Abolish source tax for 2 years: BGMEA
Garment manufacturers yesterday demanded reduction in source tax to zero percent from existing 0.70 percent for the next two years, and cash incentive of 5 percent on exports to help the sector tide through the current choppy waters.
The Bangladesh Garment Manufacturers and Exporters Association also demanded the corporate tax for apparel makers be halved to 10 percent in the upcoming national budget.
The demand comes as apparel exporters are struggling to maintain the average growth rate of 13 percent that the sector has witnessed over the last few years.
Garment exports grew only 2.21 percent to $23.13 billion during the first ten months of the current fiscal year.
The actual growth should have been at least 13 percent in keeping with the last few years' trend, said Siddiqur Rahman, president of the BGMEA, at a press conference at the trade body's office in Dhaka.
Furthermore, the receipts during the July-April period were 6.06 percent lower than the ten-month target of $24.62 billion, according to data from the Export Promotion Bureau.
During the period, garment shipments to Bangladesh's single largest export destination, the US, declined 6.80 percent and the third largest export destination, the UK, 5.91
percent. Regarding new destinations like Japan, Australia and New Zealand, Rahman said exports grew only 1.21 percent to those countries in the last ten months, way lower than the 20 percent growth recorded a year earlier.
Rahman blamed the weak demand for clothing items in the Western world for the slowdown in exports. In 2015, consumption of apparel items declined 7.9 percent worldwide as consumers shifted their focus to electronic gadgets.
The Indian government announced a Rs 6,000-crore stimulus package for its garment exporters to give a boost to export receipts. “So, our situation in global garment trade will be more volatile in the near future,” Rahman said.