Garment exporters are calling on the central bank governor to lower the interest rates on export loans to single digits and simplify loan conditions for small and medium enterprises (SMEs). The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) stated in a release yesterday that if incentive funds are not promptly and consistently disbursed, many factories could face closure, impacting the labor market negatively.
In a meeting with Md Mostaqur Rahman, the governor of Bangladesh Bank (BB), BGMEA leaders highlighted that due to liquidity shortages, numerous factories are struggling to meet their financial obligations, such as paying workers’ salaries and utility bills like electricity. The business delegation, led by Mahmud Hasan Khan, president of BGMEA, noted that the garment industry in the country is facing challenges due to global economic instability and domestic limitations.
The leaders stressed the importance of continuing and strengthening policy support measures, particularly through increased cash incentives, to protect the industry during this critical period and foster the growth of new entrepreneurs. Their proposals included raising the special cash incentive rate to 1 percent, increasing the alternative cash incentive rate to 2 percent, and boosting the incentive for SMEs to 4 percent. They also suggested reducing the interest rate on packing credit (PC) to 7 percent, expanding the Pre-Shipment Credit Refinance Scheme to Tk 10,000 crore, and extending the fund’s tenure until 2030.
While acknowledging that many banks have rescheduled loans, the leaders raised concerns that sufficient working capital was not being provided, hindering factory operations and loan repayments. The central bank governor reassured that actions would be taken within the BB’s authority to address these issues.
Regarding cash incentives, he affirmed that no applications would be left pending and committed to disbursing monthly incentives within the same month to alleviate liquidity challenges for exporters. The delegation also highlighted difficulties in withdrawing fixed deposits and export proceeds from certain consolidated Islamic banks, including former EXIM Bank and First Security Islami Bank.
The BGMEA delegation expressed optimism that swift actions by the central bank would help the garment sector overcome global hurdles, regain momentum, and sustain employment levels.