The government yesterday gave yet another stimulus package worth Tk 3,000 crore for the export-oriented industries to help them provide wages and salaries to their workers for July.
This is the third stimulus package for the export-oriented industries, which are now actively running their units, since March.
The development comes after the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), whose members generate most of the export receipts, jointly wrote to Finance Minister AHM Mustafa Kamal on June 22 seeking continuation of low-cost loans for three more months to September.
Garment factory owners are in deep worry about carrying out various activities, the future of the industry and how to pay wages to the workers, said the joint letter, which was also sent to the prime minister's principal secretary.
"As a result, it would not be possible for most garment factory owners to pay wages to workers for July, August and September," the letter said, adding that the initial stimulus package had helped the garment sector withstand the crisis brought on by the global coronavirus pandemic.
Garment factories in Bangladesh faced order cancellations or suspensions worth more than $3 billion since the pandemic took form. Subsequently, earnings from apparel shipments in the immediate past fiscal year fell to its lowest in a decade of $27.83 billion. The amount is 18.45 per cent lower than in fiscal 2018-19.
It may take up to eight months to get the payment for the shipments already made. But the workers have to be paid to keep factories up and running to execute the current shipments and make the delivery for the orders coming in, the two trade bodies said.
Subsequently, the finance ministry on Wednesday asked the central bank to provide the additional fund to the export-oriented industries, which are dominated by garment factories.
Accordingly, the central bank yesterday sent a letter to 47 banks to release the fund from the stimulus package for the large borrowers in the industrial and service sectors. The package's allocation was raised to Tk 33,000 crore from Tk 30,000 crore for this end.
Borrowers will have to pay 4.50 per cent interest rate to avail the fund while banks will get 9 per cent interest as the government will give the rest as subsidy.
Banks will be permitted to take up 50 per cent fund from the central bank's refinance scheme to provide the credit to the export-oriented industries smoothly.
Borrowers will have to pay the loans within two years including a grace period of six months.
Things are looking up for the apparel sector though.
In June, the final month of the immediate past fiscal year, the earnings were $2.12 billion, according to data from the Export Promotion Bureau. June's earnings were 11.43 per cent lower than a year earlier but up 72.4 per cent from the previous month as economies in the Western world gradually opened up.
This could be why the finance ministry has held back from ceding the apparel exporters' latest demand for another round of financing in its entirety.
On the eve of Bangladesh embarking on a countrywide shutdown on March 26, the government announced a Tk 5,000-crore special package to pay the wages and allowances of export-oriented industries' workers for three months starting from April.
As the fund was later found to be inadequate, the government released another Tk 2,500 crore from the bailout package rolled out for the large industries affected by the pandemic.
Banks disbursed the amount directly to the workers' bank accounts or mobile financial service accounts.
The interest-free loan carried a 2 per cent service charge.
Two managing directors of banks preferring anonymity said they had already taken the required measures to implement the central bank's instruction.
Banks will release the funds in the quickest possible time, they said.
"We are hopeful that the commercial banks will start disbursing the salary to the workers' accounts soon as the government has set July 30 as the deadline for payment of salary to workers," said Khan Monirul Alam Shuvo, chairman of PR Standing Committee of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
If the workers get the salary from the banks timely, it is expected that the factory owners will also pay the workers' Eid festival allowance from their own funds timely.
The government asked the factory owners of 42 sectors including garment sector to pay the festival allowance by July 27.
Mohammad Hatem, vice-president of BKMEA, is also hopeful that the workers will get the salary timely as the government gave another stimulus package.