Minister vows to set up bank for garment sector

People visit a stall of Bangladesh Apparel and Safety Expo at Radisson hotel in Chittagong on Thursday. Photo: Anurup Kanti Das

Planning Minister AHM Mustafa Kamal has vowed to push the government to set up a specialised bank for the garment industry to provide easy loans for entrepreneurs.

“I will try my best to establish a designated bank that will serve the garment sector, as we have some other specialised banks now,” he said on Friday. Kamal spoke at a discussion with businessmen on financing apparel growth, at Radisson hotel in Chittagong.

Bangladesh Garment Manufacturers and Exporters Association or BGMEA organised the discussion as part of the three-day Bangladesh Apparel and Safety Expo, in the port city.

Mamun Rashid, an adviser to the BGMEA, presented the keynote paper and moderated the function.

The minister made the comment at a time when the garment makers have been demanding a separate bank for the sector.

Kamal said all garment factories in Chittagong would be shifted to a special zone so that factories -- medium or small -- can be facilitated equally. Regarding achieving the goal of $50 billion garment exports by 2021, the minister said: “It is possible to achieve, but it will be difficult.”

On the role of the central bank in disbursement of loans at low interest rates to the entrepreneurs, the minister said the job of the banking regulator is not to make profit, but to make industry-friendly financing policy.

Atiqul Islam, president of BGMEA, said the sector needs low-cost funds to ensure high compliance, high productivity and to remain competitive in the global market.

Small and medium factories cannot relocate their units to the purpose-built buildings from the shared buildings due to a shortage of fund, Islam said.

But at the same time the international retailers are less interested to give work orders to the factories housed in shared buildings, he said.

Currently, 60 percent of the factories are housed in purpose-built buildings, which are well accepted by the retailers, while the rest are housed in shared buildings, Islam said.

Jennifer Bair, an assistant professor at the University of Colorado in the US, suggested Bangladesh to go for producing high-end value-added garment to get high prices.

In 2012, China received the highest price of $7 for a unit of men's and boy's cotton trouser while Bangladesh received $3.5 for each unit to the US market, she said.

In 2014, Mexico received orders for each unit of the product at $7 to the US market, but the prices did not change for Bangladesh, she also said.

Ahsan H Mansur, executive director of the Policy Research Institute stressed the need for attracting new foreign and domestic investors to reach the $50 billion export target.

The factory owners should also take steps to increase the efficiency of the workers, build a strong the mid-level management and ensure the best use of water resources, Mansur said.

Allowing back-to-back letters of credit and giving 25 percent cash incentives during the beginning of the industry played a vital role to help the sector flourish, said Ahsan Ullah, executive director of Bangladesh Bank.

The situation of the small and medium factories in Chittagong is so bad that the time has come to take a decision to help the factories run, said Nasir Udddin Chowdhury, former BGMEA vice president.

Mesbah Rabin, managing director of US-based factory inspector Alliance, said the Alliance and Accord, a grouping of European retailers, gave $50 million in soft loans to Bangladesh Bank through the International Finance Corporation for factory upgrade.

But the commercial banks responsible for loans choose factories they have good relations with, depriving the factories of the funds they need the most to upgrade their units, Rabin alleged.


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