Bangladesh Garment Manufacturers and Exporters Association (BGMEA) urged the government to increase the cash incentive against garment exports to three percent from the proposed one percent for the next fiscal year of 2019-20. Apparel manufacturers and exporters demanded the increase in incentive at a post-budget press conference on Sunday.
Finance minister AHM Mustafa Kamal proposed additional one percent cash incentive for the RMG sector in the budget for 2019 – 20. The proposal excluded the four areas where the sector is currently getting cash incentive at the rate of 4 percent.
In case of three percent incentive, the government will need to give two percent more and thus it will have to spend Tk 5,650 crore. The total amount will be Tk 8,475 crore as cash assistance if the grants three percent incentive in the sector.
BGMEA president Rubana Huq also demanded devaluation of the taka against the dollar by at least Tk five against USD to be more competitive in global apparel trade. She argued that, currencies of competing countries including Vietnam, Cambodia and Turkey were devalued significantly against the dollar in last couple of years which erodes competitive edge of Banngladesh. She also said, if the government devalues Bangladesh currency by Tk 1 against a USD, RMG exporters will get additional Tk 3,400 crore a year. If the local currency is devalued by Tk five against the greenbacks, the government will require additional Tk 12,419 crore.
Referring to global change in trend, BGMEA president claimed the local industry is still at childhood phase and need special support as the sector had been facing challenges of rising cost of production, longer lead-time, absence of research and development, product diversification and value addition and innovation.
According to an estimate from the BGMEA, the government gave Tk 804.4 crore in the fiscal 208-19 for using local yarn and for shipment to new markets. The amount was Tk 641.88crore in 2017-18 fiscal while it was Tk 660.88 crore for the fiscal 2016-17, according to the BGMEA data.