BGMEA reiterates demand for a fresh round of stimulus

The government has given Tk 10,500 crore to the export-oriented garment sector in three phases since April to help factories pay salaries and allowances to workers. Photo: Star/file

Garment manufacturers yesterday reiterated their demand for another round of stimulus package from the government to cope with the deep fallouts of the Covid-19.

"The government should either announce a fresh stimulus package for the sector or continue the supports given at the beginning of the Covid-19," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), at a virtual media briefing.

The government has given Tk 10,500 crore to the export-oriented garment sector in three phases since April to help factories pay salaries and allowances to workers at 2 per cent service charge.

Besides, the country has unveiled some other packages.

For example, the government has introduced a Tk 33,000-crore stimulus package for large industrial units and has made available another Tk 12,750 crore in the Export Development Fund.

Huq also demanded the government extend the moratorium period for the repayment of the loans under the first stimulus package to one year from six months now.

The government should also extend the payback period to five years from one year as the sector is going through a rough patch, she said.

For instance, international retailers and brands have placed 30 per cent fewer work orders for the December and March season due to the second wave of coronavirus infections that have jolted the global economy.

This time, international retailers and brands have not cancelled work orders, but they are deferring orders citing the second wave that is considered as an indirect cancellation of orders.

Whatever the cases, the capacity of manufacturers would remain idle. The small and medium enterprises would face hurdle particularly, she said.

In March-April, international retailers and brands either cancelled or deferred payment or put on hold work orders worth $3.18 billion.

As a result, 1,160 factories, which used to supply garment items to 1,300 international retailers and brands from 65 countries, were affected. 

Of the sum, orders worth $52 million were cancelled by Canadian buyers, $574 million by the US buyers, $1,930 million by European buyers and $620 million by others.

Huq said the BGMEA also participated in the Call for Action programme launched by the International Labour Organisation to get back payments from international retailers and brands through discussions and consultations.

Of the major retailers and brands with which the BGMEA held talks and discussions are C&A, Bestseller, H&M, M&S, VF, PVH, KIK, Primark, Tesco, Decathlon, Arcadia Group, Next, New Look, Asda/George, OVS, K-Mart and Target Australia, Camieu, La Halle, and Ny Gard.

So far, 90 per cent cancelled work orders have been reinstated, she said.

Because of the pandemic, garment exports declined by 34.72 per cent year-on-year from March to July. It had rebounded in August and September declining again in October because of the surging infections in the export destinations.

In October, garment export to the US dropped by 8 per cent, Germany 10 per cent, Spain 6 per cent, France 15 per cent, Italy 30 per cent, and Japan 28 per cent, she said.

The retail sales in Europe declined 13 per cent in September in an indication that the second wave is affecting businesses and also the shipment of garments from Bangladesh to its leading export destination.

Between 2014 and 2019, the rate offered to Bangladeshi garments declined by 1.79 per cent, the BGMEA chief said.

In September, the rate dropped 5.23 per cent as international retailers and brands are offering lower prices. In the US, the rate fell by 4.81 per cent, she added.


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