Waste fabric export: Turning trash into treasure

Businesses have demanded that the government provide export subsidies on four new types of products, including waste fabric, to tap into their export potential. The three other products are sodium silicate, synthetic fibre and artificial quartz.

The commerce ministry held a meeting after the associations related to the products submitted an application with their demand. Commerce secretary Abdur Rahim Khan chaired the meeting on Wednesday, according to the ministry sources.  

It was learnt that some initial discussions took place in the meeting and it will be followed by further meetings in the coming days. Later, the commerce ministry will write a letter to the finance ministry with its recommendations in favour of subsidies for the seproducts. The finance ministry will take a decision on the issue in the next phase. 

The traders sought subsidy for the fiscal year 2022-23, but the commerce ministry would recommend it for the next fiscal.

The commerce ministry officials said it is not solely under the commerce or the finance ministry to subsidise a new product and to increase or decrease the ongoing subsidies. The national revenue board (NBR) and the Bangladesh Bank also play a crucial role in the process and a decision is made through a consensus of all stakeholders.

The commerce ministry is only allowed to recommend and it will do so, the officials added.

According to a central bank gazette, the government currently provides cash subsidies at various rates ranging from 2 to 20 per cent to exporters of 37 sectors.

Mohammad Hatem, a knitwear business tycoon who attended the meeting, told Prothom Alo that the current regulations for export subsidy are not correct. It requires going through a rigorous passage of efforts to avail of the subsidy. Sometimes businesses have to deal with corruption.

He believes that the government should make the process of subsidies easier, in addition to subsidising some new products.

Bangladesh Textile and Garments Waste Processors and Exporters Association (BTGWPEA) in a recent application to the commerce ministry said garment waste, locally known as 'jhoot', has the potential to be a promising export tool. It requires a government subsidy to encourage its exports. 

The BTGWPEA does not have any statistics on the amount of Jhut produced in the country every year. However, BGMEA president Faruque Hassan told an event in November that the textile industry now produces around 400,000 tonnes of waste fabric each year and Bangladesh may earn around USD 3 billion through its exports. 

According to BTGWPEA sources, many of its member companies export waste fabric to European countries, in addition to India, China, the USA, and Turkey. The average exports in the last five years amounted to USD 50 to 60 million. 

BTGWPEA president Syed Nazrul Islam said some 30 per cent of waste fabric comes from cotton garments and the rest is from polyester and polyester-like apparel products. 

If there are incentives and good supervision, this sector can bag an export income of up to USD 10 billion, he added.  

There is a huge demand for synthetic fibre garments made by global giants. As a result, its production is rising worldwide. 

In 2019, synthetic fibre products worth USD 190 to 200 billion were exported from one country to another. A US and India-based research firm – Grand View Research – predicted that the exports would reach USD 400 billion by 2025.  

Meanwhile, Switzerland-based International Textile Manufacturers Federation (ITMF) assessed that some 78 per cent of the total global clothing is made of synthetic fibres and the remaining 22 per cent is of cotton fibre.

Bangladesh is the second largest exporter of readymade garments in the world. China and Vietnam have been respectively in the first and second spots. Bangladesh lags far behind the two countries in the context of synthetic fibre cloth production. Vietnam maintains a 10 per cent share of the global synthetic fibre market while Bangladesh maintains nearly a 5 per cent share. 

Even, neighbouring India fared well as it exported synthetic fibre products worth USD 1.6 billion. 

According to BTMA, around 80 textile mills are currently producing various types of synthetic fibre yarns and fabrics, including polyester, viscose, tensile, and modal. The number was less than 50 in 2016. 

Quasem Industries Limited has submitted an application to the commerce ministry seeking a subsidy for the export of artificial quartz. Meanwhile, Super Silica Bangladesh sought cash assistance against the export of sodium silicate. 

Artificial quartz, a construction material, is mainly used in the decoration of buildings. The dirt-resistant and easy-to-clean material is gaining popularity day by day and is widely being used in making floors in buildings.

On the flip side, sodium silicate is used as an important raw material in soap, ceramic and welding electrode factories.

The rate of cash assistance against warehouse and duty drawback on product exports in the handloom industry is 5 per cent. Bangladesh weavers product and manufacturers business association requested the commerce ministry to raise this rate to 25 per cent. 

The BTMA said the authorities charge a 7.5 per cent VAT on the collection of recyclable local fibre, a raw material, and a 15 per cent VAT on its supply or sale to yarn mills. They requested a withdrawal of the VAT.