Textiles, RMG seek soft loan citing deep crisis

The country's textile and ready-made garment (RMG) industry leaders have urged the government for a soft loan to cover July's salaries and utility bills citing that they are facing a severe financial crisis following recent disruptions amid unrest centring quota movement protest. 

The Bangladesh Textile Mills Association (BTMA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) submitted the appeal to Finance Minister Abul Hassan Mahmood Ali in letters dated 31 July and 28 July, respectively.

The letters were also sent to the prime minister's private industry and investment adviser, the Bangladesh Bank governor, the state minister for commerce, and other relevant ministries.

In the letters, the industry leaders sought a loan at a 2% interest rate with a one-year repayment period and a six-month deferral on existing loans to help them navigate the ongoing crisis.

"Considering the current situation, if we avail July's salary with a 2% interest rate and a one-year repayment period, we will be able to manage the situation. Otherwise, we are concerned about paying the workers' wages," Mohammad Ali Khokon, president of BTMA, stated in the letter. 

He referred to the recent business crisis following the unrest and about a week-long factory shutdown.

Khokon also requested the same loan terms for July to cover gas and electricity bills. 

Placing similar appeals, BKMEA President AKM Salim Osman said, "If we are able to secure the loan, it will be possible for us to overcome the crisis. Otherwise, there may be delays in paying workers' salaries, which could lead to a chaotic situation."

The BTMA letter also stated, "Necessary steps should be taken to ensure that commercial banks, which provide LCs to textile manufacturing companies, pay the accepted/matured bills on time for yarn and fabric supplied by the BTMA."

Once the bill amounts are received, member mills will be somewhat relieved from the shortage of necessary working capital for their operations, it read.

The recent internet blackout and production affected export and import activities for about a week, resulting in significant financial losses for businesses.

To offset the losses, business leaders are urging relevant ministers and government officials to come up with assistance. 

Economists, however, suggest that businesses consider potential long-term damage rather than just focus on immediate losses. 

Ahsan H Mansur, executive director of the Policy Research Institute, told The Business Standard, "They are experiencing some losses now, but they should also think about the possible long-term impact, as export orders may decrease in the coming months."

He added, "They need to consider the political and economic situation of the country, not just their balance sheet."