In a fresh move the government has expanded the basket of export products eligible for cash incentive. With four new products added to the already prevailing incentive scheme, the total number of products now stands at 42. The new products --- tea, bicycle and its parts, MS steel products and cement sheet --- would receive the incentive or cash assistance at the rate of 4.0 per cent. Besides, the incentive or cash assistance for entities located in specialised zones under the Bangladesh Economic Zones Authority, Bangladesh Export Processing Zones Authority and in Hi-Tech Parks has been raised.
Providing incentives by way of cash, fiscal, financial or other facilitating measures has been integral to the functioning of the country's export sector. There is no argument that the growth of some of the export products is attributable to the incentives the government has been providing not only to promote exports but help them in critical times caused by adverse international market conditions. The ongoing pandemic has undoubtedly rendered export of products difficult.
The ministry of commerce has reportedly been working on revising the incentive structure for exports. Although a common phenomenon for long, the idea to help various export products withstand market shocks and related difficulties through cash and other incentives has hardly ever been methodically assessed as a follow-up procedure. As a result, it remains unknown if the incentives dished out to facilitate the affected and needy sectors actually served any purpose or not. Quite often, it is argued that incentives, especially in cash, are required to provide exporters the all important competitive edge in target markets. In this pandemic time when sluggishness has affected most export products, it is important that in order for them to stay afloat, some facilitating measures by way of incentives are provided by the government. However, it also needs to be taken into account that in today's competitive trading world, government subsidies by way of cash incentives cannot render a product competitive for long. It is also not desirable that subsidy should be a component of competitiveness. Incentive does not necessarily mean cash benefit. Hence, creating a conducive environment, such as soft-term lending facility, quick shipment of goods, pre-shipment inspection, laboratory testing, suitable warehousing, fulfilling compliance needs of importing countries may augur well for facilitating exports in a sustainable manner.
In this context, it is thus pertinent to say that there is the need to revisit the entire incentive structure and bring necessary changes, if felt necessary. Mere addition of a few items may not be the right approach. Assessing which of the products are most hurt should be the prime consideration. At the same time, it needs to be examined whether cash benefit is the only suitable option. Facilitation in many ways may be more helpful than a paltry cash subsidy. Besides, it is also necessary to prioritise products which, given their export prospect and the ability to access overseas markets in a big way, deserve more than others.