The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has sought legal protection if an exporter is unable to make payment against a letter of credit (LC) due to the bankruptcy of a foreign buyer.
The intermediate raw material that exporters have to import for the production of export products is done through back-to-back LCs. The loan is repaid after the buyers get the goods and send the payment.
If the buyer does not pay the price for some reasons, the loan is not repaid and the exporter becomes a defaulter. Besides, the money sent abroad to pay the import cost can also be considered as smuggling.
An eight-member delegation of BGMEA, led by its President Farooq Hasan, met with Bangladesh Bank Governor Fazle Kabir on Sunday and requested for legal protection of exporters to get rid of such an undesirable situation.
Notably, foreign buyers such as EWM, JCPenney, Debenhams and Sears have defaulted during the ongoing epidemic, which has raised concerns about whether the companies will be able to pay their dues.
The BGMEA leaders also demanded that the repayment period of the loan taken from the incentive package be increased from two years to five years and that the debt classification be stopped.
Apart from this, Bangladesh Bank has been again requested to provide policy assistance for the rehabilitation of 133 ailing industries in the garment industry.
The leaders urged the banks not to create pressure on the exporters to submit bonded warehouse licenses and IRCs for opening back-to-back LCs.
Bangladesh Bank Governor assured to fulfil the requests.
The BGMEA delegation included Senior Vice President SM Mannan (Kachi), Vice President Md Shahidullah Azim, Vice President (Finance) Khandaker Rafiqul Islam, Vice President Rakibul Alam Chowdhury, Director Asif Ashraf, Director Md Khasru Chowdhury and former director Md Munir Hossain.
Deputy Governors of Bangladesh Bank Ahmed Jamal and Kazi Chaidur Rahman and its top officials were present at the occasion.