According to Bangladesh Textile Mills Association (BTMA), yarn worth Tk1,000 crore has piled up in the warehouses of its members
Fear and frustration have gripped yarn manufacturer KM Dash (not real name) as yarn worth Tk90 crore lies unsold in his warehouse.
With only eight days left of the current month, his disappointment grows further as he has to pay his workers their wages for the month of September.
Mr Das is one of the hundreds of millers facing problems in selling the huge amount of yarn and fabrics lying unsold.
According to Bangladesh Textile Mills Association (BTMA), yarn worth Tk1,000 crore has piled up in the warehouses of its members.
The situation went from bad to worse in the last seven to eight months when the demands for locally manufactured yarn and fabrics fell amid seen decreased work orders, the sector people have said.
On the other hand, fabrics imported illegally by misusing the bonded ware house facilities by an errant group of apparel makers are taking toll on the sector.
“Currently, the apparel work order is slower than the same period of last year, which dragged down demands of yarn and fabrics. It was assumed that work orders flow will increase due to the ongoing US-China trade war,” BTMA president Mohammad Ali Khokon has told Dhaka Tribune.
But it did not happen, he says, as the Chinese government has devalued the US dollar and offered local manufacturers incentive while fabrics and yarn are entering into Bangladesh through misdeclaration, Khokon explains.
Besides, production cost has gone up due to rise in gas prices, while yarn prices has fallen due to slower demands, Khokon adds.
According to BTMA, per kilogram of 30 carded yarn is selling between $2.60 and $2.65, while 40 carded yarn sold for maximum $2.75.
“The apparel makers are preferring to import yarn and fabrics as they offer better prices than Bangladesh. This is because of devaluation of US dollar by their governments, while Bangladeshi taka has gained against the US dollar which ate up the competitive edge,” the BTMA leader maintains.
According to National Board of Revenue (NBR), during January-June period of the year, Bangladesh imported 602,432 tons of yarn, while it exported (deemed export) 506,342 tons, meaning imports are higher than exports.
India, China and other countries offer better prices of yarn and fabrics as their governments have devalued dollar while they have their own cotton against Bangladesh’s zero production, he goes on to say.
Apparel makers also say that the demands of yarn is slower as the work order inflows is less than the previous year.
“In August, the apparel sector saw negative growth, which may continue for the next few months. This is only because of shortage of work orders,” Exporters’ Association of Bangladesh (EAB) senior vice president Mohammad Hatem has told Dhaka Tribune.
In August, the apparel sector, which accounts for 84% of national exports, witnessed an 11.46% decline to $2.41 billion.
Global buyers are not placing orders as the production cost here has gone up due to new wage structure and utility services, says Hatmem, also managing director of MB Knit Fashion Ltd.
For industrial use, gas price has been increased by 37.88% from Tk7.76 to Tk10.70 per cubic metre, while for captive power it has been increased by 43.97% from Tk9.62 to Tk13.85.
To overcome the difficult situation, the sector people have called for policy support, stern action against misuse of bonded warehouse facility and stopping illegal imports of Indian and Pakistani clothing products especially three pieces.
“Now the sector is able to supply 85% of yarn and fabric for knitwear sector and 40% of woven fabric. So, the government should come up with policy support and stop illegal imports,” Shahid Alam, a director of BTMA, demands.
He also calls for 5% cut in advance income tax (AIT) on fibre. It is a burden for the sector people as they cannot even make 1% profits, he claims.
As per the BTMA, there are 430 yarn manufacturing mills, 802 fabrics manufacturing mills, and 244 dyeing-printing finishing mills in Bangladesh, along with 32 denim fabrics manufacturing mills and 22 home textile manufacturing mills.
Currently, local manufactures are capable of supplying 85% of yarn and fabric, along with 40% of woven fabric, required by the knitwear sector.
