Exporters seek expansion of loan moratorium, repayment periods

January 11, 2021 Business
Exporters would like extensions on both moratorium and repayment period for loans accrued from a good government sponsored stimulus bundle aimed at helping them cope with the pandemic's fallouts.

So far, the federal government has provided Tk 10,500 crore through banking stations to the export-oriented sectors of them costing only 2 per cent service charge for the payment of staff' wages between April and August this past year.

While disbursing the fund, Bangladesh Bank incorporated a moratorium of half a year, meaning repayments do not need to start for the first one half year's period. The federal government explained the loans would have to be repaid in 18 every month instalments.

The moratorium expired last month and exporters said some banks have previously started putting pressure seeking the repayments.

The Daily Superstar talked to trade body leaders and a specialist to learn about the needs which exporters want to realise lobbying with the central bank and ministries concerned, incorporating that of finance.

"We just prefer the moratorium for another half a year. So, by July we can start repaying the bank loan," said Rubana Huq, president of the Bangladesh Garment Makers and Exporters Association.

In a WhatsApp music message to The Daily Star, she also demanded thirty six months for the loan repayments rather than two years, pointing at the a down economy the garment sector has been going right through for the pandemic's second wave.

"That even can help us. But at this moment it would come to be very difficult for us to start repaying the loan," Huq as well said.

Earnings from attire shipments, which typically take into account 84 per cent of national exports, dropped 2.99 per cent year-on-year to $15.54 billion in July-December 2020, according to info from the Export Advertising Bureau (EPB).

Of the export receipts, $8.52 billion originated from knitwear, up 3.9 %, while that for woven declined 10.22 per cent to $7.01 billion.

Regardless of the pandemic, knitwear shipments rose as persons mostly opted for everyday wear because they stayed indoors and performed from home because of the health crisis.

Merchandise exports found in December declined 6.11 % year-on-year to $3.3 billion. Last month's receipts were 6.13 % shy of the monthly export target of $3.5 billion.

Garment export was straight down 9.64 per cent in December as the pandemic continues to batter the global market. Last month, woven garment export submitted the worst performance since June, plummeting 18.07 %. Knitwear export fell 0.45 %.

Total, garment exports witnessed an unprecedented 16.94 % year-on-year decline in 2020, according to exporters.

Overall merchandise shipment declined 0.36 per cent year-on-year to $19.23 billion in July-December 2020 as Bangladesh's major export places continued to battle to tame rising coronavirus infections, showed official data.

Backing the extension require, Md Saiful Islam, president of the Leathergoods and Sneakers Makers & Exporters Association of Bangladesh, reasoned that they received 30 % fewer work orders to get next season.

In April and May last year, there was minimal professional production in factories but expenses needed to be borne for wage payment.

And once again when the factories were trying to recover, a second wave arose from November last year, affecting production and sales found in factories, he said.

As supply chains and demand dwindled, Bangladesh missed some very nice sales bonanzas in Europe and the USA.

For instance, Bangladesh cannot latch on to the Christmas and Thanksgiving Day revenue momentum as many significant export destinations went into unique lockdowns to counter the second wave, Islam told The Daily Star over the telephone.

"We may keep coming back in business towards the end of June this year as the vaccine for curing the people from the virus is already available in the market. The central lender should address the problem as quickly as possible," he said.

"Nobody can repay the loan now. The government should also give another stimulus package to retain the jobs of workers as the profit percentage and orders possess declined," Islam also explained.

Ahsan H Mansur, executive director of the Insurance plan Research Institute, was against any moratorium expansion, explaining that many factory owners would face difficulties in starting repayments suddenly once the dues piled-up for, say, 12 months.

"So the moratorium isn't great for the business enterprise," he said.

He, even so, supported extending the bank loan repayment tenure to at least five years, reasoning that lots of, especially micro, cottage, tiny and medium enterprises, do not have adequate job orders to create a earnings and repayments currently.

The banking sector won't face any difficulty if the federal government extends the repayment period for five years, Mansur said.

"And also the authorities should provide another stimulus package to the export oriented sectors so that they can cope with the fallouts of the second wave as much have faced work buy cancellations, deferred repayments and a lot of other difficulties," he said.

The next stimulus package ought to be limited in size, much less big as the first one, he said.

The government provides only Tk 5,000 crore as a second stimulus package for businesses to keep paying workers' wages, Mansur added.

Mohammad Hatem, senior vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, said many small and moderate enterprises would become bankrupt without a moratorium extension and at least five years' loan repayment period.

M Shahadat Hossain, chairman of the Bangladesh Terry Towel & Linen Producers & Exporters Association, echoed the other exporters.

"We are in need of at least one year as moratorium and 3 years' repayment tenure for the mortgage loan," he said.
Source: Thedaily Star

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