Leaders of the country’s primary textile millers have demanded withdrawal of two-stage value-added tax (VAT) on the purchase of textile wastage from local sources and recycled cotton yarn from the wastage.
Bangladesh Textile Mills Association (BTMA) in a letter last week also urged the National Board of Revenue (NBR) to introduce a new Harmonized System (HS) Code for recycled cotton fibre to avert complexities over VAT and supplementary duty on the products.
BTMA President Mohammad Ali Khokon wrote the letter to NBR Chairman Abu Hena Md Rahmatul Muneem on August 6, further requesting to take effective measures to stop export of all kinds of garment wastage, known as jhut, and textile wastage.
According to the BTMA, currently recycling industries need to pay 7.5 per cent VAT while purchasing textile wastage from the local vendors and 15 per cent VAT is applicable for selling recycled fibre or cotton produced from that wastage to spinning mills.
“As a result, spinning mills are not encouraged to use the recycled fibre as they can import virgin cotton duty free,” Mr Khokon said in the letter.
According to industry insiders, the readymade garment industry produces around 0.4-0.5 million tonnes of waste annually and only 5.0 per cent is recycled locally.
Citing the example of RBD Fiber Ltd, a recycling unit, Mr Khokon said the factory has already invested US$ 50 million and an additional investment of $50 million is in the pipeline as global demand for such recycled products is increasing.
Virgin cotton imports could be reduced by 30 per cent that could help retain US$1.0 billion annually if the wastage that is generated by export-oriented textile and garment factories could be recycled fully, he noted.
Besides, Bangladesh will face post-graduation challenges as high tariffs would be applicable in exporting garments to the European Union while garments produced from recycled fibre would enjoy a 30 per cent duty rebate which would make local garments cost-competitive, he added.
“This (duty rebate) would work as an impetus, besides cash support.”
The BTMA leader lamented that during the pre-budget discussion, BTMA requested the NBR to exempt recycled industry in the textile sector from all types of duties while Bangladesh Investment Development Authority (BIDA) in a separate letter on February 26 last had forwarded the issue before the NBR for its consideration.
“It is very unfortunate that despite assurances, there is no reflection of our demand in the national budget,” the BTMA president said.
Munni_fe@yahoo.com
