RMG factory owners for release of cash incentives

A large number of readymade garment (RMG) factory owners may face difficulties in paying wages and allowances to their workers if the government does not release committed cash incentive on time before Eid-ul Fitr, industry insiders said.
It usually takes 15 to 20 days for the exporters concerned to get cash incentive after its release from the Ministry of Finance (MoF). So, it will be very difficult to provide wages and allowances to their workers before Eid if funds are not cleared from the very beginning of Ramadan, they pointed out.
The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has sought cash incentive to be cleared by July 10 next, officials said.
They said acting President of the association Mohammad Hatem recently sent a letter to Finance Minister AMA Muhith seeking release of cash subsidy.
The government released Tk 6.48 billion in April last. But the allocation for the apparel exporters was Tk. 5.55 billion. At that time, they had applied for Tk 8.50 billion. There was a deficit of some Tk 3.50 billion then.
A large number of applications from exporters seeking Tk 9.0 billion cash subsidy have in the meantime been submitted to the Bangladesh Bank (BB), according to the BKMEA sources.
The country's apparel sector gets 5 per cent cash incentive as an alternative to duty bonds and duty drawbacks, sources said.
The government has increased the cash incentive to 3 per cent from 2 per cent for export of new textile products and expanding export of textile items to new markets other than the US, Canada and the European Union for fiscal year 2014-15, according to a BB circular.
The main consideration for giving cash incentive to textile and garment sector is for its contribution to the country's economy. It is also being paid to promote backward linkage industries.