BGMEA wants single-digit interest rates for exporters

Garment exporters have urged the central bank governor to bring export loan interest rates down to single digits and provide easier loan conditions for small and medium enterprises (SMEs).

They emphasised 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) issued yesterday.

In a meeting with Md Mostaqur Rahman, governor of Bangladesh Bank (BB), BGMEA leaders said that due to liquidity shortages, many factories are struggling to pay workers’ wages and utility bills, including electricity.

Mahmud Hasan Khan, president of BGMEA, led the business delegation. He 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.

The leaders strongly urged the continuation and enhancement of policy support measures, particularly an increase in cash incentives, to help safeguard the industry during this critical period and encourage the emergence of new entrepreneurs.

They proposed increasing the special cash incentive rate from 0.30 percent to 1 percent, raising the alternative cash incentive rate (in place of bonded warehouse and duty drawback facilities) from 1.5 percent to 2 percent, and increasing the incentive for SMEs from 3 percent to 4 percent.

Additionally, they proposed reducing the interest rate on packing credit (PC) to 7 percent, increasing the Pre-Shipment Credit Refinance Scheme from Tk 5,000 crore to Tk 10,000 crore, and extending the tenure of this fund until 2030.

Although many banks have rescheduled loans, they are not providing the necessary working capital, which is hampering both the smooth operation of factories and the timely repayment of loans, they said.

The central bank governor assured that effective measures would be taken on matters within the jurisdiction of the BB, according to the BGMEA statement.

Regarding cash incentives, he firmly stated that no application will remain pending from now on and that, to ease liquidity constraints for exporters, arrangements will be made to disburse monthly cash incentives within the same month.

During the meeting, the delegation also raised the issue of difficulties in encashing fixed deposits and export proceeds held in several consolidated Islamic banks, including former EXIM Bank and First Security Islami Bank.

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.