Bangladesh Textile Mills Association (BTMA) has demanded of the authorities concerned to include its member factories in the Tk 50 billion stimulus package to help them pay the workers' wages.
It said that the textile and readymade garment (RMG) industry is one sector and interdependent while the backward linkage mills enabled the RMG to grow.
The trade body for primary textile millers on Tuesday sent a letter to finance minister AHM Mustafa Kamal, demanding equivalent facilities to other export-earning sectors from the package.
BTMA president Mohammad Ali Khokon in his letter said that the directives from finance ministry to the central bank by axing the textile mills from the Tk 50 billion fund for export-oriented sector was contradictory to the export policy.
On March 25, the government announced the package for export-oriented industries to help offset the negative impacts caused by the ongoing coronavirus pandemic.
The fund could only be used for paying wages and allowances of their workers and employee. Later on April 01, the finance ministry provided a guideline for disbursement of the assistance while another circular issued on April 15 included export-oriented textile mills for the facility of the fund.
Industrial units engaged in direct export with more than 80 per cent overseas sales would get the support from the package provided their letter of credit (L/C) documents are scrutinised, a finance division directive issued on Sunday said.
In addition, the deemed exporters would be entitled to avail the working capital from the incentive package of Tk 200 billion constituted for the small and medium enterprises (SMEs) and can pay their workers from the fund, the Ministry of Finance said.
Expressing dissatisfaction over the directives, the BTMA said the decision was contradictory to the Export Policy 2018-21.
Citing the policy, the BTMA president said the companies which export at least 80 per cent of its products would get same facility with 100 per cent export-oriented sector. About 230 spinning mills in the country are supplying 85 per cent to 90 per cent yarn to knitwear manufacturers and 55 per cent fabrics for woven garments including denim.
The sector is working as import substitute backward linkage industry and contributing more than $23 billion out of nearly $35 billion export earnings in the last financial year, he said in the letter.
According to the government's directive, the textile mills (deemed exporter) would get support from the Tk 200 billion package for paying the workers' wages but the fund was constituted for small and medium enterprises (SMEs).
The directive would create complexity for the textile millers to avail the benefit of stimulus package as the sector is capital-intensive heavy industry, the BTMA president said.
Echoing Mr Khokon, former BTMA president A Matin Chowdhury told the FE: "Unfortunately, we don't belong to SME and not covered under the circular which reserves 70 per cent for the cottage, micro and small industries and the rest 30 per cent for medium industry."
Moreover, it carries 4.0 per cent interest, he added.
The global textile industry have been facing crisis with low demand and manufacturing countries are giving incentive package to the manufacturers to remain competitive, he noted
The Prime Minister announced interest-free salary support for the export sector, but unfortunately it is going against the Export Policy 2018-2021, through depriving textile (deemed exporters) from the support, he said.
He feared labour unrest in textile sector, saying that they might be unable to pay the workers as they are not getting fund from the banks.
The textile mills might ruin and export with imported yarn and fabric will reduce fiscal year retention, he observed. He demanded interest waiver on term loans for six months and extend the tenure for additional six months to help the sector to be competitive.
