Finance ministry unwilling to give more funds to RMG exporters

The finance ministry has denied allocating more funds for apparel exporters as loans to pay workers' wages, sources said.

As per the Bangladesh Bank's directive in July, ready-made garment (RMG) exporters will not be allowed to get any more funds to pay their workers, said ministry officials seeking anonymity.

However, it will be a different matter if top government officials make a decision about this, they added. 

Despite doing good business since July, apparel exporters have demanded financial support from the government in the form of loans to pay workers' wages for August, ministry sources said.

The RMG industry regained its position as the second largest exporter in the first month of the current fiscal year after losing that position to Vietnam last fiscal year.

Not only that, with about 51 percent growth, exporters have seen a big jump in business during the first 19 days of the current month compared to the same period last year.

They are also hopeful that business will rise further in September.

Despite this, according to a letter sent to the finance minister by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), factory owners have sought additional funds to maintain competitiveness as the RMG industry has faced serious problems due to the ongoing novel coronavirus pandemic.

Penned by the association's President Dr Rubana Huq, it was sent to the finance minister on August 20.

Rubana said, in the letter, that production in export-oriented apparel units was suspended during the general holidays and the lockdown announced in the wake of the Covid-19 outbreak.

She said the impacts of the pandemic on the national economy were already evident, adding that the RMG industry has been severely affected by the pandemic. As a result, several factories are going to face closure.

Export orders worth about $3 billion were cancelled or withdrawn by buyers when the pandemic began, said Rubana, citing statistics.

She also mentioned that it might take exporters eight to nine months to receive payments of previous shipments.

For these reasons, the apparel sector is facing an acute financial crisis, and that is why exporters are asking for financial support from the government, Rubana wrote. 

The government had announced a Tk5,000 crore stimulus package for export-oriented industries as loans with a two percent service charge to pay workers' wages amid the pandemic.

The fund was extended, twice, with an addition of Tk2,500 crore and Tk3,000 crore. The size of the fund now is Tk10,500 crore.

Several apparel exporters said about 80 percent of their cancelled orders were restored, and they are enjoying large growth in August.   

According to Bangladesh Customs data on daily exports compiled by the BGMEA, during August 1-19, the country exported apparel items worth $2,048 million, up from $1,359 million during the corresponding period last year.

Bangladesh again second largest apparel exporter 

Vietnam surpassed Bangladesh in apparel and textile exports in June this year.

However, Bangladesh restored its position as the second largest apparel exporter after China in the first month of the current fiscal year.

Textile and garment exports of Vietnam amounted to about $3.04 billion in July this year, while Bangladesh exported products worth $4.09 billion, according to the General Statistics Office of Vietnam and the Export Promotion Bureau of Bangladesh.

Of Bangladesh's earnings, garment exports accounted for $3.31 billion, while home textile and specialised textile exports amounted to $66.09 million and $13.48 million, respectively.

"Generally, Vietnam calculates textile and garment exports as a single sector. They do not release separate data on garment exports. They have a large volume of textile exports. But in Bangladesh, the government has separate data on textile and garment exports," said Ashikur Rahman Tuhin, a former BGMEA director.

He hopes that apparel export earnings will be better in the coming days if factory owners manage to sustain themselves during the pandemic.