Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged the National Board of Revenue (NBR) to permit readymade garment (RMG) exporters to sell a duty-free portion of their export products to global brands’ outlets in Bangladesh.
On January 11, Dr. Rubana Huq, President, BGMEA sent a letter to the NBR looking for its approval for the duty-free sales.
Rubana Huq said that it would help encourage investments, generate more jobs and thus boost export of the locally-manufactured RMG items.
“The country is losing foreign investment and local consumers are being deprived of the ability to buy global brands’ products at reasonable prices due to lack of time-befitting policy,” said Rubana in the letter.
According to a statutory order issued by the NBR in June 1996, the 100% export-oriented industries are allowed to sell products equal in volume to 20% of their total exports of the “previous year to the local market by paying the applicable duty.
“But many of the foreign brands are keen to procure the 20% products duty-free for their outlets in Bangladesh. But such plans cannot be implemented in the absence of required policy support,” added Rubana.
Some foreign brands with outlets in Bangladesh have to pay up to 130% customs duties on many of the garments and shoes they import, even the ones that are made in Bangladesh, people familiar with the process said.
In the absence of policy support and the non-availability of branded items, general people cannot buy foreign branded items at a ‘rational rate’. As a result, they buy local branded items at a high rate, the letter said.
“If the global brands in Bangladesh were given the opportunity to procure garments duty-free, it would reduce the competitiveness of the local brands. If the prices of products at the outlets of global brands and local brands were the same, the local companies would be affected badly as they had to pay duty for the import of raw materials.”
The BGMEA also requested the NBR to consider the supply as export performance and formulate a guideline in this regard.
Local clothing brands have opposed the BGMEA proposal saying that such a move would hurt their businesses because of uneven competition.
Anwar-ul Alam Chowdhury Parvez, Chairman of Evince Group, one of the leading garment exporters in the country, however, differed with the BGMEA initiative.
Parvez, who has also established the local brand, Noir, said, “If the global brands in Bangladesh were given the opportunity to procure garments duty-free, it would reduce the competitiveness of the local brands. If the prices of products at the outlets of global brands and local brands were the same, the local companies would be affected badly as they had to pay duty for the import of raw materials.”
SM Khaled, Managing Director of export-oriented Snowtex Outwear Ltd and owner of a local brand, Sara, said, “The move to allow the duty-free sale of locally-made items in foreign retailers’ outlets might not affect the local brands having high production capacity and they might be able to compete with foreign ones. But it might have a negative impact on the local brands small in size.”
The main aim is to establish retail business both in local and global markets by ensuring own-designed and quality products at affordable prices, he said.
Syed Azharul Haque Azad, President of the Fashion Entrepreneurs Association of Bangladesh, said that the BGMEA proposal would not be encouraging for the local brands. As the local entrepreneurs are not getting a bond facility for the import of raw materials, they would disappear from the market.