Most of the local apparel makers queuing up for the Tk 1.0 billion (100 crore) Japanese soft loans failed to meet two important criteria for access to the fund created under the Bangladesh Bank’s Small and Medium Enterprise (SME) window after the tragic Rana Plaza incident in 2013. Sources said most of the applicants were found disqualified for the soft loan as those RMG factories were constructed without following any structural design commensurate with the Bangladesh National Building Code (BNBC) and they were loan defaulters. Adherence to building designs and avoidance of default loans are two of the 45 criteria set by the Japan International Cooperation Agency (JICA) for support from the Tk 1.0 billion fund, they added. The fund was created to assist in building only small and medium RMG factories earthquake-resistant by restructuring and retrofitting them and thus meeting the buyers’ demand to ensure building safety as well as health safety of factory workers. “We spent more than one and a half years to assist the garment factories to meet the criteria before getting the JICA loan, but at the end of the assessment we found that many factories could not meet the basic criteria for the loan,” said an official involved with the assessment. He said almost all the factories that applied for the fund had no approved design at all or had deviations in the factory designs. Sector leaders, however, say the JICA requirement of having genuine structural designs for factory buildings could not be met in the country’s context as most of the factories were constructed before adoption of the BNBC in 2006. According to the Memorandum of Understanding (MoU) signed by five parties on October 3, 2013, an interested RMG owner can seek a loan from the JICA fund through their respective associations – BGMEA (Bangladesh Garment Manufacturers and Exporters Association) and BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association). The Public Works Department (PWD), which is also one of the parties from the government side, scrutinises and screens the documents to assess the level of restructuring or retrofitting needed for the factory buildings. “In most of the cases, the applications were submitted seeking loans for constructing new factory buildings,” said Ahsan Habib, project manager of a JICA-funded capacity building project of the PWD. He said, so far, only one firm-DK Enterprise Ltd-was found qualified for the fund as retrofitting work of the factory was done. The main objective of the JICA fund was to remove weaknesses of a building structure, not totally demolishing it, he added. PWD officials said since the MoU was signed 300 applications had been received through BGMEA and BKMEA, the two other parties to the MoU. Of them, only 68 applicants are now in the queue for loans, which means they met most of the 45 criteria attached with the fund. Sources said during the first scrutiny, applications were rejected for not meeting the criteria like factory location in and around Dhaka city, workforce below 2,000 workers and factory not being located in a rented building etc. Another qualified factory owner, however, refused to take the loan as he could not manage his bank’s clearance, an essential criterion for it, said the official. Bangladesh Bank officials said the commercial banks were also undecided about receiving the JICA fund for the RMG sector, as most of the SME garment factories were loan defaulters. BGMEA President Atiqul Islam said the hopes that hinged on the JICA fund gradually evaporated over the too many criteria. He said RMG factories in the country had been set up over the period of 36 years, when there was no existence of BNBC and any such legal approval authority. “This kind of criteria does not play any role. In fact, it will not fulfil the mission of making industry safe as hardly any factory will be found having genuine structural design, and not located in a rented house. This kind of criteria cannot be fulfilled by any small or medium RMG factory,” the BGMEA president told the FE over phone. He, however, raised a question over giving loans to those who constructed their buildings by following the BNBC and had no bank loans. That means they were solvent and needed no such loan. But Fumio Kaneko, the JICA team leader for the PWD retrofitting project, said the JICA fund was created to support the RMG factories in making their buildings safe and not to guide them about what to do. “We are not giving any suggestion or guidance on compliance with factory safety, we are rather providing total assistance including construction mechanism … checking factory buildings, design, engineering … all in details, methodically and technically,” he said. He said the target of the fund was to help transfer technology and make the RMG units quake-resistant, the necessity of which came to the fore after the Rana Plaza tragedy.
