BTMA seeks 100% duty waiver for all fiber types

Key requests

  • Duty-free import facility for over 20 fiber types

  • Maintaining the corporate tax rate facility of 15% until 2026

  • Reduction of duties on imports of textile instruments to 1%

  • Reduced VAT on locally produced yarn to Tk 3 per kg

  • Increase in government-set wastage rates in yarn production

The Bangladesh Textile Mills Association (BTMA) has called for full import duty exemption for all fiber types as the global demand for diversified garments has increased.

“Nowadays, our foreign buyers specify fabrics and fibers for their ordered garments. Thus, textile factories import many little-known fibers, apart from traditional fibers, according to their needs,” the BTMA chairman wrote, Mohammad Ali Khokon, in a letter to the Ministry of Commerce recently.

He also suggested increasing the wastage rate for yarn production from raw cotton to 17% from the existing 10%.

Although the government offers duty-free facilities for the importation of five types of traditional fibers – raw cotton, polyester fibers, viscose fibers, tensile and flux fibers – it is not well informed on more than 20 non-traditional items.

“Even, fibers are not listed on the customs tariff containing Harmonized System (HS) codes (a standardized numerical method of classifying traded products). As a result, textile mills import the little-known items under HS codes for similar products. Unfortunately, customs authorities sometimes identify these imports as false declarations and impose fines on the importers,” Khokon said, adding that it was not the fault of the importers.

He urged the government to take necessary measures for hassle-free imports and duty-free on all non-traditional fibers in a bid to promote the diversification of the country’s export basket and expand exports to new markets.

The popularity of garments made from unconventional fibers would increase day by day as they are fashionable, diverse and cheaper, the BTMA chairman added.

Some of these fibers are synthetic fibers, linen, Lycra T-40, Remie, acrylic fibers, cationic cotton, textured, metallic, drawn fibers and PCW.

BTMA, in the letter, requested the ministry to inform the National Revenue Board of the matter so that the revenue agency could consider the duty waiver when formulating the national budget for the coming financial year ( financial year 2022-23).

The textile and clothing sectors are struggling to recover from the fallout induced by the Covid.

Over the next two years, the struggle will continue, the association expressed its fear and said that the next budget was crucial for its future.

The trade body for textile mills has also called on the government to maintain the 15% corporate tax rate easement until 2026 for companies involved in the sector. The tax exemption is expected to end in June this year, which the sector has been enjoying since the 2019-20 financial year.

The association said the reduction in the corporate tax rate had helped them increase their capital and that maintaining such a facility would also benefit the government in the long run.

The trade body demanded the reduction of import duties on textile parts to 1%, such as capital goods, from the existing 26-104%.

“It has become difficult to continue business competitively for the existing high import duties on mill implements,” the letter says.

The BTMA also demanded the reduction of value added tax on locally produced yarn to Tk 3 per kg. Currently it is 6 Tk per kg.

Citing that actual wastage rates in yarn production were higher than fixed government rates, the organization called for rates to be increased to 17% for raw cotton yarn from the current 7-10%.

He suggested a wastage rate of 34% for yarn production for export purposes, which is currently 10-12%.

The wastage rates set by the government were also higher in other supplier countries competing with Bangladesh in export markets, the BTMA said in its letter.

In addition, he proposed to consider the deducted withholding tax of 0.50% as the final settlement of textile enterprises.