The national budget has proposed a significant rise in the allocation for the country's readymade garment (RMG) sector, taking its contribution and potential into account.
In the upcoming fiscal year 2019-20, it has proposed an additional allocation of Tk 28.25 billion for the sector which is receiving Tk 15 billion in the current fiscal.
It also proposed 1.0 per cent cash incentive in the next fiscal year to the rest of the RMG sector except those who are currently getting cash incentive at 4.0 per cent.
"Currently, four sectors of ready-made garment are receiving export incentives at 4.0 per cent. I propose providing an export incentive of 1.0 per cent in the next fiscal year to the rest of the sectors of ready-made garment," the finance minister said in his budget speech.
"An allocation of additional Tk 28.25 billion (Tk 2,825 crore) will be made in the budget for FY 2019-20 for this purpose," he said.
Bangladesh has acquired the second position in the world in exporting RMG, he said, adding that in the current context of international trade, it is considered as a growing and promising sector.
Keeping this in mind, he said, the government has kept providing all types of facilities to this sector including the existing incentives.
The current corporate tax on RMG factories is 12 per cent and 10 per cent on green building certification and 15 per cent on the textile sector.
"Considering the contribution of these sectors to our economy, particularly in boosting export and generating employment opportunities, I propose to continue this provision of reduced rate of taxes for these sectors," the minister said.
The textile sector will enjoy 15 per cent corporate tax for next three years, according to the Finance Bill.
The budget speech, however, mentioned nothing about source tax.
According to the previous decision, the government proposed 1.0 per cent source tax which was later reduced to 0.25 per cent for the RMG sector in the current fiscal.
Source tax at reduced rate will continue until June 30.
Lauding the budget proposals, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Dr Rubana Huq in an instant reaction said the proposed budget has given priority to some new sectors especially allocation of Tk 1.0 billion and Tk 500 million for innovation, creating new entrepreneurs and research and development respectively.
"We have sought 5.0 per cent cash incentive for all RMG exporters while the budget has proposed 1.0 per cent," she said.
A Tk 140 billion would be required for 5.0 per cent incentive, she said, adding that the government has proposed an allocation of Tk 28.25 billion.
Though the allocation of Tk 28.25 billion is the highest in the last 10 years the RMG sector is receiving, the amount was inadequate, she said. The sector received Tk 15 billion last year.
RMG exporters are getting 4.0 per cent cash incentive for exports to European Union (EU) and new markets except EU, United States (US) and Canada.
Small and medium enterprises and local textile millers also get 4.0 per cent incentive.
© 2017 - All Rights with The Financial Express