Two leading trade bodies representing the country’s readymade garment (RMG) sector have strongly objected to the National Board of Revenue’s (NBR) decision to withdraw bonded warehouse facilities on the import of 10–30 count cotton yarn.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) sent a joint letter to the Commerce Minister on Tuesday, urging an immediate revocation of the decision.
Copies of the letter were also sent to the Commerce Secretary and the NBR Chairman.
According to an NBR order issued on September 7 under Section 266 of the Customs Act, 2023, bonded warehouse facilities were withdrawn for 10–30 count cotton yarn.
Under the new directive, genuine exporters holding bonded warehouse licenses are required to import this yarn against an unconditional and continuous bank guarantee equal to the applicable duties and taxes.
The bank guarantee will only be released upon verification of full export compliance by the licensing authority.
In the joint letter, signed by BGMEA President Mahmud Hasan Khan and BKMEA President Mohammad Hatem, they expressed surprise, stating that the withdrawal of bond facilities was never discussed during the inter-ministerial committee meeting held on August 20 under the chairmanship of the Commerce Minister.
They noted that the inclusion of this decision as Clause 5(a)—withdrawing bond facilities—and Clause 5(b)—mandating local spinning mills to supply at least 50% of export-oriented yarn—in the meeting minutes was ungrounded and contradictory to the actual discussions.
Terming the decision "unrealistic and self-defeating," the apparel leaders warned that its implementation would plunge 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 stated.
Addressing current domestic market dynamics, the trade bodies highlighted that yarn prices in the local market continue to rise despite lower overall demand due to reduced export orders. They questioned whether vested interests are attempting to establish a local monopoly.
The leaders further pointed out that local spinning mills are currently operating at under 50% capacity due to an ongoing energy crisis, making it impossible for local suppliers alone to meet the total yarn demand of the export-oriented garment industry.
Calling for the urgent cancellation of Clauses 5(a) and 5(b), BGMEA and BKMEA proposed a tripartite meeting involving BGMEA, BKMEA, and the Bangladesh Textile Mills Association (BTMA) to resolve the issue constructively.