Garment sector’s proposals overlooked in the budget, says BGMEA president

The proposed budget fails to address the key proposals from the key sector, claims SM Mannan Kochi

SM Mannan Kochi, president of the Bangladesh Garment Manufacturers and Exporters Association, says that the proposed budget does not reflect the garment sector's proposals.

He made the statement during a joint press conference called to discuss the budget's implications at the BGMEA complex in Uttara on Saturday.

Two other associations in the garment sector, the Bangladesh Knitwear Manufacturers and Exporters Association and the Bangladesh Textile Mills Association were also in attendance.

In his written statement, BGMEA President Kochi said, "The budget statement highlights that controlling inflation will be the biggest challenge in the upcoming fiscal year due to the decline in foreign exchange reserves.”

“However, despite some policy support proposals for this key foreign exchange-earning sector [the garment sector], our main proposals to tackle the current tough situation have not been reflected in the budget."

Kochi claims the garment industry is in crisis due to falling product prices and a nearly 50 percent rise in local production costs over five years.

Claiming a sharp decline in garment export growth over the past 11 months, he said, "In May alone, it dropped by 17 percent. We increased wages by 56 percent, but our prices did not rise.”

“Instead, in the last 9 months, the prices of our main products have fallen by 8-18 percent”, he added.

BGMEA believes several proposals in the budget will not aid investment and job creation. These include:

- Increasing import duty on various construction materials used in steel building construction from 5 percent to 10 percent;

- Setting import duty on capital machinery and construction materials for factories in economic zones at 1 percent;

- Raising VAT on energy-efficient bulbs from 5 percent to 15 percent;

- Increasing the fee for new bond licences from Tk 50,000 to Tk 100,000 and the annual renewal fee from Tk 5,000 to Tk 10,000.

Kochi said, "We hoped for supportive policies for the garment industry in the budget. We had particularly deep expectations of reducing source tax to 5 percent and considering it as final taxation."

“Additionally, proposals like maintaining tax exemption on incentives, VAT exemption for essential industrial goods and services, resolving complexity in HS codes and weights, reducing income tax on ERQ from 20 percent to 10 percent, tax exemption on imports for the reinstallation of fire and safety equipment, and withdrawing 15 percent VAT on recycled fibre supplies for the garment industry were notably absent from the budget. This is disheartening for us.”

He pushed for consultation with stakeholders before implementing the Customs Act 2023 and called for the withdrawal of Section 171 of the Act.

He also presented a demand to maintain existing incentives in the garment sector until 2029, refrain from initiating any alternative incentives, implement an exit policy, and allocate special funds for food rationing until the same year

BKMEA Executive President Hatem said, "If advance income tax is required for exports, we request it is set at 1 percent to 0.5 percent. This requires returns and adjustments, for which we urge the government."

"We will face pressure if cash incentives are withdrawn. Therefore, we request the government's support," he added.

BTMA President Mohammad Ali Khokon commented that the government's decision not to provide gas-electricity connections and bank loans outside industrial areas would hinder growth and investment.

He said, "Production has decreased in factories in Gazipur and Narayanganj. Yet, the administration has instructed everyone to pay salaries and allowances properly."

Additionally, he emphasised the need for the government's attention in solving the ‘gas crisis’.