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BGMEA proposes tax cut for 5 years & cash incentive for man-made fiber

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has again urged the govt. to review some of its proposals, including a 10 percent cash incentive for non-cotton-based garment exports. As globally, the fashion apparel industry has been moving to manmade fiber thanks to its environment-friendliness, functionality and durability.

Faruque Hassan, President, BGMEA said, “Apparel exports to western markets have been declining, especially as new markets have suffered more economically as a result of COVID-19. Whereas, globally synthetic-based apparel demand is growing 3% to 4% yearly. Bangladesh has a huge opportunity in grabbing the global market for non-cotton based readymade garment (RMG) exports.”

BGMEA-FY21-budget-reaction
Figure: RMG makers welcomed the proposed budget for continuing different facilities for exporters and cutting corporate tax and VAT.

Hassan was talking at a press conference at the BGMEA’s office in Uttara, Dhaka to express BGMEA’s budget response. Adding that the world consumption of non-cotton-based textile items is 75 percent and growing.

BGMEA boss reflecting the large dependency on cotton said that in FY 2018-19, 74.14% of Bangladesh’s RMG is cotton-based. Which is annually rising at a rate of 1-2 percent.

Bangladesh has already set up its capacity with the installation of machinery in non-cotton RMG items manufacturing while the fabric is also available, he said adding now the country needs to be competitive in this segment.

The government’s support to provide an incentive in such manmade textile manufacturing and exporting will aid in increasing the RMG’s competitiveness and help raising the global market share.

“We have the opportunity to create fresh employment, attract new investment and thus increase the overall RMG exports,” Faruque Hassan said demanding a 10 percent cash incentive on non-cotton apparel exports.

The BGMEA President also demanded the continuation of the existing 0.5 percent source tax for the next five years.

Apparel makers usually demand source tax to be reduced to 0.25 percent both before and after the budget is announced every year.

However, this year they came up with the call to keep the tax the same for some time, as Finance Minister AHM Mustafa Kamal in his budget speech on June 3 did not mention any rate of source tax.

Hassan said, “The fluctuations in source tax would obstruct the business plan. So, we necessitated the continuation of the existing rate of 0.5 percent source tax as the same source tax is better for long-term business planning.”

The BGMEA chief also hoped that by October and November this year, the sector would observe a full recovery of the apparel business.

Though, Hassan insisted the government take measures to eliminate bureaucratic knots for the ease of doing business.

Hassan also said the EU should prolong its generalized system of preferences (GSP) to Bangladesh for more than 10 years. After 10 years, the EU should grant Bangladesh the GSP+ as the south Asian economy was hit hard by the pandemic.

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