Revised instruction on loan classification upsets RMG exporters
Dhaka, June 27 (UNB) – Apparel and textile exporters on Wednesday said the implementation of revised instruction on loan classification and provisioning issued by the Bangladesh Bank on June 14 will create an unbearable pressure on the RMG sector.
Pointing out the factors that the RMG manufacturers and exporters have already sustained various problems due to global ‘recession’ and increase in power cost, they cautioned that the implementation of the provisions can also lead to irregularities in the payment of wages.
Addressing a press conference jointly organised by Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Manufacturers Associatoin (BTMA) at BGMEA, they urged the finance ministry and the central bank to review the decision.
BGMEA president Shafiul Islam Mohiuddin said, “According to the revised instruction, a continuous loan will be classified for non-repayment within three months, but it takes at least four months’ time for the return after the loan is taken due to the complex import-export process.”
The investors in these sectors need to undergo the process of importing various raw materials, including cotton, thread and petrochemical items, before they can export, he explained.
Mohiudding said the new provisions will definitely increase the rate of classification of loans by the factories that will also lead to lack of interest among banks to sanction new loans.
Legal actions should be taken against those involved in “looting” the bank money, or posing as loan defaulters by exploiting the bank policy, but real businessmen should not be the sufferers for the irregularities by a few dishonest businessmen, he added.
The BGMEA president also pointed out that the production cost has increased by 12 percent this year due to various difficulties that include the increase in power-gas prices, bank interest rates and transportation costs, he said.
There is a possibility the power prices may increase by 50 percent very soon as the Bangladesh Energy Regulatory Commission (BERC) has already started the process, he said.
“As a result, running regular activities in the factories, including the payment of wages, would fall into a great risk,” he cautioned.
BTMA president Jahangir Alamin said the new instruction of classification of loans is undesirable, as the investors are facing a milieu of external-internal problems that include the reduction of exports due to global recession, unsuitable environment for investment due to political instability in the country and workers unrest.
The revised instruction on loan classification and provisioning will come into effect on July 1.
BKMEA president AKM Selim Osman, its second vice-president Mohammad Hatem, BGMEA’s second vice-president Siddiqur Rahman were, among others, present at the press conference.
Pointing out the factors that the RMG manufacturers and exporters have already sustained various problems due to global ‘recession’ and increase in power cost, they cautioned that the implementation of the provisions can also lead to irregularities in the payment of wages.
Addressing a press conference jointly organised by Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Manufacturers Associatoin (BTMA) at BGMEA, they urged the finance ministry and the central bank to review the decision.
BGMEA president Shafiul Islam Mohiuddin said, “According to the revised instruction, a continuous loan will be classified for non-repayment within three months, but it takes at least four months’ time for the return after the loan is taken due to the complex import-export process.”
The investors in these sectors need to undergo the process of importing various raw materials, including cotton, thread and petrochemical items, before they can export, he explained.
Mohiudding said the new provisions will definitely increase the rate of classification of loans by the factories that will also lead to lack of interest among banks to sanction new loans.
Legal actions should be taken against those involved in “looting” the bank money, or posing as loan defaulters by exploiting the bank policy, but real businessmen should not be the sufferers for the irregularities by a few dishonest businessmen, he added.
The BGMEA president also pointed out that the production cost has increased by 12 percent this year due to various difficulties that include the increase in power-gas prices, bank interest rates and transportation costs, he said.
There is a possibility the power prices may increase by 50 percent very soon as the Bangladesh Energy Regulatory Commission (BERC) has already started the process, he said.
“As a result, running regular activities in the factories, including the payment of wages, would fall into a great risk,” he cautioned.
BTMA president Jahangir Alamin said the new instruction of classification of loans is undesirable, as the investors are facing a milieu of external-internal problems that include the reduction of exports due to global recession, unsuitable environment for investment due to political instability in the country and workers unrest.
The revised instruction on loan classification and provisioning will come into effect on July 1.
BKMEA president AKM Selim Osman, its second vice-president Mohammad Hatem, BGMEA’s second vice-president Siddiqur Rahman were, among others, present at the press conference.
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