Solve cash crunch in five banks immediately: BGMEA

Garment exporters yesterday called for an immediate solution to the liquidity crisis in five to six commercial banks so that they can pay workers' salaries on time and open letters of credit (LCs) to continue normal business activities.

They expressed concern that labour unrest may increase in garment factories if the banks fail to disburse salaries on time due to the ongoing cash crunch.

Exporters linked with these troubled banks are also struggling to open LCs for importing raw materials, BGMEA President Mahmud Hasan Khan said in a statement following a meeting with Bangladesh Bank Governor Ahsan H Mansur at the central bank office yesterday.

The liquidity-hit banks are even unable to release export proceeds to apparel exporters on time, the statement added.

Consequently, affected factories face disruptions in both export and import operations, which could damage the reputation of the sector and the country internationally.

The governor assured business leaders that initiatives would be taken as soon as possible to resolve the problem so that exporters can meet their financial needs, according to the statement.

BGMEA Vice-President Md Shehab Udduza Chowdhury said it is expected that the problem will be addressed by the end of this month, as the governor took the matter seriously and assured exporters of timely action.

Chowdhury added that nearly 350 export-oriented garment factories are affected by the dollar shortage linked to the five to six banks.

The affected banks are prioritising importers' demands, leaving exporters without access, although exporters own the dollars, he alleged.

Exporters are facing difficulties in settling back-to-back LCs due to the dollar shortage, making it challenging to purchase the raw materials required to maintain production during the peak season, Chowdhury also said.

This season, garment exporters have seen an increase in work orders following the final settlement of the US tariff at 20 percent. International clothing retailers and brands are placing orders for upcoming seasons, driving higher demand for dollars to import raw materials and accessories for the US, European, and other markets.

A dollar crunch at this time may create trouble in the garment sector, exporters said.