The country's textile millers have urged the government to ban exports of all types of garment waste, in a bid to ensure availability of the raw materials for local recycling units.
They also have demanded withdrawal of 7.5 per cent and 15 per cent VAT, respectively, on sourcing the raw materials from the local market and supplying cotton made from recycled fibre to the spinning mills.
Bangladesh Textile Mills Association (BTMA), in a letter signed by its president Mohammad Ali Khokon to the National Board of Revenue (NBR), made the demands on Wednesday.
In the letter, Mr Khokon said there are some 20 recycled fibre factories across the country with the recycling capacity of 2,400,000 tonnes and they mostly use garment jhut or waste as raw materials.
Out of the 20 such factories, RBD Fibers Limited, having recycling capacity of 1,20,000 tonnes, has so far invested US$50 million in this trade, he said.
The factory produces cotton from recycling garment jhut, old and used garments, and the textile wastage - later, it sells (deemed export) the cotton to local spinners in cash or on sales agreement.
"These recycling factories have to pay 7.5 per cent VAT while collecting the raw materials (jhut/waste) locally and also pay 15 per cent VAT at the time of selling the recycled fibre to the spinners," he explained.
As a result, prices of the recycled fibre have increased due to the rise in production cost and imposition of higher VAT, he said.
He further said that textile millers import raw cotton duty free, while the raw materials the recycling units use are the textile and garment waste.
This waste is recycled to make fibre, which is then used to make cotton and yarn - fabrics and finished garments are produced from the recycled cotton, he explained.
Besides, Bangladesh will face post-graduation challenges as high tariff would be applicable in exporting garments to the European Union, he said, adding garments produced from recycled fibre would enjoy 30 per cent duty rebate which would make local garments cost-competitive.
"This (duty rebate) would work as an incentive against cash support," Mr Khokon said.
The use of recycled fibre would help retain US$1.0 billion locally, he opined, demanding withdrawal of VAT and a ban on exports of textile and garment waste.
Earlier, on November 13, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan at a programme also called for urgent government measures to stop the export of pre-consumer waste.
He said less than 5.0 per cent of the textile waste are recycled locally, while over 35 per cent are incinerated in boilers or landfills.
The remaining 60 per cent of the textile waste are exported to India, Hong Kong, Sweden and other countries where they are recycled and sold back to the local readymade garment industry as recycled yarn, at a higher cost, he said.
There are already companies that have established recycling plants, like 'Recover' from Beximco and 'Cyclo' from Simco. Apart from those, many other small facilities also recycle garment waste in the country.
"It is important to incentivise them, and promote the pre-consumer waste-recycling industry in Bangladesh," Mr Hassan observed.
The 400,000 tonnes of micro-fibres and scraps that are disposed of as waste every year can be recycled to produce about 1.0 billion pieces of garment, which has the potential to generate revenue worth about US$3 billion per annum, he added.
