FBCCI demands support to bridge over coronavirus

The country's apex trade body yesterday called for policy support from the government to help businesses tide over the massive supply disruptions brought about by the coronavirus pandemic in China.

Banks should offer special credit facility to the businesses that have opened letters of credit to import products from China but have been unable to because of the lockdown in large parts of Chine to help avoid defaulting on their instalment payments.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) came up with the proposals at a press conference at its office in Dhaka.

Banks should not impose additional charges on LCs and penal interest on loans that were earlier disbursed to businesses, said FBCCI President Sheikh Fazle Fahim, while calling for a national strategy to tackle the crisis.

"The government should resolve the problem soon," he said.

Since the deadly virus was first reported in China in December last year, the outbreak has rattled the global economy and disrupted supply chains.

Bangladesh's trade with China is facing the doldrums as complexities have arisen for the shipment of the products against which LCs were opened before the outbreak of coronavirus.

"The supply chain has been facing disruption for a month. And we fear that the credit instalments of the businesses may face an overdue because of the outbreak."

Normalcy, however, will return within next three quarters if businesses get the required support from the government, Fahim said.

China is the main source of fabrics and synthetic yarns, the two major raw materials for the export-oriented garment sector.

The world's second biggest economy is also the major supplier of industrial raw materials for other sectors, such as leather, plastic, electronics and electrical, footwear, cosmetics and toiletries, computer, water pump and medical instruments.

In January, the country imported 6.72 lakh tonnes of products from China, down 21 per cent from a year earlier, according to the FBCCI.

Last fiscal year, about 26 per cent of Bangladesh's imports worth $52.19 billion came from China, according to data from the central bank. A year earlier, the share of imports from the country was 23.8 per cent.

"The problems pinpointed by the FBCCI are completely logical and banks are worried about the situation as well," said MA Halim Chowdhury, managing director of Pubali Bank.

The Association of Bankers, Bangladesh, a forum of managing directors of banks, has already discussed the issue in order to explore ways to manage the situation.

The central bank has collected trade-related data of China from each bank, he said.

"I think the central bank may give a roadmap to this end to solve the ongoing situation. We are waiting for the central bank's instructions," Chowdhury said.

Agrani Bank Managing Director Mohammad Shams-Ul Islam echoed Chowdhury.

"The problems can be resolved by taking collective steps," he said, adding that the situation is still under control.

The majority of the demands placed by the FBCCI will be fulfilled under the existing central bank's rules, said a Bangladesh Bank official with direct knowledge of the matter.

But some fresh policy support can be taken for the time being in order to give credit facility to businesses, he said.

Businesses of various provinces of China have assured that export from the country will start from February 24.

"We expect that the government will take measures to release the products to be exported from China on time from ports," Fahim added.