Garment accessory makers seek tax cuts, revised import rules in budget proposals
They seek a fixed rate for at least five years to provide predictability and stability for businesses planning their investments
The Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association submitted their budget proposals for the fiscal year 2024-25, outlining measures they believe will strengthen the industry's contribution to the country's garment sector.
The association, representing a crucial segment of the garment industry's supply chain, proposed a decrease from the current 1% tax to 0.25%, arguing that this aligns with previous government initiatives to encourage exports.
Additionally, they seek a fixed rate for at least five years to provide predictability and stability for businesses planning their investments.
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The association's President Al Shahriar Ahmed, during a media briefing today, said that considering the current global economic climate, they hope the government will consider revising the tax rate again to further stimulate exports.
The manufacturers and exporters association also seeks a level playing field for both tariff and non-tariff-bonded establishments.
Currently, there are limitations on the import availability for non-tariff bonded establishments compared to those located within designated tariff zones.
These zones, often managed by authorities like the Bangladesh Export Processing Zone Authority or Bangladesh Economic Zones Authority, offer certain benefits like tax breaks and simplified customs procedures. Businesses operating within these zones are considered bonded establishments.
The manufacturers and exporters association requested a three-year import availability period specifically for the accessories sector. This would allow manufacturers to manage their raw material needs more effectively and avoid delays caused by slow audits, which can be a particular issue for non-tariff bonded establishments.
The organisation also pointed out that 15-18% of the final price of a garment product is attributed to accessory components. Furthermore, the domestic accessories sector currently fulfils nearly 100% of the demand for the country's major export-oriented apparel industry.
Streamlining imports, protecting domestic production
Another key demand concerns the import process for export-oriented businesses. The association urges the government to eliminate the requirement for bank guarantees on imported goods, which can be a financial burden and cause delays.
Furthermore, they propose the exclusion of all local purchases made by export-oriented industries from the existing 15% value-added tax (VAT). This would significantly reduce production costs for the industry.
To bolster the domestic garment accessories industry and ensure its continued support for the readymade garments sector, the manufacturers and exporters association proposes a ban on the import of finished garment accessories and packaging products under bond.
This would incentivise local production and enhance the overall competitiveness of Bangladesh's export sector in the international market.
The organisation's president, Al Shahriar, urged to ban the import of finished products of garments accessories and packaging under the bond in order to sustain the domestic industry and to keep the direct export sector competitive in the international market.
The association underscored its role as a 100% export-oriented industry, supplying vital components to the readymade garment sector, a major contributor to Bangladesh's export earnings.
They believe that the proposed reforms are essential to maintain Bangladesh's position as a leading garment exporter and ensure the continued growth of both the accessories sector and the RMG industry as a whole.
