Bangladesh Bank has assured garment exporters that cash incentives will be released every month without delay, as the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) urged the central bank to take urgent measures to address the ongoing crisis in the readymade garment (RMG) sector.
The assurance came during a meeting between Bangladesh Bank Governor Md Mostakur Rahman and a BGMEA delegation at the central bank headquarters on Wednesday. The delegation, led by BGMEA President Mahmud Hasan Khan, presented several recommendations seeking policy support and financial relief for the struggling industry.
The governor said applications for export cash incentives would no longer remain pending and that payments would be released within the same month to ease liquidity pressure on exporters.
During the meeting, BGMEA leaders said the garment sector is currently facing a difficult period due to global economic uncertainty and domestic constraints. They noted that although many banks have rescheduled loans, they are not providing adequate working capital, making it difficult for factories to maintain operations and repay loans on time.
To support the sector during the ongoing crisis, BGMEA leaders proposed raising the special cash incentive rate from 0.30 percent to 1 percent. They also suggested increasing the alternative cash incentive in place of bonded warehouse and duty drawback facilities from 1.5 percent to 2 percent, and raising incentives for small and medium enterprises (SMEs) from 3 percent to 4 percent.
The association warned that if incentive payments are not released quickly and regularly, many factories may face closure, which could have a negative impact on employment in the labour-intensive sector.
BGMEA also proposed reducing the interest rate on packing credit to 7 percent and increasing the pre-shipment credit refinance scheme from Tk 50 billion to Tk 100 billion, with the tenure extended until 2030. The delegation further called for bringing export loan interest rates to single digits and ensuring easier loan conditions for SME enterprises.
The delegation also raised concerns over difficulties in encashing fixed deposits and export proceeds held in several Islamic banks, including former Exim Bank and First Security Islami Bank, citing liquidity shortages. They said many factories are struggling to pay workers’ wages and electricity bills due to the situation.
The governor assured the delegation that Bangladesh Bank would take prompt action on issues within its jurisdiction and strengthen monitoring to address the liquidity problems.
BGMEA leaders expressed hope that swift steps by the central bank would help the garment sector overcome current global challenges and sustain employment in the country’s largest export industry.