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Bangladesh factories struggle with remediation

High bank interest rates and a lack of financing are the major obstacles for remediation of the readymade garment factories in Bangladesh. Remediation involves correcting structural or procedural defects. Factory owners are unable to get finance due to high rates and complicated procedures.

An interest rate that ranges from 9 to 18 per cent is a barrier to carrying out remediation, while the rates are even higher, from 9 to 16 per cent, for larger enterprises. Readymade garment owners also need support to present audited balance sheets, profit and loss statements and cash flow projections to banks and prospective investors to avail of loan facilities, which is also another barrier to obtain financing.

Most factories complete 80 per cent of their remediation work on their own financing. However, these are factories working with renowned brands and they don’t face financing problem. Getting remediation finance is very difficult for small factories due to complex documentation.

Safety remediation for structural, electrical, and fire proof work in readymade garment factories involves a cost and the question is if factories have the ability to finance this mega task. About 75 per cent of factories in Bangladesh do not need large structural retrofitting work.