Written by The Banking Post
The government is unlikely to further reduce export cash incentives before Bangladesh’s graduation from the least-developed country (LDC) category in November 2026, as it seeks to support trade and industry amid global economic uncertainties, officials have said.
In the first six months of the current fiscal year, the interim government kept cash incentive rates unchanged from the January 2024 revision, aiming to cushion exporters against the effects of tariff wars and what officials described as a “hostile attitude” from some trade partners.
Finance Secretary Dr Md Khairuzzaman Mozumder said at a recent meeting that the government had planned to phase out cash incentives in four stages to avoid a sudden impact on businesses after graduation. However, given the current global trade environment, authorities are reviewing whether to postpone any further reductions until the transition is complete.
Mr Mozumder also noted that the government is considering replacing cash incentives with production-linked support for key sectors such as agriculture, pharmaceuticals, leather, and jute products.
A senior official at the meeting told The Financial Express that “the government is unlikely to lessen cash incentives with only months remaining before graduation,” citing global conditions that remain unfavourable for trade.
Under World Trade Organization rules, developing countries are prohibited from providing direct export subsidies, meaning Bangladesh will have to withdraw cash incentives automatically after graduation.
The government began restructuring export subsidies in January 2024, cutting rates for 43 product categories to between 1% and 15%. In the second phase, the range dropped further to 0.3%–10%, sparking protests from exporters who demanded a return to pre-2024 levels.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan welcomed the government’s latest stance, urging a reinstatement of the special 1% apparel incentive, which has been reduced to 0.3%.
Abdullah Hil Nakib, Deputy Managing Director of Team Group, said the government should focus on supporting exporters rather than reducing incentives, highlighting that Bangladeshi firms lag behind competitors in terms of policy support. He also called for lower bank interest rates to spur investment and job creation, along with new bilateral trade deals to secure zero-tariff market access.
Nakib further urged policymakers to explore ways of continuing some form of export incentives even after LDC graduation.
