BGMEA welcomes budget, urges more support for RMG sector

FE REPORT
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has welcomed the proposed FY2026-27 budget as welfare-oriented and business-friendly, while calling for additional policy support to help the ready-made garment (RMG) sector overcome mounting challenges.
In a statement issued on Saturday, the apparel exporters' body said the budget contains several reform measures aimed at improving the investment climate, ensuring policy stability and supporting industrial growth.
BGMEA praised initiatives such as maintaining continuity in tax policy, introducing risk-based audits and automated tax refunds, simplifying business registration and licensing procedures, and providing incentives for renewable energy and green industries.
The association also welcomed the reduction in income tax deduction at source on cash incentives from 10 per cent to 5.0 per cent, alongside reforms in the bond and VAT systems.
Despite these positive steps, BGMEA said the country's largest export-earning sector continues to face significant pressure.
It noted that garment export earnings declined by 3.41 per cent in FY2025-26, while average unit prices fell by 1.55 per cent. Openings of back-to-back letters of credit (LCs) for raw material imports also dropped by 7.93 per cent.
According to the association, nearly 400 garment factories have shut down over the past three years due to weak global demand and rising domestic production costs.
To support the sector, BGMEA reiterated its demand for reducing the source tax on garment exports from 1.0 per cent to 0.65 per cent and keeping the rate unchanged for the next five years.
It also sought a complete waiver of the remaining 5.0 per cent tax deduction on cash incentives, citing liquidity constraints faced by exporters.
The association further called for the removal of double taxation in subcontracting arrangements and the withdrawal of proposed import duties on key raw materials used in the production of man-made fibre-based garments.
BGMEA expressed hope that the government would consider its proposals to help preserve the sector's competitiveness as Bangladesh prepares for graduation from least developed country
(LDC) status.