An impugned government order trimming cash incentives on exports is now retracted to restore the benefits amid repeated pleas from the garment-sector players, officials say.
At the bidding of the Ministry of Finance, the central bank on January 30 issued circular withdrawing cash incentives under five harmonised system (HS) codes which include a good number of apparel items.
These products cover 55.22 per cent of total readymade garment exports from Bangladesh, according to data available with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Moreover, the order designated Australia, India and Japan as traditional markets and lessened cash incentives against exporting goods to these countries to 0.5 per cent from 3.0 per cent.
Also, the new circular on cash incentives was given retrospective effect from January 1 which sparked protests by the apparel-sector players in particular.
Apparently to pacify the exporters, the Ministry of Finance late Sunday issued a directive for the Bangladesh Bank to recast the circular of the banking-sector regulator.
The February 11 order had asked the central bank to reenlist Australia, India and Japan as new markets and reinstate the cash incentives on exports to these markets to 3.0 per cent.
The fresh Finance Ministry order also has asked for restoring cash incentives on export of the items under the five HS codes.
Furthermore on the backtracking, the ministry asks the central bank to make the circular effective from February 1, 2024 instead of January 1.
Subsequently, the central bank on Monday revised its circular on cash incentives once again.
Sources have said BGMEA leaders, including some former presidents of the apex apparel body, on Sunday met the Prime Minister and sought her assistance in this regard. And after the meeting the ministry of finance issued the order asking the central bank to redo the order on cash incentives.
The government had moved to cut down cash incentives for export-oriented industries in a bid to align with the provisions of the World Trade Organisation (WTO) which prohibits member-countries from providing cash stimulus when they graduate to the next level of development.
Bangladesh is scheduled to graduate from the Least Developed Country (LDC) status in 2026 to a developing country and so the government wanted to gradually lessen the cash incentives from now on instead of slashing them at one go, central bank officials said.