Plastic goods exporters demand reconsideration of cash incentive cut

Business Desk :
Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) has demanded reconsideration of the government’s decision to lower cash incentive rates for exports.
Shamim Ahmed, President of the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) in a press statement said the change in the rate of cash incentives is not helpful and timely for the industry.
“Rather, it will bring unintended risks and disasters to other industries, including the plastics sector,” he said.
He also demanded the amendment of the decision on an urgent basis before having a major negative impact on exports and maintaining 10 per cent cash support against the export of plastic products until the year 2026.
The amount of cash incentives for plastic sector was reduced from 10 per cent to 8 per cent through Bangladesh Bank’s FE circular number-02 dated January 30 this year.
The statement said that the plastic sector is an emerging and promising sector. It is diversifying export products according to the needs of foreign buyers and earning foreign exchange by exporting 150 varieties of plastic products to about 126 countries using modern technology.
Direct exports in FY 2022-2023 amount to USD 209.86 million (source-EPB). As a backward linkage industry that exports to the country’s largest export sector, garments and other industries, earn about US$ 950 million.
That is, the export volume (Direct + Deemed) is above 1.2 billion US dollars. 1.5 million men and women are employed here, of which 30 per cent of them are women. It has been growing at a rate of 20 per cent for the past two decades. The position of plastic sector in exports is 12th.
The current government has also included the plastic sector as a priority sector in the Import and Export Policy-2024.
The circular does not mention the introduction of alternative incentives in the duty-compliant system post-LDC transition, the statement said.
However, many middle-income countries have been providing alternative incentives rather than direct incentives for their industries.
The issue of providing alternative incentives has come up in various government and private studies of the country. “We do not think that the sudden reduction of the existing system without an alternative system is a helpful step for industry and the economy,” the BPGMEA president said.