Country’s apparel sector leaders proposed the formation of a Tk 300 crore emergency fund for ensuring safe exit for the small and medium units which are facing struggles.
They also demanded 5% cash incentive worth Tk 11,724 crore a year against readymade garment exports for next five years to remain competitive in the global market saying “RMG manufacturers were facing an uncertain situation due to low prices of products.”
According to the finance ministry officials, the garment sector currently gets around Tk 3,000 crore to Tk 3500 crore a year as cash incentives against export.
The leaders also sought initiatives to bring down the bank interest rate to a single digit for all garment factories with immediate effect.
Leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Textile Mills Association (BTMA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Exporters Association of Bangladesh (EAB) made the demands at a pre-budget press conference in Dhaka 27 May at a city hotel.
“If we consider employment generation, the readymade garment sector needs incentive as the sector is facing a transitional period,” the newly-elected BGMEA President Rubana Huq said.
Mentioning that the manufacturers have been facing continued pressure due to low prices from the buyers and survival of many small factories was at stake she said, “If the government allows 5% cash incentive against the freight on board price of all garment products for the next five years the sector would rebound.”
Apparel exporters get 4 percent cash incentive as an alternative to duty bonds and duty drawbacks, 4 percent for apparel products export for the small and medium industries, 4 percent for export of new textile and garment products and expanding export of textile items to new markets, markets other than the United States, Canada and the European Union, and 2 percent cash incentive for exports of apparel products to EU market in addition to 4 percent cash incentive.
Rubana Huq also demanded export-friendly exchange rate for the export sectors, saying “Competitiveness of the sector would be increased by 6% if exporters received additional Tk 5 for per dollar.”
Apparel leaders also urged the government to keep the source tax unchanged at the rate of 0.25% and to reduce the corporate tax to 10 percent from the existing 12 percent.
BTMA President Mohammad Ali Khokon demanded 15 percent cash incentive from existing 4 percent for the textile sector.
He also demanded 16 percent cash incentive for the US market, saying “Bangladeshi exporters were losing their competitiveness in the market due to the high tariff.”
Mohammed Hatem, Senior Vice Presiden of the Exporters Association of Bangladesh demanded to ease the procedure of cash incentive so that exporters can get the amount without any hassle and said, “We need 5 percent cash incentive for all export sectors and a waiver from submitting a VAT return.”