BGMEA wants withdrawal of RMG tax at source as exports drop

BGMEA has demanded that the readymade garments sector be kept out of the purview of tax at source for next two fiscals since the industry experienced a gradual drop in export growth in past few years.

The organisation’s President Siddiqur Rahman described the current market situation as ‘critical’ and made some more demands at a press conference at the BGMEA building in Dhaka on Saturday. 

The BGMEA’s other demands include:

>> Halving 20 percent corporate tax for next five years.

>> Extra 5 percent incentives for BGMEA and BKMEA.

>> Adopting a stable revenue policy to encourage investors.

Finance Minister AMA Muhith had proposed 1.5 percent tax at source on all products, including RMG, for 2016-17 fiscal year, but later cut it to 0.7 percent following demand by businesses.

BGMEA President Siddiqur said the average growth of export in RMG sector was 13 percent in past 10 years, but it dropped to 2.21 percent in the current fiscal.

He blamed unsuccessful bids to enter new markets, the crisis of gas and power supply, and high rates of interest on bank loans for the fall.

According to him, 1,200 RMG factories were closed in past four years, and around 400,000 workers lost jobs.

Stressing the need for withdrawal of the tax at source on RMG products to help the sector stay in the world market, he said, "Taxes are paid on yarn, cloth, accessories, washing and end products. How many times will we have to pay tax on the same product?"

The $28 billion RMG sector contributes to around 80 percent of Bangladesh's total export.

The BGMEA president said the export from the sector is decreasing in a 'worrying' rate due to 'silent recession' in the US and European Union countries, the major markets for Bangladesh's RMG products.

Export from this sector dropped by 6.8 percent to the US and 5.91 percent to the EU countries.