Incentive cut poses a huge risk to apparel

At first, the cash incentive rate was reduced in four categories. But finally the circular narrowed down to products under five HS [harmonised system] codes which will not get cash incentives. These five items are a crucial part of readymade garment exports.

Now only a few goods will get the cash incentive as per the new circular. 

As regards the category of new markets, names of India, Australia and Japan were omitted. We developed these markets with great difficulty. Such decisions have created a huge risk for our industry. 

The central bank argued that the incentive rate was reduced according to the World Trade Organization guidelines, which says incentives cannot be kept after 2026 as Bangladesh is scheduled to graduate from LDC status.

We have repeatedly asked the government not to reduce the incentives now because then we won't remain competitive in terms of foreign currency. Already international orders are low and there is a dollar crisis in the country. We need to work on bringing more dollars to the country.

Foreign exchange reserves had reached such a point that there were issues in opening letters of credit. Importing raw materials has also become difficult because of this. Thus, we asked that incentives not be reduced. 

However, the government did not agree to our plea.