Govt eases rule on yarn release from port

The government has allowed the release of 10- to 30-count yarn without bank guarantees from the port, which was imported through letters of credit (LCs) opened before September 7.

But yarn imported through LCs opened after that date will require bank guarantees, the National Board of Revenue (NBR) said in a circular yesterday.

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However, local spinners argued against allowing yarn imports without bank guarantees, saying easing the process would harm the domestic industry as they are capable of supplying these kinds of yarns, for which dependence on foreign sources is not needed.

The 10- to 30-count yarns are widely consumed mainly for making fabrics for knitwear items such as T-shirts, polo shirts and trousers.

Earlier, local garment exporters raised their voices when the customs department denied releasing yarn without bank guarantees, which was imported through LCs opened before September 7 following a commerce ministry circular published on the same date.

In another circular on September 13, the ministry withdrew the condition of having a bank guarantee, but so far, customs officials have been denying receiving any go-ahead from the authorities concerned to release the yarn without such a guarantee.

Because of this mix-up, garment exporters feared having to resort to expensive air shipments.

“I was supposed to ship the finished knit trousers to my buyers in October and November, made from the imported 100 tonnes of yarn,” said a garment exporter asking not to be named.

“So, I have to send the goods through expensive air shipment to maintain the strict lead time, for which I cannot make any profit from this shipment.”

He said yarn is imported not only from India, but also from Vietnam, China, Pakistan and Indonesia. However, the volume is higher from India than from other sources, he added.

The government should not impose such stringent conditions on yarn imports at a time when some international clothing retailers and brands are shifting some work orders from Bangladesh, the apparel exporter said.

The customs department started releasing yarn yesterday that was imported through LCs opened before September 7, said Mahmud Hasan Khan, president of Bangladesh Garment Manufacturers and Exporters Association.

Another anonymous garment exporter, who has imported a good amount of yarn, said the delay in yarn release causes an increase in duties, taxes, bank guarantees and related financing costs, ultimately raising the landed cost of yarn and overall garment production costs.

Garment manufacturers may fail to source yarn of the required quality and count and deliver goods on time and at competitive prices, as domestic sources may not meet the required yarn standards, he added.

Moreover, bank guarantees and payment of duties/taxes can lock up cash and reduce liquidity, particularly for small and medium exporters, the exporter said.

Delays in yarn sourcing can affect production planning, shipment schedules and buyers’ confidence as well, he said.

Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association, said they will sit with the commerce minister soon so that the previous duty-free yarn import facility can be reinstated.