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

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

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

But the president of the Bangladesh Garment Manufacturers and Exporters Association said they needed another year to repay the loans.

She cited the dire state of exports due to the shattered global economy, particularly key western markets for Bangladeshi garments, in Thursday’s open letter.

If the loan term is not extended, the industry will need a six-month extension of the wage stimulus moratorium as the second wave of the pandemic continues in the United States and Europe, a- she declared.

His letter is as follows:

Open letter from BGMEA President, Dr Rubana Huq

This is one of the most tragic turning points in our industry. In the absence of real restructuring or even an exit policy, shrouded in Western bankruptcies, harassed by ruthless buyer contracts and force majeure clauses, factories face turbulent times. The perception of the industry doing well and getting all the government’s favor needs to be kindly reassessed today. Otherwise, the jobs of 4.1 million workers will be at stake.

The reality today:

Commercial banks have been instructed by Bangladesh Bank to arrange repayment of the stimulus package by the 3rd week of January 2021. The letters were issued the day before yesterday. And the industry, amid the second wave of Covid, is sinking deep into uncertainty. Without the wage stimulus moratorium extended for another 6 months or the loan term extended for at least another 1 year (currently 24 months), the industry will collapse.

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

RMG saw a consecutive decline in exports in December of 9.64%, which concluded the annual export performance for 2020 with an unprecedented fall of 16.94%.

In December, exports of woven garments showed the worst performance since June 2020, with a drop of 18.07%. Exports of knitwear managed to have a relatively stable position with a growth of -0.45% in December, thanks to the demand for garments for household use.

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

So, given the effect of the shutdowns in Europe and the United States and their impact on retail and demand, the worst Christmas sales the world has ever seen, and especially the effect of the lower prices (which is around 5% since September 2020), it has been a dark year for the industry that we have seen. As the uncertainties and stresses caused by the second wave persist, coupled with the unavailability of the vaccine and the impact on the global economy it would leave, this downward trend in exports will likely continue through April from This year.

I ask for all of your help in examining the industry perspective and helping us frame our narrative so that policy makers consider the real situation and not the perceived one.

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