Bangladesh RMG exporters flag risks of deferred payments system

Deemed excessively precarious for exporters, they are urging the Bangladesh Bank to issue a circular prohibiting its utilisation.

Mohammad Hatem, the executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), underscored that under this system, buyers engage in importing and conducting business for protracted periods, ranging from six to seven months, before settling payments.

He highlighted the grave risks, particularly if a buyer declares bankruptcy, which could significantly impact manufacturers, emphasising the urgent need for regulatory intervention.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), echoed concerns about the industry’s sustainability amidst challenges and emphasised strides towards resolving pertinent issues.

He noted significant progress in reducing water consumption in garment production, attributing it to technological advancements.

Hassan also contrasted Bangladesh’s reliance on local investors with Vietnam’s influx of Foreign Direct Investment (FDI), cautioning against overreliance on FDI for sustainable growth.

Highlighting industry challenges, the BGMEA president stressed the need for strategic planning to mitigate unhealthy competition stemming from unplanned growth even as he emphasised diversification efforts, focusing on non-cotton fabric items and exploring new markets while prioritising workers’ safety and hygiene.

ALCHEMPro News Desk (DR)