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BKMEA stresses govt. to reconsider RMG waste depreciation rate

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) urged the government to raise the limit of wastage rate in apparel production.

BKMEA sent a letter to the commerce ministry in this regard on 20 December.

Earlier the commerce ministry redefined the waste depreciation rate of yarn and fabric used in knit garments the maximum wastage rates will be 27% for basic knit items, 30% for specialized items and 8% for sweaters and socks.

BKMEA-govt-reconsider-RMG-waste-depreciation-rate
Figure 1: BKMEA urged the government to raise the limit of wastage rate in apparel production.

The ministry also informed that this new rate will come into effect immediately.

BKMEA letter said, “In the meeting, relevant stakeholders’ presented detailed data on the depreciation rate with practical explanations. Sadly, the reevaluation of the depreciation rates through order ‘ka’ issued by the Ministry of Commerce did not reflect it.”

Mohammad Hatem, Vice President, BKMEA expressed that this decision by the ministry was absurd and unrealistic.

Hatem told Textile Today, “And we really feel sorry that the committee the ministry formed to set the depreciation rate included a professor from BUTEX. But the professor utterly failed to depict the real scenario to the ministry.”

“On top of it, the committee visited 6 leading apparel factories to make the report. Who uses the latest machinery and their efficiency level is really high. Still, these factories’ wastage rate was 35 to 50% in various garment items.”

“So, how come the ministry can settle on 27% and 30%? The Commerce Ministry is supposed to pave the way for ease of trade. But here this decision will create a barrier.”

“If I elaborate the waste scenario in a knit factory, in cutting table one can achieve a maximum of 82% of efficiency. Meaning the rest 18% is waste. In dyeing, it is 12% to 15% waste. But it varies in special fabrics like yarn dye, fleece/brushing, all-over print, etc. and increases up to 20% to 25%.”

“As a whole, the existing problem remained and this govt. the decision will not benefit us. And we are really disappointed with that. BKMEA demanded a 30% waste rate for basic knit items, 35% for specialized items (i.e. knitting and dyeing 16% and from cutting to shipment 19%). Then it would have been sustainable to run the business.”

BKMEA-proposed-RMG-waste-depreciation-rate
Figure 2: BKMEA proposed RMG waste depreciation rate.

Mohammad Hatem highlighted the most important point that it is unnecessary to even fix a waste rate. As no sane manufacturer would waste fabric willingly. Neither anybody will sell yarn or fabric in the market.

“So, we urge the commerce ministry to reevaluate the RMG waste depreciation rate and make a realistic decision.”

“The second vital aspect I will stress that the ministry said that the decision will come into effect immediately. Which created another headache for knitwear manufacturers.”

Mohammad-Hatem-BKMEA
Figure 3: Mohammad Hatem, Vice President, BKMEA expressed that this decision by the ministry was absurd and unrealistic.

Hatem explained to Textile Today, “We urged that we are facing several problems doing auditing in custom bond. And the custom house is issuing demands for high wastage rate. Also, as there are a lot of unsettled audits – which we urge to settle in the revised wastage rate. Plus to withdraw the issued demands to settle these in new wastage rate.”

“Meaning the already issued demands will settle in the previously set 16% wastage rate. This is absurd and a huge burden for BKMEA members.”

The BKMEA letter also states that no sweater factory has been reviewed by the committee so far but the rate of depreciation of sweaters and socks has been fixed at 4%, which is completely unreasonable. The rate in sweater production is usually more than 12%.

“We heartily request the ministry to revise the wastage rate and pay heed to our demand.”

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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