The government of Bangladesh is implementing changes to limit cash incentives for textile and apparel exports. The Bangladesh Bank will issue a new circular, removing freight costs, foreign currency commissions, and insurance costs from the cash incentives provided to these sectors. Currently, the cut, make, and trim (CMT) manufacturing sector receives cash incentives, where buyers handle pre- and post-production processes.
However, industry experts express concerns about the government’s decision. They suggest implementing the Ministry of Commerce’s Technical Committee’s recommendations, which propose a flat rate of export incentives for textile and apparel exporters. Under the new circular, the value of exported products will be determined based on imported materials’ total assessed value and repatriated CMT value. The requirement for local value addition to qualify for export incentives will remain unchanged.
This change in cash incentives policy could have implications for exporters and create complications, especially considering the recent increase in the value addition limit. Traders in the textile and apparel sector urge the government to carefully consider the potential consequences and impact on the industry before issuing the new circular.