Bangladesh (Common Wealth) _ To avoid stockpiling of unsold yarn and save US dollars, the Bangladesh Textile Mills Association (BTMA) advised the manufacturers of woven and knit garments to open back-to-back letters of credit (LCs) and purchase yarn from the local market.
In order to help them deal with the situation brought on by the unsold yarn, the textile millers also urged that the government increase the Export Development Fund (EDF) allocation from $20 million to $30 million, according to BSS.
BTMA president Mohammad Ali Khokon emphasized that the lack of gas, the influx of illegally imported clothing, and the difficulty banks were having issuing LCs owing to the EDF’s reduction were all contributing factors to the decline in business. He explained that the overall value of yarn on the local market had decreased to $500 million from its previous value of $3 billion. He claimed that unchecked luggage from Pakistan and India brought clothing in that was the source of this.
To maintain currency reserves and increase value, the BTMA has recently requested a temporary block on cotton yarn imports for the readymade garment (RMG) in order to retain forex reserves and to boost value addition.
The recommendation was communicated to the governor of the Bangladesh Bank by BTMA president in a letter. Exporters argue that the measure will reduce their competitiveness in international markets and have resisted the proposal.
According to BTMA, 510 local spinning mills with a 3,600 million kg production capacity can satisfy 70% of the RMG industry’s demand for cotton yarn.
Due to a decline in demand, mills have a sizable supply of raw materials, but the export-focused RMG industry imports a lot of cotton carded and combed yarn through bonded warehouse facilities, which costs a lot of US dollars, according to Khokon.
According to him, employing domestic cotton yarn would result in a value increase of up to 60% as opposed to 30% when using imported cotton yarn.
Since Bangladesh is more than capable of producing cotton yarn, Khokon requested the governor of the central bank to take action to prohibit back-to-back LCs opening for imports of cotton yarn.
