Reinstate full cash incentives for exports

Amid rising production costs and escalating global economic uncertainty, apparel exporters have urged the government to reinstate full cash incentives for exports to help the sector remain competitive.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the appeal during a meeting with Finance Division Secretary Dr Md Khairuzzaman Mozumder at the Secretariat on Wednesday.

Talking to The Financial Express after the meeting, BGMEA President Mahmud Hasan Khan Babu said, "We met the finance secretary to explain the current situation of the industry and to request the continuation of cash incentives."

According to BGMEA Vice President Shehabudduza Chowdhury, the industry is bracing for fresh challenges following Bangladesh's upcoming graduation from Least Developed Country (LDC) status, and government support will be critical during this transition.

"To sustain the industry and cope with the upcoming challenges, continued support from the government is essential," he said.

He stressed that cash incentives are not subsidies, but rather strategic investments that help improve the global competitiveness of Bangladeshi exporters.

"The incentives should not be reduced, as they are intended to boost export performance," he added.

Mr Chowdhury pointed out that the 1 per cent special incentive introduced during the Covid-19 pandemic has since been slashed to 0.30 per cent, and urged the government to restore it to the previous level.

He further noted that global conflicts, including the Russia-Ukraine war and the Israel-Iran tensions, have significantly impacted the global economy, pushing up gas and LNG prices and consequently raising production costs in Bangladesh.

"Given the current global and local situation, the government should treat export incentives as strategic investments for future growth," he said.

The BGMEA president also raised concerns about the reciprocal tariffs imposed by the US government, calling them a serious threat to Bangladesh's apparel exports.

"To address this, the government should consider initiating dialogue with the US authorities to find a resolution," he said.

He mentioned that the commerce ministry is currently working on a response plan, which is expected to be shared with the United States Trade Representative (USTR) by next week.

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