BGMEA, BKMEA object to withdrawal of bond facility on yarn imports
BGMEA and BKMEA have urged the government to immediately reverse the NBR’s decision to withdraw bonded warehouse facilities for 10–30 count cotton yarn imports, warning it could raise production costs and weaken the RMG sector’s global competitiveness.
Garment exporters warn that withdrawing bonded warehouse facilities for 10–30 count cotton yarn will raise costs and undermine the sector's global competitiveness
The country's two leading readymade garment (RMG) trade bodies have strongly opposed the National Board of Revenue's (NBR) decision to withdraw bonded warehouse facilities for imports of 10–30 count cotton yarn, urging the government to immediately reverse the measure.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) made the demand in a joint letter sent to the commerce minister today (8 September). Copies were also sent to the commerce secretary and NBR chairman.
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Under an NBR order issued on yesterday (7 September) pursuant to Section 266 of the Customs Act, 2023, bonded warehouse facilities were withdrawn for imports of 10–30 count cotton yarn.
The new directive requires genuine exporters holding bonded warehouse licences to import the yarn against an unconditional and continuous bank guarantee equivalent to the applicable duties and taxes.
The guarantee will be released only after the licensing authority verifies full compliance with export requirements.
In their letter, BGMEA President Mahmud Hasan Khan and BKMEA President Mohammad Hatem expressed surprise at the decision, saying the withdrawal of bond facilities had not been discussed at the inter-ministerial committee meeting held on 20 August under the chairmanship of the commerce minister.
They said the inclusion of Clause 5(a), which calls for withdrawing bond facilities, and Clause 5(b), which requires local spinning mills to supply at least 50% of yarn for export-oriented production, in the meeting minutes did not reflect the actual discussions.
The apparel leaders described the measures as "unrealistic and self-defeating", warning that their implementation could push the export-oriented RMG sector into a severe crisis.
"The ready-made garment industry has developed relying on the long-standing bonded warehouse system. A sudden withdrawal of this facility will send a negative signal to international buyers and erode the global competitiveness of our export sector at a time when competing nations are expanding such benefits," the letter said.
The two trade bodies also raised concerns over domestic yarn prices, saying prices have continued to rise despite weaker demand caused by reduced export orders. They questioned whether vested interests were seeking to establish a monopoly in the local market.
According to the associations, local spinning mills are operating at less than 50% of capacity amid the ongoing energy crisis. They argued that domestic producers therefore cannot meet the entire yarn demand of the export-oriented garment sector.
BGMEA and BKMEA called for the immediate cancellation of Clauses 5(a) and 5(b) and proposed a tripartite meeting involving the two apparel bodies and the Bangladesh Textile Mills Association (BTMA) to resolve the issue.
