Dhaka, Thursday, 21 January 2021

Apparel sector to get more Tk 2,825cr as incentive

Apparel sector to get more Tk 2,825cr as incentive

Staff Reporter:Country’s apparel sector has got an allocation of additional Tk 2,825 crore as cash incentive for the next financial year of 2019-20. The finance minister AHM Mustafa Kamal made the proposal while delivering his speech on the proposed national budget for the 2019-20 fiscal in the parliament.

However, the apparel manufacturers voiced their dissatisfaction with the 1 percent cash incentive given to them in the proposed budget. They told that it is insufficient to help them tide through the current volatile situation in garment business.They had originally demanded 5 percent

cash incentive, but now are asking for 3 percent. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq said they had demanded 5 percent cash incentive for all RMG exporters while the budget proposed only 1 percent and considering the existing challenges of the RMG sector the amount was insufficient. She said that Tk 14,000 crore was required for 5 percent incentive but the government proposed an allocation of Tk 2,825 crore.
Rubana, however, said that the allocation of Tk 2,825 crore was highest in last 10 years the RMG sector was receiving. However, the tax at source on RMG export would be reinstated at 1 percent. The government reduced the tax rate to 0.25 percent through a statutory regulatory order, which would expire on June 30 this year.
Mustafa Kamal said that the government had kept on providing all types of facilities including existing incentives to the RMG sector. “Currently, four sectors of readymade garments are receiving export incentives at 4 percent. I propose to provide an export incentive of 1 percent in the next fiscal year to the rest of the sectors of readymade garments,” the finance minister said. Mustafa Kamal also proposed continuation of reduced corporate tax rate for the RMG and textile sectors. The apparel sector is now enjoying corporate tax at the rate of 12 percent while the rate is 10 percent for the green factories.
At the same time the textile sector has been enjoying reduced 15 percent tax rate for a long period of time, which would expire on June 30 this year.
“Considering the contribution of these sectors to our economy, particularly in boosting export and generating employment opportunities, I propose to continue this provision of reduced rate of taxes for these sectors,” the finance minister said.