No guideline on RMG sector in budget: BGMEA

Staff Reporter :
No specific direction for the export-oriented readymade garment sector has been found in the proposed budget, said BGMEA Presiden Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He further said like the previous years, no allocation against incentive for the sector was announced in the proposed budget.

Even, we wanted 10 per cent special incentive on export value of non-cotton items to encourage new investment in this sector and increase competitiveness. But, no direction has been seen in the proposed budget in this regard, the BGMEA president said.

He was speaking at a meet the press on the proposed budget at a convention hall in the city on Friday.

The BGMEA president also said that the sector is struggling hard to overcome the economic shocks caused by the Covid-19 pandemic and the ongoing Russia-Ukraine war.

Demand for our products has been declined due to drop in retail sales in the major export destinations due to the economic recessions in the developed countries, he said.

“Production cost has increased due to the rise in prices of fuel oil and all kinds of raw materials. Many our factories are running with under capacity. No sign is seen to overcome the situation in coming months,” he added.

Moreover, the decision of the withdrawal of bank interest cap from July 1 will also increase the crisis further, Faruque said.

He further said uninterrupted gas and electricity supply is yet to be ensured, although the prices of the two have been increased continuously.

So, uninterrupted energy supply must be ensured as well as unauthorized electricity and gas lines should be disconnected immediately, he said.

“The entrepreneurs of the RMG sector are failing to import capital machineries due to the ongoing dollar shortage. The dollar crisis is deepening further due to slow pace in remittance inflow and the decline in export earnings,” he said.

The flow of remittances has declined by 16.22 per cent and 10.27 per cent in April and May respectively.

The down trend of the export earnings and remittance inflow is not positive sign for the county’s economy, he said.

Following this, no alternative to protect our export-oriented sectors at the moment by providing policy supports, the BGMEA president observed.

He also urged to reduce the prices of all kinds of fuel oil keeping adjustment with the international markets as well as withdrawing VAT and Customs duty on LNG and LPG import.

During a post-budget press conference, the BGMEA president described some proposed budgetary measures for the upcoming fiscal year as “positive” and made additional demands. These demands include fixing the source tax at 0.50 percent and maintaining this rate for the next five years.

He also elaborated on optimistic measures proposed for the export-oriented industry in the fiscal year 2023-24.

These measures include a 15 percent tax reduction on container imports for both export and import purposes, VAT exemption on cut and waste fabrics made of artificial fibres at the manufacturing level, amendments of the circular related to some product details and inclusion of certain machinery parts in the HS code.