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Wednesday, June 19, 2024

Bangladesh government cut cash incentives on apparel exports

The Bangladesh government has reduced the cash incentive on garment exports to the dismay of the exporters. Initially, incentives for four categories were reduced. However, the final circular narrowed to products under five HS [harmonized system] codes, which will not get cash incentives.

Exporters say these five items are a crucial part of readymade garment exports. Only a few goods will get the cash incentive as per the new circular. At the same time, the names of India, Australia, and Japan were removed from the category of new markets. Exporters say they developed these markets with incredible difficulty. Such decisions have created a massive risk for our industry.

The central bank of Bangladesh explained that the incentive rate was reduced according to the World Trade Organization guidelines, which say incentives cannot be kept after 2026 as Bangladesh is scheduled to graduate from LDC status.

Garment exporters lament that they pleaded with the government not to reduce the incentives now because they won’t remain competitive in foreign currency. The international orders they added are already low, and the country faces a dollar crisis. They say exporters and the government should have worked together to bring more dollars to the country.

Because of low foreign exchange reserves, exporters have issues opening letters of credit. Importing raw materials has also become difficult because of this. However, the government disagreed with the exporters’ plea not to reduce the incentives.

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