Written by The Banking Post
Bangladesh’s apparel exporters have called on the government to raise export incentive rates to help the country’s largest foreign exchange-earning sector maintain its growth momentum.
The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) proposed increasing the special incentive from 0.3 per cent to 1 per cent, boosting the rate for small and medium units from 3 per cent to 4 per cent, and raising cash support as an alternative to duty drawback from 1.5 per cent to 2 per cent. The proposals were submitted to the Ministry of Finance on August 11.
BGMEA Vice President Md. Shehab Udduza Chowdhury said the association met the finance secretary recently, urging that the cash incentive not be reduced. “We have proposed increasing the special incentive rate, which currently does not even cover basic administrative costs,” he said.
The association noted that even with higher rates, government expenditure on incentives would not rise beyond past levels. Based on estimated RMG exports of $40 billion in FY 2025-26, the total incentive requirement would be around Tk 50.6 billion—lower than the Tk 56.96 billion provided in FY 2022-23.
Exporters stressed the importance of the incentives for maintaining competitiveness amid rising costs. Over the past year, wages, electricity, diesel, transportation, and gas prices for new factories have increased. Interest rates on bank loans have also risen to 14–15 per cent, and imports of capital machinery dropped 24 per cent in the first ten months of FY 2024-25.
The sector is additionally facing challenges from US reciprocal tariffs, the Russia-Ukraine conflict, and restrictions on garment exports to India, including the cancellation of transshipment facilities.
RMG contributes about 82 per cent of Bangladesh’s total export earnings and employs roughly 10 million people directly and indirectly. Last year, the sector paid around Tk 37 billion as source tax on exports, Tk 22 billion on local raw materials, Tk 5.2 billion in income tax on cash incentives, and Tk 6 billion in VAT, stamp duty, and related charges.
At a meeting on August 10, BGMEA also requested the government restore the cash incentives provided in FY 2022-23, citing the sector’s socio-economic significance and emerging challenges.
