BGMEA reiterates demand for a fresh round of stimulus

December 08, 2020 Business
Garment companies yesterday reiterated their demand for another circular of stimulus bundle from the government to handle the deep fallouts of the Covid-19.

"The federal government should either announce a fresh stimulus bundle for the sector or continue the works with given at the beginning of the Covid-19," explained Rubana Huq, president of the Bangladesh Garment Companies and Exporters Association (BGMEA), at a virtual press briefing.

The federal government has given Tk 10,500 crore to the export-oriented garment sector in three phases since April to help factories pay salaries and allowances to workers at 2 % service charge.

Besides, the country has unveiled various other packages.

For example, the federal government has introduced a Tk 33,000-crore stimulus package for large industrial units and has offered another Tk 12,750 crore in the Export Development Fund.

Huq as well demanded the government extend the moratorium period for the repayment of the loans under the first stimulus package to 1 year from six months now.

The government also needs to extend the payback period to five years from one year as the sector is certainly going through a rough patch, she said.

For example, international retailers and brands have placed 30 % fewer do the job orders for the December and March time of year as a result of second wave of coronavirus infections which have jolted the global economy.

This time, international retailers and brands have not cancelled work orders, nonetheless they are deferring orders citing the next wave that is regarded as an indirect cancellation of orders.

Whatever the cases, the capacity of manufacturers would stay idle. The tiny and channel enterprises would face hurdle specifically, she said.

In March-April, overseas retailers and makes either cancelled or deferred payment or placed on hold work orders worthwhile $3.18 billion.

Due to this fact, 1,160 factories, that used to source garment items to 1,300 international sellers and brands from 65 countries, were affected. 

Of the sum, orders worth $52 million were cancelled by Canadian clients, $574 million by the US potential buyers, $1,930 million by European buyers and $620 million by others.

Huq said the BGMEA as well participated in the decision for Action program launched by the International Labour Organisation to get back payments from international vendors and brands through discussions and consultations.

Of the major vendors and brands with which the BGMEA held talks and discussions are C&A, Bestseller, H&M, M&S, VF, PVH, KIK, Primark, Tesco, Decathlon, Arcadia Group, Next, New Look, Asda/George, OVS, K-Mart and Target Australia, Camieu, La Halle, and Ny Gard.

So far, 90 per cent cancelled do the job orders have already been reinstated, she said.

As a result of pandemic, garment exports declined by 34.72 per cent year-on-time from March to July. It possessed rebounded in August and September declining again in October as a result of the surging attacks in the export places.

In October, garment export to the US dropped by 8 %, Germany 10 per cent, Spain 6 %, France 15 per cent, Italy 30 per cent, and Japan 28 %, she said.

The retail sales in Europe declined 13 % in September within an indication that the second wave has effects on businesses as well as the shipment of garments from Bangladesh to its top rated export destination.

Between 2014 and 2019, the rate wanted to Bangladeshi garments declined by 1.79 %, the BGMEA chief explained.

In September, the rate dropped 5.23 per cent as international retailers and brands are offering lower rates. In the US, the rate fell by 4.81 %, she added.
Source: Thedaily Star

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