Apparel exporters will get an additional 1.0 per cent cash incentive as the government is going to issue a circular soon to this end amid less-than-expected export growth due to global competition, officials said.
They said the existing four categories of exporters, who now enjoy 4.0 per cent incentive, will also be entitled to get the extra subsidy, once the government issues an order in this regard.
The exporters, who have so far been deprived of the facility, will then get 1.0 per cent incentive as proposed in the budget for the current fiscal year.
The finance minister has already given his approval to a finance division proposal in this regard.
The finance division will ask the Bangladesh Bank (BB) to publish a revised circular in this regard. Earlier on October 10, the central bank issued a circular to this effect.
The national budget for the current fiscal year proposed special cash incentives for the rest of the readymade garment (RMG) sector except those who are now getting 4.0 per cent cash incentive in non-traditional markets.
In his budget speech, the finance minister proposed providing 1.0 per cent export incentive in the current fiscal year for the rest of the sectors of RMG.
The national budget for FY 2019-20 proposed a significant rise in the allocation for the country's readymade garment sector, taking its contributions and potential into account.
It also set aside an additional allocation of Tk 28.25 billion for the sector which is receiving Tk 15 billion in the current fiscal year.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Dr. Rubana Huq hailed the incentive offer, saying that it was not enough for the apparel sector as apparel exports dropped significantly to date.
She explained that the RMG sector saw a 14.50 per cent negative growth in the first half of the current month.
Country's small RMG factories are passing hard times now. Large RMG units are somehow continuing their activities, she added.
Earlier, the BGMEA chief has sought to provide 1.0 per cent cash incentive on apparel exports without any condition as the sector is going through tough times and needs support to remain competitive.
Recently, a meeting on existing problems facing the readymade garment sector was held at the commerce ministry with commerce minister Tipu Munshi in the chair. BGMEA leaders were also present at the meeting.
After the meeting, the minister told reporters that RMG exports have been witnessing a negative growth for the last three months.
"We have discussed issues how to overcome this situation and increase competitiveness of the apparel sector."
The commerce minister pointed out that exporters are taking orders at 'undercut' prices, which are impacting the overall export growth.
They have been reducing prices just to get more orders, he observed.
At the meeting, the traders placed some suggestions to overcome existing problems.
"We have discussed the issue of the negative growth of RMG exports for the last three months. The government will take steps to ensure positive growth of apparel export,'' said the minister.
BGMEA leaders at the meeting sought more incentives to enhance the production capacity of the apparel sector. They also demanded a cut in the bank interest rate, tax waiver, more facilities at the port and devaluation of taka against dollar, a meeting source said.
"We have already issued instruction to the central bank on 1.0 per cent special cash incentive for all apparel exporters," research officer of finance division Mohammad Sohrab Hossain told the FE on Monday.
When contacted, a senior officer of BB's Foreign Exchange Policy Department said, "We have received an instruction from the finance division on cash incentive. We are working on the issue."
He said they will send a letter to the finance division, seeking approval for a circular in this regard.
Export growth of the RMG sector continued to decline in three months of the current fiscal year-- 11.46 per cent in August, 4.70 per cent in September and 19.79 per cent in October.
Country received US$ 12.72 billion from merchandise exports in the first four months to October of the current fiscal year that down 11.21 per cent from the set target, according to the Export Promotion Bureau (EPB).
RMG shipments especially both woven and knitwear led the fall in the export growth.
Bangladesh expects the volume of garment exports to reach US$60 billion within next three to five years.
The country's total export earnings stood at US$ 40.53 billion in the fiscal year (FY) 2018-19, riding on a high volume of RMG shipments.
Garment fetched more than 84 per cent of total national exports, amounting to US$ 34.13 billion, registering an 11.49 per cent year-on-year growth.
Of the amount, US$ 16.88 billion came from knitwear and $ 17.24 billion from woven garment items.
Earnings from apparel shipment were 4.57 per cent higher than the target of US$ 32.68 billion.
An estimated US$ 30.61 billion was earned in the FY 2017-18.