The government is reportedly examining a proposal for extending cash incentive to a number of agro products, in addition to those already enjoying the benefit. The apex trade body -- the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) -- recently placed the proposal to the ministry of commerce (MoC) seeking cash incentives for 37 more agricultural products to help boost exports. The issue -- no doubt a sensitive one given the difficulties being faced by agro-product exporters and the small basket of their products -- is often viewed with a sense of added empathy, and on occasions considered prejudicial by exporters of other sectors.
Furthermore, it is commonly believed that Bangladesh, being primarily an agricultural country, has enough potential to thrive in agro-product exports, had there been adequate infrastructural facilities, financing support, and last but not least cash incentives. The fact that exporters of agro-products are facing a host of problems, both at home and abroad, is unquestionable. Perishable as these goods are, lack of modern processing centres, pre-shipment inspection as regards compliance with sanitary/phytosanitary standards of overseas markets, warehousing facilities prior to air lifting and hassle-prone cargo handling at the airport are some of the key issues awaiting remedial measures for decades. If these facilities were in place, exporting of agro-products would have certainly been a good deal easier.
Providing incentives by way of cash, fiscal, financial or other facilitating measures has been integral to the functioning of the country's export-oriented sector. It must not be argued that the growth of some sub-sectors of it is attributable to the incentives that the government has been providing not only to promote exports but also to help them in critical times caused by adverse international market conditions. Initially, the idea was to support the selected potential sectors in easing their teething problems in production and marketing. Over time, the pattern has somewhat changed with a focus on value addition and use of domestic materials in export-oriented production. There have been changes in the selection of the sub-sectors, with some of the latter getting dropped while some making their way into the list of incentive-recipients. In the current fiscal, sectors which are getting incentives include textile, frozen fish, leather goods, jute goods, agricultural and agro-processed products, ship building, light engineering, and 'Halal' meat, among others. The rate of cash incentives that are provided to such sectors, ranges from 2.0 to 20 per cent.
Linking incentives to export growth may at times be misleading as success in export marketing is sometimes dependent on factors beyond the control of the exporters, reliant on a shift in consumer choices, non-tariff measures, sanitary and phytosanitary regulations of the destination markets, import diversion, recessionary factors and so on. There is no denying that in today's globalised world, government subsidies by way of cash incentives cannot render a product competitive for long. It is also not desirable that subsidy should be a component of sustainable competitiveness. The government would do well to examine the matter in depth to arrive at a decision on extension of cash incentives.
