Govt curbs bonded cotton yarn imports amid BGMEA, BKMEA protest
Bangladesh’s National Board of Revenue (NBR) has suspended duty-free bonded imports of 10-30 count cotton yarn for export-oriented garment factories, while allowing those shipments to continue if exporters provide bank guarantees under a new order.
The NBR issued an order on Tuesday, making the measure effective immediately.
Two leading trade bodies representing the country’s readymade garment (RMG) sector have strongly objected to the National Board of Revenue’s (NBR) decision to withdraw bonded warehouse facilities on the import of 10-30 count cotton yarn while the Bangladesh Textile Mills Association (BTMA) welcomed the move.
In the joint letter, signed by BGMEA President Mahmud Hasan Khan and BKMEA President Mohammad Hatem, they expressed surprise, stating that the withdrawal of bond facilities was never discussed during the inter-ministerial committee meeting held on August 20 under the chairmanship of the Commerce Minister.
They noted that the inclusion of this decision as Clause 5(a)-withdrawing bond facilities-and Clause 5(b)-mandating local spinning mills to supply at least 50 per cent of export-oriented yarn-in the meeting minutes was ungrounded and contradictory to the actual discussions.
Terming the decision “unrealistic and self-defeating,” the apparel leaders warned that its implementation would plunge the export-oriented RMG sector into a severe crisis.
“The ready-made garment industry has developed relying on the long-standing bonded warehouse system. A sudden withdrawal of this facility will send a negative signal to international buyers and erode the global competitiveness of our export sector at a time when competing nations are expanding such benefits,” the letter stated.
Addressing current domestic market dynamics, the trade bodies highlighted that yarn prices in the local market continue to rise despite lower overall demand due to reduced export orders. They questioned whether vested interests are attempting to establish a local monopoly.
The leaders further pointed out that local spinning mill are currently operating at under 50 per cent capacity due to an ongoing energy crisis, making it impossible for local suppliers alone to meet the total yarn demand of the export-oriented garment industry.
However, Bangladesh Textile Mills Association (BTMA) has welcomed the National Board of Revenue’s (NBR) move, calling it a potential turning point for the country’s struggling spinning and textile industries.
BTMA said the easy availability of bonded imported yarn had suppressed demand for locally produced 10-30-count yarn, leaving many domestic spinning mills operating below capacity or remaining idle.
The move could also generate employment, help banks recover stalled investments, and reduce non-performing loans in the banking sector, BTMA said.
