Textile millers of the country opposed the proposal of knitwear makers to settle Letter of Credit (LC) payments in Taka in the wake of a dollar crisis.
Bangladesh Textile Mills Association (BTMA) has opposed the demand sought by the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to the Bangladesh Bank for making taka the currency of local back-to-back LCs in case of the dollar.
Earlier on Sunday, BKMEA sent a letter – signed by Executive President Mohammad Hatem – to the central bank Governor Abdur Rouf Talukder demanding approval for opening and settling LC payments in Bangladeshi Taka as 80% of the knit manufacturers source raw materials from local sources.
Opposing the BKMEA’s proposal, BTMA expressed their position through another letter signed by BTMA President Mohammad Ali Khokon to the central bank governor claiming that the proposal once implemented, would not play any effective role in resolving the dollar crunch.
“It will create complications in the management of import-export trade for the stakeholders of the textile sector,” the letter read.
Moreover, as knitwear exporters source yarns and fabrics through inward back-to-back LC in foreign currency, so, no foreign currency flies out of the country due to the inter-bank transactions.
“It needs to be noted that the millers currently have adequate stocks of yarn and cloth,” he added.
The availability of yarn or fabric made of man-made fibre may not be enough, but a significant amount of this is being produced in the country.
“In such a situation of the dollar crisis, it is necessary to discourage the import of yarn in order to save dollars,” the letter read.
Moreover, as the EDF (export development fund) and UPAS loan payment is settled in dollars in general, textile millers must have a sufficient dollar in reserve to repay loans, the letter reads.
“In that case, if goods are supplied in local currency against back-to-back LC, receipt of foreign currency will not be possible and the existing dollar crisis may worsen due to accumulation of greenback in a group of people,” he added.