BTMA seeks continuation of bank guarantee system for yarn imports

The Bangladesh Textile Mills Association (BTMA) has called for maintaining the bank guarantee requirement instead of bonded warehouse facilities for importing 10–30 count yarn, saying the move would protect government revenue and domestic textile millers from misuse of the system.

The association has also proposed a policy framework requiring at least 40% local value addition in export goods as Bangladesh prepares to graduate from the least developed country (LDC) category.

“We request that the withdrawal of regular bonded warehouse facilities for 10–30 count cotton yarn be maintained and that the bank guarantee-based import system for genuine exporters be continued,” BTMA said in a press release today (18 October).

The association said implementing the proposals would help protect investment and production capacity in the domestic spinning industry, create jobs, facilitate bank loan recovery and support export growth.

Garment exporters, however, have opposed the proposal, warning that losing access to bonded warehouse facilities would put additional financial pressure on the sector.

According to industry representatives, 10–30 count yarn accounts for around 80% of Bangladesh’s total yarn imports and is primarily used in knitwear manufacturing.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS that requiring the yarn to be imported under the bank guarantee system would create serious financial pressure on exporters, particularly small and medium-sized factories.

“If the government requires yarn to be imported under the bank guarantee system, exporters, particularly small and medium-sized factories, will face severe cash flow constraints, which could force some of them out of business,” he said.

On 7 September, the customs wing of the National Board of Revenue (NBR) issued a circular withdrawing bonded warehouse facilities for imports of 10–30 count yarn and introducing a bank guarantee requirement, following an inter-ministerial decision.

After the order was issued, two garment exporters’ associations expressed concern that the move could hamper Bangladesh’s ready-made garment (RMG) exports and called for the decision to be withdrawn.