BTMA for yarn procurement by RMG thru back-to-back LC

Bangladesh Textile Mills Association (BTMA) has urged the National Board of Revenue (NBR) to formulate a policy for an interim period so that ready-made garment industries can procure yarn produced by local spinning mills through back-to-back LC.

The move will help ease the country’s forex crunch and the existing liquidity crisis facing the mills, said BTMA President Mohammad Ali Khokon in a letter sent to NBR chairman Abu Hena Md Rahmatul Muneem on Sunday.

“Bangladesh is 100 per cent self-sufficient in cotton yarn production. Therefore, during this crisis, if export-oriented garment industries purchase at least 70 per cent of export quality carded and combed cotton yarn from local spinning mills through back-to-back LCs for an interim period, the ongoing crunch will be resolved,” the letter reads.

It said that the impact of the global recession, caused by Russia-Ukraine war, has also affected the textile sector of Bangladesh. As a result, the production cost of yarn and clothes in the mills is relatively higher due to an acute dollar crisis as well as an increase in fuel prices.

However, an acute liquidity crisis has been created in the mills for not getting proper prices of yarn and fabric and decrease in export orders, it added.

It said that mills have to pay salaries, wages and bonuses and various utility bills ahead of Eid-ul-Fitr. But the purchase order or the desired price of the yarn is not available in the market.

In another letter sent to the NBR chairman on Sunday, BTMA president requested the revenue board to take necessary steps to stop selling of smuggled yarn, clothes and dress materials in the local market.

In order to stop the sales of yarn and clothes brought in the local market under duty and tax-free facilities or misdeclaration or by any illegal means, he made request to strengthen the drives in various parts of the country namely Narayanganj, Araihazar, Gausia Market, Narsingdi, Tangail, Sirajganj and other markets.

He said, “This drive has been stopped for a long time. As a result, there is a slowdown in the yarn and fabric sales of the mills during this month of Ramadan ahead of Eid-ul-Fitr and Pahela Baishakh, which is alarming.”

Due to lesser drive against illegal sales, there is extensive marketing and sale of yarns and clothes that have been infiltrated in various ways in those markets, he said.

“Mills face liquidity crunch due to an increase of yarn and cloth stock made in the local mills. Besides, the government is losing a huge amount of revenue, and the mills are gradually running out of money or being sick due to liquidity crunch.”