The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has urged the National Board of Revenue (NBR) to allow the import of raw materials without letters of credit (LCs) or on a free-of-cost (FOC) basis. Signed by Mohammad Hatem, Chairman, BKMEA, the letter was recently submitted to the NBR chairman.
In the letter, BKMEA emphasized that export-oriented non-bonded ready-made garment (RMG) companies typically procure yarn, fabric, and accessories locally through back-to-back LCs. Meanwhile, bonded factories source raw materials both locally and internationally using the same mechanism.
BKMEA highlighted that under current policies by Bangladesh Bank, there has been a gradual increase in raw materials imported from abroad rather than procured domestically. As part of this trend, the share of FOC imports has also risen alongside back-to-back LCs. For such exports, the added value remains at 100 per cent, ensuring that all foreign exchange earnings benefit the country.
The letter noted that this system benefits exporters, eliminating the need for bank limits or security mortgages to process back-to-back LCs. The buyers bear the cost of raw materials, shielding exporters from potential risks such as order cancellations, air shipment charges, or discounts.
However, BKMEA argued that regulations from the Ministry of Commerce and the NBR have created unnecessary barriers, negatively impacting the export sector and causing losses for exporters.
The letter further cited two restrictive Statutory Regulatory Orders (SROs). One allows companies to import raw materials and accessories without LCs for only six months under buyer agreements. Another limits enterprises receiving over 80 per cent of raw materials free of charge from foreign buyers to a six-month revolving import period.
These conditions are harming export growth and causing exporters to lose foreign buyers, emphasized BKMEA. The organization urged policymakers to remove these restrictions to maintain export momentum and support the larger interests of the country’s RMG industry.
