Citing various issues that have ‘plagued’ the readymade (RMG) garment industry in Bangladesh, the apex garment manufacturers’ body in the country, Bangladesh Garment Manufacturer and Exporters Association (BGMEA) has called upon the Government not to raise the tax at source in the apparel sector and are contemplating to sit with the Prime Minister, Commerce Minister and Finance Minister on this issue.
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“Some steps have been proposed in the budget to boost the industry, but there are also some that go against the industry’s interest. Tax at source on all kinds of exports has been raised to 1.50 per cent from the current 0.6 per cent in the proposed budget. It means the direct tax will be hiked by 150 per cent. This goes completely against the industry’s development,” stated BGMEA President Siddiqur Rahman while addressing a press meet in Dhaka, a day after Finance Minister AMA Muhith proposed a BDT 3.41 trillion National Budget, for the 2016-17 fiscal.
Highlighting the challenges faced by the RMG industry, Rahman stated that prices of apparel products in the international market are on the decline. “On the other hand, production cost is increasing up to 10 per cent every year. Also, the BDT getting stronger against the Dollar has become another reason for losses… Under the circumstances, hiking the tax at source will push the apparel sector into a deeper crisis. A total of 618 factories have been closed down due to various reasons while 319 more are following suit,” added Rahman.
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With the BDT becoming stronger by 7.66 per cent in the past four years, small- and medium-sized factories were spending between BDT 50 million and BDT 100 million to implement the reform plans prescribed by Accord, Alliance and National Action Plan, he claimed.
