Home ›› 30 Apr 2023 ›› Front
Apparel makers of the country are seeking duty-free facilities for importing apparel and textile waste, including clips and mutilated garments, in a bid to boost recycled fibre production.
They also asked for establishing an HS code for importing the materials by proper classification.
At the same time, they want the government to waive the 7.5 per cent and 15 per cent VAT levied on the collection of raw materials for recycled fibre production and supplying the fibre to local spinning mills.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the leading trade organisation of garments manufacturers in the country, recently made the demands in a proposal to the Ministry of Finance.
In the proposal, BGMEA President Faruque Hasan said the existing VAT should be waived to to attract investment in the sector.
“Bangladesh will need to emphasise on recycled fibre production after the graduation from the status of Least Development Countries (LDC) in 2026. Consumer demand for recycled products will increase to 25 per cent by then. There will be an obligation to use 30 per cent recycled water,” said AK Azad, managing director of Ha-Meem Group, the country's leading garment exporter.
“To meet this challenge, the import of old and waste clothes from abroad needs to be opened up in order to produce recycled products,” he added.
Senior Commerce Secretary Tapan Kanti Ghosh said, “Six lakh tonnes of apparel and textile waste in the clothing sector need to be recycled first. On top of it, if traders want, they will be given the opportunity to import. In addition, there will be no objection from the government in permitting the traders to export 100 per cent of the manufactured products.”
According to BGMEA, the garment sector of the country has been playing a major role in economic growth and development for a long time. The sector exported $42.6 million to 167 countries in the last fiscal year. This industry has created 4 million jobs and contributes 11% to the GDP and 84% to overall exports.
According to the BGMEA proposal, climate change will create various challenges for the world. If the environment is unfavourable, it will not be possible to achieve the growth of industrial establishments. Current and future industrialisation decisions will impact climate change. For this reason, circularity and sustainability goals and procedures must be ensured.
At present, Bangladesh is home to the world's most eco-friendly green factories. There are 193 LEED-certified green factories certified by the US Green Building Council in the country. Also, 53 of the world's top 100 LEED-certified power plants are located in Bangladesh.
Industry insiders said consumer demand is shifting towards circular fashion and recycled products at a fast rate in the international market. Factories are reducing waste by using new technologies and process upgrades. Now it is necessary to prioritise the reuse of post-industrial apparel waste as raw material.
The proposal said even though recycled fibre manufacturing companies have recently started production and marketing in the country, there are no separate regulations for raw material collection and marketing of these companies. They have to pay 7.5% VAT for the procurement of raw materials. Again 15% VAT has to be paid for product sale.
This has led to a reluctance among producers to use locally collected recycled fibre, said BGMEA.
Besides, garment industry waste is one of the major causes of environmental pollution. Well-known brands have taken steps to use recycled raw materials. The Western countries are enacting new laws and exempting various types of incentives to import goods in this regard. Meanwhile, Bangladesh’s manufactured garment industry recycle fibre is an emerging backward industry.
At present there are 23 small and big mills producing recycled fibre with an annual production capacity of 2,20,000 tonnes. In addition, the country has 330 yarn producing mills, out of which, 61 are Global Recycle Standard (GRS) certified for fibre production with yarn produced using first-line spinning mills. 14 spinning mills are also set to achieve GRS certified capacity within a short period of time.
On the other hand, the country currently produces 5,77,000 tonnes of textile waste, which will not be sufficient in meeting the consumer demand for recycled fibre. Textile waste and mutilated garments have to be imported to meet the demand.
Recycled fibre is being used as a substitute for virgin cotton. As a result, 30% of foreign exchange with a value of $1 billion is being saved on virgin cotton imports. Using VAT-free recycled fibre will make it possible to produce clothes at relatively low cost. It will play a major role in expanding the market of readymade garments industry and protecting the environment.
Meanwhile, according to an upcoming law of the EU due to be enacted in 2025, cotton fibre must be produced by combining recycled fibre with a maximum of 50% virgin cotton at a proportional rate. Following the phase out of GSP benefits in 2026 after the LDC graduation, garment products in EU countries will be taxable and face tougher competition. EU importers will be exempted from the 30 percent tax if they procure clothes or garment products from recycled fibres. As a result, garment products will get access to the European market at relatively low prices and export income will be guaranteed. Along with this, it will play a helpful role in the discussion of cash incentives in the country's export incentives.
