BGMEA seeks political support and proposes a source tax of 0.50%.

Domestic clothing manufacturers and exporters today asked the government for policy support under the next budget for the next financial year (FY25), including the implementation of withholding tax at the current rate of 0.50% instead of 1% on exports, thereby maintaining it intact for the next five years.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has also proposed to maintain government incentives until 2029 and also reduce the tax on cash incentives to 5% from the current 10%, according to a press release.

BGMEA president SM Mannan (Kochi) made the proposal while addressing a meeting with journalists for an exchange of views at a city hotel.

The entire newly elected BGMEA Management Board, after taking office on April 4 this year, was present at the ceremony.

Besides, former BGMEA president and mayor of Dhaka North City Corporation (DNCC) Atiqul Islam, former BGMEA president Abdus Salam Murshedy, MP and former BGMEA president and Awami League Industry and Commerce Secretary Siddiqur Rahman, among others, spoke on the occasion.

Highlighting the BGMEA board’s plans for further advancements in the sector, SM Mannan also urged the government to keep various products and services related to the RMG industry VAT-free by providing tax breaks on import of firefighting equipment, providing special allocation like rationing of food to workers, extension support for exports and investments in non-cotton products.

“We hope that these recommendations will be reflected in the next budget,” he added.

Mentioning that the country’s apparel export target has been set at $100 billion by 2030, Mannan said it will not be possible to achieve this export target unless support is available from the government.

The BGMEA president said the number of direct export-oriented RMG factories in the country has now reduced to 2,200 from the previous 5,000.

If RMG factories focused on direct exports continued to operate, the export volume could be much higher and thus create more new jobs, he added.

Mannan said there is huge potential to further increase the global share of Bangladesh’s RMG industry as it currently accounts for only 7.87% of its international share.

“If all kinds of government support remain intact, our RMG sector can play a pioneering role in building a smart Bangladesh as Prime Minister Sheikh Hasina envisioned and a poverty-free Sonar Bangla as dreamed by Father of the Nation Bangabandhu Sheikh Mujibur Rahman,” he said.

The BGMEA chairman said that the new board is prioritizing several issues which include resolving the complexities related to RSC, simplifying operations, continuing cash incentives till 2029 and providing alternative support, taking initiatives related to banking services and financial sector, introducing exit and export policy loan guarantee instruments, extending SMEs to specific policy support and financing programmes, increasing competitive advantage through automation and digitalisation, taking initiatives on product and market diversification, food rationing and employee welfare, setting fair product prices and minimum prices, formulating a uniform code of conduct , increasing the industry’s capacity to build environmentally friendly factories and providing specific policy support to motivate investment in the man-made fiber industry.

Mannan also promised to re-introduce the BGMEA journalism scholarship, sought government intervention to resolve the complexities related to customs, VAT and bonds in NBR, listed the various stages of product and market diversification, also sought government attention to resolve the electricity crisis as addressing the complexity of the HS code and the weight of the fabric, rather than providing gas and power connections for industries outside industrial areas.

The BGMEA president said he has already urged the government to bring the law to bear on those who obstruct export activities, harass exporters and cause damage to the country’s economy.

Former BGMEA president and DNCC mayor Atiqul Islam said that since the country’s independence, no other sector in the country can become parallel to the RMG sector.

He urged industry leaders to make progress compared to the RMG industry standards in neighboring countries.