Increasing waste rate to encourage inefficient production
Currently, the global practice is to try to bring the wastage rate down to near zero
The garments sector is progressing with the help of technological advancement. In this situation, there is no scope to increase wastage rate.
Currently, the global practice is to try to bring the wastage rate down near zero. In this situation, it is not logical to encourage a more inefficient production system. Instead, the commerce ministry should look for ways to reduce the wastage rate from the existing 16%.
The Bangladesh Bank is providing facilities from its technological upgradation fund. Using this fund for technological advancement can help factories to reduce wastage. The ministry can also think about pressurising the association to implement this.
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We see extra raw materials imported by the companies are sold in the local market, which damages the business of the local producers. Moreover, the use of imported fabric has increased in our industry in recent years.
In our country, most of the wastage happens in the production of raw materials, and in the production of yarn and fabric. Since most of the producers use imported raw materials, the wastage is likely to be much less.
However, the claim of high wastage rate is also questionable. It can create a tendency to misuse the 3% government cash incentive provided for using locally produced fabrics. It can reduce the government's revenue.
I think the commerce ministry should not encourage the factories to increase wastage. It should rather put pressure on the associations to reduce wastage and bring it down from the existing 16%.
The ministry should conduct a research on the overall wastage condition in the factories to find out the actual situation. We should try to join the global effort to bring the wastage rate down to zero.
Dr Khondaker Golam Moazzem, research director, Centre for Policy Dialogue
