- RMG exporters demand increasing rate of cash assistance to 10% from current 4% for 2 years
- BGMEA and BKMEA have sought disbursement of 80% of cash incentives before audit
- BGMEA and BKMEA have demanded workers' wages for next 3 months at 2% service charge from the government
- Lack of work orders has prompted owners to terminate workers: Mohammad Hatem
- Govt may curtail existing facilities on RMG exports to arrange fund for paying wages to workers: Golam Moazzem
Clothing factory owners have urged the government to increase cash incentives against apparel exports by more than double the present amount.
They have also demanded disbursement of 80 percent of the incentive before conducting audits.
Besides, they have called upon the government to create another fund at the existing 2 percent service charge to pay workers' wages for three months, starting from July 2020.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have written several letters to the Ministry of Finance and the Ministry of Commerce seeking these facilities.
However, in their letters, they have not given any assurance that there would be no firing of workers in the apparel sector.
Apparel factory owners said there has been a sharp decline in export orders as demand for garments in the Western countries have reduced to half that during normal situations.
Mentioning that buyers are demanding large discounts on whatever limited number of orders they are placing, and that suppliers will make losses if they take those orders, apparel exporters said they can make up for the losses if the government increases its cash assistance to the sector to 10 percent from the existing 4 percent.
This will also enable them to take the current work orders, industry insiders said.
As per existing regulations, the Bangladesh Bank releases funds for cash assistance after it receives reports from audit firms confirming that goods have been exported and the prices of the exported items have reached the country. However, apparel exporters have demanded disbursement of 80 percent of the cash assistance before audits.
Additionally, they said it is impossible for them to pay wages to their workers in the next three months as well. Therefore, they have urged the government to create another fund to pay wages to workers from July to September, similar to the Tk5,000 crore one created for providing loans to pandemic-hit industries at 2 percent service charge from April to June this year.
Confirming the news of sending letters to the finance minister, BKMEA Senior Vice-President Mohammad Hatem told The Business Standard that they have appealed to the government to provide cash support at 10 percent rate for the next two years.
BGMEA President Rubana Huq, in an application to the commerce ministry, urged the government to raise the rate of cash support given for six months to 10 percent from the current 4 percent, said Hatem, adding that the BKMEA and BGMEA later wrote separately to the finance minister seeking this facility for the next two years.
He said, "It will take six months for us to receive the payments of the products which are being exported now. Besides, the bills of products exported earlier are still stuck. Therefore, we have written to the finance minister to create funds at easy conditions to pay workers."
Commenting on these demands of apparel factory owners, analysts said the government has offered various facilities including the Tk5,000 crore incentive package to the sector in a bid to ensure minimum wages and job security of workers.
Factory owners promised the government not to terminate workers and also made public announcements in this regard, the experts said, pointing out that even then, a huge number of workers is facing job termination. Many others are not getting their wages regularly.
Asked about this, BKMEA leader Mohammad Hatem said owners cannot utilise all of their workers as there is a severe dearth of work orders. Because it is not possible for factory owners to pay wages to workers by keeping them idle, they are being compelled to terminate them, he said.
Meanwhile, Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said the government in the proposed budget for the fiscal year 2020-21 has upheld various tax relaxations including VAT waiver on imports of raw materials for the apparel sector. The government does not appear to have the capability to pay more incentives to the sector in the current situation of revenue crisis, he said.
Apparel exporters have been getting money from the government incentive fund since April, he pointed out, adding that apparel factory owners have also gotten respite from paying instalments of bank loans. Besides, some factories have also been kept open during the pandemic and are also exporting their products, which ensures income for the owners.
Even then, if owners are unable to pay wages to their workers, the government may think of curtailing the existing facilities on apparel exports to arrange funds for paying wages to workers, Moazzem suggested.
Besides, apparel owners will also get a huge chunk from the Tk50,000 crore fund created by the government for the pandemic-hit large industries and SMEs. They can also pay their workers by taking out loans from that fund, he opined.