Pakistani spinners are not alone in facing difficulties to open letters of credit for cotton imports Bangladeshi spinners also struggle to open LCs for raw material import.
The dollar shortage in the banking sector of Bangladesh is posing a threat to local textile millers and spinners who cannot open letters of credit (LCs) to import raw materials and cotton to feed the country’s value-added apparel industry.
The expected shortage of raw material would further pressurize the readymade garment exporters that were able to fetch 25 percent fewer orders for October-April.
The dollar crunch has resulted in a delay of 10-15 days additional in the opening of LCs. This has affected the effect of import on raw materials such as cotton, dyes chemicals, viscose, and staple. The spinning industry which invested heavily in recent years is operating much below capacity.
The central Bangladesh Bank has tightened rules to discourage the imports of non-essential and luxury items in order to save the foreign currency reserves from fast depletion.
The opening of LCs aimed at importing textile fabrics declined by 25.
63 percent year-on-year to $4.88 billion in the July-December period of the current financial year, central bank data showed. The LC opening for raw cotton dipped by 41.
64 percent to $1.02 billion. The opening of LCs to buy cotton yarn, synthetic fibre and yarn also fell sharply during the first half of the fiscal year.
