BGMEA seeks BB’s spl assistance scheme to handle China virus impact

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The Bangladesh Garment Manufacturers and Exporters Association has requested the Bangladesh Bank to have a special assistance scheme for the country’s readymade garment sector to face the impact of China’s coronavirus outbreak on the RMG supply chain.

BGMEA president Rubana Huq on February 13 sent a letter to the BB governor Fazle Kabir putting numerous proposals, including formation of a tragedy assistance fund, a particular credit guarantee scheme and amendment to the back-to-back LC procedures to aid the sector.

Rubana wrote that the deadly coronavirus outbreak in China was taking its toll on trade and industry, especially on the supply chain of Bangladesh’s manufacturing industries.

The disaster assistance fund could be extended to exporters to aid unforeseen costs such as for example air freight, sourcing of recycleables and accessories from alternate and more expensive options to complete the orders and cost of financing for the extended period, the letter said. 

While exporters will negotiate with buyers, banks should be ready to extend the credit term by 30-60 days because of late arrivals of recycleables and increased charges for the extended period, it said.

The Bangladesh Bank may look at a special credit guarantee scheme to inspire commercial banks to ensure that they can continue steadily to support the industry, Rubana wrote in the letter.

She also requested the central bank for issuing policy directives to the scheduled banks to amend the respective clauses in the back-to-back LCs to help make the payments to the suppliers conditional and justified compared to export proceeds.

China remains the most significant trading partner of Bangladesh with total import worth $13.63 billion within the last fiscal year 2018-2019, she said.

Which, import of textile fibre and articles was worth $5.02 billion as around 46 % of the country’s textile recycleables come from China, she added.

The supply chain might become paralyse, which could prove to be fatal for the industry, if the epidemic in China prolongs, she said.

The country’s import from China has recently started slowing and China vessels’ berthing at Chattogram port attended right down to zero, she said.

Import from China decreased by 21 % in January and by 37 % in February 1-8, she said, discussing the info of the National Board of Revenue.

‘It is about time to adopt a set of precautionary policy measures to save lots of the industry from the unprecedented disaster taking into consideration the severity of the multipronged impact of the virus inside our industry,’ she said.

The impact includes delays in the arrival of raw materials, late shipments and delivery and cashflow crisis, she added.
Source: https://www.newagebd.net

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