The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has formally requested the National Board of Revenue (NBR) to allow the importation of raw materials without the requirement of a Letter of Credit (LC) or on a free of cost (FOC) basis. This appeal was outlined in a letter signed by BKMEA Chairman Mohammad Hatem, sent recently to the NBR chairman.
In the correspondence, the BKMEA noted that export-oriented non-bonded ready-made garment enterprises typically acquire yarn, fabric, and accessories locally through back-to-back LCs. Similarly, bonded factories also rely on local procurement and overseas imports through this mechanism.
The letter highlighted a growing trend influenced by the policies of Bangladesh Bank, which has led to an increasing reliance on imported raw materials rather than local sources. The BKMEA pointed out that the volume of raw materials imported without LCs or on an FOC basis is rising alongside traditional back-to-back LCs. In these cases, the entire value added remains within the country, contributing to the national economy.
The organisation emphasised that this approach is advantageous for exporters, as it eliminates the need for bank limits or security mortgages when arranging back-to-back LCs. Instead, buyers assume the cost of supplying all necessary raw materials, thereby reducing the risks associated with potential order cancellations or shipping issues.
The BKMEA argued that existing regulations from the Ministry of Commerce and the NBR are complicating the import process, ultimately impacting the country’s export performance and harming local exporting enterprises. Specific restrictions outlined in two SROs limit companies to importing raw materials and accessories for a maximum of six months without a back-to-back LC, contingent upon agreements with buyers. Additionally, firms that obtain more than 80 per cent of their required raw materials free of charge from foreign buyers can only import on a revolving basis for up to six months.
These stipulations are reportedly hindering exports and causing local exporters to lose foreign clients. In light of these challenges, the BKMEA’s letter urges a reevaluation of the current regulations to support the growth of the ready-made garment sector and ensure the continuation of export trends beneficial for the nation’s economy.
