Chittagong, Bangladesh (BBN)-Bangladesh planning minister AHM Mustafa Kamal has suggested establishment of a specialised bank for the readymade garment (RMG) sector on the lines of Krishi Bank.
The minister said he would try his best to set up a designated bank for the country’s garment sector while participating in a discussion on financing apparel growth last week in Chittagong, reports the fibre2fashion.
Kamal said achieving the $50 billion export target by 2021 by the garment industry is possible but difficult.
Setting up a specialised bank for the garment sector would ensure low-cost financing and attract more investment, the minister said.
Agreeing with the minister, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Atiqul Islam said setting up such a bank would help the garment sector meet its needs of low-cost financing for achieving higher compliance and productivity and remain competitive in the international market.
Islam said the Japan International Cooperation Agency (JICA) offers loan at 0.01 per cent interest rate, but the final interest rate at the disbursement stage goes up to 10 per cent, as the banking division of the finance ministry charges 4 per cent, Bangladesh Bank 1 per cent, and another 5 per cent is charged by commercial banks for processing the loan.
Small and medium apparel enterprises are finding it difficult to relocate their factories from shared buildings to the purpose-made buildings due to shortage of funds, while buyers are showing less interest in placing orders with the factories housed in shared buildings, Islam said.
At present, 60 per cent of RMG factories in Bangladesh are housed in purpose-built buildings, while the rest are functioning from shared buildings, according to BGMEA.