Leaders of the country’s textile and apparel sectors expressed concern over the central bank’s recent directive not to provide gas and electricity connections to new factories outside the government-designated economic zones (EZs) and industrial areas.
The banks have also been asked to ensure mandatory clearance certificates from utility service providers before approving loans.
Bangladesh Bank has recently issued two separate circulars in these regards.
Expressing concern, the leaders said the garment industry is at a crossroads due to the current geopolitical crisis that is causing disruptions in global trade.
“And the implementation of the central bank circulars would exacerbate the crisis of the garment industry, hindering its growth and discouraging entrepreneurs from setting up new factories,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President SM Mannan Kochi said.
He expressed the concern while presiding over a meeting with the leaders of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at BGMEA’s Uttara office in the city on Wednesday night.
The meeting was to discuss the current pressing issues of the ready-made garment (RMG) industry.
BKMEA Executive President Mohammad Hatem, BTMA President Mohammad Ali Khokon, FBCCI Vice President Md Munir Hossain, BGMEA Vice Presidents (Finance) Md Nasir Uddin, Abdullah Hil Rakib, Directors Md Imranur Rahman, Mohammad Sohel Sadat, Shams Mahmud, Rajiv Chowdhury, Md Jakir Hossain, and Md Rezaul Alam (Miru), among others, were present.
Talking to the FE, Mr Hatem said during the meeting, various issues of the garment industry came up for discussion, especially focusing on two circulars recently issued by the Bangladesh Bank, source tax and customs-related issues.
The leaders highlighted that many garment factories established outside the designated economic zones or areas are undergoing expansion, and new factories are under construction.
Therefore, implementation of the BB circulars at this point would disrupt ongoing expansion works and new establishment efforts, they noted.
The leaders urged the government to exempt the garment industry from the purview of the circulars for at least five years, while reiterated the demand for uninterrupted power and gas supply.
The issues related to customs, VAT, and income tax in the garment industry were also discussed in the meeting.
The business leaders urged the National Board of Revenue (NBR) to make customs, VAT, bonds, and tax-related processes faster, easier and hassle-free to facilitate sustainable industry development, aiming to achieve the target of US$100 billion from garment exports by 2030.
When asked, BTMA President Khokon said that the exporters proposed reducing the tax at source applicable to the garment industry from existing 1.0 per cent to 0.5 per cent to mitigate the increased costs of doing business and maintain competitiveness.
The leaders also discussed Bangladesh’s graduation from the Least Developed Country (LDC) status and possible strategies to retain competitiveness in the post-graduation era.
They emphasized the need for necessary policy support to attract increased investment in promising sectors for overall economic benefits
