The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) demanded a 10% incentive (export value) on the export of non-cotton items or items manufactured by man-made fibre (MMF) in the upcoming budget of the fiscal year 2023-24.
In this regard, BGMEA President Faruque Hassan sent a letter to Finance Minister AHM Mustofa Kamal on April 16.
In this letter, he said that in the last four decades, though the export of RMG items reached $45 billion, there is still material diversification of the products.
As per FY 2021-22 exports, about 76% of the total RMG exports were cotton items though growth in non-cotton garments exports has been promising in recent years.
“Where about 75% of the total textile consumption in the world is non-cotton and the share of cotton is only 25%.
“Moreover, currently 52% of global apparel trade is non-cotton, while our non-cotton apparel exports account for only 26%,” he added.
However, although the non-cotton or MMF sector has attracted some investment in recent years, these investments are mainly capital and technology dependent.
Another important point here is that as an LDC, Bangladesh gets the most duty-free benefits in the European Union where currently, under the EBA facility, duty-free benefits are available only when the clothing is made from fabric (single transformation).
However, if the EBA benefits are lost, in order to enjoy the GSP Plus or Standard GSP benefits in Europe, the double transformation rules of origin of fabric from yarn and clothing from fabric must be ensured.
“As a result, our woven sector, especially the non-cotton sector, will be in crisis,” he added, noting that to overcome this situation, investment in backward linkage sectors, particularly in the woven and non-cotton sectors is required.
In the current world, the demand for non-cotton products is increasing due to the continuous change in the lifestyle of consumers and the increasing demand for sustainable and eco-friendly clothing.
“Taking into account the global market for non-cotton products and our export potential, special incentives of 10% (of export value) on non-cotton garment exports will encourage investment and exports in this sector and maintain a competitive edge in the budget for the next financial year 2023-24,” he added.
This incentive will increase exports, will attract new investment and will create new employment, he added.
“As the transition from LDCs will lead to restrictions on cash incentives from 2026 onwards, it would be a timely strategy for us if we can increase investment in promising sectors through various incentives till 2026,” he added.
The government's incentives for market diversification have resulted in exports to non-traditional markets increasing from $849 million to $6.37 billion in the last 14 years.
Similarly, if this incentive is given for fibre diversification, then new horizons will open up in exports, he added.
In this letter, he also said that there is no alternative to sustaining export earnings and sustaining growth in the face of the current global crisis.
“It is necessary to give due importance to the protection of our export sectors and the potential areas for increasing exports,” he added.
He also said that in the post-Covid-19 world of war and economic turmoil, they are not hopeless, but are working to reach the milestone of earning $100 billion from exporting RMG items by 2030.
In this regard, the immediate implementation of the proposal to provide a special incentive at the rate of 10% on the export value of non-cotton garments to ensure sustainable growth of this industry is required, he added.