Buyer’s fear of ban Not placing new order

Uncertainty in Bangladesh RMG sector

Mahfuja Mukul: After the United States announced a new labor policy to protect labor rights, the entrepreneurs of the garment industry in Bangladesh are worried. This time the anxiety increased a little more. Because, if Bangladesh is faced with any sanctions, a buyer company has given a letter of credit for ready-made clothes with the condition of not taking the product or not paying the money.
Confirming the matter, Faruk Hasan, president of BGMEA, an association of garment industry owners, told Prothom Alo on Wednesday that a buyer company has for the first time said in the general terms of the loan that they will not take the product if Bangladesh faces any sanctions. If there is any incident of embargo after shipment of the goods, then the buyer company will not pay.
However, the BGMEA president did not say that any buyer organization has given such a condition or any clothing factory has been given such a condition.
Farooq Hasan said, the anxiety increased a little due to the new conditions. Because many banks cannot open back-to-back loans against the original loan. The reason for this is that after exporting garments made for this new condition, there remains some uncertainty regarding the receipt of payment. Again, if the buyer does not take the product, it may be out of stock. Many banks will open back-to-back loans normally. Don’t overdo it. Because, they have faith in this sector.
The president of BGMEA also said that he will talk to the government so that there is no problem in opening back-to-back loans.
When asked whether the entrepreneurs will be worried after this incident, Farooq Hasan said, “Of course, the entrepreneurs will be tensed.” However, we do not think there will be any negative impact on business. Since the US labor policy is applicable to all countries of the world, foreign buyers may be giving similar conditions when placing purchase orders in other countries.
On November 16, the United States announced a new policy to protect labor rights around the world. When officially announcing this policy, the foreign minister of the country, Anthony Blinken, said that sanctions will be imposed on those who will go against the rights of the workers, threaten and intimidate the workers, if necessary.
A letter was sent to the Secretary of Commerce expressing ‘concern’ on behalf of the Bangladesh Embassy in Washington on November 20 about this policy of the United States. It is said in that letter that Bangladesh can be the target of this new policy on labor rights. Because, if the labor rights are violated, there is an opportunity to impose this policy on individuals, institutions or the state.