Primary textile sector people have urged the government to take measures to stop misuse of duty-free imported fabrics and yarn and not to impose value added tax (VAT) on locally produced yarn and fabrics.
Bangladesh Textile Mills Association (BTMA) president Mohammad Ali Khokon made the call at a press conference at a Dhaka city hotel yesterday.
“Foreign yarn, fabrics and several dress materials, imported through mis-declaration or illegally, are being largely sold in the local markets. As a result, local manufacturers of fabrics and yarn are facing serious trouble and struggling to survive due to lower prices of imported fabrics and yarn,” said Mohammad Ali.
The platform of the primary textile also claimed that about 50% looms located in Narsingdi, Baburhat, Rupganj, Pabna, Sirajganj and Madhabdi were on the verge of closure due to sales of smuggled and duty-free imported fabrics and yarn.
Amid this situation, the government was going to implement VAT from the next budget, which would deal a death blow to the manufacturers of yarn and fabrics, said Ali.
“Moreover, the gas distribution companies have proposed to increase the prices of gas, an important element for the textile sector, by 96% and 208%,” he mentioned.
So, considering the present status of the primary textile sector, the government should include fabrics and yarns on the list of products exempted from VAT, the BTMA president demanded.
On the other hand, the sector people also urged the government to increase cash incentives from existing 4% to 15% on freight on board (FoB) prices of fabrics prices.
In addition, they also urged the government to stop the misuse of fabrics and yarn imported under duty-free facilities.
There were some people, whose business was to sell the product imported under bonded warehouse facilities and they lived on this, said Ali.
In stopping the sale of duty-free imported fabrics, the business leader suggested that the government write “not for sale” on the fabrics so that one could identify it easily.
Call to reduce corporate taxes and interest rate
Since the production cost of the primary textile sector has gone up due to rise in wage and raw materials, local manufacturers have urged the government to cut corporate tax from the existing rate and keep it effective for a long time.
Production cost of yarn and fabrics went up by 12% to 13% due to high bank interest rate while the local manufactures of fabrics and yarn were struggling to survive as importers were importing the goods through mis-declaration, said Ali.
As a result, the manufacturers were facing trouble in paying the installment of loans and becoming defaulters. So for help the business survive, the government should bring down the interest rate to 7% and extend the repayment tenure to 12 years, he added.
He also urged the government to give opportunity to the business people, who were paying installment of loans regularly as a reward.
Meanwhile, the sector people called a level playing field in the case of corporate tax as the apparel sector was paying 12% corporate tax.
As per the current budget, the sector is paying 15% corporate tax, which will expire on June 30, 2019. “So, to ensure a level playing field, we are urging the government to set cooperate tax at 12.5% and to continue it till 2028,” said Ali.
On top of that, the sector people also expressed concern over the illegal import of sari, three-piece, and other clothing products ahead of Eid-ul-Fitr.
In Eid-ul-Fitr and Eid-ul-Azha, the two largest festivals of the Muslims, about 60% sales of the year take place.
“But there is no enthusiasm among the local manufactures due to dominance of smuggled goods ahead of Eid,” mentioned Ali.
He urged the government to strengthen monitoring of the board so that no one could import clothing products evading taxes.
