Allowing partial yarn imports via land ports to be suicidal: BTMA to NBR

Bangladesh Textile Mills Association (BTMA) has said it would be a suicidal decision to allow in partial shipments of yarn against each letter of credit (LC) through Benapole land port.

"If partial shipment against a LC is allowed, many trucks may enter the country with products of different quality other than what has been mentioned in the LC. Thus, due to the sale of yarn brought through duty evasion in the local market, the domestic spinning mills may face unequal competition and close down at some point," the association of the country's textile mill owners expressed concern in a letter sent to the National Board of Revenue (NBR) on Thursday last week.

Garment industry owners and home textile exporters – the main buyers of yarn – have alleged that local spinning mills are making extra profits by raising the price of yarn in the country.

For this reason, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has written to the commerce ministry demanding removal of the existing barriers to imports in order to reduce the over-reliance on local yarns and to facilitate the partial import of yarn against each of the LCs through Benapole, and other land ports. On the other hand, the Home Textile Mill Owners Association sent a letter to the NBR.

BTMA sent the letter to NBR on Thursday against the BGMEA's letter. The letter from BTMA said that if there was an opportunity to import yarn through other land ports, there would be unauthorised yarn import through extensive misdeclaration as there was no proper yarn count measurement mechanism there, resulting in unequal competition in domestic textile mills and loss of revenue of the government.

Speaking to reporters at a hotel in the capital on Saturday, BTMA President Mohammad Ali Khokon said various allegations about the import price of cotton and the price of yarn at the time were baseless.

He denied allegations that local spinning mill owners were charging extra $1 per kg of yarn and, by presenting data, he said when per kg yarn is selling for $3.88 in India, the price is 4.20 in Bangladesh. At present, the cost of production of yarn with imported cotton is $4.12 per kg, he said.

They blamed the price rise on the gap between the supply and demand at the time and said, "If I want to calculate my profit, they have to take a share of the losses I have incurred in the past. BGMEA did not stand by us when we lost capital. Nevertheless, as part of the agreement, we sent a letter to our member mill owners not to increase the price of yarn."

"But the mill owners have asked me, what did the garment industry organisations do when in the past they withdrew (Proforma Invoice or PI withdrawal) from us even after negotiating the purchase order, and they had imported yarn from India due to market decline? I could not answer," said the BTMA president

Highlighting the reasons for the yarn crisis, the BTMA president said the demand for cotton garments increased by 22% last year. On the other hand, cotton harvesting fell by 30% due to various reasons including rain.

He does not see any hope of the price coming down very soon.

According to BTMA, cotton imports will be around 90 lakh bales this year. But local spinning mills will not be able to meet the demand for yarn due to the increase in garment export orders, he said.