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Central bonded warehouse to result in drastic fall in export earning

Textile mill owners tell economic reporters

STAR BUSINESS REPORT
The central bonded warehouse facility, a key demand of garment manufacturers and exporters, will result in a drastic decline in export earning in the quota-free era, warned textile mill owners yesterday.
They argued that export of readymade garments made of domestic fabrics will ensure more retention of foreign exchange and qualify for EU duty concession under GSP (generalised system of preferences) facility.
Bangladesh exported $4,912 million woven and knit garments in 2002-2003, of which only $2,297 million was retained as the export-
ers paid the rest for import of fabrics and other raw materials in back-to-back L/Cs, Chairman of Bangladesh Textile Mills Association MA Awal said at a meeting with Economic Reporters' Forum (ERF) in Dhaka.
He said garment exporters claim that they are the highest foreign exchange earners with 75 percent share in total export. "But the fact is that over half of the earning goes to foreign countries as they depend on imported raw materials."
Providing statistics of Bangladesh Bank and Export Promotion Bureau, Awal said knit and woven garments made of local fabrics attain 75 percent foreign exchange retention while export with imported fabrics attains only 25
percent retention.
Bangladesh retained $992 million out of $1,323 million knit garments made of local fabrics exported in 2002-2003 while $814 million woven garment made of local fabrics was exported of which $611 million was retained, he said.
Besides, Bangladesh retained $611 million out of $2,444 million woven garment with imported fabrics exported in the same period registering only 25 percent value addition.
The country retained only $83 million out of $331 million export earning from knit garments prepared from imported fabrics showing only 25 percent value addition, he said.
Awal further said if local backward linkage industry is not developed Bangladesh garment export will fall drastically as there will be no quota in the US and export also will fail to avail EU GSP facilities if value addition is less than 25 percent.
"So to survive the quota-free challenges, local textile and garment sector have to work in tandem complementing each other," he said.
Making a presentation on local textile and clothing related issues, immediate past chairman of BTMA Matin Chowdhury said the central bonded warehouse will destroy the growing textile industry and nip in the bud the self-sufficiency in backward linkage sector, a prerequisite
in post-MFA (multi-fibre arrangement) period.
He said central bonded warehouse will not be viable in the quota-free era from next year. The stock lot will sneak into the local market depriving the government of revenue, he added.
About the proposals of national co-ordination council's recommendation to the government on setting up the warehouse in export processing zone (EPZ), he said EPZ cannot ensure checking of leakage.
ERF President Monowar Hossain and General Secretary Nurul Hasan Khan also spoke at the function held at Purbani Hotel.