Apparel exports finally get promised cash incentive

All garment exports from Bangladesh will receive 1 percent special incentive on their shipment to all markets after the government yesterday made effective the much-awaited cash support announced in the budget for fiscal 2019-20.

The incentive for the apparel and textile exporters will be effective retrospectively from July 1 last year, the central bank said in a notice.

Finance Minister AHM Mustafa Kamal in his maiden budget proposed the incentive to help exporters remain competitive in the global market. But the decision was put on hold because of some ambiguity in the previous notice.

The central bank yesterday also widened the coverage of the incentive by including terry towel and specialised textile.

The terry towel and specialised textiles were not eligible for the cash support in the past as the two items were not defined clearly, said a central bank official.

“The government brought in more sectors under the scheme as the garment and textile sectors have been going through a difficult time,” he added.

But the central bank notice yesterday failed to bring a smile on garment exporters’ faces.

By the time the incentive came, the sector has lost its competitiveness in the global market as competitors such as Vietnam and India have already gained a lot of ground in the major markets, exporters say.

“It will help but it won’t be sufficient,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.

Had this been given in July the way it has been given now, the garment exporters could have averted hiccups.

“It won’t have an immediate impact, unfortunately,” she said, while calling for currency adjustment, which would give the garment exporters the ultimate leg up in the global market.

Garment export has been declining for the last five months because of the appreciation of the local currency, the rising cost of production, the declining trend of spending by consumers for garment items and the free trade agreement between Vietnam and the EU.

In the first half of the fiscal year, Bangladesh’s apparel shipment, which rakes in more than 80 percent of the export earnings, fell 6.21 percent to $16.02 billion, according to data from the Export Promotion Bureau showed.

Currently, Bangladeshi garment exporters receive 4 percent cash incentives for shipment to non-traditional markets. The country considers all the destinations as non-traditional markets except the EU, the US and Canada.