BGMEA wants to negotiatie, lowers cash incentive demand to 3%

BDApparelNews Desk
16 June 2019  

BGMEA President Rubana Huq addressing the post-budget press briefing at a hotel in Gulshan on June 16, 2019. Photo Courtesy: BGMEA

BGMEA President Rubana Huq addressing the post-budget press briefing at a hotel in Gulshan on June 16, 2019. Photo Courtesy: BGMEA

Bangladesh’s apparel manufacturers want to negotiate with the government on the issue of cash incentive, seeking to reap more from the government for the budget of fiscal 2019-20.

At a post-budget official press briefing organised in Dhaka on June 16, 2019, Bangladesh Garments Manufacturers and Exporters Association (BGMEA) have sought for 3 per cent cash incentive on exports to all destinations, lowering the amount they initially sought.

Previously, the manufacturers placed a 5 per cent cash incentive demand on exports to all destinations in their budget expectation, in opposed to the existing provision of 4 per cent cash incentive on four categories to exports to non-traditional markets.

In response, Finance Minister AHM Mustafa Kamal has proposed a 1 per cent flat cash incentive, in exports to both traditional and non-traditional markets, in his proposed budget for fiscal 2019-20. Now, a highest of 5 per cent cash incentive has been effectuated.

BGMEA President Rubana Huq was “70 per cent” happy with what the government had to offer for the apparel industry. However, she did say in her impromptu reaction that the amount of cash incentive offered is “too little” for the “in need of help” industry.

Revising up form there, Rubana Huq reiterated a lowered down demand of cash incentive. She sought 3 per cent cash incentive from the government, for exports to both traditional and non-traditional destinations, in the official budget reaction.

Notably, the government is making an allocation of additional Tk. 2,825 crore will be made in the budget for FY2019-20 for the fresh cash incentive for the apparel industry.

Also in the budget, the existing tax rates for the readymade garments sector is staying same, what the manufacturers had wanted to be lowered down.

Currently, the tax rate for readymade garments is 12%. The rate is 10% if there is green building certification. Besides, for textile sector tax rate is 15%.

The unchanged tax rates have been kept “considering the contribution of these sectors,” particularly in boosting export and generating employment.

In case of three percent incentive, the government will need to give 2 percent more and thus it will have to spend Tk 5,650 crore, said Rubana Huq. "The total amount will be Tk 8,475 crore as cash assistance if the grants three percent incentive in the sector."

Huq, also urged the government devalue the local currency by at least Tk five against a US Dollar (USD) to be more competitive in global apparel trade. "If the local currency is devalued by Tk five against the greenbacks, the government will require additional Tk 12,419 crore," she said.