Cash crunch makes survival harder for garment exporters

প্রকাশিত: 4:59 PM, January 27, 2021

News Desk: Pandemic-struck local garment suppliers are struggling to survive because of a poor cash flow caused by delays in payments by international retailers and brands despite the restoration of the orders.

In April last year, the buyers started cancelling or suspending the orders following the spread of the virus, which forced shops to shut amid lockdowns in Europe and North America, two major export destinations of Bangladesh.

Some 90 per cent of $3.18 billion worth orders have been restored so far after negotiations by the manufacturers, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Buyers have agreed to pay the local suppliers in different modes, which include as high as 50 per cent discount and deferment of payments from six months to one year.

Ahmed F Rahman, managing director of Kappa Fashions Ltd, said nine small and medium-sized garment exporters had together settled with their Hong Kong-based buyer at 43.5 per cent discount after nearly a year of negotiation.

“The exact date of the export receipt from Asia Today is not finalised yet. We are hopeful that the buyer will complete payment in March this year,” Rahman said.

“The companies are borrowing money from banks and near and dear ones to run businesses for the delay in export receipts.”

The entrepreneur received Tk 2.5 crore from the stimulus package of the government to pay wages to the workers. But he said it was not enough.

“It would have been better had I got Tk 2 crore every month.”

Vidiya Amrit Khan, deputy managing director of Desh Garments, has been facing fund shortage because of the delay in payment from buyers and the reluctance of banks to extend financing.

Rahman and Khan are not alone.