BKMEA seeks longer payback period

The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) yesterday demanded the central bank allow them to repay stimulus loans in 42 months instead of initially fixed 18 months as the severe impacts of Covid-19 persist.

In a letter to Fazle Kabir, governor of the Bangladesh Bank, AKM Salim Osman, president of the trade body, said they were facing crisis in shipment of goods because of the impacts of the pandemic. In many cases, exporters are getting delayed payment from the international buyers.

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"So, the exporters should be allowed to be pay the remaining 14 instalments of the stimulus loan in 42 months so that exporters don't face any challenge in their business," he said.

The association sent the letter to the governor on January 4.

The BKMEA also demanded the central bank raise the borrowing ceiling for its members from the Export Development Fund (EDF) to $30 million.

"If needed, the members should be allowed more than $30 million in loans from the EDF," Osman said, adding that the repayment period for the loans from the EDF should be extended to December 31 this year.

Osman also urged the central bank to allow non-bonded garment factories to procure raw materials through back-to-back letters of credit.

The credit limit set by banks should be extended by 75 per cent as the prices of raw materials have increased abnormally in the domestic and international markets, said the association.

"During the peak of Covid-19, a majority of local exporters ran their business incurring losses as international retailers and brands paid less and delayed payment," Osman said.

Fazlee Shamim Ehsan, a vice-president of the BKMEA, said they demanded 42 months as the repayment period as they wanted to pay back a third of each instalment every month to make a full instalment in every quarter.

After the pandemic hit Bangladesh in March 2020, the government allocated interest-free loans of Tk 7,500 crore to the garment exporters to help them pay salaries and wages to garment workers.

The exporters were supposed to repay the loans in 18 months in 18 instalments.

BKMEA's members are major contributors to Bangladesh's overall exports.

Knitwear shipment fetched $17 billion in the last fiscal year, out of the total garment export of $31.45 billion and the national receipts of $38.75 billion.