Buyer sets condition not to receive RMG items if Bangladesh faces sanction

A worker sews a cloth inside a garment factory in BangladeshFile photo

The Bangladeshi readymade garment entrepreneurs were concerned due to the new US labour policy announced on 16 November.

Now the concerns have been intensified as a US apparel company has included a certain condition in the letter of credit sent to a Bangladeshi garment factory.

The condition says it will not receive the product or pay the money if any related sanction is imposed on Bangladesh.

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Confirming the matter, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told Prothom Alo on Wednesday that a buyer organisation in its LC included a general condition. It said they would not receive any product if Bangladesh faces any sanction.

He further stated that the company also clarified that neither it would receive the product if the sanction is imposed even after the shipment of the product, nor it would pay any money for that.

The BGMEA president, however, did not disclose the name of the buyer organisation that included this condition.

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Faruque Hassan stated that the new condition would raise concerns a bit. Many banks may not agree to open back to back letter of credits (LCs) due to the newly imposed conditions as it creates an uncertainty over getting money from the buyers after export.

Many banks, however, will open LCs as usual, he said adding they won’t see the condition as a big issue as they trust this sector.

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The BGMEA president further said he would talk to the government to ensure that the exporters don't face any problem opening the LCs.

Asked whether the entrepreneurs will be concerned due to this, Faruque Hassan said, “Of course, the entrepreneurs will be concerned. However, I don’t think it will create any impact on the business. As the US labour policy is applicable to all the countries, the buyers might impose the same conditions to other countries too while issuing a purchase order.”