BM Depot fire: Uncertainty grips RMG exporters over payment for burnt goods

Apparel exporters of the country, whose millions of dollars' worth of goods were burnt during a fire incident at the BM Container Depot in Chattogram in June, are facing uncertainties as their foreign buyers continue to delay payment for the damaged apparels.

The buyers are responsible for the goods handed over to their forwarding agents by exporters as per the terms of the letter of credits (LC), said industry insiders. 

According to a government-appointed third-party assessment, the BM Depot fire burnt 5.38 million pieces of apparel worth $29.38 million supplied to forwarding agents of the buyers by at least 100 Dhaka-based exporters.

Infographic: TBS

The manufacturers asked for payment for their supplied goods from the buyers who will claim compensation from their respective insurance companies.

Some buyers like H&M have already paid their suppliers, but many are yet to do the same, putting stress on the manufacturers.

According to sources, over 84,000 pieces of apparel made by Ananta Casual Wear Ltd for its Swedish buyer and global fashion giant H&M got burnt in the fire. The damage was assessed to be worth $0.47 million. 

Ananta Group Managing Director Sharif Zahir told The Business Standard, "H&M has already paid the amount as per the commitment."

Haroon Ar Rashid, managing director of TRZ Group, another supplier to H&M, said, "We had two consignments of apparel at the depot. We do not know the status of the products after the fire."

"Our goods worth were $0.23million; we have been paid by the H&M, which kept its promise as a responsible buyer," he added.

Not every buyer has been as swift in paying as the Swedish fashion giant. Even two and a half months after the fire, many of them are yet to respond to calls for paying their suppliers.

For instance, Top Grade Int'l, a Hong Kong-based importer of JFK Fashion Ltd, is yet to pay the local exporter.

As per the LC terms, JFK Fashion had handed over 44,994 pieces of goods worth about $0.26 million to the buyer's forwarding agent Unitrans Container Ltd. 

"We are trying to contact Top Grade Int'l but they have not responded yet," said JFK Fashion Managing Director M Kafil Uddin.

With no idea as to when they will get the payment, Kafil said his company might face challenges to open a new LCs if the buyer does not pay on time.

Shahidullah Azim, acting president of Bangladesh Garment Manufacturers and Exporters Association, said, "Some responsible buyers already paid their exporters."

"We are trying to communicate with the rest of the buyers who have not paid yet," he added.

On the night of 4 June 2022, fire and explosions rocked the BM Container Depot in the Kadamrasul area of Sitakunda in Chattogram,  killing at least 47 people and injuring some 450 others.