Bd textile and powerloom industries need low cost fund to modernize

Bangladesh, currently has around 30,000 to 40,000 textile mills, of which 20% to 30% are modernized and producing high quality export-oriented products while the rest 80% use traditional power-loom to produce saree, lungi, poplin, napkin, long clothes, shirting and suiting, said Azizul Haque, President of Bangladesh Specialised Textile Mills and Powerloom Industries Association (BSTMPIA).

Azizul Haque at a dialogue titled “Public private dialogue on overcoming challenges towards modernisation of textile sector in the capital yesterday made the demand for a single-digit loan facility to modernize the historic industry for producing quality products and increasing productivity.

The sector needs low-cost fund to set up modern machinery by next 10 years, Haque said, calling for an allocation of low-cost foreign funds for the sector from Bangladesh Bank.

He urged the government to set up textile village and take measures to discourage import of foreign clothes.

In response to the demands of the sector people, Textiles and Jute Minister Md Emaz Uddin Pramanik assured the sector people that he would place the demands to Prime Minister Sheik Hasina.

He was present as the chief guest at the event. State Minister for Finance and Planning MA Mannan was also present as special guest.
The BSTMPIA leaders also sought withdrawal of 15% VAT on textile products imposed for the current fiscal year.

Md Haider Ali, a director of BSTMPIA, said that specialised textile sector meets 70 percent local demands. A sudden imposition of 70 percent Value Added Tax (VAT) is a threat to the sector and it would hinder expansion and modernization.

Clothing products are being imported from several countries and they are doing business facing huge competition. They are producing products for the country’s poor people. If 15% VAT is implemented, it would increase the prices, which would be a burden for consumers, said Shahjahan Mia, another director.

The sector people have experience which cannot be utilised due to lack of modernization. On the other hand, factories are turning into sick industry because of old machinery that produce less products.

For modernization, low-cost fund is a must, but the current interest rate is 14%, while the low-cost fund charge 10% provided by the donor agencies and development partner, Sultan Mahmud, a director of the organization, said, urging the government to ensure a single-digit loan facility for the industry to contribute more to the economy.

If the quality of products is improved, local manufacturers would not import foreign clothes and BGMEA will use the clothes made here, said Senior Industry Secretary Md Mosharraf Hossain Bhuiyan. He suggested setting up a Testing Laboratory to provide certificate that would help the sector to issue certification for production.

According to Md Shafiul Islam Mohiuddin, acting president of the Federation of Bangladesh Chamber of Commerce and Industry, there is huge opportunity to contribute a lot by the specialized sector as presently, 90% demands of knitwear sector are met locally, while woven sector met only 30%.

The sector is not ready to pay VAT as it not equipped with the manpower and system. The government should give time to introduce VAT, or else it would hurt the business expansion.

The government can earn in two ways by helping business expansion and creating jobs, while the other is taking policy in line with the recommendation from the world bank.