FBCCI wants special credit and LC payment support as exporters cannot export on time for raw material crisis
The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has claimed that the coronavirus has hampered procurement of raw materials from China for all sectors.
It fears that they will become defaulters with banks if they could not carry out export orders on time because of the raw material procurement crisis.
The apex body of businessmen demanded that banks refrain from imposing forced loans against letters of credit (LCs) and classifying loans as non-performing ones if instalments are delayed.
Sheikh Fazle Fahim, the FBCCI president, made the demands at a press conference held at the federation's conference room on Saturday.
The conference was organised to convey opinions of the trade body on the overall impact of the coronavirus outbreak in China on industrial production, export-import, supply management, and on the service sector in Bangladesh.
Informing that the extent of financial losses would not be known for sure before March, the FBCCI said that in some sectors, foreign orders cannot be executed on time due to a lack of raw materials.
However, the trade body is not sure whether the orders will be cancelled or extra charges will be imposed for this.
Some firms have been continuing production using their stock of raw materials. As a result, the financial loss cannot be determined at the moment.
"Our business activities have stagnated due to coronavirus. Problems have been growing in shipments and getting documents of those for which LCs were opened earlier," said Fahim.
The FBCCI president added the number of fresh LCs has decreased.
"Normal supply in all sectors – RMG, plastic, leather, electronic, medical equipment, computers and communication materials have been hampered."
Fahim asked for special attention so that export-import activities are not hindered, and banks do not impose additional charges or interest penalties on businesses that are unable to pay off loans or LCs since they could not procure raw materials from China.
The FBCCI also said businessmen do not want any financial assistance for the time being. Instead, they want trade with China to go smoothly.
"Businessmen from different provinces in China have assured that the exports from China will return to normal from February 24. We do not want any Chinese goods to be stranded in our ports or any delays in unloading," said Fahim.
He also requested the banks concerned to provide short-term loans out of the LC limits of firms who have already opened LCs but need more time for shipments – if the firms get an opportunity to import from another source.
In the fiscal year 2018-19, the total trade between Bangladesh and China was about $14.68 billion.
In the garments sector – especially in the woven sector – 60 percent of the raw materials come from China. Moreover, 20 percent raw material of the knitwear sector also comes from China.
The main source of raw material in many other industries is China.
"About 80 percent of the manufacturing value chain of our economy was suspended for about one month. During this time, very small amounts of shipments were made," the FBCCI president said.
"In January this year, 6.72 lakh tonnes of goods came in from China. During the same month in 2019, the amount was 8.51 lakh tonnes."