BGMEA wants single-digit bank interest rates to BB
Garment exporters on Wednesday recommended to the central bank governor that export loan interest rates be brought down to single digits and that easier loan conditions be provided for small and medium enterprises (SMEs).
The trade association also raised concerns regarding the inability to encash Fixed Deposits (FDRs) and export proceeds held in several Shariah-based banks currently facing liquidity shortages.
In a meeting with Bangladesh Bank (BB) Governor Md Mostaqur Rahman at his office in Dhaka, BGMEA leaders said that due to liquidity shortages, many factories are struggling to pay workers’ wages and utility bills, including electricity.
They emphasized that if incentive funds are not released promptly and regularly, many factories may soon be forced to shut down, which would negatively impact the labour market, according to a statement from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
BGMEA President Mahmud Hasan Khan, who led the business delegation, stated that due to instability in the global economy and various domestic constraints, the country’s garment industry is currently going through a difficult period.
BGMEA leaders also called for an increase in cash incentive rates. The delegation proposed raising the special cash incentive rate from 0.30% to 1%, the alternative cash incentive rate from 1.5% to 2%, and the rate for small and medium enterprises (SMEs) from 3% to 4%.
They warned that if incentive payments are not released regularly and quickly, many factories could soon shut down, which would negatively affect the labour market.
The industry body also proposed reducing the interest rate on packing credit (PC) to 7%, increasing the size of the pre-shipment credit refinance scheme from Tk5,000 crore to Tk10,000 crore, and extending the scheme until 2030.
Responding to the proposals, Governor Mostaqur Rahman stated that no applications for cash incentives would be kept pending.
He assured the delegation that the central bank would implement a system to release the incentive funds within the same month the applications are processed.
The BGMEA delegation included Directors Majumdar Arifur Rahman and Dr. Rashid Ahmed Hosaini, and Abdullah-al-Mahmud Mahin, Managing Director of Mahin Apparels Ltd.
High-ranking officials of Bangladesh Bank were also present at the discussion.
The BGMEA delegation expressed hope that these swift measures by the central bank would help the garment sector overcome current global challenges, recover its momentum, and sustain employment.
