Proposed budget frustrates textile, apparel sector

Leaders of the country's textile and apparel sector on Saturday urged the government to reconsider a cut in source tax and continuation of cash incentive which, according to them, were not reflected in the proposed budget for FY 2024-25.
They also demanded withdrawal of the 1.0 per cent duty proposed on import of capital machinery and construction materials by factories located in the economic zones.
These were some of the major concerns they raised at a joint post-budget press conference of the sector-related trade bodies at Bangladesh Garment Manufacturers and Exporters Association (BGMEA) office at Uttara in the city.
Leaders of BGMEA, Bangladesh Knitwear Manufacturers and Exporters  Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) put forward their demands while appreciating some of the proposed measures.
They welcomed allowing imports of 17 textile goods at reduced rate, tax reduction on chillers to 10 per cent from 104.68 per cent and import duty reduction on polyester staple fibre and pet chips (textile grade).
The readymade garment exporters had earlier requested a reduction in the source tax from the current 1.0 per cent to 0.5 per cent. However, the government did not address this in the budget proposal.
"We expected some policy support, especially a cut in source tax to 0.50 per cent, among others," BGMEA president SM Mannan Kochi said at the event, expressing his frustration that their demands were not reflected in the proposed budget.
The government also proposed increasing import duty of different construction materials used in steel building to 10 per cent from 5.0 per cent, 1.0 per cent duty on capital machinery by economic zones factories, increasing VAT to 15 per cent from 5.0 per cent on energy saving light and enhancing new bond license and license renewal fees.
"These measures, if implemented, would not encourage investment and help generate employment," he noted.
The BGMEA president urged the government to re-fix the source tax at 0.50 per cent for five years and continue cash incentive support until 2029 and not to reduce the rate until alternative cash supports are introduced.
Mr Kochi also requested the government to withdraw the decision of not providing gas and electricity connection to factories outside the economic zones.
Talking there, BTMA president Mohammad Ali Khokon demanded withdrawal of 7.5 per cent VAT on garment waste or jhut and 15 per cent VAT on fibres made of such waste.
His other demands included withdrawal of the 5.0 per cent VAT on man-made fibre, 5 per cent advance tax and 5 per cent advance income tax on flax fibre.
During his speech, BKMEA executive president Mohammad Hatem said the textile and clothing industry has been passing through difficult times due to the dollar crisis, poor energy supply, and high interest rate.
"In such a situation, if our demands are not met, the industry might face further blow," he said.
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