Budget excludes proposals in favour of RMG factories: BGMEA

The ready-made garment sector had suggested tax free imports of 30 items but the new budget proposes tax benefit to only two of them, said Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The budget does not reflect the proposals that had been given by garment owners, he said. 

Faruque, however, said the source tax, cash incentive and the corporate tax for the sector had been kept unchanged, which was positive.

He demanded that the source tax be kept unchanged for the next five years, to keep the environment conducive for investments, and a 10% incentive for exports of non-cotton fabrics or man-made fiber products.

BGMEA welcomed the reduction in import tax for machine parts and chemicals, an extension of the tenure of some existing benefits, 1% cash incentive for exports of all kinds of apparels and the lowering of advance tax for imports. 

Speaking in favour of incentives to exports of non-cotton fabric items, Faruque said the export market for non-cotton apparels had grown to become a significant size, but Bangladesh's share of the market was low compared to other exporters. 

Incentives, if given to encourage exports of such products, will give rise to higher returns in terms of direct and indirect taxes, he said.

According to the lobbying body of garment owners, non-cotton fabrics make up 75% consumption of garments worldwide. Of it, 64% is synthetic or man-made fibre.  

The demand for such products grows at 3-4% annually, while the market for cotton items that has 24% share of the overall apparel market, grows at 1-2% a year.

At the press briefing, BGMEA proposed allocations for skill development in the apparel sector, increasing incentive to 5% from 4% for exports to non-traditional markets, withdrawal of the 10% source tax on cash incentive, fund for healthcare to garment workers and housing and transport facilities to them. 

Moreover, BGMEA said garment owners needed legal protection to realise money for exported items from brands that had gone bankrupt.

Faruque requested for an allocation in the budget to lend support to the garments that had incurred huge losses for such bankruptcy.