29-point suggestions to boost export-oriented textile sector

A government core group has placed 29-point recommendations aiming to support export-oriented textile sector by making existing rules pragmatic and providing attractive incentives, officials said.
The body, comprising public officials and stakeholders, submitted the report recently to the ministry of commerce (MoC). The ministry will convene an inter-ministerial meeting on March 8 to decide on implementation of the recommendations, they added.
Director General of the Export Promotion Bureau (EPB) Mafruha Sultana led the 12-member core group.
The group recommended 100 per cent waiver of value added tax (VAT) on gas, power and water for export-oriented textile and apparel sectors to avoid complications on VAT collection and their return.
It also suggested that the tax at source should be realised on export price if exporter and deemed exporter are from same group of companies, and rules of realising tax at source at the stage of raw materials supply should be abolished.
If exporter and deemed exporter are not from the same group, the tax at source on export should be realised from exporter except the tax at source paid by deemed exporter.
The core group also recommended calculating income tax for home textile exporters based on Section 53 BB of Income Tax Ordinance of 1984 as calculated in case of apparel and terry towel exporters.
It suggested VAT waiver for export- oriented textile industry on various charges including laboratory test, consultancy, compliance audit, evaluation audit, and ethical audit, contractor fee,  security services, legal adviser, corporate social responsibility, building construction cost, and courier service.
The report also recommended formulating a special fund by the central bank under which entrepreneurs should get low-cost loan for constructing buildings, buying lands, and BMRE (Balancing Modernisation Rehabilitation and Expansion) of factories in industrial zones.
It also suggested providing cash incentives at the rate of 2.0 per cent for three years on export earnings of apparel factories outside the export processing zones as those have to spend a lot of money to make them compliant.   
The report recommended declaring BSCIC (Bangladesh Small and Cottage Industries Corporation) industrial estates in Rajshahi, Pabna, Sirajganj, Kushtia, Tangail, Narsingdi, and Comilla as customs bond areas to attract investments there.        
It said the cash incentives against export income should be given in few instalments instead of four instalments considering the present situation in the apparel industry.
The report also recommended for making prices of goods competitive by reducing cost of capital and bank service charges, granting loan from export development fund for raw material import, and simplifying manufacturing and export systems.  Low-cost loans and import duty reduction can be offered to factory owners for establishing central effluent treatment plants (ETP), it added.  
It suggested for signing long-term bilateral deals with cotton-growing countries to ensure supply of the item. Steps need to be taken to stop unusual price hike of yarn, the report said.
Former vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Siddiqur Rahman told the FE Friday that the sector needs massive policy support to attain the goal of raising export earnings to US$50 billion by 2021.
He said the sector has to go through intensive changes to make the factories compliant in line with the demand of buyers.
"To make the remaining factories compliant and establish ETP for protecting environment, we need low-cost loans," he added.       
When contacted, vice chairman of the EPB Shubhashish Bose told FE the committee has submitted the report taking into consideration suggestions made by the stakeholders.
"We want further development of export- oriented textile industry as it's the key sector for earning foreign currency for the country," he said.
Mr Bose said the ministry will now decide which of the recommendations can be implemented for the sake of the sector.
    —  [email protected]