Textile and garment factory leaders on Saturday urged the government to postpone the proposed duty policy for investments in economic zones (EZ) by five years and to allow gas and electricity connections and approve loans for factories outside industrial zones.
They further said that if the government does not amend the policy, it will severely impact investments and hamper employment generation. Furthermore, they noted that the proposed government borrowing from banks would adversely affect private sector investment.
These remarks were made during a joint press conference held at the BGMEA office in the capital. The event was organised by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Textile Mills Association (BTMA), and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
BGMEA President SM Mannan Kochi, responding to a question, said, "We [RMG owners] have purchased 46 plots in the EZs, but it will take at least three years to set up factories. Many entrepreneurs have already set up factories outside industrial zones and are awaiting utility connections. If the government does not provide utility connections and banks do not approve loans for these factories, where will they go? Additionally, the policy will make it difficult for small entrepreneurs to establish factories in the EZs."
Kochi suggested creating a fund with minimum interest rates for small and medium entrepreneurs for at least 15 years, saying, "Otherwise, small entrepreneurs will struggle to thrive given the current high interest rates and business establishment costs."
Finance Minister Abul Hassan Mahmood Ali presented the national budget for the fiscal year 2024-2025 last Thursday, indicating a reduction in cash incentives and other facilities to prepare for LDC graduation. These facilities will cease post-graduation, as per World Trade Organization (WTO) rules, forcing exporters to compete openly.
Regarding this, BGMEA Vice President Abdullah Hil Rakib said, "According to WTO rules, the government can continue cash incentives for six years after graduation. Alternatively, the government can provide incentives through other means. We have asked the finance ministry to either maintain existing facilities until 2032, as per WTO rules, or offer alternatives. We reiterate this request considering the country's economy and employment."
At the press conference, BKMEA Executive President Mohammad Hatem said, “We demanded the government reduce the source tax from the current 1 per cent to 0.5 per cent. The government did not address this in the budget proposal.”
We also requested that the source tax be considered as the final settlement, but the finance minister did not mention this in his budget speech. We continue to make the same demand."
"The government's plan to borrow heavily from banks will affect private sector investments," Hatem warned.
Responding to a question, BTMA President Mohammad Ali Khokon said, “The textile sector is severely impacted by gas and energy supply shortages, affecting our production. As we could not meet the demand for RMG makers, they had to increase yarn and fabric imports. If Petrobangla supplied at least 3,000 million cubic feet per day to the national grid, we could survive.”
During the press conference, the BGMEA president further stated that the proposed budget includes a 200-400 per cent penalty for unintentional HS Code mismatches.
He urged the government to withdraw this proposal.
