Attach no strings to 1pc cash incentive
Garment exporters yesterday said the government should not attach any condition to the 1 percent cash incentive on apparel exports as the sector is going through difficult times and needs support to remain competitive.
The finance minister announced the cash incentive for all markets while presenting the budget for the current fiscal year in June. But the finance ministry recently said the exporters would be entitled to the rate if they add 30 percent value to their products during manufacturing.
“We don’t want any condition now on the 1 percent incentive that the government declared for all markets in the latest national budget,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Currently, garment exporters receive a cash incentive of 4 percent for emerging markets. All the countries except for Canada, the EU members and the US are considered as emerging markets.
In the budget for the current fiscal year, an additional Tk 2,825 crore has been allocated to pay cash incentives on garment export receipts.
Rubana said the sector has been going through a rough patch as many garment producers had to shut down their factories because of a lack of diversified products and their inability to maintain strict compliance.
In the first quarter of the current fiscal year, garment export from Bangladesh dropped 1.64 percent year-on-year to $8.05 billion when earnings from the sector fell 11.52 percent short of the quarter’s target of $9.10 billion. “So, many existing units need support from the government,” Rubana told The Daily Star after a meeting with Finance Minister AHM Mustafa Kamal at his secretariat office in Dhaka yesterday.
To help the local apparel exports become more competitive worldwide, the BGMEA chief also urged the minister to devalue the local currency against the US dollar by Tk 2, for which the government has to allocate an additional Tk 1,850 crore.
The garment sector has not been doing well as 59 small and medium-sized factories were closed and 25,900 workers lost jobs in the last seven months.
Rubana said she sent a list of 133 sick garment factories to the finance ministry earlier this year, urging it to waive bank loans of Tk 238.49 crore, as they are too weak to survive.
“Still, no action has been taken in favour of them.”
The parliament had identified 279 factories as sick considering their financial conditions. These units were established between 1985 and 2005.
However, the number was whittled down to 133 after a recent scrutiny, Rubana said.
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