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The Financial Express

BGMEA pleads for incentivising jv apparel makers

FE REPORT | Published: January 18, 2020 10:18:35 | Updated: January 18, 2020 16:15:41


BGMEA pleads for incentivising jv apparel makers

The garment-sector apex trade body has urged finance ministry to provide a 1.0-per cent cash incentive for joint-venture apparel manufacturers, officials said.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the plea in a recent letter to finance minister AHM Mustafa Kamal.

It has sought to incentivise the factories located in export-processing zones and economic zones as they ship products to the European Union, the USA and Canada.

Currently, there are three types of units in the export-processing zones.

'Type A' company is 100 per cent foreign-owned (including Bangladeshi expatriates). 'Type B' is a joint venture between foreign and local entrepreneurs.

On the other hand, 'Type C' companies are owned by 100 per cent Bangladeshi residents.

BGMEA president Dr Rubana Huq in the letter thanked Mr Kamal for providing 1.0-per cent incentive to the apparel sector recently.

The stimulus will help recover the crisis situation prevailing in the ready-made garment sector, she said.

Ms Huq said the special incentive is not provided to the 'Type B' entrepreneurs, although the joint-venture companies are largely contributing to the country's economy and employment generation.

She thinks the same facility should be in place for joint-venture investment, as local-foreign investors produce high-value apparel items that local entrepreneurs alone do not make.

"Foreign investors may feel frustrated at the dual policy. Even local investors may be discouraged in joint-venture investment," the BGMEA chief cited.

The government should provide similar incentive for 'Type B' investors, she asserted.

The current fiscal budget proposed a 1.0-per cent cash incentive for the rest of the RMG sector except those who are getting cash incentive at 4.0 per cent.

It mooted a significant rise in the allocation for the garment sector, taking into account its growing contribution and potential.

The budget also set aside an additional allocation of Tk 28.25 billion for the sector.

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