BGMEA seeks 10% cash incentive for non-cotton clothes exports

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is seeking a 10 per cent cash incentive from the government for the non-cotton-based clothes export in a bid to attract investors and increase investment.

BGMEA President Faruque Hassan wrote a letter to the Finance Minister AHM Mustafa Kamal on Sunday, asking for the incentive on the upcoming 2023-24 fiscal year budget proposal.

“We want the incentive for all non-cotton clothes exports for the next three years. After that, we want the facility for local yarn-based non-cotton clothes,” Faruque told The Business Post.

“If the government provides the incentive, the non-cotton sector will boom like local spinning mills,” he added. The BGMEA president said thanks to the incentive for the non-traditional markets, the country’s export ratio rose from 6 per cent to 20 per cent within a decade. Incentives to the non-cotton sector will help the country to achieve $100 billion export in 2030 from the RMG sector.

The letter stated that Bangladesh’s cotton-based clothes manufacturing increased from 69 per cent in fiscal year 2008-09 (FY09) to 73 per cent in FY22. At present, 75 per cent of the global textile market is dominated by the non-cotton.

To set up a non-cotton base factory, traders need huge capital because it is technology dependent. That is why Bangladesh has a few non-cotton-based backward linkage factories, while the country needs 50 per cent value addition to continue GSP+ facility to the European Union market after the LDC graduation.

Faruque expects that if the government provides the cash incentive, many non-cotton fibre and clothes manufacturing factories will be set up in Bangladesh.

He said brands are shifting from China due to the Western-China trade war, and they are looking to Bangladesh as an alternative sourcing hub.

Now Bangladesh needs local and foreign investment to cash on the opportunity, and cash incentive could attract the investor.