BGMEA, BKMEA urge govt to restore yarn import bond facility

Yarn is an essential primary raw material for the readymade garment industry. Recently, the government withdrew the bond facility for yarn import, sparking dissatisfaction among entrepreneurs in Bangladesh’s main export sector.

In a letter sent to the ministry, apparel exporters raised a demand for the urgent withdrawal of this government decision.

BGMEA President Mahmud Hasan Khan and BKMEA President Mohammad Hatem jointly signed the letter, signaling that garment factory owners want the bond facility for yarn import restored.

Cotton yarn is used for versatile manufacturing purposes, including making sweaters and knitwear such as t-shirts. Among these, 10-30 count mixed yarn required for sweater production is not manufactured in Bangladesh at all.

Garment owners estimate that there are more than 1,000 bonds operating across the country. Last year, around 1.2 million tons of yarn were imported at an estimated cost of nearly Tk 46,000 crore.  

Domestic factory owners must import yarn at lower costs to remain competitive in the global market, where Bangladesh exports $40 billion worth of apparel annually to various countries.

In the joint letter sent on 8 September to the minister and secretary of the Ministry of Commerce and the chairman of the National Board of Revenue (NBR), apparel leaders said this unannounced decision was issued without prior discussion to grant special privileges to a vested interest group.

To resolve the crisis, industry leaders requested a tripartite meeting. The meeting cited to justify the withdrawal of the bond facility took place on 20 August in the conference room of the Ministry of Commerce.

Eleven days later, serial number 5 of that meeting’s minutes explicitly directed that upon withdrawing the bond facility for 10-30 count cotton yarn, genuine exporters could import necessary yarn against a bank guarantee based on certification from the relevant association, with the National Board of Revenue (NBR) taking the necessary steps.

Garment owners argue that rather than simplifying procedures, this creates an equation of complexity and delay.

Inquiries revealed that the government withdrew the bond facility to safeguard domestic industries - specifically to keep spinning mills operational and active. However, garment owners maintain that yarn of the required quality cannot be produced in many local mills.

As a result, exporters have been placed in a predicament due to the sudden withdrawal without proper scrutiny. Although the bond facility was granted several years ago after careful consideration to support the rapidly growing apparel sector, industry owners now view its withdrawal as unrealistic and self-defeating, warning that it will trigger a production crisis and send a “wrong message” to international buyers.

Repeated phone calls and text messages sent to the commerce secretary and the NBR chairman seeking comment on the exporters’ demands went unanswered.

However, BGMEA Vice President Md Shihab Uddoza Chowdhury told Agamir Somoy, “When the topic of withdrawing the yarn bond facility came up casually during conversation after the meeting at the Ministry of Commerce, the commerce minister requested all parties to submit their views in writing.

“How a letter was issued from the ministry as an official decision before that even happened is a matter of great surprise and forgery. Afterwards, we went to the minister and asked why this had occurred - to which he felt embarrassed. He stated he knew nothing about it. The letter regarding the decision to withdraw the bond facility was obtained among many other letters for his signature. He said he would look into the matter.”

An anonymous expert on bond matters said while protecting the domestic textile industry is important, caution must be exercised to ensure the readymade garment sector is not adversely affected. Since garment export is a priority and sensitive sector in the national economy, decisions on such sensitive issues should only be made through discussions involving all stakeholders.