The finance ministry has decided to slash the cash incentive by little above nine per cent from export receipts to come from outbound shipment by large garment units. The cut would save the exchequer more than Tk 200 crore in a single financial year, a senior finance official said, indicating more cost-cutting measures for the highest export earning sector. The move follows a drastic 25 per cent reduction in the export subsidy on all types of export-oriented apparel makers the government re-fixed from July 1 and it came as a fresh blow to the already struggling industry. As per the latest decision, taken last week and approved by finance minister AMA Muhith, cash incentive (export subsidy) for garment units enjoying all three types of incentives at an aggregate rate of 11 per cent, will now get only 10 per cent on their export earnings. The new instruction on cash incentive for apparel sector will be effective from July 1, this year, a finance official said. ‘We seek to rationalize the cash incentive regime for large apparel exporters that enjoy all three kinds of cash subsidy facilities,’ the finance official told New Age on Wednesday. ‘The new instruction through an official circular of Bangladesh Bank will soon be made public, as we are going to ask the central bank soon to act on the latest fiscal decision of the ministry,’ he said. From July 1, the government reduced cash subsidy on all types of export-oriented RMG industries to four per cent from five per cent and incentive for medium and small RMG units has also been reduced to four per cent from five per cent. However, three per cent incentive for export earnings to be generated from countries other than the US, Canada and EU markets, remained unchanged at three per cent. The amount of export subsidy given to RMG sector in 2013-14 fiscal year was Tk 950 crore as the largest export earning sector raked in above US$ 25 billion during the period. ‘The apparel sector is the most blessed area that receives maximum fiscal and non-fiscal privileges from the government. The facilities will be trimmed down to support other non-traditional items that are making their presence in the global export markets,’ another top finance official told New Age. Bangladesh Garment Manufacturers and Exporters Association reacted over the move of the government, saying any cut in existing facility ‘would be suicidal for this vital sector.’ ‘We have been in constant miseries, given the shrinking global market share of apparel export and increasing political chaos and blockades,’ Atiqul Islam, president of BGMEA, said. He urged the government to reconsider its decision to help survive the largest employing sector of the country.
