1,150 non-bonded garment manufacturers, which employ 700,000 people, are at risk of closing. Small garment companies with minimal cash are struggling to operate due to a lack of bonded warehouse permits, issues in acquiring back-to-back letters of credit (LCs), and difficulties in procuring raw materials and accessories.
1,150 non-bonded garment :Â Industry players have stated that many banks are not issuing back-to-back LCs against master LCs due to a lack of a bonded warehouse license.
Customs restrictions make it impossible to acquire yarn, fabric, or accessories on credit through back-to-back LCs from local bonded license holders. Even when trying to buy these things in cash, entrepreneurs pay higher expenditures, putting additional strain on working capital and reducing earnings.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the country’s 1,150 factories employ around 700,000 individuals, with a combined yearly export value of approximately 6.5 billion dollars.
In a letter to the National Board of Revenue (NBR) dated November 30, the BGMEA claimed, “Over a hundred factories have already shut down due to the inability to get back-to-back LCs and the failure to collect raw materials from bonded enterprises. The remaining factories face the same peril.”
According to NBR officials, the government’s tough position stems from the difficulties of tracking transactions between bonded and non-bonded firms. However, BGMEA officials believe it is unjust to penalize thousands of entrepreneurs for the conduct of a few corrupt organizations.
“Of the more than 1,100 non-bonded factories, approximately 20 are likely involved in abnormalities. They need to be identified and addressed. But others, particularly small exporters, require assistance,” said BGMEA administrator Anwar Hossain.
According to sources, the BGMEA recently met with the NBR chairman to discuss the problem.
A senior official from the NBR who attended the meeting told, “The current leadership of the NBR is positive about resolving the issue.”
NBR member Moazzem Hossain stated, “We are in a good position to address the matter. Efforts are being taken to prevent misuse and promote business.”
