stimulus package as the second wave of the pandemic continues in the US and Europe, she said.

Her letter is as follows:

Open Letter from BGMEA president Dr Rubana Huq

This is one of the most tragic turns in our industry. In the absence of proper restructuring or even an exit policy, shrouded by western bankruptcies, hounded by buyers’ unforgiving contracts and force majeure clauses, factories are facing turbulent times. Perception of the industry doing well and getting all the favours from the government must kindly be re assessed today. Otherwise jobs of 4.1 million workers will be at stake.

Reality today:

The commercial banks have been instructed by Bangladesh Bank to arrange repayment of the stimulus package by 3rd week Jan, 2021. The letters were issued day before yesterday. And the industry, amidst the second wave of Covid is taking a deep plunge into uncertainty. Without the moratorium of the salary stimulus package being extended by 6 more months or the tenure of the loan being extended by at least 1 more year (currently 24 months) the industry will collapse.

The Export Promotion Bureau (EPB) of Bangladesh has just published the export performance data for the month of December 2020 which continues to portray the worrisome scenario of our exports.

RMG has had consecutive downturn in export in December by 9.64%, which wrapped up the annual export performance for 2020 with an unprecedented fall of 16.94%.

In December, woven garment export posted the worse performance since June 2020, as it declined by 18.07%. Knitwear export managed to have a relatively stable position with -0.45% growth in December, thanks to the demand for apparel for home use.

While looking at 2 years trend, it shows that growth between October 2018 and 2020 was -26.03%, and November 2018 and 2020 was -14.32%. The two years change in export for the month of December is -8.55%, meaning that we exported 8.55% less in December this year compared to what we exported in December 2018!

So, given the effect of lockdowns in Europe and USA and their impact on retail and demand, the worst ever Christmas sales the world has seen, and most of all the effect of price decline (which is around 5% since September 2020), it was a dark year for the Industry that we have seen. As the uncertainties and stresses caused by the second wave still persists coupled with the unavailability of vaccine, and the impact on global economy it would leave, this downtrend in export will probably continue till April of this year.

I seek all your help to look at the industry perspective and help us frame our narrative for policy makers to pay heed to the real situation and not the perceived one.”