The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Wednesday urged the government to raise cash incentives and maintain these consistently to help the sector weather the current crisis and encourage new entrepreneurship.

Addressing the challenges facing the industry, the BGMEA proposed that Bangladesh Bank raise the rate of special cash assistance from 0.3 per cent to 1.0 per cent.

It also suggested increasing alternative cash assistance in lieu of customs bonds and duty draw-backs from 1.5 per cent to 2.0 per cent, and from 3.0 per cent to 4.0 per cent for small and medium enterprises (SMEs).

The demands were presented by BGMEA president Mahmud Hasan Khan during a meeting with Bangladesh Bank governor Md Mostaqur Rahman at his office in Dhaka.

BGMEA president highlighted that the country’s garment industry is facing a difficult period due to global economic instability and domestic constraints.

He noted that many banks are reluctant to provide the necessary working capital even after rescheduling loans, hampering factory operations and timely repayment.

Mahmud Hasan warned that if incentive payments are not released promptly and on a regular basis, many factories could soon be forced to close, with serious repercussions for the labour market.

To further support the industry, the BGMEA proposed reducing the interest rate on packing credit to 7.0 per cent, doubling the pre-shipment credit refinancing scheme from Tk 50 billion to Tk 100 billion, and extending the repayment period until 2030.

The association also called for lowering export loan interest rates to single digits and providing easier loan terms for SMEs.

The meeting was attended by BGMEA directors Majumder Arifur Rahman, Dr Rashid Ahmed Hossaini, and Abdullah Al Mahmud Mahin, managing director of Mahin Apparels Limited, among others.

Governor Md Mostaqur Rahman assured the delegation that effective measures would be taken on issues under the central bank’s purview.

 He said that steps would be introduced to ensure cash incentive applications are not left pending and that payments are released on a monthly basis.

The BGMEA delegation also raised concerns over difficulties in accessing fixed deposits and export earnings held with consolidated Islamic banks, previously known as Exim Bank, First Security Islamic Bank, and others.

They highlighted that liquidity shortages are causing factories to struggle with paying wages, allowances, and electricity bills.

The governor assured the BGMEA of special oversight from the central bank to address these issues.