To encourage export of local textiles, the Bangladesh Textiles Mills Association (BTMA) has called upon the Government to eliminate the central bank’s (Bangladesh Bank) provision of mandatory bonded warehouse licence to open back-to-back letters of credit (LCs).
According to media reports, Mohammad Ali Khokon, the BTMA President in January this year wrote to the Governor of the central bank, seeking withdrawal of Section III of the guidelines (Foreign Exchange Transaction Guidelines), as per which ‘only recognised export-oriented industrial units operating under bonded warehouse system will be allowed the back-to-back LC facility’ even as according to the industry people many small and medium mills in Bangladesh were exporting locally produced fabrics and yarn but were not getting the facility of back-to-back LCs due to Bangladesh Bank’s Foreign Exchange Transaction Guidelines.
So, for the expansion of the local industry and to boost exports, the BTMA called for waiving or relaxing the rules for the textile mills as it underlined that Section III of the Bangladesh Bank’s Foreign Exchange Transaction Guidelines obstructed opening of back-to-back LCs for the textiles mills which have no bond licence and went on to add that the textile manufacturers were reluctant to obtain bond licences as they received duty benefits for importing raw materials as per the Government’s decision even as the cumbersome procedure to obtain and maintain bond licences also discourages the textile mills owners from doing so, the BTMA letter, reportedly, stated.
