Bangladesh’s textile millers have asked the Bangladesh Bank to extend the credit period to help ease the financial burden of importing raw materials and support their import-export trade.
The textile millers sent a letter regarding this to Ahsan H Mansur, governor of Bangladesh Bank, on Monday.
Brig Gen (retd) Zakir Hossain, general secretary of the Bangladesh Textile Mills Association (BTMA), signed the letter.
A central bank circular dated June 30, 2024, extended the credit period for importing industrial raw materials until December 31, 2024.
The bank representatives and the BTMA delegation held a detailed meeting on December 17, where they discussed the problems, challenges, and potential solutions, including the proposal to extend the crediting period for importing industrial raw materials once more.
Following the discussion, the BTMA also sent a detailed report identifying the existing problems and challenges of the export-oriented textile sector, along with potential recommendations for resolution and prioritization.
The letter explained that mills are unable to operate at full capacity because of several reasons.
That includes the Ukraine-Russia and Israel-Palestine wars, the global economic recession, significant depreciation of the taka against foreign currencies, a 250% increase in gas prices, a 70% increase in workers’ wages, recent political unrest in the country, workers’ unrest, and a lack of necessary gas and electricity supply, mills are unable to use their full production capacity.
Moreover, the export-oriented textile industry, including the manufacturing industries, has faced huge losses due to the exchange rate when importing raw materials.
The export-oriented textile industry has been facing several problems since the deadline for the extended crediting period has passed, the letter added.
Considering the overall aspect, it has become necessary to increase the credit period for the import of industrial raw materials urgently to facilitate the import-export trade.
The textile millers urged the central bank to take necessary measures to extend the credit period for importing industrial raw materials for the textile mills belonging to BTMA per the circular of June 30, 2024.
The BTMA, in a separate letter, also urged the central bank to take necessary steps to pay the outstanding amount of “Accepted/Matured” bills against the value of yarn and fabric supplied worth approximately $44.31 against 961 LCs of 66 BTMA member mills against back-to-back LCs by the LC opening banks.
The letter said that many of the concerned BTMA member mills are facing a liquidity crisis due to such a large number of unpaid bills.
Moreover, this issue was also discussed in detail in the meeting held by the Bangladesh Bank governor with the BTMA delegation on December 17, where he assured that steps would be taken to pay the outstanding bills as soon as possible.
The investment in this sector is about $22 billion, which is the highest single investment in the private sector. The textile and apparel sector earns about 84% of the country’s export earnings, with the country’s textile millers supplying 70% of the raw materials and gaining about 30% of foreign exchange through it.
