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Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan says there are no guidelines on the textile and readymade garment (RMG) sectors in the proposed FY24 budget though those are struggling due to low export earnings caused by the ongoing global economic crisis.
He made the comments at a budget reaction programme organised by the BGMEA in the capital on Friday.
Faruque said remittance and export earnings had declined in the last two months year-on-year while the country’s forex reserves dipped by $18 billion in the last 21 months, though the export sector fetched an additional $14.73 billion during the 21-month period.
The downward trend in remittance and export earnings is not a good sign for the economy, he said.
He continued, “Amid the situation, we demanded source tax be reduced to 0.5 per cent, but that has remained unchanged at 1 per cent in the budget proposal. Even cash incentive allocations for the export sector have not been mentioned.
“The finance minister said they have to reduce cash incentives to prepare as the facility will be gone after the least developed country (LDC) graduation in 2026. But the US, India, and many developed countries are still providing cash incentives.”
Faruque said cash incentives should not be cut as those have helped Bangladesh develop the export sector.
“I believe the government also knows how the facility will be continued even after the LDC graduation. We are also seeking a 10 per cent cash incentive for exporting non-cotton clothes as we have huge opportunities on that front,” he explained.
Replying to a question, he said, “The finance minister’s budget speech is not clear to me. That is why I want to wait until the budget is passed in parliament.”
The apparel apex body leader urged the government to lift all VAT and taxes for the recycling industry, which has the potential to earn $5 billion annually.
He also requested to lift the 10 per cent tax on cash incentives as well as fix 12 per cent corporate tax for subcontract factories and 0.5 per cent source tax for all export-oriented industries for at least five years.
Faruque warned apparel export earnings would decline for at least the next two months year-on-year as the global economic crisis has forced owners to run factories at reduced capacity.
Amid the situation, the interest rate cap would be lifted from July, which will increase production costs and reduce competitiveness in the global market, he said.
“That is why we are seeking the facilities considering foreign currency earnings and the employment situation as well as to survive.”
