The Bangladesh Garment Manufacturers and Exporters Association on Sunday said that the proposed budget was not RMG sector friendly, reiterating its demand for revoking tax at source for the sector for the next two years.
RMG exporters now pay tax at source at 0.7 per cent on their export proceeds as per a statutory regulatory order issued by the National Board of Revenue instead of 1 per cent set in the budget for the outgoing fiscal year (2016-17).
As finance minister AMA Muhith did not mention anything about the tax in the proposed budget for the next fiscal year (2017-18), the rate would remain 1 per cent for the next fiscal year as the effectiveness of the SRO expires on June 30.
‘Considering the current crisis in the RMG sector we request government to provide five per cent of freight on board price as cash incentive in addition to the incentives the sector is now enjoying for the next two years for the members of the BGMEA and the BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association),’ BGMEA president Md Siddiqur Rahman said at a post-budget press conference at the association’s headquarters in the capital Dhaka.
The BGMEA president said that they could not term the budget RMG sector friendly as not a single recommendation of the trade body had been included in the proposed budget.
‘As of today we cannot say that the proposed budget is garment sector friendly. But time is not over yet, there is scope for including the demands of the RMG sector association in the budget through discussion,’ Siddiq said.
He said that the RMG industry had never before fallen into such crisis as it was facing now in 35 years.
‘The sector would be able to rebound if it gets two years,’ he said.
The BGMEA president also demanded reduction in the corporate tax rate to 10 per cent from the proposed 15 per cent.
He said that the RMG sector remained under huge pressure of global buyers and entrepreneurs were investing huge amount of money to make their factories compliant.
Siddiq said that the readymade garment sector had been facing challenges at home and abroad due to volatility in global economy, deprecation of the euro, impacts of the US presidential election and Brexit and production cost increase.
He said that the cost of production increased by 18 per cent in last two years and exports declined by 6.80 per cent in the US market and by 5.91 per cent in the UK market in July-April period of the current financial year.
Siddiq said that RMG export earnings grew by around 13 per cent annually during the last 10 fiscal years while the earnings registered only 2.21 per cent growth in the first 10 months of the current fiscal year.
To remain competitive in the global market, the BGMEA urged the government to continue policy support to the RMG sector.
Former BGMEA president Abdus Salam Murshedy and vice-presidents Faruq Hassan, SM Mannan Kochi, Mohammad Nasir and Mahmud Hassan Khan Babu were present, among others, at the press conference.