Commerce minister Tipu Munshi on Wednesday said that country’s readymade garment export posted a negative growth for three months in a row as the country had been losing its competitiveness in the global market due to price undercut among manufacturers, high value of the local currency against the dollar and congestion in Chattogram port.
‘Businesspeople have discussed a number of issues including increasing production cost, appreciation of the local currency, problems in port, and bank interest rate for the negative export growth and the government would work on the issues to bring the export earnings into positive track,’ the minister told reporters following a meeting with garment exporters over the sluggish growth.
Tipu Munshi requested RMG exporters to avoid uneven competition among them and said the RMG sector was losing its competitiveness as many exporters were undercutting prices to grab more export orders.
He said that due to delay in shipment in port, many exporters had been forced to send the export consignments through air and the export sector was losing its competitiveness.
Country’s export earnings in the July-October period of FY20 fell by 6.82 per cent while the earnings in October dropped by 17.19 per cent.
According to the EPB data, the earnings from the RMG exports in the four months of FY20 fell by 6.67 per cent to $10.57 billion from $11.33 billion in the same period of FY19.
It showed that RMG export fell by 11.46 per cent in August, 4.70 per cent in September and 19.79 per cent in October.
At the meeting with the commerce minister, Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq showed in a presentation the current challenges the RMG sector is facing.
The presentation showed that the prices of RMG products declined by 1.61 per cent in last five years while the cost of production increased by 30.10 per cent in the period.
Rubana demanded compensation for the sector through additional provision of Tk 2-5 against each dollar on the value they retained.
She also demanded withdrawal of 10 per cent source tax on cash incentive and bringing down the bank loan interest rate to single digit.
Tipu Munshi told reporters that bank interest rate was one of the problems for the businesspeople as it was very difficult to survive after paying 12-14 per cent interest against loans.
Businesspeople discussed the problem of tax system and requested the government to widen the tax net to reduce pressure on regular tax payers, the minister said.
He said that the finance ministry secretary and the National Board of Revenue chairman assured that they would work on the issues so that the exports could rebound.
Tipu Munshi said that the NBR chairman assured of reducing the source tax imposed on cash incentive for the RMG sector.
He said that the difference between the buying and the selling prices of the dollar was discussed at the meeting and the finance secretary said the ministry would take initiative in this regard.
Finance secretary Abdur Rouf Talukder, NBR chairman Md Mosharraf Hossain Bhuiyan, Federation of Bangladesh Chambers of Commerce and Industry president Sheikh Fazle Fahim and former FBCCI president Shafiul Islam Mohiuddin attended the meeting, among others.
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