Exporters seek extension of loan moratorium, repayment periods
Exporters are seeking extensions on both moratorium and repayment period for loans accrued from a government sponsored stimulus package aimed at helping them cope with the pandemic's fallouts.
So far, the government has provided Tk 10,500 crore through banking channels to the export-oriented sectors at only 2 per cent service charge for the payment of workers' wages between April and August last year.
While disbursing the fund, Bangladesh Bank incorporated a moratorium of six months, meaning repayments need not start for the first half year's period. The government said the loans needed to be repaid in 18 monthly instalments.
The moratorium expired last month and exporters said some banks have already started putting pressure seeking the repayments.
The Daily Star talked to trade body leaders and an expert to know about the demands which exporters are trying to realise lobbying with the central bank and ministries concerned, including that of finance.
"We just want the moratorium for another six months. So, by July we can start repaying the loan," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.
In a WhatsApp audio message to The Daily Star, she also demanded 36 months for the loan repayments instead of 24 months, pointing at the tough times the garment sector has been going through for the pandemic's second wave.
"That even will help us. But at this moment it would be very difficult for us to start paying back the loan," Huq also said.
Earnings from apparel shipments, which typically account for 84 per cent of national exports, dropped 2.99 per cent year-on-year to $15.54 billion in July-December 2020, according to data from the Export Promotion Bureau (EPB).
Of the export receipts, $8.52 billion came from knitwear, up 3.9 per cent, while that for woven declined 10.22 per cent to $7.01 billion.
Despite the pandemic, knitwear shipments rose as people mostly opted for casual wear as they stayed indoors and worked from home because of the health crisis.
Merchandise exports in December declined 6.11 per cent year-on-year to $3.3 billion. Last month's receipts were 6.13 per cent shy of the monthly export target of $3.5 billion.
Garment export was down 9.64 per cent in December as the pandemic continues to batter the global economy. Last month, woven garment export posted the worst performance since June, plummeting 18.07 per cent. Knitwear export fell 0.45 per cent.
Overall, garment exports witnessed an unprecedented 16.94 per cent year-on-year decline in 2020, according to exporters.
Overall merchandise shipment declined 0.36 per cent year-on-year to $19.23 billion in July-December 2020 as Bangladesh's major export destinations continued to struggle to tame rising coronavirus infections, showed official data.
Backing the extension demand, Md Saiful Islam, president of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh, reasoned that they received 30 per cent fewer work orders for next season.
In April and May last year, there was almost no commercial production in factories but expenses had to be borne for wage payment.
And again when the factories were trying to recover, a second wave arose from November last year, affecting production and sales in factories, he said.
As supply chains and demand dwindled, Bangladesh missed some great sale bonanzas in Europe and the USA.
For instance, Bangladesh could not latch on to the Christmas and Thanksgiving Day sales momentum as many important export destinations went into fresh lockdowns to counter the second wave, Islam told The Daily Star over the phone.
"We may come back in business at the end of June this year as the vaccine for curing the patients from the virus is already in the market. The central bank should address the issue as soon as possible," he said.
"Nobody has the capacity to repay the loan now. The government should also give another stimulus package to retain the jobs of workers as the profit margin and orders have declined," Islam also said.
Ahsan H Mansur, executive director of the Policy Research Institute, was against any moratorium extension, explaining that many factory owners would face difficulties in starting repayments all of a sudden once the dues piled up for, say, 12 months.
"So the moratorium is not good for the business," he said.
He, however, supported extending the loan repayment tenure to at least five years, reasoning that many, especially micro, cottage, small and medium enterprises, do not have adequate work orders to make a profit and repayments at this moment.
The banking sector will not face any difficulty if the government extends the repayment period for five years, Mansur said.
"And also the government should provide another stimulus package to the export oriented sectors so that they can cope with the fallouts of the second wave as many have faced work order cancellations, deferred payments and a lot of other challenges," he said.
The second stimulus package should be limited in size, not as big as the first one, he said.
The government can provide not more than Tk 5,000 crore as a second stimulus package for businesses to continue paying workers' wages, Mansur added.
Mohammad Hatem, senior vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, said many small and medium enterprises would become bankrupt without a moratorium extension and at least five years' loan repayment period.
M Shahadat Hossain, chairman of the Bangladesh Terry Towel & Linen Manufacturers & Exporters Association, echoed the other exporters.
"We need at least one year as moratorium and three years' repayment tenure for the loan," he said.
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