The commerce ministry plans to raise the maximum wastage rate in the production of apparel products from raw materials from 16% to 28%, allowing readymade garment exporters to import more yarn and fabrics duty free than they do now for the same amount of export.
According to the decision, the maximum wastage rates for basic readymade garment items will be 25%, specialised items will be 28%, and sweaters and socks will be 3%.
According to ministry officials, a circular will be issued this week to that effect.
Bangladesh’s commerce ministry has recommended increasing the maximum wastage rate for knitwear from 25% to 40%, but knitwear exporters have rejected the decision. Excess raw materials from export-oriented apparel manufacturers would be sold in the open market, damaging local firms that produce raw material. A committee formed by the government had recommended averaging the wastage rates of similar factories based on machine types.
Bangladesh’s commerce ministry has decided to fix the wastage rates for various types of knitwear products at 20-40% and even more in some cases. The BKMEA, however, strongly objected to this decision, saying the actual wastage in factories is much higher. This rate will not solve our problems. So, we will reject the notification of the ministry, said Mohammad Hatem, first vice-president of the BK MEA.
Dr. Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), disagreed with the decision. “The ministry should conduct a research on the overall wastage condition in the factories to find out the actual situation”.
In 1998, the RMG industry calculated 16% wastage in various stages of production – cotton to yarn to fabric to finished products for shipment. The industry now demands that the rate be 40%, meaning their wastage has increased by 150% over the past two decades. An earlier study by a researcher of Pakistan’s Mehran University of Engineering and Technology said the spinning industry’s usual yield is 84%.
India’s textile industry has urged the commerce ministry to lower its wastage rate from 16% to 15%, arguing that it is not practical to increase this when the world is moving to reduce wastage to zero. Industrial economist Dr Khondaker Golam Moazzem said at a time when the RMG industry is flourishing with use of modern technologies, there is little scope that wastage will go up.
They told the government negotiators that fashion changes and types of fabric and cotton mattered for wastages ranging from 20% to 40%. The ministry should investigate the factors cited by the industry that contribute to the higher wastage using the central bank’s technology upgradation fund.
There is no standard rate for wastage, but we are lagging behind our major competitors who are well ahead of us in technology, says Abdullah Hil Rakib, a director of the BGMEA. In the past they used to make seamless T-shirts, which needed stitches only in sleeves, but now they need to sew both sides, and thus fabric is required to be cut and stitched from both sides.
Some of the country’s leading factories, however, are improving their efficiency, but that cannot be generalised for the entire industry’s position, he claims, claiming that the industry’s wastage is close to 40%, which eats into profit margins.