Staff Reporter :
The country’s apparel exporters have demanded continuation of the back-to-back LC facilities for non-bonded factories in a bid to rebound export growth.
Stopping the facilities will hurt the country’s export growth severely and thousands of workers will be unemployed, they said.
Currently, more than five hundreds garments and other non-bonded export-oriented factories in the country are taking the back-to-back LC facilities to procure raw materials for finished goods.
The National Board of Revenue (NBR) requested the Bangladesh Bank recently not to allow non-bonded apparel factories facility, as it contradicts the central bank’s guidelines.
Following the letter, the leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) requested the government for refraining from the decision.
In face of the request, the Commerce Ministry is likely to hold a meeting
with the stakeholders this week to resolve the crisis, the sector insiders said.
“Stopping the LC facilities will be unwise decision as it will hurt export severely. NBR does not have right to create obstacles to the country’s export,” said Shahidullah Azim, Vice-President BGMEA, told The New Nation on Saturday.
“We have requested the central bank to amend the foreign exchange guideline several times with a view to facilitating the export. But it is yet to be done. It is unexpected,” Azim said.
Many factory owners have not financial ability to procure all the raw materials with cash. They will not survive in an unequal competition with those who have bond licences, he said.
The sector insiders said if the back-to-back LC benefits have been withdrawn, at least 450 knitwear and around 50 home textile factories will no longer be able to procure raw materials and accessories from local and foreign sources on credit.
Instead, they will have to make full payments plus VAT in cash for local purchases, which will make their survival very difficult.
“Many factories will face closure if they are barred from opening back-to-back LC as they procure 70-80 per cent of raw materials and accessories on credit from the local market with the facility,” said Mohammad Hatem, Senior Vice-President of the BKMEA.
As per our demand, the Commerce Ministry will hold a meeting with the concern stakeholders this week, Hatem said.
In a back-to-back LC, an importer issues an LC to an exporter and the exporter can use it as collateral to get another LC issued for sourcing raw materials and accessories on credit.
