Welcome to Business Outlook
Related Articles
Local garment manufacturers have demanded that the government ease conditions for importing yarn, cotton and fabrics as work orders were pouring in from international clothing retailers and brands.
“We have a lot of work orders…We need ready raw materials like yarn, cotton and fabrics,” said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The quantity of work orders is so high that local raw material suppliers are also facing difficulties in ensuring the timely supply of goods, said Hassan.
Hassan sent a letter to Commerce Minister Tipu Munshi on Saturday demanding easing the rules for importing yarn from India by removing different non-tariff barriers and improving infrastructures at the land port areas.
He demanded that the government allow the import of yarn, cotton fabrics and other raw materials particularly through the Bhumra and Sunamasjid land ports under bonded warehouse facility.
Currently, importers can import yarn, cotton and fabrics from India under the bonded warehouse facility only through the Benapole Land Port as it had storage and warehouse facilities.
The BGMEA also demanded that the government allow partial shipment facilities through the land ports, including the Benapole land port.
Partial import of garment raw materials is now allowed only through the country’s premier sea port at Chattogram.
Partial shipment refers to allowing importing and unloading a portion of a consignment ordered under letters of credit (LCs).
Businesspeople choose partial shipments mainly for timely use of raw materials and to reduce storage and warehousing costs of imported goods.
For instance, imagine an importer opening an LC for importing 100 tonnes of yarn but currently having a capacity to use 50 tonnes.
In that case, he opts for bringing over 50 tonnes for the time being and importing the remaining 50 tonnes later at his convenience.
However, in case of raw material imports not being made through Chattogram port, importers do not have the scope for partial shipments.
So, the importers have to import the whole consignment at one go if those are not unloaded at Chattogram port.
“Partial shipment is very much needed for us as we also need to reduce the cost of storage and warehousing,” said Hassan.
“The government should also construct more warehouse facilities in the land port areas so that goods can be properly stored,” he told The Daily Star over the phone.
The BGMEA also sought improvements of the infrastructure at the land port areas so that transport congestion can be avoided there in case of importing raw materials in bulk quantities from India.
Local garment manufacturers have been trying to import yarn and fabrics from India in bulk quantities as demand has soared with a rise in work orders while prices of yarn have gone up in the local markets.
The local garment manufacturers and exporters and spinners were at loggerheads recently for instabilities in the supply of yarn and for unusual price fluctuations of yarn in local markets.
Last week scrapping separate press conferences, leaders of the BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), terry towel association and Bangladesh Textile Mills Association (BTMA) sat together in a meeting, where they decided not to increase the prices of yarn in local markets.
Monsoor Ahmed, chief executive officer of the BTMA, opted against allowing partial shipments through the land ports, reasoning that it would create scopes for irregularities.
The government has stopped partial shipments many years ago to stop the irregularities, Ahmed told The Daily Star over the phone.
The BGMEA in its letter could not state whether they would get yarn at lower prices from any country, Ahmed said.
Yarn prices in the local markets increased mainly for associated rises in freight charge and cotton price in the international markets. The same reasons are applicable for garment manufacturers and exporters, Ahmed said.
“It is not possible to import yarn without bond. The local industry will face challenges if all ports are opened up and the government will lose a lot of revenue. So it is not possible to import yarn without bond,” said BTMA President Mohammad Ali Khokon,.
The garment manufacturers want to import yarn without bond which is very dangerous for the local industry, he added.
Last fiscal year, Bangladesh imported 8.2 million bales of cotton and 326,539 tonnes of yarn, according to data from the BTMA.
The spinners say they can supply 3,500 million kilogrammes of yarn a year.
The BGMEA in the letter said the cost of production has increased by 30.10 per cent over the last eight years, although the prices of clothing items declined 3.7 per cent last year manly because of the fallouts of Covid-19.
The freight charge went up anywhere from 100 per cent to 300 per cent during the pandemic. Over the last one and a half years, the local garment exporters have catered to work orders accepting losses.
But now they are expecting to make a profit as the international retailers and brands have been placing a lot of work orders. However, high yarn prices are becoming a major concern for them, the BGMEA said in the letter.
(TDS)
