BKMEA demands raise in wastage rates yet again

The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has demanded that the government raise the wastage rates of raw materials used in producing readymade garments, particularly for knitwear items, yet again as the trade body believes the recently revised up-rates are "not realistic".

The commerce ministry usually sets the rate so that export-oriented garment manufacturers cannot make any irregularity for the raw materials such as cotton and yarn imported free of duties.

On Sunday this week, it, issuing a notification, revised the maximum wastage rates up to 27% from 16% for the production of basic knit items – such as t-shirts, polo shirts, trousers, shorts, skirts, pyjamas – as per the recommendation of a committee that the ministry formed a year ago following the requests of the manufacturers.

Apart from the basic items, the authorities for the first time creating separate categories set a wastage rate of 4% for sweaters, socks and similar item productions, 30% for special items including rompers, gowns, and hoodies.

However, the BKMEA Executive President Mohammad Hatem, in a letter to the Commerce Minister Tipu Munshi on Tuesday, expressed his concern over the newly-set rates and said the actual wastage was higher than the newly set rates.

In the letter, the apex trade body of the knitwear producers urged the government to raise rates to 30% for basic knit items, 35% for special items, and 12% sweaters and socks items.

"In the case of knit garments, multiple meetings were held with the commerce minister and the secretary, to redefine the wastage rates," reads the letter.

"In the meeting, stakeholders concerned presented detailed data on the actual wastage rates with practical explanations. Sadly, the reevaluation of the rates did not reflect it," added the letter. Around 90%  of knitwear are basic items.

The letter also reads that no sweater factory has been inspected by the committee so far but the wastage rate is fixed at 4% for the items, which is completely unreasonable. The rate in sweater production is usually more than 12%, the BKMEA said.

Some of the knitwear manufacturers feared that the government officials would use the new rates for harassing businesspeople.

"The new rates set by the order will pave a new way for the officials to make irregularities. Manufacturers will be harassed," said Fazlee Shamim Ehsan, vice-president of BKMEA.

In such a feared situation, he told TBS, apparel products producers would be forced for yarn imports, instead of buying these from local millers.

Meanwhile, some apparel manufacturers did not agree with the BKMEA and said the newly set rates were rational. Experts also said it was expected to reduce wastage rates thanks to the latest technology and machinery.

"I believe the wastage rates for basic items are moderately rational. However, the actual rates may vary depending on factories and production styles," said Mahmud Hasan Khan Babu, managing director of Rising Group.

Centre for Policy Dialogue (CPD) Research Director Dr Khondaker Golam Moazzem earlier told The Business Standard that the wastage rates were supposed to be reduced thanks to modern technology and machinery usage.

Meanwhile, a revenue board senior official, seeking anonymity, said the wastage rate for basic knit items should be fixed at 20%. "The newly-set 27% is much higher."

For the "irrational" maximum limit for wastage, the government would lose revenue, he told The Business Standard.