The procedure for importing cotton into Bangladesh is fairly
simple. The importer has to be registered with the Controller of
Imports and Exports as an importer and must have an import
registration certificate, generally known as an IRC, issued by the
Office of the Controller of Imports and Exports. This certificate
is renewable yearly on deposit of a renewal fee. In addition an
import permit from the Ministry of Agriculture is needed; this is
usually granted within three days without any difficulty. Only
United States cotton needs to go through a fumigation process,
because of the high use there of genetically modified cotton and
chemicals. There is no customs duty on imports of cotton into
Bangladesh. The textile companies import cotton mostly through international
trading houses. These traders have representatives in Dhaka, who
act as indenter. The cotton-buying companies approach them giving
their requirements and the indenters make them offers with full
specifications and details on origin and prices. The long
relationship between the buyers and these indenters functions very
smoothly. Occasionally the indenters propose new cotton sources to
buyers, including those from Africa. Hanif Spinning Mills for
example has bought cotton from Zambia, upon the recommendation of
Dunavant, an international trading house with representation in
Bangladesh. Names of some of these local agents and indenters can
be found at the end of this section. Bangladeshi importers follow International Cotton Association
(ICA) rules and contracts, with two exceptions. When importing from
government companies in India, East Indian Cotton Association rules
are followed. Imports from Egypt follow the Alexandria Cotton
Rules. Payment is done through letter of credit. Contract parameters mainly cover staple length, micronaire range
and strength of the cotton. However, other considerations such as
neps, trash content (i.e. contamination), sugar content and
maturity, though not part of the contract, may cause serious
difficulties. That is one reason why the importers prefer cotton
from established sources, as they know exactly what is coming.
Price is the main consideration for buying decisions although other
parameters are also looked at. Most yarn spinners in Bangladesh source around 70% of their
cotton requirements from Central Asia, mainly Uzbekistan and
Turkmenistan. Ten per cent of imports come from the United States,
and the remaining 20% from India, Pakistan, the Syrian Arab
Republic, Australia and various African countries. Yarn spinners
receive advance fibre information measured using the HVI (High
Volume Instrument) system. All purchases are made through contracts to ensure clear and
correct understanding between the buyer and seller on the following
factors: - Quality. Based on a sample or description of grade specifying
range of staple length, micronaire range, Pressley range (a measure
of strength), uniformity, percentage of short fibre, percentage of
non-lint content, tolerable level of stickiness, etc.
- Percentage of sampling at destination.
- Procedure for settling disputes about quality or fulfilment of
contract obligations.
- Responsibility regarding contamination or stickiness.
- Price in terms of currency, weight and place of delivery and
shipment periods.
- Tolerances for weights and specifications.
- Port of shipment and port of destination, whether partial
shipments are allowed or not, whether transshipment is allowed or
not, whether shipment is to be in containers or break-bulk
carriers.
Buyers in Bangladesh prefer to establish long-term relationships
with a few agents who represent reputable trading companies in
various cotton exporting countries. |