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The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged the government to slash the import duties on solar PV system accessories to 1 per cent so that the export-oriented garment factories can install solar power systems for saving energy costs.
The apex body of the RMG sector also urged the government to provide appropriate policy support for the recycle fibre business, and tax rebate for the sector.
BGMEA President Faruque Hassan sought the duty-cut facility in a letter sent to Finance Minister AHM Mustafa Kamal on Thursday.
In the letter, the apparel body suggested that the Total Tax Incidence (TTI) of solar panels, inverters, aluminium structures, fuel saver controllers and other accessories be lowered to 1 per cent from its existing rate of 26.2 per cent to 58.6 per cent.
According to the letter, the government is encouraging entrepreneurs to use renewable energy in industries to solve the energy crisis. But due to high tariffs, it is not possible for entrepreneurs to set up solar power systems in industrial establishments.
As a result, entrepreneurs face various challenges in saving energy and setting up and running green factories.
It is possible to build environment-friendly industrial establishments by installing solar panel systems. Besides, foreign buyers are interested in importing garments manufactured by compliant factories, the letter read.
“Meanwhile, our garment factories have already invested significantly in setting up solar panel-based renewable energy plants. But high tariffs on equipment for solar panel systems are hampering the country's journey towards renewable energy,” it added.
The BGMEA president said that as per the new law of European Union (EU), in 2025, manufacturers would have to mix 50 per cent recycle fibre to produce cotton clothes. Bangladesh will graduate from the LDC on 2026, and after that year, Bangladesh’s apparel exporters have to abide by the rule to export readymade garments to the EU countries.
IF Bangladesh can use recycled fibre, the country will get 30 per cent duty rebate in export of goods to the EU market. Currently, the country has 23 recycle fibre factories, but the domestic wastes do not meet their demand. There is no law over collection of raw materials for these factories and marketing of recycled fibre, and manufacturers have to pay 7.5 per cent VAT to collect the raw materials and 15 per cent for marketing.
“As per a 2019 survey, Bangladesh can earn and save $7.5 billion through recycle business, but it needs strong policy support. To cash on the opportunities, we want all VAT-tax rebates for recycle business,” BGMEA president said in the letter.
Faruque Hassan told The Business Post, “We want all the sectors to perform well. We want other sectors to enjoy benefit like us. The government has already executed flat income tax rate for the all export-oriented sectors, which is good for the economy.”
“The RMG sector is the lifeline of the foreign currency earnings and employment, holding nearly 84 per cent export earnings share. The sector has succeeded maintaining growth amid the global economic crisis when other sectors performed negative,” he said.
“Considering the country’s economy growth, foreign currency earnings and employment, the government should provide appropriate policy support to all sectors, especially for the RMG,” he added.
