In a communication addressed to both the Bangladesh Bank and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Bangladesh Textile Mills Association (BTMA) disclosed that garment exporters owe its members over $376 million. This disclosure comes in response to an inquiry from the country’s principal trade body regarding the repatriation of export proceeds.
Upon the recommendation of Bangladesh Bank, the FBCCI established a committee to oversee the repatriation process on October 14. The FBCCI also sought the perspectives of various trade organizations on the reasons behind delays in disbursing export proceeds.
The BTMA, in its letter, revealed that 15 of its members supplied yarn amounting to $375.77 million to 307 export-oriented garment factories but have not yet received payment. Similarly, four weaving mills are awaiting $1.08 million in payment for the supply of fabrics to 12 apparel exporters.
Monsoor Ahmed, the CEO of the BTMA, mentioned that they have already set up a unit to monitor payment delays to millers and spinners. However, the monitoring unit has yet to take effective actions, despite many garment exporters not adhering to their initial agreements or proforma invoices (PI) when procuring yarn and fabrics. The Proforma invoice (PI) is a fundamental agreement between buyers and sellers established prior to the delivery of goods.
Furthermore, delayed payments to textile millers are making it challenging for them to repay loans from the central bank’s Export Development Fund, placing additional pressure on the country’s foreign currency reserves.
Consequently, yarn stockpiling is once again occurring in the mills, as many garment makers are not collecting their orders despite prior agreement on Proforma invoices. This trend began in July this year, as work orders from abroad increased, coinciding with a decrease in inflationary pressures in the Western world and the recovery of their economies. However, this surge in work orders led to a spike in yarn prices in the local market.
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