Production of local synthetic yarn becomes costlier

FE Team | Published: November 03, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The production of polyester and viscose staple blended fibre in the country declined by 50 per cent over the last five months as the entrepreneurs switched over to manufacturing other products following budgetary implications and high cost of raw materials abroad.
Sources said the prices of raw material for production of such yarn increased more than 61 per cent in the world markets over the last few months.
In June 2006, the international price of the raw material was US$1.95 per kg but now it is being sold at $3.15 per kg, sources in the textile sector told the FE.
Meantime, the Bangladesh government in its budget for 2007-08 fiscal, imposed 10 per cent duty and 15 per cent value added tax (VAT) on import of the raw material.
"As a result, many mills have already shifted their line of production to other materials instead of polyester and viscose blended fibre," said former president of the Bangladesh Textile Mills Association (BTMA) MA Awal.
Awal said the demand for such product in the international markets is increasing, but the Bangladeshi producers are losing their markets to India and China due to high cost of production.
In India and China there is no customs duty on import of such raw materials, Awal said adding that Bangladeshi textile producers also had enjoyed this facility.
At least 60 per cent of a total of 261 spinning mills having 6.0 million spindles are capable to produce such blended products, he said.
"One of the main reasons for the fall in export of knit items from the country over the last two months is because of decline in production of such polyester and viscose blended fibre. The knit sector was the main consumer locally," Awal said.
The BTMA had requested the government several times in the past to withdraw the tax and VAT on import of such raw materials to remain competitive in the world markets, the BTMA sources said.
Recently, in a letter to the Adviser to the Ministry of Industries Geeteara Safiya Choudhury the BTMA said: "An increase in the prices of such magnitude will definitely reduce our international competitiveness as more than 80 per cent of the above materials are converted into exportable apparels. As a result existing mills producing those import substitute items will face economic crisis because of higher cost of production. Once they become unviable, pressure will mount on foreign exchange reserve due to import of finished products,".