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BGMEA urges government to extend loan repayment period


The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has once again sought extension of loan repayment packages in view of uncertainties caused by the 'second wave' of the pandemic. Industry says garment buyers’ new approach to managing their supply chain amid second wave of Covid-19 has put local apparel exporters in an awkward situation, especially with their management capacity.

The buyers are now deferring order placements and divide them into smaller orders with shorter lead time, though cancellation is not that rampant this time around, exporters say.

Following a surge in new cases in major importing countries, buyers are now deferring order placements and splitting them into batches with shorter lead time, instead of cancelling orders, the BGMEA says. This has an adverse impact on the industry, since factories are not being able to make a forecast and plan their capacity.

Against this backdrop of multipronged crisis, it was becoming increasingly difficult for factories to stay on course without additional financial support by the government. Since factories were already struggling to meet regular expenses and cash flow with exports falling, prices dropped 5 per cent in recent months. Repayment of wage loan incentive, which was availed during April-July 2020, at equal instalments in 18 months would mean an estimated 20 per cent additional wage burden on the factories, the letter mentioned.