Apparel bodies recommend 370 factories for govt stimulus

Three textile and apparel trade bodies have recommended 370 closed and struggling factories to the Bangladesh Bank for loans under the government’s Tk 60,000 crore stimulus package.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) submitted 140 garment factories, the Bangladesh Textile Mills Association (BTMA) recommended 130 textile, spinning, weaving, dyeing, finishing and printing mills, while the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) put forward 100 factories.

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Presidents of the trade bodies confirmed the development to The Daily Star.

The recommended factories account for more than half of the nearly 700 closed or financially distressed textile and garment units hit by political instability, labour unrest and operational disruptions over the past two years.

The recommended factories account for more than half of the nearly 700 closed or financially distressed textile and garment units hit by political instability, labour unrest and other disruptions

Trade bodies said factories were selected based on prolonged shutdowns, financial deterioration and loan rescheduling during the period. The recommendations were finalised after third-party verification.

“We certified the factories only after a third-party audit so that the fund reaches the right recipients,” said BGMEA President Mahmud Hasan Khan.

The textile and apparel sector suffered severe disruptions during and after the student-led July Uprising in 2024, affecting factory production and exports.

After the fall of the Sheikh Hasina government in August that year, labour unrest spread across major industrial belts, including Savar, Ashulia, Gazipur, Narayanganj and Bhaluka, where more than 60 percent of the country’s textile and garment factories are located, according to the trade bodies.

They said several factories and goods-laden trucks bound for Chattogram port were set on fire, disrupting supply chains. Delayed shipments forced many exporters to offer steep discounts to international buyers, rely on costly air freight and absorb order cancellations. Many factories have yet to fully recover.

The industry’s woes have been compounded by a prolonged domestic energy crisis and supply chain disruptions linked to geopolitical conflicts, particularly the wars involving Russia and Iran, exporters said.

Against this backdrop, the central bank unveiled a Tk 60,000 crore stimulus package on May 23 to support distressed businesses, revive investment and accelerate economic recovery.

The package comprises a Tk 41,000 crore refinancing fund sourced from banks with excess liquidity through deposits of at least three years at a 10 percent interest rate, and a Tk 19,000 crore fund financed from the central bank’s own resources with a government guarantee.

Under the refinancing scheme, Tk 20,000 crore has been earmarked for closed factories, Tk 10,000 crore for agriculture and rural activities, Tk 5,000 crore for cottage, micro, small and medium enterprises, and Tk 3,000 crore each for export diversification and the North Bengal Agricultural Hub.

Factories certified by BGMEA, BTMA and BKMEA will be able to apply for the loans through their lien banks, which will process the applications with the Bangladesh Bank.

However, industry leaders cautioned that strict eligibility criteria could limit access to the fund.

“Many applying mills and factories will not be able to avail the loan from the fund because of stringent conditions in the package, such as classified loans, said BTMA President Showkat Aziz Russell.

He added that the stimulus fund alone will not be enough to revive the factories without adequate supply of gas and electricity.

BKMEA President Mohammad Hatem said the fund would help many small and medium-sized factories recover and repay overdue bank loans, although restoring the sector’s overall health would take time.