The Japan International Cooperation Agency (Jica) is providing soft loans at 0.01% for remediation of readymade garment factories, but the factory owners have to take that loan at 9% to 10% from the market. Out of this 10%, the Finance Ministry and Bangladesh Bank are making a profit of 5% and the rest goes to commercial banks. As of now, around $200m in funds are available for remediation purpose of garment factories. Out of the total funds, the IFC is providing $50m, the USAID $22m guarantee fund and Jica $13m. Europe-based AFD is also going to provide a 50 million euro fund by mid-2016. All these funds are provided at a rate of 0.01% to 1% but the ultimate clients, the factory owners, have to take the loan as high as 10% because of bureaucratic problems. Ambassadors of the US, UK, Netherlands, Canada and European Union had a meeting with secretaries of Foreign, Commerce, and Labour Ministries and expressed their displeasure about the issue. At the meeting, the ambassadors wanted to know why the rate was so high for the ultimate consumers when they were providing the soft loan so that the readymade garment industry in Bangladesh becomes competitive, said a source who attended the meeting. He said the envoys expressed their views that the loan disbursement issue should not be considered from petty commercial point of view. Another official, who attended the meeting, said the government gave the excuse that due to legal barriers, they have to provide the soft loan at a high rate. Exchange rate fluctuation and bank rate are the main causes of providing the loans at a high rate, he said. The finance ministry gets the fund at less than 1% and transfers it to The Bangladesh Bank at 4%. The central bank provides the fund at 5% to commercial banks which ultimately lends it for 9% to 10% to factory owners. After the collapse of Rana Plaza in 2013, all stakeholders including the government, manufacturers, buyers, and development partners took the initiative to improve the safety of the workplace and ensure security of the workers. The RMG sector is the country’s biggest export earning sector with an annual export earning of about $30bn. About four million workers, mostly women, are employed in the sector.
