Increased tax, VAT will let down RMG exporters: BGMEA

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FE Report
Apparel manufacturers Tuesday demanded withdrawal of four times more tax at source and 15 per cent VAT on space rent for the exporters that are proposed in the budget for the 2010-2011 fiscal year.
Leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the demand at a post-budget press briefing in the city.
"Increased income tax will let down the exporters definitely as they are still to recover from the impacts of global recession and when there is a severe competition in the world market," Abdus Salam Murshedy, president of BGMEA said.
In the proposed national budget, Finance Minister AMA Muhith has proposed that the existing 0.25 per cent advance income tax at source on exports should be raised to 1.0 per cent.
The budget has also imposed 15 per cent value added tax (VAT) on rented space for commercial purpose.
The 100 per cent export-oriented garment industry is out of all kinds of VAT and a large number of factories are run on rented flats, Mr Murshedy said.
At one hand the government is providing cash incentive for RMG while on the other it has imposed VAT and tax, he said asking, "How will this contradictory decision help achieve competitiveness of the entrepreneurs?"
"Such tax at source and VAT on space will increase cost of production," he argued. "Energy crisis, other infrastructural bottlenecks and increased price of yarns have already pushed up cost of production."
He said such measures would go against the spirit of the budget proposals as the finance minister had said that the government would support exporters in a post-recession global market.
The BGMEA president said exporters were struggling now as global recession had restructured the apparel market with an enhanced competition between the suppliers.
"We are fighting for retaining our share in the global apparel market as our competitors from China, Vietnam, Cambodia and India are offering the buyers prices lower than ever before," he said.
The leaders said the government should provide subsidy on furnace oil and diesel to sustain competitiveness in the global market.
They also sought continuation of off-peak electricity rate of Tk 3.15 as flat rate and withdrawal of the minimum charge of gas for the garment industry until the power crisis improves.
UNB adds, BGMEA urged the government to announce a national coal policy to address the country's power crisis by setting up coal-based power plants.
"As a majority of the power plants are dependent on gas, and gas crisis has been prevailing across the country, the government should announce a national coal policy to generate more power," Murshedy said.
He said if coal is well-utilized to generate power, huge amounts of gas will be saved and this gas can be supplied to the newly installed industries in the country.