The Bangladesh Government may have to spend additional Tk 200 crore to pay for the 1 per cent cash incentive that the Government had announced recently to help readymade garment (RMG) sector have a competitive edge in the world market.
Already, Tk 2,800 crore incentives have been provided in the budget for the same purpose.
The monitoring cell in Finance Ministry has said that the amount allocated in this year’s budget is insufficient to provide additional incentive. Additional Tk 200 crore is therefore needed, it said.
However, Abdur Rauf Talukder, Finance Secretary, said that it was too early to say how much additional amount would be required to pay incentives and it all depends on export trends.
The RMG makers had been asking for 5 per cent cash incentive to retain competitiveness but Finance Minister Mustafa Kamal offered 1 per cent incentive in this year’s budget.
Until then, garment exporters in the country received 4 per cent cash incentives against exports to non-traditional destinations.
Additionally, Government paid another 4 per cent cash incentive as duty drawback for small and medium textile manufacturers.
That’s not all! It paid 6 per cent incentive for exports to the Euro zone.
And now for the first time, the RMG exporters to the US and Canada will get the cash incentive under the new dispensation.
Dr. Rubana Haq, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) reportedly said that the Government has increased only 1 per cent cash incentive against their demand for 5 per cent though she hoped it would help the country stay competitive in world market.