The BGMEA thanked the country’s finance minister for efforts to keep the country’s macroeconomic stability intact, ensure business facilitation, and establish long-term policy stability for investors amid multiple global and domestic economic challenges.
It said the new budget has shifted focus from a growth-centric approach towards holistic development with the aim of transforming Bangladesh into a trillion-dollar economy by 2034. The emphasis on sectors including education, healthcare and social protection is one of the distinctive features of the budget.
The budget has set a growth target of 6.5% for the upcoming fiscal year. Alongside this, 10 critical priorities have been identified, including investment-driven employment generation, a production-oriented economy, deregulation, financial sector stability and energy security.
BGMEA says it considers these measures highly important and supportive for the country’s industrial development, trade expansion and particularly for the smooth graduation from the least developed countries (LDC) category.
The budget arrives as the BGMEA called an emergency meeting to review what it said was “persistent decline” in garment exports.
Due to the global economic slowdown and rising domestic costs, apparel export earnings have declined by 3.41%, average unit prices have decreased by 1.55%, and opening of back-to-back LCs for raw material imports has declined by 7.93% in the current fiscal year.
As a result, around 400 factories have closed in Bangladesh over the past three years.
While the reform-oriented announcements are believed to be supportive for industries, the BGMEA said that, with the current challenges faced by the apparel sector, it believes that "certain policy support measures are essential to protect the competitiveness of the RMG industry, which remains one of the major sources of employment and foreign exchange earnings”.
The BGMEA said it expects the following recommendations to be incorporated in the budget to overcome the crisis in the apparel sector:
- reduction of withholding tax
- reduction of income tax on cash incentives
- ensuring reasonable corporate tax
- removal of double taxation in the sub-contracting process
- and reduction of import duties on man-made fibre-based apparel inputs
“BGMEA believes that the apparel sector is not only the country’s leading foreign exchange-earning sector but also a major driver of employment generation for millions of people," the organisation said in a statement.
“To remain competitive in the international market after LDC graduation, it is essential to reduce business costs, ensure uninterrupted and affordable gas and electricity supply, and further simplify customs and port-related procedures.”
In April, the BGMEA requested government intervention to address an ongoing gas and electricity crisis affecting the country’s RMG sector as the ongoing energy crisis has led to a rise in raw material prices and transportation expenses, increasing total production costs.
