Kamal: I will try my best for a designated bank that will serve the purposes of the RMG industry Planning Minister AHM Mostafa Kamal yesterday told RMG entrepreneurs that he would try to convince the government to allow the establishment of a specialised bank dedicated only for the garment sector. The proposed bank, if realised, will give RMG entrepreneurs access to finance at lower interest rates so that investment could be expedited. “I will try my best for a designated bank that will serve the purposes of the RMG industry,” Kamal said in response to a demand by BGMEA President Md Atiqul Islam. The minister was speaking at a seminar on “Financing Apparel Growth” at the three-day Bangladesh Apparel and Safety Expo being held in a Chittagong hotel. Commenting on interest rates, Kamal said the Bangladesh Bank should provide services instead of making profits so that the industry does not suffer in securing funds. The minister added that achieving the $50bn garment product export target by the end of 2021 was “possible, but challenging.” BGMEA chief Atiqul said the sector needs low-cost financing to meet the expense of compliance, to increase productivity, and to remain competitive in the global market. “Jica [Japan International Cooperation Agency] offer us loan at 0.01% interest rate, but investors are not interested to avail this loan as the interest rate goes to 10% at the final stage of disbursement,” he said. The Banking Division of the Finance Ministry charges 4%, Bangladesh Bank 1%, and commercial banks that process the loan charge 5% – ultimately pushing up the interest rate to 10% for the borrowers, Atiqul said. “We will apply to the government for a specialised bank for the garment sector soon so that we can ensure access to finance for our members,” the BGMEA boss said. Addressing the event, Jennifer Bair, an assistant professor of the University of Colorado, suggested Bangladesh to shift from lower-end products to higher-end for receiving better prices. Pointing out China’s example, she said China received the highest export price of $7 for each men’s and boy’s cotton trouser in 2012, while Bangladesh received only $3.5 per unit. In 2014, Mexico received the highest export price for such trousers at $7 per unit, but the price for the same Bangladeshi item to the same US market remained at $3.5 per unit, she said. Ahsan H Mansur, executive director of Policy Research Institute, stressed on attracting foreign investment along with domestic investors to achieve the $50bn export target. “The garment owners should also increase the efficiency level of workers, improve mid-level management, and ensure the best use of water resources,” Mansur said. Mesbah Rabin, managing director of US-based garment factory inspection agency Alliance, said both Alliance and another inspection agency Accord had given Bangladesh Bank $50m through the International Finance Corporation to upgrade the country’s factories. However, the commercial banks in charge of disbursing that money chose only the factories that were in good terms with the banks, leaving out the small and medium factories that needed the funds for upgrade, Rabin said. “Global resources can be utilised for meeting up various compliance requirements in the factory, improvements of workers skill, development of high quality products and diversification of market,” said BGMEA Adviser Manun Rashid in his keynote presentation.
