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20 June, 2019 10:28:33 AM

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BTMA wants 5pc VAT on yarn, fabrics scrapped

Staff Reporter
BTMA wants 5pc VAT on yarn, fabrics scrapped

Leaders of the Bangladesh Textile Mills Association (BTMA) yesterday urged the government to withdraw a 5 per cent VAT imposed on yarn and fabric in the proposed budget for the fiscal year 2019-2020.

Explaining the reason behind the demand, BTMA president Mohammad Ali Khokon said the sale of fabric and local yarn has dropped drastically and 50-60 per cent of the looms have remained closed for a long time.

He was speaking at a press briefing yesterday at a hotel in the capital after the national budget for FY2019-20 was announced last Thursday.

Moreover, yarn, fabric and other dress materials are being imported by providing misleading declarations and getting duty-free facilities, and this posing a threat to the local mills. Woven dying mills have reduced their capacity to below 40 per cent, while export-oriented spinning mills are forced to sell their products at a price less than their production cost, resulting in a huge stockpiling of yarn and fabric, said Khokon.

“The existing tax rate is 15 per cent but this will be expired by 30 June of this year.

But we want this to be extending for three more years by keeping the existing rate,” he also said.

“The government has proposed an export incentive of 1 per cent in the next fiscal year to the rest of the readymade garments sectors. An allocation of additional Tk. 2,825 crore will be made in the FY2019-20 budget for this purpose. We have already praised this move,” he added.

“We want the source tax to be fixed at 0.25 per cent on exports processed,”said the BTMA president.

According to the BTMA, the size of the local textile market is about USD 11 billion and the mills under the BTMA are meeting 30 per cent of the yarn demand of export-oriented knitwear factories and 80 per cent of the yarn requirements of factories producing woven materials.

“Import of fabrics and clothes is not necessary if we consider the capacity of the country's primary textile sector,” said Khokon.

“We have to compete with several global players that have been running their factories with their own raw materials and machinery. But we are largely dependent on imported raw materials and machines to run our mills, although the textile sector can meet a major portion of the yarn and fabric demand of the local market,” he added.

“The textile industry is highly capital-intensive. To set up a textile mill, an entrepreneur requires huge venture capital. The government has proposed an import tariff of 1 per cent for all types of textile machinery, tools and equipment. We appreciate this move,” said the BTMA chief.

The BTMA urged the government to launch a drive in textile-producing areas to prevent the sale of illegally imported yarn and fabric as well as to ensure a proper management of bonded warehouses.

KK

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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