Bangladesh: Muhith assures textile mills of hiking cash incentive

Finance Minister AMA Muhith assured Sunday the country's troubled textile mills of hiking cash incentives. Textile mills are hit hard by plummeting sale in recent months owing to volatile cotton prices in the global market and the European Union's easing of import rules.

Muhith told the millers and garment manufacturers that the government was "sympathetic" to their cause and would enhance cash incentives against their sale in an effort to bail them out of the ongoing troubles.

The assurance came when the officials of the Bangladesh Textile Mills Association (BTMA), Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) met him at his Secretariat office.

The three associations, whose members account for 80 per cent of the country's exports and some 30 per cent of the imports, demanded 15 per cent cash incentive on their sale, up from the existing five per cent.

"We will consider the demand for enhancing cash incentive in a sympathetic way as the textile sector now faces numerous difficulties," Muhith told reporters after the meeting.

"Most of the demands from the textile sector are genuine. We will consult with other ministries to solve their problems immediately after the Eid vacation," he added.

Leaders of the associations told the minister that the country's primary textile sector faced a disastrous future as they had no market to sell their products, leading to huge inventory worth Tk90 billion.

Local textile mills, which have invested billions of dollars in the capital intensive sector, bought cotton at a high price from international market and were facing the prospect of selling their products at a price far lower than their manufacturing cost.

The mills have also been hit by European Union's relaxation of import rules from January this year, which now allow Bangladeshi apparel makers to get duty-free access to the 27-nation bloc by sourcing yarn from anywhere in the world.

In the past, local textile mills would enjoy a protected market at home as the EU rules would force the apparel makers to source yarn and fabrics from Bangladesh in order to enjoy duty-free access to the economic bloc.

The association leaders sought a raft of bail-out benefits from the finance minister including a ban on import of yarn -- up to 60 counts -- for six months and converting the working capital loans of textile mills into term ones.

"It's a very fruitful meeting. We narrated our woes to the finance minister and he has assured us of enhancing incentives very soon," said BTMA president Jahangir Alamin.

Alamin said if the cash incentive was not raised substantially, most of the country's 300 textile and spinning mills would be forced to pull down shutters as they could not compete with cheap yarn being imported from India, Pakistan and China.

He said the millers have urged the minister to convert their inventory loss into term loan and extend the credit repayment schedule as part of the bailout package for the sector.

the financial express-bd