No stimulus for RMG export | The Daily Star
12:00 AM, June 10, 2011 / LAST MODIFIED: 12:00 AM, June 10, 2011

Budget 2011-12 Special

No stimulus for RMG export

Cash incentive for potato rises

Finance Minister AMA Muhith has not awarded any stimulus package to the country's main export-earner readymade garment sector in the fiscal year of 2011-12, dashing the hopes of apparel exporters.
However, a proposal to increase cash incentive for potato exports to 20 percent from 10 percent was made in the budget unveiled yesterday.
The minister in his budget speech recognised that the textile sector, particularly the yarn and clothing sub-sector linked to garment industries, faces problems. He said they are looking into the matter and would take steps accordingly.
On April 19, 2009, the government announced a Tk 3,424 crore stimulus package for export-oriented industries, except for the RMG sector, to cushion the blow of global economic downturn.
Later, the government announced a second stimulus package worth Tk 1,000 crore along with policy supports for the garment sector on November 25, 2009 to face the recession fallout.
As for policy support, the government had pledged to pay the licence renewal fees for captive power plants used by different RMG units between November 1, 2009 and June, 2010, extend bank loan re-scheduling without any down payment, and a five percent cash incentive for apparel export to new destinations.
During July-April of 2010-11, exports of RMG, raw jute and jute goods, leather and leather goods, frozen foods, electronics, petroleum and engineering products grew by more than 40 percent, said the finance minister giving credit to the stimulus package.
However, AKM Salim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association, said exporters did not get the fund from the stimulus package in time due to bureaucratic tangle and some paperwork issues.
"Now, we are receiving some money from the package. We were able to survive the recession even without the stimulus package due to political stability and normal production environment," he said.
Jahangir Alamin, president of Bangladesh Textile Mills Association, said there is no mention of raising cash incentives for the textile sector.
"We have been demanding a raise in cash incentive for primary textile sector to 10 percent from the existing 5 percent, but the minister did not propose it," he said.
Alamin said the spinners are going through a decline in sale of locally made fabrics because of the relaxation of Rules of Origin by the EU, and selling of yarn at dumping price by India. "We demanded the enhancement of cash incentive to help us face the problem," he said.
The minister yesterday boasted of the way the government tried to protect the export sector in the wake of the global recession.
He said in 2008-09, Bangladesh achieved 5.7 percent real GDP growth against 5 percent negative growth in the global economy. This trend continued in 2009-10, helping the economy expand by 6.1 percent.
"We have achieved a provisionally estimated 6.7 percent growth in the current fiscal year. Exports, imports and remittances recorded 10.3, 4.1 and 22.4 percent growth respectively whereas globally these sectors posted negative growth," he said.
Muhith said surplus on current account balance increased to 3.7 percent of the GDP in 2009-10 from 2.7 percent of 2008-09. During the period, Bangladesh earned credit ratings of BB- and Ba3 from internationally reputed agencies Standard and Poor's (S&P) and Moody's, he said.
The upward trend in investment in the manufacturing sector still continues. "By this time, our export-oriented industries have also consolidated their position. Up to March 31, 2011, the disbursement of industrial term loan posted 30 percent growth," he said.
The import of capital machinery and industrial raw materials also recorded a significant growth, making up 54 percent of total import, the minister said.

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