In the current fiscal year, only exports to non-traditional markets enjoy 4% cash incentive
In the proposed budget for fiscal year 2019-20, the government has planned to provide 1% cash incentive against export of apparel goods to traditional export destinations and allocated Tk2,825 crore for the sector.
Currently, apparel exporters enjoy 4% cash incentives against exports to non-traditional destinations.
“We have acquired the second position in the world in exporting ready-made garments (RMG). In the present context of international trade, it is considered as a growing and promising sector," Prime Minister Sheikh Hasina said, while reading from the budget speech in the parliament on Thursday.
Keeping this in mind, the government has kept on providing all types of facilities, including existing incentives to the sector, said Hasina.
The prime minister read out the speech as Finance Minister AHM Mustafa Kamal had fallen sick during his maiden budget presentation.
Currently, four RMG sectors are receiving export incentives at 4%.
"I am proposing to provide 1% export incentive from the next fiscal to the ready-made garments sector. An allocation of additional Tk2,825 crore will be provisioned in this regard," she said.
Exporters welcome the proposed budget
Welcoming the government's proposed budget, people involved with the apparel sector said the incentives for traditional markets will help boost the export market.
Exports to non-traditional markets contribute only 15.85% to the total apparel export earnings, while the rest comes from the traditional market.
“In the budget proposal, we demanded a 5% cash incentive against exports to all markets, but the government has given 1% or Tk2,825 crore,” BGMEA President Rubana Huq told Dhaka Tribune.
“Although the amount is much less than what we demanded, it would play an important role,” said Rubana.
She also urged the government to continue its support as the sector is going through a critical time, and losing its competitive edge in the global export market.
Corporate tax for apparel sector unchanged
Meanwhile, the government has also kept corporate tax for the apparel sector unchanged at 12%. The tax rate will be 10%, if there is green building certification. As for the textile sector, the tax rate is 15%.
Considering the contribution of the sectors to the country's economy, particularly in boosting exports and generating employment opportunities, the prime minister proposed to continue the provision of reduced tax rates for them.
Meanwhile, tax at source for the apparel sector will remain unchanged at 0.25% for the next fiscal.