Country's local fabric markets have become flooded with cheaper and low quality imported foreign fabric, specially from China and India through under-invoicing and false declaration.
As a result, many local textile mills are now on the verge of closure. Production at most of the small and large local textile mills has also drastically fallen.
Traders of shirting and suiting fabrics at Islampur market, the largest wholesale market of locally manufactured fabrics said the demand of foreign fabrics, specially Chinese and Indian, is now very high in the country. Prices of these fabrics are almost half compared to the local fabrics. Though the quality of these fabrics is very low and they do not last long, buyers tend to buy them simply because they are cheaper and good-looking at sight.
Shamsul Islam, a trader at Islampur wholesale fabric market said that customers coming from different parts of the country usually look for foreign fabrics.
'No customer has yet come to my shop today because I sell local fabrics,' he regretted.
The local fabric manufacturers have become deeply worried over the lower prices of fabrics imported from China and India through under-invoicing and false declaration.
They said the local importers have been importing huge quantities of shirting and suiting fabrics from China and India taking advantage of the free market economy. The importers also conceal the real prices of fabrics when they import them.
For instance, the import price of each meter of fabric is shown at 30 to 50 cents when letter of credit (L/C) is opened for import although the real import price of each meter of the fabric from China is 3 dollars.
So, the importers conceal $2.5 from the real price of the imported fabrics in one hand and on the other pay duty only on 50 cents as quoted in the L/C depriving the government of proper amount of duty.
Moreover, Chinese or Indian manufacturers are at an advantageous position because they produce fabrics using their own raw materials and chemicals. But, the local manufacturers import raw materials, dyes and chemicals paying high duty to manufacture fabrics. As a result, the local fabric is now facing an uneven competition from foreign fabrics. Clearly, the local fabric manufacturers and traders have been facing great difficulties to cope with this undesirable competition.
Statistics available with the Bangladesh Bank show that fabrics worth Tk 1,538 crore were imported from China alone in 2003-04 fiscal year, while the import of fabrics from China amounted to Tk 1,273 crore during the first six months of the last fiscal year of 2004-05. It means that import of fabrics from China grew by 65 per cent in a year.
However, Bangladesh Grey and Finished Fabrics Mills and Exporters Association (BGFFMEA) believe that the import of fabrics from China would amount to Tk 6,000 crore annually if the real value of the imported fabrics is taken into account.
Besides, the government could earn four to five times more revenues and the local textile sector did not have to face uneven competition.
Sources at the BGFFMEA said production at some 250 small and large textile mills has remained suspended for months. Huge quantity of locally produced fabrics have remained stockpiled at godowns. But, the manufacturers cannot sell their fabrics in the market. Finding no other alternatives, majority of these textile mills owners have already terminated their workers. Besides, interest of their bank loans is mounting.
Statistics available with the Ministry of Commerce shows that there are 182 spinning textile units, having 55 crore kilogram fabric manufacturing capacity, now in the country. However, the real production at these units is 38 crore kilograms.
On the other hand, statistics available with the Ministry of Jute and Textile shows that there are 356 units in the weaving sector, having 80 crore meters of fabric production capacity, in the country. However, these units are now producing 60 crore meters of fabrics.
Besides, there are 1,200 ordinary power loom industries in the weaving sector where 16 crore meters of fabrics are produced.
Talking to The New Nation, Alhaj Harun-ar-Rashid, President of BGFFMEA, said yesterday that some 40 lakh men and women are directly employed in the country's textile sector and the livelihood of about two crore people is indirectly connected to this sector.
He also proposed three-point demands to save the country's booming textile sector from ruination. These are: i) Imposition of 25 per cent price-based duty or minimum Tk 300 per kg as specific import duty on imported suiting fabrics (whichever is higher); ii) Imposition of 25 per cent price-based duty or minimum Tk 200 as specific import duty on per kg shirting fabrics (whichever is higher); and iii) Formation of a high-powered task force, comprising the representatives of NBR, FBCCI and BGFFMEA, to check import of additional fabrics over the quantity mentioned in invoices.
By Syed Zahirul Abedin
?Copyright 2003 by The New Nation
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