RMG subsidies not viable

Giving continuous subsidies to the export-oriented garment sector will not be viable for the country as much of such benefits goes to the buyers' end, said Mashiur Rahman, adviser to the prime minister on economic affairs, yesterday.

He said if the government increases subsidy by a certain amount for the readymade garment (RMG) sector, the international buyers will bargain for less price.

So the manufacturers and exporters will not be benefited ultimately from the government's initiatives, Rahman said at a seminar on Bangladesh's knitwear industry at Dhaka Sheraton hotel.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) organised the seminar on the sidelines of the fifth knitwear exposition that will end today at the hotel.

He said the existing high bank interest rate is really a problem for industrial loan, but if the interest rate is reduced, there will be less debt financing in the industrial sector.

"Lowering the interest rates leads to massive cuts in deposit rates,' Rahman said.

Instead, the adviser stressed readjusting energy tariff somewhere at an upward level, improving transport infrastructure and developing more ports for the growth of business.

He advised the industry owners to relocate their factories outside Dhaka to reduce production cost.

Rahman also suggested the factory owners manage their workers efficiently and improve productivity.

Bangladesh Institute of Development Studies' Research Fellow Dr Nazneen Ahmed presented the keynote paper at the seminar where Executive Director of private think tank Centre for Policy Dialogue Mustafizur Rahman, Trade Adviser to European Commission Zillul Hye Razi and Chairman of Bangladesh Tariff Commission Mujibur Rahman also spoke.

Mustafizur Rahman said both the private sector and the government should be prepared beforehand as it is very difficult to understand how the global market will play once the recession is over.

"The government needs to play an important role in every aspect," he said. Mustafizur also called upon the industry owners for product and production diversification to be more competitive in the global apparel market.

Razi said Bangladesh will face more competition in near future in RMG business if India signs free trade agreements (FTAs) with EU and Association of Southeast Asian Nations.

"The negotiation for signing an FTA between India and EU is at the final stage now," he said.

Former finance minister M Syeduzzaman, among others, was present at the seminar, moderated by BKMEA President Fazlul Hoque.

Meanwhile, at least 80 stalls are showcasing products from home and abroad at the show. The special aspect of this year's fair is that a record 52 buyers and investors from Japan came to Dhaka to attend the exposition.