Apparel leaders demand cash incentives until 2032

Apparel industry leaders have called on the government to extend the cash incentives on export receipts until 2032, aligning with the World Trade Organisation's (WTO) decision to maintain LDC trade benefits for graduating countries until that year.

"As per WTO rules, the government has scope to continue cash incentives after LDC graduation," said Abdullah Hil Rakib, vice president of the Bangladesh Garment Manufacturers and Exporters Association, held this morning (8 June) at the BGMEA building in the capital's Uttara.

At the event organised jointly with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMEA), BGMEA President SM Mannan Kochi said several developed countries have provided incentives to support their industries and make them competitive.

"India has been providing some incentives – 30% on land price, 40% on worker payment, and 5% on bank interest. We want such alternative incentives after LDC graduation," he added.

The BGMEA president said the apparel trade bodies believe some of the FY25 budget proposals will support the textile and apparel industries, while others will not.

Talking about the proposals that would support the textile and apparel industries, he said 20% of the demanded amount had to be deposited previously for VAT appeals, which has now been reduced to 10%.

Kochi added that import facilities at concessional rates have been given for 17 different textile products, and the total tax incidence on importing chillers with a capacity of 50 tonnes or more for factories has been reduced from 104.68% to 10%.

However, he said the concessional import rate for chillers was previously set at 1% and requested the government put it at the same rate again.

He also said the special allocation of Tk100 crore in the FY25 budget to encourage renewable energy sources would help the industry.

"The government also reduced the import duties on two raw materials used in the production of polyester fibre (PSF) and PET chips (Textile Grade) from 10% and 25% to 1%, which will undoubtedly aid the industry," he continued.

In a written statement, the BGMEA president mentioned some proposals from the FY25 budget that they believe will not help create investments and employment.

He said the proposals to increase the import duty on construction materials and capital machinery, the VAT on energy-saving lights, and bond license fees will not help the industry.

"Under Section 171 of the Customs Act 2023, there are provisions for a fine of 200%-400% if the HS code of imported goods is incorrect. We are requesting to withdraw this because charging such high fees for mistakes is unreasonable," said Kochi.

He also requested consultations with all stakeholders before implementing the new Customs Act.

He said the industry faced a global slowdown and high inflation due to geopolitical reasons, just as it was recovering from the Covid-19 pandemic. These factors reduced consumers' purchasing power.

"Moreover, in the last five years, local production costs have increased by about 50%, putting the industry in a crisis," he added.

Kochi said the apparel export growth has alarmingly decreased in the past seven months, with a 17% decrease in May alone.

"We have increased wages by 56%, but our prices have not. Instead, the prices of our main products have dropped by 8%-18% in the last nine months," he added.

"At a time when the industry is in such a crisis, what was needed the most was to support the apparel industry, which earns a significant portion of export revenue, and through this support, to increase reserves and control inflation," the BGMEA president said.