April 17, 2021

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The second wave of corona in the clothing sector

The second wave of corona has begun to have an adverse effect on the country’s export-oriented garment industry. In November, global garment exports fell 6 percent and prices fell by about 5 percent. The BGMEA, an association of garment industry owners, submitted a report to the finance ministry on Monday highlighting such information. In the report, the organization has proposed to increase the repayment period of the incentive loan given by the government from 18 months to 60 months.

Meanwhile, the finance ministry is not taking any decision to extend the repayment period of Tk 5,000 crore incentive loan for the salaries and allowances of the workers and employees of the export sector affected in Corona. The Finance Minister will soon seek guidance from the Prime Minister in this regard. After that, the finance ministry will decide to extend the loan repayment period. This information has been known from the relevant sources.

In April-June, 35 lakh garment workers were paid from the government’s Tk 5,000 crore incentive loan package for the export sector in Corona. The Ministry of Finance provides this assistance from the current budget. However, the condition was to repay the loan in 18 months. And its grace period will be 6 months. In the context of the second wave of corona, BGMEA has proposed to increase the loan repayment period from 18 months to 5 years and the grace period from 6 months to 12 months.

In this regard, a senior official of the Finance Department told Jugantar that the Prime Minister’s direction will be sought on the BGMEA proposal. The Finance Department will decide as he directs. The finance minister will discuss the matter with the prime minister. However, Finance Minister AHM Mustafa Kamal is currently in Singapore for follow-up treatment. Sources said that he could discuss the issue back in the country.

Bangladesh Knitwear Manufacturers Association (BKMEA) Senior Vice President. Hatem told Jugantar that many foreign buyers have slowed down orders again after seeing signs of a second wave of corona. Many are also postponing. Some orders were supposed to come but the buyers are not giving them anymore. In such a situation, there is a rationale for extending the payment period and grace period of Rs 5,000 crore of our incentive package.

Meanwhile, in the BGMEA report given to the Ministry of Finance, BGMEA President Dr. expressed concern about facing the second wave. Rubana Haque. “Just as the industry began to recover from the crisis caused by the Kovid-19 epidemic, the second wave of lightning began to appear,” he said in the report. And the growth that took place in August and September is now threatened by the second wave.

According to the report, garment exports to six major countries declined in October due to the Corona situation. Of these, exports to the United States fell by 7 per cent, Germany by 10 per cent, Spain by 6 per cent, France by 15 per cent, Italy by 30 per cent and Japan by 26 per cent. During the three months from July to September, the main export market was garment exports. But in October it dropped again at a significant rate. We see this as the effect of the second wave of the corona. However, due to the first push of Corona, the export of readymade garments decreased by 34.72 percent from March to July.

The report further said that the impact of the second wave has led to a sharp fall in retail prices and demand for more garments in the world market in October and November. Its negative impact has reduced both the growth and value of exports of the country’s garment industry. Earlier, due to the global lockdown caused by the Corona, the price and demand for clothing has been declining since February. This trend is still going on. Especially in August, the price of ready-made garments in the European market fell by 5 percent. There it dropped further to 13 percent in September. Similarly, the price of clothing has also decreased in the US market. Clothing sales fell 9 percent in the United States in September. Due to the second wave, it dropped further to 13 percent in October. Highlighting the fall in the price of garments, the report said that the prices of garments were falling even before the Corona situation. Which has assumed intense shape in the corona. In the five years of 2014-19, the value of the country’s garment exports has lost an average of 1.79 percent per annum. Corona lost 5.23 percent of global clothing prices in September, and the United States fell 4.61 percent. Overall, the global apparel prices fell by 4.15 percent in October, continuing the downward trend. And in the first 20 days of November, the price has fallen by 4.92 percent.

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