Apparel makers asked to report to BB about non-repatriated export proceeds

The apparel apex body has asked all its members to report to the central bank by the end of this month their non-repatriated export proceeds up to 10 per cent.

 

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) communicated with the members through issuing a letter on March 16, calling for taking the move through their respective lien banks by March 30, 2021.

 

The information should be on the goods shipped since December 2019 to February last.

 

It is expected to help the factories clean their respective status in the online system of reporting EXP and continue to get various export facilities, despite having huge amount of unrealised payments due to the Covid-19 pandemic, industry insiders have said.

 

The Bangladesh Bank uses the online system to track down whether the export proceeds are repatriated or not and accordingly allow the factories to enjoy the existing export facilities.

 

Amid the pandemic, Bangladesh Bank had earlier decided that the cases of unrealised export proceeds up to 10 per cent would be accommodated on the on-line system up to March 31 without approval from the BB's discount committee, the exporters said.

 

The cases of discount above the threshold would, however, require approval from the committee.

 

Usually, the exporters have to get approval from the committee in cases of partially non-repatriated export proceeds.

 

The move came against the backdrop of apparel makers' sufferings from the heavy cuts on the bills by their buyers, who were

 

reportedly facing fund flow crisis due to the pandemic.

 

"In many cases, the entire export proceeds have not repatriated as global readymade garment (RMG) buyers are also financially affected due to the Covid-induced disruptions," the BGMEA said in its letter to the members.

 

In the recent months, the exporters claimed, such cases of non-repatriated export proceeds has gone up due to the pandemic as the exporters were facing frequent discounts on their bills.

 

When contacted, BGMEA president Dr Rubana Huq said the buyers were asking for discounts ranging from 15 per cent to 50 per cent.

 

Mohammed Hatem, senior vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), informed the FE that there were 1,042 cases of discount up to 10 per cent.

 

The factories involved would not be allowed to run their businesses after March 31 as the online reporting system would show their EXP unrealized due to absence of approval from the discount committee, he explained.

 

He said that the exporters on March 15 held a meeting with the BB discount committee and requested to approve the cases timely.

 

"The BB has decided to approve the cases on valid ground and so, we've requested our members to submit the information on discount by March 31 to continue their business," he added.

 

If the BB system marks any factory red for non-repatriation of the export proceeds, the banks would not finance it and it would not be allowed to open letter of credits, Mr. Hatem said.

 

Meanwhile, the BGMEA in another letter to the National Board of Revenue on March 04 last requested not to put pressure on an export-oriented garment factory for its unrealised export proceeds.

 

The factory's buyer, JC Penny, has declared itself bankrupt due to the pandemic and a total of US$ 1,433,715 against 25 of the factory's EXPs have not been repatriated, according to the letter signed by the BGMEA president.

 

The factory has opened letter of credit through its lien bank and its EXPs would be overdue by March 31 next, the letter reads.

 

The BGMEA requested the NBR to take necessary measures so that the factory gets continued banking supports and cash incentive from the EDF and extension of the duration for its 25 EXPs till December 31 next.

 

The BGMEA letter said many global buyers have become financially insolvent since the outbreak of coronavirus in major importing countries especially in the EU, China and US.

 

Since the second wave of the virus outbreak, many buyers have suspended their existing work orders and deferred the current shipments.

 

In such a situation, it is also apprehended that the exporters might have to wait for several more months to get their payments against the already shipped goods.

Source: Fianancial Express