Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in its budgetary reaction, expressed concern over increasing source tax on export earnings to 1.0 per cent from the existing 0.5 in the proposed budget for the fiscal year (FY) 2022-23.
The apparel-sector apex trade-body in a statement on Thursday also said the source-tax hike would make the situation difficult for the industry in the current global situation.
The BGMEA, however, hailed the government for some of its budgetary proposals, including VAT withdrawal on sub-contracting, extension of 15 per cent corporate tax for textile sector for additional three years, continuation of cash incentive, and import duty reduction to 5.0 per cent from the existing 25 per cent on sewerage treatment plant.
"We hope that the prime minister and the finance minister will consider keeping the source tax for garment industry at 0.5 per cent," BGMEA acting president S M Mannan Kochi said in the statement.
He also requested the government to continue the existing 0.5 per cent source tax for next five years to help the industry create more employment after overcoming the present crisis situation.
If the industry survives, revenue could be earned. The sector earned US$31.45 billion in last FY and expects to earn $41 billion in the current FY. More revenue could be earned following enhanced export earnings, he added.
Citing a World Bank report, the BGMEA statement said world trade growth might fall to 4.0 per cent in 2022, which was 10.3 per cent in 2021.
Besides, US dollar is taking a strong position and euro is becoming weak. So, euro might be equivalent to dollar, creating a negative impact on locally-made apparel item prices in its largest market - Europe.
There is a huge pressure on balance of payment due to fall in remittance inflow and high import trend, while there is hardly any new employment during the last two years due to the Covid pandemic, the BGMEA statement noted.
"It is necessary to keep the largest foreign currency earning sector's growth momentum," it added.
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