Bangladesh Textile Mills Association (BTMA) has urged the government to discourage yarn imports amid the ongoing dollar crisis as the local spinning mill owners have huge stockpiles due to a decline in demand.
On Tuesday, the organisation sent a letter to the Bangladesh Bank in this regard, saying the step would open a way to sell the stockpiled yarn.
The letter requested the BB governor to take initiatives to discourage imports against back-to-back letters of credit (LC) to save dollars.
Entrepreneurs in the textile sector say that this will save local textile mills from huge losses.
Md Fazlul Hoque, vice president of BTMA, told The Business Standard, "We have enough yarns. If we import yarn from abroad, it will cost dollars. That is why we have requested to discourage imports. The government can fix the price of local yarns."
However, entrepreneurs in the garment sector, the main buyers of yarn, say that if there is an opportunity to import yarn at a cheap rate, it should not be stopped.
Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, "Local traders will have a monopoly business if the government takes action to discourage yarn import. We observed this in times of crisis in the past."
"However, we can take yarn from the local sources if the government fixes the price. But the price should not be more than 10 cents higher than the imported yarn," he added.
The BTMA has also opposed the BKMEA's demand to the Bangladesh Bank for making taka the currency of local back to back LCs in case of the dollar.
In the same letter, the organisation said that the BKMEA's demand would not play any role in dealing with the dollar crisis, but will create more problems in managing the import and export trade.
BTMA Vice President Md Fazlul Hoque said, "Since we import raw material (cotton) in dollars, back to back LCs should also be opened in dollars."
However, Mohammad Hatem, executive president of BKMEA, said that opening back to back LCs in dollars would reduce the excessive profit of the banks.
Meanwhile, some of the textile mill owners say that there is no problem in opening back to back LCs in taka.
One entrepreneur, on condition of anonymity, told The Business Standard that except the dollars needed for cotton import, the remaining payment could be done in taka. "Opening back to back LCs in taka could release the pressure on the dollar."