Primary textile sector still deprived of bailout funds
The primary textile sector is yet to receive funding from the government's Tk 30,000 crore stimulus package, despite being in dire straits due to the ongoing coronavirus pandemic.
Following a slump in sales, manufacturers unable to resume operations in full due to a lack of working capital, leading to large stockpiles of yarn and other fabrics.
Spinning, weaving and dyeing factories are eligible for a loan, according to the guidelines banks must follow when disbursing funds from the stimulus package.
From the $8 billion invested in the primary textile sector, Tk 20,000 crore has been lost to the coronavirus fallout, various millers said.
Making matters worse, about 11,000 micro, small, medium and large firms engaged in the industry could not manufacture any goods in the March-April period as it coincided with the government's two-month nationwide lockdown aimed at curbing the spread of coronavirus within Bangladesh.
As a result, these millers missed the two biggest sales windows of the year -- Pahela Baishakh and Eid ul Fitr, they added.
No one has been able to avail the loans from the bailout package as of yet, said Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA).
The primary textile sector requires heavy investment since its operational costs are so high and due to the coronavirus outbreak, the sale of yarn and other fabrics has dropped significantly.
Besides, international demand began to pick up again after stores started reopening in the US and EU, the two major export destinations for Bangladeshi garment products.
Therefore, millers need a large amount of funding so that they can restart their businesses, Khokon added. Currently, the number of spinning mills operating in the country stands at 450 with total investment in the sector amounting to Tk 40,000 crore, said Monsoor Ahmed, secretary to the BTMA.
Moreover, Tk 30,000 crore is invested in the weaving and dyeing sectors, he said, adding that those units need immediate loans to supply raw materials for the garment sector.
"Banks are reluctant to receive applications from us. I have corrected my application several times as my bank cited new excuses again and again," said Rashidul Hasan Rinto, proprietor of Chistia Sizing Mills.
Rinto is seeking to borrow Tk 1.20 crore to expand his factory in Narsingdi.
Millers who serve local markets with traditional garbs like sarees and lungis are also finding themselves in trouble for several reasons.
For instance, export-oriented textile millers who produce yarn and other fabrics are now targeting the local market due to a slump in demand from apparel exporters.
As a result of the excess supply, the price of yarn fell significantly in the domestic market, Rinto said.
A month ago, yarn sold for Tk 130 per pound. It is now selling at Tk 110 per pound.
Besides, millers have the added challenge of preserving unsold stockpiles due to the decreased demand, he added.
"This time, I expect the bank to disburse the loan as Bangladesh Bank asked the scheduled banks to complete disbursements from the stimulus packages by next month," Rinto told The Daily Star over the phone.
On July 2, the central bank issued a notice directing all scheduled banks to release a major portion of the bailout package as loans by the end of the current month while the remainder is to be distributed next month in a bid to ensure proper utilisation of the funds.
Like Rinto, Abdullah Al Mamun, director of Abed Textile Processing Mills, is waiting for his loan application to get approved.
"I hope that my bank will disburse the amount now as the central bank asked scheduled banks to make quick disbursements," he added.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the association responsible for coordinating the disbursement of loans from the government stimulus packages, expects to see a reasonable flow of funding for both existing and new loan applications soon.
"The momentum should be visible to all within two weeks. District business chambers and sectoral associations are in touch with FBCCI in this regard," said FBCCI President Sheikh Fazle Fahim.
Working out the challenges faced by borrowers is a continuous process that requires constant communication between the government and various stakeholders. To streamline the process, applications, disbursements, approvals, declines and customer service is being monitored by the FBCCI, Fahim added.
As of July 1, Bangladesh Bank approved applications to disburse a total of about Tk 4,100 crore from the Tk 30,000 crore-package.