Officials of the monitoring cell under Finance Ministry of Bangladesh recently said that Tk 2,800 cr earmarked for the burgeoning RMG sector in the budget would be insufficient to provide the additional incentive awarded to the sector under ‘pressure’. They said extra fund around Tk 200 cr would be needed to provide four types of cash incentive to the apparel exporters. Finance Secretary Abdur Rauf Talukder, however, said it was too early to say how much additional fund would be needed to pay the cash incentives. It depends on the export trend, he told in the secretariat. RMG has been dominating the country’s export basket of only handful products with no exception in the recently ended fiscal with $34.13 bn out of total export receipts of $40.53 bn coming from the sector.
Additional one per cent cash incentive announced for the export oriented apparel industry would require the government to spend another sum of Tk200 cr. The readymade garment export exceeded $1.44 bn over the government set target of $32.68 bn for fiscal 2018-19 with shipment from woven increasing to $17.24 bn from $15.42 bn and knitwear to $16.18 bn from $15.18 bn.
Bangladesh which overtook India in 2014-15 to be the second highest RMG exporter after China has targeted $50 bn export receipts from the RMG in 2021, the country’s silver jubilee of Independence.
RMG businesses keep the government under pressure for incentives and policy support to retain their competitiveness in the international market and recently demanded five per cent cash incentive.
But Finance Minister Mustafa Kamal proposed one per cent cash incentive to the apparel industry in the first ever budget he placed in Parliament on June 13.
Until then, the apparel exporters received four per cent cash incentives against exports to non-traditional destinations. Besides, the government used to pay another four per cent of cash incentive to by way of duty draw back to small and medium textile manufacturers and six per cent incentive for exports to the Euro zone. Now the RMG exporters to the US and Canada will, for the first time, get the cash incentive under the new dispensation.
Bangladesh Garment Manufacturers and Exporters Association President Rubana Huq said that the government increased only one per cent cash incentive though the BGMEA had demanded five per cent. She, however, hoped that the incentive would help the RMG industry to stay competitive in the global market.
Meanwhile, Bangladesh’s apparel exports to the US in the first half of 2019 saw the highest growth in the wake of the US buyers shifting orders from China to Bangladesh due to the mounting US-China trade tensions. Bangladesh’s earnings from apparel exports to the US in January-June grew by 14.49 per cent to $3.08 bn from $2.69 bn compared to the corresponding period in 2018, according to data of the Office of Textiles and Apparel under the US Department of Commerce.